SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
GENERAL AMERICAN ROYALTY, INC.
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class securities to which transaction
applies: _______________________.
2) Aggregate number of securities to which transaction applies:
_______________________.
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: _________.
4) Proposed maximum aggregate value of transaction:
--------------------.
5) Total fee paid: ____________________.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or Schedule and the date of its filing.
1) Amount Previously Paid: ________________________.
2) Form, Schedule or Registration Statement No.:
---------------------------.
3) Filing Party: _______________________________________.
4) Date filed: _________________________________________.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS AND
PROXY STATEMENT
Dear General American Royalty Shareholder:
A special meeting of the shareholders will be held at Royal Oaks Country Club,
7915 Greenville Avenue, Dallas, Texas, beginning at 4:00 P.M., local time, on
Tuesday, January 5, 1999.
The attached Notice of Special Meeting and Proxy Statement describe the business
to be conducted at the meeting.
Whether or not you plan to attend in person, please mark your proxy in the space
provided. It is important that your shares be represented by a proxy, even if
you cannot be present. Take a moment now to sign, date and return your proxy in
the envelope provided. If you have multiple accounts and received more than one
set of this material, please be sure to return each proxy.
I look forward to greeting you at this Special Meeting.
Sincerely,
Paul Goodman-Simpson
President
<PAGE>
General American Royalty, Inc.
5646 Milton Street, Suite 731
Dallas, Texas 75206
214-361-8535
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 5, 1999
TO OUR SHAREHOLDERS:
A Special Meeting of Shareholders of General American Royalty, Inc. (the
"Company") will be held at the Royal Oaks Country Club, 7915 Greenville Avenue,
Dallas, Texas, on Tuesday, January 5, 1999, at 4:00 P.M., local time, for the
following purposes:
1. To amend the Certificate of Incorporation of the Company to change the
name of the corporation to "World CallNet, Inc."
2. To amend the Certificate of Incorporation of the Company to increase
its authorized capital (i) from 20 million shares of Common Stock (par
value $0.001) to 30 million shares of Common Stock (par value $0.001)
and (ii) from 5 million shares of Preferred Stock (par value $0.001) to
10 million shares of Preferred Stock (par value $0.001).
3. To approve the Company's 1998 Stock Option Plan.
The Special Meeting may be adjourned from time to time and, at any reconvened
meeting, action with respect to the matters specified in the notice may be taken
without further notice to the shareholders unless required by the Bylaws.
Shareholders of record of Common Stock at the close of business on November 16,
1998 are entitled to notice of, and to vote on all matters at, the Special
Meeting. A list of such shareholders will be available for examination by any
shareholder for any purpose germane to the Special Meeting, during normal
business hours, at the principal office of the Company, 5646 Milton Street,
Suite 731, Dallas, Texas, for a period of ten days prior to the Special Meeting
and at the Special Meeting.
BY THE ORDER OF THE BOARD OF DIRECTORS.
_______________________________________
Secretary
DATED: December 23, 1998
<PAGE>
General American Royalty, Inc.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
JANUARY 5, 1999
The following information is furnished in connection with a Special Meeting
of Shareholders of General American Royalty, Inc., a Delaware corporation (the
"Company"), which will be held on Tuesday, January 5, 1999, at 4:00 P.M., local
time, at the Royal Oaks Country Club, 7915 Greenville Avenue, Dallas, Texas, and
at any adjournment or adjournments thereof, and will be mailed on or about
December 23, 1998 to the holders of record of Common Stock as of the record
date.
The record date for determining shareholders entitled to notice of and to
vote at, the Annual Meeting has been fixed as the close of business on November
16, 1998. On that date, the Company had 7,433,333 shares of Common Stock
outstanding. Each outstanding share of Common Stock is entitled to one vote on
all matters presented at the Special Meeting.
The enclosed proxy for the Special Meeting is being solicited by the
Company's Board of Directors and is revocable at any time prior to the exercise
of the powers conferred thereby. The cost of the solicitation of proxies in the
enclosed form will be borne by the Company. In addition to the use of the mail,
proxies may be solicited by personal interview, telephone, or facsimile, and by
banks, brokerage houses and other institutions. Nominees or fiduciaries will be
requested to forward the solicitation material to their principals and to obtain
authorization for the execution of proxies. The Company will, upon request,
reimburse banks, brokerage houses and other institutions, nominees and
fiduciaries for their reasonable expenses in forwarding proxy material to their
principals.
Unless otherwise directed in the accompanying form of proxy, the persons
named therein will vote FOR the amendment to the Certificate of Incorporation of
the Company to change its name to "World CallNet, Inc.", FOR the amendment to
the Certificate of Incorporation of the Company to increase from 20 million to
30 million the authorized number of shares of Common Stock and to increase from
5 million to 10 million the authorized number of shares of Preferred Stock, and
FOR the approval of the Company's 1998 Stock Option Plan. Any shareholder
returning the accompanying proxy may revoke such proxy at any time prior to its
exercise by (a) giving written notice to the Company of such revocation, (b)
voting in person at the Annual Meeting or (c) executing and delivering to the
Company a later dated proxy. Written revocations and later dated proxies should
be sent to General American Royalty, Inc., 5646 Milton Street, Suite 731,
Dallas, Texas 75206.
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CHANGE IN CONTROL OF THE COMPANY
On October 9, 1998 the Company issued 5,500,000 of its shares of Common
Stock in exchange for all the outstanding shares of World Wide Communications
(Holdings) Ltd., (now named "World CallNet, Ltd.") a United Kingdom
development-stage telecommunications company based in London, England. As a
result of this acquisition for stock of the Company, the stockholders of World
CallNet, Ltd. ("WCL") became the owners of 75 percent of all outstanding shares
of stock of the Company. Control of the Company passed to them. WCL will be
operated as a wholly-owned subsidiary of the Company and, generally, WCL
directors and officers now occupy similar positions with the Company.
PROPOSAL 1:
CHANGE OF CORPORATE NAME TO WORLD CALLNET, INC.
The Company proposes to change its corporate name to better reflect the
business it conducts. It no longer is engaged in the business of acquiring oil
and gas royalty and mineral interests. It is a developer of new products and
services that offer access to the internet through television-based instruments.
PROPOSAL 2:
INCREASE IN AUTHORIZED CAPITAL STOCK
The Company proposes to increase its authorized capital stock from 20
million shares of Common Stock to 30 million shares of Common Stock and from 5
million shares of Preferred Stock to 10 million shares of Preferred Stock. The
Company is now engaged in a business that involves both the internet and
telecommunications. Both of these industries are developing rapidly with
innovations occurring rapidly. The Company could at some time desire to acquire
another company that owns intellectual property rights or has developed a
product compatible with the Company's growth. Further, the Company could propose
to raise capital for its business in amounts that require more shares than would
be available, as authorized but unissued, should the present capitalization not
be increased. It could be inconvenient or even fatal, particularly in the
instance of an acquisition, if the Company first had to call a stockholders'
meeting and amend its
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certificate of incorporation before it could assure an acquisition candidate
that the Company has sufficient authorized but unissued stock to make the
acquisition.
PROPOSAL 3:
APPROVAL OF STOCK OPTION PLAN
The Company's Board of Directors proposes to offer employment incentives to
its officers and regular employees to encourage them to remain with the Company
and to increase the Company's productivity. Several of the officers and
employees that joined the Company, when it acquired WCL, possess extraordinary
talents and inventiveness. Other, similarly gifted persons will be recruited to
join the Company. An excellent employment incentive is a stock option plan that
gives officers and employees a stake in the Company if the Company succeeds.
From time to time the Company may wish to contract for the consulting
services of professionals in fields of immediate but not permanent need of the
Company. It is frequently the case that these consulting professionals are aware
of the commercial value their services should be to the Company, and they seek
partial compensation for their services in the form of stock options.
The Board of Directors has adopted a 1998 Stock Option Plan for the above
purposes and submits the plan to the stockholders for their approval or
rejection.
Description of Plan.
-------------------
The Company's 1998 Stock Option Plan (the "Plan") enables the Board of
Directors or a committee designated by the Board (an "Option Committee") to
grant options to purchase up to 1,000,000 shares of Common Stock of the Company.
Options may be granted to officers, directors and employees of the Company or
any parent or subsidiary of the Company and to any consultant or advisor to the
Company or any parent or subsidiary of the Company.
Two types of options may be granted. "Incentive Stock Options" are options
granted to persons who are employees (including officers and directors if they
are employees) of the Company or any parent or subsidiary of the Company, which
options are intended to qualify as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code. All other options are called
"Nonqualified Stock Options." The two types of options have different income tax
consequences for the grantees and for the Company (see below).
Options may be granted under the Plan at any exercise price, but options
intended to be Incentive Stock Options cannot be granted at an exercise price
less than the fair market value of the Company's Common Stock on the day the
options are granted.
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However, with respect to options granted to persons owning ten percent or more
of the voting shares of all classes of stock of the Company, the exercise price
of the options cannot be less than 110% of the market value of the Company's
Common Stock on the day the options are granted.
The Plan was adopted by the Board of Directors on November 9, 1998 and, if
approved by the Company's stockholders, shall terminate ten years after
adoption. Options granted under the Plan can be for any term not exceeding ten
years or, for persons owning ten percent or more of the voting shares of all
classes of stock of the Company at the time of a grant of options, for any
period not exceeding five years.
The market value of the 1,000,000 shares subject to the Plan was $1,125,000
on November 9, 1998 (i.e., $1.125 a share). On that day, options to purchase
100,000 shares of Common Stock of the Company at $1.50 a share were granted
under the Plan to James F. Smith, a director and former president of the
Company; and options to purchase 150,000 shares of Common Stock of the Company
at $1.50 a share were granted under the Plan to each of Paul Goodman-Simpson -
chief executive officer of the Company and managing director of the Company's
wholly-owned subsidiary, World CallNet, Ltd. ("WCL"); Aaron Goodman-Simpson -
vice president of the Company and Sales Director of WCL; and Keith Goodyer -
vice president of the Company and Technical Director of WCL. The options expire
on November 9, 2001. All four of these persons are directors of the Company and
are nominated to be directors of the Company during the next year.
Federal Income Tax Consequences
-------------------------------
Incentive Stock Options.
-----------------------
There are no federal income tax consequences, to either the Company or the
option grantee, on the date the options are granted.
On exercise, there are no federal income tax consequences to either the
Company or the grantee.
On the grantee's sale of the shares acquired through exercise, the Company
has no federal income tax consequences, and the grantee has reportable capital
gain income or loss.
Nonqualified Options.
--------------------
On the date the options are granted, there are no federal income tax
consequences unless the exercise price is so far below the market value of the
underlying shares that date that some part of the difference (the "spread") may
be deemed to be immediate compensation to the grantee. There is no Treasury
regulation that sets how far below market price this spread may be, but case law
and other precedents suggest that nonqualified options granted at no lower than
30% of market price will not be challenged by the Internal Revenue Service.
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To the extent that any portion of the spread is treated as compensation to
the grantee, the grantee realizes the receipt of ordinary income the day of the
grant, and the Company must reflect the payment of this compensation expense on
its books that date.
On exercise, the difference between the exercise price (as possibly
adjusted upward, for income tax purposes only, as described in the preceding
paragraph) and the market value of the shares acquired is treated as
compensation income to the option grantee and as compensation expense to the
Company.
On the grantee's sale of shares acquired through exercise, the Company has
no federal income tax consequences, and the grantee has reportable capital gain
income or loss on the difference between the sale proceeds and the market value
of the shares on the day of exercise of the options.
Payment for Stock Upon Exercise of Options.
------------------------------------------
Grantees pay for stock upon exercise of options granted under the Plan by
certified or cashier's check. However, in the discretion of the Board of
Directors, or an Option Committee, payment may be made by any of the following:
o check,
o promissory note,
o retention by the Company, from the shares of stock subject to
an exercise of an option, of that number of shares whose value
is equal to the total exercise price amount, valued at the
market price of the stock on the day of exercise, or
o other shares of the Company's capital stock, valued at their
fair market value on the date of surrender, provided such
stock has been held by the grantee for more than six months
(in the case of stock acquired by the grantee through exercise
of an option granted under the Plan) or such surrendered stock
was not acquired directly or indirectly from the Company.
Termination of Options.
----------------------
Unexercised options granted under the Plan terminate at the earlier to
occur of the following:
o their expiration date,
o twelve months after the death or total and permanent
disability of a grantee, but only to the extent the options
were exercisable on the death or the termination of employment
or of status as a non-employee officer, director, advisor or
consultant (in the case of nonqualified options, this
twelve-month period can be
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extended by the Board of Directors or the Option
Committee), or
o 90 days after any other termination of employment or status as
a non-employee officer, director, advisor or consultant, but
only to the extent the options were exercisable on the date of
such termination (in the case of nonqualified options, this
90-day period can be extended by the Board of Directors or the
Option Committee).
<PAGE>
VOTING
Voting on the proposal to amend the Company's Certificate of Incorporation
to change its name to "World CallNet, Inc.," the proposal to amend the
Certificate of Incorporation to increase the authorized capital of the Company,
and the proposal to approve the Stock Option Plan will be decided by a majority
of the votes cast on the matter, unless otherwise required by law.
The office of the Company's Secretary appoints an inspector of election to
tabulate all votes and to certify the results of all matters voted upon at the
Special Meeting. Neither the corporate law of the State of Delaware, the state
in which the Company is incorporated, nor the Company's Certificate of
Incorporation or Bylaws, have any specific provisions regarding the treatment of
abstentions and broker non-votes. It is the Company's policy to count
abstentions or broker non-votes for the purpose of determining the presence of a
quorum at the meeting. Abstentions will be treated as shares represented at the
Special Meeting for determining results on actions requiring a majority vote but
will not be considered in determining results of plurality votes. Shares
represented by proxies returned by brokers where the broker's discretionary
authority is limited by stock exchange rules will be treated as represented at
the Special Meeting only as to such matter or matters voted on in the proxy.
Shares represented by limited proxies will be treated as represented at the
meeting only as to such matter or matters for which authority is granted in the
limited proxy.
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<PAGE>
PROPOSALS OF SHAREHOLDERS
The Board of Directors will consider proposals of shareholders intended to
be presented for action at the 2000 Annual Meeting of Shareholders. According to
the rules of the Securities and Exchange Commission, such proposals shall be
included in the Company's Proxy Statement if they are received in a timely
manner and if certain requirements are met. For a shareholder proposal to be
included in the Company's Proxy Statement relating to the 2000 Annual
Shareholders' Meeting, a written proposal complying with the requirements
established by the Securities and Exchange Commission must be received at the
Company's principal executive offices located at Suite 731, Meadows Building,
5646 Milton Street, Dallas, Texas 75206 no later than October 31, 2000.
OTHER MATTERS
There are no matters to be presented for action at the meeting other than
those listed in the Notice of Meeting and referred to herein. If any other
matters properly come before the Special Meeting, it is intended that the proxy
solicited hereby will be voted in accordance with the recommendation of the
Board of Directors.
Copies of the last Annual Report of General American Royalty, Inc. to the
Securities and Exchange Commission on Form 10-KSB may be obtained, without
charge to shareholders, by writing General American Royalty, Inc., Suite 731,
Meadows Building, 5646 Milton Street, Dallas, Texas 75206.
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<PAGE>
PROXY
General American Royalty, Inc.
5646 Milton Street, Suite 731
Dallas, Texas 75206
214-361-8535
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GENERAL AMERICAN
ROYALTY, INC. EACH MATTER TO BE ACTED UPON IS PROPOSED BY THE COMPANY.
The undersigned hereby appoints James F. Smith, Paul Goodman-Simpson, Keith
Goodyear and Sam E. Nicholson, or any one of them, each with the power to
appoint his substitute, as proxies, and hereby appoints and authorizes them to
represent and vote as designated below, all the shares of Common Stock, held of
record by the undersigned on November 16, 1998, at the Special Meeting of
Shareholders of General American Royalty, Inc. (the "Company") to be held at the
Royal Oaks Country Club, 7915 Greenville Avenue, Dallas, Texas, on Tuesday,
January 5, 1999, at 4:00 P.M., local time, and at any adjournment thereof.
1. AMENDMENT TO CERTIFICATE OF INCORPORATION OF THE COMPANY TO
CHANGE THE NAME OF THE CORPORATION TO "WORLD CALLNET, INC."
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
2. AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE THE COMPANY'S
AUTHORIZED CAPITAL FROM 20 MILLION TO 30 MILLION SHARES OF COMMON STOCK
(PAR VALUE $0.001) AND FROM 5 MILLION TO 10 MILLION SHARES OF PREFERRED
STOCK (PAR VALUE $0.001)
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
3. APPROVAL OF THE COMPANY'S 1998 STOCK OPTION PLAN
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
Proxy
Page 1 of 2 Pages
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IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING, THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS. 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
FOR THE CHANGE OF CORPORATE NAME, FOR THE INCREASE IN AUTHORIZED CAPITAL, AND
FOR THE APPROVAL OF THE COMPANY'S STOCK OPTION PLAN.
Please sign exactly as your name appears below. When shares are held as
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee, or guardian, please give full titles as such. If a
corporation, please sign full corporate name by President or other authorized
officer. If a partnership, please sign partnership name by authorized person. If
a limited liability company, please sign name by authorized person.
DATE: ____________________, 199_ ______________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
Proxy
Page 2 of 2 Pages
