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                                                                         EX 10.1

                         EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
effective as of November 7, 2002 (the "Effective Date"), by and between Velocity
Express Corporation, a corporation duly organized and existing under the laws of
the State of Delaware, with a place of business at 7803 Glenroy Road, Suite 200,
Bloomington, MN, hereinafter referred to as "Company" and Jeffry J. Parell,
hereinafter referred to as "Executive".

                                    ARTICLE 1

                                   EMPLOYMENT

     1.01. Company hereby agrees to employ Executive as President and Chief
Executive Officer of Company, and Executive hereby accepts and agrees to such
employment from and after the Effective Date, on the terms and conditions of
this Agreement.

     1.02. Executive shall have the authority, responsibilities, and perform
such duties as are customarily performed by a president and chief executive
officer or comparable position in other or similar businesses as that engaged in
by Company. A list of duties and responsibilities for this position is attached
hereto, and incorporated as a part hereof, as Exhibit A. Executive shall also
render such additional services and duties as may be reasonably requested of him
from time to time by Company's Board of Directors, and are consistent with
Executive's position and title.

     1.03. Executive shall report to the Company's Board of Directors.

     1.04. As a condition to Executive's employment by the Company and the
effectiveness of this Agreement, Executive agrees to submit to a physical
examination and drug test conducted by physicians acceptable to the Company, and
to a reference, security and credit check. In the event the results of any of
the foregoing are unacceptable to the Company in its sole discretion, the
Company's offer of employment to Executive may be revoked, and this Agreement
may be terminated and considered void ab initio, without any further obligation
of whatever kind to Executive by the Company. Executive further agrees that
Executive's employment by the Company and the effectiveness of this Agreement is
conditioned on the appropriate approval of the Company's Board of Directors.

     1.05. Executive's home office shall be Company's principal executive
office, which is currently located at 7803 Glenroy Road, Suite 200, Bloomington,
Minnesota. The Company intends to maintain its headquarters in the Minneapolis,
Minnesota metropolitan area. Executive acknowledges and agrees that the nature
and extent of his duties as President and Chief Executive Officer of the Company
will require extensive travel to the principal places of business of the
Company, its subsidiaries and their operating locations.

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                                    ARTICLE 2

                            BEST EFFORTS OF EXECUTIVE

     2.01. Executive agrees that he will at all times faithfully, industriously,
and to the best of his ability, experience, and talents, perform all of the
duties that may be required of and from him pursuant to the express and implicit
terms of this Agreement, to the reasonable satisfaction of Company.

     The foregoing shall not preclude Executive from devoting reasonable time to
activities such as supervision of personal investments and activities involving
professional, charitable, educational, religious and similar types of
activities, speaking engagements and membership on up to two other boards of
directors, provided such activities do not interfere in any material way with
the business of the Company or with Executive's performance of his duties
pursuant to this Agreement. The time involved in such activities will be treated
as time-off or vacation time unless otherwise approved in advance in the
reasonable discretion of Company, and Executive shall be solely responsible for
all costs incurred in connection with such activities. Executive shall be
entitled to keep any amounts paid to him in connection with such activities
(e.g., director fees and honoraria).

                                    ARTICLE 3

                        TERM OF EMPLOYMENT AND AGREEMENT

     3.01. The Term of Executive's employment with Company pursuant to this
Agreement shall be two (2) years from the Effective Date, subject to the
provisions set forth in Article 6 of this Agreement. Upon the expiration of this
initial two year Term, this Agreement shall be automatically extended for six
month periods, unless either Executive or Company provides the other with
written notice of intention not to renew at least ninety (90) days prior to the
expiration of the initial Term, and at least sixty (60) days prior to the
expiration of any extension Term.

                                    ARTICLE 4

                            COMPENSATION AND BENEFITS

     4.01. Executive will be paid an annualized base salary ("Base Salary") of
Three Hundred Seventy Five Thousand and no/100 Dollars ($375,000.00).
Executive's base salary shall be payable in equal installments pursuant to
Company's normal payroll procedures and dates. Company's Board of Directors
shall review Executive's base salary compensation at least annually, generally
at the conclusion of the Company's fiscal year. Any increase in Executive's base
salary shall be made within Company's sole judgment and discretion and shall be
based on an analysis of total compensation paid to a president and chief
executive officer or such other comparable position of entities comparable to
the Company within this region and any other criteria Company determines are
appropriate. Such adjusted annual salary then shall become the Executive's "Base
Salary" for purposes of this Agreement. The Executive's annual Base Salary shall
not be reduced after any increase, without the Executive's written consent.

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     4.02. Executive shall be eligible to receive such fringe benefits as are,
and may be, made available to any other executive employee of Company from time
to time. Such benefits may include, but are not limited to, a medical and dental
plan, short-term disability plan, long-term disability plan, profit sharing and
nonqualified deferred compensation arrangements, and a life insurance plan.
Executive shall be covered by the Company's life insurance plan during the Term
of this Agreement, such coverage to be in an amount equal to no less than two
times Executive's Base Salary and paid for by the Company. Executive and his
dependents shall become covered under the Company's group health benefits plan
subject to the contribution and election requirements applicable to other
executive employees.

     4.03. Executive shall be eligible to receive annual incentive bonus
compensation for the previous year upon achievement of preestablished personal
and overall Company goals and/or other criteria as are determined and approved
by Company's Board of Directors. Any bonus payments shall be made within ninety
(90) days following the completion of each fiscal year. Any dispute between
Executive and COMPANY as to the amount of, or entitlement to, any bonus shall be
promptly addressed by the Compensation Committee of Company's Board of
Directors. Unresolved disputes shall be submitted to arbitration in Minneapolis,
Minnesota, in accordance with the applicable rules of the American Arbitration
Association.

     4.04  If an automobile manufacturer, or an affiliate thereof, provides one
or more executives of the Company with the use of an automobile, Executive at
his discretion shall be provided with the use of an automobile. Executive shall
receive a monthly car allowance in the amount of $400.00. Executive otherwise
shall submit to the Company such reports regarding monthly car usage as the
Company may reasonably require. The amount of Executive's monthly car allowance
shall be reviewed on a periodic basis, and may be increased, but not decreased.
The Executive will pay all personal related income taxes.

     4.05. Company shall reimburse Executive for all reasonable and necessary
business expenses incurred in the performance of services with Company,
according to Company's policies and upon Executive's presentation of an itemized
written statement and such verification as Company may require.

                                    ARTICLE 5

                          VACATION AND LEAVE OF ABSENCE

     5.01. Executive is entitled to twenty-one (21) days of paid vacation per
year, in addition to Company's normal holidays. Vacation time will be scheduled
taking into account the Executive's duties and obligations at Company. Sick
leave, holiday pay and all other leaves of absence will be in accordance with
Company's stated personnel policies. Vacation days not used in any year may be
carried over to the following year.

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                                    ARTICLE 6

                                   TERMINATION

     6.01. Executive may resign his position and terminate his employment by
giving Company one hundred twenty (120) days written notice of his intention to
resign. If requested by Company, Executive agrees to cooperate in training his
successor until his actual termination. In the event of such resignation,
Executive shall receive only that compensation earned through his last day of
employment; provided, however, that, provided Executive gives proper notice and
cooperates in such training, Executive shall be entitled to all or a portion of
any bonus due Executive pursuant to any bonus plan or arrangement established
prior to termination, to the extent earned or performed based upon the
requirements or criteria of such plan or arrangement, as the Board of Directors
of Company shall in good faith determine.

     6.02. Company may, subject to applicable law, terminate this Agreement by
giving Executive thirty (30) days notice if Executive, due to sickness or
injury, is prevented from carrying out his essential job functions for a period
of six (6) months as reasonably determined by Company's Board of Directors. In
the event of such termination, Executive shall receive that compensation earned
through the date of termination and continuation of Executive's medical and
dental plan, long term disability plan, and a life insurance coverage until the
second anniversary of the date of termination, at the same cost to Executive as
in effect prior to termination; provided, however, that Executive shall be
entitled to all or a portion of any bonus due Executive pursuant to any bonus
plan or arrangement established prior to termination, to the extent earned or
performed based upon the requirements or criteria of such plan or arrangement,
as the Board shall in good faith determine. If Executive's employment or this
Agreement is terminated under this Section 6.02 and the illness or injury
causing such termination is work-related, the Company shall cause the immediate
vesting and exercisability of any unvested stock options or warrants to purchase
Company Common Stock then held by Executive.

     6.03. Executive's employment and this Agreement will be deemed terminated
upon the death of the Executive. In the event of such termination, Executive
shall receive compensation earned through the date of termination and
continuation of medical and dental plan coverage for Executive's spouse and
dependents until the second anniversary of the date of termination, at the same
cost to Executive's spouse and dependents as in effect prior to termination;
provided, however, that Executive shall be entitled to all or a portion of any
bonus due Executive pursuant to any bonus plan or arrangement established prior
to termination, to the extent earned or performed based upon the requirements or
criteria of such plan or arrangement, as the Board shall in good faith
determine. If Executive's employment or this Agreement is terminated under this
Section 6.03, the Company shall cause the immediate vesting and exercisability
of all unvested stock options or warrants to purchase Company Common Stock then
held by Executive.

     6.04. Any other provision of this Agreement notwithstanding, Company may
terminate Executive's employment without notice if the termination is based on
any of the following events that constitute Cause:

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     (a)  Any conviction or nolo contendere plea by Executive to a felony or
          gross misdemeanor, or a misdemeanor involving moral turpitude; or any
          public conduct by Executive, which has or can reasonably be expected
          to have a material detrimental effect on Company; or

     (b)  Any fraud, misappropriation, embezzlement or intentional material
          damage to the property or business of Company by Executive; or

     (c)  Executive's willful violation of federal or state securities laws, or
          the rules or regulations of the Securities and Exchange Commission or
          any market on which Company's securities are listed, which has or can
          reasonably be expected to have a material detrimental effect on
          Company; or

     (d)  Executive's willful breach of any of the provisions of this Agreement,
          willful breach of fiduciary duty or willful violation of specific
          lawful and reasonable directions of the Board of Directors of Company
          conveyed to Executive in writing.

In the event of such termination for Cause, and not withstanding any contrary
provision otherwise stated, Executive shall receive only his base salary earned
through the date of termination and all of the options and/or warrants granted
to Executive hereunder or otherwise by Company shall immediately terminate and
be of no further force or effect.

     6.05. The employment of the Executive shall in no event be considered to
have been terminated for Cause if the termination of his employment took place:

     (a)  as a result of an act or omission which occurred more than 360 days
          prior to the Executive's having been given notice of the termination
          of his employment for such act or omission, unless the commission of
          such act or such omission could not at the time of such commission or
          omission have been known to a member of the Board of Directors (other
          than the Executive, if he is then a member of the Board of Directors),
          in which case more than 360 days from the date that the commission of
          such act or such omission was or could reasonably have been so known;

     (b)  as a result of the continuing course of action which commenced and was
          or reasonably could have been known to a member of the Board of
          Directors (other than the Executive) more than 360 days prior to
          notice having been given to the Executive of the termination of his
          employment; or

     (c)  as a result of any act, or failure to act based upon specific
          directions given pursuant to a resolution duly adopted by the Board of
          Directors, or based upon the specific advice of counsel for Company.

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                                    ARTICLE 7

                                    SEVERANCE

     7.01. If the Company, or its respective successors or assigns, terminates
Executive's employment for any reason other than those listed in Sections 6.02,
6.03, and 6.04 above, or Executive terminates his employment for Good Reason (as
defined below) the Company, or its successors or assigns, shall:

     (a)  pay Executive as severance pay each month for eighteen (18)
          consecutive months following his termination his monthly Base Salary
          in effect at the time of separation, less customary withholdings,
          beginning one (1) month after termination; provided that said
          severance payments shall terminate at such time as Executive finds
          other comparable employment, which Executive agrees to seek in good
          faith;

     (b)  continue to provide Executive with COBRA medical and dental coverage,
          long term disability plan, and life insurance plan coverage for
          eighteen (18) months following his termination, at the same cost to
          Executive as in effect prior to his termination;

     (c)  cause the immediate vesting and exercisability of any unvested stock
          options or warrants to purchase the Company's Common Stock then held
          by Executive;

     (d)  provide or reimburse Executive for outplacement services and related
          benefits for a period of twelve (12) months in an aggregate amount not
          to exceed $20,000.00;

     (e)  pay Executive, within sixty (60) days of such termination, (i) the
          amount of any earned but unpaid bonus attributable to a completed
          fiscal year, and (ii) an amount equal to the prorated portion of the
          annual bonus payment Executive would have received for the fiscal year
          including the date of termination, provided all Bonus Criteria through
          such termination have been achieved; and

     (f)  pay Executive, within fifteen (15) days of such termination, all
          compensation earned by him through the date of termination (including
          without limitation, accrued vacation pay) to the extent not
          theretofore paid, and the amount of reimbursable expenses theretofore
          incurred in the course of employment.

     7.02. For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following without Executive's prior written consent (i)
assigning duties to Executive that are inconsistent with those of the position
of President and Chief Executive Officer of Company for similar companies in
similar industries; (ii) requiring Executive to report to other than the
Company's Board of Directors; (iii) the repeated failure of Company to pay any
portion of Executive's compensation within a reasonable time of the date such
compensation is due; (iv) Company requires Executive to relocate his principal
business office to a location not within 50 miles of Company's principal
business office on the Effective Date; or (v) Company's failure to continue in
effect any cash or stock-based incentive or bonus plan, pension plan, welfare
benefit plan or other benefit plan, program or arrangement, unless the aggregate
value of all such arrangements provided to Executive

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after such discontinuance is not materially less than the aggregate value as of
the Effective Date, and unless such failure to continue affects the other senior
executives of Company in like manner. For purposes of this paragraph, "Company"
shall mean the Company and, following any Change in Control, the Surviving
Corporation or, if applicable, the Parent Corporation (as those terms are
defined in Section 11.03).

                                    ARTICLE 8

                                  NONDISCLOSURE

     8.01. Except as permitted or directed by Company or as may be required in
the proper discharge of Executive's employment hereunder, Executive shall not,
during the Term or at any time thereafter, divulge, furnish or make accessible
to anyone or use in any way any confidential, trade secret or proprietary
information of Company, or either of their subsidiaries or affiliates
(collectively, the "Company"), including without limitation, whether or not
reduced to writing, customer lists, customer files or information, planning and
financial information, contracts, sales and marketing information, business
strategy or opportunities for new or developing business, current or planned
acquisitions or divestitures, and including any confidential or trade secret
information that may be in the possession of any of the Company regarding other
persons, firms or entities, or information regarding which Executive has
prepared, acquired or become acquainted with during his employment by Company.
Executive acknowledges that the above-described knowledge or information is the
property of the Company that constitutes a unique and valuable asset and
represents a substantial investment by the Company, and that any disclosure or
other use of such knowledge or information, other than for the sole benefit of
the Company, would be wrongful and would cause irreparable harm to the Company.
Executive agrees to at all times maintain the confidentiality of such knowledge
or information, to refrain from any acts or omissions that would reduce its
value to the Company, and to take and comply with reasonable security measures
to prevent any accidental or intentional disclosure or misappropriation. Upon
termination of Executive's employment for any reason, Executive shall promptly
return to Company all such confidential, trade secret and proprietary
information, including all copies thereof, then in Executive's possession,
control or influence, whether prepared by Executive or others.

     8.02. The foregoing obligations of confidentiality shall not apply to any
knowledge or information (i) the entirety of which is now published or
subsequently becomes generally publicly known, other than as a direct or
indirect result of the breach of this Agreement by Executive or a breach of a
confidentiality obligation owed to any of the Company by any third party, (ii)
that can be demonstrated by Executive to have been known by him prior to his
employment by the Company, or (iii) is obtained by Executive in good faith from
a third party who discloses such knowledge or information to Executive without
violating any obligation of confidentiality or secrecy.

     8.03. In the event of a breach or threatened breach by Executive of the
provisions of this Article 8, each member of the Company, as appropriate, shall
be entitled to an injunction restraining Executive from directly or indirectly
disclosing, disseminating, lecturing upon, publishing or using such
confidential, trade secret or proprietary information (whether in whole or in
part) and restraining Executive from rendering any services or participating
with any person, firm, corporation, association or other entity to whom such
knowledge or information (whether in whole or in part) has been

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disclosed, without the posting of a bond or other security. Nothing herein shall
be construed as prohibiting any member of the Company from pursuing any other
equitable or legal remedies available to it for such breach or threatened
breach, including the recovery of damages from Executive. Executive agrees that
each member of the Company, as appropriate, shall be entitled to recover their
respective costs of litigation, expenses and attorney fees incurred in enforcing
this Agreement.

     8.04. The Executive understands and agrees that any violation of this
Article 8 while employed by Company may result in immediate disciplinary action
by Company, including termination of employment pursuant to Section 6.04 hereof.

     8.05. The provisions of this Article 8 shall survive termination of this
Agreement.

                                    ARTICLE 9

                       NONCOMPETITION AND NON-RECRUITMENT

     9.01. Company and Executive recognize and agree that: (i) Executive has
received, and will in the future receive, substantial amounts of highly
confidential and proprietary information concerning Company, their businesses,
customers and employees; (ii) as a consequence of using or associating himself
with Company's name, goodwill, and reputation, Executive will develop personal
and professional relationships with Company's current and prospective customers
and clients; and (iii) provision for non-competition and non-recruitment
obligations by Executive is critical to Company's continued economic well-being
and protection of Company's confidential and proprietary business information.
In light of these considerations, this Article 9 sets forth the terms and
conditions of Executive's obligations of non-competition and non-recruitment
during the Term of and subsequent to the termination of this Agreement and/or
Executive's employment for any reason.

     9.02. Unless the obligation is waived or limited by Company as set forth
herein, Executive agrees that during the term of Executive's employment pursuant
to this Agreement and for a period of twelve (12) months following termination
of Executive's employment for any reason ("the Non-Compete Period"), Executive
will not directly or indirectly (a) solicit or do competitive business with any
person or entity that is or was a customer of Company within the twelve (12)
months prior to the date of termination, or (b) engage within North America in
any similar or related business activity in competition with the Company's
business as conducted at the time of such termination. Among all other
competitive actions that are likewise restricted, Executive during the
Non-Compete Period shall not cause or attempt to cause any existing or
prospective customer, client or account who then has a relationship with Company
for current or prospective business to divert, terminate, limit or in any
adverse manner modify, or fail to enter into any actual or potential business
with Company. As used in this Section, the phrase "Business of the Company"
shall mean the provision of same-day delivery services.

     9.03. At its sole option, Company may, by express written notice to
Executive, waive or reduce the time and/or geographic area in which Executive
cannot engage in competitive activity or the scope of such competitive activity.

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     9.04.  For a period of eighteen (18) months following termination of
Executive's employment for any reason, Executive will not initiate or actively
participate in any other employer's recruitment or hiring of any of Company's
employees.

     9.05.  Executive agrees that breach by him of the provisions of this
Article 9 will cause Company, as appropriate, irreparable harm that is not fully
remedied by monetary damages. In the event of a breach or threatened breach by
Executive of the provisions of this Article 9, Company, as appropriate, shall be
entitled to an injunction restraining Executive from directly or indirectly
competing or recruiting as prohibited herein, without posting a bond or other
security. Nothing herein shall be construed as prohibiting Company from pursuing
any other equitable or legal remedies available to it for such breach or
threatened breach, including the recovery of damages from Executive. Executive
agrees that Company shall be entitled to recover its respective costs of
litigation and attorney fees incurred in enforcing this Agreement.

     9.06.  The Executive understands and agrees that any violation of this
Article 9 while employed by Company may result in immediate disciplinary action
by Company, including termination of employment pursuant to Section 6.04 hereof.

     9.07.  The obligations contained in this Article 9 shall survive the
termination of this Agreement.

                                   ARTICLE 10

                                   INVENTIONS

     10.01. Executive acknowledges that Inventions, including new and valuable
proprietary concepts, methods, processes, discoveries, and trade secrets (as
defined in the Uniform Trade Secrets Act), may be developed, originated,
authorized, conceived, invented, or made by Executive, either alone or jointly
with others, in the course of Executive's employment by Company. Executive
acknowledges that all such Inventions shall be the exclusive property of
Company, whether or not patentable or copyrightable, and whether or not shown or
described in writing or reduced to practice. Executive agrees to promptly and
fully disclose in writing to Company complete information concerning each and
every such Invention made, developed, perfected, devised, conceived or first
reduced to practice by Executive, either solely or in collaboration with others,
during the period of the Executive's employment hereunder, whether or not during
regular working hours, relating either directly or indirectly to the business,
products, practices or techniques of Company. Executive, to the extent that he
has the legal right to do so, hereby acknowledges that any and all such
Inventions are the property of Company and hereby assigns and agrees to assign
to Company, as directed by the Board of Directors, any and all of Executive's
right, title and interest in and to any and all of such Inventions and to
applications for letters patent or copyrights in all countries and to letter
patent or copyrights granted with respect to such Inventions in all countries.

     10.02. "Inventions" means any invention, improvement, discovery, idea,
device, design, apparatus, practice, process, method or product (whether
patentable or not and including those which may be subject to copyright
protection), and including any trade names, trademarks or service marks

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or slogans, generated, conceived, or reduced to practice by Executive alone or
in conjunction with others, during or after working hours, while an employee of
Company.

     10.03. The provisions of Section 10.1 shall not apply to any Inventions
meeting the following conditions: (a) such Invention was developed entirely on
Executive's own time; and (b) such Invention was made without the use of any
Company equipment, supplies, facility or trade secret information; and either
(c) such Invention does not result from any work performed by Executive for
Company, or (d) such Invention does not relate (i) directly to the business of
Company or (ii) to Company's actual or demonstrably anticipated research or
development.

     10.04. Executive will keep accurate, complete and timely accounts, notes,
data and records of all Inventions in the manner and form requested by Company.
Such accounts, notes, data and records shall be the property of Company and
shall be retained on Company's premises, and, upon Company's request, Executive
will promptly surrender same to it or, if not previously surrendered upon its
request or otherwise, Executive will surrender the same to Company upon the
conclusion of his employment.

     10.05. Upon request and whether during the period of Executive's employment
hereunder or thereafter, Executive will do all lawful acts, including, but not
limited to, the execution of papers and lawful oaths and the giving of
testimony, that in the opinion of Company, its successors and assigns, may be
necessary or desirable in obtaining, sustaining, reissuing, extending and
enforcing United States and foreign letters patent, including, but not limited
to, design patents, or other applicable registrations, on any and all of such
Inventions, and for perfecting, affirming and recording Company's complete
ownership and title thereto, and to cooperate otherwise in all proceedings and
matters relating thereto. Executive will not be entitled to compensation for
acts performed under this Section 10.5 other than reimbursement for all
reasonable expenses.

     10.06. Executive agrees that breach by him of the provisions of this
Article 10 will cause Company irreparable harm that is not fully remedied by
monetary damages. In the event of a breach or threatened breach by Executive of
the provisions of this Article 10, Company, as appropriate, shall be entitled to
an injunction restraining Executive from directly or indirectly violating the
terms of this Article 10, without posting a bond or other security. Nothing
herein shall be construed as prohibiting Company from pursuing any other
equitable or legal remedies available to it for such breach or threatened
breach, including the recovery of damages from Executive. Executive agrees that
Company shall be entitled to recover its respective costs of litigation and
attorney fees incurred in enforcing this Agreement.

     10.07. The Executive understands and agrees that any violation of this
Article 10 while employed by Company may result in immediate disciplinary action
by Company, including termination of employment pursuant to Section 6.04 hereof.

     10.08. The obligations contained in this Article 10 shall survive the
termination of this Agreement with respect to Inventions conceived or made by
Executive during the period of his employment and shall be binding upon assigns,
executors, administrators and other legal representatives of Executive. For
purposes of this Agreement, any Invention relating to the business of Company on
which Executive files or claims a copyright, or files a patent application,
within one

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(1) year after termination of his employment with Company, shall be presumed to
cover Inventions conceived by Executive during the term of his employment with
Company, subject to proof to the contrary by good faith, written and duly
corroborated records establishing that such Invention was conceived and made
following termination of employment.

                                   ARTICLE 11

                                CHANGE IN CONTROL

     11.01. If within six (6) months after a Change in Control (as defined
below) or during the Period Pending a Change in Control (as defined below), (i)
Company terminates Executive's employment other than for Cause, or (ii)
Executive voluntarily terminates his employment for Good Reason, Company shall,
in addition to those payments and benefits provided under Section 7.01 above pay
Executive, within fifteen (15) days of such termination, the value of continued
coverage for a period of 18 months under any pension, profit sharing or other
retirement plan maintained by the Company. The value of such coverage under a
tax qualified plan may be provided through a nonqualified pension or profit
sharing plan and shall be determined by adding 18 additional months of age and
service to the Executive's actual age and service at the date of the Executive's
termination of employment and as if the Executive earned compensation during
such 18-month period at the rate in effect during the 12-month period
immediately preceding his termination date. In the case of a defined benefit
pension plan, such value shall include any early retirement subsidies to which
the Executive would have become entitled under the plan and shall be determined
using the actuarial factors set forth in such plan.

     11.02. In the event that any payment, benefit or distribution by or on
behalf of Company to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section) (the "Payments") is determined by the certified public
accounting firm used by Company prior to Executive's termination to be an
"excess parachute payment" pursuant to Code Section 280G or any successor or
substitute provision of the Code, with the effect that Executive is liable for
the payment of the excise tax described in Code Section 4999 or any successor or
substitute provision of the Code (the "Excise Tax"), then Company and Executive
agree to structure such payments in such manner as to avoid such payments being
determined to be an "excess parachute payment" so long as there is no detriment
to Company.

     11.03. For purposes of the Agreement, a "Change in Control" of the Company
will be deemed to occur as of the first day that any one or more of the
following condition is satisfied:

     (a)  Consummation by the Company of a reorganization, merger or
          consolidation, or sale or other disposition of all or substantially
          all of the stock or assets of the Company or the acquisition of assets
          or stock of another entity (a "Business Combination"), in each case,
          unless immediately following such Business Combination: (i) more than
          forty percent (40%) of the combined voting power of then outstanding
          voting securities entitled to vote generally in the election of
          directors of (x) the corporation resulting from such Business
          Combination (the "Surviving Corporation"), or (y) if applicable, a
          corporation that as a result of such transaction owns Company or all
          or

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          substantially all of the assets of Company either directly or through
          one or more subsidiaries (the "Parent Corporation"), is held, directly
          or indirectly by the shareholders of Company, as appropriate, prior to
          such Business Combination, and (ii) at least thirty percent (30%) of
          the members of the board of directors of the Parent Corporation (or,
          if there is no Parent Corporation, the Surviving Corporation) are
          individuals who, as of the date of the Agreement, constitute the Board
          of Directors of Company, (the "Incumbent Board"), provided, however,
          that any individual becoming a director subsequent to the date hereof
          whose election, or nomination for election by the Company's
          stockholders, was approved by a vote of at least a majority of the
          directors then comprising the Incumbent Board will be considered as
          though such individual were a member of the Incumbent Board; or

     (b)  Approval by the stockholders of Company of a complete liquidation or
          dissolution of Company.

     However, in no event will a Change in Control be deemed to have occurred,
with respect to Executive, if Executive is part of a purchasing group that
consummates the Change in Control transaction. Executive will be deemed "part of
a purchasing group" for purposes of the preceding sentence if Executive is an
equity participant in the purchasing company or group (except: (i) passive
ownership of less than five percent (5%) of the stock of the purchasing company;
or (ii) ownership of equity participation in the purchasing company or group
that is otherwise not significant, as determined prior to the Change in Control
by a majority of the nonemployee continuing directors).

     11.04. For purposes of this Agreement, the "Period Pending a Change in
Control" will be the three-month period immediately preceding a Change in
Control.

                                   ARTICLE 12

                                  MISCELLANEOUS

     12.01. Governing Law. This Agreement shall be governed and construed
according to the laws of the State of Minnesota without regard to conflicts of
law provisions, except insofar as the corporate laws of Delaware may be
applicable.

     12.02. Successors. This Agreement is personal to Executive and Executive
may not assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person or entity. This Agreement
may be assigned by Company, and either may require any successors or assigns to
expressly assume and agree to perform Company's obligations under this
Agreement.

     12.03. No Waiver. No failure or delay on the part of Company or Executive
in enforcing or exercising any right or remedy hereunder shall operate as a
waiver thereof.

     12.04. Modification. This Agreement supersedes and replaces any and all
prior oral or written understandings, if any, between the parties relating to
the subject matter of this Agreement, which are hereby revoked. The parties
agree that this Agreement, together with any option or

                                      -12-

<PAGE>

warrant agreement entered into between the parties pursuant to Section 4.05
hereof (a) is the entire understanding and agreement between the parties and (b)
is the complete and exclusive statement of the terms and conditions thereof, and
there are no other written or oral agreements in regard to the subject matter of
this Agreement. This Agreement shall not be changed or modified except by a
written document signed by the parties hereto.

     12.05. Severability and Blue Penciling. To the extent that any provision of
this Agreement shall be determined to be invalid or unenforceable as written,
the validity and enforceability of the remainder of such provision and of this
Agreement shall be unaffected. If any particular provision of this Agreement
shall be adjudicated to be invalid or unenforceable, Company and Executive
specifically authorize the tribunal making such determination to edit the
invalid or unenforceable provision to allow this Agreement, and the provisions
thereof, to be valid and enforceable to the fullest extent allowed by law or
public policy.

     12.06. Insurance. For the period from the date hereof through at least the
tenth anniversary of Executive's termination of employment from Company, Company
agrees to maintain Executive as an insured party on all directors' and officers'
insurance maintained by the Company for the benefit of its directors and
officers on at least the same basis as all other covered individuals and provide
Executive with at least the same corporate indemnification as its officers;
provided, however, that if by the terms of any such policy Executive
automatically remains covered for acts or omissions during the term of his
employment by Company, Company shall not be required to separately maintain
Executive as an insured party if said maintenance would require the payment of
premiums for such coverage.

     12.07. Attorneys Fees. Executive shall be solely responsible for and pay
all attorneys fees, costs and expenses incurred by Executive in connection with
the negotiation, execution and delivery of this Agreement. All reasonable costs
and expenses (including fees and disbursements of counsel) incurred by Executive
in seeking to interpret this Agreement or enforce rights pursuant to this
Agreement shall be paid on behalf of or reimbursed to Executive promptly by
Company, if Executive is successful in asserting such rights up to $5,000.

     12.08. Effect on Other Obligations. Payments and benefits herein provided
to be paid Executive by Company shall be made without regard to and in addition
to any other payments or benefits required to be paid Executive at any time
hereafter under the terms of any other agreement between Executive and Company
or under any other policy of Company relating to compensation, or retirement or
other benefits. Except for the provisions of Section 7.01(a), payments or
benefits provided Executive hereunder shall be reduced by any amount Executive
may earn or receive from employment with another employer.

     12.09. Notice. Any notice required to be given, served or delivered to any
of the parties hereto shall be sufficient if it is in writing and sent by
certified mail with proper postage prepaid or by overnight delivery service
addressed as indicated in the preamble to this Agreement (or to any other
address which either party shall, by notice given in accordance herewith,
direct). Any party may change the person and/or address to whom the other
parties must give notice under this Section by giving such other parties written
notice of such change, in accordance with the procedures described above.

                                      -13-

<PAGE>

     12.10. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute but one Agreement.

     IN WITNESS WHEREOF the following parties have executed the above instrument
the day and year first above written.

                                          VELOCITY EXPRESS CORPORATION

                                          By:___________________________________
                                              Its: _____________________________


                                          ______________________________________
                                          Jeffry J. Parell

                                      -14-

<PAGE>

                                    EXHIBIT A

                           DUTIES AND RESPONSIBILITIES

     As President and Chief Executive Officer of the Company, Executive shall,
under the direction and control of the Board of Directors, have the following
duties and responsibilities:

     1.   Direct the day-to-day operation of the business of the Company and its
          subsidiaries, and their respective businesses, as a whole;

     2.   Direct and manage certain of the Company's executive staff (both
          executive officers of the Company and its subsidiaries);

     3.   Enter into contracts on behalf of the Company and its subsidiaries,
          except where such contracts are required by statute to have prior
          Board or shareholder approval, and except as may be limited by the
          Board of Directors;

     4.   Implement all strategic and other business plans and objectives of the
          Company as determined by Board of Directors;

     5.   Enforce Company policies, rules and procedures;

     6.   Employ, direct and terminate Company personnel required for the
          performance of the foregoing duties; and

     7.   Perform such other functions as necessary or appropriate to carry out
          the directives of the Board of Directors, and as are consistent with
          Executive's position and title.

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