VELOCITY EXPRESS CORP
EMPLOYMENT AGREEMENT: JEFFREY HENDRICKSON
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<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>dex105.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT: JEFFREY HENDRICKSON
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                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT

     This employment agreement ("Agreement") is made and entered into effective
December 15, 2003 by and between Velocity Express, Inc., hereinafter referred to
as "the Company" or "Velocity", and Jeffrey Hendrickson, hereinafter referred to
as "Employee".

     Article 1. Employment and Term

     1.01. The Company hereby agrees to employ Employee in the capacity of Chief
Operating Officer and Employee hereby accepts and agrees to such employment from
and after the date of this agreement, on the terms and conditions of this
agreement. Subject to the termination provisions herein, the term of this
agreement will be for two years from the date hereof and will be renewed only at
the discretion of the Company.

     1.02. Employee shall generally have the authority, responsibilities, and
perform such duties as are customarily performed by a Chief Operating Officer
and senior executive in other or similar businesses as those engaged in by the
Company. Employee shall also render such additional services and duties as may
be reasonably requested of him from time to time by the Company.

     1.03. Employee shall report to Vincent Wasik, the Company's Chairman and
CEO unless otherwise agreed to by Employee and the Company.

     Article 2. Best Efforts

     2.01. Employee 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 the Company.

     Article 3. Compensation and Benefits

     3.01 Subject to the adjustments provided for herein, Employee will be paid
a base salary of Three-Hundred Thousand Dollars ($300,000), pursuant to the
Company's normal payroll procedures and dates. Employee's base salary shall be
increased to $350,000 in the event that the Company achieves an EBITDA as a
percentage of revenue of 5.0% for any fiscal quarter during the term of this
Agreement. Any increase in Employee's base salary shall be made pursuant to the
terms of this agreement.

     3.02 Upon execution of this Agreement, Employee shall be entitled to
receive a bonus of $150,000 to be paid in the form of 100,000 shares of the
Company's Series I Preferred Stock (initially equal to 1,000,000 shares of
common stock).

     3.03 Cash Bonus. Employee shall be eligible to receive the following cash
bonus payments subject to achieving the respective requirements:

          (a)  $100,000 annual bonus ($50,000 pro rata) in the event that the
               Company achieves an EBITDA as a percentage of revenue of 2.5% for
               any of the final two quarters of the Company's 2004 fiscal year
               during the term of this Agreement;

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          (b)  $200,000 annual bonus ($100,000 pro rata) in the event that the
               company achieves an EBITDA as a percentage of revenue of 3.5% for
               any of the final two quarters of the Company's 2004 fiscal year
               during the term of this Agreement;

          (c)  $300,000 annual bonus ($150,000 pro rata) in the event that the
               company achieves an EBITDA as a percentage of revenue of 5.0% for
               any of the two quarters of the Company's 2004 fiscal year during
               the term of this Agreement.

          (d)  If a new bonus plan is not developed and implemented by the
               Company's Compensation Committee prior to June 30, 2004, the
               bonus plan set forth in 3.03 (a)-(c) will remain in place for the
               following fiscal year.

     3.04 During the term of this Agreement, Employee shall be entitled to
receive a warrant to purchase up to a total of 2,000,000 shares of the Company's
common stock subject to achieving the requirements set forth in Section 403
(a)-(c) below. All warrants will have an exercise price equal to the 20-day
trailing average of the Company's common stock as of the date warrant is earned.

          (a)  a warrant to purchase 500,000 shares of common stock if the
               Company achieves an EBITDA as a percentage of revenue of 2.5% for
               two consecutive fiscal quarters;

          (b)  a warrant to purchase an additional 500,000 shares of common
               stock if the Company achieves an EBITDA as a percentage of
               revenue of 3.5% for two consecutive fiscal quarters;

          (c)  a warrant to purchase an  additional  1,000,000  shares of common
               stock if the  Company  achieves  an  EBITDA  as a  percentage  of
               revenue of 5.0% for two consecutive fiscal quarters;

     3.05. Employee shall be eligible to receive such fringe benefits as are,
and may be, made available to other employees of the Company from time to time
in the exclusive discretion of the Company's Board of Directors. Such benefits
may include, but are not limited to, a medical and dental plan, short-term
disability plan, long term disability plan, and a life insurance plan. The
Company is not obligated to provide or continue any of these benefits and may,
without any prior notice, discontinue any benefit already provided or as may be
provided in the future, within the exclusive discretion of the Company's Board
of Directors.

     Article 4. Vacation and Leave

     4.01. Employee is entitled to three weeks of paid vacation per year
consistent with the Company's policy, in addition to the Company's normal
holidays. Vacation time will be scheduled taking into account the Employee's
duties and obligations at the Company. Sick leave, holiday pay and all other
leaves of absence will be in accordance with the Company's stated personnel
policies.

     Article 5. Termination

     5.01. Employee may resign his position and terminate his/her employment by
giving the Company 60 days written notice of his intention to resign. The
Company may, at its option, waive the remaining notice period and terminate
Employee immediately without any notice period or severance obligations. If
requested by the Company, Employee agrees to cooperate in training his successor
until his actual termination. In the event of such resignation, Employee shall
receive only that compensation earned through his last day of employment and all
or a portion of any bonus due Employee pursuant to any bonus plan or arrangement
established prior to termination, to the extent

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earned or performed based upon the requirements or criteria of such plan or
arrangement, as the Board shall in good faith determine.

     5.02. The Company may, subject to applicable law, terminate this Agreement
by giving Employee two (2) months notice if Employee, due to sickness or injury,
is prevented from carrying out his essential job functions for a period of six
(6) months or longer. In the event of such termination, Employee shall receive
the compensation and benefits provided for in Section 5.05 for the remaining
period of the contract but, in no event, for a period longer than one-year or
shorter than six-months.

     5.03. Employee's employment and this Agreement will be deemed terminated
upon the death of the Employee. In the event of such termination, the Employee's
heir(s), as identified on the Employee's life insurance beneficiary card, shall
receive only compensation earned through the date of termination provided,
however, that Employee, or his estate, shall be entitled to all or a portion of
any bonus due Employee 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.

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

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

     (b)  Any fraud, misappropriations or embezzlement, breach of
          confidentiality, noncompetition, fiduciary duty or other obligation to
          Company, by Employee or intentional material damage to the property or
          business of the Company.

     In the event of such termination, and not withstanding any contrary
provision otherwise stated, Employee shall receive only his base salary earned
through the date of termination.

     5.05 During the two (2) year period of this Agreement, if the Company
terminates Employee's employment for any reason other than those listed in
Sections 5.02, 5.03 or 5.04 above, the Company, its successors or assigns,
shall:

     (a)  pay Employee as severance pay each month for twelve (12) consecutive
          months following his termination his monthly base salary in effect at
          the time of separation, less customary withholdings, in addition to
          his ordinary benefits, beginning one (1) month after termination;

     (b)  if Employee timely elects to continue his group health and dental
          insurance coverage pursuant to applicable COBRA/continuation law and
          the terms of the respective benefit plans, pay on Employee's behalf
          the premiums for such coverage for the lesser of (i) twelve (12)
          months, (ii) such time as Employee's COBRA/continuation rights expire,
          and (iii) the date on which Employee becomes eligible to participate
          in any other health and welfare benefit program with comparable
          benefits.

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     5.06 At the termination of this Agreement, the Company may, in its sole
discretion, extend, renew or renegotiate the Agreement. Any such renewal or
extension must be in writing. In the event that the Company elects to not renew
or extend this Agreement, the Company will offer to Employee severance for a
period of up to twelve (12) months (the "Severance Option") in exchange for
Employee executing a restrictive covenant as set forth in Exhibit A, hereto. If
the Company offers, and Employee accepts the Severance Option, the Company will
pay each month for twelve (12) consecutive months following Employees
termination his monthly base salary in effect at the time of separation, less
customary withholdings, beginning one (1) month after termination.

     5.07 Change of Control. In the event of a Change of Control, as defined
herein, Employee shall be entitled to resign his position, subject to the
limitations and obligations of Section 5.01 hereof, and will be entitled to
receive the severance and benefits provided for under Section 5.05 hereof.
Change of Control shall mean that Vincent Wasik shall cease to hold his position
as the Company's Chairman of the Board and/or TH Lee Putnam Ventures, and its
related entities, shall sell more that twenty percent (20%) of the securities of
Velocity Express Corporation owned by it as of the date of this Agreement and/or
Employee is required to use as his main office a location outside of Connecticut
or Manhattan, New York.

     Article 6. Nondisclosure

     6.01. Except as permitted or directed by the Company or as may be required
in the proper discharge of Employee's employment hereunder, Employee 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 the Company, including without limitation, customer lists,
customer files or information, planning and financial information, contracts,
sales and marketing information, business strategy or opportunities for new or
developing business, which Employee has prepared, acquired or become acquainted
with during his employment by the Company. Upon termination of Employee's
employment for any reason, Employee shall promptly return to the Company all
such confidential, trade secret and proprietary information, including all
copies thereof, then in Employee's possession, control or influence, whether
prepared by Employee or others.

     6.02. The Employee understands and agrees that any violation of this
Article 6 while employed by the Company may result in immediate disciplinary
action by the Company, including termination of employment.

     6.03. The provisions of this Article 6 shall survive termination of this
Agreement and will continue during the period of any severance or termination
payments.

     Article 7. Miscellaneous

     7.01. 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. The parties further agree that all legal actions hereunder shall
only be brought in an appropriate Minnesota court and both parties hereby
consent to such exclusive jurisdiction.

     7.02. Successors. This Agreement is personal to Employee and Employee 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 the Company and the Company may require any successors or
assigns to expressly assume and agree to perform the Company's obligations under
this Agreement.

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     7.03. Waiver. The waiver by the Company of the breach or nonperformance of
any provision of this Agreement by Employee will not operate or be construed as
a waiver of any future breach or nonperformance under any such provision of this
Agreement or any similar agreement with any other employee.

     7.04. Modification. This Agreement supersedes and replaces any and all
prior oral or written understandings or agreements, if any, between the parties
relating to the subject matter of this Agreement, which are hereby revoked.
Additionally, the severance provisions of Article 7 supersede and replace all
rights Employee may otherwise have under the Company's regular severance or
termination policies. The parties agree that this Agreement (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.

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

                                               Velocity Express Corporation


                                               By:
                                                   -----------------------------

                                               ---------------------------------
                                               Employee

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                                    Exhibit A

     In the event Employee is offered and accepts the Severance Option under
Article 7.02 of this Agreement, he will sign a restrictive covenant that
includes the following terms.

Restrictive Covenants

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

     Unless the obligation is waived or limited by the Company as set forth
herein, Employee agrees that during the term of Employee's employment pursuant
to this Agreement and for a period of twelve (12) months following termination
of Employee's employment for any reason, Employee will not directly or
indirectly (a) solicit or do competitive business with any person or entity that
is or was a customer or vendor of the Company within the twelve (12) months
prior to the date of termination, or (b) engage within the North American
markets in which the Company engages in business at the time of termination, in
any similar or related business activity in competition with the Company 's
direct line of business as conducted at the time of Employee's termination.
Among all other competitive actions that are likewise restricted, Employee shall
not cause or attempt to cause any existing or prospective customer, client or
account who then has a relationship with the 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 the Company.

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

     For a period of twelve (12) months following termination of Employee's
employment for any reason, Employee will not initiate or actively participate in
any other employer's recruitment or hiring of any of the Company's employees.

     Employee agrees that breach by him of the provisions of this article will
cause the Company irreparable harm that is not fully remedied by monetary
damages. In the event of a breach or threatened breach by Employee of the
provisions of this article, the Company shall be entitled to an injunction
restraining Employee from directly or indirectly competing or recruiting as
prohibited herein, without posting a bond or other security. Nothing herein
shall be construed as prohibiting 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 Employee. Employee agrees that the
Company shall be entitled to recover its costs of litigation and attorney fees
incurred in enforcing this Agreement.

     The Employee understands and agrees that any violation of this article
while employed by the Company may result in immediate disciplinary action by the
Company, including termination of employment.

     The obligations contained in this article shall survive the termination of
this Agreement and will continue during the period of any severance or
termination payments.

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