UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549
                                    FORM 8-K

                                 CURRENT REPORT

    Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                                December 4, 1998
                Date of Report (Date of earliest event reported)



                     CONSOLIDATED DELIVERY & LOGISTICS, INC.
             (Exact name of Registrant as specified in its charter)


     Delaware                             0-26954           22-3350958
(State or other jurisdiction of     (Commission File       (IRS Employer
incorporation or organization)          Number)           Identification No.)



380 Allwood Road, Clifton, New Jersey                           07012
(Address of principal executive offices)                     (Zip Code)  
                                                                   


(Registrant's telephone number, including area code)       (973) 471-1005

                                 NOT APPLICABLE
      (Former name or former address,  if changed since last report.)



<PAGE>


ITEM 5.         Other Events

On December 4, 1998,  Consolidated  Delivery & Logistics,  Inc. (the  "Company")
announced  that First  Union  Commercial  Corporation  ("First  Union")  and the
Company   executed  an  amendment  to  their  existing   credit   facility  (the
"Modification  Agreement"),  increasing credit  availability from $15 million to
$25 million, subject to borrowing base requirements.  The Modification Agreement
became  effective  November 30, 1998 and amends the Loan and Security  Agreement
executed  with First  Union in July 1997,  as  amended.  The credit  facility is
secured by all of the assets of the Company and its subsidiaries.

The Modification  Agreement  increased  availability  under the revolving credit
facility to $22.5  million and  established a $2.5 million  equipment  term loan
line. Under the terms of the Modification Agreement,  the Company is required to
maintain certain  financial  ratios and comply with other financial  conditions.
The Modification  Agreement  expires November 15, 2001. The Company plans to use
the increased credit facility to finance acquisitions as they arise, to increase
the size of the Company's truck fleet and for general working capital purposes.





ITEM 7.         Financial Statements and Exhibits

                c.   Exhibits

                99.1  Press Release issued December 4, 1998.
                99.2  Modification Agreement between First Union Commercial
                      Corporation and Consolidated Delivery & Logistics, Inc.




<PAGE>






                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



Dated:   December 11, 1998            CONSOLIDATED DELIVERY & LOGISTICS, INC.
                                                  (Registrant)




                                      By:  /s/ Albert W. Van Ness, Jr.
                                      Albert W. Van Ness, Jr.
                                      Chairman of the Board, Chief Executive
                                      Officer and Chief Financial Officer

<PAGE>


Exhibit 99.1

FOR IMMEDIATE RELEASE,
CONTACT:
                 
Drew Kronick, Vice President                       Lee Laino or Ken DiPaola
Consolidated Delivery & Logistics, Inc.            The Dilenschneider Group
TEL (973) 471-1005                                 (212) 922-0900
                  

                     CONSOLIDATED DELIVERY & LOGISTICS, INC.
                    INCREASES CREDIT FACILITY TO $25 MILLION

         *Additional Funds Will be Used Primarily for New Acquisitions*

Clifton,  NJ  (December  4,  1998) -  Consolidated  Delivery &  Logistics,  Inc.
(NASDAQ:  CDLI) today announced that First Union Commercial  Corporation and the
company have executed an amendment to their existing credit facility, increasing
availability  from $15 Million to $25  million.  The  majority of the  increased
availability  under the credit facility will be available for  acquisitions  and
working  capital.  The  balance  will be  earmarked  for  equipment  financing -
specifically,  to increase the size of the Company's  truck fleet as a result of
the Company's projected growth.

Commenting  on the new  facility,  Albert W. Van Ness,  Jr.,  chairman and chief
executive officer of CD&L, said,  "After seven consecutive  quarters of improved
earnings,  CD&L is poised for an aggressive  program of growth via acquisitions.
So far  this  year,  we have  made  three  acquisitions,  which  have  increased
annualized  revenues by about $14 million.  It is  anticipated  that  additional
strategic  acquisitions will be concluded before year-end.  Clearly, First Union
Commercial  Corporation has played an integral part in CD&L's  successes to date
and we look forward to our continued  partnership as the Company  implements its
acquisition strategy."

This press release contains certain forward-looking  statements regarding future
events or the future financial performance of the Company. These forward-looking
statements include comments on the Company's future business development.  These
forward-looking  statements  involve  certain risks and  uncertainties  that may
cause the actual events or results to differ  materially from those indicated by
such  forward-looking  statements.  Potential  risks and  uncertainties  include
without  limitation the risk that the Company will lack  satisfactory  merger or
acquisition  candidates  and/or have an  inability to conclude  acquisitions  or
mergers on satisfactory terms, will be unable to obtain acquisition financing on
satisfactory  terms, or achieve cost savings or additional profits  contemplated
by the Company's  business  management  strategy or other risks specified in the
Company's SEC filing.

Consolidated Delivery & Logistics,  Inc. headquartered in Clifton, New Jersey is
a full service,  same day ground and air delivery and logistics  company with 70
offices in 24 states and the District of Columbia.  The Company has nearly 4,000
employees and utilizes  contractors to provide time sensitive  delivery services
to thousands of businesses.


<PAGE>


Exhibit 99.2

                                            THIS MODIFICATION  AGREEMENT,  dated
                                            as  of  November  30,  1998  by  and
                                            between   FIRST   UNION   COMMERCIAL
                                            CORPORATION,   with   a   place   of
                                            business  at 1339  Chestnut  Street,
                                            Philadelphia,     PA     19107-3579,
                                            (hereinafter  called  "Lender")  and
                                            CONSOLIDATED  DELIVERY &  LOGISTICS,
                                            INC.,    CLAYTON/NATIONAL    COURIER
                                            SYSTEMS,   INC.,   NATIONAL  EXPRESS
                                            COMPANY,   INC.,   CLICK   MESSENGER
                                            SERVICE,   INC.,   CLICK   MESSENGER
                                            SERVICE  OF  N.Y.,   INC.,   OLYMPIC
                                            COURIER  SYSTEMS,  INC.,  SECURITIES
                                            COURIER  CORPORATION,   SILVER  STAR
                                            EXPRESS,  INC.,  SUREWAY AIR TRAFFIC
                                            CORPORATION,    SUREWAY    LOGISTICS
                                            CORPORATION,  and KBD SERVICES, INC.
                                            (hereinafter  sometimes individually
                                            and collectively called "Borrower").

                                    RECITALS
         WHEREAS,  Lender,  American Courier, Inc.  ("American"),  Court Courier
Systems,  Inc.  ("Court"),  and each of the  Borrowers  other than KBD Services,
Inc.,  entered  into a Loan and  Security  Agreement  dated  July 14,  1997,  as
modified by letter  agreements  dated as of September  30, 1997, as of April 30,
1998 and as of July 1,  1998,  which,  inter  alia,  sets  forth  the  terms and
conditions of a revolving credit facility of up to $15,000,000.00; and
         WHEREAS,  KBD became a wholly owned  subsidiary of Silver Star Express,
Inc.  and  pursuant to a Joinder  Agreement  dated as of August 27, 1998 between
Lender and Borrower , KBD  Services,  Inc.  joined into the Loan  Agreement  and
other Loan  Documents as one of the Borrowers so that the Borrower  could obtain
Advances under the revolving credit facility  provided for in the Loan Agreement
based upon, inter alia, the accounts receivable of each Borrower,  including KBD
Services, Inc.; (the aforesaid Loan and Security Agreement as modified and as so
joinded into by the aforesaid Joinder Agreement the "Loan Agreement"); and
         WHEREAS,  American and Court merged into Click Messenger Service, Inc.,
and
         WHEREAS,  Borrower  has  applied to Lender (a) for an  increase  in the
maximum amount of the revolving  credit facility to  $22,500,000.00,  (b) for an
extension of the term of the increased  revolving  credit  facility,  (c) for an
equipment  acquisition  term loan facility of up to  $2,500,000.00,  and (d) for
other  modifications to the terms and conditions set forth in the Loan Agreement
and other Loan Documents; and
         WHEREAS,  Lender has  approved the  application  of the Borrower on the
         terms and condition set forth herein.
         NOW, THEREFORE,  in consideration of the premises and other good and
valuable consideration, the parties hereto adopt the above recitals and agree as
follows:

1. Capitalized  terms not defined herein but defined in the Loan Agreement shall
have  the same  meanings  ascribed  to such  terms  in the  Loan  Agreement.
2. Paragraphs 1.4, 1.9, 1.23, 1.31, 1.47, 1.48, 1.60, 1.61, 1.65, 1.66, 1.68,
1.69, 1.76 and 1.79 of the Loan Agreement are hereby modified to read as
follows:

                  1.4  "ADVANCE  DOLLAR  LIMIT"  means  Twenty Two Million  Five
         Hundred  Thousand  and no/100  ($22,500,000.00)  Dollars or such lesser
         amount as the maximum amount of the revolving credit facility  provided
         for herein may be reduced in accordance with paragraph 7.10 hereof.
                  1.9  "BORROWING  BASE"  means  the  lesser of (A)  Twenty  Two
         Million Five Hundred Thousand and no/100  ($22,500,000.00)  Dollars, or
         (B) the net of (i) the Eligible Loan Value of Eligible  Accounts  minus
         (ii) the Debenture Reserve Amount.
                  1.23  "ELIGIBLE LOAN VALUE OF ELIGIBLE  ACCOUNTS"  means up to
         eighty-five  (85%) percent of the face amount of Eligible Accounts less
         returns  and  discounts,  offsets,  contra  balances,  credits  or  all
         allowances  of any  nature,  at any  time  issued,  owing,  granted  or
         outstanding.
                  1.31 "FIXED CHARGE COVERAGE RATIO" means at any date the ratio
         of (A)(i) the  EBITDA  minus (ii) all  unfunded  Capital  Expenditures,
         dividends,  and taxes  paid  during  the 12 months  ending on said date
         divided by (B) the sum of (i) the  current  portion of  long-term  debt
         paid or  scheduled  to be paid during the twelve (12) months  ending on
         such date plus (ii) the  interest  expense  for the twelve  (12) months
         ending on said date.
                  1.47 "LIBOR LOAN" means each Advance, or Term Loan Advance, as
         applicable,  on which interest  thereon is in accordance with the terms
         of this Agreement, based on Libor.
<PAGE>

                  1.48  "LIBOR  MARGIN"  means  a  percentage  set  forth  below
         determined by reference to the Interest Rate and Fee Cash Flow Leverage
         Ratio of the Borrower on a consolidated  basis,  with adjustments to be
         made on the dates and as set forth in paragraph 2.2(D) hereof:

             Interest Rate & Fee
             Cash Flow Leverage Ratio                         Margin

             greater than 3.65 to 1.0                         2.00%
             2.75 - 3.65 to 1.0                               1.875%
             less than 2.75 to 1.0                            1.50%

                  1.60  "PERMITTED  ENCUMBRANCES"  means (A)  Liens  for  taxes,
         assessments or  governmental  charges or levies on property of Borrower
         if the same shall not at the time be delinquent  or  thereafter  can be
         paid without penalty,  or are being diligently  contested in good faith
         and  by  appropriate   proceedings   and  against  which  Borrower  has
         established  adequate  reserves,  (B)  Liens  imposed  by law,  such as
         carriers,  warehousemen  and  mechanics  Liens,  and Liens  incurred in
         connection  with  construction  or other  similar  Liens arising in the
         ordinary  course of business  provided same are not at the time due and
         payable,  (C) Liens  arising  out of pledge or deposits  under  workers
         compensation  law,  unemployment  insurance,  old age  pension or other
         social security or retirement benefit or similar legislation, (D) Liens
         arising from  judgments or awards with respect to which  Borrower shall
         be diligently  and in good faith  prosecuting  an appeal or proceedings
         for review  and shall have  secured a stay of  execution  pending  such
         appeal or review, (E) Liens in favor of Lender or any Lender Affiliate,
         (F) the existing and future purchase money security  interests in items
         of Equipment (G) the existing  liens on specific  assets of Borrower as
         identified on Exhibit 1.60 annexed hereto and (H) the liens existing on
         the  date of  consummation  of an  Acquisition  on  specific  items  of
         Equipment of an Acquired Entity.
                  1.61 "PERMITTED INDEBTEDNESS" means (A) Indebtedness to Lender
         or any Lender Affiliate,  (B) Subordinated Debt consented to in writing
         by Lender including the Indebtedness under the Subordinated Convertible
         Debentures,   (C)  the  Seller   Indebtedness,   (D)   purchase   money
         Indebtedness  incurred  with  respect  to  the  purchase  of  items  of
         equipment or under Capital  Leases of items of Equipment  provided said
         Indebtedness  incurred  in each year does not  exceed the  maximum  per
         annum Capital Expenditures  permitted hereunder and (E) guarantees by a
         Borrower  of the  obligations  of  another  Borrower  to third  persons
         provided that if the primary Indebtedness so guaranteed is Subordinated
         Debt the guarantee Indebtedness shall be Subordinated Debt.
                  1.65  "PRIME  RATE  LOANS"  means each  Advance,  or Term Loan
         Advance, as applicable, on which interest thereon is in accordance with
         the terms of this Agreement based on the Prime Rate.
                  1.66 "PRIME RATE MARGIN"  means a  percentage  set forth below
         determined by reference to the Interest Rate and Fee Cash Flow Leverage
         Ratio of the Borrower on a consolidated  basis,  with adjustments to be
         made on the dates and as set forth in paragraph 2.2(D) hereof:

         Interest Rate & Fee
         Cash Flow Leverage Ratio                         Margin

         greater than 3.65 to 1.0                        .25%
         2.75 - 3.65 to 1.0                               00%
         less than 2.75 to 1.0                     minus .25%

                  1.68  "SELLER  INDEBTEDNESS"  means  (A) the  Indebtedness  of
         Borrower  identified  on Exhibit 5.20 annexed  hereto  arising from the
         purchase  by   Borrower  of  assets  of  third   Persons  and  (B)  all
         Indebtedness  owing on account of or with respect to an  Acquisition of
         the assets or stock of an Acquired Entity, including without limitation
         all  Indebtedness  incurred  on  account  of the  Purchase  Price of an
         Acquisition.
                  1.69 "SUBORDINATED CONVERTIBLE DEBENTURES" means those certain
         10 % Subordinated  Convertible  Debentures due August 21, 2000 of CD&L,
         the holders thereof and the principal  amount thereof being  identified
         in Exhibit 1.69 annexed hereto.
                  1.76  "TOTAL  FUNDED  DEBT"  means  all  Indebtedness  of  the
         Borrower,  including without  limitation the Obligations of Borrower to
         Lender, the Indebtedness under the Subordinated Convertible Debentures,
         all other Subordinated Debt, the Seller  Indebtedness and under Capital
         Leases.
                  1.79 "UNUSED COMMITMENT FEE RATE" means a percentage set forth
         below  determined  by reference to the Interest  Rate and Fee Cash Flow
         Leverage  Ratio  of  the  Borrower  on  a  consolidated   basis,   with
         adjustments  to be made on the  dates  and as set  forth  in  paragraph
         2.2(D) hereof:

         Interest Rate & Fee Cash Flow Leverage Ratio               Rate
         --------------------------------------------               ----
         greater than 3.65 to 1.0                                   .50%
         2.75 to 3.65 to 1.0                                        .375%
         less than 2.75 to 1.0                                      .25%

3.       Article I of the Loan Agreement is hereby modified to add paragraphs
         1.81 through 1.92 as follows:
                  1.81    "ACQUIRED  ENTITY"  means any Person whose assets or
         capital  stock was acquired by a Borrower pursuant to a Permitted
         Acquisition or other  Acquisition  consented to in writing by Lender.
                  1.82 "ACQUISITION"  means any transaction which results in the
         acquisition  of the capital stock or assets (other than the purchase of
         materials,  supplies,  etc. in the  ordinary  course of  business) of a
         Person, including without limitation by a merger or exchange of stock.
                  1.83  "AGGREGATE  ADVANCE  DOLLAR  LIMIT"  means  Twenty  Five
         Million and no/100 Dollars ($25,000,000.00).
                  1.84    "CD&L"  means Consolidated Delivery & Logistics, Inc.
                  1.85    "EQUIPMENT LINE EXPIRATION DATE" means November 15,
         2001.
                  1.86    "PERMITTED  ACQUISITION"  means the  Acquisition  by a
         Borrower  of the  capital stock of or assets of a Person which meets
         the  conditions set forth on Exhibit 1.86 annexed hereto and
         incorporated herein.
                  1.87  "PURCHASE  PRICE"  means the amounts  paid or payable on
         account  of  or  with  respect  to  an  Acquisition  including  without
         limitation (i) all sums payable (A) in cash, (B) under promissory notes
         or similar Instruments issued to the seller, (C) under  non-competition
         and/or  consulting  Agreements  entered  into  in  connection  with  an
         Acquisition, and (D) under all "Earn Out" or similar agreements entered
         into in connection  with an Acquisition  that should be recorded on the
         financial  statements of Borrower in accordance  with GAAP and (ii) the
         value of any stock issued to the seller,  such value to be equal to (x)
         the value,  if any,  placed on said stock in the  applicable  agreement
         under which the Acquisition is consummated or (y) if no value is placed
         on said stock in the applicable agreement the "value" to be assigned on
         the books and records of the Borrower in  accordance  with GAAP for the
         issuance of said stock, (including the increase in common stock and the
         increase in paid in capital)  after  consultation  with and approval by
         (prior to consummation of the  Acquisition)  the independent  certified
         public accountants of Borrower.
                  1.88 "SHAREHOLDER  EQUITY" means the total shareholder  equity
         of Borrower on a  consolidated  basis as determined in accordance  with
         GAAP.
                  1.89 "TERM LOAN" means the Term Loan  Advances  converted to a
         term loan under paragraph 2.10(B) hereof.
                  1.90  "TERM  LOAN  ADVANCE(S)"  means  all  loans by Lender to
         Borrower under the Term Loan facility provided for in paragraph 2.10 of
         this Agreement.
                  1.91 "TERM LOAN LIBOR MARGIN" means the Libor Margin in effect
         from time to time under  this  Agreement  plus one half of one  percent
         (.5%).
                  1.92 "TERM LOAN PRIME RATE MARGIN" means the Prime Rate Margin
         in effect from time to time under this  Agreement  plus one half of one
         percent (.5%).

4.       Paragraph 2.1 of the Loan Agreement is hereby modified to read as
         follows:
                  2.1      REVOLVING CREDIT FACILITY
                   (A)  Facility.  So long as no  Default  nor Event of  Default
         exists,  Lender  shall,  from  time  to  time  hereafter,  through  the
         Expiration Date, lend to Borrower such amounts as the Borrower may from
         time to time  request,  based upon the Eligible  Loan Value of Eligible
         Accounts  Receivable as may exist from time to time,  but not to exceed
         the Borrowing  Base,  and as may be reported by Borrower to Lender on a
         borrowing  base  report  in the  form of  Exhibit  2.1  which  is to be
         submitted  by Borrower to Lender by Thursday of each week and as of the
         close of business of the preceding Sunday. Lender shall have the right,
         from time to time, in the good faith exercise of its  discretion,  upon
         at  least  five  (5) days  prior  notice  to  Borrower,  to  alter  the
         percentages of the Eligible Loan Value of Eligible  Accounts  and/or to
         establish  reserves  against Eligible  Accounts.  Each month Lender may
         render to Borrower a statement of the status of the loans  provided for
         herein,  which Borrower  hereby agrees shall be deemed to be an account
         stated and correct  and  acceptable  to and binding on Borrower  unless
         Lender shall receive a corrected  statement of exceptions from Borrower
         within thirty (30) days after the monthly statements have been rendered
         to Borrower.  The revolving  credit facility  provided for herein shall
         have a Term through  November 15, 2001. All such loans shall be payable
         on the Expiration  Date or as otherwise set forth in this Agreement and
         shall be  evidenced  by a  promissory  note in the form of Exhibit  2.1
         annexed hereto.  Notwithstanding the expiration of the Term, the rights
         of  Lender  hereunder  and  the  obligations  of  Borrower   hereunder,
         including  any  Obligations  with respect to loans and other  financial
         accommodations  made after the Expiration Date,  further  including but
         not  limited  to the grant of  security  interests  in and Liens on the
         Collateral  as set forth in Article  III hereof,  shall  remain in full
         force and effect until all of the Obligations of Borrower to Lender and
         each Lender Affiliate are satisfied in full.
                   (B)     Interest on Advances.
                           (i) The Borrower  agrees to notify the Lender  orally
         or in writing, by 11:00 a.m. local time, at least two (2) Business Days
         (with  respect to Libor Loans) prior to each date it requests  interest
         on the Advances,  or a portion thereof, to be based on Libor. Each such
         notice shall be  irrevocable  and confirmed  immediately by delivery to
         the Lender of a Libor rate  request.  Each  Libor  rate  request  shall
         specify:
                                    (a)     the date from  which  interest  is
         to  accrue  based on Libor, which shall be a London Business Day;
                                    (b)     the  aggregate  amount of Advances
         on which  interest is to be based on Libor; and
                                    (c)     the duration of the Interest period
         applicable thereto.
                           (ii)     No more than three (3)  Interest  Periods
         with respect to Libor Loans shall be outstanding at any time.
                           (iii)  All  Libor  Loans  shall  be in the  principal
         amount of One Million and 00/100 ($1,000,000.00) Dollars or an integral
         multiple thereof.
                           (iv) On all Advances as to which Borrower has not, in
         accordance  with the  foregoing,  selected  to have  interest  based on
         Libor,  interest  shall  be  based on the  Prime  Rate as set  forth in
         subparagraph (C)(i) below.
                   (C).    Interest Rate and Payment Dates
                           (i) Each Prime Rate Loan shall bear  interest  on the
         daily outstanding principal amount thereof for each day such Prime Rate
         Loan is  outstanding  at a rate per annum  equal to the  Prime  Rate in
         effect  from time to time plus the Prime  Rate  Margin.  Such  interest
         shall be payable in arrears on each Payment Date.
                           (ii) Each Libor Loan  shall  bear  interest  for each
         Interest Period applicable thereto, on the daily outstanding  principal
         amount  thereof,  at a rate per  annum  equal to Libor  plus the  Libor
         Margin.  Interest shall be payable in arrears for each Interest  Period
         on each Payment Date.
                  (D)      Conversion and Continuation Options.
                           (i)  The  Borrower  may  elect  from  time to time to
         convert a Libor Loan to a Prime Rate Loan by giving the Lender at least
         one (1)  Business  Day's  prior  irrevocable  notice of such  election,
         provided  that  conversion  of a Libor  Loan to a Prime Rate Loan shall
         only  be  made on the  last  day of an  Interest  Period  with  respect
         thereto.  The  Borrower  may elect from time to time to convert a Prime
         Rate Loan to a Libor  Loan,  in each case by giving the Lender by 11:00
         a.m.  local  time at least two (2)  Business  Days'  prior  irrevocable
         notice  of such  election.  Each  notice  to be given  by the  Borrower
         pursuant  to this  paragraph,  shall be  confirmed  by  delivery to the
         Lender of a written notice, which shall specify:
                                    (a)    the date on which such rate
         conversion shall take effect;
                                    (b)    the  aggregate  amount of the
         Advances to be converted on such date;
                                    (c)    whether  the  Advances to be 
         converted  are Libor  Loans,  or Prime Rate Loans;
                                    (d)    whether the Advances,  after
         conversion,  will be Libor Loans or Prime Rate Loans; and
                                    (e)    in the case of a Libor  Loan,  the
         duration  of the  Interest Period applicable thereto.
                  All or any part of the outstanding  principal of a Libor Loan,
         or a Prime Rate Loan,  may be  converted as provided  herein,  provided
         that partial conversions shall be in an aggregate principal amount of a
         minimum of One Million  ($1,000,000.00) Dollars or an integral multiple
         thereof.
                            (ii) A Libor Loan may be  continued as such upon the
         expiration of an Interest  Period with respect thereto by compliance by
         the Borrower with the notice  provisions  contained in this  paragraph,
         provided  that a Libor Loan may not be continued as such when any Event
         of Default has occurred and is continuing,  but shall be  automatically
         converted to a Prime Rate Loan on the last day of the subject  Interest
         Period.
                            (iii) If the  Borrower  shall fail to give notice to
         convert or continue a Libor Loan in the manner  required by  paragraphs
         (i) or (ii)  above,  the  Borrower  shall be deemed to have  elected to
         convert  the  Libor  Loan to a Prime  Rate  Loan on the last day of the
         Interest Period applicable thereto;
                    (E) Prepayment.  Prime Rate Loans may be prepaid in whole or
         in part,  at any time  without  premium or penalty.  Libor Loans may be
         prepaid,  in  whole or in  part,  only on the  last day of an  Interest
         Period;  provided,  however, that any partial prepayments shall be in a
         principal amount of not less than $1,000,000.00,  or multiples thereof.
         Any prepayment shall include accrued and unpaid interest to the date of
         prepayment on the principal  amount  prepaid and all other sums due and
         payable hereunder. All payments received on the Advances may be applied
         in such order as the Lender in its sole discretion shall determine.
                   (F) Indemnification.  The Borrower shall indemnify the Lender
         against  the  Lender's  loss or  expense  in  employing  deposits  as a
         consequence of (i) the Borrower's  failure to make any payment when due
         under the Advances constituting a Libor Loan, or (ii) any prepayment of
         a Libor  Loan on a date  other  than  the  last  day of the  applicable
         Interest Period ("Indemnified Loss or Expense").
                   (G) Additional  Costs.  If, at any time, a new, or a revision
         in any  existing law or  interpretation  or  administration  (including
         reversals)  thereof  by  any  government  authority,  central  bank  or
         comparable agency imposes, increases or modifies any reserve or similar
         requirement  against  assets,  deposits  or credit  extended by lenders
         generally,  or subjects  lenders  generally  to any tax,  duty or other
         charge  (except  tax  on  the  Lender's  net  income),  and  any of the
         foregoing   increases  the  cost  to  the  Lender  of  maintaining  its
         commitment  to  provide  Libor  Loans or reduce  the  amount of any sum
         received or receivable by the Lender under the Advances which are Libor
         Loans,  within 15 days after demand by the Lender,  the Borrower agrees
         to pay the Lender such additional amounts as will compensate the Lender
         for such increased costs or reductions ("Additional Costs").
                  (H) Match Funding.  The amount of such (i) Indemnified Loss or
         Expense,  or (ii) Additional  Costs outlined above shall be determined,
         in the Lender's sole  discretion,  based upon the  assumption  that the
         Lender  funded  100% of that  portion  of the  Advances  to  which  the
         Libor-based rate applies in the applicable London interbank market.
                   (I) Unavailability of Interest Rate. If, at any time, (i) the
         Lender  shall  determine  that,  by reason of  circumstances  affecting
         foreign exchange and interbank markets generally, Libor deposits in the
         applicable amounts are not being offered to the Lender or Bank; or (ii)
         a  new,  or a  revision  in  any  existing  law  or  interpretation  or
         administration   (including   reversals)   thereof  by  any  government
         authority,  central bank or comparable agency shall make it unlawful or
         impossible for the Lender to honor its obligations  under the Advances,
         then (A) the Lender's  obligation,  if any, to make or maintain a Libor
         Loan  shall  be  suspended,  and  (B) at the  Lender's  discretion  the
         applicable Libor-based rate shall, for the remainder of the term of the
         Loan,  immediately  be  converted to the Prime Rate plus the Prime Rate
         Margin, but if so converted the indemnification  obligation of Borrower
         under (F) above shall not apply.

5.       Subparagraph 2.2(D) of the Loan Agreement is hereby modified to read as
         follows:
                  (D)   Adjustments.The Prime Rate Margin and the Libor  Margin
          and the  Unused  Commitment  Fee Rate and the Term Loan  Prime  Rate
          Margin and the Term Loan Libor Margin shall be calculated based upon
          the quarterly financial statements of Borrower on a consolidated basis
          to be  furnished  to Lender in  accordance  with the terms  hereof and
          shall be adjusted as of the first day of the month following the month
          in which  such  financial  statements  and the  required  accompanying
          compliance  certificates  are furnished by Borrower to Lender provided
          there are at least five (5) Business Days between the date same are so
          furnished to Lender and the first day of the following month. If there
          is less than five (5)  Business  Days said  margins  and rate shall be
          adjusted as of the sixth (6th)  Business Day  following  the date said
          financial statements are furnished to Lender. Subject to paragraph 9.7
          hereof,  if  said  quarterly   financial   statements  and  compliance
          certificate  are not  furnished  to Lender  within the time period set
          forth in  paragraph  6.1  hereof,  the  margins  and rate shall be the
          highest  such  margin  and rate until said  financial  statements  and
          certificate  are furnished to Lender.  Notwithstanding  the foregoing,
          for the purpose of determining  the applicable  margin with respect to
          Advances and Term Loan Advances the Prime Rate Margin and Libor Margin
          in effect on November 15, 1998 (minus .25% and plus 1.5% respectively)
          shall  remain in effect and shall not be  readjusted  until the Lender
          receives the quarterly financial statements and compliance certificate
          of Borrower  for the quarter  ending  March 31,  1999,  subject to the
          preceding sentence.

6.       Subparagraph 2. 4(C) of the Loan Agreement is hereby modified to read
         as follows:
                          (C) Early Termination Fee.  If  the revolving  credit
          facility is terminated by Lender upon the  occurrence of an Event of
          Default,  or is terminated by Borrower prior to the Expiration Date or
          if Borrower  prepays said facility prior to said  Expiration  Date, in
          view of the  impracticability  and extreme  difficulty of ascertaining
          actual  damages  and  by  mutual  agreement  of  the  parties  as to a
          reasonable  calculation of Lender's lost profits as a result  thereof,
          Borrower shall pay Lender upon the effective date of such  termination
          or  prepayment a fee in an amount equal to: (a) one percent  (1.0%) of
          the Aggregate  Advance Dollar Limit if such  termination  occurs on or
          prior to November  15, 1999;  or (b) one half of one percent  (.5%) of
          the Aggregate  Advance Dollar Limit if such  termination  occurs after
          November 15, 1999 but on or prior to November 15, 2000. Such fee shall
          be  presumed  to be the amount of damages  sustained  by Lender as the
          result of an early  termination and Borrower  acknowledges  that it is
          reasonable  under  the  circumstances   currently  existing.  The  fee
          provided  for  in  this  Section  shall  be  deemed  included  in  the
          Obligations.
7.       Paragraph 2.5 of the Loan Agreement is hereby modified to read as
         follows:
         2.5  PROCEDURES  FOR  ADVANCES On each  Business  Day Prime Rate Loans
         under the  revolving  credit  facility  provided  for  herein  shall be
         advanced  by the  Lender  to the  Borrower  pursuant  to the  terms and
         conditions of the Cash Management Services. Subject to paragraph 2.1(B)
         hereof with respect to Libor Loans,  Borrower shall provide Lender with
         at least one (1) Business  Day's oral notice of the requested  Advance,
         specifying  the date (the "Loan  Date") and  amount,  which oral notice
         shall be promptly confirmed in writing by Borrower. Lender shall, on or
         after 1:00 P.M.  (New York  time) of the Loan Date,  make the amount of
         the requested  Advance  available to Borrower,  provided all conditions
         precedent  to such  loan  have been met or  satisfied.  Each  requested
         Advance  hereunder  which is to be a Libor Loan shall be in the minimum
         amount  of  $1,000,000.00  and  multiples  of  $1,000,000.00  in excess
         thereof.

8.       Article II of the Loan Agreement is hereby modified to add paragraph
         2.10 as follows
         2.10  "EQUIPMENT  TERM LOAN  LINE" (A)  Lender  shall from time to time
         hereafter  through the  Equipment  Line  Expiration  Date make loans to
         Borrower up to the aggregate  principal sum of Two Million Five Hundred
         Thousand and no/100 ($2,500,000.00)  Dollars. The proceeds of the loans
         shall be used by  Borrower  solely to purchase  items of new  Equipment
         acceptable to Lender.  As a condition  precedent to each loan,  each of
         the following shall exist:
              (i)  No Default nor Event of Default shall exist;
             (ii)  Each  representation  and warranty of Borrower herein shall
                   be true and  accurate as of the date of each loan and other
                   financial accommodation;
            (iii)  Borrower  shall  deliver  to  Lender  such
                   documents,  certificates, bills of sale or
                   title  evidencing  that the  Equipment has
                   been   delivered   to,  and   accepted  by
                   Borrower,  that such Equipment is owned by
                   Borrower  free  and  clear  of any  Liens,
                   claims and encumbrances,  and establishing
                   the   purchase   price   thereof  and  the
                   location thereof;
             (iv)  Each loan  shall not  exceed the lesser of
                   (i) eighty  (80%)  percent of the purchase
                   price of the  Equipment for which the loan
                   is  requested  or  such  other  percentage
                   thereof  as  Lender  in good  faith  deems
                   appropriate  taking into consideration the
                   nature of the specific  item of Equipment,
                   or (iv) the  appraised  value of the items
                   of   Equipment   for   what  the  loan  is
                   requested;
              (v)  Borrower  shall  deliver  to  Lender  such
                   documents  and  instruments  as Lender and
                   its counsel may deem  necessary to perfect
                   Lender's   interest  in  the   Collateral,
                   including,   but  not  limited  to,  UCC-1
                   financing statements;
             (vi)  Lender shall be in receipt of such UCC and
                   other  search  results,   information  and
                   documents   as  are   necessary,   in  its
                   opinion,  to ensure  that its  interest in
                   the  item  of  Equipment  will  be a first
                   priority and exclusive security interest;
            (vii)  Borrower  shall  execute  and  deliver  to
                   Lender a duly  completed loan request form
                   and   Promissory   Note  in  the  form  of
                   Exhibits  2.10 and 2.10(A),  respectively;
                   and
           (viii)  Borrower  pays to Lender a fee of one half
                   of one percent (but not less than $500.00)
                   of the  principal  amount of the requested
                   Term Loan Advance.
Absent  conversion to a Term Loan as set forth below, the outstanding  principal
balance of all such Term Loan Advances and all accrued and unpaid interest shall
be due and payable on the Equipment Line Expiration date.

         (B) Provided no Default nor Event of Default  exists,  the  outstanding
         balance of all Term Loan Advances  under  Paragraph  2.10(A) which have
         not previously been converted to a Term Loan shall be consolidated  and
         converted  to a Term Loan on the  earlier of (i) the  date(s)  the Term
         Loan Advances not previously converted to a Term Loan equals or exceeds
         Five Hundred Thousand and no/100 Dollars ($500,000.00) and (ii) on each
         May  15th  and  November  15th  hereafter.  The  principal  sum of each
         converted  Term Loan  shall be  payable  in equal  consecutive  monthly
         installments  of  principal,  each equal to not more than 1/36th of the
         sum of the amount so  consolidated  and converted to a Term Loan except
         for the final installment which shall be the unpaid principal  balance.
         The first  such  installment  shall be  payable on the first day of the
         first  month  following  the  dates(s)  said  Term  Loan  Advances  are
         converted to a Term Loan, and said  installments  shall continue on the
         same  date of each  month  thereafter  until  paid in full.  Upon  such
         conversion  to a Term Loan the  Borrower  shall  execute and deliver to
         Lender a duly  completed  term loan note in the form annexed  hereto as
         exhibit 2.10(B).
         (C)      Interest on Term Loan Advances.
                  (i) All Term Loan  Advances  not yet  converted to a Term Loan
shall be Prime Rate Loans and  interest  shall be based on the Prime Rate as set
forth in subparagraph (D)(i) below.
                  (ii) The  Borrower  agrees to notify the  Lender  orally or in
writing,  by 11:00 a.m. local time, at least two (2) Business Days (with respect
to Libor  Loans) prior to each date it requests  interest on a Term Loan,  to be
based on Libor, and such selection shall apply to the entire  principal  balance
of such  Term  Loan.  Each  such  notice  shall  be  irrevocable  and  confirmed
immediately  by delivery to the Lender of a Libor rate request.  Each Libor rate
request shall specify:
                    (a)       the date from which  interest  is to accrue
based on Libor,  which  shall be a London Business Day;
                    (b)       the specific Term Loan on which interest is to be
based on Libor; and
                    (c)       the duration of the Interest period applicable
thereto.
                  (iii) No more than three (3) Interest  Periods with respect to
Libor Loans shall be outstanding at any time.
                  (iv) All Term  Loans  which  are Libor  Loans  shall be in the
original principal amount of Five Hundred and 00/100 ($500,000.00) Dollars.
                  (v) On all  Term  Loans  as to  which  Borrower  has  not,  in
accordance  with the  foregoing,  selected  to have  interest  based  on  Libor,
interest  shall be based on the Prime Rate as set forth in  subparagraph  (D)(i)
below.
                  (vi)  Notwithstanding  the foregoing,  the Lender and Borrower
may  agree,  in  writing,  that  interest  on a Term Loan may be a fixed rate of
interest  for the  entire  term of the Term  Loan or  calculated  in some  other
manner, and any prepayment premium or indemnity provisions relating thereto, the
terms of which  may be set  forth in a  promissory  note,  accepted  by  Lender,
evidencing such Term Loan, and/or any other writing between Lender and Borrower.
          (D).    Interest Rate and Payment Dates
                  (i) Each Prime Rate Loan  which is a Term Loan  Advance  shall
bear interest on the daily  outstanding  principal  amount  thereof for each day
such Prime Rate Loan is  outstanding at a rate per annum equal to the Prime Rate
in effect from time to time plus the Term Loan Prime Rate Margin.  Such interest
shall be payable in arrears on each Payment Date.
                  (ii) Each Libor Loan which is a Term Loan shall bear  interest
for each Interest Period applicable thereto, on the daily outstanding  principal
amount  thereof,  at a rate per annum  equal to Libor  plus the Term Loan  Libor
Margin.  Interest shall be payable  monthly in arrears on the first Business Day
of each month.
         (E)      Conversion and Continuation Options.
                  (i) The  Borrower  may elect  from  time to time to  convert a
Libor  Loan  which is a Term Loan to a Prime  Rate Loan by giving  the Lender at
least one (1) Business Day's prior irrevocable notice of such election, provided
that  conversion  of a Libor Loan to a Prime Rate Loan shall only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert a Prime Rate Loan which is a Term Loan to a Libor  Loan,
in each case by giving  the  Lender by 11:00  a.m.  local  time at least two (2)
Business  Days' prior  irrevocable  notice of such  election.  Each notice to be
given by the Borrower pursuant to this paragraph, shall be confirmed by delivery
to the Lender of a written notice, which shall specify:
                            (a) the date on which  such  rate  conversion  shall
                             take  effect;
                            (b)  the  specific  Term  Loan  to  be converted  on
                             such date;
                            (c)  whether  the Term Loan Advances to be converted
                            are Libor  Loans,  or Prime Rate Loans;
                            (d)     whether the subject Term Loan, after 
conversion,  will be Libor Loans or Prime Rate Loans; and
                            (e)     in the case of a Libor Loan,  the  duration
of the Interest  Period  applicable thereto.
                   (ii)  A  Libor  Loan  may  be  continued  as  such  upon  the
expiration  of an Interest  Period with  respect  thereto by  compliance  by the
Borrower with the notice provisions contained in this paragraph, provided that a
Libor Loan may not be  continued  as such when any Event of Default has occurred
and is continuing,  but shall be automatically converted to a Prime Rate Loan on
the last day of the subject Interest Period.
                  (iii) If the Borrower  shall fail to give notice to convert or
continue a Libor Loan in the manner  required by  paragraphs  (i) or (ii) above,
the  Borrower  shall be deemed to have  elected to  convert  the Libor Loan to a
Prime Rate Loan on the last day of the Interest Period applicable thereto;
           (F) Prepayment.  Prime Rate Loans may be prepaid in whole or in part,
at any time without premium or penalty.  Libor Loans may be prepaid, in whole or
in part, only on the last day of an Interest Period; provided, however, that any
partial prepayments shall be in a principal amount of not less than $250,000.00,
or multiples  thereof.  Any prepayment shall include accrued and unpaid interest
to the date of prepayment on the principal amount prepaid and all other sums due
and payable  hereunder.  All payments  received on the Term Loan Advances may be
applied in such order as the Lender in its sole discretion shall determine.
          (G)  Indemnification.  The Borrower shall indemnify the Lender against
the Lender's loss or expense in employing  deposits as a consequence  of (i) the
Borrower's failure to make any payment when due under a Term Loan constituting a
Libor Loan, or (ii) any prepayment of a Libor Loan on a date other than the last
day of the applicable Interest Period ("Indemnified Loss or Expense").
          (H)  Additional  Costs.  If, at any time,  a new, or a revision in any
existing law or interpretation or administration  (including  reversals) thereof
by  any  government  authority,  central  bank  or  comparable  agency  imposes,
increases  or  modifies  any  reserve or  similar  requirement  against  assets,
deposits or credit extended by lenders generally,  or subjects lenders generally
to any tax,  duty or other charge  (except tax on the Lender's net income),  and
any of the  foregoing  increases  the  cost to the  Lender  of  maintaining  its
commitment  to provide  Libor Loans or reduce the amount of any sum  received or
receivable  by the Lender  under the Term Loan  Advances  which are Libor Loans,
within 15 days after demand by the Lender, the Borrower agrees to pay the Lender
such  additional  amounts as will compensate the Lender for such increased costs
or reductions ("Additional Costs").
         (I) Match Funding.  The amount of such (i) Indemnified Loss or Expense,
or (ii)  Additional  Costs outlined  above shall be determined,  in the Lender's
sole  discretion,  based upon the assumption that the Lender funded 100% of that
portion of the Term Loan Advances to which the  Libor-based  rate applies in the
applicable London interbank market.
          (J)  Unavailability  of Interest Rate. If, at any time, (i) the Lender
shall determine that, by reason of circumstances  affecting foreign exchange and
interbank markets  generally,  Libor deposits in the applicable  amounts are not
being  offered  to the  Lender  or Bank;  or (ii) a new,  or a  revision  in any
existing law or interpretation or administration  (including  reversals) thereof
by any  government  authority,  central bank or comparable  agency shall make it
unlawful or impossible  for the Lender to honor its  obligations  under the Term
Loan Advances,  then (A) the Lender's obligation,  if any, to make or maintain a
Libor Loan shall be suspended, and (B) at the Lender's discretion the applicable
Libor-based rate shall,  for the remainder of the term of the Loan,  immediately
be converted  to the Prime Rate plus the Term Loan Prime Rate Margin,  but if so
converted the  indemnification  obligation of Borrower under (G) above shall not
apply.

9.       Paragraph 3.3 of the Loan Agreement is hereby modified to read as
         follows:
                  3.3 EQUIPMENT  Borrower  hereby creates in favor of Lender and
         hereby  grants  to  Lender a  security  interest  in all of  Borrower's
         Equipment,  as such term is defined herein,  whether presently owned by
         Borrower or hereafter  acquired,  and wherever  located  excepting only
         items of motor vehicle rolling stock subject to purchase money security
         interests in favor of third  Persons and  unencumbered  motor  vehicles
         more than five (5) years old, but  specifically  including all items of
         Equipment  financed  with the  proceeds  of Term  Loan  Advances  under
         paragraph 2.10 hereof.

10.      Paragraph 5.14 of the Loan Agreement is hereby modified to read as
         follows:
                  5.14 PROCEEDS OF LOAN Borrower is not engaged principally,  or
         as one of its important activities, in the business of extending credit
         for the purpose of  purchasing  or carrying any margin stock within the
         meaning  of  Regulation  U of the  Board of  Governors  of the  Federal
         Reserve System,  as amended.  No part of the proceeds of the loans will
         be used, directly or indirectly,  for a purpose which violates any law,
         rule  or  regulation  of  any  Governmental  Body,   including  without
         limitation  the  provisions of Regulations G, T, U or X of the Board of
         Governors  of  the  Federal  Reserve  System,   as  amended.   Borrower
         represents that the proceeds of the Advances  provided for herein shall
         be used to finance  Accounts  Receivable,  for  working  capital and to
         finance Permitted  Acquisitions and other Acquisitions  consented to in
         writing by Lender,  and the proceeds of the Term Loan Advances shall be
         used to finance the  acquisition  of items of Equipment  for which said
         Term Loan  Advances  are  requested.  No  proceeds of any loan or other
         financial  accommodations  hereunder shall be used to purchase or carry
         any margin  stock  (within  the meaning of  Regulation  U issued by the
         Board of Governors of the Federal  Reserve  System) or to extend credit
         to others for the purpose of purchasing or carrying any margin stock.

11.      Article VI of the Loan Agreement is hereby modified to add paragraph
         6.17 as follows:

                  6.17     CONSUMMATION OF ACQUISITONS.
                                    (A)Borrower shall furnish to Lender a  copy
          of any  letter of intent  or  similar  document  with  respect  to any
          proposed  Acquisition  promptly following the execution thereof but no
          later than three  weeks  after such  execution.  At least one (1) week
          prior  to the  anticipated  date of  consummation  of an  Acquisition,
          Borrower shall furnish to Lender the documents and other materials set
          forth on exhibit  6.17(A)  annexed hereto with respect to the proposed
          Acquisition,  provided,  however,  that if  Borrower  anticipates  the
          Acquisition  will  not  be a  Permitted  Acquisition,  but  rather  an
          Acquisition  that requires the consent of the Lender,  said  documents
          and  materials  shall be  furnished to Lender at least three (3) weeks
          prior to the  anticipated  date of consummation of the Acquisition and
          the Borrower  shall specify those aspects of the proposed  Acquisition
          which it believes makes it not a Permitted Acquisition.
                                    (B) Not  earlier  than one (1) day prior to,
          but not later than the day of and prior to the date of consummation of
          any  Acquisition,  Borrower  shall  furnish to Lender an  availability
          certificate in the form of exhibit 6.17 (B) annexed hereto,  including
          details of any adjustment in the Purchase  Price from the  anticipated
          Purchase Price previously reported to Lender.
                                    (C) Within  thirty  (30) days  after
          consummation  of an  Acquisition  Borrower  shall  furnish  to  Lender
          the documents and materials set forth on exhibit 6.17(C) annexed
          hereto.
                                    (D) If Lender  consents  to an  Acquisition
         which is not a  Permitted Acquisition,  said  Acquisition  shall
         conform to all of the terms and conditions  of a Permitted
         Acquisition,  as set forth on exhibit  1.86 annexed  hereto,  and
         Borrower shall comply with the  requirements  set forth on said exhibit
         1.86,  excepting  only those terms and conditions the Lender agrees, in
         writing, do not apply to said Acquisition.

12.                   Paragraphs 7.2, 7.8 and 7.13 of the Loan Agreement are
         hereby modified to read as follows:
                  7.2      FINANCIAL COVENANTS
                           (A) Shareholders Equity.  Borrower, on a consolidated
         basis, will not allow its Shareholder  Equity to be less than an amount
         equal to seventy-five  percent (75%) of it's Shareholders  Equity as of
         September  30,  1998 plus  sixty-five  percent  (65%) of all Net Income
         earned after  September 30, 1998 plus one hundred percent (100%) of all
         net  proceeds  received  after  September  30,  1998  from  the sale or
         issuance of any capital stock or similar equity instrument.
                           (B)      Cash Flow Leverage  Ratio.  Borrower,  on a
         consolidated  basis,  will not allow its Cash Flow  Leverage  Ratio, 
         calculated  at the end of each fiscal  quarter,  to be more than
                                  (i)   4.6 to 1.0 through December 31, 1998;
                                  (ii)  4.0 to 1.0 from January 1, 1999 through
                                        November  30,  1999;
                                  (iii) 3.75 to 1.0 from December 1, 1999
                                        through  November 30, 2000; and
                                  (iv)  3.50 to 1.0 from  December  1, 2000 on.
                           (C) Capital Expenditures. Borrower, on a consolidated
         basis, will not in any fiscal year make Capital  Expenditures in excess
         of Three Million Two Hundred  Thousand Dollars  ($3,200,000.00)  in the
         aggregate per annum.
                           (D)      Fixed Charge Coverage Ratio.  Borrower,  on
         a consolidated basis, will not allow its Fixed Charge  Coverage Ratio,
         calculated at the end of each fiscal quarter,  to be
         less than
                               (i)      1.0 to 1.0 through November 30, 1999;
                               (ii)     1.15 to 1.0  from  December  1,  1999
                                        through  November  30, 2000; and
                               (iii)    1.25 to 1.0 from December 1, 2000 on.
                           Compliance  with the  foregoing  covenants,  shall be
         calculated  on the  financial  statements  of Borrower as of the end of
         each fiscal  quarter and of the Borrower on a  consolidated  basis.  If
         during any fiscal quarter, commencing with the quarter ending September
         30, 1998,  Borrower  consummated any  Acquisition,  for the purposes of
         calculating  the foregoing  covenants,  the  financial  results for the
         subject  period  of  the  Acquired  Entity  shall  be  included  in the
         consolidated financial statements of the Borrower as if the Acquisition
         occurred  on the first day of the period for which said  covenants  are
         calculated.
                  7.8  PREPAYMENTS OF  INDEBTEDNESS  Borrower will not prepay or
         obligate  itself  to  prepay  in  whole  or  in  part,  or  redeem  the
         Subordinated Convertible Debentures, any other Subordinated Debt or any
         Capital  Leases,  except  that  provided  no  Event of  Default  exists
         Borrower may prepay its obligations under Capital Leases in conjunction
         with and from the  proceeds of a  refinancing  of said  Capital  Leases
         which  refinancing  is on financial  and other terms more  favorable to
         Borrower than the Capital  Leases being so  refinanced.  Borrower shall
         notify Lender in writing of any such refinancing.
                  7.13 MAINTAIN  CORPORATE  EXISTENCE AND NATURE OF BUSINESS (A)
         Borrower  will not allow its  corporate  existence  to be other than in
         good  standing  and will not,  without  the prior  written  consent  of
         Lender,  dissolve or liquidate, or merge or consolidate with or acquire
         or affiliate with any other business  entity  including any acquisition
         of the assets of any other Person or form any  Subsidiary  other than a
         Permitted  Acquisition,  provided that upon not less than ten (10) days
         prior written  notice to Lender (i) any Borrower may be merged into any
         other Borrower,  and (ii) any Borrower may be dissolved if the business
         of such Borrower is to be continued by any other Borrower.
                           (B)  Borrower   will  not  change  its  name  without
         furnishing  to  Lender  at least ten (10)  days  prior  written  notice
         thereof.
                           (C) Borrower  will not utilize any trade name not set
         forth on Exhibit  "A"  without  furnishing  to Lender at least ten (10)
         days prior written notice thereof.
                           (D)      Borrower will not change the nature of its
         business.

13.      Article VIII of the Loan Agreement is hereby  modified to add paragraph
         8.17 as  follows:
         8.17  CHANGE IN CONTROL If after the date hereof any event or other
         transaction  occurs,  without  the  written  consent of Lender,  as a
         result of which there is a change in ownership or control of the voting
         capital stock of CD&L so that any Person owns or controls more than 25%
         of said voting stock.

14.      Borrower represents that:
         (a) each and every  representation  heretofore  made by Borrower in the
Loan  Agreement and the other Loan  Documents is true and correct as of the date
of this  Modification  Agreement,  except  that  the  representations  as to the
financial  condition  of the  Borrower  are deemed to be updated to reflect  the
financial  condition  of Borrower  as of the date of the most  recent  financial
statements  furnished to Lender and the attached schedules are deemed to replace
the corresponding schedules in the Loan Agreement,
         (b) no consent or approval  of, or  exemption by any Person is required
to  authorize,  or is otherwise  required in  connection  with the execution and
delivery of this  Modification  Agreement and the other Loan Documents  provided
for  herein,  which has not been  obtained  and which  remains in full force and
effect,
         (c)  Borrower  has the  power to  execute,  deliver  and carry out this
Modification  Agreement and all documents executed in connection  herewith,  and
this  Modification  Agreement and such other  documents  are valid,  binding and
enforceable as against Borrower in accordance with their terms,
         (d) no material  adverse change in the financial  condition of Borrower
has occurred since the date of the most recent financial  statements of Borrower
submitted  to Lender,  and the  information  contained  in said  statements  and
reports is true and correctly  reflects the financial  condition of Borrower and
such Obligors as of the dates of the statements and reports, and such statements
and reports have been  prepared in  accordance  with GAAP and do not contain any
material  misstatement  of fact or omit to state any facts necessary to make the
statements contained therein not misleading, and
         (e)          No Default or Event of Default exists under the Loan
Agreement.

15. Each Borrower  hereby  confirms the security  interests and liens granted by
Borrower  to  Lender  in and to the  Collateral  in  accordance  with  the  Loan
Agreement and other Loan Documents as security for its Obligations to Lender.

16. Borrower agrees to pay any and all expenses,  including  reasonable  counsel
fees and  disbursements,  incurred by Lender in connection with the preparation,
negotiation  and  execution of this  Modification  Agreement  and all other Loan
Documents provided for herein.

17. In  consideration  of Lender  entering  into  this  Modification  Agreement,
Borrower  shall pay to Lender,  contemporaneous  with the execution  hereof,  an
$18,750.00 Facility Fee.

18. This  Modification  Agreement is intended to supplement  and modify the Loan
and Security  Agreement dated as of July 14, 1997 as modified between Lender and
Borrower  and the  rights and  obligations  of the  parties  under said Loan and
Security  Agreement  shall not in any way be  vacated,  modified  or  terminated
except as herein provided.  All terms and conditions contained in each and every
agreement or promissory  note or other evidence of  indebtedness  of Borrower to
Lender are incorporated herein by reference.  If there is a conflict between any
of  the  provisions   heretofore   entered  into  and  the  provisions  of  this
Modification Agreement, then the provisions of this Modification Agreement shall
govern.

19. This  Modification  Agreement  shall be  construed  in  accordance  with the
substantive laws of the State of New Jersey without regard to conflict of laws.

20. This Modification Agreement may be executed by one or more of the parties on
any number of separate  counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same document.


<PAGE>



         IN WITNESS  WHEREOF,  the parties hereto have caused this  Modification
Agreement to be executed and delivered by their duly  authorized  officers as of
the day and year first above written.

                             CONSOLIDATED DELIVERY & LOGISTICS, INC.,


                             BY:  /s/ Albert W. Van Ness
                             NAME: Albert W. VanNess, Jr.
                             TITLE: Chairman and C.E.O.


                             CLAYTON/NATIONAL COURIER SYSTEMS, INC.


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             NATIONAL EXPRESS COMPANY, INC.,


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             CLICK MESSENGER SERVICE, INC.,


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             CLICK MESSENGER SERVICE OF N.Y., INC.,

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             OLYMPIC COURIER SYSTEMS, INC.,


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             SECURITIES COURIER CORPORATION


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             SILVER STAR EXPRESS, INC.


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             SUREWAY AIR TRAFFIC CORPORATION


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President


                             SUREWAY LOGISTICS CORPORATION


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             KBD SERVICES, INC.


                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             FIRST UNION COMMERCIAL CORPORATION

                             By:  /s/ Georgios C. Kyvernitis
                             Name:  Georgios C. Kyvernitis
                             Title:  Vice President
[{"type": "8-K", "sequence": "1", "description": "CREDIT FACILITY MODIFICATION AGREEMENT", "secsgml_size_bytes": 67734}]
{"company-data": {"conformed-name": "CONSOLIDATED DELIVERY & LOGISTICS INC", "cik": "0001000779", "assigned-sic": "4213", "irs-number": "223350958", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-26954", "film-number": "98768367"}, "business-address": {"street1": "380 ALLWOOD ROAD", "city": "CLIFTON", "state": "NJ", "zip": "07012", "phone": "9734711005"}, "mail-address": {"street1": "380 ALLWOOD ROAD", "city": "CLIFTON", "state": "NJ", "zip": "07012"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549
                                    FORM 8-K

                                 CURRENT REPORT

    Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                                December 4, 1998
                Date of Report (Date of earliest event reported)

                     CONSOLIDATED DELIVERY & LOGISTICS, INC.
             (Exact name of Registrant as specified in its charter)

     Delaware                             0-26954           22-3350958
(State or other jurisdiction of     (Commission File       (IRS Employer
incorporation or organization)          Number)           Identification No.)

380 Allwood Road, Clifton, New Jersey                           07012
(Address of principal executive offices)                     (Zip Code)  
                                                                   

(Registrant's telephone number, including area code)       (973) 471-1005

                                 NOT APPLICABLE
      (Former name or former address,  if changed since last report.)
ITEM 5.         Other Events

On December 4, 1998,  Consolidated  Delivery & Logistics,  Inc. (the  "Company")
announced  that First  Union  Commercial  Corporation  ("First  Union")  and the
Company   executed  an  amendment  to  their  existing   credit   facility  (the
"Modification  Agreement"),  increasing credit  availability from $15 million to
$25 million, subject to borrowing base requirements.  The Modification Agreement
became  effective  November 30, 1998 and amends the Loan and Security  Agreement
executed  with First  Union in July 1997,  as  amended.  The credit  facility is
secured by all of the assets of the Company and its subsidiaries.

The Modification  Agreement  increased  availability  under the revolving credit
facility to $22.5  million and  established a $2.5 million  equipment  term loan
line. Under the terms of the Modification Agreement,  the Company is required to
maintain certain  financial  ratios and comply with other financial  conditions.
The Modification  Agreement  expires November 15, 2001. The Company plans to use
the increased credit facility to finance acquisitions as they arise, to increase
the size of the Company's truck fleet and for general working capital purposes.

ITEM 7.         Financial Statements and Exhibits

                c.   Exhibits

                99.1  Press Release issued December 4, 1998.
                99.2  Modification Agreement between First Union Commercial
                      Corporation and Consolidated Delivery & Logistics, Inc.
SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:   December 11, 1998            CONSOLIDATED DELIVERY & LOGISTICS, INC.
                                                  (Registrant)

                                      By:  /s/ Albert W. Van Ness, Jr.
                                      Albert W. Van Ness, Jr.
                                      Chairman of the Board, Chief Executive
                                      Officer and Chief Financial Officer
Exhibit 99.1

FOR IMMEDIATE RELEASE,
CONTACT:
                 
Drew Kronick, Vice President                       Lee Laino or Ken DiPaola
Consolidated Delivery & Logistics, Inc.            The Dilenschneider Group
TEL (973) 471-1005                                 (212) 922-0900
                  

                     CONSOLIDATED DELIVERY & LOGISTICS, INC.
                    INCREASES CREDIT FACILITY TO $25 MILLION

         *Additional Funds Will be Used Primarily for New Acquisitions*

Clifton,  NJ  (December  4,  1998) -  Consolidated  Delivery &  Logistics,  Inc.
(NASDAQ:  CDLI) today announced that First Union Commercial  Corporation and the
company have executed an amendment to their existing credit facility, increasing
availability  from $15 Million to $25  million.  The  majority of the  increased
availability  under the credit facility will be available for  acquisitions  and
working  capital.  The  balance  will be  earmarked  for  equipment  financing -
specifically,  to increase the size of the Company's  truck fleet as a result of
the Company's projected growth.

Commenting  on the new  facility,  Albert W. Van Ness,  Jr.,  chairman and chief
executive officer of CD&L, said,  "After seven consecutive  quarters of improved
earnings,  CD&L is poised for an aggressive  program of growth via acquisitions.
So far  this  year,  we have  made  three  acquisitions,  which  have  increased
annualized  revenues by about $14 million.  It is  anticipated  that  additional
strategic  acquisitions will be concluded before year-end.  Clearly, First Union
Commercial  Corporation has played an integral part in CD&L's  successes to date
and we look forward to our continued  partnership as the Company  implements its
acquisition strategy."

This press release contains certain forward-looking  statements regarding future
events or the future financial performance of the Company. These forward-looking
statements include comments on the Company's future business development.  These
forward-looking  statements  involve  certain risks and  uncertainties  that may
cause the actual events or results to differ  materially from those indicated by
such  forward-looking  statements.  Potential  risks and  uncertainties  include
without  limitation the risk that the Company will lack  satisfactory  merger or
acquisition  candidates  and/or have an  inability to conclude  acquisitions  or
mergers on satisfactory terms, will be unable to obtain acquisition financing on
satisfactory  terms, or achieve cost savings or additional profits  contemplated
by the Company's  business  management  strategy or other risks specified in the
Company's SEC filing.

Consolidated Delivery & Logistics,  Inc. headquartered in Clifton, New Jersey is
a full service,  same day ground and air delivery and logistics  company with 70
offices in 24 states and the District of Columbia.  The Company has nearly 4,000
employees and utilizes  contractors to provide time sensitive  delivery services
to thousands of businesses.
Exhibit 99.2

                                            THIS MODIFICATION  AGREEMENT,  dated
                                            as  of  November  30,  1998  by  and
                                            between   FIRST   UNION   COMMERCIAL
                                            CORPORATION,   with   a   place   of
                                            business  at 1339  Chestnut  Street,
                                            Philadelphia,     PA     19107-3579,
                                            (hereinafter  called  "Lender")  and
                                            CONSOLIDATED  DELIVERY &  LOGISTICS,
                                            INC.,    CLAYTON/NATIONAL    COURIER
                                            SYSTEMS,   INC.,   NATIONAL  EXPRESS
                                            COMPANY,   INC.,   CLICK   MESSENGER
                                            SERVICE,   INC.,   CLICK   MESSENGER
                                            SERVICE  OF  N.Y.,   INC.,   OLYMPIC
                                            COURIER  SYSTEMS,  INC.,  SECURITIES
                                            COURIER  CORPORATION,   SILVER  STAR
                                            EXPRESS,  INC.,  SUREWAY AIR TRAFFIC
                                            CORPORATION,    SUREWAY    LOGISTICS
                                            CORPORATION,  and KBD SERVICES, INC.
                                            (hereinafter  sometimes individually
                                            and collectively called "Borrower").

                                    RECITALS
         WHEREAS,  Lender,  American Courier, Inc.  ("American"),  Court Courier
Systems,  Inc.  ("Court"),  and each of the  Borrowers  other than KBD Services,
Inc.,  entered  into a Loan and  Security  Agreement  dated  July 14,  1997,  as
modified by letter  agreements  dated as of September  30, 1997, as of April 30,
1998 and as of July 1,  1998,  which,  inter  alia,  sets  forth  the  terms and
conditions of a revolving credit facility of up to $15,000,000.00; and
         WHEREAS,  KBD became a wholly owned  subsidiary of Silver Star Express,
Inc.  and  pursuant to a Joinder  Agreement  dated as of August 27, 1998 between
Lender and Borrower , KBD  Services,  Inc.  joined into the Loan  Agreement  and
other Loan  Documents as one of the Borrowers so that the Borrower  could obtain
Advances under the revolving credit facility  provided for in the Loan Agreement
based upon, inter alia, the accounts receivable of each Borrower,  including KBD
Services, Inc.; (the aforesaid Loan and Security Agreement as modified and as so
joinded into by the aforesaid Joinder Agreement the "Loan Agreement"); and
         WHEREAS,  American and Court merged into Click Messenger Service, Inc.,
and
         WHEREAS,  Borrower  has  applied to Lender (a) for an  increase  in the
maximum amount of the revolving  credit facility to  $22,500,000.00,  (b) for an
extension of the term of the increased  revolving  credit  facility,  (c) for an
equipment  acquisition  term loan facility of up to  $2,500,000.00,  and (d) for
other  modifications to the terms and conditions set forth in the Loan Agreement
and other Loan Documents; and
         WHEREAS,  Lender has  approved the  application  of the Borrower on the
         terms and condition set forth herein.
         NOW, THEREFORE,  in consideration of the premises and other good and
valuable consideration, the parties hereto adopt the above recitals and agree as
follows:

1. Capitalized  terms not defined herein but defined in the Loan Agreement shall
have  the same  meanings  ascribed  to such  terms  in the  Loan  Agreement.
2. Paragraphs 1.4, 1.9, 1.23, 1.31, 1.47, 1.48, 1.60, 1.61, 1.65, 1.66, 1.68,
1.69, 1.76 and 1.79 of the Loan Agreement are hereby modified to read as
follows:

                  1.4  "ADVANCE  DOLLAR  LIMIT"  means  Twenty Two Million  Five
         Hundred  Thousand  and no/100  ($22,500,000.00)  Dollars or such lesser
         amount as the maximum amount of the revolving credit facility  provided
         for herein may be reduced in accordance with paragraph 7.10 hereof.
                  1.9  "BORROWING  BASE"  means  the  lesser of (A)  Twenty  Two
         Million Five Hundred Thousand and no/100  ($22,500,000.00)  Dollars, or
         (B) the net of (i) the Eligible Loan Value of Eligible  Accounts  minus
         (ii) the Debenture Reserve Amount.
                  1.23  "ELIGIBLE LOAN VALUE OF ELIGIBLE  ACCOUNTS"  means up to
         eighty-five  (85%) percent of the face amount of Eligible Accounts less
         returns  and  discounts,  offsets,  contra  balances,  credits  or  all
         allowances  of any  nature,  at any  time  issued,  owing,  granted  or
         outstanding.
                  1.31 "FIXED CHARGE COVERAGE RATIO" means at any date the ratio
         of (A)(i) the  EBITDA  minus (ii) all  unfunded  Capital  Expenditures,
         dividends,  and taxes  paid  during  the 12 months  ending on said date
         divided by (B) the sum of (i) the  current  portion of  long-term  debt
         paid or  scheduled  to be paid during the twelve (12) months  ending on
         such date plus (ii) the  interest  expense  for the twelve  (12) months
         ending on said date.
                  1.47 "LIBOR LOAN" means each Advance, or Term Loan Advance, as
         applicable,  on which interest  thereon is in accordance with the terms
         of this Agreement, based on Libor.
1.48  "LIBOR  MARGIN"  means  a  percentage  set  forth  below
         determined by reference to the Interest Rate and Fee Cash Flow Leverage
         Ratio of the Borrower on a consolidated  basis,  with adjustments to be
         made on the dates and as set forth in paragraph 2.2(D) hereof:

             Interest Rate & Fee
             Cash Flow Leverage Ratio                         Margin

             greater than 3.65 to 1.0                         2.00%
             2.75 - 3.65 to 1.0                               1.875%
             less than 2.75 to 1.0                            1.50%

                  1.60  "PERMITTED  ENCUMBRANCES"  means (A)  Liens  for  taxes,
         assessments or  governmental  charges or levies on property of Borrower
         if the same shall not at the time be delinquent  or  thereafter  can be
         paid without penalty,  or are being diligently  contested in good faith
         and  by  appropriate   proceedings   and  against  which  Borrower  has
         established  adequate  reserves,  (B)  Liens  imposed  by law,  such as
         carriers,  warehousemen  and  mechanics  Liens,  and Liens  incurred in
         connection  with  construction  or other  similar  Liens arising in the
         ordinary  course of business  provided same are not at the time due and
         payable,  (C) Liens  arising  out of pledge or deposits  under  workers
         compensation  law,  unemployment  insurance,  old age  pension or other
         social security or retirement benefit or similar legislation, (D) Liens
         arising from  judgments or awards with respect to which  Borrower shall
         be diligently  and in good faith  prosecuting  an appeal or proceedings
         for review  and shall have  secured a stay of  execution  pending  such
         appeal or review, (E) Liens in favor of Lender or any Lender Affiliate,
         (F) the existing and future purchase money security  interests in items
         of Equipment (G) the existing  liens on specific  assets of Borrower as
         identified on Exhibit 1.60 annexed hereto and (H) the liens existing on
         the  date of  consummation  of an  Acquisition  on  specific  items  of
         Equipment of an Acquired Entity.
                  1.61 "PERMITTED INDEBTEDNESS" means (A) Indebtedness to Lender
         or any Lender Affiliate,  (B) Subordinated Debt consented to in writing
         by Lender including the Indebtedness under the Subordinated Convertible
         Debentures,   (C)  the  Seller   Indebtedness,   (D)   purchase   money
         Indebtedness  incurred  with  respect  to  the  purchase  of  items  of
         equipment or under Capital  Leases of items of Equipment  provided said
         Indebtedness  incurred  in each year does not  exceed the  maximum  per
         annum Capital Expenditures  permitted hereunder and (E) guarantees by a
         Borrower  of the  obligations  of  another  Borrower  to third  persons
         provided that if the primary Indebtedness so guaranteed is Subordinated
         Debt the guarantee Indebtedness shall be Subordinated Debt.
                  1.65  "PRIME  RATE  LOANS"  means each  Advance,  or Term Loan
         Advance, as applicable, on which interest thereon is in accordance with
         the terms of this Agreement based on the Prime Rate.
                  1.66 "PRIME RATE MARGIN"  means a  percentage  set forth below
         determined by reference to the Interest Rate and Fee Cash Flow Leverage
         Ratio of the Borrower on a consolidated  basis,  with adjustments to be
         made on the dates and as set forth in paragraph 2.2(D) hereof:

         Interest Rate & Fee
         Cash Flow Leverage Ratio                         Margin

         greater than 3.65 to 1.0                        .25%
         2.75 - 3.65 to 1.0                               00%
         less than 2.75 to 1.0                     minus .25%

                  1.68  "SELLER  INDEBTEDNESS"  means  (A) the  Indebtedness  of
         Borrower  identified  on Exhibit 5.20 annexed  hereto  arising from the
         purchase  by   Borrower  of  assets  of  third   Persons  and  (B)  all
         Indebtedness  owing on account of or with respect to an  Acquisition of
         the assets or stock of an Acquired Entity, including without limitation
         all  Indebtedness  incurred  on  account  of the  Purchase  Price of an
         Acquisition.
                  1.69 "SUBORDINATED CONVERTIBLE DEBENTURES" means those certain
         10 % Subordinated  Convertible  Debentures due August 21, 2000 of CD&L,
         the holders thereof and the principal  amount thereof being  identified
         in Exhibit 1.69 annexed hereto.
                  1.76  "TOTAL  FUNDED  DEBT"  means  all  Indebtedness  of  the
         Borrower,  including without  limitation the Obligations of Borrower to
         Lender, the Indebtedness under the Subordinated Convertible Debentures,
         all other Subordinated Debt, the Seller  Indebtedness and under Capital
         Leases.
                  1.79 "UNUSED COMMITMENT FEE RATE" means a percentage set forth
         below  determined  by reference to the Interest  Rate and Fee Cash Flow
         Leverage  Ratio  of  the  Borrower  on  a  consolidated   basis,   with
         adjustments  to be made on the  dates  and as set  forth  in  paragraph
         2.2(D) hereof:

         Interest Rate & Fee Cash Flow Leverage Ratio               Rate
         --------------------------------------------               ----
         greater than 3.65 to 1.0                                   .50%
         2.75 to 3.65 to 1.0                                        .375%
         less than 2.75 to 1.0                                      .25%

3.       Article I of the Loan Agreement is hereby modified to add paragraphs
         1.81 through 1.92 as follows:
                  1.81    "ACQUIRED  ENTITY"  means any Person whose assets or
         capital  stock was acquired by a Borrower pursuant to a Permitted
         Acquisition or other  Acquisition  consented to in writing by Lender.
                  1.82 "ACQUISITION"  means any transaction which results in the
         acquisition  of the capital stock or assets (other than the purchase of
         materials,  supplies,  etc. in the  ordinary  course of  business) of a
         Person, including without limitation by a merger or exchange of stock.
                  1.83  "AGGREGATE  ADVANCE  DOLLAR  LIMIT"  means  Twenty  Five
         Million and no/100 Dollars ($25,000,000.00).
                  1.84    "CD&L"  means Consolidated Delivery & Logistics, Inc.
                  1.85    "EQUIPMENT LINE EXPIRATION DATE" means November 15,
         2001.
                  1.86    "PERMITTED  ACQUISITION"  means the  Acquisition  by a
         Borrower  of the  capital stock of or assets of a Person which meets
         the  conditions set forth on Exhibit 1.86 annexed hereto and
         incorporated herein.
                  1.87  "PURCHASE  PRICE"  means the amounts  paid or payable on
         account  of  or  with  respect  to  an  Acquisition  including  without
         limitation (i) all sums payable (A) in cash, (B) under promissory notes
         or similar Instruments issued to the seller, (C) under  non-competition
         and/or  consulting  Agreements  entered  into  in  connection  with  an
         Acquisition, and (D) under all "Earn Out" or similar agreements entered
         into in connection  with an Acquisition  that should be recorded on the
         financial  statements of Borrower in accordance  with GAAP and (ii) the
         value of any stock issued to the seller,  such value to be equal to (x)
         the value,  if any,  placed on said stock in the  applicable  agreement
         under which the Acquisition is consummated or (y) if no value is placed
         on said stock in the applicable agreement the "value" to be assigned on
         the books and records of the Borrower in  accordance  with GAAP for the
         issuance of said stock, (including the increase in common stock and the
         increase in paid in capital)  after  consultation  with and approval by
         (prior to consummation of the  Acquisition)  the independent  certified
         public accountants of Borrower.
                  1.88 "SHAREHOLDER  EQUITY" means the total shareholder  equity
         of Borrower on a  consolidated  basis as determined in accordance  with
         GAAP.
                  1.89 "TERM LOAN" means the Term Loan  Advances  converted to a
         term loan under paragraph 2.10(B) hereof.
                  1.90  "TERM  LOAN  ADVANCE(S)"  means  all  loans by Lender to
         Borrower under the Term Loan facility provided for in paragraph 2.10 of
         this Agreement.
                  1.91 "TERM LOAN LIBOR MARGIN" means the Libor Margin in effect
         from time to time under  this  Agreement  plus one half of one  percent
         (.5%).
                  1.92 "TERM LOAN PRIME RATE MARGIN" means the Prime Rate Margin
         in effect from time to time under this  Agreement  plus one half of one
         percent (.5%).

4.       Paragraph 2.1 of the Loan Agreement is hereby modified to read as
         follows:
                  2.1      REVOLVING CREDIT FACILITY
                   (A)  Facility.  So long as no  Default  nor Event of  Default
         exists,  Lender  shall,  from  time  to  time  hereafter,  through  the
         Expiration Date, lend to Borrower such amounts as the Borrower may from
         time to time  request,  based upon the Eligible  Loan Value of Eligible
         Accounts  Receivable as may exist from time to time,  but not to exceed
         the Borrowing  Base,  and as may be reported by Borrower to Lender on a
         borrowing  base  report  in the  form of  Exhibit  2.1  which  is to be
         submitted  by Borrower to Lender by Thursday of each week and as of the
         close of business of the preceding Sunday. Lender shall have the right,
         from time to time, in the good faith exercise of its  discretion,  upon
         at  least  five  (5) days  prior  notice  to  Borrower,  to  alter  the
         percentages of the Eligible Loan Value of Eligible  Accounts  and/or to
         establish  reserves  against Eligible  Accounts.  Each month Lender may
         render to Borrower a statement of the status of the loans  provided for
         herein,  which Borrower  hereby agrees shall be deemed to be an account
         stated and correct  and  acceptable  to and binding on Borrower  unless
         Lender shall receive a corrected  statement of exceptions from Borrower
         within thirty (30) days after the monthly statements have been rendered
         to Borrower.  The revolving  credit facility  provided for herein shall
         have a Term through  November 15, 2001. All such loans shall be payable
         on the Expiration  Date or as otherwise set forth in this Agreement and
         shall be  evidenced  by a  promissory  note in the form of Exhibit  2.1
         annexed hereto.  Notwithstanding the expiration of the Term, the rights
         of  Lender  hereunder  and  the  obligations  of  Borrower   hereunder,
         including  any  Obligations  with respect to loans and other  financial
         accommodations  made after the Expiration Date,  further  including but
         not  limited  to the grant of  security  interests  in and Liens on the
         Collateral  as set forth in Article  III hereof,  shall  remain in full
         force and effect until all of the Obligations of Borrower to Lender and
         each Lender Affiliate are satisfied in full.
                   (B)     Interest on Advances.
                           (i) The Borrower  agrees to notify the Lender  orally
         or in writing, by 11:00 a.m. local time, at least two (2) Business Days
         (with  respect to Libor Loans) prior to each date it requests  interest
         on the Advances,  or a portion thereof, to be based on Libor. Each such
         notice shall be  irrevocable  and confirmed  immediately by delivery to
         the Lender of a Libor rate  request.  Each  Libor  rate  request  shall
         specify:
                                    (a)     the date from  which  interest  is
         to  accrue  based on Libor, which shall be a London Business Day;
                                    (b)     the  aggregate  amount of Advances
         on which  interest is to be based on Libor; and
                                    (c)     the duration of the Interest period
         applicable thereto.
                           (ii)     No more than three (3)  Interest  Periods
         with respect to Libor Loans shall be outstanding at any time.
                           (iii)  All  Libor  Loans  shall  be in the  principal
         amount of One Million and 00/100 ($1,000,000.00) Dollars or an integral
         multiple thereof.
                           (iv) On all Advances as to which Borrower has not, in
         accordance  with the  foregoing,  selected  to have  interest  based on
         Libor,  interest  shall  be  based on the  Prime  Rate as set  forth in
         subparagraph (C)(i) below.
                   (C).    Interest Rate and Payment Dates
                           (i) Each Prime Rate Loan shall bear  interest  on the
         daily outstanding principal amount thereof for each day such Prime Rate
         Loan is  outstanding  at a rate per annum  equal to the  Prime  Rate in
         effect  from time to time plus the Prime  Rate  Margin.  Such  interest
         shall be payable in arrears on each Payment Date.
                           (ii) Each Libor Loan  shall  bear  interest  for each
         Interest Period applicable thereto, on the daily outstanding  principal
         amount  thereof,  at a rate per  annum  equal to Libor  plus the  Libor
         Margin.  Interest shall be payable in arrears for each Interest  Period
         on each Payment Date.
                  (D)      Conversion and Continuation Options.
                           (i)  The  Borrower  may  elect  from  time to time to
         convert a Libor Loan to a Prime Rate Loan by giving the Lender at least
         one (1)  Business  Day's  prior  irrevocable  notice of such  election,
         provided  that  conversion  of a Libor  Loan to a Prime Rate Loan shall
         only  be  made on the  last  day of an  Interest  Period  with  respect
         thereto.  The  Borrower  may elect from time to time to convert a Prime
         Rate Loan to a Libor  Loan,  in each case by giving the Lender by 11:00
         a.m.  local  time at least two (2)  Business  Days'  prior  irrevocable
         notice  of such  election.  Each  notice  to be given  by the  Borrower
         pursuant  to this  paragraph,  shall be  confirmed  by  delivery to the
         Lender of a written notice, which shall specify:
                                    (a)    the date on which such rate
         conversion shall take effect;
                                    (b)    the  aggregate  amount of the
         Advances to be converted on such date;
                                    (c)    whether  the  Advances to be 
         converted  are Libor  Loans,  or Prime Rate Loans;
                                    (d)    whether the Advances,  after
         conversion,  will be Libor Loans or Prime Rate Loans; and
                                    (e)    in the case of a Libor  Loan,  the
         duration  of the  Interest Period applicable thereto.
                  All or any part of the outstanding  principal of a Libor Loan,
         or a Prime Rate Loan,  may be  converted as provided  herein,  provided
         that partial conversions shall be in an aggregate principal amount of a
         minimum of One Million  ($1,000,000.00) Dollars or an integral multiple
         thereof.
                            (ii) A Libor Loan may be  continued as such upon the
         expiration of an Interest  Period with respect thereto by compliance by
         the Borrower with the notice  provisions  contained in this  paragraph,
         provided  that a Libor Loan may not be continued as such when any Event
         of Default has occurred and is continuing,  but shall be  automatically
         converted to a Prime Rate Loan on the last day of the subject  Interest
         Period.
                            (iii) If the  Borrower  shall fail to give notice to
         convert or continue a Libor Loan in the manner  required by  paragraphs
         (i) or (ii)  above,  the  Borrower  shall be deemed to have  elected to
         convert  the  Libor  Loan to a Prime  Rate  Loan on the last day of the
         Interest Period applicable thereto;
                    (E) Prepayment.  Prime Rate Loans may be prepaid in whole or
         in part,  at any time  without  premium or penalty.  Libor Loans may be
         prepaid,  in  whole or in  part,  only on the  last day of an  Interest
         Period;  provided,  however, that any partial prepayments shall be in a
         principal amount of not less than $1,000,000.00,  or multiples thereof.
         Any prepayment shall include accrued and unpaid interest to the date of
         prepayment on the principal  amount  prepaid and all other sums due and
         payable hereunder. All payments received on the Advances may be applied
         in such order as the Lender in its sole discretion shall determine.
                   (F) Indemnification.  The Borrower shall indemnify the Lender
         against  the  Lender's  loss or  expense  in  employing  deposits  as a
         consequence of (i) the Borrower's  failure to make any payment when due
         under the Advances constituting a Libor Loan, or (ii) any prepayment of
         a Libor  Loan on a date  other  than  the  last  day of the  applicable
         Interest Period ("Indemnified Loss or Expense").
                   (G) Additional  Costs.  If, at any time, a new, or a revision
         in any  existing law or  interpretation  or  administration  (including
         reversals)  thereof  by  any  government  authority,  central  bank  or
         comparable agency imposes, increases or modifies any reserve or similar
         requirement  against  assets,  deposits  or credit  extended by lenders
         generally,  or subjects  lenders  generally  to any tax,  duty or other
         charge  (except  tax  on  the  Lender's  net  income),  and  any of the
         foregoing   increases  the  cost  to  the  Lender  of  maintaining  its
         commitment  to  provide  Libor  Loans or reduce  the  amount of any sum
         received or receivable by the Lender under the Advances which are Libor
         Loans,  within 15 days after demand by the Lender,  the Borrower agrees
         to pay the Lender such additional amounts as will compensate the Lender
         for such increased costs or reductions ("Additional Costs").
                  (H) Match Funding.  The amount of such (i) Indemnified Loss or
         Expense,  or (ii) Additional  Costs outlined above shall be determined,
         in the Lender's sole  discretion,  based upon the  assumption  that the
         Lender  funded  100% of that  portion  of the  Advances  to  which  the
         Libor-based rate applies in the applicable London interbank market.
                   (I) Unavailability of Interest Rate. If, at any time, (i) the
         Lender  shall  determine  that,  by reason of  circumstances  affecting
         foreign exchange and interbank markets generally, Libor deposits in the
         applicable amounts are not being offered to the Lender or Bank; or (ii)
         a  new,  or a  revision  in  any  existing  law  or  interpretation  or
         administration   (including   reversals)   thereof  by  any  government
         authority,  central bank or comparable agency shall make it unlawful or
         impossible for the Lender to honor its obligations  under the Advances,
         then (A) the Lender's  obligation,  if any, to make or maintain a Libor
         Loan  shall  be  suspended,  and  (B) at the  Lender's  discretion  the
         applicable Libor-based rate shall, for the remainder of the term of the
         Loan,  immediately  be  converted to the Prime Rate plus the Prime Rate
         Margin, but if so converted the indemnification  obligation of Borrower
         under (F) above shall not apply.

5.       Subparagraph 2.2(D) of the Loan Agreement is hereby modified to read as
         follows:
                  (D)   Adjustments.The Prime Rate Margin and the Libor  Margin
          and the  Unused  Commitment  Fee Rate and the Term Loan  Prime  Rate
          Margin and the Term Loan Libor Margin shall be calculated based upon
          the quarterly financial statements of Borrower on a consolidated basis
          to be  furnished  to Lender in  accordance  with the terms  hereof and
          shall be adjusted as of the first day of the month following the month
          in which  such  financial  statements  and the  required  accompanying
          compliance  certificates  are furnished by Borrower to Lender provided
          there are at least five (5) Business Days between the date same are so
          furnished to Lender and the first day of the following month. If there
          is less than five (5)  Business  Days said  margins  and rate shall be
          adjusted as of the sixth (6th)  Business Day  following  the date said
          financial statements are furnished to Lender. Subject to paragraph 9.7
          hereof,  if  said  quarterly   financial   statements  and  compliance
          certificate  are not  furnished  to Lender  within the time period set
          forth in  paragraph  6.1  hereof,  the  margins  and rate shall be the
          highest  such  margin  and rate until said  financial  statements  and
          certificate  are furnished to Lender.  Notwithstanding  the foregoing,
          for the purpose of determining  the applicable  margin with respect to
          Advances and Term Loan Advances the Prime Rate Margin and Libor Margin
          in effect on November 15, 1998 (minus .25% and plus 1.5% respectively)
          shall  remain in effect and shall not be  readjusted  until the Lender
          receives the quarterly financial statements and compliance certificate
          of Borrower  for the quarter  ending  March 31,  1999,  subject to the
          preceding sentence.

6.       Subparagraph 2. 4(C) of the Loan Agreement is hereby modified to read
         as follows:
                          (C) Early Termination Fee.  If  the revolving  credit
          facility is terminated by Lender upon the  occurrence of an Event of
          Default,  or is terminated by Borrower prior to the Expiration Date or
          if Borrower  prepays said facility prior to said  Expiration  Date, in
          view of the  impracticability  and extreme  difficulty of ascertaining
          actual  damages  and  by  mutual  agreement  of  the  parties  as to a
          reasonable  calculation of Lender's lost profits as a result  thereof,
          Borrower shall pay Lender upon the effective date of such  termination
          or  prepayment a fee in an amount equal to: (a) one percent  (1.0%) of
          the Aggregate  Advance Dollar Limit if such  termination  occurs on or
          prior to November  15, 1999;  or (b) one half of one percent  (.5%) of
          the Aggregate  Advance Dollar Limit if such  termination  occurs after
          November 15, 1999 but on or prior to November 15, 2000. Such fee shall
          be  presumed  to be the amount of damages  sustained  by Lender as the
          result of an early  termination and Borrower  acknowledges  that it is
          reasonable  under  the  circumstances   currently  existing.  The  fee
          provided  for  in  this  Section  shall  be  deemed  included  in  the
          Obligations.
7.       Paragraph 2.5 of the Loan Agreement is hereby modified to read as
         follows:
         2.5  PROCEDURES  FOR  ADVANCES On each  Business  Day Prime Rate Loans
         under the  revolving  credit  facility  provided  for  herein  shall be
         advanced  by the  Lender  to the  Borrower  pursuant  to the  terms and
         conditions of the Cash Management Services. Subject to paragraph 2.1(B)
         hereof with respect to Libor Loans,  Borrower shall provide Lender with
         at least one (1) Business  Day's oral notice of the requested  Advance,
         specifying  the date (the "Loan  Date") and  amount,  which oral notice
         shall be promptly confirmed in writing by Borrower. Lender shall, on or
         after 1:00 P.M.  (New York  time) of the Loan Date,  make the amount of
         the requested  Advance  available to Borrower,  provided all conditions
         precedent  to such  loan  have been met or  satisfied.  Each  requested
         Advance  hereunder  which is to be a Libor Loan shall be in the minimum
         amount  of  $1,000,000.00  and  multiples  of  $1,000,000.00  in excess
         thereof.

8.       Article II of the Loan Agreement is hereby modified to add paragraph
         2.10 as follows
         2.10  "EQUIPMENT  TERM LOAN  LINE" (A)  Lender  shall from time to time
         hereafter  through the  Equipment  Line  Expiration  Date make loans to
         Borrower up to the aggregate  principal sum of Two Million Five Hundred
         Thousand and no/100 ($2,500,000.00)  Dollars. The proceeds of the loans
         shall be used by  Borrower  solely to purchase  items of new  Equipment
         acceptable to Lender.  As a condition  precedent to each loan,  each of
         the following shall exist:
              (i)  No Default nor Event of Default shall exist;
             (ii)  Each  representation  and warranty of Borrower herein shall
                   be true and  accurate as of the date of each loan and other
                   financial accommodation;
            (iii)  Borrower  shall  deliver  to  Lender  such
                   documents,  certificates, bills of sale or
                   title  evidencing  that the  Equipment has
                   been   delivered   to,  and   accepted  by
                   Borrower,  that such Equipment is owned by
                   Borrower  free  and  clear  of any  Liens,
                   claims and encumbrances,  and establishing
                   the   purchase   price   thereof  and  the
                   location thereof;
             (iv)  Each loan  shall not  exceed the lesser of
                   (i) eighty  (80%)  percent of the purchase
                   price of the  Equipment for which the loan
                   is  requested  or  such  other  percentage
                   thereof  as  Lender  in good  faith  deems
                   appropriate  taking into consideration the
                   nature of the specific  item of Equipment,
                   or (iv) the  appraised  value of the items
                   of   Equipment   for   what  the  loan  is
                   requested;
              (v)  Borrower  shall  deliver  to  Lender  such
                   documents  and  instruments  as Lender and
                   its counsel may deem  necessary to perfect
                   Lender's   interest  in  the   Collateral,
                   including,   but  not  limited  to,  UCC-1
                   financing statements;
             (vi)  Lender shall be in receipt of such UCC and
                   other  search  results,   information  and
                   documents   as  are   necessary,   in  its
                   opinion,  to ensure  that its  interest in
                   the  item  of  Equipment  will  be a first
                   priority and exclusive security interest;
            (vii)  Borrower  shall  execute  and  deliver  to
                   Lender a duly  completed loan request form
                   and   Promissory   Note  in  the  form  of
                   Exhibits  2.10 and 2.10(A),  respectively;
                   and
           (viii)  Borrower  pays to Lender a fee of one half
                   of one percent (but not less than $500.00)
                   of the  principal  amount of the requested
                   Term Loan Advance.
Absent  conversion to a Term Loan as set forth below, the outstanding  principal
balance of all such Term Loan Advances and all accrued and unpaid interest shall
be due and payable on the Equipment Line Expiration date.

         (B) Provided no Default nor Event of Default  exists,  the  outstanding
         balance of all Term Loan Advances  under  Paragraph  2.10(A) which have
         not previously been converted to a Term Loan shall be consolidated  and
         converted  to a Term Loan on the  earlier of (i) the  date(s)  the Term
         Loan Advances not previously converted to a Term Loan equals or exceeds
         Five Hundred Thousand and no/100 Dollars ($500,000.00) and (ii) on each
         May  15th  and  November  15th  hereafter.  The  principal  sum of each
         converted  Term Loan  shall be  payable  in equal  consecutive  monthly
         installments  of  principal,  each equal to not more than 1/36th of the
         sum of the amount so  consolidated  and converted to a Term Loan except
         for the final installment which shall be the unpaid principal  balance.
         The first  such  installment  shall be  payable on the first day of the
         first  month  following  the  dates(s)  said  Term  Loan  Advances  are
         converted to a Term Loan, and said  installments  shall continue on the
         same  date of each  month  thereafter  until  paid in full.  Upon  such
         conversion  to a Term Loan the  Borrower  shall  execute and deliver to
         Lender a duly  completed  term loan note in the form annexed  hereto as
         exhibit 2.10(B).
         (C)      Interest on Term Loan Advances.
                  (i) All Term Loan  Advances  not yet  converted to a Term Loan
shall be Prime Rate Loans and  interest  shall be based on the Prime Rate as set
forth in subparagraph (D)(i) below.
                  (ii) The  Borrower  agrees to notify the  Lender  orally or in
writing,  by 11:00 a.m. local time, at least two (2) Business Days (with respect
to Libor  Loans) prior to each date it requests  interest on a Term Loan,  to be
based on Libor, and such selection shall apply to the entire  principal  balance
of such  Term  Loan.  Each  such  notice  shall  be  irrevocable  and  confirmed
immediately  by delivery to the Lender of a Libor rate request.  Each Libor rate
request shall specify:
                    (a)       the date from which  interest  is to accrue
based on Libor,  which  shall be a London Business Day;
                    (b)       the specific Term Loan on which interest is to be
based on Libor; and
                    (c)       the duration of the Interest period applicable
thereto.
                  (iii) No more than three (3) Interest  Periods with respect to
Libor Loans shall be outstanding at any time.
                  (iv) All Term  Loans  which  are Libor  Loans  shall be in the
original principal amount of Five Hundred and 00/100 ($500,000.00) Dollars.
                  (v) On all  Term  Loans  as to  which  Borrower  has  not,  in
accordance  with the  foregoing,  selected  to have  interest  based  on  Libor,
interest  shall be based on the Prime Rate as set forth in  subparagraph  (D)(i)
below.
                  (vi)  Notwithstanding  the foregoing,  the Lender and Borrower
may  agree,  in  writing,  that  interest  on a Term Loan may be a fixed rate of
interest  for the  entire  term of the Term  Loan or  calculated  in some  other
manner, and any prepayment premium or indemnity provisions relating thereto, the
terms of which  may be set  forth in a  promissory  note,  accepted  by  Lender,
evidencing such Term Loan, and/or any other writing between Lender and Borrower.
          (D).    Interest Rate and Payment Dates
                  (i) Each Prime Rate Loan  which is a Term Loan  Advance  shall
bear interest on the daily  outstanding  principal  amount  thereof for each day
such Prime Rate Loan is  outstanding at a rate per annum equal to the Prime Rate
in effect from time to time plus the Term Loan Prime Rate Margin.  Such interest
shall be payable in arrears on each Payment Date.
                  (ii) Each Libor Loan which is a Term Loan shall bear  interest
for each Interest Period applicable thereto, on the daily outstanding  principal
amount  thereof,  at a rate per annum  equal to Libor  plus the Term Loan  Libor
Margin.  Interest shall be payable  monthly in arrears on the first Business Day
of each month.
         (E)      Conversion and Continuation Options.
                  (i) The  Borrower  may elect  from  time to time to  convert a
Libor  Loan  which is a Term Loan to a Prime  Rate Loan by giving  the Lender at
least one (1) Business Day's prior irrevocable notice of such election, provided
that  conversion  of a Libor Loan to a Prime Rate Loan shall only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert a Prime Rate Loan which is a Term Loan to a Libor  Loan,
in each case by giving  the  Lender by 11:00  a.m.  local  time at least two (2)
Business  Days' prior  irrevocable  notice of such  election.  Each notice to be
given by the Borrower pursuant to this paragraph, shall be confirmed by delivery
to the Lender of a written notice, which shall specify:
                            (a) the date on which  such  rate  conversion  shall
                             take  effect;
                            (b)  the  specific  Term  Loan  to  be converted  on
                             such date;
                            (c)  whether  the Term Loan Advances to be converted
                            are Libor  Loans,  or Prime Rate Loans;
                            (d)     whether the subject Term Loan, after 
conversion,  will be Libor Loans or Prime Rate Loans; and
                            (e)     in the case of a Libor Loan,  the  duration
of the Interest  Period  applicable thereto.
                   (ii)  A  Libor  Loan  may  be  continued  as  such  upon  the
expiration  of an Interest  Period with  respect  thereto by  compliance  by the
Borrower with the notice provisions contained in this paragraph, provided that a
Libor Loan may not be  continued  as such when any Event of Default has occurred
and is continuing,  but shall be automatically converted to a Prime Rate Loan on
the last day of the subject Interest Period.
                  (iii) If the Borrower  shall fail to give notice to convert or
continue a Libor Loan in the manner  required by  paragraphs  (i) or (ii) above,
the  Borrower  shall be deemed to have  elected to  convert  the Libor Loan to a
Prime Rate Loan on the last day of the Interest Period applicable thereto;
           (F) Prepayment.  Prime Rate Loans may be prepaid in whole or in part,
at any time without premium or penalty.  Libor Loans may be prepaid, in whole or
in part, only on the last day of an Interest Period; provided, however, that any
partial prepayments shall be in a principal amount of not less than $250,000.00,
or multiples  thereof.  Any prepayment shall include accrued and unpaid interest
to the date of prepayment on the principal amount prepaid and all other sums due
and payable  hereunder.  All payments  received on the Term Loan Advances may be
applied in such order as the Lender in its sole discretion shall determine.
          (G)  Indemnification.  The Borrower shall indemnify the Lender against
the Lender's loss or expense in employing  deposits as a consequence  of (i) the
Borrower's failure to make any payment when due under a Term Loan constituting a
Libor Loan, or (ii) any prepayment of a Libor Loan on a date other than the last
day of the applicable Interest Period ("Indemnified Loss or Expense").
          (H)  Additional  Costs.  If, at any time,  a new, or a revision in any
existing law or interpretation or administration  (including  reversals) thereof
by  any  government  authority,  central  bank  or  comparable  agency  imposes,
increases  or  modifies  any  reserve or  similar  requirement  against  assets,
deposits or credit extended by lenders generally,  or subjects lenders generally
to any tax,  duty or other charge  (except tax on the Lender's net income),  and
any of the  foregoing  increases  the  cost to the  Lender  of  maintaining  its
commitment  to provide  Libor Loans or reduce the amount of any sum  received or
receivable  by the Lender  under the Term Loan  Advances  which are Libor Loans,
within 15 days after demand by the Lender, the Borrower agrees to pay the Lender
such  additional  amounts as will compensate the Lender for such increased costs
or reductions ("Additional Costs").
         (I) Match Funding.  The amount of such (i) Indemnified Loss or Expense,
or (ii)  Additional  Costs outlined  above shall be determined,  in the Lender's
sole  discretion,  based upon the assumption that the Lender funded 100% of that
portion of the Term Loan Advances to which the  Libor-based  rate applies in the
applicable London interbank market.
          (J)  Unavailability  of Interest Rate. If, at any time, (i) the Lender
shall determine that, by reason of circumstances  affecting foreign exchange and
interbank markets  generally,  Libor deposits in the applicable  amounts are not
being  offered  to the  Lender  or Bank;  or (ii) a new,  or a  revision  in any
existing law or interpretation or administration  (including  reversals) thereof
by any  government  authority,  central bank or comparable  agency shall make it
unlawful or impossible  for the Lender to honor its  obligations  under the Term
Loan Advances,  then (A) the Lender's obligation,  if any, to make or maintain a
Libor Loan shall be suspended, and (B) at the Lender's discretion the applicable
Libor-based rate shall,  for the remainder of the term of the Loan,  immediately
be converted  to the Prime Rate plus the Term Loan Prime Rate Margin,  but if so
converted the  indemnification  obligation of Borrower under (G) above shall not
apply.

9.       Paragraph 3.3 of the Loan Agreement is hereby modified to read as
         follows:
                  3.3 EQUIPMENT  Borrower  hereby creates in favor of Lender and
         hereby  grants  to  Lender a  security  interest  in all of  Borrower's
         Equipment,  as such term is defined herein,  whether presently owned by
         Borrower or hereafter  acquired,  and wherever  located  excepting only
         items of motor vehicle rolling stock subject to purchase money security
         interests in favor of third  Persons and  unencumbered  motor  vehicles
         more than five (5) years old, but  specifically  including all items of
         Equipment  financed  with the  proceeds  of Term  Loan  Advances  under
         paragraph 2.10 hereof.

10.      Paragraph 5.14 of the Loan Agreement is hereby modified to read as
         follows:
                  5.14 PROCEEDS OF LOAN Borrower is not engaged principally,  or
         as one of its important activities, in the business of extending credit
         for the purpose of  purchasing  or carrying any margin stock within the
         meaning  of  Regulation  U of the  Board of  Governors  of the  Federal
         Reserve System,  as amended.  No part of the proceeds of the loans will
         be used, directly or indirectly,  for a purpose which violates any law,
         rule  or  regulation  of  any  Governmental  Body,   including  without
         limitation  the  provisions of Regulations G, T, U or X of the Board of
         Governors  of  the  Federal  Reserve  System,   as  amended.   Borrower
         represents that the proceeds of the Advances  provided for herein shall
         be used to finance  Accounts  Receivable,  for  working  capital and to
         finance Permitted  Acquisitions and other Acquisitions  consented to in
         writing by Lender,  and the proceeds of the Term Loan Advances shall be
         used to finance the  acquisition  of items of Equipment  for which said
         Term Loan  Advances  are  requested.  No  proceeds of any loan or other
         financial  accommodations  hereunder shall be used to purchase or carry
         any margin  stock  (within  the meaning of  Regulation  U issued by the
         Board of Governors of the Federal  Reserve  System) or to extend credit
         to others for the purpose of purchasing or carrying any margin stock.

11.      Article VI of the Loan Agreement is hereby modified to add paragraph
         6.17 as follows:

                  6.17     CONSUMMATION OF ACQUISITONS.
                                    (A)Borrower shall furnish to Lender a  copy
          of any  letter of intent  or  similar  document  with  respect  to any
          proposed  Acquisition  promptly following the execution thereof but no
          later than three  weeks  after such  execution.  At least one (1) week
          prior  to the  anticipated  date of  consummation  of an  Acquisition,
          Borrower shall furnish to Lender the documents and other materials set
          forth on exhibit  6.17(A)  annexed hereto with respect to the proposed
          Acquisition,  provided,  however,  that if  Borrower  anticipates  the
          Acquisition  will  not  be a  Permitted  Acquisition,  but  rather  an
          Acquisition  that requires the consent of the Lender,  said  documents
          and  materials  shall be  furnished to Lender at least three (3) weeks
          prior to the  anticipated  date of consummation of the Acquisition and
          the Borrower  shall specify those aspects of the proposed  Acquisition
          which it believes makes it not a Permitted Acquisition.
                                    (B) Not  earlier  than one (1) day prior to,
          but not later than the day of and prior to the date of consummation of
          any  Acquisition,  Borrower  shall  furnish to Lender an  availability
          certificate in the form of exhibit 6.17 (B) annexed hereto,  including
          details of any adjustment in the Purchase  Price from the  anticipated
          Purchase Price previously reported to Lender.
                                    (C) Within  thirty  (30) days  after
          consummation  of an  Acquisition  Borrower  shall  furnish  to  Lender
          the documents and materials set forth on exhibit 6.17(C) annexed
          hereto.
                                    (D) If Lender  consents  to an  Acquisition
         which is not a  Permitted Acquisition,  said  Acquisition  shall
         conform to all of the terms and conditions  of a Permitted
         Acquisition,  as set forth on exhibit  1.86 annexed  hereto,  and
         Borrower shall comply with the  requirements  set forth on said exhibit
         1.86,  excepting  only those terms and conditions the Lender agrees, in
         writing, do not apply to said Acquisition.

12.                   Paragraphs 7.2, 7.8 and 7.13 of the Loan Agreement are
         hereby modified to read as follows:
                  7.2      FINANCIAL COVENANTS
                           (A) Shareholders Equity.  Borrower, on a consolidated
         basis, will not allow its Shareholder  Equity to be less than an amount
         equal to seventy-five  percent (75%) of it's Shareholders  Equity as of
         September  30,  1998 plus  sixty-five  percent  (65%) of all Net Income
         earned after  September 30, 1998 plus one hundred percent (100%) of all
         net  proceeds  received  after  September  30,  1998  from  the sale or
         issuance of any capital stock or similar equity instrument.
                           (B)      Cash Flow Leverage  Ratio.  Borrower,  on a
         consolidated  basis,  will not allow its Cash Flow  Leverage  Ratio, 
         calculated  at the end of each fiscal  quarter,  to be more than
                                  (i)   4.6 to 1.0 through December 31, 1998;
                                  (ii)  4.0 to 1.0 from January 1, 1999 through
                                        November  30,  1999;
                                  (iii) 3.75 to 1.0 from December 1, 1999
                                        through  November 30, 2000; and
                                  (iv)  3.50 to 1.0 from  December  1, 2000 on.
                           (C) Capital Expenditures. Borrower, on a consolidated
         basis, will not in any fiscal year make Capital  Expenditures in excess
         of Three Million Two Hundred  Thousand Dollars  ($3,200,000.00)  in the
         aggregate per annum.
                           (D)      Fixed Charge Coverage Ratio.  Borrower,  on
         a consolidated basis, will not allow its Fixed Charge  Coverage Ratio,
         calculated at the end of each fiscal quarter,  to be
         less than
                               (i)      1.0 to 1.0 through November 30, 1999;
                               (ii)     1.15 to 1.0  from  December  1,  1999
                                        through  November  30, 2000; and
                               (iii)    1.25 to 1.0 from December 1, 2000 on.
                           Compliance  with the  foregoing  covenants,  shall be
         calculated  on the  financial  statements  of Borrower as of the end of
         each fiscal  quarter and of the Borrower on a  consolidated  basis.  If
         during any fiscal quarter, commencing with the quarter ending September
         30, 1998,  Borrower  consummated any  Acquisition,  for the purposes of
         calculating  the foregoing  covenants,  the  financial  results for the
         subject  period  of  the  Acquired  Entity  shall  be  included  in the
         consolidated financial statements of the Borrower as if the Acquisition
         occurred  on the first day of the period for which said  covenants  are
         calculated.
                  7.8  PREPAYMENTS OF  INDEBTEDNESS  Borrower will not prepay or
         obligate  itself  to  prepay  in  whole  or  in  part,  or  redeem  the
         Subordinated Convertible Debentures, any other Subordinated Debt or any
         Capital  Leases,  except  that  provided  no  Event of  Default  exists
         Borrower may prepay its obligations under Capital Leases in conjunction
         with and from the  proceeds of a  refinancing  of said  Capital  Leases
         which  refinancing  is on financial  and other terms more  favorable to
         Borrower than the Capital  Leases being so  refinanced.  Borrower shall
         notify Lender in writing of any such refinancing.
                  7.13 MAINTAIN  CORPORATE  EXISTENCE AND NATURE OF BUSINESS (A)
         Borrower  will not allow its  corporate  existence  to be other than in
         good  standing  and will not,  without  the prior  written  consent  of
         Lender,  dissolve or liquidate, or merge or consolidate with or acquire
         or affiliate with any other business  entity  including any acquisition
         of the assets of any other Person or form any  Subsidiary  other than a
         Permitted  Acquisition,  provided that upon not less than ten (10) days
         prior written  notice to Lender (i) any Borrower may be merged into any
         other Borrower,  and (ii) any Borrower may be dissolved if the business
         of such Borrower is to be continued by any other Borrower.
                           (B)  Borrower   will  not  change  its  name  without
         furnishing  to  Lender  at least ten (10)  days  prior  written  notice
         thereof.
                           (C) Borrower  will not utilize any trade name not set
         forth on Exhibit  "A"  without  furnishing  to Lender at least ten (10)
         days prior written notice thereof.
                           (D)      Borrower will not change the nature of its
         business.

13.      Article VIII of the Loan Agreement is hereby  modified to add paragraph
         8.17 as  follows:
         8.17  CHANGE IN CONTROL If after the date hereof any event or other
         transaction  occurs,  without  the  written  consent of Lender,  as a
         result of which there is a change in ownership or control of the voting
         capital stock of CD&L so that any Person owns or controls more than 25%
         of said voting stock.

14.      Borrower represents that:
         (a) each and every  representation  heretofore  made by Borrower in the
Loan  Agreement and the other Loan  Documents is true and correct as of the date
of this  Modification  Agreement,  except  that  the  representations  as to the
financial  condition  of the  Borrower  are deemed to be updated to reflect  the
financial  condition  of Borrower  as of the date of the most  recent  financial
statements  furnished to Lender and the attached schedules are deemed to replace
the corresponding schedules in the Loan Agreement,
         (b) no consent or approval  of, or  exemption by any Person is required
to  authorize,  or is otherwise  required in  connection  with the execution and
delivery of this  Modification  Agreement and the other Loan Documents  provided
for  herein,  which has not been  obtained  and which  remains in full force and
effect,
         (c)  Borrower  has the  power to  execute,  deliver  and carry out this
Modification  Agreement and all documents executed in connection  herewith,  and
this  Modification  Agreement and such other  documents  are valid,  binding and
enforceable as against Borrower in accordance with their terms,
         (d) no material  adverse change in the financial  condition of Borrower
has occurred since the date of the most recent financial  statements of Borrower
submitted  to Lender,  and the  information  contained  in said  statements  and
reports is true and correctly  reflects the financial  condition of Borrower and
such Obligors as of the dates of the statements and reports, and such statements
and reports have been  prepared in  accordance  with GAAP and do not contain any
material  misstatement  of fact or omit to state any facts necessary to make the
statements contained therein not misleading, and
         (e)          No Default or Event of Default exists under the Loan
Agreement.

15. Each Borrower  hereby  confirms the security  interests and liens granted by
Borrower  to  Lender  in and to the  Collateral  in  accordance  with  the  Loan
Agreement and other Loan Documents as security for its Obligations to Lender.

16. Borrower agrees to pay any and all expenses,  including  reasonable  counsel
fees and  disbursements,  incurred by Lender in connection with the preparation,
negotiation  and  execution of this  Modification  Agreement  and all other Loan
Documents provided for herein.

17. In  consideration  of Lender  entering  into  this  Modification  Agreement,
Borrower  shall pay to Lender,  contemporaneous  with the execution  hereof,  an
$18,750.00 Facility Fee.

18. This  Modification  Agreement is intended to supplement  and modify the Loan
and Security  Agreement dated as of July 14, 1997 as modified between Lender and
Borrower  and the  rights and  obligations  of the  parties  under said Loan and
Security  Agreement  shall not in any way be  vacated,  modified  or  terminated
except as herein provided.  All terms and conditions contained in each and every
agreement or promissory  note or other evidence of  indebtedness  of Borrower to
Lender are incorporated herein by reference.  If there is a conflict between any
of  the  provisions   heretofore   entered  into  and  the  provisions  of  this
Modification Agreement, then the provisions of this Modification Agreement shall
govern.

19. This  Modification  Agreement  shall be  construed  in  accordance  with the
substantive laws of the State of New Jersey without regard to conflict of laws.

20. This Modification Agreement may be executed by one or more of the parties on
any number of separate  counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same document.
IN WITNESS  WHEREOF,  the parties hereto have caused this  Modification
Agreement to be executed and delivered by their duly  authorized  officers as of
the day and year first above written.

                             CONSOLIDATED DELIVERY & LOGISTICS, INC.,

                             BY:  /s/ Albert W. Van Ness
                             NAME: Albert W. VanNess, Jr.
                             TITLE: Chairman and C.E.O.

                             CLAYTON/NATIONAL COURIER SYSTEMS, INC.

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             NATIONAL EXPRESS COMPANY, INC.,

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             CLICK MESSENGER SERVICE, INC.,

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             CLICK MESSENGER SERVICE OF N.Y., INC.,

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             OLYMPIC COURIER SYSTEMS, INC.,

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             SECURITIES COURIER CORPORATION

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             SILVER STAR EXPRESS, INC.

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             SUREWAY AIR TRAFFIC CORPORATION

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             SUREWAY LOGISTICS CORPORATION

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             KBD SERVICES, INC.

                             BY:  /s/ Mark Carlesimo
                             NAME: Mark Carlesimo
                             TITLE: Vice President

                             FIRST UNION COMMERCIAL CORPORATION

                             By:  /s/ Georgios C. Kyvernitis
                             Name:  Georgios C. Kyvernitis
                             Title:  Vice President