ACMC American Church Mortgage Inc (CE)

PROPOSAL NO. 1

APPROVAL OF THE ASSET SALE AGREEMENT AND THE SALE OF SUBSTANTIALLY

ALL OF THE ASSETS OF THE COMPANY

At the Special Meeting, the shareholders will be asked to vote upon the Sale Proposal. The affirmative vote of the holders of at least a majority of all shares of ACMC’s outstanding common stock is required to approve the Asset Sale Agreement and the Sale.

The following is a description of the Asset Sale Agreement, a copy of which is included in this proxy statement as Appendix A. The following description does not purport to be complete and is qualified in its entirety by reference to the copy of the Asset Sale Agreement included in this proxy statement as Appendix A. All capitalized terms used and not expressly defined in this proxy statement have the meanings set forth in the Asset Sale Agreement and/or the section of this “Proposal 1 – Approval of the Asset Sale Agreement and the Sale of Substantially All of the Assets of the Company – Asset Sale Agreement – Glossary” beginning on page 11, and Section references in this section of the proxy statement are references to Sections of the Asset Sale Agreement. Shareholders are urged to read the Asset Sale Agreement in its entirety.

Asset Sale Agreement

The Parties. American Church Mortgage Company is the seller of substantially all of its assets under the Asset Sale Agreement.

The buyer under the Asset Sale Agreement is OSK XII, LLC, a Minnesota limited liability company (“OSK”) that is wholly owned by OSP Value Fund III, LP. The entity is managed by O’Brien-Staley Partners (OSP), which operates across four discrete financial business strategies: alternative asset management; market-rate impact investing; nationwide loan servicing; and deposit management. Founded by Jerry O’Brien and Warren Staley in 2010, OSP is imbued with the core credit and fundamental investing discipline, risk management and governance DNA that have long been recognized as hallmarks of their personal and professional brands. OSK’s corporate address is 3948 West 49 ½ Street, Edina, MN 55424. Additional information about OSK can be found at www.osp-group.com, although information on that website is not part of this proxy statement.

Before negotiating and entering into the Asset Sale Agreement, ACMC has not done business with or entered into any other transactions with OSK or any of its affiliates within the preceding two years. OSK is not an affiliate of ACMC and will not become an affiliate of ACMC as a result of the Sale.

Description of the Sale; Purchase Price. Under Section 2, ACMC has agreed to sell to OSK, and OSK has agreed to purchase and accept, all rights, title and interests of ACMC, together with all payment and performance obligations of ACMC, in and under the Assets (including REO and the Bonds described on confidential schedules provided by ACMC to OSK (the “Schedules”). Section 6 provides that the Sale is made without recourse against ACMC or any representation or warranty by ACMC, whether express, implied or imposed by law, of any kind or nature except as provided in Sections 6 and 23 of the Asset Sale Agreement. Section 6 further provides that without limiting the generality of the foregoing, ACMC does not represent, warrant or insure the accuracy or completeness of any information or its sources of information contained in the Review File, Collateral Documents, Assets, Notes, REO, Bonds or Loans (whether contained in originals, duplicate originals, copies, or magnetic media, including computer tapes and disks), including, without limitation, any reports or other information prepared by accountants, engineers, appraisers, environmental consultants or other professionals. Section 6 also provides that ACMC has not, does not and will not make any representations or warranties with respect to the collectability of any Loan or Bond or the value or condition of any Mortgaged Property or REO or collateral securing any Loan or any Bond; and to the extent the Assets, REO or Bonds constitute personal or real property, such property is sold “as is, where is” and without any warranties of any kind or type, and ACMC expressly disclaims any representations or warranties with respect to such property.

Under Section 3, the “Purchase Price” to be paid by OSK to ACMC for the purchase and sale of the Assets and Bonds is $26,100,000 in cash, plus interest due on ACMC’s Secured Investor Certificates. Section 3.2 provides that on the “Closing Date” (as defined below), OSK is to pay to ACMC the amount of the Purchase Price, less all payments received by ACMC on account of the Loans and the Bonds from March 31, 2022 through the day before the Closing Date, as set forth in one of the Schedules provided by ACMC to OSK. Section 3.2 also provides that least two days before the Closing Date, OSK is to deliver to an account owned and controlled by OSK at the Bond Trustee $21,976,500, plus interest from April 1, 2022 through the Closing Date or the actual date of redemption of the Secured Investor Certificates, whichever is later. The “Closing Date” means June 30, 2022 or such other date as to which ACMC and OSK may agree in writing.

Representations and Warranties. Section 6.1 of the contains representations and warranties of ACMC to OSK relating to, among other things, the due organization of ACMC (Section 6.1.1); the authority of ACMC to enter into the Asset Sale Agreement and to perform the Sale and the enforceability of the Asset Sale Agreement against ACMC (Section 6.1.2); the lack of conflicts of the provisions of the Asset Sale Agreement with laws to which ACMC is subject and other agreements and contracts to which ACMC is a party (Section 6.1.3); the absence of any action, suit or proceeding of which ACMC has received actual notice pending against ACMC in any court or by or before any other governmental agency or instrumentality which would materially affect the ability of ACMC to carry out the transactions contemplated by the Sale Documents (Section 6.1.4); and that no broker or other party is entitled to a commission is involved in connection with the Sale (Section 6.1.5).

Section 6.2 sets forth representations and warranties of ACMC to OSK relating to title to the Assets and the Bonds (Section 6.2.1); the enforceability of the Bonds, Notes and Mortgages against the Obligors, with certain customary exceptions (Section 6.2.2); that, to the best of ACMC’s knowledge, the Obligor has no valid defense that prevents enforcement by the holder thereof of the provisions of the Bonds, Notes or Mortgages, or realization by the holder thereof or its assigns against the Mortgaged Property that arises from applicable local, state or federal laws, regulations or other requirements pertaining to usury and any or all other requirement of any federal, state or local law (Section 6.2.3); that, to the best of ACMC’s knowledge, the Loans and the Bonds are not subject to any valid right of rescission, set-off, abatement, diminution, counterclaim or defense that prevents enforcement by OSK thereof of the provisions of the Bonds, Notes or Mortgages or the realization by OSK or the Bond Trustee thereof against the Mortgaged Property of the intended benefits of such Mortgage and that no such claims have been asserted as of the date of the Asset Sale Agreement with respect to such Loan (Section 6.2.3); the information set forth in certain Schedules is true and correct (Section 6.2.4); that except by written instrument or other written documentation contained in the Review File, neither ACMC nor the Bond Trustee nor, to the best of ACMC’s knowledge, any prior holder of the Loans or the Bonds has modified and Notes, Bonds or Mortgages or satisfied, canceled or subordinated the Notes or Mortgages in whole or in part or released all or any material portion of the

Mortgaged Property from the lien of the Mortgages or executed any instrument of release, cancellation or satisfaction (Section 6.2.5); the Notes, Bonds and Mortgages and any documents modifying their terms included in the Review File are true and correct copies of the documents they purport to be and have not been superseded, amended, modified, canceled or otherwise changed except as disclosed in the Review File (Section 6.2.5); except as set forth in a certain Schedule, there is no litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or related to the Assets, Bonds or Mortgaged Property (Section 6.2.9); and neither any Mortgaged Property nor any portion thereof is the subject of, and no Obligor is a debtor in, any state or federal bankruptcy or insolvency or similar proceeding (Section 6.2.10).

Section 5 contains representations and warranties of OSK to ACMC relating to, among other things, the due organization of OSK (Section 5.1); the authority of OSK to enter into the Asset Sale Agreement and to perform the Sale and the enforceability of the Asset Sale Agreement against OSK (Section 5.2); the lack of conflicts of the provisions of the Asset Sale Agreement with laws to which OSK is subject and other agreements and contracts to which OSK is a party (Section 5.3); that OSK’s bid and decision to purchase the Assets and Bonds is based upon its own comprehensive review and independent expert evaluation and analysis of the Review File and other materials deemed relevant by OSK and its agents (Section 5.5); that in entering into Asset Sale Agreement and the other Sale Documents, OSK has not relied upon any oral or written information from ACMC or any of its employees, agents, attorneys or representatives, other than the limited representations and warranties of ACMC contained in the Asset Sale Agreement (Section 5.6); OSK is a sophisticated investor (as that term is used in regulations promulgated under the Securities Act of 1933) who could withstand the loss of the entire Purchase Price (Section 5.7); and no broker or other party entitled to a commission is involved in connection with the transaction (Section 5.10).

OSK also represents to ACMC in Section 5.4 that neither OSK nor any general partner, limited partner, shareholder or joint venturer in OSK is involved in any financial difficulties which would impair or prevent a closing pursuant to the Asset Sale Agreement on the Closing Date, and OSK has now and will have as of the Closing Date sufficient liquid assets, capital and net worth to meet its obligations under the Sale Documents and to pay the Purchase Price without any financing or other contingencies.

Conditions Precedent to Closing. Under Section 7, the respective obligations of OSK and ACMC to complete the purchase and sale of the Assets and Bonds pursuant to the Asset Sale Agreement are subject to the fulfillment on or before the Closing Date of each of the following additional conditions to be fulfilled by the other, unless the condition is specifically waived in writing by the party for whose benefit the same is to be fulfilled: OSK and ACMC must have performed all of their respective covenants and agreements contained in the Asset Sale Agreement which are required to be performed by them on or prior to the Closing Date (Section 7.1); all representations and warranties of OSK set forth in Section 5 and of ACMC set forth in Section 6.1 of the Asset Sale Agreement must be true in all material respects at and as of the Closing Date (Section 7.2); all requisite federal, state and local governmental and regulatory approvals relating to the transactions contemplated by the Asset Sale Agreement, if any, must have been obtained (Section 7.3); ACMC must have obtained approval of the Asset Sale Agreement and the transactions contemplated therein by its Board and shareholders (Section 7.4); and, upon the request of OSK or ACMC, the other party must provide certified copies of appropriate resolutions, directions and consents approving the execution and delivery of the Sale Documents and the consummation of the transactions contemplated thereby together with such other certificates of incumbency and other evidences of authority as ACMC or OSK or their respect counsel may reasonably require (Section 7.5).

Performance Covenants of OSK and ACMC. Section 8.1 and Section 8.2 contain the following covenants of OSK applicable during the period up to and including the Closing Date and, in some cases as described, after the Post-Close Period: including during the Post-Close Servicing Period, OSK will not violate any laws relating to unfair credit collection or foreclosure practices in connection with the Assets or Bonds, and OSK will indemnify ACMC and hold it harmless from and against any and all claims, demands, losses, damages, penalties, fines, forfeitures, judgments, legal fees and any other costs, fees, and expenses incurred by ACMC as a result of a breach by OSK of the aforesaid warranty or any claim, demand, or assertion that, after the Closing Date, OSK was in any way involved in or had in any way authorized any unlawful collection or foreclosure practices in connection with the Assets and Bonds transferred to OSK pursuant to Asset Sale Agreement (Section 8.1); and ACMC will submit all Internal Revenue Service Forms and Information Returns for the Assets or Bonds for the period during which it owns the Assets or Bonds (Section 8.2).

Section 8.3 provides that if any Asset or Bond is or becomes subject to any claim, action, lawsuit, foreclosure action, bankruptcy, or other proceeding, administrative or judicial, or similar action filed by or against any Obligor (collectively, “Litigation”), OSK must, within ten days after the Closing Date, provide ACMC and ACMC’s counsel in connection with each such Litigation with the name of counsel selected by OSK to represent OSK’s interests in such Litigation. Section 8.3 further provides that OSK must, at its own cost, liability, responsibility and risk, within ten days after the Closing Date, notify the applicable clerk of all applicable courts and all counsel of record that ownership of the subject Asset or Bond was transferred from ACMC to OSK. In addition, OSK must, at its own cost, have its counsel file appropriate pleadings with all applicable courts within ten days after the Closing Date substituting OSK’s counsel for ACMC’s counsel, removing ACMC as a party to all Litigation, and substituting OSK as the real party in interest in all such Litigation, such that ACMC will have no further obligation with respect to any such Litigation, including any fees or costs of any receiver arising from and after the Closing Date. Under Section 8.3, ACMC will have the right to notify its counsel representing its interests to cease participating in all Litigation upon the Closing Date or any date thereafter. Section 8.3 also provides that OSK irrevocably appoints ACMC’s and ACMC’s agents as the true and lawful attorney of OSK (which appointment is coupled with an interest) in the name, place and stead of, and at the expense of, OSK to take such actions and file such motions and other documents with the court and otherwise as necessary to substitute OSK in place of ACMC in all such Litigation, to effectuate ACMC’s counsel’s withdrawal as counsel from the Litigation, and to otherwise effectuate OSK’s assumed obligations with respect to such Litigation.

Under Section 22, after the Closing Date and through December 31, 2022, ACMC and Church Loan Advisors, Inc. (the “Advisor”), which is ACMC’s advisor and serves as the service provider for ACMC and Philip J. Myers, will service and administer the Assets and Bonds in the same manner as previously serviced by or on behalf of ACMC (except that ACMC must not take any material action without the prior written approval of OSK). Section 22 also provides that on the first Business Day of each month during the Post-Close Servicing Period, OSK must pay the Advisor a monthly servicing fee of $24,000; at the sole cost and expense of OSK, ACMC and the Advisor will cooperate in the appointment of TMI Trust Company as successor bond trustee (or any other substitute or successor bond trustee designated by OSK) with respect to all bond issuances; and at the sole cost and expense of OSK, ACMC and the Advisor will cooperate with requests of OSK relating to the transfer of servicing, including, without limitation, by cooperating with any designated successor servicer and cooperating with requests related to ACH authorizations. See “Proposal 1 – Approval of the Asset Sale Agreement and the Sale of Substantially All of the Assets of the Company – Interests of Certain Persons in Matters to be Acted Upon.

Section 21 provides that ACMC agrees to execute and deliver such instruments and take such further actions OSK may request in order to effectuate the purposes and to carry out the terms of the Asset Sale Agreement.

Under Section 3.5, after the Closing Date, ACMC must pay to OSK, promptly after the receipt thereof, the amount of Collections received by ACMC on or after the Closing Date to the extent collected in good funds by ACMC.

No Solicitation by ACMC; Receipt of “Superior Proposal”. Section 26 provides that ACMC will not, and will not authorize or permit any of its affiliates to, directly or indirectly, encourage, solicit, initiate, facilitate or continue inquiries regarding an acquisition proposal. Section 26 further provides that ACMC must, within two Business Days, advise OSK orally and in writing of any acquisition proposal for ACMC or the Assets and Bonds or any inquiry it receives with respect to or which could reasonably be expected to result in an acquisition proposal for ACMC or the Assets and Bonds and the material terms and conditions of such request, including the identity of the person or entity making the proposal. If ACMC receives an acquisition proposal that ACMC’s Board concludes in good faith, after consultation with ACMC’s outside counsel, constitutes a “Superior Proposal” (as defined below), ACMC may, if it determines in good faith, after consultation with outside counsel, take such action is required to comply with its fiduciary duties to its shareholders under applicable law, engage in negotiations with such third party, and supply such third party with information on ACMC and/or terminate the Asset Sale Agreement as set forth in Section 24 (described below). (See “Proposal 1 – Approval of the Asset Sale Agreement and the Sale of Substantially All of the Assets of ACMC – Asset Sale Agreement – Termination of Asset Sale Agreement.”) Section 26 then obligates ACMC to provide prior written notice to OSK at least two days in advance of its taking any action contemplated by Section 26 or Section 24 with respect to any Superior Proposal. Section 26 defines the term “Superior Proposal” to mean any bona fide acquisition proposal made in writing (i) that includes consideration that ACMC’s Board in good faith determines is greater than the Purchase Price and otherwise is on terms that ACMC’s

Board has determined in its good faith judgment (after consultation with outside counsel and after taking into account all legal, financial (including the financing terms of such proposal), regulatory and other aspects of the proposal) are more favorable to ACMC’s shareholders from a financial point of view than the Asset Sale Agreement; (ii) with respect to which ACMC’s Board has determined in good faith (after consultation with outside counsel and after taking into account all legal, financial (including the financing terms of such proposal), regulatory and other aspects of the proposal) is reasonably likely to be consummated (if accepted); and (iii) that is not subject to any financing or due diligence conditions.

Termination of Asset Sale Agreement; Termination Fee. Section 24 provides that the Asset Sale Agreement may be terminated at any time under the following conditions: at any time prior to the Closing Date, by either OSK or ACMC by providing written notice to the other party; at any time prior to the Closing Date, by the mutual written consent of OSK and ACMC; or after December 31, 2022, by either OSK or ACMC by providing written notice to the other party if the closing has not occurred by December 31, 2022.

Section 24 also provides that if either OSK or ACMC terminates the Asset Sale Agreement before the Closing Date by providing written notice to the other party, then the terminating party must pay a $100,000 Termination Fee by wire transfer in immediately available funds within two Business Days of such termination to the non-terminating party and that upon termination of the Asset Sale Agreement, OSK and ACMC each must bear its own costs and expenses.

Transfer of Assets and Bonds; Closing Documents. Under Section 4.1, not later than the Business Day prior to the Closing Date, ACMC must deliver to OSK (i) a Bill of Sale selling, assigning, transferring and conveying to OSK all rights, title and interests of ACMC in and to and under the Loans; (ii) the original Notes, or affidavits of lost Notes, endorsed by ACMC by allonge; (iii) the original Bonds, to the extent in existence, and bond powers necessary to transfer title to the Bonds to OSK; (iv) assignments of Mortgages; and (v) a Deed selling, assigning, transferring and conveying to OSK all rights, title and interests of ACMC in, to and under the REO, all on the terms set forth in the Asset Sale Agreement (collectively, the “Closing Documents”). Section 4.1 also provides that the endorsements and assignments included in the Closing Documents will be without recourse, representation or warranty of any kind or nature, and such qualifying language on the endorsements and assignments will not affect, limit or enlarge the obligations of ACMC and the rights, remedies and recourse of OSK under the Asset Sale Agreement.

Under Section 4.4, to and after the closing, to the extent prepared by OSK, ACMC must execute, and acknowledge, if appropriate, for delivery to OSK one or more additional documents to the extent required by applicable public recording or filing laws to transfer to OSK the rights, title and interests of ACMC in, to and under the purchased Assets and Bonds (collectively, “Separate Assignments”); the Separate Assignments must be without recourse, representation or warranty of any kind or nature; such qualifying language on the Separate Assignments will not affect, limit or enlarge the obligations of ACMC and the rights, remedies and recourse of OSK under the Asset Sale Agreement; OSK must prepare and furnish any and all further Separate Assignments, if necessary, in form satisfactory to ACMC; and OSK must promptly file or record each Separate Assignment, at its sole cost and expense.

Section 4.5 provides that at the request and sole cost and expense of OSK, ACMC must cooperate with OSK in executing written requests to each hazard, casualty and liability insurer, and to the writing agent for each flood hazard insurer, issuing a policy of insurance obtained by an Obligor with respect to the Assets and Bonds, requesting an endorsement of its policy of insurance effective on the Closing Date adding OSK as the mortgagee, the loss payee and/or an insured named therein, as the case may be, together with instructions that such endorsement be forwarded directly to OSK, with a copy to ACMC. Under Section 4.5, each such request must be prepared by OSK at its sole cost and expense, and any additional premium or other charge in connection therewith must be paid by OSK. Under Section 4.5, OSK is not entitled to be added to or acquire an interest in any policy of insurance obtained by ACMC. Section 4.5 provides that any loss on or after the Closing Date either to an Obligor, OSK or to the value or collectability of the Assets and Bonds due to ACMC’s cancellation of collateral or real property risk insurance or its failure to identify OSK as loss payee, mortgagee or other insured is the sole responsibility of OSK; and that to the extent the Assets or Bonds constitute personal or real property, ACMC expressly disclaims any obligation to provide title insurance, pay property taxes, or pay any related transaction taxes or other fees.

Survival of Representations and Warranties; Indemnification; Limitations of Damages. Under Section 16, each and every covenant made by OSK or ACMC in the Asset Sale Agreement will not survive the closing and will merge into the Closing Documents, provided, however, that ACMC’s representations and warranties set forth in Section 6.2 will be independently enforceable for a 30-day period following the Closing Date, after which time no claim for breach of Section 6.2 may be made.

Section 25 provides that with respect to any Proceeding brought by someone other than a party to the Asset Sale Agreement against one or more of the Seller Indemnitees and that in any way directly or indirectly relates to the Assets, Bonds or REO acquired by OSK after the Closing Date, OSK must indemnify those Seller Indemnitees against all indemnifiable Losses arising out of such Proceeding.

Under Section 23, neither party will be liable to the other party for any consequential, special or punitive damages. Also under Section 23, if ACMC fails to consummate the sale of the Assets and the Bonds upon the terms and conditions set forth in the Asset Sale Agreement, OSK's sole remedy will be for specific performance or for the refund of any sums previously received by ACMC from the OSK. If, after the Closing Date, ACMC breaches any representation or warranty set forth in Section 6 which has not expired, OSK is to give written notice to ACMC within 30 days of discovery of such breach, and ACMC will have the right to cure such breach during a period of 90 days after receipt of such notice; if such breach or failure is not duly cured within such 90-day period, or not waived or consented to in writing by OSK, ACMC must elect, in its sole discretion, to either (i) repurchase the Assets and Bonds at the Repurchase Price, or (ii) to pay to OSK’s the actual damages of OSK directly caused by such breach, up to an amount not exceeding the Repurchase Price. OSK’s remedies set forth in Section 23 will be the exclusive remedies of OSK, and OSK will not be entitled to any other rights, remedies or other relief, at law or in equity, for ACMC’s breach of any representation, warranty or covenant set forth in the Asset Sale Agreement.

Other Provisions of the Asset Sale Agreement. Section 14 provides that the Asset Sale Agreement and the terms, covenants, conditions, provisions, obligations, undertakings, rights and benefits of the Asset Sale Agreement is binding upon, and will inure to the benefit of, ACMC and OSK and their respective heirs, executors, administrators, representatives, successors, and assigns. Section 14 further provides that notwithstanding anything in the Asset Sale Agreement to the contrary, OSK agrees not to assign its rights under the Asset Sale Agreement without the prior written consent of ACMC, except that OSK may assign its rights under the Asset Sale Agreement to an affiliate of OSK, and, in the event of any assignment, both OSK and the assignee will be jointly and severally liable under the Asset Sale Agreement.

Under Section 17, the Asset Sale Agreement is governed by and construed in accordance with the laws of the State of Minnesota, without giving effect to any choice of law or conflict of laws provision or rule (whether of the State of Minnesota or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Minnesota.

Under Section 18, the Asset Sale Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of OSK and ACMC.

Section 19 provides that except as otherwise set forth in the Asset Sale Agreement, all fees and expenses incurred in connection with the Asset Sale Agreement and the transactions contemplated under the Asset Sale Agreement, including the fees and disbursements of counsel, financial advisors and accountants, will be paid by the party incurring such fees or expenses.

Board Approval; No Fairness Opinion. On May 26, 2022, the Board of ACMC unanimously approved and authorized the Asset Sale Agreement and the Sale. The Board did not receive a fairness opinion as to the fairness of the Purchase Price, as adjusted, to ACMC’s shareholders from a financial point of view.

Glossary. Unless otherwise expressly defined in this proxy statement, the following terms as used in the Asset Sale Agreement have the following meanings:

Background of the Sale

Entering into the Asset Sale Agreement is the result of an extensive review by the Board of various strategic alternatives available to the Company. The Board determined that the proposed Sale would maximize value for the shareholders.

OSK is wholly owned by OSP Value Fund III, LP, which does business as “O-Brien Staley Partners” (“OSP”). OSP is a local investment firm with an existing church loan/bond inventory with whom senior officers of ACMC have had periodic contact (but no business relationship) for approximately 10 years. An initial conversation regarding the purchase of ACMC or ACMC’s portfolio or loans and bonds occurred sometime in late September 2021 during an informal meeting. ACMC commenced the discussion by stating that ACMC was beginning to consider efforts to locate an acquisition candidate who could buy the Company and perhaps scale its church lending activity, building on the current portfolio and trade name of ACMC. ACMC understood that its prospects to obtain additional capital were not good at the time. The Company advised OSP that ACMC’s alternatives were essentially relegated to entering a wind-down phase where principal pay-down on loans over time would be applied to retire debt. Several significant bond positions in the portfolio were not performing since the commencement of the COVID-19 pandemic in early 2020, and without the approximately $110,000 of cash flow per quarter from those bonds, ACMC had not been able to pay dividends to its shareholders. ACMC did have preliminary conversations with other potential purchasers about a portfolio sale in the early summer of 2021. However, those discussions ceased shortly thereafter, and no other candidates were on the horizon.

OSP phoned ACMC within a couple weeks of the initial informal meeting and said they would like to learn more about the specifics of the ACMC’s portfolio. Information was shared subsequently pursuant to a nondisclosure agreement. ACMC’s portfolio was analyzed by OSP, and, on December 15, 2021, OSP met with ACMC’s executive officers at OSP’s office to review the Company’s records of loans and bonds and to ask specific questions. Subsequently, there were several calls between OSP and ACMC in which ACMC answered further questions regarding the loan/bond portfolio and the status of particular positions. In late February 2022, OSP submitted an initial term sheet to ACMC for acquisition of only the Company’s loan and bond portfolio for approximately $24,900,000. Further delay occurred due to the fact that the portfolio information provided by ACMC to OSP had to be adjusted due to intervening pay-offs of some loans/bonds in January 2022. The initial proposal was rejected by ACMC due an inadequate return to shareholders after debt retirement and accounting for estimated transaction costs and other expenses. The offer was subsequently improved by OSP, but was again rejected by ACMC as inadequate. A final offer was received on or about May 3, 2022, which formed the basis for the final Asset Sale Agreement which provides for a purchase price of $26,100,000. With the only prospect of slowly winding the Company down by applying principal pay-down revenue to debt reduction, and key components of the bond portfolio not performing, the current offer, which allows the Company to retire its Secured Investor Certificate indebtedness of $21,976,500 at par, issue a liquidating dividend to shareholders, and conclude operations, the offer was considered the best course available. Also considered was the fact that the Company’s public accountants had withdrawn following issuance of the audit report in the spring of 2022 due to the accountant’s inability to accurately value the non-performing/under-performing components of the bond portfolio, due in large part to the absence of a market for these church bonds and the accountant’s inability to obtain meaningful status information from the Bond Trustee. The prospect of finding a new registered public accounting firm under these circumstances is a difficult undertaking, and the Board unanimously approved OSP’s final offer as contained in the final Asset Sale Agreement.

Prior to execution of the Board resolutions dated May 26, 2022, the Company’s legal counsel reviewed material terms of the draft Asset Sale Agreement with the Board. The Board further discussed the process of seeking shareholder approval of the Sale, the Asset Sale Agreement, the Plan of Dissolutions, and the Dissolution Proposal. The Board discussed the terms of the proposed transactions and, after further discussion, the Board unanimously adopted resolutions declaring the Sale, Asset Sale Agreement, the Dissolution, and the Plan of Dissolutions to be advisable and in the best interests of the Company’s shareholders and recommending that the shareholders vote in favor of each Proposal.

On May 27, 2022, the Company and OSK signed the Asset Sale Agreement and ACMC filed a Current Report on Form 8-K with the Securities and Exchange Commission, or the “SEC,” announcing the Asset Sale Agreement. As of the date of this proxy statement, we have not had any other communication, indication of interest or offer from any other potential purchaser of our business or assets since we first publicly announced the Asset Sale Agreement with OSK on May 27, 2022.

Reasons for the Sale and the Dissolution

Our Board determined that the Sale and the dissolution under the Plan of Dissolution was advisable and fair to, and in the best interests of, the Company and its shareholders and approved the Sale Proposal and the Dissolution Proposal. The Dissolution Proposal is discussed in more detail in the section of this proxy statement entitled “Proposal No. 2 -- Approval of the Voluntary Liquidation and Dissolution of the Company pursuant to the Plan of Dissolution, a Copy of Which is Attached as Appendix B to this Proxy Statement.” Our Board recommends that shareholders vote “FOR” approval of the Sale Proposal at the Special Meeting.

In reaching its decision to approve the Asset Sale Agreement and to recommend that shareholders vote to approve the Sale, the Board, in consultation with the Company’s advisors and management, considered a number of factors, including, but not limited to, the other factors described elsewhere in this proxy statement as well as the following factors:

o       the Board’s knowledge of the nature of our business and of the current and prospective competitive, economic, regulatory and operational environment in the church mortgage industry;

o       our history of operating losses and challenges faced by ACMC as well as the Board’s understanding of, and discussions with management regarding, historical and potential performance of ACMC;

Our Board also considered potential drawbacks or risks relating to the Sale, including the following risks and potentially negative factors, but determined that these potential risks and factors were outweighed by the expected benefits of the Sale:

The foregoing discussion is a summary of the information and factors considered by the Board in its consideration of the Sale. In view of the variety of factors, the amount of information considered and the complexity of these matters, the Board did not find it practicable to, and did not attempt to, rank, quantify, make specific assessments of or otherwise assign relative weights to the specific factors considered in reaching its determination. Individual members of the Board may have given different weights to different factors. The Board considered these factors as a whole, and overall considered them to be favorable to, and to support, its determination to unanimously approve the Sale.

Risk Factors Related to the Sale

For a description of certain risk factors in respect of the business of the Company, see the risk factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The following are additional risk factors ACMC’s shareholders also should carefully consider the risk factors described below with respect to the Sale and the other information contained in this proxy statement and the attached Appendixes.

The Sale, even if approved by the ACMC shareholders, may not be completed.

The completion of the Sale is subject to a number of conditions to closing, some of which are outside the control of ACMC, including receipt of shareholder approval of the Sale and the Sale closing by December 31, 2022, the Asset Sale Agreement remaining in force, and ACMC and OSK having performed its other obligations under the

Asset Sale Agreement. See “Proposal 1 – Approval of the Asset Sale Agreement and the Sale of Substantially All of the Assets of ACMC – Asset Sale Agreement.” There can be no certainty, nor can ACMC provide any assurance to its shareholders, that, if even if the shareholders approve the Sale, these conditions will be satisfied or, if satisfied, when they will be satisfied.

The distribution to shareholders as a result of the Sale and the Plan of Dissolution is subject to a number of risks.

Any distributions made by the Company to its shareholders as a result of the Sale and the Plan of Dissolution, including the timing and amount of such distributions, are subject to a number of risks, including (without limitation) the following:

If, after the closing of the Sale, ACMC breaches its representation or warranty set forth in Section 6 of the Asset Sale Agreement which have not expired and, as a result, must choose to either repurchase the Assets for the Repurchase Price or pay OSK’s actual damages in an amount not exceeding the Repurchase Price as provided in Section 23 of the Asset Sale Agreement, it could reduce or eliminate the amount of cash available to be distributed to ACMC’s shareholders.

The Purchase Price to be paid in connection with the Sale in cash is $26,100,000, adjusted as provided in Section 3.2 of the Asset Sale Agreement. Any claims by OSK against ACMC under Section 23 for breaches by ACMC of its representations and warranties under Section 6 of the Asset Sale Agreement which have not expired would reduce or eliminate the amount of cash ultimately available for distributions to ACMC’s shareholders. There can be no assurance that OSK will not make a claim for breach under Section 23 of the Asset Sale Agreement.

ACMC may not receive any competing transaction proposals or Superior Proposals, including as a result of the termination fee payable to OSK.

The Asset Sale Agreement requires ACMC to pay to OSK the $100,000 Termination Fee if ACMC terminates the Asset Sale Agreement before the Closing Date as provided in Section 24(a) of the Asset Sale Agreement, and ACMC could terminate the Asset Sale Agreement if it receives a Superior Proposal. The amount of the Termination Fee may have the effect of causing other potential third-party buyers to not submit a proposal to buy either ACMC or its assets at a higher price or to enter into a more favorable alternative transaction.

Our directors and executive officers may have interests that are different from, or in addition to, those of shareholders generally.

You should be aware of interests of, and the benefits available to, our directors and executive officers when considering the recommendation of our Board of the Sale. Our directors and executive officers may have interests in the Sale that may be in addition to, or different from, their interests as shareholders. See “Interests of Certain Persons in Matters to be Acted Upon” on page 34.

ACMC will continue to incur the expenses of complying with public company reporting requirements, which could reduce the amount of cash to be distributed to ACMC’s shareholders.

Before and after the Closing Date, we have an obligation to continue to comply with the applicable reporting requirements of the Exchange Act even though compliance with such reporting requirements is economically burdensome. Until ACMC is able to deregister its shares of common stock and suspend its periodic reporting obligations under the Exchange Act, ACMC will remain a reporting issuer and will incur attendant costs relating to filing such reports with the SEC.

Dissenters’ Rights

Dissenters’ rights under Minnesota law are available to shareholders of ACMC with respect to the Sale that is part of Proposal No. 1, which is the Sale Proposal, if the shareholders fully comply with all applicable statutory requirements.

Section 302A.471 of the MBCA provides that any shareholder of the Company may dissent from the Sale of substantially all of the assets of the Company and obtain payment of the "fair value" of his, her or its shares as determined in accordance with Section 302A.473 of the MBCA but only if such shareholder complies with all of the provisions of Section 302A.473.

A summary of Sections 302A.471 and 302A.473 of the MBCA, which set forth the procedures for demanding statutory dissenters' rights, is set forth in Appendix A to the Notice of Special Meeting of Shareholders accompanying this proxy statement and incorporated herein by reference. The full text of Sections 302A.471 and 302A.473 is attached to the Notice of Special Meeting of Shareholders as Appendix B.

In particular, ACMC shareholders should be aware that if they vote in favor of Proposal No. 1 and do not change their vote, they will waive their right to exercise dissenters’ rights under the MBCA, and that a vote against Proposal No. 1 will not satisfy the notice requirements under Sections 302A.471 and 302A.473 of the MBCA. In addition, the payment of a dissenting shareholder would reduce the amount of cash available from the Sale for distribution to other shareholders.

The failure to comply strictly with all of the procedures set forth in Section 302A.473 of the MBCA will result in the loss of a shareholder's dissenters' rights. Consequently, any shareholder wishing to exercise dissenters' rights is urged to consult his, her or its own legal counsel before attempting to exercise such rights.

Shareholders considering the exercise of dissenters' rights should be aware that the "fair value" of their shares as determined under Section 302A.473 of the MBCA could be more than, the same as, or less than the portion of the Purchase Price they would receive in the Sale if they did not dissent.

Shareholder Distribution

If the Sale is approved, the timing of any distributions to ACMC’s shareholders upon consummation of the Sale depends on, among other factors, the timing of ACMC performing all of its obligations and requirements after the closing of the Sale and payment of any applicable liabilities and obligations. See “Risk Factors” below.

If the shareholders approve the Sale, subject to the satisfaction of the liabilities of ACMC, the Board intends, although there can be no assurance, to provide for an initial distribution of between $4.6 million and $4.8 million in the aggregate, or approximately $2.75 to $2.89 per share of ACMC’s common stock. No distribution will be made if the Sale is not closed. The Board anticipates that an initial distribution will be made after termination of the 30-day expiration period for ACMC’s representations and warranties in Section 6.2 of the Asset Sale Agreement, which begins to run on the Closing Date, and that a second distribution may be made at a later date, assuming the shareholders approve the Sale and the Sale is consummated.

No Regulatory Approval

No federal or state regulatory requirements must be complied with or approval must be obtained in connection with the Sale or the Asset Sale Agreement.

No Going Private Transaction

The Sale will not have the effect of a “going private transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934, which we refer to as the “Exchange Act.” The Sale does not involve the sale of all or substantially all of ACMC’s assets to its affiliate or to a person or entity who will become an affiliate after the Closing Date and thus is not a Rule 13e-3 transaction within the meaning of Rule 13e-3(a)(3)(i) under the Exchange Act.

The Company’s Board of Directors has unanimously approved Proposal No. 1 and

strongly recommends that the shareholders of the Company vote for approval of

Proposal No. 1.