EXHIBIT 10.18

November 13, 1998



Excalibur Limited Partnership
c/o William S. Hechter, Esq.
Barrister & Solicitor
75 Lowther Avenue
Toronto, Ontario M5R 1C9
CANADA

Gundyco in Trust for RRSP
RRSP 5500-98866-1-9
c/o William S. Hechter, Esq.
Barrister & Solicitor
75 Lowther Avenue
Toronto, Ontario M5R 1C9
CANADA

         Re:      Top Source Technologies, Inc.


Dear Sirs:

         This letter  agreement serves to modify the terms and conditions of the
Series A 5%  Convertible  Preferred  Stock  (the  "Preferred  Stock")  issued to
Excalibur Limited  Partnership  ("Excalibur") and Gundyco in Trust for RRSP RRSP
5500-98866-1-9  ("Gundyco")  as of May 7,  1998.  Each of you by your  signature
agree that  notwithstanding  the  provisions  contained  in the  Certificate  of
Designation  of Rights and  Preferences  of the Series A  Convertible  Preferred
Stock of Top Source  Technologies,  Inc. (the "Company") filed with the Delaware
Secretary of State and  notwithstanding  any other  agreement to which you are a
party  with  the  Company   including  the   Regulation  D  Private   Securities
Subscription Agreement (the "Subscription Agreement"),  the terms and conditions
of this letter agreement shall prevail to the extent inconsistent with any other
instrument or agreement. Subject to delivery by the Company of the consideration
specified below, each of you agree with the Company as follows:

1.       The Company shall on or before November 20, 1998 redeem one-half of the
         Preferred  Stock owned by Excalibur and Gundyco by tendering the sum of
         $600,000  in the  aggregate  together  with  5%  simple  interest  from
         November 13, 1998.  All  allocation  of funds and  securities  shall be
         allocated on a pro-rata basis based upon ownership of Preferred Stock;

2.       Excalibur  and  Gundyco  shall be deemed to  convert  an  aggregate  of
         $150,000 of  Preferred  Stock as of November 6, 1998.  Pursuant to this
         conversion,  Excalibur shall receive 294,894 shares of common stock and
         Gundyco shall receive  118,076  shares of common stock which sums shall
         include all dividends due through March 31, 1999;

3.       The remaining $350,000 of Preferred Stock may not be converted until on
         or after March 31, 1999, but may still be redeemable according to their
         terms at a price of $420,000.  The Company will use its best efforts to
         redeem such Preferred Stock on or before March 31, 1999;

4.       The Company  shall issue to  Excalibur  and Gundyco an  aggregate of an
         additional  25,000  Warrants  exercisable  at $.8937 as reported by the
         American  Stock  Exchange.  These Warrants may not be exercised for six
         months  after  issuance and may be  exercised  for five years  expiring
         November 6, 2003. The 250,000 Warrants  previously  issued shall remain
         in effect at an exercise price of $1.10 per Warrant;

5.       The  2%  late  penalty  for  the  delay  in  the  effectiveness  of the
         registration  statement  on Form S-3  shall  continue  to accrue on the
         principal of  $1,000,000  until the date of redemption of the $500,000;
         and for the $150,000 being  converted  until the  effectiveness  of the
         registration  statement with the  Securities  and Exchange  Commission.
         After   redemption  of  $500,000  of  Preferred   Stock,  the  2%  late
         registration penalty shall continue to accrue on the remaining $350,000
         of Preferred Stock until  effectiveness of the registration  statement.
         This portion of the 2% penalty shall only be payable if the $350,000 of
         Preferred Stock is not redeemed on or before March 31, 1999.

6. No additional  dividends are due on the Preferred Stock through and including
March 31, 1999;

7.       All other  penalties  relating to the late  registration  of the common
         stock underlying the Preferred Stock are waived; and

8.       Excalibur and Gundyco waive the right to purchase  additional shares of
         Preferred Stock as provided in the Subscription Agreement. Furthermore,
         the  provisions  in  Sections  9 and 10 of the  Subscription  Agreement
         relating  to  restrictions  on new  securities  and the  right of first
         refusal are cancelled.

         If the foregoing is acceptable  to you,  please  execute a copy of this
letter agreement and fax it to me at the above number.

                                      Very truly yours,




                                       David Natan, Vice President
                                       Chief Financial Officer


         We hereby agree to the contents of the foregoing letter agreement.

Date:  November 13, 1998       EXCALIBUR LIMITED PARTNERSHIP


                                By:

                                GUNDYCO IN TRUST FOR RRSP RRSP 5500-98866-1-9


                                By: