<PAGE>
                                                                       EXHIBIT 7

                VELOCITY EXPRESS CORPORATION (THE "CORPORATION")
                   SERIES I CONVERTIBLE PREFERRED STOCK TERMS

1. Designation and Amount. The number of authorized shares of Series I
Convertible Preferred Stock, par value $0.004 per share (the "Series I Preferred
Stock"), shall be 12,810,000.

2. Dividends. In the event that the Corporation declares or pays any dividends
upon the Common Stock (whether payable in cash, securities or other property),
other than dividends payable solely in shares of Common Stock, the Corporation
shall also declare and pay to the holders of Series I Preferred Stock at the
same time that it declares and pays such dividends to the holders of the Common
Stock, the dividends which would have been declared and paid with respect to the
Common Stock issuable upon conversion of shares of the Series I Preferred Stock
which are convertible into shares of Common Stock had all such shares of the
outstanding Series I Preferred Stock been converted immediately prior to the
record date for such dividend, or if no record date is fixed, the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined.

3. Liquidation Preference. Upon liquidation, dissolution and winding up of the
Corporation (whether voluntary or involuntary) (a "Liquidation Event"), the
Corporation shall pay to the holders of the Series I Preferred Stock (unless
otherwise provided for in the resolution or resolutions creating such stock) the
aggregate Liquidation Value attributable to such shares (each, a "Share") plus
any accrued but unpaid dividends thereon. If upon any such Liquidation Event,
the Corporation's assets to be distributed among the holders of the Junior
Securities, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H
Preferred Stock and Series I Preferred Stock are insufficient to permit payment
to such holders of the aggregate amount of their respective liquidation
preference pursuant to the Corporation's Amended and Restated Certificate of
Incorporation, as amended from time to time (the "Charter"), as applicable, then
the entire assets available to be distributed to the Corporation's stockholders
shall be distributed in accordance with the priorities set forth in Article IV,
Section 3 of the Charter, with the Series I Preferred Stock ranking parri passu
with the Series D, F, G and H Preferred Stock and prior to the Series B and C
Preferred Stock. Not less than sixty (60) days prior to the payment date of the
Liquidation Value, the Corporation shall mail written notice of any such
Liquidation Event to each record holder of Series I Preferred Stock, setting
forth in reasonable detail the amount of proceeds to be paid with respect to
each Share and each share of Common Stock in connection with such Liquidation
Event. A change of control of the Corporation shall not be deemed a Liquidation
Event for purposes of this Section 3.

4. Voting Rights.

      (a)   Voting Rights. The Series I Preferred Stock shall have no voting
            rights.

      (b)   Covenants.

      Notwithstanding the above, the Corporation shall not take any of the
actions set forth below without first obtaining the affirmative consent of the
holders of at least two-thirds of the
<PAGE>
then outstanding shares of Series I Preferred Stock for so long as at least 20%
of the Series I Preferred Stock originally issued pursuant to the Stock Purchase
Agreements remains outstanding:

      (a)   alter or change the preferences, rights or powers of the Series I
   Preferred Stock;

      (b)   increase or decrease the authorized number of shares of the Series I
   Preferred Stock;

5. Conversion. Subject to the terms of this Section 5, at any time and from time
to time after (i) the authorization by stockholders of the Corporation of the
issuance of the Series I Preferred Stock and (ii) the amendment of the Charter
to increase the number of shares of the Corporation authorized for issuance to
400,000,000 shares, of which 325,000,000 shares are Common Stock and 75,000,000
shares are Preferred Stock (the time after both conditions are met, the
"Conversion Time"), any holder of Series I Preferred Stock may convert all or
any portion of the Series I Preferred Stock (including any fraction of a Share)
held by such holder into a number of shares of Conversion Stock computed by
multiplying the number of Shares to be converted by $1.50 and dividing the
result by the Conversion Price then in effect; provided, however, that, except
for Organic Changes (as defined below) to which the following limitation does
not apply, the Series I Preferred Stock shall not be convertible into Conversion
Stock to the extent that such conversion would result in the holder of the
Series I Preferred, together with such holder's Affiliates, holding 40% or more
of all of the outstanding capital stock of the Corporation on an as converted
basis.

      (a)   Conversion Procedure.

            (i)   Except as otherwise provided herein, each conversion of
                  Preferred Stock shall be deemed to have been effected as of
                  the close of business on the date on which the certificate or
                  certificates representing the Series I Preferred Stock to be
                  converted have been surrendered for conversion at the
                  principal office of the Corporation. At the time any such
                  conversion has been effected, the rights of the holder of the
                  Shares converted as a holder of Series I Preferred Stock shall
                  cease and the Person or Persons in whose name or names any
                  certificate or certificates for shares of Conversion Stock are
                  to be issued upon such conversion shall be deemed to have
                  become the holder or holders of record of the shares of
                  Conversion Stock represented thereby.

            (ii)  Notwithstanding any other provision hereof, if a conversion of
                  Preferred Stock is to be made in connection with a transaction
                  affecting the Corporation, the conversion of any shares of
                  Series I Preferred Stock may, at the election of the holder
                  thereof, be conditioned upon the consummation of such
                  transaction, in which case such conversion shall not be deemed
                  to be effective until such transaction has been consummated.



                                       2
<PAGE>
            (iii) As soon as possible after a conversion has been effected (but
                  in any event within three (3) Business Days in the case of
                  subparagraph (A) below), the Corporation shall deliver to the
                  converting holder:

                  (A)   a certificate or certificates representing the number of
                        shares of Conversion Stock issuable by reason of such
                        conversion in such name or names and such denomination
                        or denominations as the converting holder has specified;

                  (B)   payment of any amount payable under subparagraph (viii)
                        below with respect to such conversion; and

                  (C)   a certificate representing any Shares, which were
                        represented, by the certificate or certificates
                        delivered to the Corporation in connection with such
                        conversion but which were not converted.

            (iv)  The issuance of certificates representing shares of Conversion
                  Stock upon conversion of Preferred Stock shall be made without
                  charge to the holders of such Preferred Stock for any issuance
                  tax in respect thereof or other cost incurred by the
                  Corporation in connection with such conversion and the related
                  issuance of shares of Conversion Stock. Upon conversion of
                  each share of Series I Preferred Stock, the Corporation shall
                  take all such actions as are necessary in order to insure that
                  the Conversion Stock issuable with respect to such conversion
                  shall be validly issued, fully paid and nonassessable, free
                  and clear of all taxes, liens, charges and encumbrances with
                  respect to the issuance thereof.

            (v)   The Corporation shall not close its books against the transfer
                  of Preferred Stock or of Conversion Stock issued or issuable
                  upon conversion of the Series I Preferred Stock in any manner,
                  which interferes with the timely conversion of the Series I
                  Preferred Stock. The Corporation shall assist and cooperate
                  with any holder of Shares required to make any governmental
                  filings or obtain any governmental approval prior to or in
                  connection with any conversion of Shares hereunder (including,
                  without limitation, making any filings required to be made by
                  the Corporation).

            (vi)  The Corporation shall at all times after the Conversion Time
                  reserve and keep available out of its authorized but unissued
                  shares of Conversion Stock, solely for the purpose of issuance
                  upon the conversion of the Series I Preferred Stock, such
                  number of shares of Conversion Stock issuable upon the
                  conversion of all outstanding Preferred Stock. All shares of
                  Conversion Stock that are so issuable shall, when issued, be
                  duly and validly issued, fully paid and nonassessable and free
                  from all taxes, liens and charges. The Corporation shall take
                  all such actions as may be necessary to assure that all such
                  shares of Conversion Stock may be so issued without violation
                  of any applicable law or governmental regulation or any
                  requirements of any domestic securities exchange upon which



                                       3
<PAGE>
                  shares of Conversion Stock may be listed (except for official
                  notice of issuance which shall be immediately delivered by the
                  Corporation upon each such issuance). The Corporation shall
                  not take any action that would cause the number of authorized
                  but unissued shares of Conversion Stock to be less than the
                  number of such shares required to be reserved hereunder for
                  issuance upon conversion of the Preferred Stock.

           (vii)  If any fractional interest in a share of Conversion Stock
                  would, except for the provisions of this subparagraph, be
                  delivered upon any conversion of the Series I Preferred Stock,
                  the Corporation, in lieu of delivering the fractional share
                  therefore, shall pay an amount to the holder thereof equal to
                  the Market Price of such fractional interest as of the date of
                  conversion.

           (viii) If the shares of Conversion Stock issuable by reason of
                  conversion of the Series I Preferred Stock are convertible
                  into or exchangeable for any other stock or securities of the
                  Corporation, the Corporation shall, at the converting holder's
                  option, upon surrender of the Shares to be converted by such
                  holder as provided herein together with any notice, statement
                  or payment required to effect such conversion or exchange of
                  Conversion Stock, deliver to such holder or as otherwise
                  specified by such holder a certificate or certificates
                  representing the stock or securities into which the shares of
                  Conversion Stock issuable by reason of such conversion are so
                  convertible or exchangeable, registered in such name or names
                  and in such denomination or denominations as such holder has
                  specified.

(b)   Conversion Price.

      (i)   In order to prevent dilution of the conversion rights granted under
            this Section 5, the Conversion Price of the Series I Preferred Stock
            shall be subject to adjustment from time to time pursuant to this
            Section 5B.

      (ii)  If and whenever after the original date of issuance of the first
            share of Series I Preferred Stock, the Corporation issues or sells,
            or in accordance with Section 5C is deemed to have issued or sold,
            any shares of its Common Stock for a consideration per share less
            than the Market Price of the Common Stock determined as of the date
            of such issue or sale, then immediately upon such issue or sale, the
            Conversion Price shall be reduced to the Conversion Price determined
            by multiplying the Conversion Price in effect immediately prior to
            such issue or sale by a fraction, the numerator of which shall be
            the sum of (1) the number of shares of Common Stock Deemed
            Outstanding immediately prior to such issue or sale multiplied by
            the Market Price of the Common Stock determined as of the date of
            such issuance or sale, plus (2) the consideration, if any, received
            by the Corporation upon such issue or sale, and the denominator of
            which shall be the product derived by multiplying the Market Price
            of the Common Stock by the number of shares of Common Stock Deemed
            Outstanding immediately after such issue or sale.





                                       4
<PAGE>
      (iii) Notwithstanding the foregoing, there shall be no adjustment to the
            Conversion Price hereunder with respect to any issuances that are
            exempt from adjustment with respect to any shares of Preferred Stock
            of any series pursuant to Section 5B (iii) of the Charter.

      (c) Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under paragraph 5B, the following
shall be applicable:

      (i)   Issuance of Rights or Options. If the Corporation in any manner
            grants or sells any Options and the price per share for which Common
            Stock is issuable upon the exercise of such Options, or upon
            conversion or exchange of any Convertible Securities issuable upon
            exercise of such Options, is less than the Market Price of the
            Common Stock determined as of such time, then the total maximum
            number of shares of Common Stock issuable upon the exercise of such
            Options or upon conversion or exchange of the total maximum amount
            of such Convertible Securities issuable upon the exercise of such
            Options shall be deemed to be outstanding and to have been issued
            and sold by the Corporation at the time of the granting or sale of
            such Options for such price per share. For purposes of this
            paragraph, the "price per share for which Common Stock is issuable"
            shall be determined by dividing (A) the total amount, if any,
            received or receivable by the Corporation as consideration for the
            granting or sale of such Options, plus the minimum aggregate amount
            of additional consideration payable to the Corporation upon exercise
            of all such Options, plus in the case of such Options which relate
            to Convertible Securities, the minimum aggregate amount of
            additional consideration, if any, payable to the Corporation upon
            the issuance or sale of such Convertible Securities and the
            conversion or exchange thereof, by (B) the total maximum number of
            shares of Common Stock issuable upon the exercise of such Options or
            upon the conversion or exchange of all such Convertible Securities
            issuable upon the exercise of such Options. No further adjustment of
            the Conversion Price shall be made when Convertible Securities are
            actually issued upon the exercise of such Options or when Common
            Stock is actually issued upon the exercise of such Options or the
            conversion or exchange of such Convertible Securities.

      (ii)  Issuance of Convertible Securities. If the Corporation in any manner
            issues or sells any Convertible Securities and the price per share
            for which Common Stock is issuable upon conversion or exchange
            thereof is less than the Market Price of the Common Stock determined
            as of such time, then the maximum number of shares of Common Stock
            issuable upon conversion or exchange of such Convertible Securities
            shall be deemed to be outstanding and to have been issued and sold
            by the Corporation at the time of the issuance or sale of such
            Convertible Securities for such price per share. For the purposes of
            this paragraph, the "price per share for which Common Stock is
            issuable" shall be determined by dividing (A) the



                                       5
<PAGE>
            total amount received or receivable by the Corporation as
            consideration for the issue or sale of such Convertible Securities,
            plus the minimum aggregate amount of additional consideration, if
            any, payable to the Corporation upon the conversion or exchange
            thereof, by (B) the total maximum number of shares of Common Stock
            issuable upon the conversion or exchange of all such Convertible
            Securities. No further adjustment of the Conversion Price shall be
            made when Common Stock is actually issued upon the conversion or
            exchange of such Convertible Securities, and if any such issue or
            sale of such Convertible Securities is made upon exercise of any
            Options for which adjustments of the Conversion Price had been or
            are to be made pursuant to other provisions of this Section 5, no
            further adjustment of the Conversion Price shall be made by reason
            of such issue or sale.

      (iii) Change in Option Price or Conversion Rate. If the purchase price
            provided for in any Options, the additional consideration, if any,
            payable upon the conversion or exchange of any Convertible
            Securities or the rate at which any Convertible Securities are
            convertible into or exchangeable for Common Stock changes at any
            time, the Conversion Price in effect at the time of such change
            shall be immediately adjusted to the Conversion Price which would
            have been in effect at such time had such Options or Convertible
            Securities still outstanding provided for such changed purchase
            price, additional consideration or conversion rate, as the case may
            be, at the time initially granted, issued or sold. For purposes of
            Section 5C, if the terms of any Option or Convertible Security which
            was outstanding as of the date of issuance of the Series I Preferred
            Stock are changed in the manner described in the immediately
            preceding sentence, then such Option or Convertible Security and the
            Common Stock deemed issuable upon exercise, conversion or exchange
            thereof shall be deemed to have been issued and sold as of the date
            of such change; provided, that (A) no such change shall at any time
            cause the Conversion Price hereunder to be increased, and (B) no
            adjustment to the Conversion Price pursuant to this clause (iii)
            shall be made as a result of any adjustment to the exercise and/or
            conversion price with respect to the outstanding capital security of
            the Corporation on the date hereof pursuant to and in accordance
            with the antidilution protection provisions of such securities as in
            effect on the date hereof.

      (iv)  Treatment of Expired Options and Unexercised Convertible Securities.
            Upon the expiration of any Option or the termination of any right to
            convert or exchange any Convertible Security without the exercise of
            any such Option or right, the Conversion Price then in effect
            hereunder shall be adjusted immediately to the Conversion Price
            which would have been in effect at the time of such expiration or
            termination had such Option or Convertible Security, to the extent
            outstanding immediately prior to such expiration or termination,
            never been issued. For purposes of Section 5C, the expiration or
            termination of any Option or Convertible Security which



                                       6
<PAGE>
            was outstanding as of the date of issuance of the Series I Preferred
            Stock shall not cause the Conversion Price hereunder to be adjusted
            unless, and only to the extent that, a change in the terms of such
            Option or Convertible Security caused it to be deemed to have been
            issued after the date of issuance of the Series I Preferred Stock.

      (v)   Calculation of Consideration Received. If any Common Stock, Option
            or Convertible Security is issued or sold or deemed to have been
            issued or sold for cash, the consideration received therefore shall
            be deemed to be the amount received by the Corporation therefore. If
            any Common Stock, Option or Convertible Security is issued or sold
            for a consideration other than cash, the amount of the consideration
            other than cash received by the Corporation shall be the fair value
            of such consideration, except where such consideration consists of
            securities, in which case the amount of consideration received by
            the Corporation shall be the Market Price thereof as of the date of
            receipt of such securities. The fair value of any consideration
            other than cash and securities shall be determined jointly by the
            Corporation and the holders of at least two-thirds of the Series I
            Preferred Stock. If such parties are unable to reach agreement
            within a reasonable period of time, the fair value of such
            consideration shall be determined by an independent appraiser
            experienced in valuing such type of consideration, jointly selected
            by the Corporation and the holders of at least two-thirds of the
            Series I Preferred Stock then outstanding. The determination of such
            appraiser shall be final and binding upon the parties, and the fees
            and expenses of such appraiser shall be borne by the Corporation.

      (vi)  Integrated Transactions. In case any Option is issued in connection
            with the issue or sale of other securities of the Corporation,
            together comprising one integrated transaction in which no specific
            consideration is allocated to such Option by the parties thereto,
            the Option shall be deemed to have been issued for a consideration
            of $.01.

      (vii) Treasury Shares. The number of shares of Common Stock outstanding at
            any given time shall not include shares owned or held by or for the
            account of the Corporation or any Subsidiary, and the disposition of
            any shares so owned or held shall be considered an issue or sale of
            Common Stock.

     (viii) Record Date. If the Corporation takes a record of the holders of
            Common Stock for the purpose of entitling them (a) to receive a
            dividend or other distribution payable in Common Stock, Options or
            in Convertible Securities or (b) to subscribe for or purchase Common
            Stock, Options or Convertible Securities, then such record date
            shall be deemed to be the date of the issue or sale of the shares of
            Common Stock deemed to have been issued or sold upon the declaration
            of such dividend or upon the



                                       7
<PAGE>
            making of such other distribution or the date of the granting of
            such right of subscription or purchase, as the case may be.

      (d) Subdivision or Combination of Common Stock. If the Corporation at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.

      (e) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other transaction, in
each case which is effected in such a manner that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock held by
such holders, is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions to insure that each of the holders of Series I Preferred Stock shall
thereafter have the right to acquire and receive, in lieu of the shares of
Conversion Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series I Preferred Stock, such shares of stock,
securities or assets as such holder would have received in connection with such
Organic Change if such holder had converted its Series I Preferred Stock
immediately prior to such Organic Change. The Corporation shall not effect any
such consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than the Corporation) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument, the obligation to deliver to each such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire.

      (f) Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 5 but are not expressly provided for by these
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors shall make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of the Series I
Preferred Stock; provided, that no such adjustment shall increase the Conversion
Price or decrease the number of shares of Conversion Stock issuable upon
conversion of each Share of Series I Preferred Stock as otherwise determined
pursuant to this Section 5.

      (g) Notices.

            (i)   Immediately upon any adjustment of the Conversion Price, the
                  Corporation shall give written notice thereof to all affected
                  holders of the Series I Preferred Stock, setting forth in
                  reasonable detail and certifying the calculation of such
                  adjustment.

            (ii)  The Corporation shall give written notice to all holders of
                  the Series I Preferred Stock at least 20 days prior to the
                  date on which the Corporation



                                       8
<PAGE>
                  closes its books or takes a record (a) with respect to any
                  dividend or distribution upon Common Stock, (b) with respect
                  to any pro rata subscription offer to holders of Common Stock
                  or (c) for determining rights to vote with respect to any
                  Organic Change, dissolution or liquidation.

            (iii) The Corporation shall also give written notice to the holders
                  of the Series I Preferred Stock at least 20 days prior to the
                  date on which any Organic Change shall take place.

6. Purchase Rights. If at any time the Corporation grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "Purchase Rights") and such rights are not concurrently
granted to the holders of the Preferred Stock, then each holder of Initially
Designated Preferred Stock or the Series I Preferred Stock shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Conversion Stock acquirable upon conversion of such
holder's Initially Designated Preferred Stock or Series I Preferred Stock
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.

7. Registration of Transfer. The Corporation shall keep or have its agent keep a
register for the registration of the Series I Preferred Stock. Upon the
surrender of any certificate representing the Series I Preferred Stock at a
place designated by the Corporation, the Corporation shall, at the request of
the record holder of such certificate, execute and deliver (at the Corporation's
expense) a new certificate or certificates in exchange therefore representing in
the aggregate the number of Shares represented by the surrendered certificate.
Each such new certificate shall be registered in such name and shall represent
such number of Shares as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate, and dividends shall accrue on the Series I Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such Series I Preferred Stock represented by the surrendered
certificate.

8. Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing the Shares, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Corporation (provided
that if the holder is a financial institution or other institutional investor,
its own agreement to indemnify the Corporation shall be satisfactory), or, in
the case of any such mutilation upon surrender of such certificate, the
Corporation shall (at its expense) execute and deliver in lieu of such
certificate a new certificate of like kind representing the number of shares of
the Series I Preferred Stock represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate, and dividends shall accrue on the Shares represented by
such new certificate from the date to which dividends have been fully paid on
such lost, stolen, destroyed or mutilated certificate.



                                       9
<PAGE>
9. Definitions. To the extent not defined herein, terms shall have the meaning
set forth in the Charter.

      "Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through ownership of Voting
Securities, contract or otherwise.

      "Common Stock" means, collectively, the Corporation's common stock, par
value $0.004 per share, and any capital stock of any class of the Corporation
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.

      "Common Stock Deemed Outstanding" means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to subparagraphs 5C(i)
and 5C(ii) hereof whether or not the Options or Convertible Securities are
actually exercisable at such time.

      "Conversion Price" initially means $0.15 for the Series I Preferred Stock.

      "Conversion Stock" means shares of the Corporation's Common Stock;
provided, that if there is a change such that the securities issuable upon
conversion of the Series I Preferred Stock are issued by an entity other than
the Corporation or there is a change in the type or class of securities so
issuable, then the term "Conversion Stock" shall mean one share of the security
issuable upon conversion of the Series I Preferred Stock if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.

      "Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.

      "Corporation" means Velocity Express Corporation, a Delaware corporation,
or, where applicable (for example, in connection with agreements dated prior to
the date of incorporation of the Corporation under the GCL), UST. Where
applicable, reference to certain agreements of the Corporation entered into
prior to its incorporation under the Delaware General Corporation Law refer to
those as assumed by the surviving entity as a matter of law under the merger
between the Corporation and UST, effective on January 4, 2002.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Initially Designated Preferred Stock" shall mean the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock and Series H Preferred Stock, together.

      "Junior Securities" has the meaning set forth in Section 1 of the Charter.

      "Liquidation Event" has the meaning set forth in Section 3.



                                       10
<PAGE>
      "Liquidation Value" of any share of Series I Preferred Stock shall be
equal to $1.50.

      "Market Price" of any security means the average of the closing prices of
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of the twenty (20) consecutive trading
days immediately prior to the day for which "Market Price" is being determined.
If at any time such security is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the "Market Price" shall be
the fair value thereof determined jointly by the Corporation and the holders of
at least two-thirds of each of the then outstanding classes of Preferred Stock,
voting as individual classes. If such parties are unable to reach agreement
within a reasonable period of time, such fair value shall be determined by an
independent appraiser experienced in valuing securities jointly selected by the
Corporation and the holders of at least two-thirds of each of the then
outstanding classes of Preferred Stock, voting as individual classes. The
determination of such appraiser shall be final and binding upon the parties, and
the Corporation shall pay the fees and expenses of such appraiser.

      "Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.

      "Permitted Issuances" means the acts described in Section 5B(iii) of the
Charter.

      "Person" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.

      "Preferred Stock" shall have the meaning set forth in the Charter.

      "Series B Preferred Stock" shall mean the Corporation's Series B
Convertible Preferred Stock, par value $0.004 per share.

      "Series C Preferred Stock" shall mean the Corporation's Series C
Convertible Preferred Stock, par value $0.004 per share.

      "Series D Preferred Stock" shall mean the Corporation's Series D
Convertible Preferred Stock, par value $0.004 per share.

      "Series F Preferred Stock" shall mean the Corporation's Series F
Convertible Preferred Stock, par value $0.004 per share.

      "Series G Preferred Stock" shall mean the Corporation's Series G
Convertible Preferred Stock, par value $0.004 per share.



                                       11
<PAGE>
      "Series H Preferred Stock" shall mean the Corporation's Series H
Convertible Preferred Stock, par value $0.004 per share.

      "Series I Preferred Stock" shall mean the Corporation's Series I
Convertible Preferred Stock, par value $0.004 per share.

      "Share" has the meaning set forth in Section 3.

      "Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.

      "UST" means United Shipping and Technology, Inc., a Utah corporation and
the predecessor of Velocity Express Corporation, a Delaware corporation.

      "Voting Securities" means securities of the Corporation ordinarily having
the power to vote for the election of directors of the Corporation; provided,
that when the term "Voting Securities" is used with respect to any other Person,
it means the capital stock or other equity interests of any class or kind
ordinarily having the power to vote for the election of directors or other
members of the governing body of such Person.

10. Amendment and Waiver. No amendment, modification or waiver shall be binding
or effective with respect to any provisions hereof without the prior written
consent of the holders of at least two-thirds of Series I Preferred Stock
outstanding, voting as a separate class, at the time such action is taken.

11. Notices. Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).





                                       12


