EXHIBIT 4.12
                                                                    ------------


                       FORM OF WARRANT SERVICES AGREEMENT


     This WARRANT SERVICES  AGREEMENT (the  "Agreement"),  dated as of ________,
2001,  by and  among  THE  MORGAN  GROUP,  INC.,  a  Delaware  corporation  (the
"Corporation"),  and  AMERICAN  STOCK  TRANSFER  &  TRUST  COMPANY,  a New  York
corporation, as warrant agent (the "Warrant Agent").

                               W I T N E S S E T H
                               -------------------

     WHEREAS,  each record  holder of the  Corporation's  Class A common  stock,
$.015  par  value  (the  "Class  A  Common  Stock"),   on  the  record  date  of
_____________, 2001 (the "Record Date"), will receive one warrant to purchase an
additional  share of our Class A common  stock (a  "Warrant")  for each share of
Class A common  stock held on the Record Date at an exercise  price of $9.00 per
share (the "Warrant Exercise Price"), subject to adjustment;

     WHEREAS,  the  Warrant  Exercise  Price  for the Class A  Warrants  will be
reduced to $6.00 during a reduction  period of at least 30 days to be set by the
Corporation's Board of Directors;

     WHEREAS,  the Corporation has filed with the Securities Exchange Commission
a Registration  Statement  (Reg. No.  333-63188) on Form S-2 (the  "Registration
Statement") for the registration of the Common Stock under the Securities Act of
1933, as amended, issuable upon exercise of the Warrants;

     WHEREAS, the Corporation plans to distribute the Warrants to be exercisable
for a 5-year period from the date (the "Effective  Date") of the Prospectus (the
"Prospectus")  dated  ___________,  2001 and  forming  part of the  Registration
Statement, and continuing until the Expiration Time (as hereinafter defined);

     WHEREAS,  the Corporation desires the Warrant Agent to act on behalf of the
Corporation,  and the Warrant Agent is willing to so act, in connection with the
issuance,  registration,  permitted  transfer and exchange of the Warrants,  the
issuance  of  certificates  representing  the  Warrants,  the  exercise  of  the
Warrants, and the rights of the holders thereof; and

     WHEREAS,  all acts and  things  have  been  done and  performed  which  are
necessary to make the Warrants,  when executed on behalf of the  Corporation and
countersigned  by or on behalf of the Warrant  Agent,  as provided  herein,  the
valid,  binding and legal  obligations of the Corporation,  and to authorize the
execution and delivery of this Agreement.

     NOW THEREFORE,  in consideration of the premises and the mutual  agreements
hereinafter set forth, the Parties hereto agree as follows:

     SECTION 1. Definitions.  As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:

          (a) "Common Stock" shall mean the authorized  shares of Class A Common
     Stock, $.015 per value per share, of the Corporation.

          (b) "Corporate  Office" shall mean the office of the Warrant Agent (or
     its successor) at which at any particular time its principal business shall
     be  administered,  which  office is located on the date hereof at 59 Maiden
     Lane, New York, New York 10038.

          (c) "Effective  Date" shall mean, as to each Warrant,  the date of the
     Prospectus pursuant to which the Warrants may be exercised and Common Stock
     issued.

          (d) "Exercise  Date" shall mean, as to any Warrant,  the date on which
     the Warrant  Agent  shall have  received  both (a) the Warrant  Certificate
     representing such Warrant,  with the Exercise Form thereon duly executed by
     the Registered  Holder thereof or his attorney duly  authorized in writing,
     and (b) payment in cash,  by wire transfer or by official bank or certified
     check  (if  payment  is made by  uncertified  check,  then  payment  is not
     considered  received until clearance of the uncertified check) made payable
     to the Warrant Agent,  of an amount in lawful money of the United States of
     America equal to the aggregate  Warrant Exercise Price for the Common Stock
     purchased.

          (e)  "Registered  Holder"  shall  mean the  person  in whose  name any
     certificate  representing  a Warrant or Warrants shall be registered on the
     books maintained by the Warrant Agent pursuant to Section 6.

          (f)  "Warrant  Agent"  shall  mean  American  Stock  Transfer  & Trust
     Company, as the Corporation's  warrant agent, or its authorized  successor,
     as such.

          (g)  "Expiration  Time" shall mean 5:00 p.m.,  New York City time,  on
     ___________, 2006.

          (h) "Warrant  Exercise Price" has the meaning set forth in the Warrant
     Certificate, the form of which is attached as Exhibit A.

     SECTION 2. Warrants and Issuance of Warrant Certificates.

          (a) The Warrant Agent shall  initially  countersign  and issue Warrant
     Certificates in appropriate denominations to the Registered Holders thereof
     as of the Effective Date.

          (b) Each Warrant shall initially  entitle the Registered Holder of the
     Warrant  Certificate  representing  such  Warrant to purchase  one share of
     Common  Stock  upon the  exercise  thereof,  in  accordance  with the terms
     hereof,  subject to modification  and adjustment as provided in the Warrant
     Certificate.

          (c) From time to time, up to the  Expiration  Time,  the Warrant Agent
     shall  countersign and deliver stock  certificates in required whole number
     denominations  upon the  exercise  of  Warrants  in  accordance  with  this
     Agreement.

          (d) From time to time, up to the  Expiration  Time,  the Warrant Agent
     shall execute and deliver  Warrant  Certificates  in required  whole number
     denominations to the individuals or entities entitled thereto in connection
     with any permitted  transfer or exchange  permitted  under this  Agreement;
     provided  that no  Warrant  Certificates  shall be issued  except (i) those
     initially  issued  hereunder,  (ii) those issued on or after the  Effective
     Date,  upon the  exercise  of fewer than all  Warrants  represented  by any
     Warrant  Certificate,  to evidence  any  unexercised  Warrants  held by the
     exercising  Registered  Holder,  (iii) those  issued  upon any  transfer or
     exchange  pursuant to Section 6; (iv) those issued in  replacement of lost,
     stolen,  destroyed or mutilated Warrant Certificates pursuant to Section 7;
     and (v) at the option of the  Corporation,  in such form as may be approved
     by its Board of  Directors,  to  reflect  any  adjustment  or change in the
     applicable  Warrant  Exercise Price or the number of shares of Common Stock
     purchasable upon exercise of the Warrants made pursuant to the Warrants.

          (e) The Corporation is simultaneously  issuing  2,200,000  warrants to
     purchase  Class B common stock on the Effective Date to its holder of Class
     B  common  stock.   The  Warrant  Agent  shall  have  no   obligations   or
     responsibility respecting such Class B warrants.

     SECTION 3. Form and Execution of Warrant Certificates.

          (a) The  Warrant  Certificates  representing  the  Warrants  shall  be
     substantially  in the form annexed  hereto as Exhibit A, the terms of which
     are  incorporated  herein by reference.  The Warrant  Certificates may have
     such letters,  numbers or other marks of  identification or designation and
     such legends,  summaries or endorsements printed,  lithographed or engraved
     thereon as the Corporation may deem appropriate and as are not inconsistent
     with the  provisions of this Agreement or as may be required to comply with
     any law or with any rule or regulation  made  pursuant  thereto or with any
     rule or regulation of any securities  exchange on which the Warrants may be
     listed, or to conform to usage. The Warrant Certificates shall be dated the
     date  of  issuance  thereof  (whether  upon  initial  issuance,   permitted
     transfer,  exchange or  issuance in lieu of  mutilated,  lost,  stolen,  or
     destroyed  Warrant  Certificates)  and issued in registered form.  Warrants
     shall be numbered serially following the letters "WA".

          (b)  Warrant   Certificates   shall  be  executed  on  behalf  of  the
     Corporation  by its Chairman of the Board,  President or any Vice President
     by manual signature or by facsimile  signatures  printed  thereon.  Warrant
     Certificates  shall be  manually  countersigned  and  authenticated  by the
     Warrant  Agent,   and  shall  not  be  valid  for  any  purpose  unless  so
     countersigned. In case any officer of the Corporation who shall have signed
     any of the  Warrant  Certificates  shall  cease to be such  officer  of the
     Corporation  before the date of  issuance of the  Warrant  Certificates  or
     before  countersigned by the Warrant Agent and issue and delivery  thereof,
     such Warrant  Certificates may nevertheless be countersigned by the Warrant
     Agent,  issued and  delivered  with the same force and effect as though the
     person  who  signed  such  Warrant  Certificates  had not ceased to be such
     officer of the Corporation.  After  countersignature  by the Warrant Agent,
     the  Warrant  Certificate  may be  delivered  to the  Registered  Holder as
     provided  herein  without  further  action  by the  Corporation,  except as
     otherwise provided by Section 4(a) hereof.

     SECTION 4. Exercise.

          (a) Each Warrant may be exercised by the Registered  Holder thereof at
     any time on or after the Effective Date, but not after the Expiration Time,
     upon the terms and subject to the  conditions  set forth in the  applicable
     Warrant  Certificate.  A Warrant  shall be  deemed  to have been  exercised
     immediately  prior to the close of  business on the  Exercise  Date and the
     person  entitled to receive the securities  deliverable  upon such exercise
     shall be treated for all purposes as the holder upon exercise thereof as of
     the close at business on the Exercise  Date. As soon as  practicable  on or
     after the  Exercise  Date the  Warrant  Agent shall  deposit  the  proceeds
     received from the exercise of a Warrant and shall notify the Corporation in
     writing of the  exercise  of such  Warrant  and the name and address of the
     person  exercising the warrant.  As soon as  practicable  after the date of
     such notice,  the Warrant Agent, on behalf of the Corporation,  shall cause
     to be issued and delivered to the party or parties  entitled to receive the
     certificate or certificates  representing  the securities  deliverable upon
     such exercise  (plus a Warrant  Certificate  for any remaining  unexercised
     Warrants of the Registered Holder), unless prior to the date of issuance of
     such  certificates  the  Corporation  shall  instruct the Warrant  Agent to
     refrain from causing such issuance of certificates for any reason. Upon the
     exercise of any Warrant and  clearance of the funds  received,  the Warrant
     Agent  shall  promptly,  and in no event  later  than three  business  days
     following the day in which the funds clear,  remit the payment received for
     the  Warrants  to the  Corporation  or as the  Corporation  may  direct  in
     writing.

     SECTION 5.  Reservation  of Shares;  Registration  of Warrants;  Listing of
Securities; Payment of Taxes; etc.

          (a) The  Corporation  covenants  that it will at all times reserve and
     keep available out of its authorized Common Stock, solely for issuance upon
     exercise of  Warrants,  such number of shares of Common Stock as shall then
     be issuable upon the exercise of all outstanding Warrants.  The Corporation
     covenants  that all shares of Common  Stock which  shall be  issuable  upon
     exercise  of the  Warrants  shall,  at the time of  issuance  and  delivery
     against payment  therefor of the aggregate  Warrant  Exercise Price for the
     Common  Stock   purchased,   be  duly  and  validly  issued,   fully  paid,
     nonassessable  and free from all taxes,  liens and charges  with respect to
     the issuance thereof (other than those which the Corporation shall promptly
     pay or discharge).

          (b) The Corporation covenants that if the distribution of any Warrants
     hereunder  require  registration  with,  or approval  of, any  governmental
     authority  under any federal  securities  law before such  Warrants  may be
     validly delivered upon such distribution, then the Corporation will in good
     faith and as expeditiously as reasonably possible,  endeavor to secure such
     registration or approval.  The Corporation  will use reasonable  efforts to
     obtain appropriate approvals or registrations with respect to such Warrants
     under the  "blue  sky"  securities  laws of the  states  in which  they are
     issued.

          (c) The  Corporation  covenants  that if any securities to be reserved
     for the  purpose of exercise of  Warrants  hereunder  require  registration
     with,  or  approval  of,  any  governmental  authority  under  any  federal
     securities  law before such  securities  may be validly issued or delivered
     upon  such  exercise,  then  the  Corporation  will  in good  faith  and as
     expeditiously as reasonably possible,  endeavor to secure such registration
     or approval.  However,  Warrants may not be exercised or sold by, or shares
     of Common Stock issued to, any Registered Holder in any state in which such
     exercise or sale would be unlawful.

          (d) The Corporation shall pay all documentary,  stamp or similar taxes
     and other  governmental  charges  that may be imposed  with  respect to the
     issuance  of  Warrants,  or the  issuance  or  delivery  of any shares upon
     exercise of the Warrants;  provided,  however, that if the shares of Common
     Stock are to be delivered  in a name other than the name of the  Registered
     Holder of the Warrant Certificate representing any Warrant being exercised,
     then no such delivery  shall be made unless the person  requesting the same
     has paid to the  Warrant  Agent the  amount of  transfer  taxes or  charges
     incident thereto, if any.

          (e)  The  Warrant  Agent  is  hereby  authorized  to  requisition  the
     Corporation's  stock  transfer  agent  from  time to time for  certificates
     representing shares of Common Stock required upon exercise of the Warrants,
     and the Corporation  will authorize the stock transfer agent to comply with
     such proper requisitions, if the warrant agent and the stock transfer agent
     are not the same entity.

          (f) The Corporation shall give the Warrant Agent written notice within
     five (5) business days of any action or  determination  modifying the terms
     of the Warrants or adjusting the Warrant  Exercise Price or determining the
     securities  or other  property for which the Warrants are  exercisable,  in
     accordance with the terms of the Warrants.

     SECTION 6. Exchange of Warrant Certificates.

          (a)  Warrant   Certificates   may  be  exchanged   for  other  Warrant
     Certificates representing an equal aggregate number of Warrants of the same
     class.  Warrant  Certificates  to be exchanged  shall be surrendered to the
     Warrant Agent at its Corporate  Office or, with respect to deliveries other
     than by mail or hand, at such other  locations set forth in the Prospectus,
     and upon satisfaction of the terms and provisions hereof, the Warrant Agent
     shall  execute,   issue  and  deliver  in  exchange  therefor  the  Warrant
     Certificates  which the  Registered  Holder  making the  exchange  shall be
     entitled to receive.

          (b) The Warrant Agent shall keep at its office books in which, subject
     to such  reasonable  regulations  as it may  prescribe,  it shall  register
     Warrant  Certificates and the permitted transfer thereof in accordance with
     its regular practice.  Upon due presentment for registration of transfer of
     any Warrant  Certificate at such office in accordance with the terms of the
     Warrant and this  Agreement  the Transfer  Agent shall issue and deliver to
     the  transferee or transferees  new Warrant  Certificates  representing  an
     equal aggregate number of Warrants of the same class.

          (c) The Warrants  shall not be  transferred  except (i) in  connection
     with a merger or consolidation of the Registered Holder or beneficial owner
     or otherwise  by  operation of law,  pursuant to court order or pursuant to
     the laws of  descent  and  distribution;  or (ii)  with the  express  prior
     written consent of the Corporation, in the Corporation's sole discretion. A
     Warrant  Certificate  may be  transferred  by a  Registered  Holder if such
     transfer does not represent any change of the  beneficial  ownership of the
     Warrant.  The  Warrant  Agent  shall  not give  effect to any  transfer  in
     violation of this provision.  Upon presentation of any Warrant  Certificate
     for transfer,  the Warrant Agent shall require  delivery by the  Registered
     Holder of such written  representations  and or other  evidence as it deems
     reasonable  to  substantiate   that  the  transfer  does  not  violate  the
     restrictions of the Warrant Certificate.

          (d)  With   respect  to  all  Warrant   Certificates   presented   for
     registration  of transfer,  or for exchange or exercise,  the Exercise Form
     included  therein shall be duly  endorsed,  or be  accompanied by a written
     instrument  or   instruments   of  transfer  and   subscription,   in  form
     satisfactory to the Corporation and the Warrant Agent, duly executed by the
     Registered Holder or his attorney-in-fact duly authorized in writing.

          With respect to all Warrant Certificates presented for registration of
     transfer,  the signature of the Register  Holder thereon must be guaranteed
     by an Eligible  Guarantor  Institution,  as defined in Rule  17Ad-15 of the
     Securities Exchange Act of 1934, as amended.

          (e) A reasonable  service  charge may be imposed by the Warrant  Agent
     against a Registered Holder for any exchange or registration of transfer of
     Warrant Certificates.  In addition,  the Corporation may require payment by
     such  holder of a sum  sufficient  to cover  any tax or other  governmental
     charge that may be imposed in connection therewith.

          (f) All Warrant Certificates  surrendered for exercise or for exchange
     shall be promptly canceled by the Warrant Agent and thereafter  retained by
     the Warrant Agent until  termination  of this  Agreement or  resignation as
     Warrant  Agent,  or  disposed  of or  destroyed,  at the  direction  of the
     Corporation.  If the  Corporation  shall purchase or acquire any Warrant or
     Warrants,  the Warrant Certificate or Warrant  Certificates  evidencing the
     same shall  thereupon be delivered to the Warrant  Agent and canceled by it
     and retired.

     SECTION 7. Loss or  Mutilation.  Upon  receipt by the  Corporation  and the
Warrant  Agent of evidence  satisfactory  to them of the  ownership of and loss,
theft,  destruction  or mutilation of any Warrant  Certificate,  and (in case of
loss, theft or destruction) of indemnity  satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation  thereof, the Warrant Agent shall
(in the  absence  of notice to the  Corporation  and/or  Warrant  Agent that the
Warrant  Certificate  has been  acquired  by a bonafide  purchaser)  execute and
deliver to the  Registered  Holder in lieu thereof a new Warrant  Certificate of
like tenor representing an equal aggregate number of Warrants.  Applicants for a
substitute   Warrant   Certificate  shall  comply  with  such  other  reasonable
regulations,   provide  such  reasonable  indemnification  and  pay  such  other
reasonable charges as the Warrant Agent or the Corporation may prescribe.

     SECTION 8.  Concerning the Warrant Agent.  The Warrant Agent acts hereunder
as agent and in a ministerial capacity for the Corporation, and its duties shall
be determined solely by the provisions  hereof.  The Warrant Agent shall not, by
issuing and  delivering  Warrant  Certificates  or by any other act hereunder be
deemed to make any representations as to the validity, value or authorization of
the  Warrant  Certificates  or  the  Warrants  represented  thereby  or  of  any
securities or other  property  delivered upon exercise of any Warrant or whether
any stock issued upon  exercise of any Warrant is fully paid and  nonassessable.
Except as expressly  provided in this Agreement,  the Warrant Agent shall not at
any  time  be  under  any  duty  or  responsibility  to any  holder  of  Warrant
Certificates  to make or  cause  to be made  any  adjustment  of the  applicable
Warrant  Exercise  Price,  or to  determine  whether any fact  exists  which may
require  any such  adjustments,  or with  respect to the nature or extent of any
such adjustment, when made, or with respect to the method employed in making the
same. It shall not (i) be liable for any recital or statement of facts contained
herein or for any action  taken,  suffered  or omitted by it in  reliance on any
Warrant Certificate or other document of instrument believed by it in good faith
to be  genuine  and to have been  signed or  presented  by the  proper  party or
parties,  except  for any  action  taken,  suffered  or omitted by it due to its
negligence, willful misconduct or bad faith, (ii) be responsible for any failure
on the  part  of the  Corporation  to  comply  with  any  of its  covenants  and
obligations contained in this Agreement or in any Warrant Certificate,  or (iii)
be liable for any act or omission in connection  with this Agreement  except for
its own negligence or willful misconduct.

     The  Warrant  Agent may at any time  consult  with  counsel to it and shall
incur no liability or responsibility  for any action taken,  suffered or omitted
by it in good faith in accordance with the opinion or advice of such counsel.

     Any notice, statement,  instruction, request, direction, order or demand of
the Corporation  shall be sufficiently  evidenced by an instrument signed by the
Chairman  of the  Board,  President,  any  Vice  President,  its  Secretary,  or
Assistant  Secretary  (unless  other  evidence  in  respect  thereof  is  herein
specifically  prescribed).  The Warrant Agent shall not be liable for any action
taken,  suffered or omitted by it in  accordance  with such  notice,  statement,
instruction, request, direction, order or demand believed by it to be genuine.

     The Corporation agrees to pay the Warrant Agent reasonable compensation for
its  services  hereunder  and  to  reimburse  it  for  its  reasonable  expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including judgments, costs
and counsel  fees,  for  anything  done or omitted by the  Warrant  Agent in the
execution  of its  duties and  powers  hereunder  except  losses,  expenses  and
liabilities  arising  as a result of the  Warrant  Agent's  negligence,  willful
misconduct or bad faith.

     The Warrant Agent may resign its duties and be discharged  from all further
duties and liabilities  hereunder (except liabilities arising as a result of the
Warrant Agent's own negligence or wilful misconduct or bad faith),  after giving
30 days, prior written notice to the Corporation.  At least 15 days prior to the
date such  resignation is to become  effective,  the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to each Registered Holder at the
Corporation's  expense.  Upon such resignation,  or any inability of the Warrant
Agent to act as such  hereunder,  the  Corporation  shall  appoint a new warrant
agent in writing. In connection with the appointment of a new warrant agent, the
Warrant Agent shall execute and deliver any further assurance,  conveyance,  act
or deed requested by the Corporation, at the Corporation's expense.

     Any  corporation  into which the Warrant Agent or any new warrant agent may
be converted or merged or any corporation  resulting from any  consolidation  to
which  the  Warrant  Agent  or any new  warrant  agent  shall  be a party or any
corporation  succeeding  to the trust  business of the Warrant  Agent shall be a
successor  warrant agent under this Agreement  without any further act. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Corporation and to each Registered Holder.

     SECTION 9. Modification of Agreement. The Warrant Agent and the Corporation
may modify or amend this Agreement from time to time,  provided,  however,  that
this  Agreement  shall not be  modified,  supplemented  or altered in any manner
materially  adverse to the interests of the holders of the Warrant  Certificates
except  with the  consent  in  writing  of the  Registered  Holders  of  Warrant
Certificates representing not less than 50% of the Warrants then outstanding.

     SECTION  10.   Notices.   All   notices,   requests,   consents  and  other
communications  hereunder  shall be in writing  and shall be deemed to have been
made when delivered or mailed first class registered or certified mail,  postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books  maintained by the Warrant
Agent; if to the Corporation,  at 2746 Old U.S. 20 West, Elkhart, Indiana 46514,
Attention:  Gary J. Klusman,  Executive Vice President, or at such other address
as may have been  furnished to the Warrant Agent in writing by the  Corporation;
if to the Warrant Agent, at 59 Maiden Lane, New York, New York 10038, Attention:
Shareholder Relations.

     SECTION  11.  Governing  Law.  This  Agreement  shall  be  governed  by and
construed  in  accordance  with  the  laws of the  State  of  Delaware,  without
reference to principles of conflict of laws.

     SECTION 12. Binding Effect.  This Agreement shall be binding upon and inure
to the benefit of the  Corporation  and the Warrant  Agent and their  respective
successors  and  assigns.  Nothing in this  Agreement  is  intended  or shall be
construed to confer upon any other person any right,  remedy or claim, in equity
or at law, or to impose upon any other person any duty, liability or obligation.

     SECTION 13.  Termination.  This Agreement shall terminate at the Expiration
Time or such  earlier  date upon  which all  Warrants  have  been  exercised  or
surrendered,  except that the Warrant Agent shall account to the Corporation for
cash held by it and the  provisions  of  Section  8 hereof  shall  survive  such
termination.

     SECTION 14.  Counterparts.  This Agreement may be executed in counterparts,
which taken together shall constitute a single document.

                            [signature page follows]


<PAGE>



     IN WITNESS WHEREOF,  the parties hereto have caused this Warrant  Agreement
to be duly executed as of the date first above written.

                                   The "Corporation"

                                   THE MORGAN GROUP, INC.



                                   By:
                                        ----------------------------------------
                                        Gary J. Klusman
                                        Executive Vice President of Finance
                                        and Administration



                                   The "Warrant Agent"

                                   AMERICAN STOCK TRANSFER & TRUST COMPANY



                                   By:
                                        ----------------------------------------
                                        Name:
                                        Title:



<PAGE>



                                    EXHIBIT A


Certificate No. WA-________                                  __________ Warrants


                             THE MORGAN GROUP, INC.

                               WARRANT CERTIFICATE
              For Class A Warrants To Purchase Class A Common Stock

         THIS CERTIFIES THAT,

                       -----------------------------------
                            Name of Registered Holder
                       -----------------------------------
                          Address of Registered Holder
                       -----------------------------------

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


is the  registered  holder (the  "Registered  Holder") of the number of warrants
(the "Warrants") set forth above. Each Warrant entitles the Registered Holder to
purchase, subject to the terms and conditions set forth in this certificate, one
fully paid and nonassessable  share of Class A Common Stock, $0.15 par value per
share (the "Common Stock"),  of The Morgan Group,  Inc., a Delaware  Corporation
(the "Corporation"),  during the period commencing the date hereof and ending at
5:00 p.m. (New York City time) on ____________,  2006 (the  "Expiration  Time"),
upon  the  presentation  and  surrender  of this  Warrant  Certificate  with the
Exercise Form attached hereto duly executed, at the corporate office of American
Stock Transfer & Trust Company, as Warrant Agent, or its successor (the "Warrant
Agent"),  accompanied by payment of the Warrant  Exercise Price (defined below),
and any and all  applicable  taxes due in  connection  with the  exercise of the
Warrant  in lawful  money of the  United  States of  America  by wire  transfer,
certified  or  official  bank check,  bank draft or money  order.  The  "Warrant
Exercise Price" shall be $9.00 per share,  provided,  that the Warrant  Exercise
Price will be reduced to $6.00 per share  during a reduction  period of at least
30 days (the  "Reduction  Period") to be determined by the Board of Directors of
the  Corporation.  If the Reduction Period has not been set prior to the date 60
days before the  Expiration  Time,  such period will  comprise the final 30 days
prior to the date  upon  which  the  Warrants  expire  (the  "Default  Reduction
Period").  In the event the  Reduction  Period is set by the Board of Directors,
the  Corporation  will  provide a  written  notice to all  holders  of  Warrants
indicating the dates upon which the Reduction Period shall commence and end.

     By acceptance of this Warrant  Certificate,  the holder hereof consents and
agrees  with the  Corporation,  its Warrant  Agent and every  other  holder of a
Warrant, to the terms of this Warrant Certificate, and to any adjustments to the
terms of the Warrants,  the Warrant  Exercise Price,  the number of Warrants and
the number of shares of Common Stock purchasable pursuant to each Warrant,  made
as follows:

          (a)  The  Corporation  may,  by  action  of  its  board  of  directors
     (including the favorable vote of its director  elected solely by holders of
     its Class A common stock),  make any changes or corrections to terms of the
     Warrant that it shall deem  appropriate to cure any ambiguity or to correct
     any  inconsistency  or manifest  mistake or  desirable  and which shall not
     materially  adversely  affect  the  interest  of  the  holders  of  Warrant
     Certificates including, without limitation, decreasing the Warrant Exercise
     Price.

          (b) In the event the  Corporation  shall hereafter issue any shares of
     Common  Stock as a stock  dividend  to the  holders  of  Common  Stock,  or
     subdivide or combine the outstanding  shares of Common Stock into a greater
     or lesser number of shares (any such  issuance,  subdivision or combination
     being herein called a "Change of Shares"),  then, and thereafter  upon each
     further Change of Shares,  the applicable  Warrant Exercise Price in effect
     immediately  prior to such  Change of Shares  shall be  changed  to a price
     (including any applicable fraction of a cent) determined by multiplying the
     Warrant Exercise Price in effect  immediately  prior thereto by a fraction,
     the  numerator of which shall be the total number of shares of Common Stock
     outstanding  immediately prior to such Change of Shares and the denominator
     of which shall be the total  number of shares of Common  Stock  outstanding
     immediately  after such  Change of  Shares.  The number of shares of Common
     Stock  outstanding  at any given time shall include  shares of Common Stock
     owned  or held by or for the  account  of the  Corporation  and the sale or
     issuance of such treasury  shares or the  distribution of any such treasury
     shares  shall not be  considered  a Change of Shares for  purposes  of said
     sections.

          Upon each adjustment of the applicable Warrant Exercise Price pursuant
     to this  subsection  (b) above,  the total number of shares of Common Stock
     purchasable  upon  the  exercise  of each  Warrant  shall  (subject  to the
     provisions  contained  in  subsection  (c) below) be such  number of shares
     (calculated to the nearest hundredth) purchasable at the applicable Warrant
     Exercise  Price  immediately  prior  to  such  adjustment  multiplied  by a
     fraction,  the numerator of which shall be the applicable  Warrant Exercise
     Price in effect immediately prior to such adjustment and the denominator of
     which shall be the applicable  Warrant Exercise Price in effect immediately
     after such adjustment.

          (c) In case  of any  reclassification  or  capital  reorganization  of
     outstanding  shares of Common  Stock,  or in case of any  consolidation  or
     merger of the Corporation  with or into another  corporation  (other than a
     consolidation  or  merger  in  which  the  Corporation  is  the  continuing
     corporation  and which does not result in any  reclassification  or capital
     reorganization  of  outstanding  shares of Common Stock),  the  Corporation
     shall cause  effective  provision to be made so that the Registered  Holder
     shall have the right  thereafter  to purchase the kind and number of shares
     of stock or other  securities or property  (including cash) receivable upon
     such reclassification or capital reorganization, consolidation or merger by
     a holder of the  number of shares of  Common  Stock  that  might  have been
     purchased  by  the  Registered   Holder  upon  exercise  of  the  Warrants,
     immediately  prior  to such  reclassification  or  capital  reorganization,
     consolidation or merger. The foregoing  provisions shall similarly apply to
     successive  reclassifications  or capital  reorganizations  of  outstanding
     shares of Common Stock and to successive consolidations or mergers.

          (d) Irrespective of any adjustments or changes in the Warrant Exercise
     Price or the number of shares of Common Stock  purchasable upon exercise of
     any Warrant,  this Warrant  Certificate shall, unless the Corporation shall
     exercise  its option to issue new  warrant  certificates  to each holder of
     warrants,  continue to express the  applicable  Warrant  Exercise Price per
     share and the number of shares purchasable  thereunder as expressed in this
     Warrant   Certificate  when  originally   issued,  but  shall  nevertheless
     represent  the rights of the  Registered  Holder after giving effect to all
     adjustments  provided in the Warrant Services  Agreement.  If the number of
     shares of Common  Stock  purchasable,  upon the exercise of each Warrant is
     adjusted  pursuant  hereto;  the  Corporation  shall  nevertheless  not  be
     required  to issue  fractional  shares  upon  exercise  of the  Warrants or
     otherwise, or to distribute certificates that evidence fractional shares or
     Warrants to purchase  fractional  shares. The Corporation shall not pay any
     cash in lieu of fractional shares or fractional Warrants.

          (e) Except with  respect to the  Default  Reduction  Period,  promptly
     after each adjustment of the Warrant  Exercise Price or other  modification
     of the  terms of the  Warrants,  as  authorized  or  provided  herein,  the
     Corporation   will  cause  a  notice   describing   such   adjustments   or
     modifications  to be sent by ordinary  first  class mail to the  Registered
     Holder at such  Registered  Holder's last address as it shall appear on the
     registry books of the Warrant Agent.

          (f) No adjustment of the Warrant  Exercise  Price shall be made unless
     such  adjustment  would require an increase or decrease of at least $.01 in
     such price;  provided that any  adjustments  which by reason of this clause
     (f) are not required to be made shall be carried  forward and shall be made
     at the time of and  together  with the next  subsequent  adjustment  which,
     together  with any  adjustment(s)  so  carried  forward,  shall  require an
     increase or decrease of at least $.01 in the Warrant Exercise Price then in
     effect hereunder.

          (g) Any  determination  as to whether  an  adjustment  in the  Warrant
     Exercise  Price or other  terms  of the  Warrant  in  effect  hereunder  is
     required or as to the terms of any such  adjustment,  shall be binding upon
     the holders of the  Warrants and the  Corporation  if made in good faith by
     the Board of Directors of the Corporation.

     Each  Warrant  represented  hereby  is  exercisable  at the  option  of the
Registered  Holder,  but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants  represented  hereby, the
Corporation shall cancel this Warrant  Certificate upon the surrender hereof and
shall execute and deliver a new Warrant  Certificate or Warrant  Certificates of
like tenor for the balance of such Warrants.

     The Warrants may not be transferred  except (i) in connection with a merger
or  consolidation  or otherwise by operation of law,  pursuant to court order or
pursuant to the laws of descent and distribution; or (ii) with the express prior
written consent of the Company,  in the Company's sole discretion.  The Warrants
may be transferred by the Registered  Holder if such transfer does not represent
any change of the  beneficial  ownership  of the  Warrant  (to be  evidenced  by
written certification to the Warrant Agent). Any attempted transfer in violation
of this provision shall be void and the Company shall have no obligation to give
effect to any  transfer  in  violation  of this  provision.  The Company and the
Warrant Agent may require written representations or other evidence as they deem
necessary to substantiate  compliance  herewith  before  permitting any transfer
hereof.

     This Warrant  Certificate is  exchangeable  and (subject to the limitations
set forth  herein)  transferable,  upon the surrender  hereof by the  Registered
Holder at the corporate offices of the Warrant Agent,  American Stock Transfer &
Trust Company, located at 59 Maiden Lane, Plaza Level, New York, New York 10038,
or such other locations provided by written notice to the Registered Holder, for
a new Warrant Certificate or Warrant  Certificates of like tenor representing an
equal  aggregate  number of Warrants,  each of such new Warrant  Certificates to
represent  such  number of Warrants as shall be  designated  by such  Registered
Holder  at the time of such  surrender.  Upon due  presentment  of this  Warrant
Certificate  for  registration  of transfer in  accordance  with the  provisions
hereof, together with any tax or other governmental charge imposed in connection
therewith,  a new Warrant  Certificate or Warrant  Certificates  representing an
equal aggregate  number of Warrants will be issued to the transferee in exchange
therefor.

     If this Warrant  Certificate  shall be surrendered  for exercise within any
period during which the transfer books for the Common Stock or other  securities
purchasable  upon the  exercise of this Warrant  Certificate  are closed for any
purpose,  the Corporation shall not be required to make delivery of certificates
for  the  securities  purchasable  upon  such  exercise  until  the  date of the
reopening of said transfer books.

     The Corporation  shall not be obligated to deliver any securities  pursuant
to the  exercise  or sale of this  Warrant  Certificate  unless  a  registration
statement  under the  Securities  Act of 1933,  as amended,  is effective  and a
current form of prospectus  is available  with respect to such  securities.  The
Corporation has filed a registration  statement with the Securities and Exchange
Commission and shall use its reasonable  best efforts to keep such  registration
statement  effective  while any of the  Warrants are  outstanding.  This Warrant
Certificate  may not be exercised or transferred  by a Registered  Holder in any
state where such exercise or transfer would be unlawful.

     Prior to the exercise of any Warrant  represented  hereby,  the  Registered
Holder shall not be entitled to any rights of a stockholder of the  Corporation,
including,  without  limitation,  the right to vote or to receive  dividends  or
other  distributions,  and shall not be  entitled  to receive  any notice of any
proceedings of the Corporation.

     Prior to due  presentment  for  registration  of transfer  of this  Warrant
Certificate,  the  Corporation  and the  Warrant  Agent  may deem and  treat the
Registered  Holder as the absolute owner hereof and of each Warrant  represented
hereby  (notwithstanding  any  notations of ownership or writing  hereon made by
anyone other than a duly  authorized  officer of the  Corporation or the Warrant
Agent),  for all  purposes  and  shall  not be  affected  by any  notice  to the
contrary.  This  Warrant  Certificate  shall be  governed  by and  construed  in
accordance with the laws of the State of Delaware.

     This Warrant  Certificate is not valid unless  countersigned by the Warrant
Agent.

     IN WITNESS WHEREOF,  the Corporation has caused this Warrant Certificate to
be duly executed, manually or in facsimile, on its behalf by its duly authorized
officer.

Dated:
       ----------------------------

THE MORGAN GROUP, INC.

By:________________________________
     Anthony T. Castor, III
     President and Chief Executive Officer



COUNTERSIGNED:

AMERICAN STOCK TRANSFER & TRUST COMPANY,
As Warrant Agent



BY:
   --------------------------------
     Name:
     Title:


                                  Exercise Form

EXERCISE OF WARRANTS:

         The undersigned Registered Holder hereby irrevocably elects to exercise
one or more Warrants represented by this Warrant Certificate for shares of Class
A Common Stock as indicated below, on the terms and subject to the conditions
specified in the Prospectus, receipt of which is hereby acknowledged.

         (a)      Please indicate below the number shares of Class A Common
                  Stock you desire to purchase and the requisite payment for
                  such shares:

                            NUMBER OF               WARRANT             PAYMENT
                           WARRANTS TO              EXERCISE            -------
                          BE EXERCISED*              PRICE**
                          --------------             -------
                                             X        $.900    =       $
                           ---------

               *    You are  initially  entitled  to  purchase  one (1) share of
                    Class A Common Stock per Warrant.

               **   The warrant  exercise price shall be reduced to $6.00 during
                    a  reduction  period  of at  least 30 days  (the  "Reduction
                    Period") to be set by the Board of  Directors of the Company
                    or, if the  Reduction  Period  has not been set prior to the
                    date 60 days before the  Expiration  Time,  such period will
                    comprise  the last 30 days  prior to the date upon which the
                    Warrants expire.  The Corporation will deliver notice to all
                    registered  holders of Warrants  in the event the  Reduction
                    Period is set by the Board of Directors.

         METHOD OF PAYMENT (check only one box):

               (b)  [ ]    Certificated or uncertified check, bank draft or U.S.
                           postal  money  order   payable  to  "American   Stock
                           Transfer and Trust Company, as warrant agent" or

                    [ ]    Wire transfer  directed to  ________________________,
                           ABA No. _________,  for the account of American Stock
                           Transfer and Trust Company,  as Warrant Agent for The
                           Morgan Group, Inc., for further credit to Account No.
                           ---------------.

         DELIVERY OF REMAINING WARRANTS:

               (c)  [ ]    Do not  deliver  to  the  undersigned  a new  Warrant
                           Certificate  evidencing  the  remaining  Warrants  to
                           which the undersigned is entitled.

                    [ ]    Deliver a new Warrant  Certificate in accordance with
                           the instructions below.

DELIVERY INSTRUCTIONS

     Please provide the address for mailing of a certificate representing shares
of Class A  Common  Stock  purchased  hereby  or a new  Warrant  Certificate  if
different from the address shown on the face of this Warrant Certificate.

         Name: ____________________________________________
         Address: _________________________________________
                  _________________________________________
                  _________________________________________




                                S I G N A T U R E


Signature(s) of Registered Holder(s):  _____________________  Date:  ___________

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

(Please  sign  exactly  as  your  name  appears  on the  face  of  this  Warrant
Certificate.  Joint  owners  should  each  sign  personally.  Where  applicable,
indicate your official position or representative capacity.)




TRANSFER OF WARRANTS:

TRANSFER OF WARRANTS IS NOT PERMITTED EXCEPT IN LIMITED CIRCUMSTANCES  DESCRIBED
IN THE WARRANT  CERTIFICATE.  THE COMPANY AND THE WARRANT AGENT WILL REQUIRE THE
HOLDER TO SUBMIT WRITTEN  REPRESENTATIONS  AND EVIDENCE TO DEMONSTRATE  THAT ANY
TRANSFER IS PERMITTED BY THE TERMS OF THE WARRANT.

     For value received the Registered  Holder sells,  assigns and transfers the
number of Warrants to the transferee indicated below:

         Number of Warrants to be Transferred: __________________________
         Address of Transferee: _________________________________________
                                _________________________________________
         Social Security Number or Taxpayer
         Identification Number of Transferee:  __________________________

Signature(s) of Registered Holder(s):  _____________________  Date:  ___________
                                       _____________________

(Please  sign  exactly  as  your  name  appears  on the  face  of  this  Warrant
Certificate.  Joint  owners  should  each  sign  personally.  Where  applicable,
indicate your official position or representative capacity.)

YOU MUST HAVE YOUR SIGNATURE GUARANTEED BY AN ELIGIBLE GUARANTOR  INSTITUTION IF
YOU WISH TO HAVE YOUR WARRANTS  TRANSFERRED.  Please refer to the Prospectus for
discussions regarding Eligible Guarantor Institutions and Guaranteed Signatures.

Signature Guaranteed By:  _______________________________