CONTINENTAL HERITAGE CORPORATION
1020 Macon Street
Fort Worth, Texas 76102
Commission File No: 0-7633
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(f) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14f-1 THEREUNDER
--------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
This Information Statement (the "Information Statement") is being mailed on
or about November 25, 1998, to the holders of record on November 20, 1998, of
the shares of the common stock, par value $ .10 (the "Common Stock") of
Continental Heritage Corporation (the "Company"). It is being furnished in
connection with the election of certain designees of the shareholders of Encore
International, Inc. ("Encore"), an Oklahoma corporation, to the Board of
Directors of the Company (the "Designees").
Pursuant to the Stock Exchange Agreement (the "Agreement") between the
Company and the holders of all of the outstanding shares of capital stock of
Encore, the Company will acquire all of the outstanding Common Stock of Encore
in exchange for an initial issue of 5,500,000 shares of the Company's Common
Stock (the "Transaction"). The Agreement additionally provides for the issuance
of an additional 2,000,000 shares of Common Stock as follows: (i) 1,000,000
shares to be issued if the consolidated net revenues of the Company are at
least $8,000,000 for the twelve month period commencing March 1, 1999; and (ii)
1,000,000 shares if the consolidated net revenues of the Company are at least
$15,000,000 (on a non- cumulative basis) for the twelve month period commencing
March 1, 2000.
Encore is a recently organized company which was established to conduct a
business of distributing health related products through a network of
independent distributors. Following completion of the Transaction, Encore will
be merged with a Nevada corporation and its name will be changed to VisionQuest
Worldwide, Inc. It will operate from headquarters in Las Vegas, Nevada.
Encore's business plan provides for the development of a complete line of
nutri- ceutical and homeopathic products. These products will be marketed
through a national network of distributors.
The election of the Designees is a condition, among others, of the
Transaction. Effective as of the date of closing of the Transaction, which is
expected to occur on November 27, 1998, the current officers and directors of
the Company will resign as officers and directors and will cause the Designees
to be elected as directors as of the time of the closing.
Consummation of the Transaction will result in a change of control. If the
Transaction is not consummated, the Company's current officers and directors
will not resign and there will not be a change in control. The Company
anticipates, but cannot assure, that the Transaction will be consummated on
November 27, 1998. See "Certain Relationships and Related Transactions" for a
more complete description of the Transaction.
No action is required by the shareholders of the Company in connection with
the election or appointment of the Designees to the Board. However, Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires the mailing to the Company's shareholders of the information set forth
in this Information Statement prior to a change in a majority of the Company's
directors otherwise than at a meeting of the Company's shareholders.
The current principal executive office of the Company is located at 1020
Macon Street, Fort Worth, Texas 76102. Upon completion of the Transaction, the
principal office of the Company will be located at 2140 America's Cup Circle,
Las Vegas, Nevada 89117.
COMMON STOCK
The shares of Common Stock are the only class of voting securities of the
Company outstanding. Each share of Common Stock is entitled to one vote. As
of November 13, 1998, there were 1,373,860 shares of Common Stock outstanding.
Upon consummation of the Transaction, there will be 6,873,860 shares of Common
Stock outstanding.
RIGHT TO DESIGNATE DIRECTORS; THE DESIGNEES
The Board of Directors of the Company currently consists of two members.
Each director holds office until his or her successor is elected and qualified
or until his or her death, resignation or removal. The Agreement provides
that, at the time of the closing of the Transaction, the current directors of
the Company will resign as directors and cause the Designees to be elected as
directors as of the time of the closing. The Company intends to comply with
this provision and appoint the three Designees to the Board of the Company.
Such Designees shall replace the two current directors of the Company.
The shareholders of Encore have informed the Company that each of the
Designees listed below has consented to act as a director.
It is expected that the Designees may assume office at any time following
the consummation of the Transaction, but not less than ten (10) days subsequent
to the date that the Company shall file this Information Statement with the
Securities and Exchange Commission and shall transmit this Information
Statement to holders of record of the securities of the Company who would be
entitled to vote at a meeting for election of directors, and that, upon
assuming office, the Designees will thereafter constitute a majority of the
Board.
DESIGNEES
The following table sets forth the name, present principal occupation or
employment, five-year employment history and certain other information
concerning the Designees:
Robert Bray Age 49. Mr. Bray will serve as a director of the Company. He is
currently Secretary of Encore and will hold a similar position at the Company.
He has served as President of Covenant Brothers, a retail clothing company,
from January 1982 to the present and has also been employed as an Executive
Distributor for NuSkin International, a retailer of nutritional products, from
April 1993 to the present.
Steve Gould Age 38. Mr. Gould will serve as a director of the Company. He is
currently President and Chief Executive Officer of Encore and will hold similar
positions at the Company. From December 1991 to July 1998, he was President and
Chief Executive Officer of Equinox International, a marketing company selling a
wide variety of health related products.
Lee Kaplan Age 46. Mr. Kaplan will serve as Chairman of the Board of
Directors, Vice President and a director of the Company. He currently holds
such positions at Encore. For the past 20 years, Mr. Kaplan has been
self-employed as a marketing consultant.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Pursuant to the provisions of the Company's Bylaws, the Company's current
directors and executive officers hold office until his or her successor is
elected or appointed and qualified, or until his or her death, resignation or
removal by the Board of Directors. Certain information about the Company's
current directors and executive officers is set forth below.
Name Age Position
Walter G. Cook 71 President, Chief Executive and Financial
Officer and Director
Peggy Janes 49 Secretary-Treasurer and Director
Walter G. Cook has been President of the Company since 1989 and a Director
and officer of the Company since 1975. Mr. Cook has been a practicing attorney
in Fort Worth, Texas since 1952.
Peggy Janes has been Secretary-Treasurer of the company since March 1, 1989
and a director since September 1984. Ms. Janes has been employed by Walter G.
Cook as an administrative assistant for more than 23 years.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company does not have standing audit, nominating or compensation
committees of the Board of Directors, or committees performing similar
functions. During the year ended October 31, 1998, the Board of Directors held
no meetings and acted by written consent three times.. Each director
participated in all of the actions of the Board.
Directors who are full-time employees of the Company receive no additional
compensation for services as Directors. There are currently no Directors who
are full-time employees of the Company. The Company has been advised that
each of the Designees will be full-time employees of the Company.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
No compensation has been paid or accrued for the benefit of any executive
officer or directors of the Company during the fiscal year ended October 31,
1998.
The Company has no bonus or incentive plans in effect, nor are there any
understandings in place concerning additional compensation to the Company's
officers and directors.
Encore and Steve Gould have entered into a five-year employment agreement
commencing October 15, 1998, which provides that Mr. Gould shall receive an
initial salary of $200,000 annually with a guaranteed annual increase of not
less than 10% and 1% of the gross sales revenue as computed on a monthly basis.
Robert Bray or Lee Kaplan, the other two Designees, have not as yet entered
into any employment arrangements with the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables set forth the number of shares, based on information
obtained from the persons name below, of (I) the Common Stock of the Company
beneficially owned as of October 31, 1998 by (i) owners of more than 5% of the
Company's Common Stock, (ii) each director of the Company and (iii) all
officers and directors of the Company as a Group and (II) the Common Stock of
the Company to be beneficially owned as of the date of closing of the
Transaction by (i) owners of more than 5% of the Company's Common Stock (ii)
each director of the Company and (iii) all officers and directors of the
Company as a Group:
I. Prior to Closing of the Transaction:
Name and Address (1) Number of Shares Percentage Owned (3)
Owned(2)
Walter G. Cook 541,978(4) 39.5%
Nancy M. Cook 541,978(5) 39.5%
Peggy Janes 21,750 1.5%
All officers and
directors as a Group
(3 persons) 563,728 41.01%
(1) The address of each of the persons listed above is care of the Company.
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
(3) Based upon 1,373,860 shares of Common Stock outstanding as of September
30, 1998.
(4) Includes 305,239 shares of Common Stock owned by Nancy Cook, Walter G.
Cook's wife. Mr. Cook disclaims any beneficial ownership of the shares owned
by his wife.
(5) Includes 235,739 shares of Common Stock owned by Walter G. Cook. Nancy
Cook disclaims beneficial ownership of the shares held by her husband, Walter
G. Cook.
II. Subsequent to Closing of the Transaction
Name and Address (1) Number of Shares Percentage Owned (3)
Owned(2)
Steve Gould(4) 2,090,382 30.4%
Lee Kaplan 2,090,382 30.4%
Robert Bray 550,000 8.0%
Walter G. Cook 541,978(5) 7.9%
Nancy M. Cook 541,978(6) 7.9%
All officers and
directors as a Group
(3 persons) 4,730,764 68.8%
(1) The address of each of the persons listed above is care of the Company.
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
(3) Based upon 6,873,860 shares of Common Stock outstanding as of the
consummation of the Transaction.
(4) Owned of record by Fat Cat, LLC, of which Steve Gould is the owner of all
of its equity. In connection with Mr. Gould entering into the Employment
Agreement with Encore described above, Mr. Kaplan sold to Mr. Gould 50% of his
holdings of the Common Stock of Encore (the "Shares") at a purchase price equal
to the price Mr. Kaplan paid to purchase the Shares. In the event of a
material breach by Mr. Gould of his Employment Agreement with Encore before
October 15, 1999, Mr. Gould has agreed that he will sell and Mr. Kaplan will be
required to repurchase all of the Shares (represented by Continental stock
after the completion of the Transaction) from Mr. Gould for the price paid for
the Shares. See "Compensation of Directors and Executive Officers" for a
description of the Employment Agreement.
(5) Includes 305,239 shares of Common Stock owned by Nancy Cook, Walter G.
Cook's wife. Mr. Cook disclaims any beneficial ownership of the shares owned
by his wife.
(6) Includes 235,739 shares of Common Stock owned by Walter G. Cook. Nancy
Cook disclaims beneficial ownership of the shares held by her husband, Walter
G. Cook.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and persons who own more than 10% of the Common Stock of
the Company ("Reporting Persons") to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Reporting Persons are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on the Company's review of forms furnished to the Company, the
Company believes that the Company's executive officers, directors and more than
10% shareholders complied with all filing requirements applicable to them.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since November 1, 1994, no director or executive officer of the Company, any
nominee to election as a director, or any person know to the Company to own of
record or beneficially more than 5% of the Company's Common Stock or any member
of the immediate family of any of the foregoing persons had, or will have, any
direct or material interest in any transaction or series of similar
transactions to which the Company or any of its subsidiaries, was or is to be a
party, in which the amount involved exceeds $60,000, except as follows:
As of November 1, 1994, the Company was indebted to Walter G. Cook and a
corporation owned by him in the amount of $678,083 representing an aggregate of
unpaid principal and interest on loans made by Mr. Cook since he became the
principal shareholder of the Company in 1975. Such loans bore interest at
rates of 8-10% per annum. During the three year period ended October 31, 1997,
as a result of additional loans made by Mr. Cook to the Company and accrued
interest, $778,001 of principal and interest was owed to Mr. Cook and the
aforesaid corporation as of October 31, 1997 (the "Cook Loans"). The debt of
$778,001 bears interest at the rate of 12% per annum. On October 14, 1998, the
Company paid down the Cook Loans by $150,000.
As of September 3, 1998, the execution of a Letter of Intent dated August
27, 1998 among the Company, Walter G. Cook, its principal shareholder and
President, Encore International, Inc., a privately held company located in
Oklahoma City, Oklahoma, and Lee Kaplan, Encore's then principal stockholder,
was completed. Under the terms of the Letter of Intent, it is proposed that
the Company acquire all of the outstanding Common Stock of Encore in exchange
initially for 5,500,00 shares of the Company's Common Stock with an additional
2,000,000 issuable to the shareholders of Encore as follows: 1,000,000 shares
will be issued if the sales of the Company, on a consolidated basis, for the
twelve month period commencing March 1, 1999, equal or exceed $8,000,000 and,
in the event that for the twelve month period commencing March 1, 2000, sales
on a consolidated but non-cumulative basis equal or exceed $15,000,000, an
additional 1,000,000 shares will be issued.
Under the terms of the August 27, 1998 Letter of Intent, at or prior to the
Transaction, the two properties owned by the Company, consisting of an office
building in Hurst, Texas and 65 undeveloped acres of realty in Forrest Hill,
Texas, certain assets related to the Hurst office building and a $3,000 note
payable to the Company will be transferred to Walter G. Cook in satisfaction of
the Cook Loans. The satisfaction of the Cook Loans upon the terms set forth in
the preceding sentence took place on November 20, 1998. In connection
therewith, Mr. Cook assumed payment of a $150,000 mortgage loan on the two
properties.
Dated: November 25, 1998.
CONTINENTAL HERITAGE CORPORATION
/s/ Walter G. Cook
Walter G. Cook, President and Chairman of
The Board of Directors
