Exhibit 10.40

                          AGREEMENT AND PLAN OF MERGER

                  THIS  AGREEMENT  AND PLAN OF  MERGER  is made  this 23 day of
December, 1998 between and among TRANSPORTATION RESOURCES AND MANAGEMENT, INC.,
a  corporation  organized  and existing  under the laws of the State of Indiana
(hereinafter  referred  to as ATRM@),  TRANSIT  LEASING,  INC.,  a  corporation
organized  and  existing  under the laws of the State of  Indiana  (hereinafter
referred to as ATLI@),  CERTIFIED TRANSPORT,  INC., a corporation organized and
existing  under the laws of the State of Indiana  (hereinafter  referred  to as
ACTI@),  FREIGHT MOVERS,  INC., a corporation  organized and existing under the
laws of the State of Indiana  (hereinafter  referred to as AFMI@),  DIVERSIFIED
TRUCKING  CORP.,  a corporation  organized  and existing  under the laws of the
State of Alabama (hereinafter referred to as ADTC@), NORTHSTAR  TRANSPORTATION,
INC. , a  corporation  organized  and  existing  under the laws of the State of
Alabama  (hereinafter  referred  to  as  ANTI@),   SERVICE  EXPRESS,   INC.,  a
corporation  organized  and  existing  under the laws of the  State of  Alabama
(hereinafter  referred  to as ASEI@),  GPS  ACQUISITION  CORP.,  a  corporation
organized  and  existing  under  the  laws  of  the  State  of  North  Carolina
(hereinafter  referred to as AGPS@),  CAROLINA-PACIFIC  DISTRIBUTORS,  INC.,  a
corporation  organized  and  existing  under  the  laws of the  State  of North
Carolina  (hereinafter  referred to as ACPD@),  and TRANSIT  GROUP  MERGER SUB,
INC.,  a  corporation  organized  and  existing  under the laws of the State of
Delaware  (hereinafter  referred to as ATransit@)  (collectively TRM, TLI, CTI,
FMI,  DTC,  NTI,  SEI,  GPS,  CPD and  Transit  are  referred  to herein as the
ACorporations@),  pursuant to the  provisions  of Section  23-1-40-1(b)  of the
Indiana Code, Section  10-2B-11.01 of the Code of Alabama,  Section 55-11-01 of
the North  Carolina  Business  Corporation  Act and Section 252 of the Delaware
General Corporation Law (the ACorporate Laws@).

                  WHEREAS,  the Board of Directors of each of the  Corporations
deem it advisable and generally to the advantage and welfare of the  respective
Corporations and their  respective  shareholders  that the  Corporations  merge
pursuant to the  applicable  Corporate  Laws with  Transit  being the  survivor
corporation.

                  NOW,  THEREFORE,  in consideration of the premises and of the
mutual  agreements herein contained and of the mutual benefits hereby provided,
the sufficiency of which is hereby  acknowledged,  it is agreed by, between and
among the parties hereto as follows:

1. Merger.  TRM,  TLI,  CTI, FMI, DTC, NTI, SEI, GPS, and CPD will be merged at
the  Effective  Time with and into Transit and Transit  shall be the  surviving
corporation  (the  AMerger@).  The stock of each of the  Corporations  shall be
converted as follows:

         1.1 Conversion of TRM Common Stock.  The 100 shares of common stock of
TRM, $.01 par value (the ATRM Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
common stock of Transit ("Transit Common Stock"), as the surviving corporation,
that is to be issued and outstanding immediately after the Merger.

         1.2 Conversion of TLI Common Stock.  The 300 shares of common stock of
TLI, $.01 par value (the ATLI Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.3 Conversion of CTI Common Stock.  The 100 shares of common stock of
CTI, $.01 par value (the ACTI Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.4 Conversion of FMI Common Stock.  The 100 shares of common stock of
FMI, $.01 par value (the AFMI Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.5 Conversion of DTC Common Stock.  The 100 shares of common stock of
DTC, $.01 par value (the ADTC Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.6 Conversion of NTI Common Stock.  The 100 shares of common stock of
NTI, $.01 par value (the ANTI Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.7 Conversion of SEI Common Stock.  The 100 shares of common stock of
SEI, $.01 par value (the ASEI Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.8 Conversion of GPS Common Stock.  The 10,000 shares of common stock
of GPS,  $.01  par  value  (the  AGPS  Common  Stock@),  that  are  issued  and
outstanding  immediately  prior to the Merger will be converted into and become
one share of Transit Common Stock, as the surviving corporation,  that is to be
issued and outstanding immediately after the Merger.

         1.9 Conversion of CPD Common Stock.  The 100 shares of common stock of
CPD, $.01 par value (the ACPD Common  Stock@),  that are issued and outstanding
immediately  prior to the Merger will be converted into and become one share of
Transit Common Stock,  as the surviving  corporation,  that is to be issued and
outstanding immediately after the Merger.

         1.10  Transit  Common  Stock.  Each  share  of  Transit  Common  Stock
outstanding  immediately prior to the Merger will remain outstanding  following
the Merger.

         1.11     Fractional  Shares.  No  fractional  shares of Transit 
Common Stock will be issued in connection with the Merger.

2. Effect of Merger. At the conclusion of the Merger (a) the separate existence
of TRM,  TLI,  CTI,  FMI,  DTC, NTI, SEI, GPS, and CPD will cease and TRM, TLI,
CTI,  FMI,  DTC, NTI, SEI, GPS and CPD will be merged with and into Transit and
Transit will be the surviving corporation pursuant to the terms of the Articles
of Merger;  (b) the Articles of Incorporation and Bylaws of Transit will be the
Articles of  Incorporation  and Bylaws of the surviving  corporation;  (c) each
share  of TRM,  TLI,  CTI,  FMI,  DTC,  NTI,  SEI,  GPS and  CPD  Common  Stock
outstanding  immediately  prior to the Merger  will be  converted  as  provided
above; (d) the directors of Transit in effect at the time of the Merger will be
the  directors  of Transit as the  surviving  corporation,  and the officers of
Transit will be the officers of Transit as the surviving corporation;  (e) each
share of Transit Common Stock outstanding  immediately prior to the Merger will
remain  outstanding  following the Merger;  and (f) the Merger will have all of
the effects provided by applicable law.

3.       Effective Time.  The Merger will be effective January 1, 1999 at
 12:01 a.m. (the AEffective Time@).

4. Rights and  Liabilities of Transit.  At and after the Merger,  Transit shall
succeed  to and  possess,  without  further  act or  deed,  all of the  rights,
privileges, powers, and franchises, and all of the property, real, personal and
mixed of, and all debts due to, TRM,  TLI, CTI, FMI, DTC, NTI, SEI, GPS, or CPD
on whatever account; all property,  rights,  privileges,  powers and franchises
and all and every  other  interest  shall be as  effectually  the  property  of
Transit as they were of the  respective  parties  hereto,  and the title to any
real estate  vested by deed or otherwise in TRM,  TLI, CTI, FMI, DTC, NTI, SEI,
GPS,  and CPD  shall  not  revert  or be in any way  impaired  by reason of the
Merger;  all rights of creditors  and all liens upon any property of any of the
parties hereto shall be preserved unimpaired,  and all debts, liabilities,  and
duties of the respective parties hereto shall thenceforth attach to Transit and
may be enforced  against it to the same  extent as if such debts,  liabilities,
and duties had been incurred or contracted by it.

5.  Service of Process on  Transit.  Transit  agrees that it may be served with
process in the States of Alabama,  North Carolina and Indiana in any proceeding
for enforcement of any obligation of TRM, TLI, CTI, FMI, DTC, NTI, SEI, GPS, or
CPD as well as for the  enforcement of any  obligation of Transit  arising from
the Merger,  including any suit or other proceeding to enforce the right of any
shareholder as determined in appraisal  proceedings  pursuant to the provisions
of the applicable Business Corporation Law.

6.  Termination.  This  Agreement  and Plan of  Merger  may be  terminated  and
abandoned by action of the Board of Directors of any of the Corporations at any
time  prior  to the  effective  date of the  Merger,  whether  before  or after
approval by the shareholders of the parties hereto.

                  IN WITNESS  WHEREOF,  the parties have executed and delivered
this Agreement and Plan of Merger this 23 day of December, 1998.

TRANSPORTATION RESOURCES AND MANAGEMENT, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman


TRANSIT LEASING, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman

CERTIFIED TRANSPORT, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman

FREIGHT MOVERS, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman


DIVERSIFIED TRUCKING CORP.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman

NORTHSTAR TRANSPORTATION, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman

SERVICE EXPRESS, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman

GPS ACQUISITION CORP.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, President/CEO

CAROLINA-PACIFIC DISTRIBUTORS, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman

TRANSIT GROUP MERGER SUB, INC.

By: /s/ Philip A. Belyew
PHILIP A. BELYEW, Chairman/President





                          CERTIFICATE OF THE SECRETARY
                                       OF
                         TRANSIT GROUP MERGER SUB, INC.
                            (a Delaware Corporation)

         I, Wayne N. Nellums,  the Secretary of Transit Group Merger Sub, Inc.,
hereby certify that the Agreement and Plan of Merger to which this  certificate
is attached,  after having been first duly signed on behalf of the  corporation
by the Chairman and President under the corporate seal of said corporation, was
duly approved and adopted by the stockholders by unanimous consent in lieu of a
meeting.

         WITNESS  my hand and  seal of said  Wayne  N.  Nellums  this 23 day of
December,1998.

(SEAL)
                                                     /s/ Wayne N. Nellums
                                                  WAYNE N. NELLUMS, Secretary