Guaranties  in   substantially   the  following  form   respecting  the
indebtedness  of Morgan Drive Away,  Inc.,  TDI, Inc. and  Interstate  Indemnity
Company, have been provided by The Morgan Group, Inc., and Morgan Finance, Inc.,
as well as by Morgan Drive Away, Inc.  (respecting  indebtedness of Morgan Drive
Away, Inc. and Interstate Indemnity Company.

                 ABSOLUTE, UNCONDITIONAL AND CONTINUING GUARANTY


THIS ABSOLUTE,  UNCONDITIONAL AND CONTINUING  GUARANTY  ("Guaranty") is made and
entered into, to be effective the 27th day of March,  1997, by THE MORGAN GROUP,
INC., a Delaware  corporation,  whose address is 2746 Old U.S. 20 West, Elkhart,
Indiana 46514  ("Guarantor"),  to and in favor of KEYBANK NATIONAL  ASSOCIATION,
127 Public Square,  Cleveland,  Ohio 44114,  and any Affiliate Bank (which shall
hereinafter be referred to individually or collectively as "Bank").

                               RECITALS

A. Morgan Drive Away,  Inc., an Indiana  corporation with an address at 2746 Old
U.S. 20 West, Elkhart, Indiana 46514 ("Morgan"), is a wholly-owned subsidiary of
The Morgan Group, Inc. ("Guarantor").

B. Morgan has and shall become liable and indebted to Bank.

C. Morgan shall hereinafter be referred to as "Borrower."

D. "Affiliate Bank" shall mean any one or more bank  subsidiaries of KeyCorp and
its successors.

E. As a condition to the loans,  extensions  of credit  and/or  other  financial
accommodations  made by Bank to Borrower  concurrently with the delivery of this
Guaranty,  and as a condition to any loans,  extensions  of credit  and/or other
financial  accommodations  made by Bank to Borrower from time to time hereafter,
Bank  requires  that  Guarantor  guarantee  on an  absolute,  unconditional  and
continuing  basis the payment of all of the present and future  liabilities  and
indebtedness of Borrower to Bank.

F. Guarantor expects to derive an economic benefit from any loans, extensions of
credit and/or other financial  accommodations  made by Bank to Borrower,  and in
consideration of such expected benefit and to induce Bank to make loans,  extend
credit  and/or make other  financial  accommodations  to Borrower,  Guarantor is
willing to guarantee all such liabilities and indebtedness of Borrower to Bank.

NOW, THEREFORE, for value received and as an inducement for and in consideration
of the loans, extensions of credit and/or other financial accommodations made by
Bank to Borrower  concurrently with the delivery of this Guaranty,  and of other
loans,  other  extensions of credit  and/or other  financial  accommodations  to
Borrower  which Bank, at its sole option and subject to its credit  policies and
practices, may grant to Borrower from time to time hereafter, Guarantor does now
hereby agree to and for the benefit of Bank as follows:



                                                         1

<PAGE>

                                    AGREEMENT

                                   ARTICLE 1.
                              Inclusion of Recitals

The Recitals above set forth are a part of this Guaranty for all purposes.


                                   ARTICLE 2.
                              Statement of Guaranty

Section 2.1. Liabilities and Indebtedness Guaranteed.  Guarantor guarantees,  on
an absolute,  unconditional  and continuing  basis,  the full and prompt payment
when due, whether by lapse of time or  acceleration,  of each one and all of the
existing  and  future  loans,   extensions  of  credit  and/or  other  financial
accommodations  of every kind and type  whatsoever,  now or  hereafter  owing by
Borrower to Bank including, but not limited to, the following:

         1.       all  loans,  and  extensions  of credit  and  other  financial
                  accommodations previously, currently or hereafter made by Bank
                  to Borrower  and any and all  extensions  or renewals of them;
                  and

         2.       all  other   obligations,   liabilities  and  indebtedness  of
                  Borrower to and in favor of Bank, direct or indirect, absolute
                  or  contingent,  now existing or hereafter  arising,  of every
                  kind and type whatsoever and however evidenced (including, but
                  not  limited  to, all  existing  and future  loans,  advances,
                  indebtednesses,  liabilities, guarantees of the obligations of
                  others,  and  obligations  to  reimburse  payments  made under
                  letters of credit), whether secured or unsecured;

         (the "Guaranteed Obligations").

Section  2.2.  No  Limitation.  No act or  thing  need  occur to  establish  the
liability of the undersigned hereunder, and no act or thing, except full payment
and discharge of all Indebtedness, shall in any way exonerate the undersigned or
modify, reduce, limit or release the liability of the undersigned hereunder.

Section  2.3.  Absolute,   Unconditional  and  Continuing.  The  liabilities  of
Guarantor under this Guaranty are absolute,  unconditional  and continuing,  and
irrespective of the regularity of any writing, document or instrument evidencing
any of the Guaranteed Obligations; and, to the extent any Guaranteed Obligations
are secured,  irrespective of the validity,  regularity or enforceability of any
writing,  document or  instrument  evidencing  such security for the Guaran teed
Obligations; and irrespective of the value of the security itself.


                                                         2

<PAGE>



Section 2.4.  Severable.  This  Guaranty may be enforced from time to time as to
any  part or all of the  Guaranteed  Obligations,  and the  enforcement  of this
Guaranty  as to  part of the  Guaranteed  Obligations  shall  not  terminate  or
eliminate in any manner the  liabilities  of Guarantor for the other  Guaranteed
Obligations.


                                   ARTICLE 3.
                              Payment by Guarantor

Section 3.1. Default. If the Borrower should fail at any time fully and promptly
to pay when due,  whether by lapse of time or  acceleration,  all or any part of
the  Guaranteed  Obligations,  Guarantor,  upon  written  demand  by Bank,  will
immediately  pay such  Guaranteed  Obligations  to Bank in the same manner as if
such Guaranteed  Obligations  constituted  the direct and primary  obligation or
obligations of Guarantor to Bank.

Section 3.2.  Notice.  The written  demand of Bank for payment of the Guaranteed
Obligations, or any of the Guaranteed Obligations, shall be given in writing and
personally delivered to Guarantor, or sent by telegraph, facsimile transmission,
or overnight courier, or by U.S. Mail, postage prepaid, Registered or Certified,
Return Receipt  Requested,  to the  Guarantor's  address set forth above in this
Guaranty. If there is any address change, Bank shall be notified by Guarantor in
writing, and until such notice is received by Bank, Bank may rely upon the above
address.

Section  3.3.  Obligation  of  Guarantor.  Bank is not  required,  prior  to the
enforcement of the Guaranty,  to take any action or realize against the Borrower
or against any other persons, guarantors or collateral, guaranteeing or securing
any of the Guaranteed Obligations.

Section 3.4.  Valuation and  Appraisement  Laws. The liability of Guarantor with
respect to the Guaranteed  Obligations in all cases shall be without relief from
valuation and appraisement laws.


                                   ARTICLE 4.
                               Waiver by Guarantor

Section 4.1. Waiver. Guarantor hereby waives each of the following:

          1.      notice of acceptance of this Guaranty, of each and every loan,
                  extension of credit, or other financial  accommodation by Bank
                  (including  extensions  or renewals)  to Borrower,  and of the
                  amount or nature of the Guaranteed Obligations which may exist
                  from time to time;


                                                         3

<PAGE>



         2.       presentment,  demand  and  protest,  and  notice of  dishonor,
                  non-payment  or  other  default  with  respect  to  any of the
                  Guaranteed Obligations;

         3.       any and all defenses, claims and discharges of Borrower or any
                  other  obligor,  pertaining  to  the  Guaranteed  Obligations,
                  except the defense of  discharge  by payment by  Guarantor  in
                  full; and,  without  limiting the generality of the foregoing,
                  the Guarantor  will not assert,  plead or enforce  against the
                  Bank any defense of waiver, release,  discharge in bankruptcy,
                  statute  of  limitations,  res  judicata,  statute  of frauds,
                  anti-deficiency statute, fraud, incapacity,  minority,  usury,
                  illegality or  unenforceability  which may be available to the
                  Borrower  or any  other  person  liable  with  respect  to any
                  Guaranteed  Obligations,   or  any  setoff  available  to  the
                  Borrower  or any other  person  against  Bank;  and  Guarantor
                  waives  any and all  claims  or  rights  to  assert  claims of
                  discharge under I.C. 26- 1-3.1-605;

         4.       any  requirement  that Bank take  action,  realize,  institute
                  suit,  or exercise  or exhaust its rights or remedies  against
                  the  Borrower or against  any other  person or  guarantor,  or
                  collateral securing and/or guaranteeing all or any part of the
                  Guaranteed  Obligations  [the  obligations  of any such  other
                  person or guarantor,  and any such  collateral are referred to
                  as ("Collateral")], prior to enforcing any rights it has under
                  this Guaranty or otherwise against Guarantor;

         5.       the  invalidity  of  any  instruments   evidencing  Guaranteed
                  Obligations  or the  disability  or  legal  incapacity  of any
                  person in whole or in part, at any time;

         6.       the fact  that  the  amount  or  value of any of the  property
                  constituting  a part of the  Collateral,  may at any time have
                  been or be incorrectly estimated;

         7.       the  deterioration in market or other values,  waste,  loss by
                  fire,  theft,  loss,  non-  existence or  substitution  of any
                  property constituting a part of the Collateral;

         8.       relief from valuation and appraisement laws; and

         9.       any right that  Guarantor  has, or might  hereafter  have,  to
                  recover  from  the  Borrower  the  monies  that  Guarantor  is
                  obligated to pay to Bank hereunder.  The undersigned  will not
                  exercise  or  enforce,  and  expressly  waives,  any  right of
                  contribution,  reimbursement,   indemnification,  recourse  or
                  subrogation  available to the  undersigned  against any person
                  liable for  payment of the  Indebtedness,  including,  but not
                  limited to, the  Borrower,  or as to any  collateral  security
                  therefor.


                                                         4

<PAGE>



Section 4.2. Failure of Bank to Act. The failure of Bank or any other persons to
take any of the actions  authorized  in this  Guaranty,  or the existence of any
conditions,  waived above,  shall in no way affect or release the obligations of
the Guarantor under this Guaranty.


                                   ARTICLE 5.
                                 Rights of Bank

Section 5.1.  Rights of Bank with Respect to the  Obligations  Guaranteed.  Bank
shall have the right, without releasing Guarantor from its liabilities hereunder
and  without  notice to the  Guarantor,  to deal in any  manner  with any of the
Guaranteed  Obligations  or the  Collateral  including,  but not limited to, the
following rights:

         1.       to, on any number of occasions, modify or otherwise change any
                  terms  or  alter  any  part  of  the  Guaranteed  Obligations,
                  including,  but not limited to, changing the rate of interest,
                  or affecting any release, compromise or settlement;

         2.       to extend or renew any or all of the Guaranteed Obligations on
                  any  number  of  occasions  and to  forbear  to take  steps to
                  enforce  the  payment  of all  or any  part  of  them  against
                  Borrower;

         3.       to obtain  Collateral or to not obtain  Collateral  (including
                  rights of setoff), to release or to forbear to proceed against
                  all or any part of the  Collateral,  or to substitute  any new
                  Collateral for any existing Collateral;

         4.       to apply payments received from Borrower, from Guarantor, from
                  others or from  realization upon any Collateral in such manner
                  and order in priority as Bank sees fit;

         5.       to make any election  against the  Borrower or the  Collateral
                  under the United States Bankruptcy Code, as amended;

         6.       to add or release  any other  guarantor,  surety,  endorser or
                  accommodation  party whether primarily or secondarily  liable,
                  to proceed  against all or any one or none of such  persons or
                  entities,  to accept partial payments from them and to settle,
                  compromise or adjust with any of them,  all in such manner and
                  at such time or times as Bank may deem advisable; and

         7.       to assign or grant  participation  interests in all or part of
                  the Guaranteed Obligations.

         Section 5.2.  Guarantor  not Released or  Discharged  by Bank's Acts or
Omissions.  The  obligations  of  Guarantor  hereunder  shall  not be  released,
discharged, or affected in any way,

                                                         5

<PAGE>



nor shall Guarantor have any recourse against Bank by reason of any action which
Bank may take or omit to take under this  Guaranty or otherwise  with respect to
the Guaranteed  Obligations or the Collateral.  Guarantor  expressly agrees that
Guarantor  shall be and remain  liable for any  deficiency  remaining  after the
foreclosure  of any  mortgage,  security  interest  or other  property  interest
securing  the  Guaranteed  Obligations,  whether  or not  the  liability  of the
Borrower or any other  obligor for such  deficiency  is  discharged  pursuant to
statute or judicial decision.

Section  5.3.  Guaranty  Extends  to  Amounts  Applied  on  Obligation  and Then
Returned.  If any payment  applied by Bank to the Guaranteed  Obligations is set
aside,  recovered,   rescinded  or  required  to  be  returned  for  any  reason
(including, without limitation, the bankruptcy,  insolvency or reorganization of
the Borrower or any other  obligor),  the  Guaranteed  Obligations to which such
payment was applied  shall for the  purposes of this  Guaranty be deemed to have
continued in  existence,  notwithstanding  such  application,  and this Guaranty
shall  be  enforceable  as to such  Guaranteed  Obligations  as fully as if such
application had never been made and  notwithstanding the fact that prior to such
payment being so set aside, recovered, rescinded or required to be returned, the
Guarantor shall have terminated this Guaranty under Section 6.2 below.

Section  5.4.  Assignment.  The Bank  may,  without  any  notice  whatsoever  to
Guarantor  or  to  the  Borrower,   sell,  assign  or  transfer  the  Guaranteed
Obligations and any Collateral, or any part of them, and any part or all of this
Guaranty,  and, in such event, each and every immediate and successive assignee,
transferee  or  holder  of all or any  part of the  Guaranteed  Obligations  and
Guaranty,  shall have the right to enforce this Guaranty (to the extent so sold,
assigned,  transferred)  by suit or otherwise for the benefit of such  assignee,
transferee  or holder,  as if such  assignee,  transferee or holder were by name
specifically given such rights, powers and benefits; but the Bank shall continue
to have the unimpaired and absolute right to enforce this Guaranty,  for its own
benefit, as to so much of the Guaranteed Obligations owed it that the Bank shall
not have sold, assigned or transferred.


                                   ARTICLE 6.
                                   Termination

Section 6.1.  Guaranty is Continuing until Full Payment.  This Guaranty shall be
on a  continuing  basis and  shall  remain in full  force and  effect  until all
Guaranteed  Obligations  are paid in full and  termination  is  accomplished  in
accordance with the provisions of paragraph 6.2 below.

Section 6.2. Termination.  Guarantor may terminate Guarantor's  obligation as to
payment of future obligations of the Borrower to Bank (excepting, however, those
with  respect to which there is an  outstanding  commitment  or agreement on the
part of Bank to make further loans or advances),  by delivering to an officer of
Bank, at the offices of Bank, during banking hours,

                                                         6

<PAGE>



written  notice of termination  signed by the  Guarantor,  and by receiving from
such officer written acknowledgment of such delivery. Any such termination shall
be  effective  on  the  next  banking  day  of  Bank   following   such  written
acknowledgment of delivery.

Section 6.3.  Termination  not  Effective  for  Obligations  Existing at Time of
Termination.  Termination of this Guaranty under Section 6.2 above shall have no
affect  whatsoever  on the  obligations  of  the  Guarantor  to  pay  Guaranteed
Obligations  existing  at the time of  termination  whether or not they are then
due, nor shall such termination have any affect  whatsoever on any extensions or
renewals of such existing  Guaranteed  Obligations  which are effectuated  after
such  termination.  Termination  of this Guaranty  under Section 6.2 above shall
also have no affect whatsoever on the obligations of Guarantor to pay Guaranteed
Obligations  which spring from  commitments  or  agreements  on the part of Bank
which were outstanding at the time of the termination.

Section 6.4.  Guaranty not Terminated  because Borrower is not Indebted to Bank.
This  Guaranty  shall not be  terminated  by virtue of the fact that at any time
hereafter  the  Borrower  is not  indebted  to Bank  at any  such  time,  unless
termination is accomplished in accordance with Section 6.2 above.


                                   ARTICLE 7.
                                  Miscellaneous

Section 7.1. Insolvency of Borrower does not Discharge Guarantor.  This Guaranty
shall not be discharged by the  dissolution or insolvency  (however  defined) of
the Borrower.

Section 7.2.  Dissolution  or  Insolvency of  Guarantor.  If Guarantor  shall be
dissolved or shall become insolvent  (however  defined) then Bank shall have the
right to declare immediately due and payable,  and Guarantor shall forthwith pay
to Bank, the full amount of all Guaranteed Obligations,  whether or not they are
otherwise due and payable, and if the Guarantor  voluntarily  commences or there
is commenced  involuntarily against the Guarantor a case under the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency statute
or law, the full amount of all Guaranteed  Obligations,  whether or not they are
otherwise due and payable,  shall be immediately due and payable to Bank without
demand or notice.

Section  7.3.  This  Agreement  is not a  Suretyship.  This is an  agreement  of
guaranty, not of suretyship.

Section 7.4.  Representations and Warranties of Guarantor.  Guarantor represents
and warrants to Bank that:

         1.       Guarantor is a corporation duly organized and existing in good
                  standing and has full power and  authority to make and deliver
                  this Guaranty.

                                                         7

<PAGE>



         2.       The  execution,  delivery and  performance of this Guaranty by
                  Guarantor has been duly authorized by all necessary actions of
                  its officers,  directors and share holders and do not and will
                  not violate the  provisions of, or constitute a default under,
                  any presently  applicable law or its Articles of Incorporation
                  or  By-Laws,  or any  agreement  presently  binding  upon  the
                  Guarantor.

         3.       This  Guaranty  has been duly  executed  and  delivered by the
                  authorized  officers of Guarantor and constitutes  Guarantor's
                  lawful, binding and legally enforceable obligation.

         4.       The authorization, execution, delivery and performance of this
                  Guaranty do not require notification to, registration with, or
                  consent or approval by any  federal,  state,  local or foreign
                  regulatory body or administrative agency.

         5.       All  financial  data  provided  to the  Bank by  Guarantor  in
                  connection  with the  execution of this  Guaranty are true and
                  accurate and are not materially misleading.

Section  7.5.  Representation  and  Warranty  of  Economic  Benefit  Derived  by
Guarantor. Guarantor represents and warrants to Bank that Guarantor has a direct
and substantial  economic interest in Borrower and expects to derive substantial
business, economic and other benefits from any loans, extension of credit and/or
other  financial  accommodations  which  result in the  creation  of  Guaranteed
Obligations,  and this  Guaranty  is given for a  corporate  purpose.  Guarantor
agrees to rely exclusively on the right to terminate this Guaranty in accordance
with the provisions of Section 6.2 above,  if at any time, in the opinion of the
officers,  directors or shareholders of Guarantor,  the corporate  benefits then
being  received  by the  Guarantor  in  connection  with this  Guaranty  are not
sufficient to warrant the  continuance of this Guaranty as to future  Guaranteed
Obligations.

Section 7.6. Bank may Refuse to Loan. This Guaranty shall not in any way prevent
the Bank from refusing to loan any additional sums, or extend additional credit,
or make any other  additional  financial  accommodations  to the Borrower at any
time from and after the date of this Guaranty,  and any such refusal by the Bank
shall not terminate this Guaranty nor diminish or discharge any liability of the
Guarantor.

Section 7.7. Severability of Provisions. Any provision of this Guaranty which is
prohibited or  unenforceable  in any  jurisdiction  shall be  ineffective to the
extent of such prohibition or unenforceability without affecting the validity or
enforceability  of  such  provision  in  any  other  jurisdiction,  and  without
affecting the validity or  enforceability  of the  remaining  provisions of this
Guaranty in any jurisdiction.



                                                         8

<PAGE>



Section 7.8. Writing Requirement. This Guaranty may not be modified, amended, or
otherwise changed except by a writing signed by Guarantor and Bank.

Section 7.9. Governing Law. Guarantor agrees that for all purposes this Guaranty
shall be considered to have been executed and delivered at Elkhart, Indiana, and
that it shall be governed,  interpreted  and  construed in  accordance  with the
internal laws (and not the law of conflicts) of the state of Indiana.

Section 7.10.  Successors and Assigns.  This Guaranty is binding upon Guarantor,
and Guarantor's  successors and assigns, and shall inure to the benefit of Bank,
and its successors and assigns.

Section  7.11.  Merger  Clause.  This  instrument  is the  final,  complete  and
exclusive  statement of the agreement  between the Bank and the  Guarantor  with
respect to Guarantor's  guaranty of the payment of the  Guaranteed  Obligations,
and all prior  negotiations,  representations,  promises and conditions  related
thereto are merged into this instrument.

Section 7.12. Information Concerning Financial Conditions of Borrower. Guarantor
acknowledges  that it is  capable  of,  and hereby  assumes  responsibility  for
keeping informed of the financial conditions of Borrower,  any and all endorsers
and  any and all  guarantors  of the  Guaranteed  Obligations  and of all  other
circumstances bearing upon the risk of nonpayment of the Guaranteed  Obligations
that diligent inquiry would reveal,  and Guarantor hereby agrees that Bank shall
have no duty to advise  Guarantor of  information  known to Bank  regarding such
conditions or any such circumstances.

Section  7.13.  Headings.  Article and Section  headings  in this  Guaranty  are
inserted  for  convenience  only.  They  shall  not be  considered  part of this
Guaranty,  they shall not affect the construction or interpretation  hereof, and
they shall not define or limit any of the terms or provisions herein.

Section  7.14.  Submission to  Jurisdiction;  Venue.  Guarantor  consents to the
jurisdiction of any local, state or federal court located within Elkhart County,
Indiana,  (or in the case of a federal court, the jurisdiction of which includes
Elkhart  County,  Indiana) and consents that all such service of process be made
by  registered  mail  directed  to the  parties  at the  address  stated in this
Agreement  and  service  so made shall be deemed to be  completed  five (5) days
after such mailing.

SECTION 7.15. WAIVER OF JURY TRIAL.  REGARDING ALL SUITS AND ACTIONS ARISING OUT
OF OR RELATING TO THIS GUARANTY IN ANY WAY, MANNER OR RESPECT, GUARANTOR WAIVES,
AT THE OPTION OF BANK, TRIAL BY JURY.



                                                         9

<PAGE>


IN  WITNESS  WHEREOF,  the  Guarantor  has  hereunto  set its  hand by its  duly
authorized officer to be effective the day and year first above mentioned.

                                   GUARANTOR:
                             The Morgan Group, Inc.

                                   By:/s/ Richard B. DeBoer
                                   ------------------------------------------
                                   (Signature)

                                   Richard B. DeBoer, Chief Financial Officer
                                             and Treasurer
                                   ------------------------------------------



                                   ACCEPTANCE

This  Guaranty  is hereby  accepted  by  KeyBank  National  Association,  by its
undersigned  duly  authorized  officer,  to  be  effective  the  27th   day  of
March, 1997.


                                       BANK:
                                       KeyBank National Association


                                       By:______________________________________
                                          (Signature)


                                       Its:_____________________________________
                                           (Printed Name and Office)






                                                        10