Form of Series P Stock Purchase Agreement



 Cover Page to Exhibit 10.1 
  
 All of the Purchase Agreements are identical to the form of Series P Stock Purchase Agreement, dated October 14, 2005 attached hereto,
except as to the name of the Investor, the number of shares of Series P Convertible Preferred Stock purchased and the purchase price of those shares, all of which is specified in the chart below: 
  

						
	 Investor

	  	Purchase Price

	  	Number of Shares


	 Longview Fund, LP
	  	$	8,000,000	  	2,395,210
	 Longview Equity Fund, LP
	  	$	1,340,000	  	401,198
	 Longview International Equity Fund, LP
	  	$	660,000	  	197,605
	 William S. Lapp
	  	$	200,400	  	60,000
	 Marshall & Ilsley Trust Company
	  	$	151,970	  	45,500








 Exhibit 10.1 
  
 STOCK PURCHASE AGREEMENT 
  
 Velocity Express Corporation 
 One Morningside Drive North, Bldg. B, Suite 300 
 Westport, CT 06880 
  
 The undersigned (the “Investor”), hereby confirms its agreement with you as
follows: 
  
 1. This Stock Purchase Agreement (the
“Agreement”) is made as of the date set forth below among Velocity Express Corporation, a Delaware corporation (the “Company”), and the Investor. 
  
 2. The Company has authorized the sale and issuance of shares (the “Shares”) of Series P Preferred Stock of the
Company, $0.004 par value per share (the “Series P Preferred Stock”) and the warrants (the “A Warrants” and “B Warrants”), to certain investors in a private placement (the
“Offering”). The Shares are initially convertible into 3,100,000 shares (the “Conversion Shares”) of Common Stock, $0.004 par value (the “Common Stock”), subject to adjustment in accordance with the
terms of the Series P Preferred Stock. The A and B Warrants will be, upon issuance and subject to the terms of Section 3 hereof, convertible into shares of the Company’s Common Stock (the “Warrant Shares”) under the terms of
each warrant. 
  
 3. The Company and the Investor agree that the Investor
will purchase from the Company and the Company will issue and sell to the Investor                  Shares at a purchase price of $3.34 per Share, or an aggregate
purchase price of $                , pursuant to the Terms and Conditions for Purchase of Shares attached hereto as Annex I and incorporated herein by this
reference as if fully set forth herein. Unless otherwise requested by the Investor in Exhibit A, certificates representing the Shares and the Warrant Shares purchased by the Investor will be registered in the Investor’s name and address as set
forth below. 
  
 4. The Investor represents that, except as set forth
below, (a) it has had no position, office or other material relationship within the past three years with the Company or its affiliates, (b) neither it, nor any group of which it is a member or to which it is related, beneficially owns (including
the right to acquire or vote) any securities of the Company and (c) it has no direct or indirect affiliation or association with any National Association of Securities Dealers, Inc. (“NASD”) member. Exceptions: 
  
 Please confirm that the foregoing correctly sets forth the agreement between us by signing
in the space provided below for that purpose. 
  
 (If no
exceptions, write “none.” If left blank, response will be deemed to be “none.”) 








			
	 Dated as of: October 14,2005

	
	
 “INVESTOR”

		
	 By:
	 	  


	 Print Name:
	 	  


	 Title:
	 	  


	 Address:
	 	  




  

			
	 AGREED AND ACCEPTED:

	 Velocity Express Corporation

	
	

	 By:
	 	Wesley Fredenburg
	 Title:
	 	Secretary

  

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 Exhibit 10.1A 
  
 ANNEX I 
  
 TERMS AND CONDITIONS FOR PURCHASE OF SHARES

  
 1. Agreement to Sell and Purchase the Shares;
Subscription Date. 
  
 1.1 Purchase and Sale. At the
Closing (as defined in Section 2), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions hereinafter set forth, the number of Shares set forth in paragraph 3 of the Stock Purchase
Agreement to which these Terms and Conditions for Purchase of Shares are attached as Annex I and at the purchase price set forth in such paragraph. The Company shall adopt and file with the Secretary of State of the State of Delaware on or before
the Closing Date the Certificate of Designations, Preferences and Rights of Series P Convertible Preferred Stock in the form attached hereto as Exhibit B. 
  
 1.2 Other Investors. As part of the Offering, the Company proposes to enter into this same form of Stock Purchase Agreement with certain other
investors (the “Other Investors”), and the Company expects to complete sales of Shares to them. (The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors,” and this
Agreement and the Stock Purchase Agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”) The Company will accept executed Agreements from Investors for the purchase of
Shares commencing upon the date on which the Company provides the Investors with the proposed purchase price per Share and concluding upon the date (the “Subscription Date”) on which the Company has notified Broadband Capital
Management (in its capacity as Placement Agent for the Shares, the “Placement Agent”) that it is no longer accepting Agreements for the purchase of Shares in the Offering. 
  
 1.3 Placement Agent Fee. Investor acknowledges that the Company
intends to pay the Placement Agent a fee in respect of the sale of Shares to the Investor. The Company shall indemnify and hold harmless the Investor from and against all fees, commissions or other payments owing by the Company to the Placement
Agent or any other person or firm acting on behalf of the Company hereunder. 
  
 2. Deliveries at Closing. The completion of the purchase and sale of the Shares (the “Closing”) shall occur at a place and time, no later than October 14, 2005 (the “Closing
Date”), to be specified by the Company and the Placement Agent, and of which the Investors will be notified in advance by the Placement Agent. At the Closing, the Company shall deliver to the Investor one or more stock certificates
representing the number of Shares set forth on the signature page hereto, each such certificate to be registered in the name of the Investor or, if so indicated on the Stock Certificate Questionnaire attached hereto as Exhibit A, in the name of a
nominee designated by the Investor, provided that, if requested by the Investor, stock certificates representing such Shares shall be delivered in escrow to such Investor’s agent prior to the Closing, to be held until the completion of the
Closing. In addition, on or prior to the Closing Date, the Company shall cause counsel to the Company to deliver to the Investors a legal opinion in the form attached hereto as Exhibit D. 
  
 The Company’s obligation to issue and sell the Shares to the Investor shall be subject to the following conditions, any
one or more of which may be waived by the Company: (a) receipt 
  

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 by the Company of the purchase price for the Shares being purchased hereunder as set forth on the Signature Page hereto;
(b) completion of purchases and sales under the Agreements with the Other Investors of no less than              Shares in the aggregate together with the purchase by the Investor;
and (c) the accuracy of the representations and warranties made by the Investors and the fulfillment of those undertakings of the Investors to be fulfilled prior to the Closing. 
  
 The Investor’s obligation to purchase the Shares shall be subject to the following conditions, any one or more of which
may be waived by the Investor: (a) the Company’s agreement to issue and sell, and the Investors’ agreement to purchase, on the Closing Date, not less than             
Shares; (b) the delivery to the Investor by counsel to the Company of a legal opinion in the form attached hereto as Exhibit C; (c) the representations and warranties of the Company contained in Section 4 being true and correct on and as of such
Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing (except with respect to representations and warranties which are made as of a specific date or period, which shall
continue to be true and correct in all material respects as of the respective dates and for the respective periods covered); (d) the absence of any order, writ, injunction, judgment or decree that questions the validity of the Agreements or the
right of the Company to enter into such Agreements or to consummate the transactions contemplated hereby and thereby; (e) the delivery to the Investor by the Secretary or Assistant Secretary of the Company of a certificate stating that the condition
specified in part (c) of this paragraph has been fulfilled, (f) delivery to Investors by the Company of executed copies of a Registration Rights Agreement in the form attached hereto as Exhibit C, and (g) delivery to Investors by the Company of a
certificate evidencing the Shares purchased by the Investor. 
  
 3. Warrant Issuance 
  
 Subject to the
terms and conditions set forth in Sections 3.1 and 3.2 hereof, the Company shall deliver to the Investor, at Closing, the following warrants to purchase shares of the Company’s common stock: 
  
 3.1 The A Warrant. The Company will issue to the Investor the A Warrant that
shall be convertible into 20% of the total number of common shares that the Shares are initially convertible into immediately following the Closing. The A Warrant will be in the form attached hereto and will have an exercise price of $4.00.
Notwithstanding any other terms of this Agreement or the Registration Rights Agreement, exercise of the A Warrant will be subject to the prior approval of the Company’s shareholders. The Company has received confirmation from that number of
voting shareholders necessary to approve the exercise of the A Warrant. 
  
 3.2 The B Warrant. The Company will issue to the Investor the B Warrant that shall be convertible into 20% of the number of common shares that the Shares are initially convertible into immediately following the Closing. The B Warrant will
only be exercisable in the event that the registration statement filed under the terms of the Registration Rights Agreement entered into between the Company and the Investor (the “Registration Statement”) has not been declared effective
within two hundred seventy (270) days from the Closing Date. The B Warrant will be in the form attached hereto and will have an exercise price of $4.00. Notwithstanding any other terms of this Agreement or the Registration Rights Agreement, exercise
of the B Warrant will be subject to the prior approval of the Company’s shareholders. The Company has received confirmation from that number of voting shareholders sufficient to approve the exercise of the B Warrant. 
  

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 4. Representations, Warranties and Covenants of the Company. In addition to those terms
defined above and elsewhere in this Agreement, for the purposes of this Section 3, the following terms shall have the meanings set forth below: 
  
 “Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls,
is controlled by, or is under common control with, such Person. 
  
 “Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Rule 305 under the 1933 Act) of the Company, after due inquiry. 
  
 “Common Stock Equivalent” means any preferred stock, warrant, convertible bond, debt instrument or any
other convertible instrument that can be converted into Common Stock. 
  
 “Conversion Shares” means the shares of Common Stock issuable upon conversion of the Shares and the PIK Shares. 
  
 “Intellectual Property” means all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data bases and documentation). 
  
 “Material Adverse Effect” means a material adverse effect on
(i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction
Documents. 
  
 “Nasdaq” means The Nasdaq Stock
Market, Inc. 
  
 “Person” means an individual,
corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed
herein. 
  
 “PIK Shares” means shares of
Preferred Stock issued as pay-in-kind dividends on the Shares or any previously issued PIK Shares. 
  
 “Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first
Person. 
  

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 “Transaction Documents” means the Agreements, the Certificate of Designations, and the
Registration Rights Agreement. 
  
 “1933 Act”
means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder. 
  
 “1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated
thereunder. 
  
 “Warrant Shares” means the shares
of Common Stock issuable upon conversion of the A Warrant or B Warrant. 
  
 The
Company hereby represents and warrants to the Investors that, except as set forth in the schedules delivered herewith (collectively, the “Disclosure Schedules”): 
  
 4.1 Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and
its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless
the failure to so qualify has not and could not reasonably be expected to have a Material Adverse Effect. 
  
 4.2 Authorization. The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery, conversion and or exercise of the Series P Preferred, PIK Shares and A and B Warrants. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, subject to (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally and (ii) laws
relating to the availability of specific performance, injunctive relief or other equitable remedies. 
  
 4.3 Capitalization. All of the issued and outstanding shares of the Company’s and its subsidiaries capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and were issued in full compliance with applicable state and federal securities law and any rights of third parties. The Company does not have outstanding stockholder purchase rights or “poison
pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events. 
  

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 4.4 Valid Issuance. The Shares are duly and validly authorized and, when issued and paid for
pursuant to the Agreements, will be validly issued, fully paid and nonassessable, free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws, and will be entitled to the relative rights, powers and preferences set forth in the Certificate of Designations. The PIK Shares are duly and validly authorized and, when issued pursuant to the
terms of the Certificate of Designations, will be validly issued, fully paid and nonassessable, free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws, and will be entitled to the relative rights, powers and preferences set forth in the Certificate of Designations. Upon the conversion of the Shares and/or the PIK Shares, the Conversion
Shares will be validly issued, fully paid and non-assessable, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws and except for
those created by the Investors. Prior to closing, the Company will have reserved 150% of the amount of shares of Common Stock issuable upon conversion of the Shares and 100% of the amount of shares of Common Stock issuable upon conversion of the
Warrant Shares, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws and except for those created by the Investors. 
  
 4.5 Consents. The execution, delivery and performance by the Company
of the Transaction Documents and the offer, issuance and sale of the Shares and A and B Warrants and Conversion Shares and Warrant Shares require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or
official other than (i) filings that have been made pursuant to applicable state securities laws, (ii) post-sale filings pursuant to applicable state and federal securities laws, which were not required to be made prior to Closing and (iii) such
consents as have been previously obtained. Subject to the accuracy of the representations and warranties of each Investor set forth in Section 5 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Conversion
Shares and Warrant Shares, (ii) the issuance of the PIK Shares in accordance with the Certificate of Designations, (iii) the issuance of the Conversion Shares upon due conversion of the Shares and the PIK Shares and Conversion Shares and Warrant
Shares, and (iv) the other transactions contemplated by the Transaction Documents, from the provisions of any stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or
statute binding on the Company or to which the Company or any of its assets and properties may be subject and any provision of the Company’s Certificate of Incorporation or By-laws that is or could reasonably be expected to become applicable to
the Investors as a result of the transactions contemplated hereby, including without limitation, the issuance of the Conversion Shares, Shares, Warrants and Warrant Shares and the ownership, disposition or voting of the Shares by the Investors or
the exercise of any right granted to the Investors pursuant to the Transaction Documents. The Company has received confirmation from that number of voting shareholders sufficient to approve the exercise of the Series P Preferred, the PIK Shares, the
A and B Warrants and Warrant Shares. 
  
 4.6 Delivery of SEC
Filings; Business. The Company has not filed its Annual Report on Form 10-K for the fiscal year ended July 2, 2005. The Company has made available to 
  

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 the Investors through the EDGAR system, true and complete copies of the Company’s Annual Report on Form 10-K for the
fiscal year ended July 3, 2004 (and any amendments thereto filed prior to the date hereof), the Company’s Proxy Statement for its 2003 and 2004 Annual Meeting of Stockholders, the Company’s Quarterly Reports on Form 10-Q and any of the
Company’s Current Reports on Form 8-K filed since January 31, 2005 (collectively, the “SEC Filings”). The SEC Filings are the only filings required of the Company pursuant to the 1933 Act for such period. The Company and its
Subsidiaries are engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries.

  
 4.7 Use of Proceeds. The net proceeds of the sale of
the Shares and the exercise of the Warrants shall only be used by the Company for working capital and general corporate purposes in accordance with financial budgets approved from time to time by the Board of Directors of the Company. 
  
 4.8 SEC Filings. 
  
 (a) At the time of filing thereof, the SEC Filings complied as to form in
all material respects with the requirements of the 1933 Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. 
  
 (b) Each
registration statement and any amendment thereto filed by the Company and which has become effective since January 1, 2001 pursuant to the 1933 Act and the rules and regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made
therein not misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of any sale of securities pursuant thereto did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not
misleading            , and the Company will continue to make such filings as is necessary to comply with the obligations of a company with a class of shares registered pursuant to Rule
12(g) of the 1934 Act. 
  
 4.9 No Conflict, Breach, Violation
or Default. The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Shares, Conversion Shares, Warrants, PIK Shares and Warrant Shares will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Certificate of Incorporation or the Company’s Bylaws, both as in effect on the date hereof (true and complete copies of which have been made
available to the Investors through the EDGAR system), or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective assets or properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject. 

 

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 4.10 Title to Properties. Except as disclosed in the SEC Filings and except for liens,
encumbrances and defects that arise in the ordinary course of business and do not impair the Company’s ownership or use of such properties, the Company and each Subsidiary has good and marketable title to all real properties and all other
properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as
disclosed in the SEC Filings, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof
by them. 
  
 4.11 Certificates, Authorities and Permits.
The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate. 
  
 4.12 Labor Matters.

  
 (a) The Company has complied with the federal Worker
Adjustment and Retraining Notification Act of 1988, as amended, in connection with the transactions contemplated by this Agreement and the Transaction Documents. 
  
 (b) The Company is not a party to or bound by any collective bargaining agreements or other agreements with labor
organizations. The Company has not violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours. 
  
 (c) (i) There are no labor disputes existing, or to the Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions,
disputes, lockouts or any other disruptions of or by the Company’s employees, (ii) there are no unfair labor practices or petitions for election pending or, to the Company’s Knowledge, threatened before the National Labor Relations Board
or any other federal, state or local labor commission relating to the Company’s employees, (iii) no demand for recognition or certification heretofore made by any labor organization or group of employees is pending with respect to the Company
and (iv) to the Company’s Knowledge, the Company enjoys good labor and employee relations with its employees and labor organizations. 
  
 (d) The Company is, and at all times has been, in full compliance in all material respects with all applicable laws respecting employment (including laws
relating to 
  

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 classification of employees and independent contractors) and employment practices, terms and conditions of employment,
wages and hours, and immigration and naturalization. There no claims are pending against the Company before the Equal Employment Opportunity Commission or any other administrative body or in any court asserting any violation of Title VII of the
Civil Rights Act of 1963, the Age Discrimination Act of 1967, 32 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment. 
  
 (e) The Company is not a party to, or bound by, any employment or other
contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without limitation, any “excess parachute payment,” as defined in Section 2806(b) of the Internal Revenue Code.

  
 (f) Each of the Company’s employees is a Person who is
either a United States citizen or a permanent resident entitled to work in the United States. To the Company’s Knowledge, the Company has no liability for the improper classification by the Company of such employees as independent contractors
or leased employees prior to the Closing. 
  
 4.13 Intellectual
Property. 
  
 (a) All Intellectual Property of the Company
and its Subsidiaries is currently in compliance with all legal requirements (including timely filings, proofs and payments of fees) and is valid and enforceable, except where the failure to be in compliance or to be valid and enforceable has not and
could not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole. No Intellectual Property of the Company or its Subsidiaries which is necessary for the conduct of Company’s and each of its
Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted has been or is now involved in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no such action is threatened. No
patent of the Company or its Subsidiaries has been or is now involved in any interference, reissue, re-examination or opposition proceeding. 
  
 (b) All of the licenses and sublicenses and consent, royalty or other agreements concerning Intellectual Property which are necessary for the conduct of
the Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted to which the Company or any Subsidiary is a party or by which any of their assets are bound (other than
generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than $10,000 per license) (collectively, “License Agreements”) are valid and binding obligations of the
Company or its Subsidiaries that are parties thereto and, to the Company’s Knowledge, the other parties thereto, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally, and there exists no event or condition which will result in a material violation or breach of or constitute (with
or without due notice or lapse of time or both) a default by the Company or any of its Subsidiaries under any such License Agreement. 
  

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 (c) The Company and its Subsidiaries own or have the valid right to use all of the Intellectual Property
that is necessary for the conduct of the Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted and for the ownership, maintenance and operation of the Company’s
and its Subsidiaries’ properties and assets, free and clear of all liens, encumbrances, adverse claims or obligations to license all such owned Intellectual Property and Confidential Information, other than licenses entered into in the ordinary
course of the Company’s and its Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and enforceable right to use all third party Intellectual Property and Confidential Information used or held for use in the respective
businesses of the Company and its Subsidiaries. 
  
 4.14
Environmental Matters. Neither the Company nor any Subsidiary is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with
any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, and is subject to any claim relating to any Environmental Laws, which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

  
 4.15 Litigation. Except as described on Schedule
4.15, there are no pending actions, suits or proceedings against or affecting the Company, its Subsidiaries or any of its or their properties involving an amount in controversy in excess of $150,000; and to the Company’s Knowledge, no such
actions, suits or proceedings are threatened or contemplated. 
  
 4.16 Financial Statements. The financial statements included in each SEC Filing present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10-Q under the 1933 Act). Except as set forth in the financial statements of the Company included in the SEC Filings filed prior to the date
hereof, neither the Company nor any of its Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such
financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect. 
  
 4.17 Insurance Coverage. The Company and each Subsidiary maintains in full force and effect insurance coverage that is customary for comparably
situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, and the Company reasonably believes such insurance coverage to be adequate against all liabilities, claims and risks against which
it is customary for comparably situated companies to insure. 
  

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 4.18 Compliance with Nasdaq Continued Listing Requirements. The Company has not filed its Annual
Report on Form 10-K for the fiscal year ended July 2, 2005. The Company is in compliance with applicable Nasdaq continued listing requirements. There are no proceedings pending or, to the Company’s Knowledge, threatened against the Company
relating to the continued listing of the Company’s Common Stock on Nasdaq and the Company has not received any notice of, nor to the Company’s Knowledge is there any basis for, the delisting of the Common Stock from Nasdaq. The Company is
in material compliance with NASD rules and regulations applicable to the Company and will remain so in the future. 
  
 4.19 No Directed Selling Efforts or General Solicitation. Neither the Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Shares. 
  
 4.20 No Integrated Offering. Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 3(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of the Securities under the 1933 Act. 
  
 4.21 Private Placement. Assuming the truth and accuracy of the Investors’ representations set forth in Section 4 of this Agreement, the offer
and sale of the Securities to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act. 
  
 4.22 Questionable Payments. Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their
respective current or former stockholders, directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses:
(a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate
funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment of any nature. 
  
 4.23 Transactions with Affiliates. Except as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any
officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 
  

 10 








 4.24 Internal Controls. Except as described in the SEC filings, the Company is in material
compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the Company. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as described in the SEC filings, the Company has established disclosure controls and procedures (as defined in 1933 Act Rules 13a-13 and 15d-13) for the Company and
designed such disclosure controls and procedures to ensure that material information relating to the Company, including the Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in
which the Company’s most recently filed period report under the 1933 Act, as the case may be, is being prepared. Except as described in the SEC filings, the Company’s certifying officers have evaluated the effectiveness of the
Company’s controls and procedures as of the end of the period covered by the most recently filed periodic report under the 1933 Act (such date, the “Evaluation Date”). Except as described in the SEC filings, the Company presented in
its most recently filed periodic report under the 1933 Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. The Company maintains and
will continue to maintain a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the 1933 Act. 
  

4.25 Management Lockup. Prior to Closing the Company has entered into written agreements with those members of management, agreed upon with
Investors, (the “Management”) whereby the Management will not directly or indirectly sell, dispose of or convert of any shares of the Company’s common stock, or instruments convertible into common stock, until ninety-days (90) after
the effective date of the Registration Statement. 
  
 4.26
Shareholder Approval. No later than ninety (90) days after the Closing Date the Company will have obtained shareholder approval for the following events: (i) the issuance of the PIK Shares, to the extent required by the Nasdaq SmallCap Market
Marketplace Rules; (ii) the exercise of the A Warrant and B Warrant; (iii) the issuance and exercise of any additional shares of Series P Preferred Stock under terms of Section 5E of the Series P Certificate of Designation, to the extent required by
the Nasdaq SmallCap Market Marketplace Rules. 
  
 5.
Representations, Warranties and Covenants of the Investor. 
  
 5.1 Investor Knowledge and Status. The Investor represents and warrants to, and covenants with, the Company that: (i) the Investor is an “accredited investor” as defined 
  

 11 








 in Regulation D under the Securities Act and has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Shares, and has such business and financial experience as is required to give it the capacity to utilize the information received, to evaluate the risks involved in purchasing the Shares, and
to protect its own interests in connection with the purchase of the Shares and is able to bear the risks of an investment in the Shares; (ii) the Investor understands that the Shares are “restricted securities” and have not been registered
under the Securities Act and is acquiring the number of Shares set forth on the Signature Page hereto in the ordinary course of its business and for its own account for investment only, has no present intention of distributing any of such Shares and
has no arrangement or understanding with any other persons regarding the distribution of such Shares ; (iii) the Investor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder; (iv) the Investor has answered all questions
on the Signature Page hereto and the Investor Questionnaire attached hereto as Exhibit B for use in preparation of a registration statement for the resale of the Conversion Shares (the “Registration Statement”) and the answers thereto are
true and correct as of the date hereof and will be true and correct as of the Closing Date; (v) the Investor will notify the Company promptly of any change in any of such information until such time as the Investor has sold all of its Shares or
until the Company is no longer required to keep the Registration Statement effective; and (vi) the Investor has, in connection with its decision to purchase the number of Shares set forth on the signature page hereto, relied only upon the
representations and warranties of the Company contained herein. Investor understands that the Shares to be issued to the Investor have not been registered under the Securities Act, or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Investor’s investment intent as expressed herein, and the Investor is able to bear the economic risk of holding the
Shares for an indefinite period of time and can afford a complete loss of its investment. The Placement Agent is not authorized to make any representation or use any information in connection with the placement, purchase and sale of the Shares, and
no person is authorized to provide any representation which is inconsistent or in addition to those in the SEC Reports. The Investor acknowledges that it has not received or relied on any such representations. 
  
 5.2 International Actions. The Investor acknowledges,
represents and agrees that no action has been or will be taken in any jurisdiction outside the United States by the Company or the Placement Agent that would permit an offering of the Shares, or possession or distribution of offering materials in
connection with the issue of the Shares, in any jurisdiction outside the United States. If the Investor is located outside the United States, it has or will take all actions necessary for the sale of the Shares to comply with all applicable laws and
regulations in each foreign jurisdiction in which it offers, sells or delivers Shares or has in its possession or distributes any offering material, in all cases at its own expense. 
  
 5.3 Registration Required. The Investor hereby covenants with the Company not to make any sale of the Shares
without complying with the provisions of this Agreement and the Registration Rights Agreement, and without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied (unless the Investor is selling such Shares
in a transaction not subject to the prospectus delivery requirement), and the 
  

 12 








 Investor acknowledges that the certificates evidencing the Shares will be imprinted with a legend that prohibits their
transfer except in accordance therewith. The Investor acknowledges that as set forth in, and subject to the provisions of, the Registration Rights Agreement, there may occasionally be times when the Company, based on the advice of its counsel,
determines that it must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the SEC or until the Company
has amended or supplemented such prospectus. 
  
 5.4
Power and Authority. The Investor further represents and warrants to, and covenants with, the Company that (i) if an entity, the Investor is duly organized and in good standing in the jurisdiction of its organization, (ii) the Investor
has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii)
this Agreement has been duly authorized, executed and delivered, and constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of the Investors herein may be legally unenforceable. 
  
 5.5 Prohibited Transactions. During the last thirty (30) days prior to the date hereof, neither such Investor
nor any Affiliate of such Investor, which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to such Investor’s investments or trading or information concerning such Investor’s investments,
including in respect of the Securities, or (z) is subject to such Investor’s review or input concerning such Affiliate’s investments or trading (collectively, “Trading Affiliates”), has, directly or indirectly, effected or agreed
to effect any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any other right (including, without limitation,
any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock or otherwise sought to hedge its position in the Securities (each,
a “Prohibited Transaction”). Prior to the earliest to occur of (i) the termination of this Agreement, (ii) the effective date for the registration of the Shares, (iii) 90 days after the Closing Date, or (iv) the closing of a material
transaction wherein the Company purchases the assets of another entity, such Investor shall not, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in a Prohibited Transaction. . 
  
 5.6 No Tax or Legal Advice. The Investor understands that
nothing in this Agreement, or any other materials presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Shares. 
  
 6. Right of First Refusal on Future Financings. From the date hereof for as long as at least 60% of the Series P Preferred is outstanding,
upon any financing by the Company of 
  

 13 








 its Common Stock or Common Stock Equivalents (a “Subsequent Financing”), each Investor shall have the right to
(i) exchange any outstanding Shares, including any accrued dividends, into shares of Common Stock or Commons Stock Equivalents under the terms of the Subsequent Financing, or (ii) invest its pro rata share of such Subsequent Financing on a pari
passu basis with the Holders of the Company’s Series M, N, O and P Preferred Holders. The Company will provide not less than ten (10) day prior written notice to each Investor of the terms and conditions of any Subsequent Financing. The rights
granted under this section 6 shall not apply to any Subsequent Financing related to the Company’s acquisition of another entities stock or assets. 
  
 7. Filing of Form 8-K. No later than the fourth trading day following the Closing Date, the Company will file a Current Report on Form 8-K
attaching copies of the Transaction Documents. In addition, the Company will make such other filings and notices in the manner and time required by the SEC or Nasdaq. 
  
 8. Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party
to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Investor herein shall survive the execution of this Agreement, the delivery to the Investor of the Shares being
purchased and the payment therefore. 
  
 9. Expenses.
The Company shall pay Investor’s due diligence and legal fees, which shall not exceed the amounts of $10,000 and $20,000, respectively. The legal fee payments shall be made to Grushko & Mittman, P.C.  
  
 10. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed (A) if within domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, or (B) if
delivered from outside the United States, by International Federal Express (or comparable service) or facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed,
(ii) if delivered by nationally recognized overnight carrier, one (1) business day after so mailed, (iii) if delivered by International Federal Express (or comparable service), two (2) business days after so mailed, (iv) if delivered by facsimile,
upon electric confirmation of receipt on the first business day after the transaction and shall be delivered as addressed as follows: 
  

			
	 (a)
	  	if to the Company, to:
		
	 	  	Velocity Express Corporation
	 	  	One Morningside Drive North
	 	  	Building B – Suite 300
		
	 	  	Westport, CT 06880
	 	  	Attention: Wesley C. Fredenburg
	 	  	Telephone: (612) 337-4525
	 	  	Telecopy:    (612) 337-4588

  

 14 








 (b) if to the Investor, at its address on the Signature Page hereto, or at such other address or
addresses as may have been furnished to the Company in writing, with a copy to: 
  

	
	 Grushko & Mittman, P.C.

	 551 Fifth Avenue, Suite 1601

	 New York, New York 10176

	 (212) 697-9500 Ext: 106

	 (212) 697-3575 (fax)

	Attn: Barbara Mittman

  
 11. Changes.
This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor. 
  
 12. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement. 
  
 13.
Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be
affected or impaired thereby. 
  
 14. Governing Law.
This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to the principles of conflicts or choice of law. Service of process in connection with any suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of the courts of the State
of New York in any such suit, action or proceeding and to the laying of venue exclusively in New York. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum 
  
 15. Counterparts and Facsimiles. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but
all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. This Agreement may also be executed and
delivered via facsimile, which shall be deemed an original. 
  
 16. Confidential Disclosure Agreement. Notwithstanding any provision of this Agreement to the contrary, any confidential disclosure agreement previously executed by the Company and the Investor in connection with the transactions
contemplated by this Agreement shall remain in full force and effect in accordance with its terms following the execution of this Agreement and the consummation of the transactions contemplated hereby. 
  
 17. Press Releases. The Company will issue no press releases
identifying the Investor. 
  

 15 








 EXHIBIT A 
  
 Velocity Express Corporation 
  

STOCK CERTIFICATE QUESTIONNAIRE 
  
 Pursuant to Section 4 of the Agreement, please provide us with the following information: 
  

			
	 1.      The exact name that your Shares are to be registered in (this is the name that will appear on your stock
certificate(s)). You may use a nominee name if appropriate:
	 	_________________________________________
		
	 2.      The relationship between the Investor and the registered holder listed in response to item 1
above:
	 	_________________________________________
		
	 3.      The mailing address of the registered holder listed in response to item 1 above:
	 	_________________________________________
		
	 4.      The Social Security Number or Tax Identification Number of the registered holder listed in the response
to item 1 above:
	 	_________________________________________

  
  

 A-1 








 EXHIBIT B 
  
 Velocity Express Corporation 
  

INVESTOR QUESTIONNAIRE 
  
 (all information will be treated confidentially) 
  
 To: Velocity Express Corporation: 
  
 This Investor Questionnaire (“Questionnaire”) must be completed by each potential investor in connection with the offer and sale of the
shares of the Series O Preferred Stock, par value $0.004 per share (the “Shares”), of Velocity Express Corporation (the “Company”). The Shares are being offered and sold by the Company without registration under the
Securities Act of 1933, as amended (the “Securities Act”), and the securities laws of certain states, in reliance on the exemptions contained in Section 4 of the Securities Act and on Regulation D promulgated thereunder and in
reliance on similar exemptions under applicable state laws. The Company must determine that a potential investor meets certain suitability requirements before offering or selling Shares to such investor. The purpose of this Questionnaire is to
assure the Company that each investor will meet the applicable suitability requirements. The information supplied by you will be used in determining whether you meet such criteria, and reliance upon the private offering exemption from registration
is based in part on the information herein supplied. 
  
 This
Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any security. Your answers will be kept strictly confidential. However, by signing this Questionnaire you will be authorizing the Company to provide a completed
copy of this Questionnaire to such parties as the Company deems appropriate in order to ensure that the offer and sale of the Shares will not result in a violation of the Securities Act or the securities laws of any state and that you otherwise
satisfy the suitability standards applicable to purchasers of the Shares. All potential investors must answer all applicable questions and complete, date and sign this Questionnaire. Please print or type your responses and attach additional sheets
of paper if necessary to complete your answers to any item. 
  
 A.
BACKGROUND INFORMATION 
  

					
	 Name:                                     
                                        
                                        
                                        
                                        
                                        
       

	
	 Business Address:                                   
                                        
                                        
                                        
                                        
                           

	 	  	(Number and Street)	  	 
	                                      
                                        
                                        
                                        
                                        
                                        
                   
	 (City)
	  	(State)	  	 (Zip Code)

	
	 Telephone Number: (        )                         
                                        
                                        
                                        
                                        
                    

	
	 Residence Address:                                  
                                        
                                        
                                        
                                        
                         

	 	  	(Number and Street)	  	 
	                                      
                                        
                                        
                                        
                                        
                                        
                   
	 (City)
	  	(State)	  	 (Zip Code)

	
	 Telephone Number: (        )                         
                                        
                                        
                                        
                                        
                    

	
	 If an individual:

			
	 Age:            
	  	Citizenship:                        	  	Where registered to
vote:                                       
                   
	
	 If a corporation, partnership, limited liability company, trust or other entity:

	
	 Type of entity:                                  
                                        
                                        
                                        
                                        
                                   

			
	 State of formation:                        
	  	 	  	Date of
formation:                                      
                                 
	
	Social Security or Taxpayer Identification
No.                                       
                                        
                                        
                                        
          
		
	 Send all correspondence to (check one):
              Residence Address
	  	               Business Address


  

 D-1 









	B.	STATUS AS ACCREDITED INVESTOR 

  
 The undersigned is an “accredited investor” as such term is defined in Regulation
D under the Securities Act, as at the time of the sale of the Shares the undersigned falls within one or more of the following categories (Please initial one or more, as applicable): 
  
              (1)         a bank
as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with the investment decisions made solely by persons that are accredited investors;1 
  
              (2)         a private business development company as defined in Section 202(a)(22) of the
Investment Adviser Act of 1940; 
  
              (3)         an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended,
corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares offered, with total assets in excess of $5,000,000; 
  
              (4)         a
natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of such person’s purchase of the Shares exceeds $1,000,000; 
  
              (5)         a natural
person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income
level in the current year; 
  
              (6)         a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the
Shares offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; and 
  
              (7)         an entity in which all of the equity
owners are accredited investors (as defined above). 
  


	1	As used in this Questionnaire, the term “net worth” means the excess of total assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost, including cost of improvements, or at recently appraised value by an institutional lender making a secured loan, net of encumbrances. In determining income, the investor
should add to the investor’s adjusted gross income any amounts attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depreciation, contributions to an IRA or KEOGH
retirement plan, alimony payments, and any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income. 

  

 D-2 









	C.	REPRESENTATIONS 

  
 The undersigned hereby represents and warrants to the Company as follows: 
  
 1. Any purchase of the Shares would be solely for the account of the undersigned and not for the account of any other person or with a view to any
resale, fractionalization, division, or distribution thereof. 
  
 2. The information contained herein is complete and accurate and may be relied upon by the Company, and the undersigned will notify the Company immediately of any material change in any of such information occurring prior to the
closing, if any, with respect to the purchase of Shares by the undersigned or any co-purchaser. 
  
 3. There are no suits, pending litigation, or claims against the undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire. 
  
 4. The undersigned
acknowledges that there may occasionally be times when the Company, based on the advice of its counsel, determines that it must suspend the use of the Prospectus forming a part of the Registration Statement (as such terms are defined in the Stock
Purchase Agreement to which this Questionnaire is attached) until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Securities and Exchange Commission or until the Company has amended
or supplemented such Prospectus. The undersigned is aware that, in such event, the Shares will not be subject to ready liquidation, and that any Shares purchased by the undersigned would have to be held during such suspension. The overall commitment
of the undersigned to investments which are not readily marketable is not excessive in view of the undersigned’s net worth and financial circumstances, and any purchase of the Shares will not cause such commitment to become excessive. The
undersigned is able to bear the economic risk of an investment in the Shares. 
  
 5. The undersigned has carefully considered the potential risks relating to the Company and a purchase of the Shares, and fully understands that the Shares are speculative investments which involve a high
degree of risk of loss of the undersigned’s entire investment. Among others, the undersigned has carefully considered each of the risks described under the headings “Risk Factors” in the Company’s Annual Report on Form 10-K for
the year ended July 3, 2004 and the Company’s Quarterly Report on Form 10-Q for the quarter ended January 1, 2005. 
  

 D-3 








 IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this 14th day of October, 2005, and declares under
oath that it is truthful and correct. 
  

			
	Print Name
		
	By:	 	  


	Signature
		
	Title:	 	

	 	 	(required for any purchaser that is a corporation, partnership, trust or other entity)


  

 D-4