<SUBMISSION>
<ACCESSION-NUMBER>0001125282-06-005098
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20060630
<FILING-DATE>20060816
<DATE-OF-FILING-DATE-CHANGE>20060816
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CD&L INC
<CIK>0001000779
<ASSIGNED-SIC>4213
<IRS-NUMBER>223350958
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-14823
<FILM-NUMBER>061038689
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>80 WESLEY STREET
<CITY>SOUTH HACKENSACK
<STATE>NJ
<ZIP>07606
<PHONE>201-487-7740
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>80 WESLEY STREET
<CITY>SOUTH HACKENSACK
<STATE>NJ
<ZIP>07606
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CONSOLIDATED DELIVERY & LOGISTICS INC
<DATE-CHANGED>19950915
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>b414521_10q.txt
<DESCRIPTION>FORM 10Q
<TEXT>
<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549
                                    FORM 10-Q


(Mark One)

|X|      Quarterly report pursuant to Section 13 or 15 (d) of the Securities
         Exchange Act of 1934 for the quarterly period ended June 30, 2006 or

|_|      Transition report pursuant to Section 13 or 15 (d) of the Securities
         Exchange Act of 1934 for the transition period
         from_______________to____________

Commission File Number:    0-26954

                                   CD&L, INC.
             (Exact name of Registrant as specified in its charter)

                DELAWARE                                22-3350958
                --------                                ----------
      (State or other jurisdiction of                (I.R.S. Employer
      incorporation or organization)                Identification No.)

80 WESLEY STREET                                             07606
SOUTH HACKENSACK, NEW JERSEY                               (Zip Code)
(Address of principal executive offices)

                                 (201) 487-7740
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

         Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. (as defined in Rule
12b-2 of the Securities Exchange Act of 1934)

Large accelerated filer  |_|  Accelerated filer  |_|  Non-accelerated filer  |X|

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes |_| No |X|

         The number of shares of common stock of the Registrant, par value $.001
per share, outstanding as of August 16, 2006 was 18,397,572.




                                       1
<PAGE>


                                   CD&L, INC.
                  FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2006

                                      INDEX
<TABLE>
<CAPTION>

                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
PART I - Financial Information

  ITEM 1 - Financial Statements

       CD&L, Inc. and Subsidiaries
           Condensed Consolidated Balance Sheets as of June 30, 2006 (unaudited)
                    and December 31, 2005                                                 3
           Condensed Consolidated Statements of Operations for the Three and Six
                    Months Ended June 30, 2006 and 2005 (unaudited)                       4
           Condensed Consolidated Statements of Cash Flows for the Six
                    Months Ended June 30, 2006 and 2005 (unaudited)                       5
           Notes to Condensed Consolidated Financial Statements                           6

  ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
                        of Operations                                                     16

  ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk                     24

  ITEM 4 - Controls and Procedures                                                        24

PART II - Other Information

  ITEM 1A - Risk Factors                                                                  25

  ITEM 4 - Submission of Matters to a Vote of Security Holders                            25

  ITEM 6 - Exhibits                                                                       26

SIGNATURE                                                                                 27

CERTIFICATIONS                                                                            28
</TABLE>


                                       2
<PAGE>


                           CD&L, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
             (IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)

<TABLE>
<CAPTION>

                                                                           June 30,           December 31,
                                                                             2006                 2005
                                                                           -----------        ------------
                                                                           (Unaudited)        (Note 1)
<S>                                                                          <C>                <C>
                             ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                                  $    543           $    837
  Accounts receivable, net                                                     28,745             26,376
  Prepaid expenses and other current assets                                     3,495              4,048
                                                                             --------           --------
    Total current assets                                                       32,783             31,261

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net                                       3,575              3,438
GOODWILL, net                                                                  11,531             11,531
OTHER INTANGIBLE ASSETS AND DEFERRED FINANCING COSTS, net
                                                                                1,083              1,185
OTHER ASSETS                                                                      741                932
                                                                             --------           --------
    Total assets                                                             $ 49,713           $ 48,347
                                                                             ========           ========

              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Short-term borrowings                                                      $  9,371           $  8,921
  Current maturities of long-term debt                                            542                552
  Accounts payable, accrued liabilities and bank overdrafts
                                                                               17,089             15,423
                                                                             --------           --------
    Total current liabilities                                                  27,002             24,896

LONG-TERM DEBT, net of current maturities                                       5,015              5,292
OTHER LONG-TERM LIABILITIES                                                     1,771              1,775
                                                                             --------           --------
    Total liabilities                                                          33,788             31,963
                                                                             --------           --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
 Preferred stock, $.001 par value; 2,000,000 shares
   authorized; 393,701 shares issued at June 30, 2006
   and December 31, 2005                                                        4,000              4,000
 Common stock, $.001 par value; 30,000,000 shares
   authorized; 10,046,846 and 10,041,846 shares issued at June
   30, 2006 and December 31, 2005, respectively                                    10                 10
 Additional paid-in capital                                                    15,745             15,592
 Treasury stock, 29,367 shares of common stock at cost                           (162)              (162)
 Accumulated deficit                                                           (3,668)            (3,056)
                                                                             --------           --------
    Total stockholders' equity                                                 15,925             16,384
                                                                             --------           --------
    Total liabilities and stockholders' equity                               $ 49,713           $ 48,347
                                                                             ========           ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.




                                       3
<PAGE>


                           CD&L, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                               For the Three Months              For the Six Months
                                                                     Ended                              Ended
                                                                    June 30,                          June 30,
                                                           --------------------------        --------------------------
                                                              2006             2005             2006            2005
                                                           ---------        ---------        ---------        ---------
<S>                                                        <C>              <C>              <C>              <C>
Revenue                                                    $  61,911        $  54,207        $ 122,350        $ 106,562

Cost of revenue                                               50,220           43,367           99,453           85,414
                                                           ---------        ---------        ---------        ---------

  Gross profit                                                11,691           10,840           22,897           21,148
                                                           ---------        ---------        ---------        ---------
Costs and Expenses:

Selling, general and
   administrative expenses                                    12,541            9,088           22,733           17,968
Depreciation and amortization                                    333              277              651              550
Other (income) expense, net                                        -               (9)             (16)              (9)
Interest expense                                                 401              366              757              756
                                                           ---------        ---------        ---------        ---------

Total Costs and expenses                                      13,275            9,722           24,125           19,265
                                                           ---------        ---------        ---------        ---------
(Loss) income before provision for
  income taxes                                                (1,584)           1,118           (1,228)           1,883

(Benefit) provision for income taxes                            (783)             492             (616)             829

                                                           ---------        ---------        ---------        ---------

  Net (loss) income                                            ($801)       $     626            ($612)       $   1,054
                                                           =========        =========        =========        =========
Net (loss) income per share:
  Basic                                                        ($.08)       $     .07            ($.06)       $     .11
                                                           =========        =========        =========        =========
  Diluted                                                      ($.08)       $     .04            ($.06)       $     .06
                                                           =========        =========        =========        =========
Basic weighted average common
   shares outstanding                                         10,017            9,356           10,016            9,356
                                                           =========        =========        =========        =========
Diluted weighted average common
   shares outstanding                                         10,017           20,248           10,016           20,251
                                                           =========        =========        =========        =========

</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       4
<PAGE>

                           CD&L, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                      For the Six Months Ended
                                                                                              June 30,
                                                                                      ------------------------
                                                                                        2006           2005
                                                                                      --------        --------
<S>                                                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                                                        ($612)       $ 1,054
Adjustments to reconcile net (loss) income to net cash provided by
    operating activities -
    Gain on disposal of equipment and leasehold improvements                                (4)            (5)
    Depreciation and amortization, including amortization of deferred
      financing costs                                                                      687            606
    Stock-based compensation expense                                                       151              -
    Changes in operating assets and liabilities
      (Increase) decrease in -
        Accounts receivable, net                                                        (2,369)          (827)
        Prepaid expenses and other current assets                                          553          1,357
        Other assets                                                                       191           (434)
      (Decrease) increase in -
        Accounts payable, accrued liabilities and bank overdrafts                        1,666          1,317
        Other long-term liabilities                                                         (4)           115
                                                                                       -------        -------
          Net cash provided by operating activities                                        259          3,183
                                                                                       -------        -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment and leasehold improvements                                23             22
  Additions to equipment and leasehold improvements                                       (647)          (443)
                                                                                       -------        -------
          Net cash used in investing activities                                           (624)          (421)
                                                                                       -------        -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in short-term borrowings                                         450         (1,315)
  Repayments of long-term debt                                                            (287)          (238)
  Proceeds from issuance of common stock                                                     2              -
  Deferred financing costs                                                                 (94)             -
                                                                                       -------        -------
          Net cash provided by (used in) financing activities                               71         (1,553)
                                                                                       -------        -------

          Net (decrease) increase in cash and cash equivalents                            (294)         1,209

CASH AND CASH EQUIVALENTS, beginning of period                                             837            617
                                                                                       -------        -------

CASH AND CASH EQUIVALENTS, end of period                                               $   543        $ 1,826
                                                                                       =======        =======
</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       5
<PAGE>


                           CD&L, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)      BASIS OF PRESENTATION:

         The accompanying unaudited condensed consolidated financial statements
         have been prepared in accordance with accounting principles generally
         accepted in the United States of America for interim financial
         information and with the instructions to Form 10-Q and Article 10 of
         Regulation S-X. Accordingly, they do not include all of the information
         and footnotes required by generally accepted accounting principles for
         complete financial statements. The condensed consolidated balance sheet
         at December 31, 2005 has been derived from the audited financial
         statements at that date. In the opinion of management, all adjustments
         (consisting of normal recurring adjustments) considered necessary for a
         fair presentation have been included. Operating results for the three
         and six months ended June 30, 2006 are not necessarily indicative of
         the results that may be expected for any other interim period or for
         the year ending December 31, 2006. For further information, refer to
         the consolidated financial statements and footnotes thereto included in
         the CD&L, Inc. (the "Company" or "CD&L") Form 10-K/A for the year ended
         December 31, 2005.

(2)      STOCK-BASED COMPENSATION

         As of June 30, 2006, the Company maintains certain stock-based
         compensation plans that are described in Note 12 to the Consolidated
         Financial Statements included in the Company's 2005 Annual Report on
         Form 10-K/A. Under these plans, the Company may grant stock options to
         employees and directors of the Company. The Company may grant up to a
         maximum of 4,000,000 options under the Employee Stock Compensation
         Program (the "ESCP") and up to a maximum of 500,000 options under the
         2002 Stock Option Plan for Independent Directors (the "Director Plan").
         At June 30, 2006, options available for grant under the ESCP and the
         Director Plan total 2,000,000 and 251,000, respectively.

         Prior to January 1, 2006, as permitted under SFAS No. 123, "Accounting
         for Stock-Based Compensation," ("SFAS 123"), compensation cost for
         employee and director stock options was recognized using the intrinsic
         value method described in APB No. 25, "Accounting for Stock Issued to
         Employees" ("APB 25"). Effective January 1, 2006, the Company adopted
         the fair-value recognition provisions of SFAS No. 123(R), "Share-Based
         Payment," ("SFAS 123R") and Securities and Exchange Commission Staff
         Accounting Bulletin No. 107. Under SFAS 123R, the fair value of
         employee and non-employee options granted is amortized over the related
         service period. SFAS 123R was adopted using the modified prospective
         transition method; therefore, prior periods have not been restated.
         Compensation expense recognized in the three and six months ended June
         30, 2006 includes compensation cost for all share-based payments
         granted to employees and directors prior to, but not yet vested as of
         January 1, 2006, based on the grant date fair value estimated in
         accordance with the original provisions of SFAS 123. Compensation cost
         for any share-based payments granted subsequent to January 1, 2006 is
         based on the grant date fair value estimated in accordance with the
         provisions of SFAS 123R.

         Stock options are granted with exercise prices not less than the fair
         market value of the Company's common stock at the time of grant and
         with an exercise term not to exceed 10 years. Generally, stock options
         granted under the ESCP become exercisable in three installments over a
         period of two years. Stock options granted under the Director Plan
         generally become exercisable after one year. Option awards usually
         provide for accelerated vesting upon retirement, death or disability.
         The Company granted 0 and 400,000 options during the three months ended
         June 30, 2006 and 2005, respectively, and 0 and 500,000 options during
         the six months ended June 30, 2006 and 2005, respectively.

         As a result of adopting SFAS 123R, our loss before taxes for the six
         months ended June 30, 2006 is $151,000 higher and our net loss is
         $80,000 higher than if we had continued to account for stock-based
         compensation under APB 25. Compensation expense is recognized in the
         selling, general and administrative expenses line items of the
         accompanying condensed consolidated statements of operations on a
         ratable basis over the vesting periods. These awards have been
         classified as equity instruments, and as such, a corresponding increase
         of $151,000 has been reflected in additional paid-in capital in the
         accompanying condensed consolidated balance sheet as of June 30, 2006.
         There were no capitalized stock-based compensation costs at June 30,
         2006 and 2005. As of June 30, 2006, there was $95,000 of total
         unrecognized compensation cost related to non-vested stock options to
         be recognized over a weighted-average period of 1.32 years.


                                       6
<PAGE>

         The intrinsic values of options exercised during the six months ended
         June 30, 2006 and 2005 were not significant. The total cash received
         from the exercise of stock options was $2,000 and $0 for the six months
         ended June 30, 2006 and 2005, respectively, and is classified as
         financing cash flows in the accompanying condensed consolidated
         statements of cash flows. New shares of the Company's common stock are
         issued upon exercise of the options. Prior to the adoption of SFAS
         123R, any tax benefits of deductions resulting from the exercise of
         stock options would have been presented as operating cash flows in the
         statements of cash flows. SFAS 123R requires that cash flows from tax
         benefits attributable to tax deductions in excess of the compensation
         cost recognized for those options (excess tax benefits) be classified
         as financing cash flows. The Company did not have any significant
         excess tax benefits for the six months ended June 30, 2006.

         Since employee options are granted with exercise prices that are not
         less than market value, the Company did not record any stock-based
         employee compensation in the three and six months ended June 30, 2005.
         The fair value for employee and non-employee options granted used in
         determining pro forma net income below was estimated at the date of
         grant using the Black-Scholes option-pricing model with the following
         assumptions for the three and six months ended June 30, 2005. There
         were no stock options granted during the three or six months ended June
         30, 2006.


<TABLE>
<CAPTION>

                                                    For the Three Months Ended          For the Six Months Ended
                                                          June 30, 2005                      June 30, 2005
                                                   ----------------------------         ------------------------
         <S>                                       <C>                                  <C>
         Risk-free interest rate                                3.8%                            3.5%
         Volatility factor                                       38%                             47%
         Expected life                                        7 years                         7 years
         Dividend yield                                         None                            None

</TABLE>

         The risk-free interest rate is based on reference to United States
         Treasury securities with terms matching the expected term of the
         subject options. The expected life of the 2005 option grants related to
         the above referenced periods was based on historical exercises and
         terminations. Due to the insignificant number of stock option exercises
         during the past several years, the Company has estimated the expected
         life of options granted to be the midpoint between the average vesting
         term and the contractual term. The expected volatility was based on an
         analysis of the volatility of the Company's stock price using
         alternative historical periods of time and alternative statistical
         measures of volatility (exponential weighted moving average and the
         GARCH measure of volatility). The expected dividend yield is zero.



                                       7
<PAGE>


         Changes in outstanding options in the six months ended June 30, 2006
are as follows:

<TABLE>
<CAPTION>

                                                                                  Weighted
                                                                                   Average
                                                                Weighted          Remaining
                                                                 Average         Contractual        Aggregate
                                                                Exercise        Term (years)        Intrinsic
                                                Options           Price                             Value (1)
                                              -------------    ------------     --------------    --------------
<S>                                           <C>              <C>              <C>               <C>
Options outstanding at
   December 31, 2005                           4,249,000             $1.97
      Granted                                          -                 -
      Exercised                                   (5,000)            $0.47
      Canceled                                         -                 -
                                              ----------

Options outstanding at June 30, 2006           4,244,000             $1.97            6.31           $2,071,000
                                              ==========

Options exercisable at June 30, 2006          4,019,342              $1.97            6.15           $2,002,000
                                              =========

Options available for grant at
   June 30, 2006                              2,251,000
                                              =========

</TABLE>

(1)      The aggregate intrinsic value has been calculated based on the
         difference between the exercise price of in-the-money options versus
         the Company's closing stock price as of June 30, 2006.


         The table below presents the pro forma effect on net income and basic
         and diluted net income per share if the Company had applied a fair
         value recognition method instead of the intrinsic value method to
         options granted under the Company's stock option plans for the three
         and six months ended June 30, 2005. For purposes of this pro forma
         disclosure, the value of the options is estimated using the
         Black-Scholes option-pricing model and amortized to expense over the
         options' vesting periods.



                                       8
<PAGE>


         The pro forma information regarding net income and net income per share
         is as follows (in thousands, except per share data):

<TABLE>
<CAPTION>

                                                    For the Three Months Ended          For the Six Months Ended
                                                          June 30, 2005                      June 30, 2005
                                                   ------------------------------     -----------------------------
<S>                                                             <C>                             <C>
         Net income, as reported                                $626                            $1,054
         Stock-based employee compensation
           expense determined under fair value
           based method for all awards, net of
           related tax effects
                                                                (146)                             (265)
                                                   ------------------------------     -----------------------------
         Pro forma net income                                   $480                              $789
                                                   ==============================     =============================

         Net income per share:
            Basic, as reported                                  $.07                              $.11
            Diluted, as reported                                $.04                              $.06
            Basic, pro forma                                    $.05                              $.08
            Diluted, pro forma                                  $.03                              $.05

</TABLE>

(3)      SHORT-TERM BORROWINGS:

         Short-term borrowings totaled $9,371,000 and $8,921,000 as of June 30,
         2006 and December 31, 2005, respectively. At December 31, 2005,
         short-term borrowings consisted of a line of credit balance of
         $8,080,000 and $841,000 of outstanding borrowings related to the
         insurance financing arrangements entered into in 2005. There were no
         balances related to the insurance financing arrangements at June 30,
         2006.

         As of June 27, 2002, CD&L and Summit Business Capital Corporation,
         doing business as Fleet Capital - Business Finance Division, entered
         into an agreement establishing a revolving credit facility (the "Fleet
         Facility") of $15,000,000. The Fleet Facility which was due to expire
         on June 27, 2005 but was extended through January 31, 2006, provided
         CD&L with standby letters of credit, prime rate based loans at the
         bank's prime rate, as defined, plus 25 basis points and LIBOR based
         loans at the bank's LIBOR, as defined, plus 225 basis points. Credit
         availability was based on eligible amounts of accounts receivable, as
         defined, up to a maximum amount of $15,000,000 and was collateralized
         by substantially all of the assets, including certain cash balances,
         accounts receivable, equipment, leasehold improvements and general
         intangibles of the Company and its subsidiaries.

         As of January 31, 2006, CD&L and Bank of America, N.A. (successor by
         merger to Fleet Capital Corporation) entered into a new agreement (the
         "Bank of America Facility") which replaced the prior Fleet Facility.
         The Bank of America Facility, which expires on September 30, 2008,
         continues to provide CD&L with standby letters of credit, prime rate
         based loans at the bank's prime rate, as defined (8.25% at June 30,
         2006), and LIBOR based loans at the bank's LIBOR rate, as defined, plus
         200 basis points. Credit availability is based on eligible amounts of
         accounts receivable, as defined, up to a maximum amount of $20,000,000
         and is collateralized by substantially all of the assets, including
         certain cash balances, accounts receivable, equipment, leasehold
         improvements and general intangibles of the Company and its
         subsidiaries. The maximum borrowings outstanding under the Bank of
         America Facility during the six months ended June 30, 2006 were
         $10,872,000. As of June 30, 2006, the Company had total cash on hand
         and borrowing availability of $5,670,000 under the Bank of America
         Facility, after adjusting for restrictions related to outstanding
         standby letters of credit of $4,582,000 and minimum availability
         requirements.

         Under the terms of the Bank of America Facility, the Company is
         required to maintain certain financial ratios and comply with other
         financial conditions. The Bank of America Facility also prohibits the
         Company from incurring certain additional indebtedness, limits certain
         investments, advances or loans and restricts substantial asset sales,
         capital expenditures and cash dividends. At June 30, 2006, the Company
         was in violation of certain of the financial covenants due to the
         reported net loss for the second quarter. On August 11, 2006, the
         Company obtained a waiver from its lender for the covenant violation.
         Bank of America has consented to the merger with Velocity and the
         revolving loan balance will be paid in full and closed on the merger
         date.


                                       9
<PAGE>

         Costs incurred relative to the establishment of the Bank of America
         Facility amounted to approximately $94,000. This has been accounted for
         as deferred financing costs and is being amortized over the term of the
         new financing agreement. As of June 30, 2006, the unamortized portion
         of the deferred financing costs amounted to approximately $77,000.

(4)      LONG-TERM DEBT:

         On January 29, 1999, the Company completed a $15,000,000 private
         placement of the senior subordinated notes (the "Senior Notes") and
         warrants with three financial institutions. The Senior Notes originally
         bore interest at 12.0% per annum and are subordinate to all senior debt
         including the Company's Bank of America Facility. Under the terms of
         the Senior Notes, as amended, the Company was required to maintain
         certain financial ratios and comply with other financial conditions
         contained in the Senior Notes agreement.

         At March 31, 2004, the Company owed $11,000,000 of principal on the
         Senior Notes. On April 14, 2004, an agreement was reached among the
         Company, BNP Paribas ("Paribas"), Exeter Venture Lenders, L.P. ("Exeter
         Venture") and Exeter Capital Partners IV, L.P. ("Exeter Capital") and
         together with Exeter Venture and Paribas (the "Original Note holders")
         and certain members of CD&L management and others ("Investors") as to
         the financial restructuring of the Senior Notes. The Original Note
         holders agreed to convert a portion of the existing debt due from CD&L
         into equity and to modify the terms of the Senior Notes if the
         Investors purchased a portion of the notes and accepted similar
         modifications. The nature of the restructuring was as follows:

                  (a)   The Original Note holders exchanged Senior Notes in the
                        aggregate principal amount of $4,000,000 for shares of
                        the Series A Convertible Redeemable Preferred Stock of
                        the Company, par value $.001 per share ("Preferred
                        Stock"), with a liquidation preference of $4,000,000.
                        The Preferred Stock is convertible into 3,937,010 shares
                        of Common Stock, does not pay dividends (unless
                        dividends are declared and paid on the Common Stock) and
                        is redeemable by the Company for the liquidation value.
                        The conversion price is $1.016 per share which was equal
                        to the average closing price for the Company's common
                        stock for the 5 days prior to the closing. Holders of
                        the Preferred Stock have the right to elect two
                        directors.

                  (b)   The Original Note holders and the Company amended the
                        terms of the remaining $7,000,000 principal balance of
                        the Senior Notes, and then exchanged the amended notes
                        for the new notes, which consist of two series of
                        convertible notes, the Series A Convertible Subordinated
                        Notes (the "Series A Convertible Notes") in the
                        principal amount of $3,000,000 and the Series B
                        Convertible Subordinated Notes ("Series B Convertible
                        Notes") in the principal amount of $4,000,000
                        (collectively, the "Convertible Notes"). The loan
                        agreement that governed the Senior Notes was amended and
                        restated to reflect the terms of the Convertible Notes,
                        including the elimination of most financial covenants.
                        The principal amount of the Convertible Notes is due in
                        a balloon payment at the maturity date of April 14,
                        2011. The Convertible Notes bear interest at a rate of
                        9% for the first two years of the term, 10.5% for the
                        next two years and 12% for the final three years of the
                        term and will be paid quarterly. As the interest on the
                        Convertible Notes increases over the term of the notes,
                        the Company records the associated interest expense on a
                        straight-line basis using a blended rate of 10.71%,
                        giving rise to accrued interest over the early term of
                        the Convertible Notes. The terms of the two series of
                        Convertible Notes are identical except for the
                        conversion price ($1.016 for the Series A Convertible
                        Notes, the average closing price for the Company's
                        common stock for the 5 days prior to the closing and
                        $2.032 for the Series B Convertible Notes). The Series B
                        Convertible Notes were extinguished on October 31, 2005
                        and the Series A Convertible Notes were extinguished on
                        July 11, 2006, as described below.


                                       10
<PAGE>

                  (c)   The Investors purchased the Series A Convertible Notes
                        from the Original Note holders for a price of
                        $3,000,000.

                  (d)   The Company issued an additional $1,000,000 of Series A
                        Convertible Notes to the Investors for an additional
                        payment of $1,000,000, the proceeds of which were used
                        to reduce short-term debt.

                  (e)   The Investors, the Original Note holders and the Company
                        entered into a Registration Rights Agreement pursuant to
                        which the shares of the Company's common stock issuable
                        upon conversion of the Preferred Stock (3,937,010
                        shares) and the Convertible Notes (3,937,008 shares for
                        Series A and 1,968,504 shares for Series B) would be
                        registered for resale with the Securities and Exchange
                        Commission ("SEC"). Subsequently, on August 2, 2005, the
                        Company filed the required registration statement and
                        the registration statement was declared effective on
                        August 11, 2005.

                  The Company cannot be compelled to redeem the Preferred Stock
                  for cash at any time.

                  Costs incurred relative to the aforementioned transactions
                  amounted to approximately $592,000. Of this amount, $420,000
                  has been accounted for as deferred financing costs and is
                  being amortized over the term of the new financing agreements.
                  The remaining $172,000 has been accounted for as a reduction
                  in paid-in capital. These amounts have been allocated based on
                  the proportion of debt to equity raised in the aforementioned
                  transactions. These amounts were subsequently adjusted due to
                  the extinguishment of the Series B Convertible Notes. As of
                  June 30, 2006, remaining costs related to this transaction
                  amounted to approximately $337,000. Of this amount, $225,000
                  continued to be amortized as a deferred financing cost and
                  $112,000 remained as a reduction of additional paid-in capital
                  as of June 30, 2006. These amounts will be adjusted in
                  connection with the extinguishment of the Series A Convertible
                  Notes on July 11, 2006.

                  On October 31, 2005, the Company retired the Series B
                  Convertible Notes that were issued to Paribas, Exeter Capital
                  and Exeter Venture. The principal amount of the Series B
                  Convertible Notes totaled $4,000,000 as of the retirement
                  date. The portion of the Series B Convertible Notes held by
                  Paribas was satisfied by a cash payment of $2,666,667
                  principal and $40,000 of accrued interest through October 31,
                  2005. Exeter Venture and Exeter Capital (collectively
                  "Exeter") held the remaining $1,333,333 of the Series B
                  Convertible Notes. Exeter exercised their right of conversion
                  of their notes and, as such, the Company issued to Exeter a
                  total of 656,168 shares of the Company's Common Stock. In
                  addition, a cash payment of $20,000 was made to Exeter
                  relating to accrued interest through October 31, 2005.

                  On July 11, 2006, the Series A Convertible Notes were
                  converted into 3,937,008 shares of the Company's common stock
                  and the debt was retired. In addition, the 393,701 shares of
                  Preferred Stock were converted into 3,937,010 shares of the
                  Company's common stock. See Note 7 - Subsequent Events for
                  further discussion.

                  The warrants originally issued on January 29, 1999 remain
                  outstanding at June 30, 2006 at an exercise price of $.001 per
                  share (convertible into 506,250 shares of common stock). The
                  warrants were due to expire in January 2009. On July 3, 2006,
                  Velocity Express Corporation ("Velocity") entered into a
                  warrant purchase agreement with the Original Note holders. On
                  July 11, 2006, the warrants were exercised on a cashless basis
                  for an aggregate exercise price of $506.25 so that Velocity
                  received 506,075 shares of the Company's common stock. See
                  Note 7 - Subsequent Events for further discussion.


                                       11
<PAGE>

         Long-term debt consisted of the following (in thousands)   -

<TABLE>
<CAPTION>

                                                                  JUNE 30,           DECEMBER 31,
                                                                    2006                2005
                                                               -------------        -------------
<S>                                                                   <C>                  <C>
Series A Convertible Notes                                            $4,000               $4,000
Capital lease obligation due October 2007 with interest
    at 5.45% and collateralized by the related property.                   3                    7

Seller-financed debt on acquisitions, payable in monthly
    installments through May 2009, convertible into
    134,193 and 155,197 shares of common stock at June
    30, 2006 and December 31, 2005, respectively, at a
    weighted average exercise price of $6.15 per share.
    Interest is payable at rates ranging between 7.0%
    and 9.0%.                                                          1,554                1,837
                                                               -------------        -------------
                                                                       5,557                5,844

Less - Current maturities                                               (542)                (552)
                                                               -------------        -------------

                                                                      $5,015               $5,292
                                                               =============        =============

</TABLE>

(5)      LITIGATION:

         The Company is, from time to time, a party to litigation arising in the
         normal course of its business, including claims for uninsured personal
         injury and property damage incurred in connection with its same-day
         delivery operations.

         Also from time to time, federal and state authorities have sought to
         assert that independent contractors in the transportation industry,
         including those utilized by CD&L, are employees rather than independent
         contractors. The Company believes that the independent contractors that
         it utilizes are not employees under existing interpretations of federal
         and state laws. However, federal and state authorities have and may
         continue to challenge this position. Further, laws and regulations,
         including tax laws, and the interpretations of those laws and
         regulations, may change.

         In connection with the above matters, the Company has recorded reserves
         of $2,133,000 and $555,000 as of June 30, 2006 and December 31, 2005.
         The increases in reserves were due largely to a tentative settlement of
         an employment tax assessment in the State of California, increases in
         certain reserves as a result of continued settlement negotiations for
         existing claims and the establishment of new reserves for recently
         instituted litigation.

         Management believes that none of these actions, including the actions
         described above, will have a material adverse effect on the
         consolidated financial position or results of operations of the
         Company.

(6)      NET (LOSS) INCOME PER SHARE:

         Basic net (loss) income per share represents net (loss) income divided
         by the weighted average shares outstanding. Diluted net income per
         share represents net income divided by the weighted average shares
         outstanding adjusted for the incremental dilution of potentially
         dilutive common shares.


                                       12
<PAGE>


         A reconciliation of weighted average common shares outstanding to
         weighted average common shares outstanding assuming dilution follows
         (in thousands)-

<TABLE>
<CAPTION>

                                                                        THREE MONTHS                     SIX MONTHS
                                                                            ENDED                          ENDED
                                                                           JUNE 30,                       JUNE 30,
                                                                 ----------------------------    ---------------------------
                                                                     2006            2005            2006            2005
                                                                 ------------    ------------    ------------    -----------
<S>                                                                    <C>           <C>            <C>             <C>
         Basic weighted average
          common shares outstanding                                    10,017        9,356          10,016          9,356
         Effect of dilutive securities:
             Stock options and warrants                                  -           1,049             -            1,052
             Preferred Stock                                             -           3,937             -            3,937
             Convertible Notes                                           -           5,906             -            5,906
                                                                 ------------    ---------       ---------       --------
         Diluted weighted average common shares
           outstanding                                                 10,017       20,248          10,016         20,251
                                                                 ============    =========       =========       ========

</TABLE>

         A reconciliation of net (loss) income as reported to net (loss) income
         as adjusted for the effect of dilutive securities follows (in
         thousands)-

<TABLE>
<CAPTION>

                                                                       THREE MONTHS                    SIX MONTHS
                                                                           ENDED                         ENDED
                                                                          JUNE 30,                      JUNE 30,
                                                                 --------------------------    ---------------------------
                                                                    2006           2005           2006            2005
                                                                 ------------    ----------    ------------    -----------
<S>                                                                     <C>         <C>            <C>            <C>
         Net (loss) income, as reported                                 ($801)      $626           ($612)         $1,054
         Effect of dilutive securities:
             Interest on Convertible Notes                                 -         129               -             257
                                                                 ------------    -------       ---------       ---------
         Net (loss) income, as adjusted for the effect
             of dilutive securities                                     ($801)      $755           ($612)         $1,311
                                                                 ============    =======       =========       =========
</TABLE>

         The following potentially dilutive common shares were excluded from the
         computation of diluted net (loss) income per share because the exercise
         or conversion price was greater than the average market price of common
         shares (in thousands):

<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED                 SIX MONTHS ENDED
                                                                JUNE 30,                         JUNE 30,
                                                     -------------------------------    -----------------------------
                                                         2006              2005            2006             2005
                                                     --------------     ------------    ------------     ------------
<S>                                                         <C>                <C>             <C>              <C>
         Stock options and warrants                         1,266              1,135           1,409            1,135
         Seller financed convertible notes                    134                175             139              180
         Convertible preferred stock                        3,937                  -           3,937                -
         Subordinated convertible debentures                3,937                  -           3,937                -
</TABLE>



                                       13
<PAGE>


(7)      SUBSEQUENT EVENTS:

         Entry into a Definitive Merger Agreement

         On July 3, 2006, CD&L and Velocity signed a definitive merger agreement
         for Velocity to acquire CD&L in a two-step, all cash transaction for
         $3.00 per share of common stock.

         The merger agreement provides that, upon the terms and subject to the
         conditions contained in it, a wholly-owned subsidiary of Velocity
         ("Sub") will be merged with CD&L, the separate corporate existence of
         Sub will cease, CD&L will be the surviving corporation and continue to
         be governed by the laws of the State of Delaware, and the corporate
         existence of CD&L with all its rights, privileges, immunities, powers,
         and franchises shall continue unaffected by the merger. Sub is also a
         party to the merger agreement.

         At the effective time of the merger, each share of CD&L's common stock
         issued and outstanding immediately before the merger, other than
         dissenting shares, will be canceled and converted into the right to
         receive $3.00 in cash, without interest. The $3.00 amount is subject to
         proportionate adjustment so as to maintain an aggregate merger
         consideration of approximately $33 million in the event that the total
         number of shares of common stock outstanding, or issuable (net of any
         exercise or conversion price) upon exercise or conversion of CD&L stock
         options outstanding, at the effective time of the merger is more or
         less than 11,039,238 shares. No adjustment of the per-share purchase
         price need be made as a result of any change in the number of shares
         unless such adjustment would exceed $0.01. After the merger is
         effective, each holder of a certificate representing shares of our
         common stock, other than dissenting shares, will no longer have any
         rights with respect to those shares, except for the right to receive
         the cash merger consideration. Each share of CD&L's common stock held
         by CD&L, Velocity or its subsidiaries at the time of the merger will be
         canceled without any payment.

         The Company has called for a special meeting on August 17, 2006 to seek
         shareholder approval of the merger agreement. If the merger agreement
         is approved at the special meeting and there is no litigation with
         respect thereto, it is anticipated that the merger will be completed
         immediately after the special meeting. Velocity, through its ownership
         of common stock acquired under the securities purchase agreements
         described below and through its rights under the voting agreement
         described below, has or controls the vote of a majority of the shares
         of the Company's common stock, and has indicated that it will vote to
         approve the merger agreement.

         Series A Preferred Stock, Common Stock and Warrant Purchase Agreements

         On July 3, 2006, Velocity entered into a Series A Preferred Stock and
         Warrant Purchase Agreement with BNP Paribas ("Paribas") and two Series
         A Preferred Stock, Common Stock and Warrant Purchase Agreements with
         Exeter Capital Partners IV, L.P. ("Exeter IV"), one of which related to
         securities purchased on June 30, 2006, by Exeter IV from the United
         States Small Business Administration as receiver for Exeter Venture
         Lenders, L.P. ("Exeter I") and one relating to our securities held by
         Exeter IV prior to that date (collectively, the "preferred purchase
         agreements"). Under the preferred purchase agreements, Velocity
         purchased the 393,701 shares of the Company's Preferred Stock and the
         506,250 warrants from Paribas and Exeter IV and the 656,168 shares of
         the Company's common stock held by Exeter IV.

         Shortly after consummations of such purchases, Velocity provided notice
         of conversion of the Preferred Stock, effective as of July 11, 2006,
         into an aggregate of 3,937,010 shares of the Company's common stock,
         and exercised the 506,250 warrants on a cashless basis for an aggregate
         exercise price of $506.25, so that it received 506,075 shares. As a
         result, under the preferred purchase agreements, Velocity acquired, in
         the aggregate, 5,099,253 shares of the Company's common stock.


                                       14
<PAGE>

         Series A Convertible Subordinated Debenture Purchase Agreement

         On July 3, 2006, Velocity entered into a Series A Convertible
         Subordinated Debenture Purchase Agreement (the "debenture purchase
         agreement") with the 14 individuals who held all of the Company's
         Series A Convertible Notes in the aggregate principal amount of
         $4,000,000, including Albert W. Van Ness, Jr., Chairman and Chief
         Executive Officer of CD&L, William T. Brannan, President and a director
         of CD&L, Michael Brooks, Group Operations President and a director of
         CD&L, Russell Reardon, Chief Financial Officer of CD&L, Mark Carlesimo,
         General Counsel of CD&L, Matthew J. Morahan, a director of CD&L, Peter
         Young, a director of CD&L, five other officers of subsidiaries of the
         Company, a consultant to the Company, and one other individual
         (collectively, the "Series A debenture sellers"). Under the debenture
         purchase agreement, Velocity purchased the Series A Convertible Notes
         for an aggregate price of $12,795,276.

         The Series A debenture sellers had been parties to a shareholders
         agreement with CD&L and the holders of the Preferred Stock under which
         they had a right of first refusal to acquire the Preferred Stock. As a
         condition to Velocity's entry into the debenture purchase agreement,
         the Series A debenture sellers also entered into an agreement whereby
         they waived those rights of first refusal in connection with Velocity's
         purchase of the Preferred Stock.

         Shortly after the consummation of the debenture purchase, Velocity
         converted the Series A debentures into an aggregate of 3,937,008 shares
         of the Company's common stock. As a result of this conversion and the
         preferred purchase agreement, as of July 11, 2006, Velocity will own
         9,036,261 shares of the Company's common stock, representing 49.1% of
         the outstanding shares of common stock.

         Voting Agreement

         As a condition to entering into the merger agreement and the debenture
         purchase agreement, Velocity required that each of Albert Van Ness,
         Jr., William T. Brannan, Michael Brooks, Russell J. Reardon, Matthew J.
         Morahan, Vincent P. Brana (a consultant to the Company and a former
         officer) and Jack McCorkell (an officer of one of our subsidiaries)
         enter into a voting agreement. Under the voting agreement each such
         stockholder agreed to vote in favor of the merger and the merger
         agreement and against any action which would result in a breach of the
         merger agreement or voting agreement. The voting agreement also
         provides that such stockholders will vote against any extraordinary
         corporate transaction, sale or transfer of assets, change to the Board
         of Directors, change in capitalization, charter or bylaws, change to
         the structure or business of CD&L, or any other action which would
         potentially interfere, delay or adversely effect the merger or
         transactions contemplated thereby. The prohibition does not apply to a
         vote for a competing merger offer that the Board determines to be on
         more favorable terms than the Velocity merger agreement, provided that
         the Board recommends the stockholders do not approve the merger
         transaction with Velocity. The voting agreement will terminate upon the
         earlier of the termination of the merger agreement, in accordance with
         its terms, or the effective date of the merger.



                                       15
<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This Form 10-Q contains forward-looking statements made pursuant to the
         safe harbor provisions of the Private Securities Litigation Reform Act
         of 1995. Forward-looking statements typically are identified by use of
         terms such as "may," "will," "should," "plan," "expect," "believe,"
         "anticipate," "estimate" and similar expressions, although some
         forward-looking statements are expressed differently. Forward-looking
         statements represent our management's judgment regarding future events.
         Although we believe that the expectations reflected in such
         forward-looking statements are reasonable, we can give no assurance
         that such expectations will prove to be correct. All statements other
         than statements of historical fact included in this report regarding
         our financial position, business strategy, products, services, markets,
         budgets, plans, or objectives for future operations are forward-looking
         statements. We cannot guarantee the accuracy of the forward-looking
         statements, and you should be aware that our actual results could
         differ materially from those contained in the forward-looking
         statements due to a number of factors, including the statements under
         "Risk Factors" and "Critical Accounting Policies" detailed in our
         annual report on Form 10-K for the year ended December 31, 2005, and
         other reports filed with the Securities and Exchange Commission
         ("SEC").

         Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
         current reports on Form 8-K and all other documents filed by the
         Company or with respect to its securities with the SEC are available
         free of charge through our website at www.cdl.net. Information on our
         website does not constitute a part of this report.

         OVERVIEW

         The Company is one of the leading national full-service providers of
         customized, same-day, time-critical, delivery services to a wide range
         of commercial, industrial and retail customers. These services are
         provided throughout the United States. The Company currently operates
         in a single-business segment and thus additional disclosures under
         Statement of Financial Accounting Standards No. 131, Disclosures About
         Segments of an Enterprise and Related Information, are not required.

         The Company offers the following delivery services:

                  o  Rush delivery services, typically consisting of delivering
                     time-sensitive packages, such as critical parts, emergency
                     medical devices and legal and financial documents from
                     point-to-point on an as-needed basis;

                  o  Distribution services, providing same-day delivery for many
                     pharmaceutical and office supply wholesalers, from
                     manufacturers to retailers and inter-branch distribution of
                     financial documents in a commingled system;

                  o  Facilities management, including providing and supervising
                     mailroom personnel, mail and package sorting, internal
                     delivery and outside local messenger services; and

                  o  Dedicated contract logistics, providing a comprehensive
                     solution to major corporations that want the control,
                     flexibility and image of an in-house fleet with the
                     economic benefits of outsourcing.

         Revenue consists primarily of charges to the Company's customers for
         delivery services. These customers are billed as the services are
         rendered, mostly on a weekly basis. Recurring charges related to
         facilities management or contract logistics services are typically
         billed on a monthly basis. The Company's recent revenue growth has been
         attributable to the expansion of its current customer base into new
         geographical areas. The Company has always had a strong presence in the
         Northeast and Southeast regions of the country. As a result of its
         nationwide business development program, the Company has increased its
         revenue volume on the West coast during the first half of 2006 by 48%
         as compared to the first six months of 2005.


                                       16
<PAGE>

         Cost of revenue consists primarily of independent contractor delivery
         costs, other direct pick-up and delivery costs and the costs of
         dispatching rush demand messengers. The Company has experienced an
         overall increase in cost of revenue as a percent of revenue during the
         first six months of 2006 compared to the first six months of 2005. This
         reduction in gross margin is primarily due to operational
         inefficiencies associated with the high volume of new business on the
         West coast compared to last year's first six months.

         Selling, general and administrative expense ("SG&A") includes the costs
         to support the Company's sales effort and the expense of maintaining
         facilities, information systems, financial, legal and other
         administrative functions. There was a significant increase in SG&A
         during the second quarter of 2006 related to legal costs associated
         with the definitive merger agreement entered into with Velocity as well
         as settlement costs arising out of a tentative settlement of an
         employment tax audit in the State of California. Other factors include
         increased rent charges and higher travel costs as a result of opening
         new facilities to facilitate its recent expansion into new geographical
         locations. In addition, the Company has increased its sales force and
         operating personnel significantly in the West coast to manage the
         recent revenue growth along with the anticipated growth of the region
         going forward.

         The Company continues to invest in its infrastructure and is currently
         in the development stage of implementing a state-of-the-art,
         web-enabled, business information management system. It will provide
         the scalability, availability and security required to manage the
         future growth of driver, route, tracking and reporting components of
         the Company's ground distribution services.

         The condensed consolidated financial statements of the Company,
         including all related notes, which appear elsewhere in this report,
         should be read in conjunction with this discussion of the Company's
         results of operations and its liquidity and capital resources.

         CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The Company's discussion and analysis of financial condition and
         results of operations are based upon the Company's consolidated
         financial statements, which have been prepared in accordance with
         accounting principles generally accepted in the United States of
         America. The preparation of these financial statements requires the
         Company to make estimates and judgments that affect the reported
         amounts of assets, liabilities, revenues and expenses, and related
         disclosure of contingent assets and liabilities. On an ongoing basis,
         the Company evaluates its estimates, including those related to
         accounts receivable, intangible assets, insurance reserves, income
         taxes and contingencies. The Company bases its estimates on historical
         experience and on various other assumptions that are believed to be
         reasonable under the circumstances, the results of which form the basis
         for making judgments about the carrying values of assets and
         liabilities that are not readily apparent from other sources. Actual
         results may differ from these estimates under different assumptions or
         conditions. For a discussion of the Company's critical accounting
         policies, see the Company's Annual Report on Form 10-K/A for 2005.

         New Accounting Standards and Pronouncements -

         In May 2005, SFAS No. 154, "Accounting Changes and Error Corrections"
         ("SFAS 154") was issued. SFAS 154 replaces APB Opinion No. 20,
         "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in
         Interim Financial Statements", and changes the requirements for the
         accounting for and reporting of a change in accounting principle. This
         statement is effective for accounting changes and corrections of errors
         made in fiscal years beginning after December 15, 2005. The Company has
         not had any accounting changes or corrections of errors during 2006.



                                       17
<PAGE>

         In December 2004, SFAS No. 123 (revised 2004), "Share-Based Payment"
         ("SFAS 123(R)") was issued. SFAS 123(R) revises SFAS No. 123,
         "Accounting for Stock-Based Compensation" ("SFAS 123") and supersedes
         APB No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). SFAS
         123, as originally issued in 1995, established as preferable a fair
         value-based method of accounting for share-based payment transactions
         with employees and directors. However, SFAS 123 as amended permitted
         entities the option of continuing to apply the intrinsic value method
         under APB 25 that the Company had been using, as long as the notes to
         the financial statements disclosed what net income would have been had
         the preferable fair value-based method been used. SFAS 123(R) requires
         that the compensation cost relating to all share-based payment
         transactions, including employee and director stock options, be
         recognized in the historical financial statements. That cost is
         measured based on the fair value of the equity or liability instrument
         issued and amortized over the related service period. The Company has
         adopted the guidance in SFAS 123(R) effective January 1, 2006. As such,
         the accompanying condensed consolidated statements of operations for
         the three and six months ended June 30, 2006 includes $151,000 of
         compensation expense in SG&A related to the fair value of options
         granted under the Company's stock-based employee and director
         compensation plans which is being amortized over the service period in
         the financial statements, as required by SFAS 123(R). These awards have
         been classified as equity instruments, and as such, a corresponding
         increase of $151,000 has been reflected in additional paid-in capital
         in the accompanying balance sheet as of June 30, 2006.




                                       18
<PAGE>


         RESULTS OF OPERATIONS

         INCOME AND EXPENSE AS A PERCENTAGE OF REVENUE

<TABLE>
<CAPTION>

                                                   For the Three Months Ended             For the Six Months Ended
                                                              June 30,                              June 30,
                                               ----------------------------------    -------------------------------
                                                    2006               2005              2006             2005
                                               ----------------    --------------    -------------    --------------
<S>                                                 <C>                 <C>              <C>              <C>
         Revenue                                    100.0%              100.0%           100.0%           100.0%

         Gross profit                                18.9%               20.0%            18.7%            19.9%

         Selling, general and
            administrative expenses                  20.3%               16.7%            18.6%            16.9%

         Depreciation and amortization                0.5%                0.5%             0.5%             0.5%

         Other (income) expense, net                  0.0%                0.0%             0.0%             0.0%

         Interest expense                             0.7%                0.7%             0.6%             0.7%

         (Loss) income before provision for
           income taxes                              (2.6%)               2.1%            (1.0%)            1.8%

         (Benefit) provision for income taxes        (1.3%)               0.9%            (0.5%)            0.8%

         Net (loss) income                           (1.3%)               1.2%            (0.5%)            1.0%

</TABLE>

         SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE
         30, 2005

         Revenue for the six months ended June 30, 2006 increased by
         $15,788,000, or 14.8%, to $122,350,000 from $106,562,000 for the six
         months ended June 30, 2005. This increase in revenue includes
         $12,600,000 from existing customers and $6,000,000 from new customers.
         These increases were partially offset by lost business of $2,800,000.

         Cost of revenue increased by $14,039,000, or 16.4%, to $99,453,000 for
         the six months ended June 30, 2006 from $85,414,000 for the six months
         ended June 30, 2005. Cost of revenue for the six months ended June 30,
         2006 represented 81.3% of revenues as compared to 80.1% for the same
         period in 2005. If the gross profit margin had remained the same as
         last year's 19.9%, the $22,897,000 gross profit for the six months
         ended June 30, 2006 would have been approximately $1,450,000 higher.
         The reduced margin was due primarily to new business start-up costs and
         competitive rate pressures. Our pricing to new and existing customers
         has not kept pace with our increased driver costs. The significant
         increase in fuel costs has required us to pay more to attract and
         retain contract drivers.

         SG&A increased by $4,765,000, or 26.5%, to $22,733,000 for the six
         months ended June 30, 2006 from $17,968,000 for the same period in
         2005. Stated as a percentage of revenue, SG&A was 18.6% for the six
         months ended June 30, 2006 as compared to 16.9% for the same period in
         2005. The increase in SG&A was due primarily to the following:

                                                           Increase from 2005
                                                       -------------------------
            Legal fees/reserves                        $1,970,000        400.9%
            Consulting services                           349,000         80.9%
            Premises rent                                 455,000         16.1%
            Compensation, other than stock-based          421,000          5.0%
            Provision for bad debts                       715,000        398.7%
            Travel and entertainment                      249,000         29.0%
            Stock-based compensation                      151,000           (1)

            (1) The Company implemented SFAS 123(R) during the first quarter of
                2006. As such, there was no comparable expense recorded in 2005.


                                       19
<PAGE>

         The increase in legal fees related to costs incurred in connection with
         the definitive merger agreement entered into with Velocity Express
         Corporation. In addition, a $980,000 accrual has been established
         during the second quarter 2006 related to a tentative settlement of an
         employment tax audit in the State of California.

         Of the $349,000 increase in consulting services, $250,000 relates to
         fees incurred in connection with the merger agreement with Velocity.
         The remaining increase in consulting fees relates to modifications made
         to the PeopleSoft financial reporting system during 2006. The provision
         for bad debts for the six months ended June 30, 2006 was $536,000. Of
         this amount, $300,000 related to the write-off of the Global Delivery
         Systems note receivable obtained in connection with the settlement
         agreement in September 2005. During the six months ended June 30, 2005,
         there was a reduction in the provision for doubtful accounts based on
         the historical effectiveness of our receivables management. The
         increases in compensation (other than stock-based), premises rent and
         travel and entertainment all relate primarily to additional facilities
         opened on the West coast and Southeast region as a result of the
         expansion into new geographic locations.

         Depreciation and amortization was $651,000 as of June 30, 2006 as
         compared to $550,000 for the same period in 2005. This increase relates
         to the depreciation of fixed assets purchased in the latter part of
         2005 and the first half of 2006.

         Interest expense remained consistent at $757,000 for the six months
         ended June 30, 2006 as compared to $756,000 for the same period in
         2005.

         As a result of the factors discussed above, income before provision for
         income taxes decreased by $3,111,000 to a loss of $1,228,000 for the
         six months ended June 30, 2006 from income of $1,883,000 for the six
         months ended June 30, 2005.

         Provision for income taxes decreased by $1,445,000 to a benefit of
         $616,000 for the six months ended June 30, 2006 as compared to a
         provision of $829,000 for the same period in 2005. This was due to the
         decrease in income before provision for income taxes discussed above.
         The effective tax rate for the six months ended June 30, 2006 was 50%;
         without the $39,000 of deferred tax benefit related to the SFAS 123(R)
         stock-based compensation cost, the rate would have been 47% as compared
         to 44% as of June 30, 2005.

         Net income decreased by $1,666,000 to a loss of $612,000 for the six
         months ended June 30, 2006 as compared to income of $1,054,000 for the
         same period in 2005. This was due to the factors discussed above.

         THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED
         JUNE 30, 2005

         Revenue for the three months ended June 30, 2006 increased by
         $7,704,000, or 14.2%, to $61,911,000 from $54,207,000 for the three
         months ended June 30, 2005. This increase in revenue includes
         $6,400,000 from existing customers and $3,100,000 from new customers.
         These increases were partially offset by lost business of $1,400,000.

         Cost of revenue increased by $6,853,000, or 15.8%, to $50,220,000 for
         the three months ended June 30, 2006 from $43,367,000 for the three
         months ended June 30, 2005. Cost of revenue for the three months ended
         June 30, 2006 represented 81.1% of revenue as compared to 80.0% for the
         same period in 2005. If the gross profit margin had remained the same
         as last year's 20.0%, the $11,691,000 gross profit for the three months
         ended June 30, 2006 would have been approximately $691,000 higher. The
         reduced margin was due primarily to new business start-up costs and
         competitive rate pressures. Our pricing to new and existing customers
         has not kept pace with our increased driver costs. The significant
         increase in fuel costs has required us to pay more to attract and
         retain contract drivers.


                                       20
<PAGE>

         SG&A increased by $3,453,000, or 38.0%, to $12,541,000 for the three
         months ended June 30, 2006 from $9,088,000 for the same period in 2005.
         Stated as a percentage of revenue, SG&A was 20.3% for the three months
         ended June 30, 2006 as compared to 16.7% for the same period in 2005.
         The increase in SG&A was due primarily to the following:

                                                           Increase from 2005
                                                       ------------------------
             Legal fees/reserves                       $1,693,000        496.5%
             Consulting services                          321,000        134.4%
             Premises rent                                297,000         21.4%
             Compensation, other than stock-based         143,000          3.3%
             Provision for bad debts                      737,000        460.2%
             Travel and entertainment                     102,000         20.7%
             Stock-based compensation                      56,000           (1)

             (1) The Company implemented SFAS 123(R) during the first quarter of
                 2006. As such, there was no comparable expense recorded in
                 2005.

         The increase in legal fees related to costs incurred in connection with
         the definitive merger agreement entered into with Velocity Express
         Corporation. In addition, a $980,000 accrual has been established
         during the second quarter 2006 related to a tentative settlement of an
         employment tax audit in the State of California.

         Of the $321,000 increase in consulting services, $250,000 relates to
         fees incurred in connection with the merger agreement with Velocity.
         The remaining increase in consulting fees relates to modifications made
         to the PeopleSoft financial reporting system during 2006. The provision
         for bad debts for the second quarter of 2006 was $577,000. Of this
         amount, $300,000 related to the write-off of Global Delivery Systems
         note receivable obtained in connection with the settlement agreement in
         September 2005. During the second quarter of 2005, there was a
         reduction in the provision for doubtful accounts based on the
         historical effectiveness of our receivables management. The increases
         in compensation (other than stock-based), premises rent and travel and
         entertainment all relate primarily to additional facilities opened on
         the West coast and Southeast region as a result of the expansion into
         new geographic locations.

         Depreciation and amortization increased by $56,000, or 20.2%, to
         $333,000 for the three months ended June 30, 2006 from $277,000 for the
         same period last year. This increase relates to the depreciation of
         fixed assets purchased in the latter part of 2005 and the first half of
         2006.

         Interest expense increased by $35,000 to $401,000 for the three months
         ended June 30, 2006 as compared to $366,000 for the same period last
         year primarily as a result of increased borrowings on the line of
         credit as compared with last year coupled with the increased prime rate
         during 2006.

         As a result of the factors discussed above, income before provision for
         income taxes decreased by $2,702,000 to a loss of $1,584,000 for the
         three months ended June 30, 2006, as compared to income of $1,118,000
         for the same period in 2005.

         Provision for income taxes decreased by $1,275,000 to a benefit of
         $783,000 for the three months ended June 30, 2006, as compared to a
         provision of $492,000 for the same period in 2005. This was due to the
         decrease in income before provision for income taxes discussed above.
         The effective tax rate for the three months ended June 30, 2006 was
         50%; without the $39,000 of deferred tax credit related to the SFAS
         123(R) stock-based compensation cost, the rate would have been 47% as
         compared to 44% as of June 30, 2005.

         Net income decreased by $1,427,000 to a net loss of $801,000 for the
         three months ended June 30, 2006 as compared to net income of $626,000
         for the same period in 2005. This was due to the factors discussed
         above.


                                       21
<PAGE>


         LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2004, the Company was indebted to Paribas and Exeter in
         the sum of $11.0 million pursuant to a subordinated note bearing
         interest at 12% per annum (see Senior Notes in Note 4). On April 14,
         2004, an agreement was reached between Paribas, Exeter and the
         Investors as to the financial restructuring of the Senior Notes.
         Paribas agreed to convert a portion of its existing debt due from CD&L
         into equity and to modify the terms of its subordinated note if the
         investors purchased a portion of the note and accepted similar
         modifications. The loan agreement that governed the Senior Notes was
         amended and restated to reflect the terms of the substituted Series A
         Convertible Notes and the Series B Convertible Notes, including the
         elimination of most financial covenants. The principal amount of the
         Convertible Notes was due in a balloon payment at the maturity date of
         April 14, 2011. The Convertible Notes bore interest at a rate of 9% for
         the first two years of the term, 10.5% for the next two years and 12%
         for the final three years of the term. The Series B Convertible Notes
         were extinguished on October 31, 2005 and the Series A Convertible
         Notes were extinguished on July 11, 2006, as described below. At June
         30, 2006 and 2005, long-term debt included $4,000,000 of Series A
         Convertible Notes. At June 30, 2005, long-term debt also included
         $4,000,000 of Series B Convertible Notes.

         On October 31, 2005, the Company retired the Series B Convertible Notes
         that were issued to Paribas, Exeter Capital and Exeter Venture. The
         principal amount of the Series B Convertible Notes totaled $4,000,000
         as of the retirement date. The portion of the Series B Convertible
         Notes held by Paribas was satisfied by a cash payment of $2,666,667
         principal and $40,000 of accrued interest through October 31, 2005.
         Exeter Venture and Exeter Capital (collectively "Exeter") held the
         remaining $1,333,333 of the Series B Convertible Notes. Exeter
         exercised their right of conversion of their notes and, as such, the
         Company issued to Exeter a total of 656,168 shares of the Company's
         common stock. In addition, a cash payment of $20,000 was made to Exeter
         relating to accrued interest through October 31, 2005.

         On July 11, 2006, the Series A Convertible Notes were converted into
         3,937,008 shares of the Company's common stock and the debt was
         retired. In addition, the 393,701 shares of Preferred Stock were
         converted into 3,937,010 shares of the Company's common stock.

         The Company's working capital decreased by $584,000 from $6,365,000 as
         of December 31, 2005 to $5,781,000 as of June 30, 2006. Cash and cash
         equivalents decreased by $294,000 to $543,000 as of June 30, 2006. Cash
         of $259,000 was provided by operations primarily due to a $553,000
         reduction in prepaid expenses relating to the insurance financing
         arrangements. Cash of $624,000 was used in net investing activities for
         capital expenditures discussed below and cash of $71,000 was provided
         by net financing activities from additional short-term net borrowings.
         Capital expenditures amounted to $647,000 and $443,000 for the six
         months ended June 30, 2006 and 2005, respectively. Increased capital
         expenditures in the first half of 2006 related to the purchase of
         scanners and improving the functionality of our internal network.

         As of June 27, 2002, CD&L and Summit Business Capital Corporation,
         doing business as Fleet Capital - Business Finance Division, entered
         into an agreement establishing a revolving credit facility (the "Fleet
         Facility") of $15,000,000. The Fleet Facility which was due to expire
         on June 27, 2005 but was extended through January 31, 2006, provided
         CD&L with standby letters of credit, prime rate based loans at the
         bank's prime rate, as defined, plus 25 basis points and LIBOR based
         loans at the bank's LIBOR, as defined, plus 225 basis points. Credit
         availability was based on eligible amounts of accounts receivable, as
         defined, up to a maximum amount of $15,000,000 and was collateralized
         by substantially all of the assets, including certain cash balances,
         accounts receivable, equipment, leasehold improvements and general
         intangibles of the Company and its subsidiaries.

         As of January 31, 2006, CD&L and Bank of America, N.A. (successor by
         merger to Fleet Capital Corporation) entered into a new agreement (the
         "Bank of America Facility") which replaced the prior Fleet Facility.
         The Bank of America Facility, which expires on September 30, 2008,
         continues to provide CD&L with standby letters of credit, prime rate
         based loans at the bank's prime rate, as defined (8.25% at June 30,
         2006), and LIBOR based loans at the bank's LIBOR rate, as defined, plus
         200 basis points. Credit availability is based on eligible amounts of
         accounts receivable, as defined, up to a maximum amount of $20,000,000
         and is collateralized by substantially all of the assets, including
         certain cash balances, accounts receivable, equipment, leasehold
         improvements and general intangibles of the Company and its
         subsidiaries. The maximum borrowings outstanding under the Bank of
         America Facility during the six months ended June 30, 2006 were
         $10,872,000. As of June 30, 2006, the Company had total cash on hand
         and borrowing availability of $5,670,000 under the Bank of America
         Facility, after adjusting for restrictions related to outstanding
         standby letters of credit of $4,582,000 and minimum availability
         requirements.


                                       22
<PAGE>

         Under the terms of the Bank of America Facility, the Company is
         required to maintain certain financial ratios and comply with other
         financial conditions. The Bank of America Facility also prohibits the
         Company from incurring certain additional indebtedness, limits certain
         investments, advances or loans and restricts substantial asset sales,
         capital expenditures and cash dividends. At June 30, 2006, the Company
         was in violation of certain of the financial covenants due to the
         reported net loss for the second quarter. On August 11, 2006, the
         Company obtained a waiver from its lender for the covenant violation.
         Bank of America has consented to the merger with Velocity and the
         revolving loan balance will be paid in full and closed on the merger
         date.

         Costs incurred relative to the establishment of the Bank of America
         Facility amounted to approximately $94,000. This has been accounted for
         as deferred financing costs and is being amortized over the term of the
         new financing agreement. As of June 30, 2006, the unamortized portion
         of the deferred financing costs amounted to approximately $77,000.

         The Company retains a risk of incurring uninsured losses. There can be
         no assurances that the Company's risk management policies and
         procedures will minimize future uninsured losses or that a material
         increase in frequency or severity of uninsured losses will not occur
         and adversely impact the Company's future consolidated financial
         results.

         The Company had an accumulated deficit of ($3,668,000) as of June 30,
         2006. On numerous occasions, the Company has had to amend and obtain
         waivers of the terms of its credit facilities and senior debt as a
         result of covenant violations or for other reasons. On April 14, 2004,
         the Company restructured its senior debt and related covenants. The
         restructuring included an agreement among the Company, its lenders and
         certain members of CD&L management and others which improved the
         Company's short-term liquidity and reduced interest expense. The
         restructuring eased the financial covenants to which the Company was
         subject. However, if the Company were to fail to meet such covenants in
         the future, there can be no assurances that the Company's lenders would
         agree to waive any future covenant violations, renegotiate and modify
         the terms of their loans, or further extend the maturity date, should
         it become necessary to do so. Further, there can be no assurances that
         the Company will be able to meet its revenue, cost or income
         projections, upon which the debt covenants are based.

         Management believes that cash flows from operations and its borrowing
         capacity are sufficient to support the Company's operations and general
         business and capital requirements through at least June 30, 2007. Such
         conclusions are predicated upon sufficient cash flows from operations
         and the continued availability of a revolving credit facility. The
         risks associated with cash flows from operations are mitigated by the
         Company's low gross profit margin. Unless extraordinary, decreases in
         revenue should be accompanied by corresponding decreases in costs,
         resulting in minimal impact to liquidity. The risks associated with the
         revolving credit facility are as discussed above.

         INFLATION

         While inflation has not had a material impact on the Company's results
         of operations for the periods presented herein, recent fluctuations in
         fuel prices can and do affect the Company's operating costs.



                                       23
<PAGE>

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to the effect of changing interest rates. At
         June 30, 2006, the Company's debt consisted of approximately $5,557,000
         of fixed rate debt with a weighted average interest rate of 9.35% and
         $9,371,000 of variable rate debt with a weighted average interest rate
         of 7.72%. The variable rate debt consists of borrowings of revolving
         line of credit debt at the bank's prime rate (8.25% at June 30, 2006).
         If interest rates on variable rate debt were to increase by 83 basis
         points (one-tenth of the weighted average interest rate at June 30,
         2006), the net impact to the Company's results of operations and cash
         flows for the six months ended June 30, 2006 would be a decrease of
         income before provision for income taxes and cash flows from operating
         activities of approximately $36,000. Maximum borrowings of revolving
         line of credit debt during the six months ended June 30, 2006 were
         $10,872,000.

ITEM 4 - CONTROLS AND PROCEDURES

         (a) Disclosure controls and procedures. As of the end of the Company's
             most recently completed fiscal quarter covered by this report, the
             Company carried out an evaluation, with the participation of the
             Company's management, including the Company's Chief Executive
             Officer and Chief Financial Officer, of the effectiveness of the
             Company's disclosure controls and procedures pursuant to Securities
             Exchange Act Rule 13a-15. Based upon that evaluation, the Company's
             Chief Executive Officer and Chief Financial Officer concluded that
             the Company's disclosure controls and procedures are effective in
             ensuring that information required to be disclosed by the Company
             in the reports that it files or submits under the Securities
             Exchange Act is recorded, processed, summarized and reported,
             within the time periods specified in the SEC rules and forms.

         (b) Changes in internal controls over financial reporting. There have
             been no changes in the Company's internal control over financial
             reporting that occurred during the Company's last fiscal quarter to
             which this report relates that have materially affected, or are
             reasonably likely to materially affect, the Company's internal
             control over financial reporting.



                                       24
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1A - Risk Factors

         Aside from the risk factor noted below, there have not been any
         material changes in the risk factors that were previously disclosed in
         Item 1A to Part I of the Company's Annual Report on Form 10-K for the
         year ended December 31, 2005.

         BASED ON CURRENT DISCUSSIONS WITH THE SEC, WE MAY BE REQUIRED TO AMEND
         PRIOR FILINGS.

         The SEC has asked the Company to provide additional support for its
         accounting for the March 1, 2004 transaction wherein the Company
         repurchased certain Indiana-based assets and liabilities originally
         sold to First Choice Courier in June 2001. Consideration for the
         repurchase included cancellation of a promissory note receivable owed
         by First Choice plus a three year contingent earn-out based on retained
         revenue. The majority of the purchase price related to the value of the
         First Choice customer list. An intangible asset of $1,602,000 was
         recorded as of the purchase date. The asset is being amortized over
         five years. The SEC is questioning if all, or part, of the purchase
         price should have been accounted for as forgiveness of debt.

         On July 12, 2006, the Company filed Amendment No. 1 to its Annual
         Report on Form 10-K for the year ended December 31, 2005. This
         amendment reflected a change in the description of the First Choice
         transaction and resolved the previously disclosed SEC comment.


ITEM 4 - Submission of Matters to a Vote of Security Holders

         On June 7, 2006, the Company held its annual meeting of stockholders.
         The following sets forth a brief description of each matter which was
         acted upon, as well as the votes cast for, against or withheld for each
         such matter, and, where applicable, the number of abstentions and
         broker non-votes for each matter:

         1. Election of Directors.

            Name of Director                   Votes For         Withheld
            -------------------------          ---------         --------
             Albert W. Van Ness, Jr.           8,391,349          250,816
             Thomas E. Durkin III              8,336,898          305,267
             John A. Simourian                 8,381,996          260,169
             Peter Young                       8,382,890          259,275

2. Approval of the Amendment to the 2000 Stock Incentive Plan.

             Votes For:                        1,508,538
             Votes Against:                      527,475
             Abstentions:                         13,712
             Broker Non-Votes:                 6,592,440



                                       25
<PAGE>


ITEM 6 - Exhibits

(a)      Exhibits

         10.1     Form of Amended and Restated Employment Agreement dated April
                  14, 2004 with William T. Brannan (Employment Agreements of
                  Albert W. Van Ness, Jr., Michael Brooks, Russell J. Reardon,
                  and Mark T. Carlesimo are in the same form).

         31.1     Certification of Albert W. Van Ness, Jr. Pursuant to Exchange
                  Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification of Russell J. Reardon Pursuant to Exchange Act
                  Rules 13a- 14(a) and 15d-14(a), as Adopted Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

         32.1     Certification of Albert W. Van Ness, Jr. Pursuant to 18 U.S.C.
                  Section 1350, as adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

         32.2     Certification of Russell J. Reardon Pursuant to 18 U.S.C.
                  Section 1350, as adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.



                                       26
<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: August 16, 2006                       CD&L, INC.




                                             By: \s\ Russell J. Reardon
                                                 ------------------------------
                                                 Russell J. Reardon
                                                 Vice President and
                                                 Chief Financial Officer



                                       27



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>b414521_ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<PAGE>


                                                                   EXHIBIT 10.1

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


                  AGREEMENT (this "Agreement") made as of the 14th day of April,
2004 (the "Effective Date"), by and between CD&L, Inc., a corporation formed
under the laws of the State of Delaware (the "COMPANY"), and William T. Brannan
(the "EXECUTIVE").


                              W I T N E S S E T H:

                  WHEREAS, the Company and Executive have entered into an
employment agreement as of the first day of May, 2000 that expires on or about
May 1, 2005 (the "Prior Agreement"); and

                  WHEREAS, the Company wishes to ensure the continued employment
of the Executive with the Company and the Executive wishes to accept such
continued employment upon the terms and conditions hereinafter set forth; and

                  WHEREAS, The Parties desire to amend the Prior Agreement.

                  NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:

                  1. EMPLOYMENT

                  The Company agrees to employ the Executive during the Term
specified in Section 2, and the Executive agrees to accept such employment, upon
the terms and conditions hereinafter set forth.

                  2. TERM

                  (a) Except as otherwise provided in this Section 2, the
Executive's employment by the Company shall continue from the Effective Date and
expire on the close of business on December 31, 2008 (the "Term").

                  (b) Notwithstanding Section 2(a) above, the Term and
Executive's employment hereunder may terminate prior to the end thereof pursuant
to this Section 2(b) as set forth below, subject to the applicable provisions of
Section 6 of this Agreement with respect to post-termination payments and
benefits:

<PAGE>

                           (i) Either party shall have the right to terminate
the Term and Executive's employment hereunder for any reason whatsoever, with or
without Cause (as hereinafter defined), by providing the other party hereto with
ninety (90) days' advance written notice of such termination.

                           (ii) The Company shall have the right to terminate
the Term and Executive's employment hereunder for Cause (as hereinafter defined)
by giving written notice to Executive. For purposes of this Agreement, the term
"CAUSE" shall mean the Executive's commission or omission of any act which
materially and adversely affects the Company and which constitutes: (a) a
material breach or material failure to perform his duties under applicable law
and such breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness, (b) commission of an act of dishonesty in the
performance of his duties hereunder or engagement in conduct materially
detrimental to the business of the Company, (c) conviction of a felony involving
moral turpitude, (d) a material breach or material failure to perform his
obligations and duties hereunder, which breach or failure the Executive shall
fail to remedy within 20 days after written demand from the Company, or (e)
violation in any material respect of the representations made in Section 19
below or the provisions of Sections 9 below.

                           (iii) The Executive shall be entitled to terminate
the Term and Executive's employment hereunder in the event that the Company is
in default of a material term of this Agreement, which default remains uncured
for a period of thirty (30) days after written notice of such default from the
Executive to the Company, such notice to specify the specific nature of the
claimed default and the manner in which the Executive requires such default to
be cured.

                           (iv) The Term and Executive's employment hereunder
shall automatically terminate in the event Executive shall have become Disabled
(as hereinafter defined). For the purposes of this Agreement, the term
"DISABLED" as used herein shall have the same meaning as that term, or such
substantially equivalent term, has in any applicable group disability policy
carried by the Company. If no such policy exists, the term "Disabled" shall mean
the occurrence of any physical or mental condition which materially interferes
with the performance of Executive's customary duties in his capacity as an
employee where such disability has been in effect for a period of six (6) months
(excluding permitted vacation time), which need not be consecutive, during any
single twelve (12) month period.

                           (v) The Term and Executive's employment hereunder
shall automatically terminate in the event of Executive's death.


                                      -2-
<PAGE>

                  The effective date of the termination of the Executive's
employment with the Company, regardless of the reason therefor, is referred to
in this Agreement as the "DATE OF TERMINATION". If the Executive terminates
their employment for any reason other than Section 2(b)(iii) or Section 6(c),
then the Date of Termination for purposes of Sections 9 and 10 shall be December
31, 2008 regardless of when the Executive terminates their employment.

                  3. DUTIES AND RESPONSIBILITIES

                  (a) During the Term, the Executive shall have the position of
President and Chief Operating Officer and/or such other title or titles as may
be granted by the Company. The Executive shall perform such duties and
responsibilities as may reasonably be assigned to him from time to time
consistent with his position, and in the absence of such assignment, such duties
as are customary and commensurate with such position. It is understood and
agreed that Executive shall not be required to perform his duties outside of the
New York metropolitan area except for commercially and reasonably necessary
temporary or emergency assignments.

                  (b) The Executive agrees that he will (i) devote his best
efforts, and all his skill and ability to promote the interests of the Company;
(ii) carry out his duties in a competent and professional manner; (iii) work
with other employees of the Company in a competent and professional manner; and
(iv) generally promote the interests of the Company.

                  4. COMPENSATION

                  (a) As compensation for all services rendered by the Executive
pursuant to Section 3 above, the Company shall pay the Executive, in accordance
with the Company's normal payroll periods and practices, base salary
compensation during the first year of the Term at an annual rate of $300,000
("BASE SALARY"). The Base Salary shall be subject to periodic increases based on
the Company's merit increase procedures and practices for similar executives.

                  (b) During the Term, the Company shall, in addition to Base
Salary, pay the Executive a bonus in accordance with the Company's then current
executive bonus program.

                  (c) All compensation paid to the Executive shall be subject to
applicable tax withholding requirements.


                                      -3-
<PAGE>

                  5. EXPENSES; FRINGE BENEFITS

                  (a) The Company agrees to pay or to reimburse the Executive
during the Term for all reasonable, ordinary and necessary vouchered business or
entertainment expenses incurred in the performance of his services hereunder in
accordance with the policy of the Company as from time to time in effect.

                  (b) During the Term, the Executive and, to the extent
eligible, his dependents, shall be entitled to participate in and receive all
benefits under any employee benefit plans and programs provided by the Company
(including without limitation, medical, dental, disability, group life
(including accidental death and dismemberment) and business travel insurance
plans and programs) applicable generally to executive officers of the Company,
subject, however, to the terms and conditions of the various plans and programs
in effect from time to time.

                  (c) During the Term, the Company will provide the Executive
with an automobile allowance not to exceed $7,200 per year (or that amount equal
to what other executives of the Company of similar position are provided) to
cover his costs of leasing, insuring, garaging and maintaining an automobile for
use in the business of the Company.

                  (d) The Executive shall be entitled to paid vacation during
the Term of four (4) weeks per year, to be taken at such time(s) as shall not
materially interfere with the Executive's fulfillment of his duties hereunder,
and shall be entitled to as many holidays, sick days and personal days as are in
accordance with the Company's policy then in effect for its executive officers
of similar position.

                  6. TERMINATION

                  (a) Upon Executive's termination of employment for any reason,
the Company shall pay the Executive (or Executive's estate in the event of his
death), within five (5) business days following such termination, any accrued
but unpaid compensation as defined in Section 4(a) and (b) (including any unused
accrued vacation pay), any accrued but unpaid automobile allowances, any unpaid
reimbursement expenses outstanding as of the Date of Termination, and Executive
and/or his beneficiaries shall be entitled to any benefits to which he or they
may be entitled to under the plans and programs described in Section 5, or any
other applicable plans and programs, as of the Date of Termination in accordance
with the terms of such plans and programs. In addition, Executive shall be
entitled to the applicable payments and benefits set forth below.



                                      -4-
<PAGE>

                  (b)(i) If, during the Term, the Executive's employment
hereunder is terminated (i) by the Company for any reason other than Cause,
Disability or Death then Executive shall receive from the Company as liquidated
damages (A) his then applicable Base Salary compensation (including scheduled
increases pursuant to Section 4(a) which would otherwise have been payable
through the remainder of the Term had the Executive's employment not been
terminated, and (B) bonuses for the remainder of the Term as if the Executive
was still employed in an amount equal to the highest rate of bonus (determined
as a percentage of Base Salary) paid the Executive during his employment with
the Company (or, if termination as used in this Section 6(b)(i) is prior to the
end of the first Bonus Measurement Period, then the percentage shall be assumed
to be 100%). In addition, the Company shall continue to provide Executive with
the benefits and perquisites set forth under Section 5(b) and (c) for the
remainder of the Term. For purposes of this Section 6(b)(i), the Term will be
deemed to be two (2) years from the date of termination (as used in this Section
6(b)(i)) or one year after termination if termination occurs within the twelve
(12) months preceding December 31, 2008.

                  (ii) If, during the Term, the Executive's employment hereunder
is terminated by the Executive pursuant to Section 2(b)(iii) then the Executive
shall receive as liquidated damages (A) his then applicable Base Salary
compensation (including scheduled increases pursuant to Section 4(a)) which
would otherwise have been payable through the remainder of the Term had the
Executive's employment not been terminated, and (B) bonuses for the remainder of
the Term as if the Executive was still employed in an amount equal to the
highest rate of bonus (determined as a percentage of Base Salary) paid the
Executive during his employment with the Company (or, if termination as used in
this Section 6(b)(ii) is prior to the end of the first Bonus Measurement Period,
then the percentage shall be assumed to be 100%). In addition, the Company shall
continue to provide Executive with the benefits and perquisites set forth under
Section 5(b) and (c) for the remainder of the Term. For purposes of this Section
6(b)(ii), the Term will be deemed to commence on the Effective Date and expire
on the close of business December 31, 2008 or one year after termination if
termination occurs in the last 12 months of the Term.

                  (c) If the Executive's employment with the Company terminates
for any reason by either party within 180 days following a Change of Control,
the Company shall, within twenty (20) days of Executive's Date of Termination,
pay Executive (or his estate in the event of his death) (A) a lump sum amount in
cash equal to two (2) times the sum of (i) the per annum Base Salary in effect
on the Date of Termination, and (ii) the highest rate of bonus paid the
Executive (determined as a percentage of Base Salary) during his employment with
the Company (or, if termination is prior to the end of the first Bonus
Measurement Period, then the percentage shall be assumed to be 100%), and (B)
any unpaid reimbursable expenses outstanding, and any unused accrued vacation,
as of the Date of Termination. In addition, the Company shall continue to
provide Executive with the benefits and perquisites set forth under Section 5(b)
and (c) for two years from the Date of Termination, as though the Executive had
not terminated employment.



                                      -5-
<PAGE>

                  For purposes of this Agreement, the term "CHANGE IN CONTROL"
shall have the same meaning assigned such term under the terms of the stock
option plan of the Company in effect on the Effective Date or as amended or
modified from time to time and any related terms set forth in such plan used in
defining Change in Control are hereby incorporated by reference. If Executive's
employment is terminated by the Company without Cause prior to the date of a
Change in Control, but Executive reasonably demonstrates that the termination
(A) was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control or (B) otherwise arose
in connection with, or in anticipation of, a Change in Control which has been
threatened or proposed, such termination shall be deemed to have occurred after
a Change in Control for purposes of this Agreement provided a Change in Control
shall actually have occurred.

                  Notwithstanding anything to the contrary set forth herein, the
Executive waives his right to terminate this Agreement under this Section 6(c)
with respect to any Change in Control that results from a certain restructuring
transaction that was consummated April 14, 2004 by and among the Company, the
Executive, BNP Paribas, Exeter Venture Lenders, LP, Exeter Capital Partners IV,
LP, and certain other individuals (the "Restructuring Transaction") or the
conversion of the notes acquired by the Executive thereunder. The Company and
the Executive agree, however, that such waiver shall not extend to any
conversion of convertible securities issued by the Company pursuant to the
Restructuring Transaction where such conversion occurred as a result of, in
connection with, or in response to an acquisition or attempted acquisition of
control of the Company by any person or entity not a party to the Restructuring
Transaction.

                  7.  CERTAIN FURTHER PAYMENTS BY THE COMPANY.

                  (a) In the event that the Employee is entitled to payments
and/or benefits (i) in connection with Employee's employment with the Company or
termination thereof or (ii) from the Company, any person whose actions result in
a change of ownership or effective control covered by ss. 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any person affiliated
with the Company or such person as a result of such change in ownership or
effective control (collectively the "Company Payments"), and if such Company
Payments will be subject to the tax (the "Excise Tax") imposed by ss. 4999 of
the Code, the Company shall pay to or for the benefit of the Employee at the
time specified in subsection (c) below an additional amount (the "Gross-up
Payment") such that the net amount retained by the Employee, after deduction of
any Excise Tax on the Company Payments and any U.S. federal, state and/or local
income or payroll taxes upon the Gross-up Payment, but before deduction for any
U.S. federal, state, and local income or payroll tax on the Company Payments,
shall be equal to the Company Payments. For the purposes of calculating the
Gross-Up Payment, the Employee shall be deemed to pay income taxes at the
highest applicable marginal rate of federal, state or local income taxation for
the calendar year in which the Gross-Up Payment is to be made.


                                      -6-
<PAGE>

         (b) Subject to any determinations made by the Internal Revenue Service
(the "IRS"), all determinations as to whether a Gross-Up Payment is required and
the amount of Gross-Up Payment and the assumptions to be used in arriving at the
determination shall be made by the Company's independent certified public
accountants, appointed prior to any change in ownership (as defined under Code
ss. 280G(b)(2)), and/or tax counsel selected by such accountants (the
"Accountants") in accordance with the principles of ss.280G of the Code. All
fees and expenses of the Accountants will be borne by the Company. Subject to
any determinations made by the IRS, determinations of the Accountants under this
Agreement with respect to (i) the initial amount of any Gross-Up Payments and
(ii) any subsequent adjustment of such payment shall be binding on the Company
and the Employee.

         (c) The Gross-Up Payment calculated pursuant to paragraph (b) shall be
paid no later than the thirtieth (30th) day following an event occurring which
subjects the Employee to the Excise Tax; provided, however, that if the amount
of such Gross-Up Payment or portion thereof cannot be reasonably determined on
or before such day, the Company shall pay to the Employee the amount of the
Gross-Up Payment no later than 10 days following the determination of the
Gross-Up payments by the Accountants. Notwithstanding the foregoing, the
Gross-Up Payment shall be paid to or for the benefit of the employee no later
than fifteen (15) business days prior to the date by which the Employee is
required to pay the Excise Tax or any portion of the Gross-Up Payment to any
federal, state or local taxing authority, without regard to extensions.

         (d) In the event that the Excise Tax is subsequently determined by the
Accountants to be less than the amount taken into account hereunder at the time
the Gross-Up Payment is made, the Employee shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined, the
portion of the prior Gross-up Payment attributable to such reductions (plus the
portions of the Gross-up Payment attributable to the Excise Tax and U.S.
federal, state and local income tax imposed on the portion of the Gross-Up
Payment being repaid by the Employee if such repayment results in a reduction in
Excise Tax or a U.S. federal, state and local income tax deduction), plus
interest on the amount of such repayment at the rate provided in ss.
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Gross-up Payment to be refunded to the Company has been paid to
any U.S. federal, state, and local income tax authorities, repayment thereof
(and related amounts) shall not be required until actual refund or credit of
such portion has been made to the Employee, and interest payable to the Company
shall not exceed the interest received or credited to the Employee by such tax
authority for the period it held such portion. The Employee and the Company
shall cooperate in good faith in determining the course of action to be pursued
(and the method of allocating the expense thereof) if the Employee's claim for
refund or credit is denied. However, if agreement cannot be reached, the Company
shall decide the appropriate course of action to pursue provided that the action
does not adversely impact any issues Employee may have with respect to his tax
return, other than the Excise Tax.


                                      -7-
<PAGE>

         (e) In the event that the Excise Tax is later determined by the
Accountants or the IRS to exceed the amount taken into account hereunder at the
time the Gross-Up Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment to or for the
benefit of the Employee in respect of such excess (plus any interest or
penalties payable with respect to such excess) at the time that the amount of
such excess is finally determined.

         (f) In the event of any controversy with the IRS (or other taxing
authority) with regard to the Excise Tax, the Employee shall permit the Company
to control issues related to the Excise Tax (at the Company's expense) provided
that such issues do not potentially materially adversely affect the Employee. In
the event issues are interrelated, the Employee and the Company shall in good
faith cooperate so as not to jeopardize resolution of either issue. In the event
of any conference with any taxing authority as to the Excise Tax or associated
income taxes, the Employee shall permit the representative of the Company to
accompany the Employee, and the Employee and the Employee's representative shall
cooperate with the Company and its representative.

         (g) The Company shall be responsible for all charges of the Accountant.

         (h) The Company and the Employee shall promptly deliver to each other
copies of any written communications, and summaries of any verbal
communications, with any taxing authority regarding the Excise Tax.



                                      -8-
<PAGE>

                  8. LEGAL FEES AND EXPENSES. In the event that a claim for
payment or benefits under this Agreement is disputed, the Company shall pay all
reasonable attorney fees and expenses incurred by the Executive in pursuing such
claim, provided that the Executive is successful as to at least part of the
disputed claim by reason of litigation, arbitration or settlement.

                  9. CONFIDENTIAL INFORMATION In consideration of the payments
made to the Executive herein, the Executive agrees as follows:

                  (a) The Executive hereby agrees and acknowledges that he has
and has had access to or is aware of Confidential Information. The Executive
hereby agrees that he shall keep strictly confidential and will not during and
after the Term, without the Company's express written consent, divulge, furnish
or make accessible to any person or entity, or make use of for the benefit of
himself or others, any Confidential Information obtained, possessed, or known by
him except as required in the regular course of performing the duties and
responsibilities of his employment by the Company while in the employ of the
Company, and that he will, prior to or upon his Date of Termination deliver or
return to the Company all such Confidential Information that is in written or
other physical or recorded form or which has been reduced to written or other
physical or recorded form, and all copies thereof, in his possession, custody or
control. The foregoing covenant shall not apply to (i) any Confidential
Information that becomes generally known or available to the public other than
as a result of a breach of the agreements of the Executive contained herein,
(ii) any disclosure of Confidential Information by the Executive that is
expressly required by judicial or administrative order; provided however that
the Executive shall have (x) notified the Company as promptly as possible of the
existence, terms and circumstances of any notice, subpoena or other process or
order issued by a court or administrative authority that may require him to
disclose any Confidential Information, and (y) cooperated with the Company, at
the Company's request, in taking legally available steps to resist or narrow
such process or order and to obtain an order or other reliable assurance that
confidential treatment will be given to such Confidential Information as is
required to be disclosed.

                  (b) For purposes of this Agreement, "CONFIDENTIAL INFORMATION"
means all non-public or proprietary information, data, trade secrets,
"know-how", or technology with respect to any products, designs, improvements,
research, styles, techniques, suppliers, clients, markets, methods of
distribution, accounting, advertising and promotion, pricing, sales, finances,
costs, profits, financial condition, organization, personnel, business systems
(including without limitation computer systems, software and programs), business
activities, operations, budgets, plans, prospects, objectives or strategies of
the Company.



                                      -9-
<PAGE>

                  10. POST-EMPLOYMENT OBLIGATIONS In consideration of the
payments made to the Executive herein, the Executive agrees as follows:

                  (a) The Executive agrees that his services hereunder are of a
special, unique, extraordinary and intellectual character, and his position with
the Company places him in a position of confidence and trust with employees,
suppliers and clients of the Company. The Executive further agrees and
acknowledges that in the course of the Executive's employment with the Company,
the Executive has been and will be privy to Confidential Information. The
Executive consequently agrees that it is reasonable and necessary for the
protection of the trade secrets, goodwill and business of the Company that the
Executive make the covenants contained herein. Accordingly, the Executive agrees
that he shall not, without the prior written consent of the Company, directly or
indirectly, and regardless of the reason for his ceasing to be employed by the
Company (other than a termination by the Executive pursuant to Section 2(b)(iii)
or by the Company for any reason other than Cause):

                           (i)   for a period of two years from the Date of
                                 Termination, hereinafter referred to as the
                                 "Restrictive Period", own or hold any
                                 proprietary interest in, or be employed by or
                                 receive remuneration from, any corporation,
                                 partnership, sole proprietorship or other
                                 entity engaged in competition with the Company
                                 or any of the Company's subsidiaries or
                                 affiliates (hereinafter referred to as a
                                 "Competitor") in the "Territory", other than
                                 severance-type or retirement-type benefits from
                                 entities constituting prior employers of the
                                 Executive. The Executive agrees that during
                                 such Restrictive Period he will not solicit the
                                 account of any Competitor, any customer or
                                 client of the Company or its subsidiaries or
                                 affiliates, or any entity or individual that
                                 was such a customer or client during the twenty
                                 four (24) month period immediately proceeding
                                 the Restrictive period.

                           (ii)  during the Restrictive Period act on behalf of
                                 any Competitor to interfere with the
                                 relationship between the Company or their
                                 subsidiaries or affiliates and their employees.


                                      -10-
<PAGE>

                           (iii) during the Restrictive Period hire, solicit nor
                                 induce to leave any employee or consultant of
                                 the Company or any employee or consultant of
                                 the Company who was an employee or consultant
                                 of the Company during the twelve (12) month
                                 period immediately proceeding the Restrictive
                                 Period.

                  For purposes of this Agreement, Territory shall mean (a) an
area within 100 miles of any place of business, office, warehouse or other
facility where the Company, or any of its subsidiaries or affiliates, or any of
its agents, licensees, or franchisees conducts business. For purposes of the
proceeding paragraph, (i) the term "proprietary interest" means legal or
equitable ownership, whether through stock holding or otherwise, of an equity
interest in a business, firm or entity other than ownership of less than one
percent of any class of equity interest in a publicly held business, firm or
entity and (ii) an entity shall be considered to be "engaged in competition", if
such entity is, or is a holding company for, a company engaged in the provision
of delivery, courier, or logistics services, or other transportation services
competitive with the business of the Company, its subsidiaries or affiliates in
the Territory.

                  (b) If the Executive commits a breach or is about to commit a
breach, of any of the provisions of Sections 9 or 10 hereof, the Company shall
have the right to have the provisions of this Agreement specifically enforced by
any court having equity jurisdiction without being required to post bond or
other security and without having to prove the inadequacy of the available
remedies at law, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company. In addition, the
Company may take all such other actions and remedies available to them under law
or in equity and shall be entitled to such damages as they can show they have
sustained by reason of such breach.

                  (c) The parties acknowledge that the type and periods of
restriction imposed in the provisions of Sections 9 and 10 hereof are fair and
reasonable and are reasonably required for the protection of the Company and the
goodwill associated with the business of the Company; and that the time, scope,
geographic area and other provisions of Sections 9 and 10 have been specifically
negotiated by sophisticated parties and are given as an integral part of this
Agreement. If any of the covenants in Sections 9 and 10 hereof, or any part
thereof, is hereafter construed to be invalid or unenforceable, the same shall
not affect the remainder of the covenants or covenants, which shall be given
full effect, without regard to the invalid portions. If any of the covenants
contained in Sections 9 and 10 hereof, or any part thereof, is held to be
unenforceable because



                                      -11-
<PAGE>

of the duration of such provision or the area covered thereby, the parties agree
that the court making such determination shall have the power to reduce the
duration and/or areas of such provision and, in its reduced form, such provision
shall then be enforceable. The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Sections 9 and 10 hereof
above upon the courts of any state or other jurisdiction within the geographical
scope of such covenants. In the event that the courts of any one or more of such
states or other jurisdictions shall hold such covenants wholly unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
parties hereto that such determination not bar or in any way affect the right of
the Company to the relief provided above in the courts of any other states or
other jurisdictions within the geographical scope of such covenants, as to
breaches of such covenants in such other respective states or other
jurisdictions, the above covenants as they relate to each state or other
jurisdiction being, for this purpose, severable into diverse and independent
covenants.

                  11. INTELLECTUAL PROPERTY

                  During the Term, the Executive will disclose to the Company
all ideas, inventions and business plans developed by him during such period
which relate directly or indirectly to the business of the Company, including
without limitation, any design, logo, slogan or campaign or any process,
operation, product or improvement which may be patentable or copyrightable. The
Executive agrees that all patents, licenses, copyrights, tradenames, trademarks,
service marks, advertising campaigns, promotional campaigns, designs, logos,
slogans and business plans developed or created by the Executive in the course
of his employment hereunder, either individually or in collaboration with
others, will be deemed works for hire and the sole and absolute property of the
Company. The Executive agrees, that at the Company's request, he will take all
steps necessary to secure the rights thereto to the Company by patent, copyright
or otherwise.

                  12.      ENFORCEABILITY

                  The failure of any party at any time to require performance by
another party of any provision hereunder shall in no way affect the right of
that party thereafter to enforce the same, nor shall it affect any other party's
right to enforce the same, or to enforce any of the other provisions in this
Agreement; nor shall the waiver by any party of the breach of any provision
hereof be taken or held to be a waiver of any subsequent breach of such
provision or as a waiver of the provision itself.



                                      -12-
<PAGE>

                  13.      ASSIGNMENT

                  This Agreement is a personal contract and the Executive's
rights and obligations hereunder may not be sold, transferred, assigned, pledged
or hypothecated by the Executive. The rights and obligation of the Company
hereunder shall be binding upon and run in favor of the successors and assigns
of the Company; provided, however, the Company may not assign or transfer its
rights or obligations under this Agreement unless such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law.

                  14.      MODIFICATION

                  This Agreement may not be orally canceled, changed, modified
or amended, and no cancellation, change, modification or amendment shall be
effective or binding, unless in writing and signed by the parties to this
Agreement.


                  15.      SEVERABILITY; SURVIVAL

                  In the event any provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall nevertheless be binding upon
the parties with the same effect as though the invalid or unenforceable part had
been severed and deleted. The respective rights and obligations of the parties
hereunder shall survive the termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and obligations.

                  16.      LIFE INSURANCE

                  During the Term hereof the Company shall at Company's expense,
provide Executive life insurance at a face amount equal to three (3) times
Executive's then current Base Salary as modified by any periodic increases of
Base Salary during the Term hereof. Company shall be responsible for any and all
income taxes due on any premiums paid by the Company for such insurance.

                  17.      NOTICE

                  Any notice, request, instruction or other document to be given
hereunder by any party hereto to another party shall be in writing and shall be
deemed effective (a) upon person delivery, if delivered by hand, or (b) three
days after the date of deposit in the mails, postage prepaid if mailed by
certified or registered mail, or (c) on the next business day, if sent by
facsimile transmission or prepaid overnight courier service, and in each case,
addressed as follows:


                                      -13-
<PAGE>

                  If to the Executive:
                  William T. Brannan
                  2 Carmella Court
                  Cedar Grove, NJ  07009

                  If to the Company:
                  CD&L, Inc.
                  80 Wesley Street
                  South Hackensack, NJ  07606
                  Attn: General Counsel

Any party may change the address to which notices are to be sent by giving
notice of such change of address to the other party in the manner herein
provided for giving notice.

                  18.      APPLICABLE LAW

                  The validity, interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of New Jersey. In
addition, the Executive, and the Company irrevocably submit to the exclusive
jurisdiction of the courts of the State of New Jersey and the United States
District Court for the District of New Jersey for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on the Executive anywhere in the
world by the same methods as are specified for the giving of notices under this
Agreement. The Executive irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. The Executive irrevocably waives any objection to the laying of venue of
any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.

                  19.      NO CONFLICT

                  The Executive represents and warrants that he is not subject
to any agreement, instrument, order, judgment or decree of any kind, or any
other restrictive agreement of any character, which would prevent him from
entering into this Agreement or which would be breached by the Executive upon
his performance of his duties pursuant to this Agreement.


                                      -14-
<PAGE>

                  20.      ENTIRE AGREEMENT

                  This Agreement represents the entire agreement between the
Company and the Executive with respect to the subject matter hereof, and all
prior agreements, plans and arrangements relating to the employment of the
Executive by the Company (including without limitation the Prior Agreement) are
nullified and superseded hereby.

                  21.      HEADINGS

                  The headings contained in this Agreement are for reference
purposes only, and shall not affect the meaning or interpretation of this
Agreement.


IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.


                                CD&L, INC.



                                BY:_________________________________
                                NAME: ALBERT W. VAN NESS, JR.
                                TITLE: CHAIRMAN OF THE BOARD AND
                                       CHIEF EXECUTIVE OFFICER



                                BY:_________________________________
                                NAME: WILLIAM T. BRANNAN
                                TITLE: PRESIDENT AND CHIEF OPERATING OFFICER



                                      -15-
SS
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>b414521_ex31-1.txt
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<PAGE>


                                                                   EXHIBIT 31.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Albert W. Van Ness, Jr., certify that:

       (1)    I have reviewed this Quarterly Report on Form 10-Q of CD&L, Inc.
              (the "Company");

       (2)    Based on my knowledge, this Quarterly Report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this Quarterly
              Report;

       (3)    Based on my knowledge, the financial statements, and other
              financial information included in this Quarterly Report, fairly
              present in all material respects the financial condition, results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this Quarterly Report;

       (4)    The registrant's other certifying officer and I are responsible
              for establishing and maintaining disclosure controls and
              procedures (as defined in Exchange Act Rules 13a-15(e) and
              15d-15(e)) for the registrant and have:

                     (a)    Designed such disclosure controls and procedures, or
                            caused such disclosure controls and procedures to be
                            designed under our supervision, to ensure that
                            material information relating to the registrant,
                            including its consolidated subsidiaries, is made
                            known to us by others within those entities,
                            particularly during the period in which this
                            Quarterly Report is being prepared;

                     (b)    Evaluated the effectiveness of the registrant's
                            disclosure controls and procedures and presented in
                            this Quarterly Report our conclusions about the
                            effectiveness of the disclosure controls and
                            procedures, as of the end of the period covered by
                            this Quarterly Report based on such evaluation; and

                     (c)    Disclosed in this Quarterly Report any change in the
                            registrant's internal control over financial
                            reporting that occurred during the registrant's most
                            recent fiscal quarter that has materially affected,
                            or is reasonably likely to materially affect, the
                            registrant's internal control over financial
                            reporting; and

       (5)    The registrant's other certifying officer and I have disclosed,
              based on our most recent evaluation of internal control over
              financial reporting, to the registrant's auditors and the audit
              committee of the registrant's board of directors (or persons
              performing the equivalent functions):

                     (a)    All significant deficiencies and material weaknesses
                            in the design or operation of internal control over
                            financial reporting which are reasonably likely to
                            adversely affect the registrant's ability to record,
                            process, summarize and report financial information;
                            and

                     (b)    Any fraud, whether or not material, that involves
                            management or other employees who have a significant
                            role in the registrant's internal control over
                            financial reporting.

Dated: August 16, 2006
                                                    \s\ Albert W. Van Ness, Jr.
                                                     --------------------------
                                                    Albert W. Van Ness, Jr.
                                                    Chief Executive Officer

A signed original of this written statement required by Section 302 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.



                                       28


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>b414521_ex31-2.txt
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<PAGE>

                                                                   EXHIBIT 31.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Russell J. Reardon, certify that:

       (1)    I have reviewed this Quarterly Report on Form 10-Q of CD&L, Inc.
              (the "Company");

       (2)    Based on my knowledge, this Quarterly Report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this Quarterly
              Report;

       (3)    Based on my knowledge, the financial statements, and other
              financial information included in this Quarterly Report, fairly
              present in all material respects the financial condition, results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this Quarterly Report;

       (4)    The registrant's other certifying officer and I are responsible
              for establishing and maintaining disclosure controls and
              procedures (as defined in Exchange Act Rules 13a-15(e) and
              15d-15(e)) for the registrant and have:

              (a)    Designed such disclosure controls and procedures, or caused
                     such disclosure controls and procedures to be designed
                     under our supervision, to ensure that material information
                     relating to the registrant, including its consolidated
                     subsidiaries, is made known to us by others within those
                     entities, particularly during the period in which this
                     Quarterly Report is being prepared;

              (b)    Evaluated the effectiveness of the registrant's disclosure
                     controls and procedures and presented in this Quarterly
                     Report our conclusions about the effectiveness of the
                     disclosure controls and procedures, as of the end of the
                     period covered by this Quarterly Report based on such
                     evaluation; and

              (c)    Disclosed in this Quarterly Report any change in the
                     registrant's internal control over financial reporting that
                     occurred during the registrant's most recent fiscal quarter
                     that has materially affected, or is reasonably likely to
                     materially affect, the registrant's internal control over
                     financial reporting; and

       (5)    The registrant's other certifying officer and I have disclosed,
              based on our most recent evaluation of internal control over
              financial reporting, to the registrant's auditors and the audit
              committee of the registrant's board of directors (or persons
              performing the equivalent functions):

              (a)    All significant deficiencies and material weaknesses in the
                     design or operation of internal control over financial
                     reporting which are reasonably likely to adversely affect
                     the registrant's ability to record, process, summarize and
                     report financial information; and

              (b)    Any fraud, whether or not material, that involves
                     management or other employees who have a significant role
                     in the registrant's internal control over financial
                     reporting.

Dated: August 16, 2006
                                               \s\ Russell J. Reardon
                                               --------------------------------
                                               Russell J. Reardon
                                               Chief Financial Officer

A signed original of this written statement required by Section 302 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.

                                       29
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>b414521_ex32-1.txt
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<PAGE>


                                                                   EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         In connection with the Quarterly Report of CD&L, Inc. (the "Company")
on Form 10-Q for the quarter ended June 30, 2006 filed with the Securities and
Exchange Commission (the "Report"), I, Albert W. Van Ness, Jr., Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

       (1)    The Report fully complies with the requirements of Section 13(a)
              of the Securities Exchange Act of 1934; and

       (2)    The information contained in the Report fairly presents, in all
              material respects, the consolidated financial condition of the
              Company as of the dates presented and the consolidated results of
              operations of the Company for the periods presented.

Dated: August 16, 2006


                                                 \s\ Albert W. Van Ness, Jr.
                                                  --------------------------
                                                 Albert W. Van Ness, Jr.
                                                 Chief Executive Officer


The foregoing certification is being furnished solely pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of Section 1350, Chapter
63 of Title 18, United States Code) and is not being filed as part of Form 10-Q
or as a separate disclosure statement.

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.




                                       30


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>b414521_ex32-2.txt
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<PAGE>


                                                                   EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Quarterly Report of CD&L, Inc. (the "Company")
on Form 10-Q for the quarter ended June 30, 2006 filed with the Securities and
Exchange Commission (the "Report"), I, Russell J. Reardon, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

       (1)    The Report fully complies with the requirements of Section 13(a)
              of the Securities Exchange Act of 1934; and

       (2)    The information contained in the Report fairly presents, in all
              material respects, the consolidated financial condition of the
              Company as of the dates presented and the consolidated results of
              operations of the Company for the periods presented.

Dated: August 16, 2006


                                                \s\ Russell J. Reardon
                                                --------------------------------
                                                Russell J. Reardon
                                                Chief Financial Officer


The foregoing certification is being furnished solely pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of Section 1350, Chapter
63 of Title 18, united States Code) and is not being filed as part of Form 10-Q
or as a separate disclosure statement.

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.



                                       31

</TEXT>
</DOCUMENT>
</SUBMISSION>
