UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement
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X Definitive Proxy Statement
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Soliciting Material Pursuant to ss. 240.14a-12
American Church Mortgage Company
(Name of Registrant as Specified In Its Charter)
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AMERICAN CHURCH MORTGAGE COMPANY
10237 YELLOW CIRCLE DRIVE
MINNETONKA, MINNESOTA 55343
(952) 945-9455
April 22, 2005May 10, 2007
Dear Shareholder:
You are invited to attend the 20052007 Annual Meeting of Shareholders of
American Church Mortgage Company to be held at 10237 Yellow Circle Drive,
Minnetonka, Minnesota on May 27, 2005June 15, 2007 at 10:00 a.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describedescribes the
formal business to be transacted at the meeting. After the business of the
meeting has been concluded, shareholders will be given an opportunity to ask
appropriate questions.
The items requiring shareholder approval are election of Directors and
ratification of the appointment of our independent auditorsregistered public accounting
firm for the year 2005.2007. We recommend that you vote for each of these proposals,
which are set forth in more detail in the accompanying proxy statement.
Your vote is very important and we urge you to complete, sign, date and
mail the enclosed proxy card promptly. This action will not limit your right to
revoke your proxy in the manner described in the accompanying proxy statement or
to vote in person if you wish to attend the annual meeting and vote personally.
Sincerely,
AMERICAN CHURCH MORTGAGE COMPANY
/s/ Philip J. Myers
Philip J. Myers
President
AMERICAN CHURCH MORTGAGE COMPANY
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 2005JUNE 15, 2007
AT 10:00 A.M.
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of American
Church Mortgage Company, a Minnesota corporation, will be held at ACMC's office
at 10237 Yellow Circle Drive, Minnetonka, Minnesota, at 10:00 a.m., local time,
on May 27, 2005.June 15, 2007.
This meeting is being held for the following purposes:
1. To elect five (5) persons to serve as directors until the next annual
election and until their successors are duly elected and qualified.
2. To ratify the appointment of Boulay, Heutmaker, Zibell & Co., P.L.L.P.
as our independent auditorsregistered public accounting firm for the year
ending December 31, 2004.2007.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on April 15, 2005May 4, 2007 will be
entitled to notice of or to vote at the meeting or any adjournment thereof.
Whether or not you plan to be present at the meeting, please sign and return the
accompanying form of proxy in the enclosed postage prepaid envelope at your
earliest convenience. If there are not sufficient votes for a quorum or to
approve or ratify any of the foregoing proposals at the time of the Annual
Meeting, the Annual Meeting may be adjourned in order to permit further
solicitation of proxies by the Company.
Each of you is invited to attend the Annual Meeting in person, if possible.
Whether or not you plan to attend in person, please mark, date and sign the
enclosed proxy, and mail it promptly. A return envelope is enclosed for your
convenience.
For ten days prior to the meeting a complete list of shareholders entitled
to vote at the meeting will be available for examination by any shareholder, for
any purpose relating to the meeting, during normal business hours at the our
offices.
By Order of the Board of Directors
/s/ Philip J. Myers
----------------------------------------
Philip J. Myers, President and Secretary
Minneapolis,Minnetonka, Minnesota
April 22, 2005May 10, 2007
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WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING, PLEASE SIGN THE PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE.
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AMERICAN CHURCH MORTGAGE COMPANY
10237 YELLOW CIRCLE DRIVE
MINNETONKA, MINNESOTA 55343
(952) 945-9455
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PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 2005JUNE 15, 2007
This proxy statement and the accompanying proxy card are being mailed,
beginning on April 22, 2005May 10, 2007 to owners of common shares of American Church Mortgage
Company in connection with the solicitation of proxies by the Board of Directors
for our 20052007 Annual Meeting of Shareholders. This proxy procedure is necessary
to permit all American Church Mortgage Company shareholders, many of whom are
unable to attend the annual meeting, to vote. The Board of Directors encourages
you to read this document thoroughly and to take this opportunity to vote on the
matters to be decided at the annual meeting.
TABLE OF CONTENTS
GENERAL INFORMATION 3
PROPOSAL 1: ELECTION OF DIRECTORS 7
HOW DOES THE BOARD OPERATE? 9
HOW ARE EXECUTIVES AND DIRECTORS COMPENSATED? 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 11
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 15
PROPOSAL 2: APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS 16
SHAREHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING OF SHAREHOLDERS 16
OTHER MATTERS 17
GENERAL INFORMATION 3
PROPOSAL 1: ELECTION OF DIRECTORS 6
HOW DOES THE BOARD OPERATE? 8
HOW ARE EXECUTIVES AND DIRECTORS COMPENSATED? 9
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
CORPORATE GOVERENANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 14
EXECUTIVE COMPENSATION AND EQUITY COMPENSATION PLANS 14
DIRECTOR COMPENSATION 15
PRINCIPAL ACCOUNTANT FEES AND SERVICES 15
PROPOSAL 2: APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM 16
SHAREHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING OF
SHAREHOLDERS 16
OTHER MATTERS 16
EXHIBITS
CORPORATE INFORMATION
PROXY
2
GENERAL INFORMATION
The questions and answers set forth below provide general information
regarding this proxy statement and our annual meeting of shareholders.
When are our annual report to shareholders and this proxy statement first
being sent to shareholders?
This proxy statement is being sent to shareholders beginning on April 22,
2005.May 10,
2007. The Company's 20042006 Annual Report to Shareholders on Form 10KSB is
enclosed.10-KSB
accompanies this proxy statement.
What am I voting on?
1. The election of five (5) Board members, each for a one-year term or
until their successors are elected.
2. The ratification of the appointment of Boulay, Heutmaker, Zibell &
Co., P.L.L.P. as the our independent auditor.registered public accounting firm.
Who is entitled to vote at the annual meeting and how many votes do they have?
Common shareholders of record at the close of business on April 15, 2005May 4, 2007 may
vote at the annual meeting. Each share has one vote. There were 2,551,5682,493,595 common
shares outstanding on April 15, 2005.30, 2007. The Company presently expects that there
will be no change in the number of common shares issued and outstanding on May
4, 2007.
How do I vote?
You must be present, or represented by proxy, at the annual meeting in
order to vote your shares. Since many of our shareholders are unable to attend
the annual meeting in person, we send proxy cards to all of our shareholders to
enable them to vote.
What is a proxy?
A proxy is a person you appoint to vote on your behalf. We are soliciting
your appointment of proxies so that your common shares may be voted at the
annual meeting without your attendance. If you complete and return the enclosed
proxy card, your shares will be voted by your proxy as you instruct on your
returned proxy card.
By completing and returning the proxy card, whom am I designating as my proxy?
You will be designating Philip J. Myers and Scott J. Marquis as your
proxies. They may act on your behalf together or individually and will have the
authority to appoint a substitute to act as proxy.
3
How will my proxy vote my shares?
Your proxy will vote according to the instructions on your proxy card. If
you complete and return your proxy card but do not indicate your vote on
business matters, your proxy will vote "FOR" the election of Philip J. Myers,
Kirbyjon H. Caldwell, Robert O. Naegele, Jr., Dennis J. Doyle and Michael G.
Holmquist as Directors and "FOR" the ratification of the appointment of our
independent auditors. If you do not complete and return your proxy or vote in
person, your failure to vote will be considered a vote "FOR" the election of our
Board of Directors and a vote "FOR" the ratification of the appointment of our
independent auditors.registered public accounting firm. We do not intend to bring any
other matters for a vote at the annual meeting, and we do not know of anyone
else who intends to do so. However, your proxies are authorized to vote on your
behalf, using their best judgment, on any other business that properly comes
before the annual meeting.
How do I vote using my proxy card?
Other than attending the annual meeting and voting in person, you must vote
by mail. To vote by mail, simply mark, sign and date the enclosed proxy card and
return it in the postage-paid envelope provided. If you hold your shares through
a broker, bank or other nominee, you will receive separate instructions from the
nominee describing how to vote your shares.
How do I revoke my proxy?
You may revoke your proxy at any time before your shares are voted at the
annual meeting by:
o Notifying our Corporate Secretary, Philip J. Myers, in writing at
10237 Yellow Circle Drive, Minnetonka, Minnesota 55343, that you are
revoking your proxy;
o Executing a later-dated proxy card; or
o Attending and voting by ballot at the annual meeting.
Is my vote confidential?
Yes, only certain of our officers will have access to your card.
Who will count the votes?
An officer of American Church Mortgage Company will act as the inspector of
election and will count the votes.
What constitutes a quorum?
As of April 15, 2005, 2,551,56830, 2007, 2,493,595 of our common shares were issued and
outstanding. The Company presently expects that there will be no change in the
number of common shares issued and outstanding on May 4, 2007. The holders of one-third (1/3)a
majority of the shares outstanding and entitled to vote, represented either in
person or by proxy, constitute a quorum for the transaction of business. If you
sign and return your proxy card, you will be considered part of the quorum, even
if you withhold your vote. If a 4
quorum is not present at the annual meeting, the
shareholders present in person or, by proxy may adjourn the meeting to a date
not more than 120 days after May
27, 2005,June 15, 2007, until a quorum is present.
4
How will my vote be counted?
With respect to the election of Directors, votes may be cast in favor of or
withheld from one or all nominees. Votes that are withheld will not be included
in the vote.
With respect to the proposed amendments to our Bylaws, votes may be cast in
favor or against the proposed amendments, or you may abstain from the vote. If
you abstain from the vote or do not return your proxy card, your abstention or
non-vote will have the same effect as a vote against the proposed amendment.
Since the proposed amendment to our Bylaws requires the approval of the holders
of a majority of our outstanding shares, it is very important that you return
your proxy card so that your vote is counted.
With respect to approval of and appointment of our independent auditors,registered
public accounting firm, votes may be cast for or against the proposal or the
proxy may be instructed to abstain. Abstaining or not returning your proxy is considered a "Yes" vote.Abstentions will be treated as "No" votes.
What percentage of the Company's common shares do the directors and executive
officers own?
Our Board of Directors and executive officers beneficially owned 1.11%1.14% of
our common shares as of April 15, 2005.30, 2007. (See the discussion under the heading
"Security Ownership of Certain Beneficial Owners and Management" for more
details.)
Who is soliciting my proxy, how is it being solicited and who pays the cost?
American Church Mortgage Company is soliciting your proxy. The solicitation
process is being conducted primarily by mail. However, proxies may also be
solicited in person, by telephone or facsimile. Computershare Trust Company,
Inc., our transfer agent, will be assisting us for a fee of approximately
$5,400.00,$5,300.00, plus out-of-pocket expenses. American Church Mortgage Company pays
the cost of soliciting proxies. We will also reimburse stockbrokers and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation material to the owners of our common
shares.
Who is our largest shareholder?Do we have any significant shareholders?
We have no shareholders who beneficially owned more than 5%1.0% of our stock
as of April 15, 2005.
5
30, 2007.
When are shareholder proposals for the year 20062008 shareholder meeting due?
Shareholder proposals to be presented at the 20062008 Annual Meeting must be
submitted in writing by January 3, 20062, 2008 to Philip J. Myers, President, at 10237
Yellow Circle Drive, Minnetonka, Minnesota 55343. You should submit any proposal
by a method that permits you to prove the date of delivery to us. (See the
discussion under the heading "Shareholder Proposals for the 20062008 Annual Meeting
of Shareholders" and "Election of Directors" for information regarding certain
procedures with respect to shareholder proposals and nominations of Directors.)
65
PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to our Bylaws, the Board has fixed at five (5) the number of
directors to be elected at the annual meeting. Unless otherwise indicated
thereon, the proxy holders will vote for"FOR" the election of the nominees listed
below to serve until the next annual meeting of shareholders and until their
successors are elected and qualified. All nominees are members of the present
Board. If any nominee is unavailable for election to the Board, the holders of
proxies will vote for a substitute. Management has no reason to believe that any
of the nominees will be unable to serve if elected to office.
The five (5) nominees who receive the highest number of votes will be
elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE BOARD NOMINEES LISTED BELOW.
Nominees
The following table sets forth certain information regarding the
nominees.
Name Age Biographical Summary Director
Since
Philip J. Myers 4850 Mr. Myers has been our President, Treasurer and Secretary since 2001
April 2001 and a director of the Company since October 2001.
He has also served as President, Treasurer, shareholder and a
director of our Advisor, Church Loan Advisors, Inc. since 1994,
President, Secretary, and a director of our underwriter,
American Investors
Group, Inc., an underwriter of our prior securities offerings,
since 1996, and of its parent company, Apostle Holdings Corp.
since 2000. Mr. Myers has been an officer of the underwriterAmerican Investors
Group, Inc. and has engaged directly in church mortgage lending
since 1989. He earned his bachelor of arts degree in political
science in 1977 from the State University of New York at
Binghamton and his juris doctor degree from the State
University of New York at Buffalo School of Law in 1980. From
1980 to 1982, Mr. Myers served as an attorney in the Division
of Market Regulation of the U.S. Securities and Exchange
Commission in Washington, D.C. and, from 1982 to 1984, as an
attorney with the Division of Enforcement of the Securities and
Exchange Commission in San Francisco. From August 1984 to
January 1986, he was employed as an attorney with the San
Francisco law firm of Wilson, Ryan and 7
Compilongo where he
6
specialized in corporate finance, securities and broker-dealer
matters. From January 1986 to January 1989, Mr. Myers was
Senior Vice President and General Counsel of Financial Planners
Equity Corporation, a 400 broker securities dealer formerly
located in Marin County, California. He became affiliated with
American Investors Group, Inc. in 1989. He is aan inactive
member of the New York, California (inactive
status) and Minnesota State Bar
Associations. Mr. Myers holds General Securities Representative
and General Securities Principal licenses with the National
Association of Securities Dealers, Inc.
Kirbyjon H. Caldwell 5153 Mr. Caldwell has served as an independent director of the 1994
Company since September 1994. He has been Senior Pastor of Windsor
Village United Methodist Church in Houston, Texas since January
1982. The membership of Windsor Village is approximately
14,400. Mr. Caldwell received his B.A. degree in Economics from
Carlton College (1975), an M.B.A. in Finance from the
University of Pennsylvania's Wharton School (1977), and his
Masters in Theology from Southern Methodist University School
of Theology (1981). He is a member of the Boards of Directors
of JP Morgan Chase--Texas, Continental Airlines, National Children's Defense Fund,
Baylor College of Medicine, Greater Houston Partnership, Amergy
Bank of Texas, Reliant Energy, Bridgeway Capital Management and
the American Cancer Society. He is also the founder and member
of several foundations and other community development
organizations.
Robert O. Naegle,Naegele, Jr. 6567 Mr. Naegele has served as an independent director of the 1994
Company since September 1994. Mr. Naegele's professional background
includes advertising, real estate development and consumer
products with a special interest in entrepreneurial ventures
and small developing companies. Most recently,In 1997, he led a group of
investors to apply for, and receive an NHL expansion franchise,
the Minnesota Wild, which began play in the Xcel Energy Center
in St. Paul, Minnesota, in October 2000. 8Mr. Naegle is a
member of the NHL Board of Governors and Chairman of the
Minnesota Wild.
7
Dennis J. Doyle 5254 Mr. Doyle has served as an independent director of the Company 1994
since 1994. September 1994. He is the majority shareholder and co-founder of
Welsh Companies, Inc., Minneapolis, Minnesota, a full-service
real estate company involved in property management, brokerage,
investment sales, construction and commercial development.
Welsh Companies was co-founded by Mr. Doyle in 1980, and has
over 350 employees. Mr. Doyle is the recipient of numerous
civic awards relating to his business skills. He also is a
member of the post board of directors of Rottlund Homes and Hope For
The City.
Michael G. Holmquist 5557 Mr. Holmquist has served as an independent director of the 2003
Company since July 17, 2003. Mr. Holmquist is a Certified Public
Accountant practicing from his office in Deephaven, Minnesota.
He entered the public accounting field in 1977.
Prior to entering the accounting field in 1977, he worked for
two years as a public school teacher and served four years in
the U.S. Coast Guard. He is a graduate of St. Olaf College and has
taken additional studies in accounting and income tax at the
University of Minnesota.College.
Mr. Holmquist was an original incorporator of American
Investors Group and an employee of the firm from 1986-1989. He
participated in establishing thethat firm's church bond
underwriting department and has extensive
additional experience in church
auditing. Mr. Holmquist is a member of the American Institute
of CPAs and the Minnesota
Society of CPAs.Central Lutheran Church.
How does the Board operate?
During 2004,2006, the Board of Directors had four meetings. AllThe attendance
policy of the Board encourages and expects all board members to attend all Board
meetings. Last year, all Directors attended 75% or more of the meetings.meetings except
for Kirbyjon H. Caldwell and Robert O. Naegele, Jr. In addition, the 2006 Annual
Shareholder Meeting was attended by one director.
The Board has no separately-designated standing audit committee,
compensation committee, nominating or executive committee. The Company's entire
Board performs the functions of an audit committee, and while the Board has not
designated an "audit committee financial expert," the Company believes that
several of its independent directors qualify for such a designation.
How are Executives and Directors compensated?
Since inception, the Company has determined that eachnot had employees and the Company has only
one executive officer, Philip J. Myer, who serves in several capacities. The
actions and decisions of Dennis J. Doyle, Kirbyjon H. Caldwell, Robert O. Naegele, Jr.the Company and Michael G.
Holmquistthe Advisor are "independent," as that term is defined ingoverned by the
8
Company's independent directors and by the Company's Bylaws and the Advisory
Agreement. Both of these documents comply with the NASAA REIT Guidelines, which
include substantial limitations on, among other things, conflicts of interest
and in Rule 4200(a)(15)related party transactions. As such, the Company has not adopted a Code of
Ethics.
Because the Marketplace Rules ofCompany has no employees, and because Mr. Myers is not
compensated by the Nasdaq Stock Market,
Inc. Accordingly, the BoardCompany, there is composed of a majority of independent directors.
9
How are directors compensated?
Weno Company compensation committee. However,
we currently pay each independent director $500 for each board meeting attended
($400 for telephonic meetings), limited to $2,500 per year. In addition, we
reimburse directors for travel expenses incurred in connection with their duties
as our directors. Please see the Director Compensation on page fifteen (15). As
a non-independent director, Philip J. Myers receives no compensation or
reimbursements in connection with his service on our Board of Directors.
The Company has not adopted a Code of Business Conduct and Ethics that
applies to all directors, officers and employees of the Company. Since
inception, the Company has not had employees and the Company's activities have
been directed by the Advisor. In addition, the Company's and the Advisor's
activities have been governed by the Company's Bylaws and the Advisory
Agreement. Both of these documents comply with the NASAA REIT Guidelines which
include substantive limitations on, among other things, conflicts of interest
and related party transactions.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERENANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Qualifications of Candidates for Election to the Board
The Company's Directors take a critical role in guiding the Company's
strategic direction. Since 1994, we have had very little turnover on the Board.
See "Election of Directors." As such, the Company does not have a separate
Nominating Committee. When Board candidates are considered, they are evaluated
based upon their ability to qualify as independent directors under Section 3.3
of the Company's Bylaws and other various criteria, such as their broad-based
business and professional skills and experiences, experience serving as
management or on the board of directors of companies such as the Company,
concern for the long-term interests of the shareholders, financial literacy and
personal integrity in judgment. In addition, director candidates must have time
available to devote to Board activities. Accordingly, the Board seeks to attract
and retain highly qualified directors who have sufficient time to attend to
their duties and responsibilities to the Company. Recent developments in
corporate governance and financial reporting have resulted in an increased
demand for such highly-qualified and productive public company directors. The
Company's Bylaws are available on both of its websites. You can view our Bylaws
at www.churchbondsusa.com under the heading "Library" or www.church-loans.net
under the heading "About Us."
Process for Identifying and Evaluating Candidates for Election to the Board
ManagementThe Company's Board of Directors has no Nominating Committee, however,
management of the Company will reviewreviews the qualifications and backgrounds of the
Directors, as well as the overall composition of the Board, and recommend to the
full Board theof Directors the persons to be nominated for election at each Annual
Meeting of Shareholders of the Company. In the case of incumbent directors, the
Board reviews such directors' overall service to the Company, including the
number of meetings attended, level of participation, quality of performance, and
whether the director continues to meet the applicable independence standards. In
the case of any new director candidates, the questions of independence and
financial expertise are important to determine what roles can be performed by
the candidate, and the Board determines whether the candidate meets the
applicable independence standards and the level of the candidate's financial
expertise. Any new candidates would be interviewed by the management of the
Company and, if appropriate, then by all members of the Board. The full Board
9
will approve the final nominations. The Chairman of the Board, acting on behalf
of the full Board, will extend the formal invitation to become a nominee of the
Board of Directors.
10
Shareholder Nominations of Director Candidates
Shareholders may nominate Director candidates for consideration by
management of the Company by writing to Philip J. Myers and providing to Mr.
Myers the candidate's name, biographical data and qualifications, including
five-year employment history with employer names and a description of the
employer's business; whether such individual can read and understand fundamental
financial statements; other board memberships (if any); and such other
information as reasonably available and sufficient to evaluate the minimum
qualifications stated above under the section of this proxy statement entitled
"- Qualifications of Candidates for Election to the Board." The submission must
be accompanied by a written consent of the individual to stand for election if
nominated by the Board of Directors and to serve if elected by the shareholders.
Written notice must be given at least 120 days before the date of the next
Annual Meeting of Shareholders. If a shareholder nominee is eligible, and if the
nomination is proper, management then will deliberate and make its
recommendation to the Board of Directors. For the 2007 Annual Meeting of
Shareholders, the Board of Directors did not receive nominations for Director
candidates from eligible shareholders or groups of shareholders. Additionally,
there were no changes to the procedures by which shareholders may recommend
nominees to the Board.
Communications with the Board
Shareholders can communicate directly with the Board by writing to Mr.
Philip J. Myers or by calling Mr. Myers at (952) 945-9455 (x126) or via e-mail
at phil@amerinvest.com. All communications will be reviewed by management and
then forwarded to the appropriate director or directors or to the full Board, as
appropriate.
Section 16(a) beneficial ownership reporting complianceBeneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and persons who own more than 10% of a registered
class of our equity securities, to file reports of ownership of our common stock
and other equity securities with the Securities and Exchange Commission.
Executive Officers and directors are required by SEC regulations to furnish us
with copies of all Section 16(a) forms they file. To the Company's knowledge,
all of its directors and executive officer filed in a timely manner all such
reports.
1110
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
General
The Company's and the Advisor's activities are governed by the Company's
Bylaws and the Advisory Agreement. Both of these documents comply with the NASAA
REIT Guidelines which include substantial limitations on, among other things,
conflicts of interest and related party transactions. Other than with respect to
the purchase and sale of church bonds for our portfolio in the ordinary course
of business, as described below, all future transactions between us and our
officers, directors and affiliates will be approved, in advance, by a majority
of our independent directors.
Our Advisor
Subject to the supervision of the Board of Directors, our business is
managed by Church Loan Advisors, Inc. (our "Advisor"), which provides investment
advisory and administrative services. Church Loan Advisors, Inc. is a Minnesota
corporation and a wholly-owned subsidiary of Apostle Holdings, Corp.has acted as our Advisor since inception in 1994. Our Advisor
renders lending and advisory services solely to us, and administers our business
affairs and operations.
The following table sets forth the names and positions of the officers
and directors of the Advisor:
Name Position
Philip J. Myers President, Treasurer and Director
Scott J. Marquis Vice President, Secretary
Our Advisory Agreement
We have entered into a contract with our Advisor (the "Advisory Agreement")
under which our Advisor will furnishfurnishes advice and recommendations concerning our
affairs, provideprovides administrative services to us, and managemanages our day-to-day
affairs. In performing its services under the Advisory Agreement, our Advisor
may use facilities, personnel and support services of its affiliates. Expenses,
such as legal and accounting fees, director fees, stock transfer agent and
registrar and paying agent fees, are our direct expenses and are not provided
for by our Advisor as part of its services.
The Advisory Agreement is renewable annually by us for one-year periods,
subject to a determination, including a majority of our independent directors,
that our Advisor's performance has been satisfactory and that the compensation
paid by us to our Advisor has been reasonable. We may terminate the Advisory
Agreement without cause or penalty on 60 days' written notice. Upon termination
of the Advisory Agreement by either party, the Advisor may require us to change
our name to a name that does not contain the word "American," "America" or the
name of the Advisor or any approximation or abbreviation thereof. However, we
may continue to use the word `church""church" in our name. Our directors must determine
that any successor Advisor possesses sufficient qualifications to perform the
Advisory function for us and justify the compensation provided for in its
contract with us.
11
Pursuant to the Advisory Agreement, our Advisor is required to pay all of
the expenses it incurs in providing us services including, but not limited to,
personnel expenses, rental and other office expenses of officers and employees
of the Advisor (except out-of-pocket expenses of such persons who are our
directors or officers), and all of its overhead and miscellaneous administrative
expenses relating to performance of its functions under the Advisory Agreement.
We are required to pay all other expenses, including the costs and expenses of
reporting to various governmental agencies and our shareholders and of
conducting our operations as a 12
mortgage lender, fees and expenses of appraisers,
directors, auditors, outside legal counsel and transfer agents, and costs
directly relating to the closing of loan transactions.
In the event that our total operating expenses exceed in any calendar year
the greater of (a) 2% of our average invested assets or (b) 25% of our net
income (before interest expense), the Advisor is obligated to reimburse us, to
the extent of its fees for such calendar year, for the amount by which the
aggregate annual operating expenses paid or incurred by us exceed the
limitation. Our independent directors may, upon a finding of unusual and
non-recurring factors which they deem sufficient, determine that a higher level
of expenses is justified in any given year.
Our Bylaws provide that our independent directors are to determine, at
least annually, the reasonableness of the compensation which we pay to our
Advisor. Factors to be considered in reviewing the Advisory fee include the size
of the fees of the Advisor in relation to the size, composition and our
profitability, the rates charged by other investment Advisorsadvisors performing
comparable services, the success of our Advisor in generating opportunities that
meet our investment objectives, the amount of additional revenues realized by
our Advisor for other services performed, the quality and extent of service and
advice furnished by our Advisor, the quality of our investments in relation to
investments generated by our Advisor for its own account, if any, and the
performance of our investments.
Pursuant to the Advisory Agreement, we pay our Advisor an annual base
management fee of 1.25% of average invested assets on the first $35 million of
such assets, 1.00% on assets from $35 million to $50 million, and .75% on assets
in excess of $50 million. Although entitled to do so, the Advisor does not
assess its management fee on the church bond portion of our portfolio, but
rather only on the church loan portion of our portfolio. For purposes of the
Advisory Agreement, the Company's Invested Assets means outstanding church
loans, and does not include church bonds or cash equivalent temporary
investments. As defined in the agreement, andAdvisory Agreement, we remit to the Advisor
one-half of any origination fee collected from a borrower in connection with
mortgage loans made or renewed by us. For the years ended December 31, 20042006 and
2003,2005, we paid our Advisor $450,000$573,000 and $545,000,$466,000, respectively.
American Investors Group, Inc.
In December 2001,July 2004, the Company filed a Registration Statement with the
Securities and Exchange Commission for a fourth public offering of its common
stock and its first public offering of debt securities, which the Securities and
Exchange Commission declared effective April 26, 2002. In May 2003, the Company
extended the offering period to May 2004. The Company concluded its fourth
public offering on April 30, 2004. The Company offered 1,500,000 shares of its
common stock at a price of $10 per share and $15,000,000 principal amount of its
Series A investor saver certificates. Certificates may be purchased in any
multiple of $1,000. The offering was underwritten by an American Investors
Group, Inc. (an affiliate of the Advisor) on a "best efforts" basis, and no
minimum sale of stock or certificates was required. As of December 31, 2004 and
2003, respectively, the Company sold 763,471 and 671,450 shares of common stock
and $15,000,000 and $14,257,000 of its Series A investor saver certificates.
13
The Company filed a Registration Statement with the
Securities and Exchange Commission for a second public offering of debt
securities.securities, which the Securities and Exchange Commission declared effective
October 7, 2004. The Company isconcluded the offering on October 7, 2006. The
Company offered $23,000,000 principal amount of its Series B secured investor
certificates. ThisCertificates could be purchased in any multiple of $1,000. The
12
offering became effectivewas underwritten by American Investors Group, Inc., an affiliate of the
Advisor, on October 7, 2004.a "best efforts" basis, and no minimum sale of certificates was
required. As of April 15, 2004,December 31, 2006 and 2005, respectively, the Company has sold
$5,892,000$14,860,000 and $11,491,000 of its Series B secured investor saver certificates.
The
terms of the Series AIn connection with this public offering, and Series B public offerings of debt securities are
essentially identical, differing only in maturity dates of the certificates and
the interest rates paid on them.
Pursuantpursuant to the terms of the
Underwriting Agreement, the Company incurred
expense to the managing underwriterpaid American Investors Group, Inc. and
participating broker-dealers commissions and non-reimbursable expenses of
approximately $286,988$172,763 and $449,154$302,989 during 20042006 and 2003, respectively, in connection with these public offerings.2005, respectively.
In the course of our business, we have purchased and may continue to
purchase church bonds being underwritten and sold by American Investors Group.Group,
Inc. Although we have not and would not pay any commissions, American Investors
Group, will benefitInc. benefits from such purchases as a result of commissions paid to it
by the issuer of the bonds. It also may benefit from mark-ups on bonds we buy
from it and mark-downs on bonds we sell through it on the secondary market. We
purchase church bonds for investment purposes only, and only at the public
offering price. Church bonds we purchase in the secondary market, if any, are
purchased at the best price available, subject to customary mark-ups (or in the
case of sales - mark-downs), on terms no less favorable than those applied to
other customers of American Investors Group, Inc. Our principals and our Advisor
may receive a benefit in connection with such transactions due to their
affiliation with the underwriter.
Other than with
respect toDirector Independence
The Company's Board of Directors has determined that each of Dennis J.
Doyle, Kirbyjon H. Caldwell, Robert O. Naegele, Jr. and Michael G. Holmquist are
"independent," as that term is defined in NASAA REIT Guidelines and in Rule
4200(a)(15) of the purchase and saleMarketplace Rules of church bonds for our portfolio in the ordinary courseNasdaq Stock Market, Inc.
Accordingly, the Board is composed of business, all future transactions between us and our
officers, directors and affiliates will be approved, in advance, by a majority of our independent directors. 14There
are no transactions with the directors which were evaluated in connection with
the Board's determination of the independence or which have not already been
disclosed elsewhere in this Proxy Statement.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 15, 2005,30, 2007, the number of shares
beneficially owned by each director and by all executive officers and directors
as a group, and the beneficial owner of 5% or more of our outstanding stock.
Unless otherwise noted, each of the following persons has sole voting and
investment power with respect to the shares set forth opposite their respective
names.
Number of Shares
Beneficially Percent
Name of Beneficial Owner (1) Owned of Class
- ---------------------------- ------------------------------------- --------
Robert O. Naegele, Jr. 8,033 .31%.32%
Philip J. Myers 20,000 .78%.80%
Kirbyjon H. Caldwell 0 .00%-- --
Dennis J. Doyle 0 .00%-- --
Michael G. Holmquist 0 .00%-- --
All Executive Officers and Directors as a Group (seven(six individuals) 28,333 (2) 1.11%1.14%
- -------------------
(1) The address for the Directors is 10237 Yellow Circle Drive, Minnetonka,
Minnesota 55343. (2) Includes 300 shares owned by Scott J. Marquis. Mr. Marquis
is an officer of our Advisor.
EXECUTIVE COMPENSATION AND OPTIONEQUITY COMPENSATION PLANS
The Company pays no compensation to its officers and has no other
employees. The Company has no optionequity compensation plans. Because no compensation
or equity awards have been awarded to, earned by or paid to any executive
officer of the Company, the Company has not included any tables or charts
describing executive compensation. However, compensation paid to our directors
is described below.
14
DIRECTOR COMPENSATION(1)
Fees
Earned Non-Equity Non-Qualified
or Paid Stock Option Incentive Plan Incentive Plan All Other
Name in Cash Awards Awards Compensation Compensation Compensation Total
- ----- ------- ------ ------ ------------ ------------ ------------ -----
Kirbyjon H. $1,200 n/a n/a n/a n/a n/a $1,200
Caldwell
Dennis J. Doyle $1,600 n/a n/a n/a n/a n/a $1,600
Michael G. $1,600 n/a n/a n/a n/a n/a $1,600
Holmquist
Philip J. Myers n/a n/a n/a n/a n/a n/a --
Robert O. $800 n/a n/a n/a n/a n/a $800
Naegele, Jr.
(1) All Directors, except Philip J, Myers, are paid $500 per board meeting
attended ($400 for telephonic meetings), limited to $2,500 per year, and
reimbursed for travel expenses incurred in connection with their duties as
directors.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees billed to the Company by Boulay, Heutmaker, Zibell & Co., P.L.L.P. during
2006 and 2005 are described below.
Audit Fees: Audit fees billed to the Company by Boulay, Heutmaker, Zibell &
Co., P.L.L.P. during 2006 and 2005 for review of our annual financial statements
and those financial statements included in our quarterly reports on Form 10-QSB
totaled $41,605 and $49,855 respectively.
Audit-Related Fees: We did not engage Boulay, Heutmaker, Zibell & Co.,
P.L.L.P. to provide audit-related services during 2006 and 2005.
Tax Fees: Tax fees billed to the Company by Boulay, Heutmaker, Zibell &
Co., P.L.L.P. during 2006 and 2005 totaled $1,895 and $1,800 respectively.
All Other Fees: All other fees billed to the Company by Boulay, Heutmaker,
Zibell & Co., P.L.L.P. during 2006 and 2005 for tax consulting services, totaled
$0 and $1,355 respectively.
The Board does not have an audit committee. However, the Board as a whole
considers whether the independent registered public accounting firm's provision
of audit-related services to the Company is compatible with the auditor's
independence.
15
PROPOSAL 2
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM
The Board recommends that the shareholders ratify the Board's appointment
of Boulay, Heutmaker, Zibell & Co., P.L.L.P. as the Company's independent
auditorsregistered public accounting firm for the year ending December 31, 2005.2007. Boulay,
Heutmaker, Zibell & Co., P.L.L.P. has served as our independent auditorsregistered
public accounting firm since 1996.
No representative of Boulay, Heutmaker, Zibell & Co., P.L.L.P. is expected
to be present at the annual meeting.
Fees billed to the Company by Boulay, Heutmaker, Zibell & Co., P.L.L.P.
during 2005 are described below.
Audit Fees: Audit fees billed to the Company by Boulay, Heutmaker, Zibell &
Co., P.L.L.P. during 2003 for review of our annual financial statements and
those financial statements included in our quarterly reports on Form 10-QSB
totaled $27,747.
Financial Information Systems Design and Implementation Fees: We did not
engage Boulay, Heutmaker, Zibell & Co., P.L.L.P. to provide advice regarding
financial information systems design or implementation during the fiscal year
ended December 31, 2004.
All Other Fees: Fees billed to the Company by Boulay, Heutmaker, Zibell &
Co., P.L.L.P. during 2004 for all other non-audit related services, including
tax related services, totaled $16,776.
The Board does not have an audit committee. However, the Board as a whole
has considered whether the independent auditor's provision of non-audit services
to the Company is compatible with the auditor's independence.
SHAREHOLDER PROPOSALS FOR THE
20062008 ANNUAL MEETING OF
SHAREHOLDERS
Any shareholder who wishes to present a proposal for action at the next
annual meeting of shareholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by the Company must
notify us so that such notice is received by our Secretary by January 3, 2006.2, 2008.
Any proposal must be in the form required under the rules and regulations
promulgated by the Securities and Exchange Commission. In addition, any
shareholder who intends to propose any matter that is not identified in the
notice of such meeting must comply with the our Bylaws, which require at least
twenty (20) days' written notice prior to the meeting stating with reasonable
particularity the substance of the proposal.
16
OTHER MATTERS
TheAs of the date of this Proxy Statement, the Board knows of no other matters
that are intended to be brought before the annual meeting. If other matters, of
which the Board is not aware, are presented for action, it is the intention of
the proxies named in the enclosed form of proxy to vote on such matters in their
sole discretion.
By Order of the Board of Directors,
/s/ Philip J. Myers
-----------------------------------
Philip J. Myers
President and Secretary
April 22, 2005
17May 10, 2007
16
CORPORATE INFORMATION
DIRECTORS
Philip J. Myers, President, Treasurer and Secretary
Kirbyjon H. Caldwell, Senior Pastor of Windsor Village United Methodist Church,
Houston, Texas
Robert O. Naegele, Jr., Governor and Chairman of Minnesota Wild
Dennis J. Doyle, Majority Owner and Co-Founder of Welsh Company, Inc.,
Minneapolis
Michael G. Holmquist, Certified Public Accountant
OFFICERS AND MANAGEMENT OF ADVISOR
Philip J. Myers, President, Treasurer and Director
Scott J. Marquis, Vice President, Secretary
TRANSFER AGENT
Computershare Trust Company, Inc.
350 Indiana Street
Suite 800
Golden, CO 80401
303-262-0600
LEGAL COUNSEL
Winthrop & Weinstine, P.A.
Suite 3500
225 South Sixth Street
Minneapolis, MN 55402
INDEPENDENT ACCOUNTANT
Boulay, Heutmaker, Zibell & Co. P.L.L.P.
5151 Edina Industrial Blvd.7500 Flying Cloud Drive, Suite 800
Minneapolis, MN 5543955344
COMMON STOCK INFORMATION
Our common stock is not traded on any established market. From time to time, we
have repurchased shares of common stock offered to us for sale. At April 15,
200530,
2007 we had 2,551,5681,049 record holders of our common stock and an undetermined number
of additional beneficial owners.
DIVIDENDS
We have paid quarterly dividends since we became a public company in 1996. The
following table lists our quarterly dividends for the periods indicated.
Dividend
2004 Per Share
- ---- ---------
December 31 .1875
September 30 .165625
June 30 .153125
March 31 .16250
2003
December 31 .16875
September 30 .153125
June 30 .1625
March 31 .165625
2002
December 31 .165625
September 30 .1875
June 30 .209375
March 31 .20625
20052007 ANNUAL MEETING
Our annual meeting of Shareholders will be held at 10:00 a.m. on May 27, 2005June 15, 2007
at our office, 10237 Yellow Circle Drive, Minnetonka, Minnesota 55343.
SHAREHOLDER CONTACT
Inquiries concerning ACMC or matters of shareholder interest may be directed to:
American Church Mortgage Company
10237 Yellow Circle Drive
Minnetonka, Minnesota 55343
(952) 945-9455 (x 124) Attention: Scott J. Marquis
AMERICAN CHURCH MORTGAGE COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY
The undersigned hereby appoint Philip J. Myers and Scott J. Marquis as
Proxies, each with the power to appoint his substitute, and hereby authorize
them to represent and to vote, as designated hereon, all the shares of common
stock of American Church Mortgage Company held of record by the undersigned on
April 15, 2005,May 4, 2007, at the annual meeting of shareholders to be held on AprilJune 15, 2005,2007,
or any adjournment thereof.
PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE [X]
1. ELECTION OF DIRECTORS
01 Philip J. Myers
02 Kirbyjon H. Caldwell
03 Robert O. Naegele, Jr.
04 Dennis J. Doyle
05 Michael G. Holmquist
VOTE FOR all nominees listed
VOTE WITHHELD for all nominees (to withhold authority to
vote for a nominee, write number(s) in the box provided)
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2. PROPOSAL TO RATIFY THE APPOINTMENT OF BOULAY, HEUTMAKER, ZIBELL &
CO. PLLP as the independent auditorsregistered public accounting firm of
the Corporation for the year ending December 31, 2004.2007.
FOR AGAINST ABSTAIN
(CONTINUED AND TO BE SIGNED ON THE REVERSE.)
(CONTINUED FROM THE OTHER SIDE)
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted forFOR Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both shouldmust sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full titles as such. If a Corporation,corporation or other
entity, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign by authorized person.
Date: , 20052007
-------------------------
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SIGNATURE
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SIGNATURE (IF HELD JOINTLY)
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.