PACEL CORP.
Class "A" Convertible
Preferred Stock
AGREEMENT
AGREEMENT made this 1st day of September, 1998, between Pacel Corp., a
Virginia corporation, hereinafter called the Corporation, and
Xxxxx X. Xxxxxxx, an employee of the Corporation hereinafter called the
Employee.
The Corporation desires, by providing the Employee Class "A" Series of
Convertible Preferred Stock, with no par value, hereinafter called the stock, as
hereinafter provided, as compensation for the 1997 outstanding debt owed by
Pacel Corp. to the employee.
Now, therefore, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of stock. The Corporation hereby irrevocably grants to the Employee
the right and stock, hereinafter called the stock, an aggregate of 500,000
preferred shares (such number being subject to adjustment as provided in
paragraph (3 hereof) of on the terms and conditions herein set forth.
2. Conversion.
(a) Subject to the provisions of sub-paragraph (b) below, the shares of
the 1997-CLASS A Series of Convertible Preferred Stock shall, at the option
of the respective holders thereof, be convertible into fully paid and
nonassessable Common Shares of the Company, at any time and from time to
time, except that any of such 1997-CLASS A shares which have been called for
redemption shall be convertible up to and including, but not after, the
close of business on the tenth (10) day prior to the redemption date.
(i) In order to exercise the conversation privilege, the holder of any
of the shares of the 1997 -CLASS A Series to be converted shall
surrender the certificate or certificates therefor to any transfer
agent of the Company for such shares, duly endorsed in blank for
transfer with the signature Medallion guaranteed, accompanied by
written notice of election to convert such shares or a portion thereof
executed on the form set forth on such certificates or on such other
form as may be provided from time to time by the Company.
As soon as practicable after the surrender of such certificates as
provided above, the Company shall cause to be issued and delivered, at
the office of such transfer agent, to or on the order of the holder of
the certificates thus surrendered, a certificate or certificates for
the number of full shares of Common Stock issuable hereunder upon the
conversation of such shares of the 1997-CLASS A Series. Such conversion
shall be deemed to have been affected on the date on which the
certificates for such shares of the 1997-CLASS A Series have been
surrendered as provided above, and the person on whose name any
certificate or certificates for Common Stock are issuable upon
conversion shall be deemed to have become on such date the holder of
record of the shares represented thereby.
(ii) The shares of 1997-CLASS A Series of Convertible Preferred Stock
shall be convertible into Common Shares of the Company on a one-for-one
basis; i.e., one share of 1997-CLASS A Series shall convert into one
share of Common Stock.
(iii) Earned and declared but unpaid and accrued or accumulated
dividends on the 1997-CLASS A Series of Convertible Preferred Stock
shall be payable in cash and shall not entitle the holder to any
additional shares of Common Stock or any further conversion right with
respect to such dividends.
(iv) In case of the voluntary dissolution, liquidation, or winding up
of the Company, all conversion rights of the holders of shares of
1997-CLASS A series of Convertible Preferred Stock shall terminate on a
date fixed by the Board of Directors, but not more than thirty (30)
days prior to the record date for determining the holders of the Common
Shares entitled to receive any distribution upon such dissolution,
liquidation or winding up. The Company shall cause notice of the
proposed action, and of the date of termination of conversion rights,
to be mailed to the holders of record of shares of the 1997-CLASS A
Series not later than thirty (30) days prior to the date of such
termination, and shall promptly give similar notice to each transfer
agent for such Preferred Stock and for the Common Stock.
(v) No fractional share of Common Stock shall be issued upon conversion
of any share of the 1997-CLASS A Series; furthermore, no scrip or cash
balance shall be paid.
(vi) As long as any of the shares of the 1997-CLASS A Series remain
outstanding, the Company shall take all steps necessary to reserve and
keep available a number of its authorized but unissued shares of Common
Stock sufficient for issuance upon conversion of all such outstanding
shares of the 1997-CLASS A Series.
(viii) All certificates for the shares of the 1997-CLASS A Series
surrendered for conversion as provided herein shall be cancelled and
retired, and no further shares of the 1997-CLASS A Series shall be
issued in lieu thereof.
(ix) The exercise of the conversion privilege shall be subject to such
regulations, not inconsistent with the foregoing provisions of this
paragraph, as may from time to time be adopted by the Board of
Directors of the Company.
(x) All shares of Common Stock issued upon the conversion of the shares
of the 1997-CLASS A Series shall be validly issued and outstanding, and
fully paid and nonassessable.
(b) In the event that prior to the conversion of any outstanding shares
of the 1997-CLASS A Series, the COMPANY shall:
(i) Issue any of its Common Shares as a share dividend or subdivide the
number of outstanding Common Shares into a greater number of shares,
then, in either of such cases, the conversion price of the Common
Shares in effect at the time of such action shall be proportionately
reduced and the number of shares at the time purchasable shall be
proportionately reduced and the number of shares at the time
purchasable shall be proportionately increased; and conversely, in the
event the COMPANY shall contract the number of outstanding Common
Shares by combining such shares into a smaller number of shares, then,
in such case, the conversion price per share of the Common Shares in
effect at the time of such action shall be proportionately decreased.
If the COMPANY shall, prior to the conversion date declare a dividend
payable in cash on its Common Shares and shall at substantially the
same time offer to its shareholders a right to purchase new Common
Shares from the proceeds of such dividend or for an amount
substantially equal to the dividend, all Common Shares so issued shall,
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for the purposes of this provision, be deemed to have been issued as a
share dividend. Any dividend paid or distributed upon the Common Shares
in shares of any other class or securities convertible into Common
Shares shall be treated as a dividend paid in Common Shares to the
extent that Common Shares are issuable upon the conversion thereof.
Or
(ii) be recapitalized, or the COMPANY or a SUCCESSOR corporation shall
consolidate or merge with or convey all or substantially all of its or
of any successor corporation's property and assets to any other
corporation, the registered Holders of any of the shares of the
1997-CLASS A Series shall thereafter have the right to convert such
shares upon a basis adjusted for such recapitalization or consolidation
or merger or conveyance.
Or
(iii) take a record of the holders of its Common Shares for the purpose
of entitling them to receive a dividend payable otherwise than in case,
or any other distribution in respect of the Common Shares (including
cash), pursuant to, without limitation, any spin-off, split-off, or
distribution of the COMPANY'S assets; or for the purpose of entitling
them to subscribe for or purchase any shares of any class or to receive
any other rights; or of any classification, reclassification, or other
reorganization of the shares which the COMPANY is authorized to issue,
consolidation or merger of the COMPANY with or into another
corporation, or conveyance of all or substantially all of the assets of
the COMPANY; then, and in any such case, the COMPANY shall mail to the
registered Holders of the outstanding shares of the 1997-CLASS A
Series, at least 21 days prior thereto, a notice stating the date or
expected date on which a record is to be taken for the purpose of such
dividend, distribution, or rights, or the date on which such
classification, reclassification, reorganization, consolidation or
merger, conveyance, is to take place, as the case may be. Such notice
shall also specify the date or expected date, if any is to be fixed, as
of which registered holders of Common Shares of record shall be
entitled to participate in such dividend, distribution, or rights, or
shall be entitled to exchange their Common Shares for securities or
other property deliverable upon such classification, reclassification,
reorganization, consolidation, merger or conveyance, as the case may
be.
3. NO PREEMPTIVE RIGHTS. No holder of any shares of the 1997-CLASS A Series of
Convertible Preferred Stock, as such, shall be entitled as a matter of right to
subscribe for or purchase any part of any new or additional issue of shares of
any class or series, junior or senior thereto, or securities convertible into,
exchangeable for, or exercisable for the purchase of, shares of any class or
series, junior or senior, whether now or hereafter authorized, and whether
issued for cash, property, services, by way of dividends, or otherwise.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly executed
on its behalf by its undersigned President and attested to by its Secretary this
2nd day of September, 1998.
ATTEST: PACEL CORP.
(Corporate Seal)
By:/s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx, President
/s/ F. Xxx Xxxxxxx
----------------------------
F. Xxx Xxxxxxx, Secretary
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