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                                                                     EXHIBIT 4.1

                          VELOCITY EXPRESS CORPORATION
             CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS OF
                      SERIES I CONVERTIBLE PREFERRED STOCK

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        Section 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 8,409,091.

        Section 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.

        Section 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 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 which they are entitled to be paid under
this Section 3 or Article IV, Section 3 of 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.

        Section 4. Voting Rights.

        4A.     Voting Rights. Subject to the terms of this Section 4, the
holders of the Series I Preferred Stock shall be entitled to notice of all
stockholders meetings in accordance with the Corporation's Bylaws, and except as
otherwise required by applicable law, the holders of the

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Series I Preferred Stock shall be entitled to vote on all matters submitted to
the stockholders for a vote together with the holders of the Common Stock, and
all other classes of capital stock entitled to vote with the Common Stock,
voting together as a single class with each share of and Series I Preferred
Stock entitled to one vote for each share of Common Stock issuable upon
conversion of the such Series I Preferred Stock as of the record date for such
vote or, if no record date is specified, as of the date of such vote.
Notwithstanding the above, the Series I Preferred Stock shall have no voting
rights to the extent that its holder, together with the holder's Affiliates,
have voting power in excess of 40% of all of the Corporation's outstanding
capital stock.

        4B.     Covenants.

        The Corporation shall not take any of the actions set forth below
without first obtaining the affirmative vote of the holders of at least
two-thirds of the 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 Rights Offering 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;

        Section 5. Conversion. Subject to the terms of this Section 5, at any
time and from time to 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 $2.20 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.

        5A.     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

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        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.

                (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 Series I Preferred Stock in any manner, which
        interferes with the timely conversion of 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 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 shares of

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        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 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 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.

        5B.     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.

                (iii)   Notwithstanding the foregoing, there shall be no
        adjustment to the Conversion Price hereunder with respect to any
        issuances that are exempt from

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        adjustment with respect to any shares of Preferred Stock of any series
        pursuant to Section 5B (iii) of the Charter.

        5C.     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 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

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        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 Bayview Warrant,
        the Common Warrants, the Series D Preferred Stock and Series F Preferred
        Stock only, the Series B Preferred Stock, the Series C Preferred Stock,
        the Series C Warrants, the Preferred Warrants and the exercise of the
        Bridge Warrants, 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 was outstanding as of the
        date of issuance of the Preferred Stock with Conversion Price subject to
        adjustment 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 Preferred Stock with Conversion
        Price subject to adjustment.

                (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

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        received by the Corporation shall be the Market Price thereof as of the
        date of receipt. 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, voting as an individual
        class. 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 making of such other distribution or the date of the granting
        of such right of subscription or purchase, as the case may be.

        5D.     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.

        5E.     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

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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.

        5F.     Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 5 but not expressly provided for by such
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 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 Preferred Stock as otherwise determined pursuant to this Section
5.

        5G.     Notices.

                (i)     Immediately upon any adjustment of the Conversion Price,
        the Corporation shall give written notice thereof to all affected
        holders of 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 Preferred Stock at least 20 days prior to the date on which the
        Corporation 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 Preferred Stock at least 20 days prior to the date on which
        any Organic Change shall take place.

        Section 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.

        Section 7. Registration of Transfer. The Corporation shall keep or have
its agent keep a register for the registration of Series I Preferred Stock. Upon
the surrender of any certificate

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representing 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.

        Section 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 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 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 such class
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.

        Section 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.

        "Bayview Warrant" has the meaning set forth in the Charter.

        "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.

        "Common Warrants" means, collectively, the "Common Warrants" as defined
in the Charter.

        "Conversion Price" initially means $0.22 for the Series I Preferred
Stock.

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        "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 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 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 GCL refer to those as assumed by the
surviving entity as a matter of law under the expected merger between the
Corporation and UST.

        "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.

        "Liquidation Value" of any share of Series I Preferred Stock shall be
equal to $2.20.

        "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 as of 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.

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<PAGE>

        "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.

        "Preferred Warrants" means, collectively, the "Preferred Warrants" and
the "Additional Warrants" as defined 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.

        "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.

        "Series C Warrants" means, collectively, the "Series C Warrants" as
defined in, and issued pursuant to, Securities Purchase Agreement dated as of
September 1, 2000, by and among UST and certain investors, as such agreement may
from time to time be amended in accordance with its terms, and any warrants
issued in exchange, substitution or replacement therefore.

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

        "Stock Option Plans" means, collectively, the Corporation's 1995 Stock
Option Plan, 1996 Director Stock Option Plan and 2000 Stock Option Plan.

        "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

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<PAGE>

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.

        Section 10. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision of Sections 1 to 10
hereof without the prior written consent of the holders of at least two-thirds
of Series I Preferred Stock outstanding, voting as individual series, at the
time such action is taken.

        Section 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).

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