One Corporate Center
Rye, NY 10580-1435
Tel. (914) 921-3700 Fax (914) 921-5060               Gabelli & Company, Inc.
http://www.gabe11i.com
info@gabellixom


                                                      November 11, 1998

CONFIDENTIAL

Mr. Robert E. Dolan
Lynch Corporation
401 Theodore Fremd Avenue
Rye, New York 10580

Dear Mr. Dolan:


     We are pleased to confirm the  arrangements  under which Gabelli & Company,
Inc.  ("Gabelli") is engaged on a non-exclusive  basis by Lynch Corporation (the
"Company") as financial  advisor to assist the Company in the realization of the
value  of  its  investments  in  Coronet   Communications  Company  and  Capital
Communications   Company,   Inc.   in  one  or  more   transactions   (each,   a
"Transaction").

     We  understand  that the  Company's  objective is to maximize the after-tax
return on investment in these  properties and that it seeks the optimum  balance
between maximum selling price and minimal tax  consequences.  This could include
an arrangement  whereby the Company would retain a small equity stake  therefore
deferring some taxes.

     Gabelli will use its  broadcasting  industry  expertise to network with its
industry  contacts to identify one or more  suitable  buyers,  subject to any of
Gabelli's regulatory  constraints.  Ms. Laura Linehan will be assigned initially
to this project.

     In the event that a Transaction  is consummated  with a party  contacted by
Gabelli,  the Company  agrees to pay Gabelli a fee (the "Fee") equal to 0.75% of
the total consideration received by the Company and/or its subsidiaries. The Fee
shall be payable in cash at the  closing of any  Transaction.  In the event that
the Company  does not receive the majority of the total  consideration  in cash,
however,  Gabelli  agrees to negotiate  with the Company  regarding  alternative
arrangements  for payment.  In addition,  if a Transaction is consummated with a
party contacted by Gabelli, you agree to reimburse Gabelli for its out-of-pocket
expenses,  which shall not exceed $5,000  without your prior  written  approval,
plus any sales,  use or similar taxes arising in connection with our engagement.
Gabelli,  however,  shall  not be  entitled  to the  Fee  or its  expenses  if a
Transaction is consummated with a buyer found by Mr. Lombardo,  his companies or
their advisers.

     In the event that the  consideration  received in a Transaction  is paid in
whole OF in part in the form of securities  or other  assets,  the value of such
securities or other assets,  for purposes of  calculating  the Fee, shall be the
fair market value thereof,  as the parties hereto shall mutually  agree,  on the
day  prior  to the  consummation  of the  Transaction;  provided,  that  if such
consideration includes securities with an existing liquid public trading market,
the value thereof


<PAGE>



shall be  determined  by the last sales  price for such  securities  on the last
trading day thereof prior to such  consummation,  In connection with engagements
such as this, it is our policy to receive indemnification. The Company agrees to
the  provisions  with respect to our  indemnity  and other  matters set forth in
Annex A which is incorporated by reference into this letter.

     This  Agreement will  terminate on June 30, 1999,  unless  extended by both
parties in writing. We shall,  however, be entitled to the Fee in the event that
on or prior to June 30, 1999, there is an understanding or agreement regarding a
Transaction   with  a  party  contacted  by  Gabelli  and  such  Transaction  is
consummated prior to June 30, 2000.

     Please  note  that any  written  or oral  advice  provided  by  Gabelli  in
connection  with our engagement is exclusively  for the information of the Board
of Directors  and senior  management  of the Company and may not be disclosed to
any third party or circulated or referred to publicly  without our prior written
consent.
            
     As you know, Gabelli is a full service securities firm and as such may from
time  to  time  effect  transactions,  for its own  account  or the  account  of
customers,  and hold  positions in  securities  or options on  securities of the
Company and other  companies  which may be the subject of the engagement by this
letter.

     Except as contemplated by the terms hereof or as required by applicable law
or  pursuant  to an order  entered or  subpoena  issued by a court of  competent
jurisdiction,   Gabelli  shall  keep  confidential  all  non-public  information
provided to it by the Company,  and shall not disclose such  information  to any
third party without the consent of the Company.

     Please confirm that the foregoing is in accordance with your  understanding
by signing and  returning  to us the enclosed  copy of this letter,  which shall
become a binding  agreement  upon our receipt.  We are  delighted to accept this
engagement and look forward to working with you on this  assignment.  Very truly
yours,

                                                     GABELLI & COMPANY, INC.


                                                     Stephen G. Bondi

LYNCH CORPORATION

By:____________________________
Name: Robert E. Dolan
Title:   Chief Financial Officer





<PAGE>


Annex A

In the event that  Gabelli  becomes  involved  in any  capacity  in any  action,
proceeding  or  investigation  brought  by  or  against  any  person,  including
stockholders  of the Company,  in  connection  with or as a result of either our
engagement or any matter  referred to in this letter,  the Company  periodically
will reimburse  Gabelli for its legal and other expenses  (including the cost of
any investigation and preparation) incurred in connection  therewith;  provided,
however,  that in the  event a final  judicial  determination  is made that such
action,  proceeding or  investigation  resulted from the gross negligence or bad
faith of Gabelli it will remit to the Company any  amounts  reimbursed  pursuant
hereto.  The Company also will indemnify and hold Gabelli  harmless  against any
and all losses, claims, damages or liabilities to any such pet-son in connection
with or as a result of either our  engagement or any matter  referred to in this
letter,  except to the extent  that any such loss,  claim,  damage or  liability
results  from the gross  negligence  or bad faith of Gabelli in  performing  the
services  that are the subject of this letter.  If for any reason the  foregoing
indemnification  is unavailable to Gabelli or  insufficient to hold it harmless,
then the Company shall  contribute to the amount paid or payable by Gabelli as a
result of such  loss,  claim,  damage or  liability  ill such  proportion  as is
appropriate  to reflect the relative  economic  interests of the Company and its
stockholders  on the one hand and  Gabelli  oil the  other  hand in the  matters
contemplated  by this  letter as well as the  relative  fault of the Company and
Gabelli with  respect to such loss,  claim,  damage or  liability  and any other
relevant equitable considerations. The reimbursement, indemnity and contribution
obligations  of the  Company  under this  paragraph  shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliate of Gabelli and the partners,  directors, agents,
employees and  controlling  persons (if any), as the case may be, of Gabelli and
any such  affiliate,  and shall be binding upon and inure to the benefit of ally
successors, assigns, heirs and personal representatives of the Company, Gabelli,
any such affiliate and any such  pet-sons.  The Company also agrees that neither
Gabelli nor any such  affiliates,  partners,  directors,  agents,  employees and
controlling  persons  shall  have any  liability  to the  Company  or any person
asserting claims oil behalf of or in right of the Company ill connection with or
as a result of either our  engagement  or any matter  referred to in this letter
except to the extent that any losses, claims,  damages,  liabilities or expenses
incurred by the Company result from the gross negligence or bad faith of Gabelli
in  performing  the  services  that are the  subject  of this  letter.  Prior to
entering into any agreement or  arrangement  with respect to, or effecting,  any
proposed sale, exchange, dividend or other distribution or liquidation of all or
a significant  portion of its assets in one or a series of  transactions  or any
significant  recapitalization or reclassification of its outstanding  securities
that  does  not  directly  or  indirectly  provide  for  the  assumption  of the
obligations  of the Company set forth in this Annex A (other than a  transaction
in  which  the  Company  receives  consideration  deemed  fair by the  Board  of
Directors of the Company for the assets  transferred or the proposed division of
the Company into two separate companies pursuant to a spin-off, the Company will
notify  Gabelli in writing  thereof  (if not  previously  so  notified)  and, if
requested by Gabelli, shall arrange in connection therewith alternative means of
providing  for the  obligations  of the  Company  set  forth in this  paragraph,
including the assumption of such obligations by another party, insurance, surety
bonds or the  creation of all  escrow,  in each case in an amount and upon terms
and conditions  satisfactory to Gabelli. Any right to trial by jury with respect
to any action or proceeding  arising in connection with or as a result of either
our engagement or any matter  referred to in this letter is hereby waived by the
parties hereto.  The provisions of this Annex A shall survive any termination or
completion of the engagement provided by this letter agreement,  and this letter
agreement  shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws.