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                                                                    EXHIBIT 99.1
                                                                  Execution Copy

                          TH LEE PUTNAM VENTURES, L.P.
                      TH LEE PUTNAM PARALLEL VENTURES, L.P.

                                                                    July 1, 2004

Fleet Capital Corporation, as Agent
One South Wacker Drive
Suite 3400
Chicago, Illinois 60606

        Re:     Velocity Express, Inc.

Ladies and Gentlemen:

        1.      Reference is hereby made to that certain Amended and Restated
Loan and Security Agreement dated as of November 26, 2003 (as amended from time
to time (including without limitation, by that certain Fourth Amendment to
Amended and Restated Loan and Security Agreement of even date herewith (the
"Fourth Amendment") by and among Borrowers, Lenders and Agent, the "Loan
Agreement"), made by and among the borrower signatories thereto (individually a
"Borrower" and collectively, "Borrowers"), the lenders who are signatories
thereto ("Lenders") and Fleet Capital Corporation ("FCC") as Agent for such
Lenders (FCC, in such capacity, "Agent"). Capitalized terms used herein without
definition shall have the meanings contained in the Loan Agreement. This letter
agreement is the Capital Contribution Agreement referred to in the Fourth
Amendment.

        2.      To induce Agent and Lenders to enter into the Fourth Amendment
and to continue to make the credit accommodations to Borrowers contemplated by
the Loan Agreement, TH Lee Putnam Ventures, L.P. and TH Lee Putnam Parallel
Ventures, L.P. (collectively ("THLPV") hereby agree that, subject to the
remaining provisions of this letter, if on any date between the date hereof and
the Notification Event, Availability equals or is less than $0, THLPV shall make
(or cause a third party designee to make) (a) cash contributions to the equity
of Parent and to cause Parent, in turn to make a like cash contribution to the
equity of Borrowers or (b) a guarantee of an Additional Third Party Letter of
Credit (as defined in the Fourth Amendment) and cause Borrowers to draw down on
such Additional Third Party Letter of Credit and use the proceeds thereof to
repay a portion of the Revolving Credit Loans described in the following
sentence. The amount of such capital contribution and/or face amount of such
Additional Third Party Letter of Credit shall be equal to the lesser of (x) the
amount necessary to increase Availability (after giving effect to any
disbursements that Borrowers request to be funded) to $0 and (y) the remainder
of $2,875,000 minus the aggregate amount of all previous capital contributions
and guarantees of Additional Third Party Letters of Credit made from or after
July 9, 2004 pursuant to Section 2 hereof (the "Maximum Amount").

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Fleet Capital Corporation, as Agent
July 1, 2004
Page 2

Any such cash contribution and/or guarantee of an Additional Third Party Letter
of Credit due pursuant to this Section 2 or to Section 3 below to Parent's
equity and subsequent cash contribution to Borrowers' equity or draw down by
Borrowers on such Additional Third Party Letter of Credit to repay a portion of
the Revolving Credit Loans, as applicable, shall be made on the same Business
Day of receipt by THLPV of a written demand therefor delivered by Agent, if such
demand is received on or prior to 2:00 p.m. (Chicago time) or on the next
Business Day, if such demand is received after 2:00 p.m. (Chicago time). THLPV,
at its option, may elect to invest or guarantee (or cause third parties to
guarantee) Additional Third Party Letters of Credit more than the Maximum Amount
required pursuant to this Section 2. THLPV may terminate its obligations under
this Section 2 at any time by providing written notice to Agent.

        3.      The foregoing notwithstanding, THLPV's obligations pursuant to
Section 2 above shall terminate on the Notification Event and thereafter THLPV
acknowledges and agrees that, as of the Notification Event, THLPV shall make a
deposit in the amount of $1,950,000 with Parent (which in turn shall make like
capital contributions to Borrowers) in amounts necessary (i) to fund, for a
thirty day period commencing on the Notification Event, all of Borrowers'
operations on a going concern basis in a manner consistent with Borrowers'
historical performance, in all material respects, and (ii) to fund all amounts
to pay the fees and expenses of the consultant retained by Agent's counsel
pursuant to the Loan Agreement incurred within said thirty day period (up to a
$75,000 cap which amount includes the $45,000 to be paid by Borrowers under the
Fourth Amendment after the Fourth Amendment Effective Date if so paid by
Borrowers) and to pay interest and fees due with respect to the Obligations
within said thirty day period, in each case to the extent Borrowers do not have
sufficient Availability to fund such amounts with additional Revolving Credit
Loans and subject to the fourth sentence of this Section 3; provided that the
aggregate capital contribution required to be deposited by THLPV with Parent
shall not exceed $1,950,000 (the "CAP"). Without limiting the generality of
clause (i) above, the deposit shall be used by Parent to provide Borrowers with
sufficient funds to insure that Borrowers continue to provide, in all material
respects, the same level of service to customers as is consistent with
Borrowers' historical practice, to maintain Borrowers' collection efforts at a
level greater than or equal to historical practice, to maintain sufficient
employees to complete and service Borrowers' existing routes and to meet, in all
material respects, the requirements of Borrowers' vendor and customer contracts.
Such amounts shall be calculated on the basis of cash flow projections prepared
by Borrowers, subject in all cases to the CAP. The foregoing notwithstanding,
Agent and Lenders agree that during said thirty day period Borrowers may reduce
their operating expenses by effecting the expense savings listed on Schedule 1
hereto and incorporated herein. THLPV shall fund amounts due hereunder by
depositing an amount equal to the CAP in a cash collateral account established
by Parent at Bank which cash collateral account shall be pledged to Agent for
its benefit and the benefit of Lenders. Agent shall cause amounts in said cash
collateral account to be invested in Borrowers, on a daily basis, as needed to
fund THLPV's obligations pursuant to this Section 3. At the end of the thirty
day period

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Fleet Capital Corporation, as Agent
July 1, 2004
Page 3

commencing on the Notification Event and the fulfillment of THLPV's Obligations
pursuant to this Section 3, any remaining amounts contained in the cash
collateral account shall be returned to THLPV.

        4.      In the event of a dispute between the parties concerning the
enforcement of Sections 2 or 3 hereof, the party who is determined to be the
prevailing party by a court of competent jurisdiction in a final, nonappealable
judgment or order shall be reimbursed by the other party for all reasonable
costs and expenses of every kind incurred by the prevailing party in connection
with the determination of such dispute ("Enforcement Costs"). Enforcement Costs
shall include, without limitation, reasonable attorneys' fees incurred by the
prevailing party in retaining counsel in connection with any claim, suit,
appeal, insolvency or other proceeding, whether under the United States
Bankruptcy Code or otherwise relating to the determination of such dispute and,
if the Agent is the prevailing party, interest accruing on the amount of the
required cash equity contribution from the due date thereof until paid in full
at the annual Default Rate for the Base Rate Advances.

        5.      THLPV represents and warrants to Agent and Lender that:

                (a)     Each of TH Lee Putnam Ventures, L.P. and TH Lee Putnam
Parallel Ventures, L.P. is a limited partnership duly formed, validly existing
and in good standing under the laws of the jurisdiction of its formation, and
has full limited partnership power, authority and legal right to own its
property and assets and to transact the business in which it is engaged; and

                (b)     Each of TH Lee Putnam Ventures, L.P. and TH Lee Putnam
Parallel Ventures, L.P. has full limited partnership power, authority and legal
right to execute and deliver, and to perform its obligations under, this letter,
and has taken all necessary action to authorize its obligations hereunder on the
terms and conditions of this letter and to authorize the execution, delivery and
performance of this letter.

        6.      This letter has been duly executed and delivered by each of TH
Lee Putnam Ventures, L.P. and TH Lee Putnam Parallel Ventures, L.P. as of the
date hereof and constitutes a legal, valid and binding obligation of each of TH
Lee Putnam Ventures, L.P. and TH Lee Putnam Parallel Ventures, L.P. enforceable
against each of TH Lee Putnam Ventures, L.P. and TH Lee Putnam Parallel
Ventures, L.P. in accordance with its terms, except to the extent that such
enforceability is subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, and moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally, or the availability of
equitable remedies, which are subject to the discretion of the court before
which any action may be brought.

        7.      The parties hereto expressly and affirmatively acknowledge and
agree that this letter is for the sole benefit of Agent and Lenders and that
nothing herein shall confer

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Fleet Capital Corporation, as Agent
July 1, 2004
Page 4

upon any Person (including Borrowers), other than the parties hereto and their
respective successors and permitted assigns, any rights or remedies.

        8.      This letter is absolute and unconditional and shall not be
changed or affected by any representation, oral agreement, act or thing
whatsoever, except as herein provided. This letter is intended to be the final,
complete and exclusive expression between THLPV and Agent relating to the
subject mater hereof. No modification or amendment of any provision of this
letter shall be effective unless in writing and signed by a duly authorized
officer of Agent and THLPV.

        9.      No course of dealing between or among Borrowers or THLPV and
Agent and no act, delay or omission by Agent in exercising any right or remedy
hereunder shall operate as a waiver thereof or of any other right or remedy, and
no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. If any provision
of this letter is unenforceable in whole or in part for any reason, the
remaining provisions shall continue to be effective.

        10.     All notices, approvals, requests, demands and other
communications hereunder shall be in writing and delivered by hand or by
nationally recognized overnight courier, or sent by first class mail or sent by
telecopy (with such telecopy to be confirmed promptly in writing sent by first
class mail), sent to the address or telecopy number specified below each party's
signature hereto and shall be deemed to have been given or made as specified in
Section 12.8 of the Loan Agreement.

        11.     THLPV's obligations under Sections 2 and 3 of this Capital
Contribution Agreement shall terminate on the later of (i) January 1, 2005 or
(ii) the date on which (a) Borrower's EBITDA for each of two consecutive months
equals or exceeds Borrower's fixed charges (interest expense and scheduled
principal payments due with respect to Money Borrowed) for the applicable month
and (b) Availability for each day of the immediately preceding thirty days is
greater than or equal to $1,000,000 including as a result of the contributions
and/or guarantees made pursuant to Section 2 of this Capital Contribution
Agreement.

        This letter may be executed in multiple counterparts (including by means
of telecopied signature pages), all of which shall be considered one and the
same letter and shall become effective when one or more of such counterparts
have been signed by each of the parties and delivered to the other parties.

                            (Signature Page Follows)

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                   (Signature Page to Capital Call Agreement)

                                        Very truly yours,


                                        TH LEE PUTNAM VENTURES, L.P.


                                        By:
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                                        Name:
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                                        Title:
                                              ----------------------------------


                                        Address:

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                                        Attention:
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                                        Facsimile No.:
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                                        TH LEE PUTNAM PARALLEL VENTURES, L.P.


                                        By:
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                                        Name:
                                              ----------------------------------
                                        Title:
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                                        Address:

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                                        Attention:
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                                        Facsimile No.:
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Fleet Capital Corporation, as Agent
July 1, 2004
Page 5

Accepted and Agreed to
this 1st day of July, 2004

Fleet Capital Corporation, as Agent


By:
   -------------------------------------
Name:
      ----------------------------------
Title:
      ----------------------------------


Address:

One South Wacker Drive, Suite 3400
Chicago, Illinois  60606
Attention:  Loan Administration Manager
Facsimile No.:  312.332.6537