Exhibit 4.2


CONVERTIBLE DEBENTURE




	NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION REQUIREMENTS THEREOF OR EXEMPTION THEREFROM. 


	No. 	1	$100,000.00





PACEL CORP.





CONVERTIBLE DEBENTURE DUE MARCH 15, 2006





	FOR VALUE RECEIVED, PACEL CORP. (the "Company"), a corporation organized and existing under the laws of the Commonwealth of Virginia hereby promises to pay to THOMAS KELLY, an individual having his
address at 1961 Casa de Elegante Ct., Las Vegas, NV 89117, or his assigns (the "Holder"), the principal sum of One Hundred Thousand and 00/100 Dollars ($100,000.00) on March 15, 2006 (the "Maturity Date") and to pay simple interest on the principal sum
outstanding from time to time in arrears (i) upon conversion as provided herein or (ii) on the Maturity Date, at the rate of 5% per annum.  Interest shall commence to accrue on this Debenture on the first such business day to occur after the date hereof
and shall continue on a daily basis until payment in full of the principal sum has been made or duly provided for or until the full outstanding amount of this Debenture has been converted in accordance with the provisions hereof.




	This Debenture is the Debenture referred to in the Securities Purchase Agreement (the "Securities Purchase Agreement") dated March 14, 2001, between the Company and the Holder, is subject to the provisions of the Securities Purchase
Agreement and further is subject to the following additional provisions:




            1.            	This Debenture has been issued subject to investment representations of the original
purchaser hereof
and may be transferred or exchanged only in compliance with the Securities Act  and other applicable state and foreign
securities laws.  In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance
of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including legal
opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Securities
Act or any applicable state or foreign securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the
Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected
by notice to the contrary.




            2.            A.            The Holder is
entitled to, at any time or from time to time, convert the Conversion Amount
into shares of Common Stock of the Company, no par value per share ("Common Stock"), at a conversion price for each
share of Common Stock (the "Conversion Price") initially equal to the lower of (x) $0.09372 [calculated as 120% of
the final bid price per share on the Closing Date (as defined in the Securities Purchase Agreement)] or (y) 80% of the
lowest five closing bid prices per share (as reported by Bloomberg, LP) of the Company's Common Stock for the 20
Trading Days immediately preceding the date of conversion.  The Conversion Price will be adjusted as provided in
Section 6.




                        B.            For purposes of this
Debenture, the following terms have the meanings indicated below:




                                    (i)   
         "Conversion Amount" shall mean the sum of (A) all or any portion of the
outstanding principal amount of this Debenture, as designated by the Holder upon exercise of its right of conversion
and (B) all interest that has accrued on the portion of the principal amount that has been designated for payment 












pursuant to (A).




                                    (ii)   
         "Market Price of the Common Stock" means (x) the closing bid price of the
Common Stock for the period indicated in the relevant provision hereof (unless a different relevant period is specified
in the relevant provision), as reported by Bloomberg, LP or, if not so reported, as reported on the over-the-counter
market or (y) if the Common Stock is listed on a stock exchange, the closing price on such exchange, as reported in The
Wall Street Journal.




                                    	(iii)  
          "Trading Day: shall mean any day on which the New York Stock Exchange is open
for business.




                        	C.            Conversion shall be
effectuated by surrendering the Debentures to be converted to the
Company's transfer agent, Olde Monmouth Stock Transfer located at 77 Memorial Parkway, 2nd Floor, Atlantic
Highlands, NJ 07719, accompanied by or preceded by facsimile or other delivery to the Company of the form of
conversion notice attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof, and accompanied, if required by the Company, by
proper assignment hereof in blank.  No fractional shares of Common Stock or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.  The date on
which notice of conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder faxes
or otherwise delivers the conversion notice ("Notice of Conversion"), substantially in the form annexed hereto as Exhibit
A, duly executed, to the Company; provided that the Holder shall deliver to the Company's transfer agent or the
Company the original Debentures being converted within five (5) business days thereafter (and if not so delivered within
such time, the Conversion Date shall be the date on which the later of the Notice of Conversion and the original
Debentures being converted is received by the Company). Facsimile delivery of the Notice of Conversion shall be
accepted by the Company at facsimile number (703) 361-6706; ATTN: Corporate Secretary. Except as otherwise
provided, certificates representing Common Stock upon conversion will be delivered within five (5) business days from
the date of delivery of the Notice of Conversion.




            3.            Unless demand has otherwise been made for payment in cash by the Holder, any Debentures not
previously received for conversion as of the Maturity Date shall be deemed to have been surrendered for conversion,
without further action of any kind by the Company or any of its agents, employees or representatives, as of the Maturity
Date at the Conversion Price applicable on the Maturity Date ("Mandatory Conversion").




            4.            No provision of this Debenture shall alter or impair the obligation of the Company, which is
absolute
and unconditional, to Convert this Debenture into Common Stock, at the time, place, and rate herein prescribed.  This
Debenture is a direct obligation of the Company.




            5.            If the Company (a) merges or consolidates with another corporation or after business entity
and the
Company is not the surviving entity or (b) sells or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for
Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee will agree that this Debenture may thereafter be converted on the terms and subject
to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable.  In the event of any (i) proposed merger or consolidation where the
Company is not the surviving entity or (ii) sale or transfer of all or substantially all of the assets of the Company (in
either such case, a "Sale"), the Holder shall have the right to convert by delivering a Notice of Conversion to the
Company within fifteen (15) days of receipt of notice of such Sale from the Company.




            6.            If, at any time while any portion of this Debenture remains outstanding, the Company
effectuates a
stock split or reverse stock split of its Common Stock or issues a dividend on its Common Stock consisting of shares
of Common Stock or otherwise recapitalizes its Common Stock, the Conversion Price shall be equitably adjusted to













reflect such action.  By way of illustration, and not in limitation, of the foregoing (i) if the Company effectuates a 2:1
split of its Common Stock, thereafter, with respect to any conversion for which the Company issues the shares after the
record date of such split, the Conversion Price shall be deemed to be one-half of what it had been calculated to be
immediately prior to such split; (ii) if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter, with
respect to any conversion for which the Company issues the shares after the record date of such reverse split, the
Conversion Price shall be deemed to be the amount of such Conversion Price calculated immediately prior to the record
date multiplied by 10; and (iii) if the Company declares a stock dividend of one share of Common Stock for every 10
shares outstanding, thereafter, with respect to any conversion for which the Company issues the shares after the record
date of such dividend, the Conversion Price shall be deemed to be the amount of such Conversion Price calculated
immediately prior to such record date multiplied by a fraction, of which the numerator is the number of shares (10) for
which a dividend share will be issued and the denominator is such number of shares plus the dividend share(s) issuable
or issued thereon (11).




            7.            All payments contemplated hereby to be made "in cash" shall be made by wire transfer of
immediately
available funds in such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts.  All payments of cash and each delivery of shares of Common Stock issuable to
the Holder as contemplated hereby shall be made to the Holder to an account designated by the Holder to the Company
and if the Holder has not designated any such accounts at the address last appearing on the Debenture Register of the
Company as designated in writing by the Holder from time to time; except that the Holder may designate, by notice to
the Company, a different delivery address for any one or more specific payments or deliveries.




            8.            The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being
acquired for
investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the Shares of Common
Stock issuable upon conversion thereof except in compliance with the terms of the Securities Purchase Agreement and
the Registration Rights Agreement and under circumstances which will not result in a violation of the Securities Act
or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities.




            9.            This Debenture shall be governed by and construed in accordance with the laws of the State
of New
York. Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the City
of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute
arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non coveniens, to the bringing of any such proceeding in such jurisdictions.  To the extent
determined by such court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements
incurred by the Holder in enforcement of or protection of any of its rights under this Debenture or the Securities
Purchase Agreement.




            10.            The following shall constitute an "Event of Default":




                        a.            The Company fails in
the payment of principal or interest on this Debenture as required
hereunder and the same shall continue for a period of three (3) days; or 




                        b.            Any of the
representations or warranties made by the Company herein, in the Securities
Purchase Agreement, the Registration Rights Agreement, dated March 14, 2001 between the Company and the Investor
therein (the "Registration Rights Agreement"), or in any certificate or financial or other written statements heretofore
or hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Securities
Purchase Agreement shall be false or misleading in any material respect at the time made; or




                        c.            The Company fails to
issue shares of Common Stock to the Holder or to cause its Transfer
Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate
for shares of Common Stock issued to the Holder upon conversion of this Debenture and when required by this
Debenture or the Registration Rights Agreement, and such transfer is otherwise lawful, or fails to remove any restrictive
legend or to cause its Transfer Agent to transfer any certificate or any shares of Common Stock issued to the Holder
upon conversion of this Debenture as and when required by this Debenture, the Agreement or the Registration Rights













Agreement and such legend removal is otherwise lawful, and any such failure shall continue uncured for five (5)
business days after written notice from the Holder of such failure; or




                        d.            The Company shall
fail to perform or observe, in any material respect, any other covenant,
term, provision, condition, agreement or obligation of the Debenture and, except the case of Section 5, such failure shall
continue uncured for a period of thirty (30) days after written notice from the Holder of such failure; or




                        e.            The Company shall
fail to perform or observe, in any material respect, any covenant, term,
provision, condition, agreement or obligation of the Company under the Securities Purchase Agreement or the
Registration Rights Agreement and such failure  shall continue uncured for a period of thirty (30) days after written
notice from the Holder of such; or




                        f.            The Company shall
(1) admit in writing its inability to pay its debts generally as they mature;
(2) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (3) apply for or
consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business;
or




                        g.            A trustee,
liquidator or receiver shall be appointed for the Company or for a substantial part
of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment;
or




                        h.            Any governmental
agency or any court of competent jurisdiction at the instance of any
governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets
of the Company and shall not be dismissed within sixty (60) days thereafter; or




                        i.            Any final money
judgment, writ or warrant of attachment, or similar process, not subject to
appeal, in excess of Fifty Thousand ($50,000) Dollars in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of sixty
(60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or




                        j.            Bankruptcy,
reorganization, insolvency or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and,
if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company
shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any such proceeding; or




                        k.            The Company shall
have its Common Stock suspended or delisted from an exchange for in
excess of five (5) trading days.




Then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived
in writing by a majority in interest of the Holders of the Debentures (which waiver shall not be deemed to be a waiver
of any subsequent default) at the option of a majority in interest of the Holders and in the discretion of a majority in
interest of the Holders, the Holder may at its option and discretion declare this Debenture, together with all accrued and
unpaid interest herein, to be immediately due and payable, without presentment, demand, protest or notice of any kinds,
all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary
notwithstanding, and a majority in interest of the Holders may immediately enforce any and all of the Holder's rights
and remedies provided herein or any other rights or remedies afforded by law.




            11.            Nothing contained in this Debenture shall be construed as conferring upon the Holder the
right to vote
or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms
hereof.




            12.            This Debenture may be amended only by the written consent of the parties hereto.


















            13.            No waivers or consents in regard to any provision of this Debenture may be given other than
by an instrument
in writing signed by the Holder.






            IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by an officer thereunto
duly authorized.




Dated:  March 15, 2001






		PACEL CORP.
		




		By:_______________________________________
		__________________________________________

(Print Name)
		__________________________________________


(Title)










































































EXHIBIT A







NOTICE OF CONVERSION





(To be Executed by the Registered Holder in order to Convert the Debenture)







            The undersigned hereby irrevocably elects to convert $ ________________ of the principal amount of the
above Debenture No. ___ into Shares of Common Stock of PACEL CORP.  (the "Company") according to the
conditions hereof, as of the date written below.






Conversion Date*


 ___________________________________________________________________




Applicable Conversion Price 


 ___________________________________________________________________






Signature


 ___________________________________________________________________


				[Name]




Address:


 ___________________________________________________________________


 ___________________________________________________________________






* This original Debenture must be received by the Company or its transfer agent by the fifth business date following
the Conversion Date.