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                                                                EXHIBIT 10.1

                                                        
                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made and entered into as of the 12th day August, 1996,
by and between INTERCARGO CORPORATION, a Delaware corporation ("Intercargo"),
and MICHAEL L. RYBAK, an individual residing in the State of Illinois
("Employee"). Other capitalized terms shall have the respective meanings set
forth in Section 15 and elsewhere herein.

                              W I T N E S S E T H

     WHEREAS, Intercargo wishes to employ Employee under the terms and
conditions as set forth herein; and

     WHEREAS, the Employee is willing to accept such employment on the terms
and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed as follows:

     1. Employment. Intercargo hereby employs the Employee, and the Employee
hereby accepts employment with Intercargo, on the terms and conditions set
forth in this Agreement.

     2. Employment Period. The term of Employee's employment shall be for a one
year period and shall commence as of August 12, 1996 and shall continue on a
month to month basis thereafter, unless this Agreement is terminated pursuant
to Section 14 hereof.

     3. Duties. Employee shall serve as the Chief Financial Officer of
Intercargo and will, under the direction of Intercargo's Board of Directors and
President, faithfully and to the best of his ability perform the duties of a
Chief Financial Officer as assigned and revised by Intercargo's Board of
Directors and President from time to time. The Employee agrees to devote his
entire working time, energy and skills to such employment during the Employment
Period, and shall not render any services of a business, commercial or
professional nature to any person or organization other than Intercargo or be
engaged in any other business activity, without the prior written consent of
Intercargo's Board of Directors and/or the President. All duties to be rendered
hereunder shall be performed at such place or places as the President and/or
Board of Directors of Intercargo shall in good faith require.

     The Employee represents and warrants that he is not a party to or bound by
any agreement or contract or subject to any restrictions, particularly, but
without limitation, in




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connection with any previous employment, which prevents the Employee from
entering into and performing his obligations under this Agreement.

     4. Compensation. During the Employment Period, the Employee shall be
compensated for his services as follows:

        (a) Base Salary. The Employee shall receive an annual base salary for 
     the calendar year 1996 in the amount of One Hundred Twenty Thousand and
     00/100 Dollars ($120,000.00), payable in accordance with Intercargo's
     payroll schedule for all employees. If the Employment Period is extended
     as provided for in Section 2, this base salary will be increased, on a pro
     rata basis, beginning monthly at the beginning of each month commencing as
     of August 12, 1996.
        
        (b) Employee Benefits. The Employee shall be entitled to participate in
     all employee benefit plans maintained by the Company, including but not
     limited to, group hospitalization, medical and disability plans, if 
     applicable.

     5. Employee Expenses. During the Employment Period, and following the
submission by Employee of the documentation necessary for deduction by
Intercargo on its Federal and State income tax returns of reasonable or
necessary expenditures incurred in the performance of Employee's duties
hereunder and the prior approval of such expenses by the President, Employee
shall be entitled to be reimbursed for such reasonable and necessary expenses,
including, but not limited to, expenses for entertainment, travel, meals, hotel
accommodations, professional seminars, and related use of the telephone.

     6. Vacation. During the Employment Period, Employee shall be entitled to
vacations with pay in accordance with Intercargo's regular vacation policies 
in effect from time to time.

     7. No Competing Business. Employee hereby agrees that during the
Employment Period and for a period of two (2) years following termination of
the Employment Period, regardless of whether this Agreement is terminated for
Cause, or as a result of the natural termination of the Employment Period,
except as permitted by Section 10 of this Agreement, the Employee will not
directly or indirectly own, manage, operate, control, invest or acquire an
interest in, or otherwise engage or participate in (whether as a proprietor,
partner, stockholder, director, officer, employee, joint venture, investor,
sales representative or other participant in) any Competitive Business in
Intercargo's Market, without regard to (a) whether the Competitive Business has
its office or other business facilities within Intercargo's Market, (b) whether
any of the activities of the Employee referred to above itself occurs or is
performed within Intercargo's Market or (c) whether the Employee resides, or
reports to an office, within Intercargo's Market.


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     8.  No Interference with the Business.

         (a) Business Relationships. Employee hereby agrees that during the
     Employment Period, and for a period of two (2) years following the
     expiration of the Employment Period, except as permitted by Section 10 of
     this Agreement, Employee will not directly or indirectly solicit, induce or
     influence any sales representative, supplier, lender, lessor or any other
     person which has a business relationship with Intercargo, or which had on
     the date of this Agreement a business relationship with Intercargo, to
     discontinue, reduce the extent of, discourage the development of or
     otherwise harm such relationship with Intercargo.

         (b) Customers. Employee hereby agrees that during the Employment Period
     and during the remaining term as extended pursuant to any extension options
     of Intercargo of any contracts between Intercargo and any customers of
     Intercargo, to the extent such contracts extend beyond the Employment
     Period, that Employee will not directly or indirectly attempt to induce any
     such customers to terminate such contracts or otherwise divert from
     Intercargo any trade or business being conducted by such customers with
     Intercargo pursuant to such contracts; and, during the Employment Period
     and for two (2) years following the expiration thereof, Employee will not
     directly or indirectly solicit from, or otherwise agree to provide any
     services to any customer to which Intercargo has provided any services
     during the two years next preceding the termination of the Employment
     Period, or any party whose identity or potential as a customer was
     confidential or learned by the Employee during the Employment Period.

         (c) Employees. Employee hereby agrees that during the Employment Period
     and for a period of two (2) years following the expiration of the
     Employment Period, except as permitted by Section 10 of this Agreement,
     Employee will not (i) directly or indirectly recruit, solicit or otherwise
     induce or influence any employee or sales agent of Intercargo to
     discontinue such sales, employment or agency relationship with Intercargo,
     or (ii) employ, seek to employ or cause any Competitive Business to employ
     or seek to employ as a sales representative or employee for any Competitive
     Business in Intercargo's Market, any person who is then (or was at any time
     within six months prior to the date the Employee or the Competitive
     Business employs or seeks to employ such person) employed by Intercargo.

     9. No Disclosure of Confidential Information. The Employee hereby agrees
that he will not knowingly, directly or indirectly, disclose to anyone, or use
or otherwise exploit for the Employee's own benefit or for the benefit of
anyone other than Intercargo, any Confidential Lnformation, except as permitted
by Section 10 of this Agreement.


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     10. Permitted Activities. The restrictions set forth in Sections 7, 8 and
9 of this Agreement shall not apply to Permitted Activities or to actions taken
by the Employee during the time the Employee may be employed by Intercargo to
the extent, but only to the extent, that such actions are (i) necessary in
connection with such employment, and (ii) expressly approved in writing by the
Board of Directors.

     11. Inventions and Other Intellectual Property. Employee hereby agrees
that any design, invention or copyright materials made or created in the course
of his employment shall be the property of Intercargo. Employee further agrees
that at Intercargo's request and expense, he will execute any deeds or
documents necessary to transfer any such design, invention, copyright or
trademark materials to Intercargo and to cooperate with Intercargo or its
nominee in perfecting Intercargo's title (or the title of Intercargo's nominee)
in such materials. During the Employment Period, Employee shall keep Intercargo
informed of the development of all designs, inventions or copyright materials
made, conceived or reduced to practice by Employee, in whole or in part, alone
or with others, which either result from any work Employee may do for, or at
the request of Intercargo, or are related to Intercargo's present or
contemplated activities, investigations, or obligations.

     12. Reduction of Restrictions by Court Action. If the length of time, type
of activity, geographic area or other restrictions set forth in the
restrictions of Sections 7, 8 or 9 are deemed unreasonable in any court
proceeding, the parties hereto agree that the court may reduce such
restrictions to ones it deems reasonable to protect the substantial investment
of Intercargo in its business and the goodwill attached thereto.

     13. Remedies. Employee understands that Intercargo will not have an
adequate remedy at law for the material breach or threatened breach by Employee
of any one or more of the covenants set forth in this Agreement and agrees that
in the event of any such material breach or threatened breach, Intercargo may,
in addition to the other remedies which may be available to it:

        (a) declare forfeited any monies otherwise payable to the Employee as of
     the date of such breach under the terms of Section 4 of this Agreement, and
     otherwise cease all payments and obligations under this Agreement; and/or

        (b) file a suit in equity to enjoin Employee from the breach or
     threatened breach of such covenants.

     14. Termination. The Employment Period shall terminate upon the first to
occur of:

        (a) the Employee's death,

        (b) the Disability of Employee,   


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     (c) the termination of the Agreement by the President of
Intercargo for Cause,

     (d) after the first anniversary hereof upon 30 days notice.

     Termination of the Employment shall not relieve the Employee of his
obligations under Sections 7, 8 and 9 hereof, notwithstanding that Employee's
compensation and this Agreement shall otherwise terminate.

     In the event of the termination of Employee's employment with the Employer
for the reasons outlined in Sections (a), (b) (c) or (d), the Employee shall
receive from the Employer all accrued but unpaid compensation due under Section
4 herein.

     15. Definitions. As used in this Agreement, terms defined in the preamble
and recitals of this Agreement shall have the meanings set forth therein and
the following terms shall have the meanings set forth below:

        "Board of Directors" shall mean the Board of Directors of Intercargo.

        "Cause" shall include, without limitation, (i) the inability of the
     Employee to perform his duties due to a legal impediment such as, without
     limitation, the entry against the Employee of an injunction, restraining
     order or other type of judicial judgment, decree or order which would
     prevent or hinder the Employee from performing his duties; (ii) a breach
     of any of the restrictions or covenants set forth in Sections 7, 8, 9, 11
     and 12 hereof; (iii) the failure to follow Intercargo's reasonable
     instructions with respect to the performance of the Employee's duties;
     (iv) failure to comply with the normal and customary methods of operation
     for Intercargo as reasonably determined by the President of Intercargo,
     (v) excessive absenteeism, flagrant neglect of work, serious misconduct,
     conviction of a felony, fraud, disclosure of any proprietary information
     of Intercargo without the consent of Intercargo, or aiding a competitor of
     Intercargo to the detriment of Intercargo.
        
        "Competitive Business" shall mean any person or entity engaged in a
     business similar to Intercargo's Line of Business.

        "Confidential Information" shall mean trade secrets, customer and
     supplier lists, marketing arrangements, business plans, projections,
     financial information, training manuals, pricing manuals, product and
     service development plans, market strategies, internal performance
     statistics and other competitively sensitive information belonging to and
     concerning Intercargo and which is material to Intercargo and not
     generally known by or available to the public, whether or not in written
     or tangible form, as the
        


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     same may exist at any time during the Employment Period or during prior
     periods in which Employee was employed by Intercargo.
        
        "Control" shall mean, with respect to any person, the power to direct
     the management and policies of such person, directly or indirectly,
     whether through the ownership of voting securities, by contract or
     otherwise.
        
        "Disability" shall mean any illness, disability or incapacity of such a
     character as to render Employee unable to perform his duties hereunder
     (which determination shall be made by the Board of Directors) for a total
     period of ninety (90) days, whether or not such days are consecutive,
     during any consecutive twelve (12) month period.
        
        "Employment Period" shall mean that period of time set forth in Section
     2 of this Agreement.

        "Intercargo's Line of Business" shall mean and include any products or
     services manufactured, developed or distributed at any time during the
     Employment Period by Intercargo. For purposes of this Agreement, such
     business shall be deemed to be conducted with any person, institution,
     association or entity to which sales or negotiations therefor (whether or
     not sales resulted) have been made, products delivered or services
     performed, or to or from which advertising, solicitation or other
     communications have been directed or received during the previous three
     years.
        
        "Intercargo's Market" shall mean those states or countries in which
     Intercargo is doing business at any time during the Employment Period.

        "Permitted Activities" shall mean (i) owning not more than 5% of the
     outstanding shares of any one or more publicly-held Competitive Business
     which has shares listed for trading on a securities exchange registered
     with the Securities and Exchange Commission or through the automated
     quotation system of a registered securities association, (ii) owning
     capital stock of Intercargo, and (iii) serving as an officer, director or
     employee of Intercargo.
        
     16. Notices. All notices, demands or other communications required or
provided hereunder shall be in writing and shall be deemed to have been given
and received when delivered in person or transmitted by facsimile transmission
(telecopy), cable, or telex to the respective parties, or seven (7) days after
dispatch by registered or certified mail, postage prepaid, addressed to the
parties at the addresses set forth below or at such other addresses as such
parties may designate by notice to the other parties:


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     If to Intercargo:          Intercargo Corporation 
                                Attn: James R. Zuhlke    
                                1450 East American Lane
                                20th Floor             
                                Schaumburg, lL 60173   

     with a copy to:            Michael Sklar            
                                Rudnick & Wolfe          
                                203 North LaSalle Street 
                                Suite 1800               
                                Chicago, lL 60601-1293   



     If to Employee:            Michael Rybak              
                                c/o Intercargo Corporation 
                                1450 East American Lane    
                                20th Floor                 
                                Schaumburg, IL 60173       

     17. Assignment. Neither party to this Agreement may assign or delegate any
of its rights or obligations hereunder without first obtaining the written
consent of the other party. However, this Agreement shall be binding upon and
inure to the benefit of any successor of Intercargo and any such successor
shall be deemed substituted for Intercargo under the terms of this Agreement.
As used in this Agreement, the term "successor" shall include any person,
persons, firm, partnership, corporation, or company which at any time, whether
by merger, purchase, or otherwise, acquires all or substantially all of the
assets or business of Intercargo and assumes Intercargo's obligations
hereunder.

     18. Amendment and Modification. No amendment or modification of the terms
of this Agreement shall be binding upon either party unless reduced to writing
and signed by Employee and a duly appointed officer of Intercargo.

     19. Governing Law. The provisions of this Agreement shall be construed in
accordance with the internal laws and not the choice of laws provisions of the
State of Illinois.

     20. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which shall be deemed the original without reference
to the others.

     21. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions and portions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.


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     22. Waiver. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.

     23. Headings. Headings of the paragraphs in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.




                                                Michael L. Rybak         
                                        ---------------------------------
                                        Michael L. Rybak                 
                                                                         
                                        INTERCARGO CORPORATION           
                                                                         
                                                                         
                                        By:        
                                           ------------------------------
                                                                         
                                        Its:      President 
                                            -----------------------------
                                                                         




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                       RIDER TO EMPLOYEMENT AGREEMENT

THIS RIDER is made this 12th day of August, 1996 by and between Intercargo
Corporation ("Employer") and Michael L. Rybak ("Employee").

                                  RECITALS

A.   The Employer and Employee entered into an employment agreement dated
     August 12, 1996 relative to the Employee's employment at Intercargo
     Corporation.

B.   The Employer and Employee wish to amend the terms of the Employment
     Agreement pursuant to the terms of this Rider as follows:

     1.   It is agreed that Michael Rybak shall start with three weeks vacation
          and enter the vacation entitlement schedule as if he were a five
          year employee.

All other terms of the Employment Agreement shall remain the same. Where the
terms of this Rider conflict with the terms of the Employment Agreement, this
Rider shall govern.
        
                                                Michael L. Rybak    
                                        ----------------------------
                                        Michael L. Rybak            
                                                                    
                                                                    
                                        INTERCARGO CORPORATION      
                                                                    
                                        By:                         
                                           -------------------------
                                                                    
                                        Its:      President
                                            ------------------------



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