Separation and Distribution Agreement
                                  by and among
                         Lynch Interactive Corporation,
                       Brighton Communications Corporation
                             The Morgan Group, Inc.
                                       and
                            Morgan Group Holding Co.
                         ------------------------------
                                 Effective as of
                                January 18, 2002


<PAGE>




                                        1
330495-4

                      SEPARATION AND DISTRIBUTION AGREEMENT

     This Separation and  Distribution  Agreement (this  "Agreement") is entered
into as of January 18,  2002,  by and among  Lynch  Interactive  Corporation,  a
Delaware corporation  ("Interactive"),  Brighton Communications  Corporation,  a
Delaware   corporation   ("Brighton"),   The  Morgan  Group,  Inc.,  a  Delaware
corporation  ("Morgan"),  and Morgan Group  Holding Co., a Delaware  corporation
("Holding" and with Interactive, Brighton and Morgan, the "Parties").

                                    RECITALS

     WHEREAS,  Interactive is a diversified  holding  company with  subsidiaries
primarily engaged in multimedia and transportation services; and

     WHEREAS,  Interactive's  involvement in transportation  services is through
Brighton,  a  wholly-owned  subsidiary  that holds the  securities of Morgan,  a
publicly traded corporation specializing in outsourced  transportation services;
and

     WHEREAS,  the  securities  of Morgan held by  Brighton  are  identified  on
Exhibit A hereto (the "Morgan Group Securities"); and

     WHEREAS,  each of the Boards of Directors of Interactive  and Brighton have
determined  that it is in their best  interests for Brighton to  contribute  the
Morgan Group Securities and the sum of $500,000 to the capital of Holding solely
in exchange (the  "Exchange") for an aggregate of 3,055,345  shares of Holding's
Common Stock, $.01 par value (the "Holding Shares"),  for Brighton to distribute
the 3,055,345  Holding Shares to Interactive (the "Brighton  Distribution")  and
for  Interactive  to distribute  2,820,051 of the Holding Shares pro rata to its
stockholders  on the basis of one  Holding  Share for each share of  Interactive
common stock outstanding (the "Distribution"); and

     WHEREAS,  the  Parties  intend  for  each  of the  Exchange,  the  Brighton
Distribution and the Distribution to qualify as tax-free  transactions  pursuant
to the Internal Revenue Code of 1986, as amended (the "Code"); and

     WHEREAS,  the Parties  desire to set forth herein the  principal  corporate
transactions  to be effected  in  connection  with the  Exchange,  the  Brighton
Distribution  and the  Distribution  and certain other  matters  relating to the
relationship and respective  rights and obligations of the Parties following the
Distribution.

     NOW,  THEREFORE,  in  consideration  of the foregoing and the covenants and
agreements set forth below, the Parties agree as follows:



                       EXCHANGE AND BRIGHTON DISTRIBUTION

     Exchange.  Upon the terms and subject to the  conditions  set forth herein,
not  later  than  three  days  prior to the  Distribution  Date (as  hereinafter
defined), Brighton and Holding shall effect the Exchange.

     Brighton  Distribution.  Upon the terms and subject to the  conditions  set
forth herein,  not later than one day prior to the Distribution  Date,  Brighton
shall make the Brighton Distribution to Interactive.



                       THE DISTRIBUTION AND CASCADE SHARES

     The Distribution.
     ----------------

     Subject to Sections 2.1(d) and 3.1, on or prior to the  Distribution  Date,
Interactive  shall deliver 2,820,051 Holding Shares to American Stock Transfer &
Trust Co. (the  "Distribution  Agent") and shall instruct the Distribution Agent
to  distribute  such Holding  Shares on the  Distribution  Date pro rata to each
holder  of record of  Interactive  common  stock as of  December  18,  2001 (the
"Record Date").

     Subject  to  Sections  2.1(d)  and  3.1,  on the  Distribution  Date,  each
Interactive  stockholder  as of the  Record  Date (or such  holder's  designated
transferee  or  transferees),  shall be entitled  to  receive,  in the form of a
dividend,  one Holding Share for each share of common stock of Interactive  held
by such holder on the Record Date.

     Interactive  and  Holding  shall  provide the  Distribution  Agent with all
necessary documents or information to complete the Distribution  pursuant to the
terms set forth herein.

     Interactive shall, in its sole and absolute discretion,  determine the date
of the Distribution (the "Distribution Date") and all terms of the Distribution,
and the timing of and conditions to the Distribution.  In addition,  Interactive
may at any time and from time to time until the completion of the  Distribution,
modify or change the terms of the Distribution,  including,  without limitation,
by accelerating or delaying the timing of all or part of the Distribution.

     Cascade Shares. Subsequent to the Distribution Date, Interactive shall hold
the 235,294  Holding Shares not subject to the  Distribution as escrow agent for
Cascade  Investment LLC  ("Cascade"),  the holder of an outstanding  convertible
promissory  note  made by  Interactive  (the  "Interactive  Note").  If  Cascade
converts  all or any portion of the  principal  amount of the  Interactive  Note
prior to December 10,  2004,  Interactive  shall  transfer to Cascade a pro rata
portion of the 235,294  Holding Shares  depending upon how much of the principal
amount of the Interactive Note is converted.  Should Cascade fail to convert any
or all of the  Interactive  Note prior to December  10,  2004,  ownership of any
Holding Shares then remaining in escrow shall be retained by Interactive.



                    CONDITIONS PRECEDENT TO THE DISTRIBUTION

     Conditions  Precedent  to  the  Distribution.  The  Distribution  shall  be
conditioned on the satisfaction of the following conditions:


     Holding shall have filed a  registration  statement with the Securities and
Exchange   Commission  (the   "Commission")  on  Form  S-1  (the   "Registration
Statement"),  and such amendments or supplements  thereto as may be necessary in
order to cause the same to become and remain effective, in order to register the
Holding Shares under the Securities Act of 1933, as amended;

     (a)  The Registration  Statement shall have been declared  effective by the
          Commission  and there shall be no  stop-order  in effect with  respect
          thereto;

     (b)  The Exchange and the Brighton Distribution shall have occurred;

     (c)  Not later than the Distribution  Date, Holding shall have prepared and
          mailed  to  Interactive's   common   stockholders,   such  information
          concerning  Holding  and the  Distribution  and such other  matters as
          Interactive  determines  upon  advice  of  counsel  are  necessary  or
          required by law;

     (d)  All required  actions and filings with regard to state  securities and
          blue sky laws of the United States (and any comparable  laws under any
          foreign  jurisdictions)  shall have been taken by Holding,  and, where
          applicable,  have become effective or been accepted,  or Holding shall
          have been  advised  by  counsel  that any such  action  or filing  not
          effective or accepted shall not be required;

     (e)  Interactive shall have obtained an opinion letter from its independent
          auditors to the effect  that the  Distribution  will  qualify as a tax
          free  transaction  under  the  Code,  and no  gain  or  loss  will  be
          recognized by (and no amount will  otherwise be included in the income
          of) the  stockholders  of  Interactive  upon their  receipt of Holding
          Shares in the Distribution;

     (f)  Any  material   governmental   approvals  and  consents  necessary  to
          consummate  the  Distribution  shall have been obtained and be in full
          force and effect;

     (g)  No other events or developments shall have occurred  subsequent to the
          date  hereof  that,  in the  judgment  of the  Board of  Directors  of
          Interactive,  would  result  in the  Distribution  having  a  material
          adverse effect on Interactive or on Interactive's stockholders;

     (h)  No  order,  injunction  or  decree  issued  by any  court or agency of
          competent  jurisdiction or other legal restraint or prohibition  shall
          be in  effect  so as to  prevent  the  consummation  of  the  Brighton
          Distribution,   the  Exchange  or  the   Distribution   or  any  other
          transactions contemplated by this Agreement;

     (i)  Such  other  actions  as the  Parties  may,  based  upon the advice of
          counsel,  reasonably  request to be taken prior to the Distribution in
          order to assure the successful  completion of the  Distribution  shall
          have been taken; and

     (j)  This Agreement shall not have been terminated.



                           COVENANTS AND OTHER MATTERS

     Cooperation.  The  Parties  shall  cooperate  with each  other and take all
actions necessary or desirable to consummate the

Distribution as contemplated herein.

     Further Acts.  Each of the Parties shall,  at the request of another Party,
execute or cause to be executed such other agreements,  instruments or documents
as may be  necessary  or  desirable  in order to  effect  the  purposes  of this
Agreement.

                  Agreement for Exchange of Information.


     (k)  Each of the Parties shall  provide,  or cause to be provided,  to each
          other, at any time before or after the  Distribution  Date, as soon as
          reasonably practicable after written request therefor, any Information
          (hereinafter  defined) in the  possession or under the control of such
          Party that the requesting  Party  reasonably  needs (i) to comply with
          reporting,  disclosure,  filing or other  requirements  imposed on the
          requesting Party  (including  under  applicable  securities laws) by a
          governmental  authority having jurisdiction over the requesting Party,
          (ii) for use in any  other  judicial,  regulatory,  administrative  or
          other  proceeding or in order to satisfy  audit,  accounting,  claims,
          regulatory,  litigation or other similar requirements, (iii) to comply
          with its  obligations  under this Agreement or (iv) in connection with
          the ongoing  businesses of the Parties,  as the case may be; provided,
          however, that in the event any of the Parties determines that any such
          provision of Information  could be commercially  detrimental,  violate
          any law or  agreement,  or waive any  attorney-client  privilege,  the
          Parties shall take all  reasonable  measures to permit the  compliance
          with  such  obligations  in a manner  that  avoids  any  such  harm or
          consequence.   "Information"   means   information,   whether  or  not
          patentable of  copyrightable,  in written,  oral,  electronic or other
          tangible or intangible forms, stored in any medium, including studies,
          reports, records, books, contracts, instruments, surveys, discoveries,
          ideas,  concepts,  know-how,  techniques,   designs,   specifications,
          drawings,  blueprints,  diagrams,  models,  prototypes,  samples, flow
          charts,  data,  computer  data,  disks,  diskettes,   tapes,  computer
          programs  or  other  software,   marketing   plans,   customer  names,
          communications   by  or  to   attorneys   (including   attorney-client
          privileged  communications),  memos and other  materials  prepared  by
          attorneys or under their direction  (including attorney work product),
          and other technical,  financial,  employee or business  information or
          data.

     (l)  After the Distribution  Date, (i) the Parties each shall maintain,  at
          their own cost and  expense,  adequate  systems and controls for their
          businesses  to the extent  necessary  to enable them to satisfy  their
          reporting,  accounting,  audit  and  other  obligations,  and (ii) the
          Parties  shall  provide  each  other,  or  cause to be  provided,  all
          financial  and  other  data and  information  as may be  requested  or
          determined  necessary  in order to prepare any  financial  statements,
          reports or filings with a governmental authority.

     (m)  To facilitate the possible  exchange of  Information  pursuant to this
          Section 4.3 and other  provisions of this Agreement,  Holding,  Morgan
          and  Brighton  shall use their  reasonable  best efforts to retain all
          Information  in  their   respective   possession  or  control  on  the
          Distribution  Date  substantially  in accordance  with the policies of
          Interactive  as  then  in  effect.  However,  at any  time  after  the
          Distribution  Date,  Holding,  Morgan  or  Brighton  may  amend  their
          respective record retention policies.

     (n)  None of the Parties may destroy any  Information  in  existence on the
          Separation  Date that  falls  under the  categories  listed in Section
          4.3(a) without first using its  reasonable  best efforts to notify the
          other Parties of the proposed  destruction and giving such Parties the
          opportunity  to  take   possession  of  such   Information   prior  to
          destruction.

     (o)  Absent gross negligence or willful  misconduct,  the Parties shall not
          be liable to each other should any  Information  exchanged or provided
          pursuant to this  Section 4.3 be found to be  inaccurate.  The Parties
          shall not be liable to each other should any  Information be destroyed
          or  lost  following   reasonable  best  efforts  to  comply  with  the
          provisions of Section 4.3(d).

     (p)  The rights and obligations  granted under this Section 4.3 are subject
          to any specific  limitations,  qualifications or additional provisions
          on the sharing,  exchange or confidential  treatment of Information as
          set forth in this Agreement.

     Auditors and Audits; Annual and Quarterly Statements and Accounting. Morgan
and  Holding  agree  that,  for so long as  either  party  is  required,  in the
accordance  with United States  generally  accepted  accounting  principles,  to
consolidate the other party's results of operations and financial position:

     Without  Holding's  prior written  consent (which shall not be unreasonably
withheld), Morgan shall not select a different accounting firm from that used by
Holding to serve as its independent  certified  public  accountants  ("Holding's
Auditors")  for purposes of providing an opinion on its  consolidated  financial
statements.

     (q)  Morgan shall provide Holding,  on a timely basis, all Information that
          Holding reasonably  requires to meet its schedule for the preparation,
          printing,  filing,  and public  dissemination  of Holding's annual and
          quarterly financial statements. Without limiting the generality of the
          foregoing,  Morgan shall  provide all required  financial  Information
          with  respect to Morgan to  Holding's  Auditors  in a  sufficient  and
          reasonable time and in sufficient detail to permit Holding's  Auditors
          to take all steps and perform all reviews  necessary  with  respect to
          financial  Information to be included or contained in Holding's annual
          and quarterly financial statements.  Similarly,  Holding shall provide
          Morgan,  on a timely  basis,  all  financial  Information  that Morgan
          reasonably   requires  to  meet  its  schedule  for  the  preparation,
          printing,  filing,  and public  dissemination  of Morgan's  annual and
          quarterly financial statements. Without limiting the generality of the
          foregoing,  Holding shall provide all required  financial  Information
          with  respect to Holding to  Morgan's  auditors  in a  sufficient  and
          reasonable time and in sufficient  detail to permit Morgan's  auditors
          to take all steps and perform all reviews  necessary  with  respect to
          Information  to be  included  or  contained  in  Morgan's  annual  and
          quarterly financial statements.

     (r)  Morgan shall give  Holding,  and Holding  shall give  Morgan,  as much
          prior notice as reasonably practical of any proposed determination of,
          or any significant changes in, its accounting  estimates or accounting
          principles from those in effect on the Distribution Date.

     (s)  Nothing in Sections 4.3 or 4.4 shall  require any Party to violate any
          agreement with any third party regarding  confidential and proprietary
          information  relating to that third party or its  business;  provided,
          however,  that in the event that any Party is required  under Sections
          4.3 or 4.4 to disclose any such Information,  such Party shall use its
          reasonable  best efforts to seek to obtain such third party's  consent
          to disclose such information.

     Payment of Expenses.  All third party costs and expenses in connection with
the Exchange,  the Brighton  Distribution and the Distribution shall be borne by
Interactive.  The Parties shall each be responsible for their own internal fees,
costs and  expenses  incurred in  connection  with the  Exchange,  the  Brighton
Distribution and the Distribution.

     Section 1.2.  Governmental  Approvals.  To the extent that the Distribution
requires any governmental approvals, the Parties shall use their reasonable best
efforts to obtain any such approvals.

     No  Representation  or Warranty  by  Brighton.  Brighton  does not, in this
Agreement or any other  agreement,  instrument or document  contemplated by this
Agreement,  make any  representation as to, warranty of or covenant with respect
to:

     (a)  the value of any asset or thing of value to be  transferred to Holding
          or Interactive; or

     (b)  the  legal  sufficiency  of any  assignment,  document  or  instrument
          delivered  hereunder  to  convey  title to any asset or thing of value
          upon its execution, delivery and filing.

     Intercompany Accounts. Interactive hereby transfers to Holding all accounts
on its books and records,  whether  reflecting a credit or a debit,  relating to
transactions between Morgan and it.

     Competitive  Matters.  No Party shall have any duty to refrain  directly or
indirectly  from (a)  engaging  in the same or  similar  activities  or lines of
business as any other Party;  or (b) doing business with any potential or actual
supplier  or  customer of any other  Party.  No Party shall  solicit or recruit,
without the express  written  consent of any other  Party,  any employee of such
other Party for a period of one year following the Distribution Date.

     Administrative   Services.   Interactive  and  Morgan  shall  provide  such
Administrative  Services  (as  hereinafter  defined) as Holding may from time to
time  reasonably  request  and as the Party to whom the  request is made has the
capacity to provide.  All Administrative  Services shall be billed to Holding at
the  cost  thereof  to  Interactive  or  Morgan,  as the  case  may  be.  Actual
out-of-pocket  expenses  incurred  to  third  parties  in  connection  with  the
Administrative  Services  shall be paid  directly  by Holding or  reimbursed  to
Interactive or Morgan,  if previously  paid by  Interactive  or Morgan.  For the
purposes  hereof,  Administrative  Services  shall  include  without  limitation
clerical,  word processing and secretarial services,  accounting and bookkeeping
services, record keeping and filing services, insurance services, facilities and
custodial  services,  legal  and  paralegal  services,   telecommunications  and
internet services, postal and delivery services.

     Tax Matters. Prior to the Exchange,  Interactive,  Brighton and Holding, on
the one hand and Morgan,  on the other hand, filed separate  Federal,  state and
other tax returns,  and neither filer had any obligation to the other on account
of taxes that might be due and owing to any  taxing  authority.  Nothing in this
Agreement shall create any such obligation, whether in respect of periods ending
before or after the Exchange,  except that from and after the Exchange,  Holding
and  Morgan  shall  file   consolidated  tax  returns  and  shall  allocate  tax
liabilities  between them,  all as shall be more fully provided in a tax matters
agreement to be entered into between them subsequent to the date hereof.



                    ASSIGNMENT OF CERTAIN SERVICES AGREEMENT


     Assignment.  Interactive  hereby assigns to Holding all of its right, title
and interest in and to that  Certain  Services  Agreement  made as of January 1,
1995 (the "Certain  Services  Agreement") by and between Lynch  Corporation  and
Morgan, previously assigned by Lynch Corporation to Interactive.  Holding hereby
accepts  such   assignment   and  agrees  to  perform  all  of  the  duties  and
responsibilities of Interactive thereunder,  subject to the terms and conditions
thereof.

     Consent. Morgan hereby consents to the foregoing assignment and assumption.




                                 INDEMNIFICATION

     Release of  Existing  Claims.  1.  Except as  provided  in Section  6.1(c),
effective as of the Distribution Date, the Interactive Companies (as hereinafter
defined) do hereby, for themselves,  their respective Affiliates, other than the
Morgan  Companies,  successors  and  assigns,  and all Persons  (as  hereinafter
defined)  who at any time  prior  to the date  hereof  have  been  stockholders,
directors,  officers,  agents or employees of the Interactive Companies (in each
case,  in their  respective  capacities  as such),  remise,  release and forever
discharge each of the Morgan Companies,  their respective Affiliates (other than
the Interactive  Companies),  successors and assigns,  and all prior, current or
future  stockholders,  directors,  officers,  agents or  employees of the Morgan
Companies (in each case,  in their  respective  capacities  as such),  and their
respective heirs,  executors,  administrators,  successors and assigns, from any
and all Liabilities whatsoever, whether at law or in equity (including any right
of contribution),  whether arising under any contract or agreement, by operation
of law or otherwise,  existing or arising from all acts and events  occurring or
failing to occur or alleged to have  occurred or to have failed to occur and all
conditions  existing  or alleged to have  existed on or before the  Distribution
Date between the Interactive  Companies and the Morgan Companies  (including any
contractual  arrangements or  arrangements  existing or alleged to exist between
them on or before the Distribution Date).

     Except as provided in Section 6.1(c),  effective as of the date hereof, the
Morgan  Companies do hereby,  for  themselves  and their  respective  Affiliates
(other than the Interactive Companies),  successors and assigns, and all Persons
who at any time  prior to the date  hereof  have been  stockholders,  directors,
officers,  agents or employees of the Morgan  Companies  (in each case, in their
respective  capacities  as such),  remise,  release  and forever  discharge  the
Interactive  Companies,  their  respective  Affiliates  (other  than the  Morgan
Companies),   successors  and  assigns,   and  all  prior,   current  or  future
stockholders,  directors,  officers,  agents  or  employees  of the  Interactive
Companies (in each case,  in their  respective  capacities  as such),  and their
respective heirs,  executors,  administrators,  successors and assigns, from any
and all Liabilities whatsoever, whether at law or in equity (including any right
of contribution),  whether arising under any contract or agreement, by operation
of law or otherwise,  existing or arising from all acts and events  occurring or
failing to occur or alleged to have  occurred or to have failed to occur and all
conditions  existing  or alleged to have  existed on or before the  Distribution
Date between the Morgan Companies and the Interactive  Companies  (including any
contractual  arrangements or  arrangements  existing or alleged to exist between
them on or before the date hereof).

     Nothing  contained  in Section  6.1(a) or (b) shall impair any right of any
Person to enforce this  Agreement.  Nothing  contained in Section  6.1(a) or (b)
shall release any Person from: any Liability,  contingent or otherwise, assumed,
transferred,  assigned or allocated under this Agreement;  or any Liability that
the parties may have with respect to indemnification or contribution pursuant to
this  Agreement,  including any Liability for claims brought against the parties
by third Persons,  which  Liability  shall be governed by the provisions of this
Article VI and Article VII.

Indemnification by the Interactive Companies.  Except as provided in Section 6.5
or elsewhere in this  Agreement,  the  Interactive  Companies  shall  indemnify,
defend and hold  harmless  the  Morgan  Companies  and each of their  respective
directors,  officers and employees (in each case, in their respective capacities
as such), and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "Morgan Indemnitees"), from and against any and all
Liabilities of the Morgan  Indemnitees  relating to, arising out of or resulting
from any of the following items (without duplication):

     the  failure  of the  Interactive  Companies  or any  other  Person to pay,
perform or otherwise  promptly  discharge  any  Liabilities  of the  Interactive
Companies in accordance with their respective  terms,  whether prior to or after
the Distribution Date;

     any  breach  by the  Interactive  Companies  or  either  of  them  of  this
Agreement; and

     any  Liabilities  relating to or arising out of the Exchange,  the Brighton
Distribution or the Distribution.

     Indemnification  by Morgan.  Except as  otherwise  provided in Section 6.5,
Morgan  shall  indemnify,  defend and hold  harmless  Holding,  the  Interactive
Companies  and each of their  respective  directors,  officers and employees (in
each  case,  in their  respective  capacities  as such),  and each of the heirs,
executors,  successors and assigns of any of the foregoing, from and against any
and all  Liabilities  of Holding,  the  Interactive  Companies  and such persons
relating  to,  arising  out of or  resulting  from  any of the  following  items
(without duplication):

     the  failure of Morgan or any other  Person to pay,  perform  or  otherwise
promptly  discharge  any  Liabilities  of Morgan,  whether prior to or after the
Distribution  Date,  including without limitation those relating to, arising out
of or resulting from the action  described  under the caption  "Business - Legal
Proceedings" in the Registration Statement and any and all other actions arising
out of the subject matter thereof; and

     any breach by Morgan of this Agreement.

     Indemnification  by Holding.  Except as otherwise  provided in Section 6.5,
Holding shall  indemnify,  defend and hold harmless  Morgan and the  Interactive
Companies  and each of their  respective  directors,  officers and employees (in
each  case,  in their  respective  capacities  as such),  and each of the heirs,
executors,  successors and assigns of any of the foregoing, from and against any
and all  Liabilities  of Morgan,  the  Interactive  Companies  and such  persons
relating  to,  arising  out of or  resulting  from  any of the  following  items
(without duplication):

     the  failure of Holding or any other  Person to pay,  perform or  otherwise
promptly  discharge any  Liabilities  of Holding,  whether prior to or after the
Distribution Date; and

     any breach by Holding of this Agreement.

     Indemnification Obligations Net of Insurance Proceeds and other Amounts. 1.
The  Parties   intend  that  any  Liability   subject  to   indemnification   or
reimbursement  pursuant to this Article VI will be net of Insurance Proceeds (as
hereinafter   defined)  that  actually  reduce  the  amount  of  the  Liability.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any Person entitled to  indemnification  hereunder (an "Indemnitee") will
be reduced by any Insurance  Proceeds  theretofore  actually  recovered by or on
behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee
receives a payment (an "Indemnity  Payment")  required by this Agreement from an
Indemnifying  Party  in  respect  of any  Liability  and  subsequently  receives
Insurance  Proceeds,  then the Indemnitee will pay to the Indemnifying  Party an
amount equal to the excess of the Indemnity  Payment received over the amount of
the  Indemnity  Payment that would have been due if the  Insurance  Proceeds had
been received, realized or recovered before the Indemnity Payment was made.

     An insurer that would  otherwise be obligated to pay any claim shall not be
relieved of the responsibility  with respect thereto or, solely by virtue of the
indemnification  provisions  hereof,  have any  subrogation  rights with respect
thereto,  it being expressly  understood and agreed that no insurer or any other
third party shall be entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification  provisions) by virtue
of the  indemnification  provisions hereof.  Nothing contained in this Agreement
shall obligate any Party to seek to collect or recover any Insurance Proceeds.

     Procedures for  Indemnification  of Third Party Claims. 1. If an Indemnitee
shall receive notice or otherwise learn of the assertion by a Person,  including
any Governmental Authority, who is not a Party to this Agreement of any claim or
of the  commencement by any such Person of any Action (as  hereinafter  defined)
(in either case, a "Third  Party  Claim") with respect to which an  Indemnifying
Party may be obligated to provide indemnification to such Indemnitee pursuant to
Section 6.2, 6.3 or 6.4, or any other Section of this Agreement, such Indemnitee
shall give such  Indemnifying  Party written notice thereof within 20 days after
becoming  aware of such Third Party Claim.  Any such notice  shall  describe the
Third Party Claim in  reasonable  detail.  Notwithstanding  the  foregoing,  the
failure of any  Indemnitee  or other  Person to give  notice as provided in this
Section  6.6(a)  shall  not  relieve  the  related  Indemnifying  Party  of  its
obligations  under this Article VI, except to the extent that such  Indemnifying
Party is actually prejudiced by such failure to give notice.

     An  Indemnifying  Party may elect to defend (and,  unless the  Indemnifying
Party  has  specified  any  reservations  or  exceptions,  to seek to  settle or
compromise),  at such Indemnifying  Party's own expense and by such Indemnifying
Party's own counsel,  any Third Party Claim. Within 30 days after the receipt of
notice from an Indemnitee in accordance  with Section 6.6(a) (or sooner,  if the
nature of such Third  Party Claim so  requires),  the  Indemnifying  Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility  for  defending  such Third Party  Claim,  which  election  shall
specify any reservations or exceptions.  After notice from an Indemnifying Party
to an  Indemnitee  of its election to assume the defense of a Third Party Claim,
such  Indemnitee  shall  have  the  right  to  employ  separate  counsel  and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the  fees  and  expenses  of  such  counsel  shall  be the  expense  of such
Indemnitee  except as set  forth in the next  sentence.  In the  event  that the
Indemnifying  Party has  elected to assume the  defense of the Third Party Claim
but has specified,  and continues to assert,  any  reservations or exceptions in
such notice,  then, in any such case,  the  reasonable  fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

     If an Indemnifying Party elects not to assume  responsibility for defending
a Third  Party  Claim,  or fails to  notify an  Indemnitee  of its  election  as
provided in Section 6.6(b), such Indemnitee may defend such Third Party Claim at
the cost and expense of the Indemnifying Party.

     Unless the Indemnifying Party has failed to assume the defense of the Third
Party Claim in accordance  with the terms of this  Agreement,  no Indemnitee may
settle  or  compromise  any  Third  Party  Claim  without  the  consent  of  the
Indemnifying Party, which consent shall not be unreasonably withheld.

                  No Indemnifying Party shall consent to entry of any judgment
or enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.

     Additional  Matters.  1. Any claim on account of a Liability  that does not
result from a Third Party Claim shall be asserted by written notice given by the
Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have
a period of 30 days after the  receipt of such  notice  within  which to respond
thereto.  If such Indemnifying Party does not respond within such 30-day period,
such Indemnifying Party shall be deemed to have refused to accept responsibility
to make payment.  If such Indemnifying Party does not respond within such 30-day
period or rejects such claim in whole or in part, such Indemnitee  shall be free
to pursue such  remedies as may be  available to such party as  contemplated  by
this Agreement.

     In the event of  payment by or on behalf of any  Indemnifying  Party to any
Indemnitee in connection  with any Third Party Claim,  such  Indemnifying  Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or  circumstances in respect of which such Indemnitee may have any right,
defense or claim  relating  to such Third Party  Claim  against any  claimant or
plaintiff  asserting  such Third Party Claim or against any other  person.  Such
Indemnitee shall cooperate with such Indemnifying  Party in a reasonable manner,
and at the cost and expense  (including  allocated costs of in-house counsel and
other  personnel) of such  Indemnifying  Party,  in  prosecuting  any subrogated
right, defense or claim.

     In the event of an Action  in which the  Indemnifying  Party is not a named
defendant,  if the  Indemnifying  Party  shall so  request,  the  parties  shall
endeavor to substitute the Indemnifying  Party for the named defendant if at all
practicable.  If such substitution or addition cannot be achieved for any reason
or is not requested,  the named defendant shall allow the Indemnifying  Party to
manage the Action as set forth in this Section and the Indemnifying  Party shall
fully  indemnify the named  defendant  against all costs of defending the Action
(including court costs, sanctions imposed by a court,  attorneys' fees, experts'
fees and all other external expenses),  the costs of any judgment or settlement,
and  the  cost  of  any  interest  or  penalties  relating  to any  judgment  or
settlement.

     Remedies  Cumulative.  The  remedies  provided in this  Article VI shall be
cumulative  and,  subject to the  provisions of Section 8.3,  shall not preclude
assertion  by any  Indemnitee  of any other rights or the seeking of any and all
other remedies against any Indemnifying Party.

     Survival of Indemnities.  The rights and obligations of each of the Parties
and their  respective  Indemnitees  under  this  Article  VI shall  survive  the
Distribution  and the sale or other  transfer  by any  Party  of any  assets  or
businesses or the assignment by it of any Liabilities.

     Unavailability of Indemnity.  If the  indemnification  provided for in this
Article VI is held by a court of competent  jurisdiction to be unavailable to an
Indemnitee with respect to any Liabilities  referred to herein, the Indemnifying
Party, in lieu of indemnifying such Indemnitee  hereunder,  agrees to contribute
to the amount paid or payable by such  Indemnitee as a result of such  Liability
in such  proportion  as is  appropriate  to reflect  the  relative  fault of the
Indemnifying  Party on one hand and of the Indemnitee on the other in connection
with the event that resulted in such  Liability,  as well as any other  relevant
equitable considerations.



                              CERTAIN DEFINED TERMS

     Defined  Terms.   For  the  purposes  of  this  Agreement,   the  following
capitalized terms shall have the following meanings:


     "Action" means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any federal,  state, local,  foreign or
international Governmental Authority or any arbitration or mediation tribunal.

     "Affiliate" of any Person means a Person that  controls,  is controlled by,
or is under common control with such Person. As used herein, "control" means the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction  of the  management  and  policies  of such  entity,  whether  through
ownership of voting securities or other interests, by contract or otherwise.

     "Governmental Authority" means any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.

     "Insurance Proceeds" means those monies:

     received by an insured from an insurance carrier; or

     paid by an insurance carrier on behalf of the insured;

in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
incurred in the collection thereof.

         "Interactive Companies" means Interactive and Brighton.

     "Liabilities" means any and all losses,  claims,  charges,  debts, demands,
actions,  causes of action, suits,  damages,  obligations,  payments,  costs and
expenses, sums of money, accounts,  reckonings, bonds, specialties,  indemnities
and similar  obligations,  exonerations,  covenants,  contracts,  controversies,
agreements,  promises,  doings,  omissions,  variances,  guarantees,  make whole
agreements  and  similar  obligations,  and  other  liabilities,  including  all
contractual obligations,  whether absolute or contingent,  matured or unmatured,
liquidated or  unliquidated,  accrued or unaccrued,  known or unknown,  whenever
arising,  and including those arising under any law, rule,  regulation,  Action,
threatened or contemplated  Action (including the costs and expenses of demands,
assessments,   judgments,  settlements  and  compromises  relating  thereto  and
attorneys' fees and any and all costs and expenses (including allocated costs of
in-house  counsel  and  other  personnel),  whatsoever  reasonably  incurred  in
investigating,  preparing or defending against any such Actions or threatened or
contemplated Actions),  order or consent decree of any Governmental Authority or
any award of any arbitrator or mediator of any kind, and those arising under any
contract,  commitment  or  undertaking,   including  those  arising  under  this
Agreement,  in each case, whether or not recorded or reflected or required to be
recorded or reflected on the books and records or  financial  statements  of any
Person.

     "Morgan Companies" means Morgan and Holding.

     "Person"  means  an  individual,  a  general  or  limited  partnership,   a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.



                                  MISCELLANEOUS

     Entire Agreement.  This Agreement  constitutes the entire agreement between
the Parties with respect to the subject  matter  hereof and shall  supersede all
prior   written  and  oral  and  all   contemporaneous   oral   agreements   and
understandings with respect to the subject matter hereof.

     Section 1.3. Governing Law. This Agreement shall be construed in accordance
with and all  disputes  hereunder  shall be governed by the laws of the State of
New York, except that body of law relating to choice of laws.

                  Dispute Resolution.

     If a dispute,  controversy or claim (a "Dispute") arises between any two or
more of the  Parties  relating  to the  interpretation  or  performance  of this
Agreement,   or  the   grounds   for   the   termination   hereof,   appropriate
representatives of each Party who shall have the authority to resolve the matter
shall meet to attempt in good faith to  negotiate  a  resolution  of the Dispute
prior to pursuing  other  available  remedies.  If the  representatives  of such
Parties are unable to resolve the Dispute and either  party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable  mediator appointed pursuant to the mediation rules of JAMS/Endispute
within  30 days  after  written  notice  by one  Party  to the  other  demanding
non-binding  mediation.  Neither party may unreasonably  withhold consent to the
selection of a mediator or the  location of the  mediation.  Both Parties  shall
share the costs of the mediation equally,  except that each Party shall bear its
own  costs  and  expenses,  including  attorney's  fees,  witness  fees,  travel
expenses, and preparation costs. The Parties may also agree to replace mediation
with some other form of non-binding or binding ADR.

     Any Dispute that the Parties cannot  resolve  through  mediation  within 60
days  after one  Party's  demand for  non-binding  mediation,  unless  otherwise
mutually agreed,  shall be submitted to final and binding  arbitration under the
then  current   Commercial   Arbitration  Rules  of  the  American   Arbitration
Association   ("AAA"),  by  three  arbitrators  in  New  York,  New  York.  Such
arbitrators shall be selected by the mutual agreement of the Parties or, failing
such  agreement,  shall be selected  according to the aforesaid  AAA rules.  The
arbitrators  shall be  instructed  to prepare  and  deliver a written,  reasoned
opinion  stating  their  decision  within 30 days  after the  completion  of the
arbitration.  The  prevailing  party in such  arbitration  shall be  entitled to
expenses, including costs and reasonable attorneys' and other professional fees,
incurred in connection  with the  arbitration  (but excluding any costs and fees
associated with prior negotiation or mediation).  The decision of the arbitrator
shall be final and  non-appealable,  absent fraud or manifest error,  and may be
enforced in any court of competent  jurisdiction.  The use of any ADR procedures
will not be  construed  under the  doctrine  of laches,  waiver or  estoppel  to
adversely affect the rights of either party.

     Any Dispute  regarding  the  following  is not  required to be  negotiated,
mediated  or  arbitrated  prior to  seeking  relief  from a court  of  competent
jurisdiction:  breach of any obligation of  confidentiality;  or any other claim
where interim relief from the court is sought to prevent serious and irreparable
injury to one of the Parties or to others.  However,  the Parties to the Dispute
shall make a good faith effort to negotiate and mediate such Dispute,  according
to the above procedures, while such court action is pending.

     Unless  otherwise  agreed in writing,  the Parties will continue to provide
service and honor all other  commitments  under this Agreement during the course
of dispute  resolution  pursuant  to the  provisions  of this  Section  8.3 with
respect to all matters not subject to such dispute, controversy or claim.

     Section  1.4.  Termination.  This  Agreement  may  be  terminated  and  the
Distribution abandoned at any time prior to the Distribution

     Date  by and  in the  sole  discretion  of  Interactive.  In the  event  of
termination pursuant to this Section 8.4, none of the Parties shall be liable to
each other.

     Section 1.5. Notices.  Notices,  offers,  requests or other  communications
required or permitted to be given by any of the Parties -------  pursuant to the
terms of this Agreement shall be given in writing to the respective party at the
following addresses:

         if to Interactive:

                  Lynch Interactive Corporation
                  401 Theodore Fremd Avenue
                  Rye, New York 10580
                  Attention:  Chief Financial Officer
                  Fax:  (914) 921-6410

         if to Brighton:

                  Brighton Communications Corporation
                  401 Theodore Fremd Avenue
                  Rye, New York 10580
                  Attention:  Chief Financial Officer
                  Fax:  (914) 921-6410



<PAGE>





         if to Morgan:

                  The Morgan Group, Inc.
                  2746 Old U.S. 20 West
                  Elkhart, Indiana 46514
                  Attention:  Chief Financial Officer
                  Fax:  (800) 285-0828

         if to Holding:

                  Morgan Group Holding Co.
                  401 Theodore Fremd Avenue
                  Rye, New York 10580
                  Attention:  Chief Financial Officer
                  Fax:  (914) 921-6410

or to such  other  address  as the  party  to whom  notice  is  given  may  have
previously  furnished to the other  Parties in writing as provided  herein.  Any
notice  involving  breach shall be sent by hand delivery,  recognized  overnight
courier  or,  within the United  States,  via  certified  mail,  return  receipt
requested.  All other  notices may also be sent by fax or first class mail.  All
notices shall be deemed to have been given and received on the earlier of actual
delivery or five days after the date of postmark.

     Limitation on Liability. In no event shall any Party be liable to any
other Party for any special, consequential, indirect, incidental or punitive
damages or lost profits, however caused and on any theory of liability arising
in any way out of this Agreement; provided, however, that the foregoing
limitation shall not limit a Party's indemnification obligations pursuant to
Article VI hereof.

     Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but  all of which shall constitute
one and the same agreement.

     Section 1.6. Binding Effect; Assignment.  This Agreement shall inure to the
benefit  of  and  be  binding  upon  the   Parties,   their   respective   legal
representatives  and their  successors.  None of the  Parties  may  assign  this
Agreement  or any rights or  obligations  hereunder,  without the prior  written
consent of the other Parties.

     Section 1.7. Severability. If any term or other provision of this Agreement
is  determined  by a court,  administrative  agency or arbitrator to be invalid,
illegal or incapable of being enforced by any rule of law or public policy,  all
other conditions and provisions of this Agreement shall  nevertheless  remain in
full  force  and  effect  so long as the  economic  or  legal  substance  of the
transactions  contemplated  hereby are not  affected  in any  manner  materially
adverse to any of the Parties.  Upon such  determination  that any term or other
provision is invalid,  illegal or incapable of being enforced, the Parties shall
negotiate  in good faith to modify this  Agreement  so as to effect the original
intent of the Parties as closely as possible in an acceptable  manner to the end
that  transactions  contemplated  hereby are  fulfilled  to the  fullest  extent
possible.

     Section 1.8.  Failure or Indulgence  Not Waiver;  Remedies  Cumulative.  No
failure or delay by any of the Parties to  exercise  any right  hereunder  shall
impair such right or be  construed  to be a waiver of, or  acquiescence  in, any
breach of any representation, warranty or agreement herein, nor shall any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

     Section  1.9.  Amendment.  No  change  or  amendment  may be  made  to this
Agreement  except by an  instrument  in writing  signed on behalf of each of the
Parties.

     Section 1.10.  Authority.  Each of the Parties represents to the other that
(a) it has the  corporate  or other  requisite  power and  authority to execute,
deliver and perform this Agreement, (b) the execution,  delivery and performance
of this Agreement by it have been duly authorized by all necessary  corporate or
other  actions,  (c) it  has  duly  and  validly  executed  and  delivered  this
Agreement,  and (d) this  Agreement  is a legal,  valid and binding  obligation,
enforceable  against  it in  accordance  with its terms  subject  to  applicable
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting creditors' rights generally and general equity principles.

     Section 1.11. Interpretation.  The headings contained in this Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of this Agreement.

            [The remainder of this page is intentionally left blank]


<PAGE>



         WHEREFORE, the Parties have signed this Separation and Distribution
Agreement effective as of the date first set forth above.

                          LYNCH INTERACTIVE CORPORATION

                          By: /s/Robert E. Dolan
                                 Title: Chief Financial Officer


                                 BRIGHTON COMMUNICATIONS CORPORATION
                                 By: /s/Robert E. Dolan
                                 Title: President


                                 THE MORGAN GROUP, INC.


                                 By: /s/Gary J. Klusman
                                 Title: Executive Vice President
                                        Finance and Administration


                                 MORGAN GROUP HOLDING CO.


                                 By: /s/Robert E. Dolan
                                 Title: Chief Financial Officer




<PAGE>





                             Morgan Group Securities


         161,100 shares of the Class A Common Stock of Morgan

         warrants to purchase 161,100 shares of
         Class A Common Stock of Morgan

         2,200,000 shares of the Class B Common Stock of Morgan

         warrants to purchase 2,200,000 shares of
         Class B Common Stock of Morgan