UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION STATEMENT
PURSUANT TO SECTION 14(C)
of the
SECURITIES EXCHANGE ACT OF 1934
PACEL CORPORATION
-----------------
(Exact name of registrant as specified in its charter.)
VIRGINIA
--------
(State or other jurisdiction of incorporation or organization.)
69372L 702 54-1712558
---------- ----------
(CUSIP Number) (IRS Employer Identification Number)
10108 Industrial Drive, Prineville, NC 28134
--------------------------------------------
(Address of principal executive offices.)
(704) 643-0676
--------------
(Registrant's telephone number, including area code.)
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2)
[ x ] Definitive Information Statement
Payment of Filing Fee (Check the appropriate box.):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14(c)-5(g)
and 0-11.
1) Title of each class of 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: $ -0-
[ ] 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 No.:
3) Filing Party:
4) Date Filed:
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PACEL CORPORATION
10108 Industrial Drive
Prineville, NC 28134
Notice of Proposed Action by Written Consent
of a
Two-Thirds of the Outstanding Common Stock
to be taken on or about January 15, 2005.
To the Stockholders of PACEL CORPORATION
Notice is hereby given that upon written consent by the holders of two-thirds
(2/3) of the outstanding shares of common and preferred stock of the Company,
the Company intends to take certain actions as more particularly described in
this Information Statement. The actions will be effected on or after 20 days
from the date this Information Statement is mailed to stockholders which is
expected to be on or about January 15, 2004.
Only stockholders of record at the close of business on October 26, 2004 will be
given Notice of the Action by Written Consent. The Company is not soliciting
proxies.
By Order of the Board of Directors
/s/ GARY MUSSELMAN
President
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
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PACEL CORPORATION
10108 Industrial Drive
Prineville, NC 28134
Telephone (704) 643-0676
INFORMATION STATEMENT
---------------------
CONSENT ACTION BY A MAJORITY OF STOCKHOLDERS WITHOUT A MEETING
--------------------------------------------------------------
This Information Statement is furnished to all holders of the common and
preferred stock of the Company in connection with proposed action by holders of
two-thirds (2/3) of the issued and outstanding shares of common and preferred
stock of the Company to take the following actions:
o Increase the authorized capital stock from 2 billion to 10
billion shares of common stock;
o The change of the Company's state of incorporation from
Virginia to Nevada;
o The approval of the Employment Agreement of David Calkins;
o The election of Gary Musselman; Joseph Amato; and Thorn
Auchter as directors;
The actions are proposed to occur on or about January 15, 2005. This Information
Statement is first being mailed to stockholders on or about December 27, 2004.
Only stockholders of record at the close of business on October 26, 2004 are
entitled to notice of the action to be taken. There will be no vote on the
matters by the shareholders of the Company because the proposed action will be
accomplished by the written consent of two-thirds (2/3) of the shareholders of
the Company as allowed by Section 13.1-657 of the Virginia Stock Corporation
Act. Persons holding two-thirds ( 2/3) of the outstanding voting securities of
the Company have unanimously adopted, ratified and approved resolutions to
effect the actions described. No other votes are required or necessary. See the
caption "Vote Required for Approval," below.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
DISSENTER'S RIGHTS OF APPRAISAL
-------------------------------
The Virginia Stock Corporation Act ("Virginia Law") does not provide for
dissenter's rights of appraisal in connection with the corporate actions to be
taken.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
-----------------------------------------------
The Board of Directors has fixed the close of business on October 26, 2004 as
the record date for the determination of the common shareholders entitled to
notice of proposed action by written consent. At the record date, the Company
had outstanding 484,667,610 shares of no par value common stock. and 1,000,000
shares of Class "A" Convertible Preferred Stock . The Company's shareholders who
hold in the aggregate 326,666,667 shares of the issued and outstanding shares of
Common on the record date have signed a consent to the taking of the corporate
actions described. This consent will be sufficient, without any further action,
to provide the necessary stockholder approval of the action.
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CORPORATE ACTIONS TO BE TAKEN
-----------------------------
INCREASE IN THE AUTHORIZED CAPITAL STOCK
The Company's current authorized capital stock consists of 2,000,000,000 shares
of no par common stock, of which 484,667,610 shares are issued and outstanding,
and 5,000,000 shares of preferred stock, of which 1,000,000 shares of Class "A"
Convertible Preferred Stock are issued and outstanding. Management believes that
it is in the best interests of the Company and its shareholders that the
authorized common stock be increased to 10,000,000,000 shares. The increase in
the authorized common stock will provide the Company with needed stock to enable
it to undertake financing transactions in which the Company may employ the
common stock, including transactions to raise working capital through the sale
of common stock. Since the Board of Directors believes that the currently
authorized number of shares may be not be sufficient to meet anticipated needs
in the immediate future, the Board considers it desirable that the Company has
the flexibility to issue an additional amount of Common Stock without further
stockholder action, unless otherwise required by law or other regulations. The
availability of these additional shares will enhance the Company's flexibility
in connection with any possible acquisition or merger, stock splits or
dividends, financings and other corporate purposes and will allow such shares to
be issued without the expense and delay of a special stockholders' meeting,
unless such action is required by applicable law or rules of any stock exchange
on which the Company's securities may then be listed. At the present time, the
Company has no plans, proposals or arrangement, written or otherwise, to issue
any additional authorized shares of common stock.
In certain circumstances, a proposal to increase the authorized capital stock
may have an anti-takeover effect. The authorization of classes of preferred or
common stock with either specified voting rights or rights providing for the
approval of extraordinary corporate action may be used to create voting
impediments or to frustrate persons seeking to effect a merger or otherwise gain
control of the Company by diluting the stock ownership of any persons seeking to
obtain control of the Company. Management of the Company might use the
additional authorized capital stock to resist or frustrate a third-party
transaction which might provide an above-market premium that is favored by a
majority of the independent shareholders. Management of the Company has no
present plans to adopt any proposals or to enter into other arrangements that
may have material anti-takeover consequences. There are no anti-takeover
provisions in the Company's Articles of Incorporation, Bylaws or other governing
documents.
CHANGE OF CORPORATE DOMICILE TO NEVADA
Management believes that it is in the best interests of the Company and its
shareholders the Company change its corporate domicile from Virginia to Nevada.
There are several reasons for the recommended change:
o Nevada does not impose any corporate income tax;
o There are no taxes on corporate shares;
o There is no annual franchise tax;
o The annual fees are nominal;
In order to accomplish change in corporate domicile, the Company will be in
effect re-incorporated in Nevada through Articles and Agreement of Merger
whereby the Company will be merged into a newly formed Nevada corporation having
the identical corporate structure as the Company, after which the Nevada
corporation will be the surviving corporation with all of the same assets,
liabilities, shareholders and corporate identity as the Company. Attached to
this Information Statement as Exhibit "A" is the proposed Articles and Agreement
of Merger. The Company's transfer agent will act as the exchange agent for the
purposes of
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implementing any exchange of stock certificates. As soon as practicable after
the completion of the change to Nevada, shareholders will receive a letter of
transmittal requesting them to surrender old stock certificates for new
certificates reflecting the change. Persons who hold their shares in brokerage
accounts or in street name will not be required to take any further action to
effect the exchange of certificates. Shareholders should not destroy any stock
certificates and should not submit any certificates until they received a letter
of transmittal.
The common stock of the Company after the completion of the change of domicile
to Nevada will have the same rights and preferences as currently exists. The
Bylaws and Articles of Incorporation of the Company after the completion of the
change of domicile will be identical in substance to the Company's current
Bylaws and Articles of Incorporation, after the amendment disclosed in this
Information Statement becomes effective.
The following is a summary description of the material differences and
similarities between the Virginia Stock Corporation Act and the Nevada Business
Corporation Act with respect to matters involving corporate governance by
shareholders.
SHAREHOLDER ACTION VIRGINIA NEVADA
------------------ -------- ------
o Shareholder vote for Approval of 2/3 of Majority vote.
amendments to Articles of Incorporation shares entitled to vote.
o Consent action of shareholders without Same vote required Majority vote.
a meeting as if action taken
at a meeting.
o Election and removal of Directors Majority vote. Majority vote.
o Quorum required for shareholder meetings Majority of issued Majority of
and outstanding shares. issued and
However, bylaws may outstanding
provide for not less than voting securities.
1/3.
o Right of shareholders to call special Current bylaws permit Same bylaw
meeting of the shareholders holders of not less than 10% provisions will
of issued and outstanding apply.
voting securities to call a
special meeting.
o Inspection rights of shareholders Must be shareholder for Same as Virginia
for at least six months or
the holder of at least 5%
of all of the outstanding
shares.
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SHAREHOLDER ACTION VIRGINIA NEVADA
------------------ -------- ------
o Corporate records to be inspected Meeting minutes; Same as Virginia,
accounting records; but no meeting
shareholder ledger. minutes and no
accounting
records.
o Approval of Plan of Merger or Share Approval of 2/3 of shares Majority vote.
Exchange entitled to vote
o Sale of corporate assets not in the Approval of 2/3 of shares Majority vote
ordinary course of business entitled to vote.
As a consequence of the differences between the Virginia Stock
Corporation Act and the Nevada Business Corporation Act, management of the
Company believes there will be greater flexibility in the management of
corporate affairs. This would include a lesser shareholder vote required in
Nevada for the approval of amendments to the Articles of Incorporation; for
consent action of shareholders without a meeting; for approval of Plans of
Merger or Plans of Share Exchange; and the sale of corporate assets not in the
ordinary course of business. The consequence to the Company's independent
shareholders of the differences in applicable corporate governance between
Virginia and Nevada is that many corporate actions can be taken by the holders
of a simple majority of the outstanding shares without the need for a
shareholders' meeting.
APPROVAL OF EMPLOYMENT AGREEMENT
Attached as Exhibit "B" is the Employment Agreement for David Calkins. The Board
of Directors recommends the approval of this Employment Agreement. The Company
seeks shareholder approval of Mr. Calkins' Employment Agreement because Mr.
Calkins and his wife, F. Kay Calkins, were the only directors of the Company as
of the date of the execution of the Employment Agreement. Consequently, there
was no review and approval of the terms of the Employment Agreement by
independent directors. The material provisions of the Employment Agreement are
summarized as follows:
o The term of the agreement is ten (10 years.
o Base compensation is $300,000 per year, subject to adjustment,
plus an Incentive Bonus in an amount equal to 25% of the base
compensation in each of the first two(2) years that the
Company's earnings before income tax, depreciation and
amortization ("EBITDA") is not less than one dollar ($1.00).
In addition, the Company will pay an Incentive Bonus in an
amount equal to five percent (5%) of EBITDA for each fiscal
year that EBITDA is at least $200,000, but not greater than
$500,000. The Company will pay an Incentive Bonus in an amount
equal to seven percent (7%) of EBITDA for each year that
EBITDA is greater than $500,000 but no greater than $1
million. For any fiscal year during which EBITDA is greater
than %$1 million, the Company will pay an Incentive Bonus in
an amount equal to ten percent (10%) of EBITDA.
o In the event of termination of employment by the Company, Mr.
Calkins will be entitled to receive severance payments as
follows:
o If termination occurs prior to September 9, 2005, he
will be paid an amount equal to three (3) years of
the then base compensation and Incentive Bonuses;
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o If termination occurs between September 9, 2005 and
September 9, 2006, he will be paid an amount equal to
five (5) years of the then base compensation and
Incentive Bonuses;
o If termination occurs between September 9, 2006 and
September 9, 2007, he will be paid an amount equal to
seven (7) years of the then base compensation and
Incentive Bonuses.
o The Employment Agreement can be terminated upon ninety (90)
days written notice. However, the Company can terminate the
Employment Agreement for cause upon ten (10) written notice.
-7-
ELECTION OF DIRECTORS
The Company's current Board of Directors consists of two members, who are
standing for election: David Calkins and F. Kaye Calkins. In addition, the
following persons are nominated to serve as directors: Gary Musselman; Joseph
Amato; and Thorn Auchter.
The Board of Directors has approved these nominees and their business experience
is summarized below. The nominees have consented to their nomination and have
agreed to serve.
BUSINESS EXPERIENCE DURING THE
NAME AGE LAST FIVE (5) YEARS & OTHER INFORMATION
------------------- ------- -------------------------------------------
David Calkins 60 Mr. Calkins founded the Company in 1994. He
served as President, Chief Executive
Officer and Chief Financial Officer of the
Company until December 2003. From 1992
until the founding of the Company, Mr.
Calkins was the regional manager of three
divisions of Pacific Nuclear Corporation,
now known as Vectra Technologies, Inc. From
1987 to 1993, Mr. Calkins served as Project
Manager, Program Director, Vice President
of Operations and Executive Vice President
for Business Development for Pacific
Nuclear Corporation.
F. Kay Calkins 45 Mrs. Calkins was the President of
EBStor.com, Inc, an Internet and web
development company until late 2003, when
EBStor.com, Inc. ceased operations. Prior
to her position with EBStor.com, Inc., Mrs.
Calkins was Vice-President and Chief
Operating Officer of the Company. Prior to
her positions with the Company, she was
President of CMC Services, a marketing and
consulting firm based in Virginia.
Gary Musselman 49 Mr. Musselman was President/CEO of ECS
Financial Management Services, LLC, a
national call center business, from 1998 to
late 2000. From late 2000 until June 2002,
he served as a mergers and acquisitions
consultant in the Washington, DC area. From
June 2002 until March 2004, Mr. Musselman
was the Chief Financial Officer of Grace
Global US, an international media company.
Joseph Amato 47 Mr. Amato was a Managing Director of
American Express Tax and Business Services
specializing in commercial finance from
June 1998 unit late 2000. From late 2000
until July 2003, Mr. Amato was the Senior
Vice President if Southern Financial Bank
in the metropolitan Washington, DC area.
Since July 2003, he serves as the principal
in JGA Associates, LLC a consulting firm
specializing in commercial finance, mergers
and acquisitions. Mr. Amato is the past
recipient of the US Small Business
Administration Financial Services Advocate
of the Year.
Thorn Auchter 62 Mr. Auchter has been the President of
Auchter, Inc., a business and regulatory
consulting firm in Washington, DC since
1996. Mr. Auchter is the former US
Department of Labor-Assistant Secretary of
Labor for Occupational Safety and Health
Administration in the Reagan
administration. He is a former member of
the National Commission on Risk Assessment
and Management, appointed by President
George H.W. Bush.
=================== ======= ===========================================
Family Relationships; Board Meetings; Committees
David Calkins and F. Kay Calkins are husband and wide. There are
currently no audit, nominating or compensation committees of the Board.
-8-
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS
---------------------------------------------------
AND FIVE PERCENT STOCKHOLDERS
-----------------------------
The following table sets forth certain information concerning the ownership of
the Company's Common Stock as of October 26, 2004, with respect to: (i) each
person known to the Company to be the beneficial owner of more than five percent
of the Company's Common Stock; (ii) all directors; and (iii) directors and
executive officers of the Company as a group. To the knowledge of the Company,
each shareholder listed below possesses sole voting and investment power with
respect to the shares indicated.
TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------------------------- ---------------------------------- ---------------
Common Stock Gary Musselman -0- -0-
10108 Industrial Dr.
Prineville, NC 28134
Common Stock David Calkins 6,002 less than 1%
10108 Industrial Dr.
Prineville, NC 28134
F. Kay Calkins 6,001 less than 1%
Common Stock 10108 Industrial Dr.
Prineville, NC 28134
Compass Capital Group (a) 35,000,000 7.2%
Common Stock 813 Shades Creek Rd. Ste. 100B
Birmingham, AL 35209
Kentan Ltd. (b) 35,000,000 7.2%
Common Stock 813 Shades Creek Rd. Ste 100B
Birmingham, AL 35209
Reef Holdings Ltd. (c) 35,000,000 7.2%
Common Stock 813 Shades Creek Rd. Ste 100B
Birmingham, AL 35209
Yanzu, Inc.(d) 221,666,667 46%
Common Stock Cape Building
Leeward Highway
Providencials
Turks & Caicos British Indies
------------------- -------------------------------------- ---------------------------------- ---------------
Common Stock All Executive Officers and Directors 12,003 less than 1%
as a Group ( 3 persons)
------------------- -------------------------------------- ---------------------------------- ---------------
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(a) Mark Lefkowitz has the voting and dispositive power with
respect to the shares held by Compass Capital Group.
(b)(d) Hugh O'Neil has the voting and dispositive power with respect
to the shares held by Kentan Ltd. and Yanzu, Inc.,
respectively;
(c) Dale Peters has the voting and dispositive power with respect
to the shares held by Reef Holdings Ltd.
DESCRIPTION OF CAPITAL STOCK AND VOTING RIGHTS
----------------------------------------------
The Company's authorized capital consists of 2,000,000,000 shares of Common
Stock, no par value and 5,000,000 shares of Preferred Stock, no par value. As of
October 26, 2004, there were 484,667,610 shares of Common Stock outstanding and
1,000,000 shares of Class "A" Convertible Preferred Stock outstanding. The
holders of Common Stock and the holders of the Class "A" Convertible Preferred
Stock are each entitled to vote on all matters to come before a vote of the
stockholders of the Company.
VOTE REQUIRED FOR APPROVAL
--------------------------
Section 13.1-707 of the Virginia Stock Corporation Act provides an outline of
the scope of the amendments of the Articles of Incorporation allowed a Virginia
Corporation. This includes the amendment discussed in this Information
Statement. The procedure and requirements to effect an amendment to the Articles
of Incorporation of a Virginia corporation are set forth in Section 13.1-710
provides that proposed amendments must first be adopted by the Board of
Directors and then submitted to stockholders for their consideration at an
annual or special meeting and must be approved by two- thirds (2/3) of the
outstanding voting securities.
Section 13.1-657 of the Virginia Stock Corporation Act provides that any action
required to be taken at a special or annual meeting of the stockholders of a
Virginia corporation may be taken by written consent, in lieu of a meeting, if
the consent is signed by stockholders owning not less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting at
which all shareholders entitled to vote were present and voted.
The Board of Directors of the Company and persons owning and having voting power
in excess of two-thirds of the outstanding voting securities of the Company have
adopted, ratified and approved the amendment to the articles of incorporation
increasing the authorized capital stock. and other corporate actions described
in this Information Statement. No further votes are required or necessary to
effect the proposed amendment. or the other corporate actions to be taken.
The securities that would have been entitled to vote if a meeting was required
to be held to amend the Company's Articles of Incorporation consist of
484,667,610 shares of the Company's no par value common stock and 1,000,000
shares of Class "A" Convertible Preferred Stock issued and outstanding as of
October 26, 2004, the record date for determining stockholders who would have
been entitled to notice of and to vote on the proposed amendment to the Articles
of Incorporation.
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INTEREST OF CERTAIN PERSONS IN
------------------------------
OR OPPOSITION TO MATTERS TO BE ACTED UPON
-----------------------------------------
No person who has been a director or officer of the Company at any time since
the beginning of the last fiscal year, nominee for election as a director of the
Company, nor associates of the foregoing persons has any substantial interest,
direct or indirect, in proposed amendment to the Company's Articles of
Incorporation which differs from that of other stockholders of the Company. No
director of the Company opposes the proposed amendment of the Company's Articles
of Incorporation or any of the other corporate actions to be taken.
ADDITIONAL INFORMATION
----------------------
Additional information concerning the Company, including its annual and
quarterly reports for the previous twelve months which have been filed with the
Securities and Exchange Commission may be accessed through the Securities and
Exchange Commission EDGAR archives at www.sec.gov. Upon written request of any
stockholder to the Company's President, Gary Musselman, at 10108 Industrial
Drive, Prineville, NC 28134, a copy of the Company's Annual Report on Form
10-KSB for the year ended December 31, 2003, will be provided without charge.
Dated: December 24, 2004
By Order of the Board of Directors
/s/ GARY MUSSELMAN
President
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EXHIBIT "A"
ARTICLES AND AGREEMENT OF MERGER
ARTICLES AND AGREEMENT OF MERGER
DATED: ________________, 2005
BETWEEN: PACEL CORPORATION
a Virginia corporation ("Pacel-Virginia")
AND: PACEL CORPORATION
a Nevada corporation ("Pacel-Nevada")
WHEREAS, Pacel-Virginia and Pacel-Nevada wish to provide for the terms
and conditions upon which a merger of Pacel-Virginia with and into Pacel-Nevada
would be consummated for the sole purpose of changing the corporate domicile of
Pacel-Virginia from Virginia to Nevada; and
WHEREAS, the Board of Directors of Pacel-Virginia and Pacel-Nevada,
respectively, have deemed it desirable and in the best interests of the
corporations and their shareholders that the merger should take place, and have
approved the merger pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, the parties agree
as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
------------------------------
1.01 The Merger
----------
(a) Subject to the terms and conditions of this Agreement, at
the Effective Date, as defined in Section 1.01(b),
Pacel-Virginia shall be merged with and into Pacel- Nevada
in accordance with the provisions of the Business
Corporation Acts of the States of Virginia and Nevada,
respectively ("Corporation Acts"), and the separate
existence of Pacel-Virginia shall cease and Pacel-Nevada
shall continue as the surviving corporation under the laws
of the State of Nevada under the name "Pacel Corporation".
("Surviving Corporation").
(b) The merger shall become effective at the time of filing
Articles of Merger under the Corporation Acts. The date
when the merger shall become effective is hereinafter
referred to as the "Effective Date."
(c) On the Effective Date, the Surviving Corporation shall
thereafter possess all assets and property of every
description, and the rights, privileges, powers and
authority of Pacel-Virginia and Pacel-Nevada, and all
obligations belonging to or due to each of Pacel-Virginia
and Pacel-Nevada. The Surviving Corporation shall be
liable for all obligations of each of Pacel-Virginia and
Pacel-Nevada, including liability to dissenting
shareholders as referred to in Section 1.03.
Articles and Agreement of Merger - Page 1
1.02 Exchange of Shares
------------------
On the Effective Date, the then issued and outstanding shares of
voting common stock of Pacel-Virginia shall be exchanged for an
equal number of shares of fully paid and nonassessable voting
common stock in the Surviving Corporation. The voting common stock
of Pacel-Virginia so exchanged shall be cancelled and returned and
shall no longer be considered issued or outstanding. On the
Effective Date, there shall be outstanding shares of the common
stock of the Surviving Corporation.
10.3 Articles of Incorporation and Bylaws of Surviving Corporation
-------------------------------------------------------------
The Articles of Incorporation and Bylaws of Pacel-Nevada, as in
effect on the Effective Date, shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation until amended
as provided by law.
1.04 Directors and Officers of the Surviving Corporation
---------------------------------------------------
The officers and directors of the Surviving Corporation shall be as
follows:
NAME TITLE
---- -----
Gary Musselman President, Director
David Calkins Director
F. Kaye Calkins Director
Joseph Amato Director
Thorn Auchton Director
The directors shall hold office subject to the provisions of the
Bylaws of the Surviving Corporation until the next annual
shareholders' meeting of the Surviving Corporation and until their
respective successors have been duly elected or appointed and
qualified. Such officers shall hold office subject to the
provisions of the Articles of Incorporation and Bylaws of the
Surviving Corporation until their respective successors have been
duly elected or appointed, and have been duly qualified.
ARTICLE II
WARRANTIES AND REPRESENTATIONS
------------------------------
2.01 Warranties and Representations of Pacel-Virginia
------------------------------------------------
Pacel-Virginia hereby warrants and represents to Pacel-Nevada as
follows:
(a) Due Organization; Good Standing and Corporate Power.
Pacel-Virginia is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Virginia and has all requisite corporate power and
authority to own, lease, and operate its properties and to
carry on its business as now being conducted.
(b) Capitalization. On the Effective Date, the authorized
capital stock shall consist of 10,000,000,000 shares of
voting common stock, no par value, and 5,000,000 shares of
preferred stock. All issued and outstanding shares of
common stock have been validly issued and are fully paid
and nonassessable. There are 1,000,000 shares of preferred
stock issued and outstanding.
Articles and Agreement of Merger - Page 2
(c) Authorization and Validity of Agreement. Pacel-Virginia
has full corporate power and authority to execute and
deliver this Agreement, and has obtained the necessary
approval of its shareholders, to consummate the merger.
The execution, delivery and performance by the Company of
this Agreement have been authorized by its Board of
Directors. This Agreement is a valid and binding
obligation of the Company, enforceable against it in
accordance with its terms.
(d) No Consents or Approvals Required. The execution and
delivery of this Agreement will not (i) conflict with, or
violate any provision of the Articles of Incorporation or
Bylaws of Pacel-Virginia, (ii) conflict with or violate
any law, rule, regulation, order, writ, injunction,
judgment or decree applicable to Pacel- Virginia or by
which any of its properties or assets are found or
affected; or (iii) conflict with or result in any breach
of or constitute a default under, or give to others any
rights of termination or cancellation of or result in the
creation of any lien, charge or encumbrance on any of the
properties or assets of Pacel-Virginia pursuant to any
note, bond, mortgage, indenture, deed of trust, lease, or
any other instrument to which Pacel-Virginia is a party.
(e) Litigation or Administrative Proceedings. There are no
suits, actions, legal or administrative proceedings or
investigations pending or threatened against Pacel-
Virginia of which Pacel-Nevada has not been advised,
which, if adversely determined, would materially and
adversely affect the financial condition of Pacel-Virginia
or the conduct of its business.
2.02 Warranties and Representations of Pacel-Nevada
----------------------------------------------
Pacel-Nevada hereby warrants and represents to Pacel-Virginia as
follows:
(a) Due Organization; Good Standing and Corporate Power.
Pacel-Nevada is a corporation duly organized and validly
existing and in good standing under the laws of the state
of Nevada and has all requisite corporate power and
authority to own, lease, and operate its properties and to
carry on the business as now being conducted.
(b) Capitalization. The authorized capital stock consists of
10,000,000,000 shares of voting common stock, no par
value, and 5,000,000 shares of preferred stock. All issued
and outstanding shares of common stock and preferred have
been validly issued and are fully paid and nonassessable.
(c) Authorization and Validity of Agreement. Pacel-Nevada has
full corporate power and authority to execute and deliver
this Agreement and to consummate the merger. The
execution, delivery and performance by Pacel-Nevada of
this Agreement have been authorized by the Board of
Directors. This Agreement is a valid and binding
obligation of Pacel-Nevada, enforceable against it in
accordance with its terms.
(d) No Consents or Approvals Required. Neither the execution
nor the delivery of this Agreement will (i) conflict with,
violate, or result in a breach of any provision of the
Articles of Incorporation or Bylaws of Pacel-Nevada, (ii)
conflict with, or violate any law, rule, regulation,
order, writ, injunction, judgment or decree applicable to
Pacel-Nevada, or by which any of its properties or assets
may be found or affected; or (iii) conflict with or result
in any breach of or constitute a default under or give to
others any rights of termination or cancellation of or
result in the creation of any lien, charge or encumbrance
on any of the properties
Articles and Agreement of Merger - Page 3
or assets of Pacel-Nevada pursuant to any note, bond,
mortgage, indenture, deed of trust, lease or any other
instrument to which Pacel-Nevada is a party.
(e) Litigation or Administrative Proceedings. There are no
suits, actions, legal or administrative proceedings or
investigations pending or threatened against Pacel- Nevada
of which Pacel-Virginia has not been advised, which, if
adversely determined, would materially and adversely
affect the financial condition of Pacel-Nevada or the
conduct of its business.
ARTICLE III
CONDITIONS TO THE MERGER
------------------------
3.01 Conditions Precedent to Obligations of Pacel-Virginia and
Pacel-Nevada
---------------------------------------------------------
The respective obligations of Pacel-Virginia and Pacel-Nevada to
consummate the merger under this Agreement are subject to the
satisfaction or waiver of each of the following conditions:
(a) The approval of the shareholders of Pacel-Virginia shall
have been obtained in accordance with the Corporation
Acts.
(b) No order, statute, regulation, injunction, decree or
restraining order shall have been enacted, entered or
enforced by any court of competent jurisdiction or
governmental authority that prohibits the consummation of
the merger.
(c) All regulatory authorizations necessary to carry out the
merger shall have been received.
Pacel-Virginia and Pacel-Nevada each agree to use their best
efforts to fulfill all conditions precedent referred to herein and
to do all things necessary to consummate the merger.
ARTICLE IV
TERMINATION AND ABANDONMENT
---------------------------
4.01 Termination
-----------
This Agreement may be terminated and the merger abandoned, at any
time prior to the Effective Date, whether before or after the
approval of the merger by the shareholders of Pacel-Virginia and
Pacel-Nevada, respectively, by mutual consent of the Board of
Directors of Pacel-Virginia and Pacel-Nevada.
4.02 Effect of Termination
---------------------
In the event of the termination of this Agreement pursuant to
Section 4.01, this Agreement shall become void and have no effect
and there shall be no liability hereunder on the part of
Pacel-Virginia or Pacel-Nevada or any of their respective officers,
directors, employees, agents or shareholders.
Articles and Agreement of Merger - Page 4
ARTICLE V
MISCELLANEOUS
-------------
5.01 Entire Agreement
----------------
This Agreement contains the entire agreement of the parties with
respect to the merger and supercedes all prior agreements and
understandings oral and written with respect thereto.
5.02 Amendment and Modification
--------------------------
To the extent permitted by applicable law, at or prior to the
Effective Date this Agreement may be amended, modified or
supplemented by written agreement of the respective Boards of
Directors of Pacel-Virginia and Pacel-Nevada, whether before or
after the vote of the shareholders of Pacel-Virginia and
Pacel-Nevada.
5.03 Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
5.04 Applicable Law
--------------
This Agreement and the legal relations between Pacel-Virginia and
Pacel-Nevada shall be governed by and construed in accordance with
the laws of the State of Nevada
IN WITNESS WHEREOF, Pacel-Virginia and Pacel-Nevada have each
caused this Agreement to be executed by their respective officers duly
authorized as of the date first above written.
PACEL CORPORATION, a Virginia corporation
By:_______________________
President
PACEL CORPORATION, a Nevada corporation
By:_________________________
President
Articles and Agreement of Merger - Page 5
EXHIBIT "B"
EMPLOYMENT AGREEMENT
FOR
DAVID E.CALKINS
EMPLOYMENT AGREEMENT
This Agreement dated and effective as of September 9, 2004, by and
between PACEL CORP., a Virginia corporation, hereinafter the "Employer", and
DAVID E. CALKINS, hereinafter the "Employee."
1. EMPLOYMENT. Employer hereby employs the Employee and the Employee
hereby accepts employment as Chairman of the Board of Directors upon the terms
and conditions hereinafter set forth.
2. TERM OF AGREEMENT. Subject to the provisions for termination
hereinafter provided, this Agreement shall begin on September 9, 2004 and
continue for a ten year period, until September 9, 2014.
3. COMPENSATION AND BENEFITS.
SALARY & BENEFITS. Employer shall pay Employee a salary of
$300,000 per year, which amount may be adjusted from time to time by mutual
agreement of Employer and Employee. The employer shall also pay for employee's
$1.1 million dollar retirement insurance program including any and all employee
tax payments (a "Gross-Up Payment"), and such other and similar deductions as
the law now or may from time to time require.
A. WITHHOLDINGS. Employer shall make deductions from
Employee's compensation for federal and state income taxes, social security
taxes, and such other and similar deductions as the law now or may from time to
time require.
B. BUSINESS EXPENSES. Employer shall reimburse Employee for
expenses reasonably incurred in the course of his employment, in accordance with
Employer's policies in effect from time to time.
C. SEVERANCE PAYMENTS UPON TERMINATION OF EMPLOYMENT. In the
event Employer terminates this Agreement for any reason other than for Cause (as
defined below), then Employee shall be entitled to receive the following
severance payments:
(i) if termination of this Agreement occurs prior to
September 9, 2005, then Employee shall, upon notice of termination,
receive an amount equal to three (3) years of Employee's most recent
base annual salary, commissions and benefits. The company shall also
make a single payment to complete the retirement insurance package in
its entirety
(ii) if termination of this Agreement occurs between
September 9, 2005 and September 9, 2006, then Employee shall receive an
amount equal to five (5) years of Employee's most recent base annual
salary, commissions and benefits. Such sum shall be payable, at
Employer's option, either in full on the date Employer terminates this
Agreement, or in two (2) equal installments, the first installment on
the date Employer terminates this Agreement and the second installment
on the first anniversary of the date
Employer terminates this Agreement. The company shall also make a
single payment to complete the retirement insurance package in its
entirety;
(iii) if termination of this Agreement occurs between
September 9, 2006 and September 9, 2007, then Employee shall receive an
amount equal to seven (7) years of Employee's most recent base annual
salary, commissions and benefits. Such sum shall be payable, at
Employer's option, either in full on the date Employer terminates this
Agreement, or in two (2) equal installments, the first installment on
the date Employer terminates this Agreement and the second installment
on the first anniversary of the date Employer terminates this
Agreement. The company shall also make a single payment to complete the
retirement insurance package in its entirety;
(iv) if termination of this Agreement occurs on or
after September 9, 2007, then Employee shall receive an amount equal to
seven (7) years of Employee's most recent base annual salary,
commissions and benefits and a one time bonus of two years salary .
Such sum shall be payable, at Employer's option, either in full on the
date Employer terminates this Agreement, or in two (2) equal
installments, the first installment on the date Employer terminates
this Agreement and the second installment on the first anniversary of
the date Employer terminates this Agreement.
In the event any payment by Employer pursuant to the terms of this
paragraph 3(D) ("Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties are incurred by Employee with respect to such excise tax
(collectively, the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Employee of all taxes (including any income taxes) and the Excise
Tax imposed on the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed on the Payment. All
determinations required to be made under this section shall be made by the
Employer's regular accounting firm and all fees and expenses of such accounting
firm shall be borne solely by Employer. Any Gross-Up Payment shall be paid to
Employee within ten (10) days of Employer's receipt of the accounting firm's
determination.
Notwithstanding any other provisions contained herein, Employee shall
not be entitled to the sums above if Employee voluntarily resigns his employment
under this Agreement.
For purposes of this paragraph, "Cause" is defined as any of the
following: Employee's commission of an act of fraud against Employer; Employee's
conviction of a felony adversely affecting the professional reputation or
standing of Employer; and Employee's willful failure or refusal to faithfully
and diligently perform the usual customary duties of his employment and adhere
to the provisions of this Agreement.
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Employer's obligation to pay severance benefits under this paragraph is
expressly conditioned upon Employee's execution and delivery to Employer of a
Release Agreement unconditionally releasing all of Employee's rights to any
claims, charges, complaints, grievances, known or unknown to Employee against
Employer, through the date of Employee's termination from employment; and a
representation and warranty that Employee has not filed or assigned any claims,
charges, complaints, or grievances against Employer.
E. VACATION AND TIME OFF. Employee shall be entitled to a
minimum eight (8) weeks of vacation time in each calendar year. Minimum unused
vacation time may be accumulated.
F. BENEFITS. Employee shall be eligible to receive Employer's
benefits package offered to other of Employer's executive personnel. Employer
agrees to pay 100% of Employee's health and dental premiums for family coverage.
G. INCENTIVE BONUS PLAN. Employer shall provide Employee with
an Incentive Bonus Plan ("Plan"). Employer shall pay to Employee a bonus in an
amount equal to 25% of Employee's base annual salary in each of the first two
(2) fiscal years that Employer's EBITDA is one dollar ($1.00) or greater.
Additionally, Employer shall pay Employee an amount equal to
five percent (5%) of the EBITDA for each fiscal year EBITDA is at least $200,000
but not greater than $500,000. Employer shall pay Employee an amount equal to
seven percent (7%) of the EBITDA for each fiscal year EBITDA is greater than
$500,000 but not greater than $1 million. Employer shall pay Employee an amount
equal to ten percent (10%) of the EBITDA for each fiscal year EBITDA is greater
than $1 million. Such payments shall be due and payable upon the completion of
Employer's year-end audit by an independent auditor.
4. INDEMNIFICATION. Employer shall indemnify and hold Employee harmless
from and against any and all liability and expense of any kind, including legal
costs and reasonable attorney's fees, arising out of or in connection with
Employee's acting within the scope of his employment of official duties and in
conformity with this Agreement, the Employer's by-laws and the mandates of the
Employer's Board of Directors, where such liabilities and expenses are not paid
by Employer's liability insurance.
5. DUTIES AND REPORTING STRUCTURE. Employee shall devote such time and
attention as is necessary to performance of his duties and pledges his active,
industrious and full participation in the Employer's undertakings. Employer
agrees that Employee shall report to the Board of Directors. Employer also
agrees that Employee shall be appointed to the Employer's Board of Directors by
the Chairman of the Board of Directors. Employer further agrees that if Employee
is not elected to the Employer's Board of Directors by the Employer's
shareholders, then Employee shall serve as an ex officio member of the Board of
Directors.
6. NON-SOLICITATION. Employee agrees and covenants that at any time
during the term of his employment with Employer and for a period of one (1) year
from the last day of employment with the Employer, Employee shall not solicit,
or directly or indirectly
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influence any of Employer's employees to terminate their employment with
Employer or accept employment with any of Employer's competitors.
7. CONFIDENTIALITY. Employee recognizes that by virtue of his position
with Employer, he will have access to certain confidential information of
Employer, such as customer lists, customer information, administrative systems,
software, pricing policies, strategic plans and information on new product
development (hereinafter referred to as "Confidential Information"). Employee
recognizes that the Confidential Information is confidential and highly valuable
to Employer and is the source of Employer's original and repeat business.
Employee agrees that he will not disclose to any person or corporation any
Confidential Information, except pursuant to his employment under this
Agreement.
8. TERMINATION. Either the Employer or the Employee may terminate this
Agreement upon ninety (90) days written notice to the other party. However, in
the event that Employer has sufficient grounds to properly terminate this
Agreement for Cause, as defined above, then, at the option of Employer, this
Agreement may be terminated upon five (5) days written notice to Employee. Upon
termination by Employer, without cause, then Employee shall be entitled to
receive the severance payments as described above.
Employee further agrees that upon any termination of employment, all
property of the Employer shall be immediately returned in the same condition it
was received, less reasonable wear and tear.
9. ENTIRE AGREEMENT. This Agreement contains the entire Agreement of
the parties and may be amended at any time, so long as such amendment is in
writing and signed by both parties.
10. APPLICABLE LAW AND JURISDICTION. This Agreement shall be governed
and construed by and under the substantive and procedural laws of the
Commonwealth of Virginia. The parties hereby stipulate and agree that the state
and federal courts sitting in Washington, Virginia, shall have personal
jurisdiction over the parties, and that venue is proper in such courts for all
actions or proceedings with respect to this Agreement. Accordingly, the parties
waive all objections to such jurisdiction and venue and agree and stipulate that
neither party shall, in any action brought with respect to this Agreement, deny
or contest jurisdiction in such forums. However, if an action in filed in the
Commonwealth of Virginia court, this provision shall not preclude either party
from removing the action to the appropriate federal court, if such removal is
proper.
11. ATTORNEYS' FEES. The expenses and costs, including, without
limitation, attorneys' fees, incurred by the prevailing party with respect to
any claim, suit or legal proceeding arising out of, under, or in connection
with, this Agreement shall be paid by the non-prevailing party.
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12. WAIVER. Failure of a party at any time to require performance of
any provision of this Agreement shall not limit the party's right to enforce the
provision, nor shall any waiver of any breach of any provision be a waiver of
any succeeding breach of any provision or a waiver of the provision itself or
any other provision.
13. TITLES AND CAPTIONS. All article, section and paragraph titles or
captions contained in this Agreement are for convenience only and shall not be
deemed part of the context nor affect the interpretation of this Agreement.
14. PRONOUNS AND PLURALS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
15. SAVINGS CLAUSE. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
16. CONSTRUCTION. This Agreement shall be interpreted without regard to
any presumption or rule requiring construction against the party causing this
Agreement to be drafted.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement.
18. NOTICE. Whenever notice is required under this Agreement, it shall
be deemed to have been given if sent via certified mail, return receipt
requested, or via commercial overnight delivery service to the Employer's
president at the Employer's main office, or to Employee at Employee's residence.
19. INCLUSION OF SUBSIDIARIES. When the term "Employer" is used herein,
it shall mean Pacel Corporation and each of its wholly-owned, majority owned and
legally controlled subsidiaries.
20. LEGAL COUNSEL. Employee acknowledges that he has been afforded a
reasonable opportunity to review this Agreement, to understand its terms, and to
discuss it with an attorney of his choice, and that he knowingly and voluntarily
enters into this Agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement on
the respective dates indicated below.
Date: September 9, 2004 /s/ DAVID E. CALKINS
----------------- ---------------------------------------
David E. Calkins
5
14048 Lee Highway
Amissville, VA 20106
Date: September 9, 2004 PACEL CORPORATION
-----------------
By: /s/ DAVID CALKINS
-----------------------------------
David Calkins
Its Chairman of the Board
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