EMPLOYMENT AGREEMENT
 
                  AGREEMENT made this 9th day of February, 1999 (the "Effective
Date") by and between Gabelli Asset Management Inc. (the "Company"), a New York
corporation, and Mario J. Gabelli (the "Executive").
 
                  WHEREAS, the Executive has served as an executive of the
Company since the inception of the Company and its predecessors in 1976.
 
                  WHEREAS, the Executive's skills, position, knowledge and
expertise in the management of portfolios such as those managed by the Company
are unique.
 
                  WHEREAS, the Company is dependent upon the efforts of the
Executive, in the capacities described herein in which he serves, and as the
primary portfolio manager for a significant majority of the Company's assets
under management.
 
                  WHEREAS, the loss of the Executive's services would have a
material adverse effect on the Company.
 
                  WHEREAS, since the inception of the Company and its
predecessors in 1976, the Executive has received an incentive-based management
fee of twenty percent (20%) of the pre-tax profits, if any, as computed for
financial reporting purposes in accordance with generally accepted accounting
principles as applied by the Company and its subsidiaries and consolidated
affiliates for financial reporting purposes (together, "Subsidiaries") from time
to time, for each fiscal year of each of the operating divisions of the Company
and each of its Subsidiaries before consideration of this fee, less applicable
payroll and tax deductions, accrued monthly and payable at least annually.
 
                  WHEREAS, the Company desires that the Executive continue to
serve as an executive of the Company and the Executive is willing to continue to
serve as an executive under the terms and conditions set forth herein.
 
                  WHEREAS, the Company desires that the Executive receive a
management fee to provide an incentive for the achievement of the Company's
performance goals and the enhancement of shareholder value.
 
                  NOW THEREFORE, in consideration of the foregoing and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:
 
         1. EMPLOYMENT.
 
         The Company hires and employs the Executive, and the Executive agrees
to work for the Company, under the terms and conditions set forth herein.
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         2. DUTIES.
 
         The Executive shall serve as Chairman of the Board, Chief Executive
Officer and Chief Investment Officer of the Company, as an executive in various
capacities for certain of the Company's Subsidiaries as determined by the
Executive, and as Portfolio Manager for certain investment companies and
separate accounts managed by the Company and its Subsidiaries as determined by
the Executive. The Executive or the Company may at any time limit or terminate
the Executive's service in one or more of the capacities referred to above.
 
         3. TERM.
 
         The term of this Agreement shall commence on the Effective Date. This
Agreement shall continue so long as the Executive is performing any of the
services described in Paragraph 2 above.
 
         4. FEES FROM REVENUE GENERATING ACTIVITIES (REVENUE FEES).
 
         For managing or overseeing the management of investment companies or
partnerships, attracting mutual fund accounts or partnership investments,
attracting or managing separate accounts, providing investment banking services,
acting as a broker or otherwise generating revenues for the Company or its
Subsidiaries, the Executive will be paid a percentage of the revenues or net
profits related to or generated by such business activities, in a manner and at
payment rates as agreed to from time to time by the Executive and the Company or
the affected Subsidiaries, which rates have been and generally will be the same
as those received by other professionals in the Company or the affected
Subsidiaries performing similar services.
 
         5. INCENTIVE-BASED MANAGEMENT FEE (THE MANAGEMENT FEE).
 
         Commencing on the Effective Date, the Executive will be entitled to
receive an incentive-based management fee in the amount of ten percent (10%) of
the aggregate annual pre-tax profits, if any, as computed for financial
reporting purposes in accordance with generally accepted accounting principles
as applied by the Company and its Subsidiaries from time to time, of the Company
and each of its Subsidiaries before consideration of this fee or the deferred
payment pursuant to Paragraph 6 below or any employment taxes thereon, less
applicable payroll and tax deductions, accrued monthly and payable at least
annually (the "Management Fee"). A committee or subcommittee (comprised solely
of independent directors) of the Board of Directors of the Company will review
at least annually all Management Fee payments for compliance with the terms
hereof. In the event that the Executive is no longer an executive of the Company
or is no longer devoting the substantial majority of his working time to the
business of the Company and its Subsidiaries, the Executive's right to accrue
any additional Management Fee payments will terminate. The Management Fee is
separate and distinct from the Executive's
 
 
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revenue fees pursuant to Paragraph 4 above.
 
         6. DEFERRED PAYMENT.
 
         The Company shall pay the Executive the amount of fifty million dollars
($50,000,000) on January 2, 2002 (the "Payment Date"), and shall pay the
Executive interest on such amount quarterly from the Effective Date to the
Payment Date at the annual rate of six percent (6%). The Company's obligation to
make this deferred payment is not contingent in any respect, including on the
Executive's continued employment status or affiliation with the Company.
 
         7. EXTENT OF SERVICE-RESTRICTIVE COVENANT.
 
         During the term of this Agreement, the Executive shall not provide
investment management services for compensation other than in his capacity as an
officer or employee of the Company or its Subsidiaries, except to (a) the funds
(which serve no investors other than those as of the date of the initial
offering to the public of shares of Class A Common Stock of the Company which
offering is registered with the Securities and Exchange Commission under the
Securities Act of 1933 (the "IPO Date") or their successors, heirs, donees or
immediate family) and accounts managed by the Executive outside the Company
under performance fee arrangements as of the IPO Date, and (b) successor funds
and accounts ("New Outside Accounts") which funds serve no investors other than
those in the funds referred to in clause (a) or their successors, heirs, donees
or immediate family and which accounts are for no investors other than those
having an interest in the accounts referred to in clause (a) or their
successors, heirs, donees or immediate family, which funds and accounts operate
according to an investment style similar to such other funds or accounts, which
style is not used at the Company as of the IPO Date, and which are subject to
performance fee arrangements (collectively, "Permissible Accounts"). Prior to
providing investment management services for compensation to any New Outside
Accounts during the term hereof, the Executive agrees to have a committee or
subcommittee (comprised solely of independent directors) of the Board of
Directors of the Company review any proposed New Outside Accounts for compliance
with the terms hereof and accept the determination of such committee or
subcommittee as final. The Company understands that Mario J. Gabelli intends to
serve as a director, Chairman of the Board, Chief Executive Officer and Chief
Investment Officer of Gabelli Group Capital Partners, Inc. and be compensated
for such service, and the Company agrees that such service and compensation is
permissible under this Agreement.
 
         8. NON-COMPETE AGREEMENT.
 
         The Company has undertaken its activities with the expectation that the
Executive will continue to be available to it, and shall not compete with it,
including but not limited to taking necessary and appropriate steps to issue
securities of the Company to the public. In this regard, the Company and the
Executive agree that the Executive's skills, position,
 
 
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<PAGE>   4
knowledge and expertise in the offices and positions entrusted to him by the
Company are unique and of high value to the Company, that he excels at his work,
that the loss of the Executive's services would have a material adverse effect
upon the Company, and that the replacement of the Executive would be impossible.
Accordingly, for five years from the IPO Date, whether or not the Executive
remains employed by the Company during this period, the Executive shall not
provide investment management services for compensation other than in his
capacity as an officer or employee of the Company or its Subsidiaries, except to
Permissible Accounts. Prior to providing investment management services for
compensation to any New Outside Accounts during this five-year period, the
Executive agrees to have a committee or subcommittee (comprised solely of
independent directors) of the Board of Directors of the Company review any
proposed New Outside Accounts for compliance with the terms hereof and accept
the determination of such committee or subcommittee as final.
 
         The Executive and the Company agree that the covenants contained in
this Paragraph 8 are reasonable under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraints are not
reasonable in any respect, such court shall have the right, power and authority
to excuse or modify such provision or provisions thereof as to the court shall
not appear reasonable and to enforce the remainder of the covenant as so
amended. The Executive acknowledges that any breach of the covenants contained
herein would irreparably injure the Company. Accordingly, the Company may, in
addition to pursuing any other remedies it may have in law or in equity, obtain
an injunction against the Executive from any court having jurisdiction over the
matter, restraining any further violation of this Agreement by the Executive.
 
         9. BENEFITS.
 
         The Executive shall be entitled to participate in all group health and
insurance programs and all other fringe benefit or retirement plans which the
Company may, in its sole and absolute discretion, elect to make available to its
senior executives generally, provided that the Executive meets the
qualifications therefor.
 
         10. REIMBURSEMENT OF EXPENSES.
 
         The Company shall reimburse the Executive for all reasonable and
legitimate business expenses incurred after the date of employment by the
Executive while conducting business, provided that the Executive submits
vouchers for such expenses in a manner and form prescribed from time to time by
the Company, except that up to $50,000 per year of such expenses may be
non-accountable.
 
         11. ASSIGNABILITY CLAUSE.
 
         This Agreement is binding upon the Company, its successors and assigns,
but this Agreement may not be assigned by the Executive.
 
 
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         12. GOVERNING LAW.
 
         This Agreement shall be governed by the law of the State of New York,
without giving effect to the principles of conflicts of laws thereof. The
Executive and the Company agree that any claim arising hereunder shall be
brought before the state or federal courts sitting in New York, New York, and
the Executive and the Company each consent to jurisdiction and venue in New
York, New York, as being proper and appropriate for the resolution of any such
claim.
 
         13. ENTIRE AGREEMENT; MODIFICATION.
 
         This Agreement supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, written or oral, of the parties
hereto, relating to the matters covered by this Agreement. This Agreement may
not be modified or amended except by a further written instrument duly executed
by the Executive and the Company with the approval of a committee or
subcommittee (comprised solely of independent directors) of the Board of
Directors of the Company.
 
         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
 
 
___________________________________________
Mario J. Gabelli
 
GABELLI ASSET MANAGEMENT INC.
 
By:________________________________________