<PAGE>
 
                                                                 EXHIBIT 10.4
                             Agreement of Employment
                                     Between
                                 Craig J. Kelbel
                                       And
                            US Facilities Corporation
                                 ---------------

         This Agreement is made at Costa Mesa, California, and shall be
effective as of the 1st day of November, 1996, between US Facilities
Corporation, a Delaware corporation (the "Company"), and Craig J. Kelbel (the
"Executive"). In consideration of the respective promises and mutual covenants
and agreements of the parties which are set forth herein, and intending to be
legally bound thereby, the parties hereby agree as set forth below.

Section 1.        Employment
         The Company hereby agrees to employ the Executive and the Executive
hereby agrees to be employed by and to serve the Company on the terms and
conditions as set forth in this Agreement.

Section 2.        Period of Employment
         This Agreement will commence and be effective as of November 1, 1996,
and shall expire and terminate as of October 31, 1999.

Section 3.        Position and Duties
         The Executive shall serve the Company as a Senior Vice President and as
the President and Chief Operating Officer of its USBenefits Insurance Services,
Inc. subsidiary ("USB"), with the duties, responsibilities, authority, rights
and privileges which normally attach to those offices; and shall have such
additional duties, powers, responsibilities and authority as may be delegated or
assigned to Executive from time to time by the Company's Chief Executive
Officer. Executive's services shall be performed on behalf of the Company in
consonance with the Company's Certificate of Incorporation and its Bylaws, and
Executive shall be subject at all times to the supervision, direction and
control of the Company's Chief Executive Officer and its Board of Directors.

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Section 4.        Devotion of Time and Best Efforts
         Executive agrees that during the period of his employment he will
devote the substantial portion of his working and productive time, attention,
energies, abilities, skill and efforts to the business affairs of the Company;
and he will diligently exert his best efforts to the promotion, development and
best interest of the Company and its affiliates (including all subsidiaries),
and will faithfully and diligently perform all of the duties incident to his
positions. It is recognized by the Company that Executive, during his employment
period, may have certain personal business activities and enterprises, and the
Company accepts that a relatively minor portion of any given business day may be
spent by Executive attending to such personal business affairs. The Company
acknowledges that such activities will not interfere with the performance of
Executive's duties under this Agreement; and Executive agrees that he will spend
such time in the daily performance of his duties under this Agreement as an
executive in the same industry with similar positions and responsibilities would
spend on behalf of his employer; provided, however, during the term of his
employment Executive, as hereinafter set forth, will not, directly or
indirectly, promote, participate or engage in any activities, whether as a
partner, employee, creditor, shareholder or otherwise, in any business which
shall in any way be competitive or constitute a conflict of interest with the
Company's business.

Section 5.        Place of Performance
         Executive's duties and responsibilities shall be performed primarily at
the Company's offices in Costa Mesa, California, except for such travel as may
be required to be undertaken on behalf of the Company's business. The Company
may not relocate the Executive for purposes of his employment under this
Agreement without the express agreement by the Executive to such relocation.

Section 6.        Salary Compensation Payable to Executive
         In consideration of Executive's services, the Company shall pay to the
Executive a salary at the rate of not less than Two Hundred Thirty-One Thousand
Five Hundred Twenty-Nine Dollars and Ninety-Two Cents ($231,529.92) per annum,
in equal installments as nearly as practicable, on the fifteenth (15th) and the
last day of each month in arrears, or otherwise in conformity with the Company's
prevailing payroll practices and policies which are in effect from time to time.
At least once each year, at some date prior to each anniversary date of this

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Agreement, the Chief Executive Officer shall (i) review the annual salary being
paid to Executive which is then in effect, (ii) determine whether any increase
thereto may be appropriate and (iii) recommend any such adjustment to the
Compensation Committee of the Board of Directors. The amount of annual salary
being paid to the Executive by the Company may be adjusted upward as hereinabove
provided, and such adjustment shall not require a written amendment to this
Agreement, nor shall such upward salary adjustment affect any other provisions
of this Agreement, which shall remain in effect unless changed by a written
amendment hereto; provided, further, that any reference in this Agreement to
amounts payable to Executive pursuant to this Section 6 shall refer to the
annual salary payable to Executive as then in effect, whether or not adjusted
pursuant to a written amendment to this Agreement. It is specifically agreed to
that Executive's salary shall not be decreased at any time during the term of
this Agreement. Compensation of the Executive by salary payments shall not be
deemed to be exclusive, and shall not prevent Executive from participating in
other bonus, compensation, incentive or benefit plans of the Company. The salary
payments hereunder shall not in any way limit or reduce any other obligation of
the Company under this Agreement.

Section 7.        Additional Benefits
         7.01 General:  During the period of his employment, Executive shall be
entitled to receive all other benefits of employment generally available to the
Company's senior executive officers, and shall have the same rights and
privileges to participate in any employee benefits as any other employee of the
Company. Specifically, nothing contained in this Agreement is intended to or
shall be deemed to be granted to Executive in lieu of whatever rights and
privileges which Executive may be entitled to receive as a regular employee and
as a senior executive officer of the Company. Such general employment benefits
include but are not limited to the Company's group medical, hospital, life and
disability insurance plans, the Company's pension, retirement, stock option and
salary incentive plans, the Company's long-term and short-term bonus and
incentive plans, as well as other forms of compensation arrangements which may
now be in effect or which may hereafter be adopted by the Company during the
period of Executive's employment. In addition, Executive shall be entitled to an
annual paid vacation and to such amount of paid sick leave in accordance with
the Company's policies on these matters

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for senior  executives,  so that Executive's  normal salary then in effect shall
continue to be paid to him during such vacation and sick leave periods.

         7.02  Company Automobile or Car Allowance: During the period of
Executive's employment, the Company will either (i) furnish an automobile to
Executive of a type to be mutually agreed upon by Executive and the Company's
Chief Executive Officer, which automobile shall be for Executive's use in
connection with the Company's business, and for which the Company shall provide
insurance coverage as well as costs for its operation and maintenance; or (ii)
grant to Executive a monthly automobile allowance in an amount to be mutually
agreed upon by Executive and the Company's Chief Executive Officer, which
allowance will be used to provide an automobile of a type to be mutually upon by
Executive and the Company's Chief Executive Officer, and which allowance shall
be used by Executive to pay for insurance coverage as well as all costs for the
automobile's operation and maintenance. Executive agrees that he will be
responsible for any federal or state income taxes that may be incurred by
Executive to the extent applicable which result from Executive's use of such
automobile, as reflected on Executive's W-2 Form from the Company.

         7.03  Expense Reimbursement: The Company agrees that during the period
of employment described in this Agreement, Executive is authorized to incur
ordinary and necessary expenses in connection with the promotion, operation and
furtherance of the business affairs of the Company, including expenses incurred
for purposes of entertainment, professional memberships, dues and subscriptions,
travel, as well as educational/professional meetings as shall, in Executive's
judgment, be required for the effective and efficient performance of the
Executive's duties. In accordance with normal Company policy, Executive shall
also be permitted to use credit cards issued in the Company's name for such
business expenses and to take an advance monetary allowance prior to any such
expenditure. However, any business expenditures and expenses which are paid in
the first instance by the Executive shall be reimbursed to the Executive by the
Company upon presentation by the Executive to the Company, not less often than
monthly, of an itemized account of such expenditures, together with receipts and
vouchers. All travel by Executive for Company purposes shall be of such class

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and all hotels shall be of such quality in compliance with the Company's  policy
on this matter for its senior executives.

         7.04     Club Membership: Subject to approval by the Company's Chief
Executive Officer, during the period of Executive's employment, the Company
shall provide for Executive's membership in various clubs through the payment of
the monthly and annual dues as well as the initial membership fee required for
such membership. In addition, the Executive shall have the right to incur
monthly charges, and the Company will pay such monthly charges for entertainment
at the said clubs when such entertainment is for and on behalf of the Company.

         7.05     Indemnification:
                  (a) Maximum Permitted Plus Insurance: The Company shall, to
the maximum extent permitted by law, indemnify and hold Executive harmless
against expenses, including reasonable attorneys' fees, judgments, fines,
settlements and other amounts actually incurred in connection with any
proceeding arising by reason of Executive's employment by the Company. The
Company shall advance to Executive any expenses incurred in defending such
proceeding, to the maximum extent permitted by law. In addition, the Company
shall make every reasonable effort to secure and maintain directors and officers
liability insurance on behalf of the Executive against any liability asserted
against or incurred by Executive arising out of his employment by the Company.
Such insurance shall not discharge the Company from its obligation to provide
the Executive with the maximum indemnification permitted by law.

                  (b) No Decrease and Continuing Effect: The Company agrees that
the rights, benefits and the protections now afforded to officers and directors
of the Company, whether through the Company's Certificate of Incorporation or
its Bylaws, or by resolutions of its Board of Directors, operation of law or by
any other source (i) shall not be diminished (but may be expanded) during the
Executive's term of employment under this Agreement; and (ii) shall be continued
to be kept in full force and effect after the Executive's employment has
terminated for such additional period of time as may be necessary until any
cause of action for which indemnification would otherwise be available is barred
by the applicable statute of limitations.

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         7.06  Estate Planning Reimbursement: Recognizing the importance to the
Company of Executive's peace of mind, so that Executive's major efforts will be
more directly focused toward those business affairs of the Company which require
his attention, the Company agrees that during the term of employment described
in this Agreement it will reimburse to the Executive the expense incurred by
Executive arising from or in connection with Executive's estate planning. For
purposes of such reimbursement, estate planning shall include, but not be
limited to, the establishment of inter vivos or testamentary trusts, the
preparation of a Last Will and Testament, or similar testamentary arrangements,
and any and all other documents required in connection with the above. Any
amount to be reimbursed to Executive under this Section 7.06 for estate planning
expenses which exceeds $5,000 shall be subject to approval by the Chief
Executive Officer of the Company.

Section 8.        Death or Disability
         8.01  Payment: In the event of the death or disability (as hereinafter
defined) of Executive during the period of Executive's employment, the Company
will pay to the Executive, or to the Executive's estate, or to any other person
whom the Executive shall have designated by written notice to the Company for
that purpose, a sum equal to the amount of compensation or other payments
remaining due to Executive under Section 6 for a period of one (1) year under
this Agreement and due to Executive under Section 7 of this Agreement. Any
amounts payable hereunder shall be made in accordance with the Company's normal
payroll policies and procedures.

         8.02  Definition of "Disability": The term "disability" in this
Agreement for purposes of this section shall mean the inability of the Executive
to perform the normal functions, duties and responsibilities as required for his
position under this Agreement due to his incapacity, whether such incapacity
arises from physical or mental illness or injury. In order to determine any
issue relating to the question of disability, the Company shall have the right
to require that Executive submit to a medical examination by a licensed
physician who shall be mutually agreed upon and selected by the Executive and
the Company. The Company shall also have the right to carry disability insurance
on the Executive to provide for its obligations under this Section 8.

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Section 9.        Termination
         9.01     Termination for Cause:
                  (a) Definition of Cause: At any time during the period covered
by this Agreement the Company may terminate the Executive from his employment
under this Agreement for cause. The term "cause" in this Agreement for purposes
of termination shall include, but not be limited to: (i) the commission by
Executive of any act of fraud or material dishonesty with respect to the
financial or monetary aspects of the business, as determined by an independent
national accounting firm selected by mutual agreement of the Company and
Executive; or (ii) a final conviction of a felony involving moral turpitude in
either a state or federal court proceeding; or (iii) the intentional and willful
breach of the terms of this Agreement, including the failure of Executive to
diligently and faithfully perform his duties under this Agreement or as
instructed by the Board of Directors of the Company, after reasonable notice to
and discussion with Executive; or (iv) intentionally acting in a manner or
intentionally engaging in activities which place Executive in a direct or
indirect conflicting position with the interests of the Company and which could
have a material adverse effect on the Company, after reasonable notice to and
discussion with Executive.

                  (b)  Payment When Terminated For Cause: In the event of
termination of Executive for cause, the Company will pay to the Executive the
accrued but unpaid salary compensation due to Executive under Section 6, the
unpaid reimbursement expenses due to Executive under Section 7.03 and the
accrued vacation days due to Executive under Section 7.01 of this Agreement to
the date of such termination. Such payment shall be made to Executive either in
a lump sum or in accordance with the Company's normal payroll policies and
procedures, as determined by the Company in its sole discretion.

         9.02  Involuntary Termination (Without Cause): During the period of
Executive's employment, the Company shall have the right to terminate the
Executive involuntarily and without any cause or any reason by paying to the
Executive one hundred percent (100%) of all amounts which would be due and
payable to the Executive pursuant to the compensation provisions set forth in
Section 6 of this Agreement for the remainder of the term as set forth in
Section 2 of this Agreement. In addition to the salary provisions of Section 6,
such payment shall include any amounts due to Executive under the provisions of
Section 7 hereof, such as

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amounts due for expense reimbursement or for accrued vacation time. Any and all
monetary amounts payable to the Executive under this Section 9 shall be paid in
the manner selected by the Executive, at his sole discretion.

Section 10.       Covenants
         10.01    Covenants of Executive:
                  (a)  Noncompetition:  Executive agrees that for the period
commencing from the date of his employment under this Agreement and continuing
for the period of such employment and for a period of eighteen (18) months after
termination of such employment, he shall not directly or indirectly be involved
in, or shall have an interest in, any person, firm, corporation or business,
whether as an employee, officer, director, agent, shareholder or otherwise
(except as a minority shareholder of a publicly held corporation) that is
engaged in any business in which the Company is engaged or which places
Executive in a position which may constitute a conflict between the interests of
the Executive and the interests of the Company; provided, however, the
prohibitions and restrictions set forth in this section shall not apply to or in
any way limit a relationship, involvement or interest in any firm, corporation
or business which in the ordinary course of its business activities does not
have more than ten percent (10%) of its annual gross income derived from the
business activities in which the Company is engaged during the period of
Executive's employment under this Agreement.

                  (b) Nonsolicitation:  Executive covenants that for a period of
eighteen (18) months after the termination of Executive's employment with the
Company, Executive shall not, directly or indirectly (meaning, for purposes
hereof, through another person or entity acting on Executive's behalf), as an
employee, agent, salesperson, consultant or member of any person, corporation,
firm or otherwise, (i) call upon or solicit any persons, firms, corporations or
otherwise who are clients or customers of the Company; (ii) solicit any employee
or agent of the Company or make such other contact with the employees or agents
of the Company, the result of which contact will or may yield a termination of
the employment or agency relationship of such employees or agents from the
Company.

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                  (c) Confidentiality: Executive acknowledges that he has been
exposed to or has had access to, and will continue to have access to,
confidential information regarding the business of the Company, including, but
not limited to, trade secrets and proprietary information, all of which are
proprietary assets of the Company, and which give the Company an advantage in
the marketplace against its competitors. Executive covenants that for a period
of eighteen (18) months after termination of Executive's employment with the
Company, Executive will hold and keep secret such proprietary information, and
shall not directly or indirectly disclose or divulge any proprietary information
to any person, firm or corporation unless prior written approval for such
disclosure is given to Executive by the Company.

                  (d)  Protection of Company: Executive acknowledges that
compliance with the restrictive covenants set forth in this Section 10 are
necessary to protect the business, goodwill and proprietary information of the
Company, and that a breach of these restrictions will irreparably and
continually damage the Company for which money damages may not be adequate.
Consequently, Executive agrees that in the event he breaches or threatens to
breach any of these covenants, the Company shall be entitled to both (i) a
temporary, preliminary or permanent injunction in order to prevent the
continuation of such harm and (ii) money damages insofar as they can be
determined.

         10.02  Severability of Covenants: The unenforceability (or the
modification to conform with such laws and public policies) of any provision of
these covenants shall not render unenforceable or impair the remainder of the
covenants. Accordingly, if any provisions of these covenants shall be determined
to be invalid or unenforceable, either in whole or in part, these covenants
shall be amended to delete or modify, as necessary, the offending provisions or
offending portions of said provisions, and to alter the balance of these
covenants in order to render the same valid and enforceable. Without limiting
the generality of the foregoing, the Executive agrees that if these covenants
are deemed by a court or other body having jurisdiction to be unreasonably
broad, there shall be automatically substituted such area of coverage as such
court or other body having jurisdiction deems to be reasonable and sufficient to
protect the Company's interests herein.

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<PAGE>
 
         10.03 Survival of Covenants: The covenants set forth in this Section 10
shall survive the termination of this Agreement, and shall continue for a period
of eighteen (18) months after the termination of Executive's employment with the
Company.

Section 11.       Settlement of Disputes
         (a) Any controversy or dispute between the parties to this Agreement
involving the construction, interpretation, application or performance of the
terms, covenants or conditions of this Agreement or in any way arising under
this Agreement shall, on demand of one of the parties by written notice hereto
served on the other in the manner prescribed in Section 16 hereof, be determined
pursuant to the general reference provisions of California Code of Civil
Procedure ("CCP") ss.638(1), et seq., by a retired or former judge of the
Superior Court for the County of Orange, State of California. The parties intend
this general reference provision to be specifically enforceable in accordance
with said ss.638(1).

         (b) The reference may be commenced by any party hereto by the filing in
the Superior Court of the State of California for the County of Orange of a
petition or a motion for a general reference. The petition and any opposition or
response thereto shall recite in a clear and meaningful manner the factual basis
of the controversy between the parties and identify the issues to be submitted
to the referee for decision.

         (c) The petition or motion shall designate as a sole referee a retired
judge from the Orange County, California, Judicial Arbitration & Mediation
Services ("JAMS") panel acceptable to that party. If the parties to the
reference proceeding are unable to agree upon a referee, the Presiding Judge or
any judge of the Orange County Superior Court to whom the matter is assigned
shall appoint a retired or former Orange County Superior Court Judge from the
JAMS panel as the referee.

         (d) The parties acknowledge that the terms of this Section 11 are
specifically enforceable and that the decision by the referee is tantamount to a
judgment by a trial court (CCP ss.644) and is subject to review in accordance
with CCP ss.645, and that any judgment rendered in the trial court is appealable
in the same manner as any other trial court judgment.

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Section 12.       Setoff
         The Company agrees that its obligation to the Executive, whether to pay
the Executive the compensation as provided in Section 6 of this Agreement, to
provide Executive with the benefits set forth in Section 7 of this Agreement, or
otherwise, shall not be subject at any time to any setoff, reduction, mitigation
or diminishment as a result of any alleged claims which the Company believes it
has against Executive, or for any other reason whatsoever.

Section 13.       Covenant of Good Faith
         The parties to this Agreement covenant that they enter into this
Agreement and undertake the obligations of this Agreement in good faith. No
party will do anything to interfere with the rights of any other party to obtain
the advantages extended to that party by this Agreement. The parties agree that
a breach of this covenant shall create a liability against the party in breach
for consequential damages as though the breach were a tort, in addition to
liability for other contractual damages.

Section 14.       Nonassignability
         This Agreement is a personal service contract and the rights and duties
of the parties hereunder shall not be assignable, except in accordance with the
provisions of Section 15 of this Agreement. Any attempted assignment or transfer
not permitted by the terms of Section 15 shall be void and of no force and
effect.

Section 15.       Successors and Assigns
         15.01  Of the  Company:  If the Company shall at any time be merged or
consolidated into or with any other corporation, or if substantially all of the
assets of the Company are transferred to another corporation or party, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the entity or successors resulting from such merger or consolidation or to which
such assets shall be transferred; and this provision shall apply in such events.

         15.02  Of Executive: To the extent applicable, this Agreement shall be
binding on the devises, heirs, next of kin, executors and administrators of the
Executive.

Section 16.       Notice
         16.01  Method of Notice:  All notices, demands or other communications
required or desired to be given hereunder by any party shall be in writing and
shall be validly given or made

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to the other parties if served personally on such other parties or if deposited
in the United States mail, certified or registered, postage prepaid, return
receipt requested. If such notice, demand or other communication be served
personally, service shall be deemed made at the time of such personal service.
If such notice, demand or other communication be given by mail, such notice
shall be conclusively deemed given forty-eight (48) hours after the deposit
thereof in the United States mail, addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter provided.

     16.02  Addresses: Notice shall be given to the Company at the following
address:

                            US Facilities Corporation
                            650 Town Center Drive, Suite 1600
                            Costa Mesa, California 92626
                            Attention:  David L. Cargile,
                            President and Chief Executive Officer


            Notice shall be given to the Executive at the following address:

                            Craig J. Kelbel
                            56 Prairie Falcon
                            Aliso Viejo, California  92656

Any party hereto may change his address for purposes of receiving notices,
demands or other communications as herein provided by a written notice given in
the manner aforesaid to the other party hereto.

Section 17.       Applicable Governing Law
         The parties hereto specifically concur that this Agreement, having been
executed and delivered in the State of California between US Facilities
Corporation, whose principal offices are in the State of California, and Craig
J. Kelbel, a resident of the State of California, shall be construed in
accordance with the laws of the State of California; and the validity,
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of California, including its laws and decisions
relating to conflict of laws.

Section 18.       Severability/Captions
         Every provision in this Agreement is intended to be severable. If any
term or provision hereof is illegal or invalid, for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder hereof.
The captions or headings in this Agreement are

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inserted for convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provisions hereof.

Section 19.       Amendments/Waivers
         No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing after
approval by the Company's Board of Directors and signed by Executive and an
officer of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

Section 20.       Entire Agreement/Severance Agreement
         20.01  Employment Agreement: Except as set forth in Section 20.02
below, this Agreement expresses the entire agreement of the parties hereto, and
supersedes all prior promises, representations, understandings, arrangements and
agreements between these parties with respect to the subject matter herein,
specifically including any prior Employment Agreement between the Executive and
the Company, and any amendments and corrections to such prior Employment
Agreement. The parties hereto further acknowledge and agree that neither of them
has made any representation to induce the execution and delivery of this
Agreement, except those as specifically set forth herein.

         20.02  Severance Agreement: Notwithstanding anything set forth in
Subsection 20.01 above or in any Severance Agreement with Executive which would
appear to be to the contrary, if Executive and the Company have entered into a
Severance Agreement which is in effect at the time of Executive's termination,
then in that event the Company and Executive hereby agree that Executive shall
be entitled to receive upon Executive's termination either (i) the salary and
bonus termination payments as provided for in this Employment Agreement, or (ii)
the salary and bonus termination payments as provided for in any Severance
Agreement between Executive and the Company, whichever salary and bonus
termination payment is the greater; but under no conditions shall Executive be
entitled to receive upon termination the salary and bonus termination payments
under a Severance Agreement and the salary and bonus termination payments under
this Employment Agreement.

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Section 21.       Signatures
         In Witness Whereof, the Company has authorized that this Agreement be
executed, and when the Company's duly authorized officers and the Executive have
signed this Agreement in the places as indicated below, this Agreement shall be
effective as of November 1, 1996.
<TABLE> 
<S>                                       <C>
         Company:                         US Facilities Corporation


                                          By /s/ DAVID L. CARGILE
                                          -------------------------------------
                                          David L. Cargile
                                          President and Chief Executive Officer

         Executive:

                                          /s/ CRAIG J. KELBEL
                                          -------------------------------------
                                          Craig J. Kelbel

Witness:

/s/ JOSE A. VELASCO
------------------------------------
Jose A. Velasco
Senior Vice President, Secretary
and General Counsel

</TABLE> 
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