INVESTMENT MANAGEMENT AGREEMENT


                  AGREEMENT made as of the ____ day of _________, 199_ by and
between ______________ INSURANCE COMPANY ("Client") and WOODHAVEN INVESTORS,
INC. ("Manager").

                              W I T N E S S E T H:

                  In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed between the parties hereto as follows:

                  1. General. Client hereby employs Manager as investment
manager for the purpose of managing the investment and reinvestment of funds of
Client (the "Funds") subject to the terms and conditions set forth in this
Agreement.

                  2. Authority of Manager. Manager will supervise and direct the
investments of Client, subject to the limitations and investment guidelines set
forth in Paragraph 15 below or as Client may impose by notice in writing to the
Manager ("Investment Guidelines"). Manager, as agent and attorney-in-fact of
Client with respect to the Funds, when it deems appropriate, without prior
consultation with Client, may, subject to the Investment Guidelines, (a) buy,
sell, exchange, convert and otherwise trade in any stocks, bonds and debt and
other securities, including money-market instruments, and (b) place orders for
the execution of such securities transactions with or through brokers, dealers
or issuers, including those from which


<PAGE>

Manager or its affiliates may receive research, brokerage and other services, or
which may be otherwise affiliated with Manager.

                  3. Services of Manager. Manager accepts the appointment as
investment manager and agrees to supervise and direct the investments in
accordance with the Investment Guidelines. Manager, in the maintenance of
records pertaining to Client's investments, does not assume responsibility for
the accuracy of information furnished by Client or any other party.

                  4. Transaction Procedures. Manager may issue appropriate
instructions to the custodian designated by Client (the "Custodian"), in
connection with the settlement of transactions initiated by Manager hereunder,
either in writing sent by first-class mail or orally, and confirmed in writing
as soon as practical thereafter. Manager shall instruct brokers or dealers
executing orders for the account of Client to forward to Client and/or the
Custodian copies of all confirmations promptly after each execution. Manager
shall not be responsible for any loss incurred by reason of any act or omission
of any broker or the Custodian; provided, however, that Manager will make
reasonable efforts to require that brokers and dealers selected by Manager
perform their obligations with respect to the Client's account (the "Account").

                  5. Removal of Assets. Client may, by written notice to
Manager, remove any assets from the Account, in which event Manager shall have
no further responsibility or authority with respect to such assets.

                                       2
<PAGE>

                  6. Reports to Manager. Client will provide or instruct
Custodian to provide Manager with such periodic reports concerning the status of
the funds in the Account as Manager may reasonably request.

                  7. Confidential Relationship. All information and advice
furnished by either party to the other hereunder including their respective
agents and employees, shall be treated as confidential.

                  8. Service to Other Clients. It is understood that Manager may
perform investment advisory services for other clients. Manager may give advice
and take actions with respect to any of its other clients which may differ from
advice given or the timing or nature of action taken with respect to Client.
Manager shall not have any obligation to purchase or sell, or to recommend for
purchase or sale, for Client any security which Manager, its principals,
affiliates or employees may purchase or sell, or recommend for purchase or sale,
for its or their own accounts or for the account of any other client. Investment
decisions for each account managed by Manager are made independently of each
other in the light of differing conditions. However, the same investment
decision may occasionally be made for two or more of such accounts. In such
cases, simultaneous transactions may occur at different prices .

                  9. Allocation of Brokerage. If Client does not direct in
writing that transactions be executed by a designated broker(s), in placing
orders for the execution of portfolio transactions for the Account, Manager may
allocate such transactions to such brokers or dealers for execution on such
markets and at such commission rates

                    3
<PAGE>

or at such terms as, in the good faith judgment of Manager, will be in the best
interests of Client taking into consideration not only the rate of brokerage
commissions or markups or markdowns but also, to the extent permitted by
applicable law, other relevant factors such as, without limitation, net price
execution capabilities, research and other services, which aid the Manager in
the performance of its investment-making responsibilities, without having to
demonstrate that such services specifically benefitted the Client.

                  10. Manager's Standard of Care. Manager, in providing
investment advice hereunder, will use its best efforts to achieve the investment
objectives of Client. Manager shall not be liable to Client for any error of
judgment or for any loss suffered by Client in connection with any Investment
Guideline or the purchase, sale or retention of any security on this
recommendation of Manager, provided that Manager shall nonetheless be
responsible for its acts or omissions due to its negligence, bad faith or
reckless disregard of duties, and further provided that nothing herein shall in
any way constitute a waiver or limitation of any rights which Client may have
under any federal or state securities laws.

                  11. Inside Information. Manager shall have no obligation to
seek to obtain any material non-public ("inside") information about any issuer
of securities, or to purchase or sell, or to recommend for purchase or sale, for
Client, the securities of any issuer on the basis of any such information as may
come into its possession.

                  12. Proxies and Other Legal Notices. Manager will not be
required to take any actions or render any advice with respect to the voting of
proxies solicited

                                       4
<PAGE>

by, or with respect to, the issuers of any securities held in the Account, nor
will Manager be obligated to render any advice or take any actions on behalf of
Client with respect to securities or other investments held in the Account, or
the issuers thereof, which become the subject of any legal proceedings,
including those under the Federal bankruptcy laws.

                  13. Fees. In consideration of the Manager's services pursuant
to the Investment Management Agreement, the Client hereby agrees to pay the
Manager an annual management fee equal to Client's pro rata share (based on the
proportion Client's investible assets under the management of Manager bears to
the total investible assets of Client and the Common Clients (as hereinafter
defined) under the management of Manager) of the sum of (i) one quarter of one
percent (1/4 of 1%) of the total value of the first one hundred million dollars
($100,000,000) of Client's and the Common Clients' investible assets under the
management of the Manager and (ii) one eighth of one percent (1/8%) of the
Client's and the Common Clients' investible assets under the management of the
Manager in excess of one hundred million dollars ($100,000,000). As used herein,
the "Common Clients" refers to the other insurance companies which are direct or
indirect subsidiaries of (or managed by) Home State Holdings, Inc.

                  14. Valuation. In computing the market value of investments in
the Account for purposes of calculating the Fee when such is required under the
terms of Section 13, above, Manager shall use sources which it in good faith
deems appropriate. At present: for securities other than money-market
instruments,

                                       5
<PAGE>
Manager shall use the values obtained from various independent data sources;
money-market investments are valued at cost; zero-Treasury instruments are
valued at amortized cost; and any other assets, including securities not in such
data sources to be valued in such manner as is determined in good faith by
Manager to reflect their fair market value.

                  15. Investment Guidelines. Until such time as Client achieves
pre-tax profit at an annual rate of $400,000.00 the Funds shall be invested only
in securities guaranteed by the United States Government, its agencies or
divisions, or in corporate securities rated AAA by Standard and Poor's or
Moody's. In addition, Client shall give Manager written notice of all investment
objectives and all other investment restrictions applicable to the Account, and
any broker(s) through which Client directs that orders be executed or not to be
executed, and of any changes or modifications thereof. Client shall give Manager
prompt written notice if Client deems any investment selected by Manager for the
Account to be violative of these or any other such Investment Guidelines as they
may exist from time to time.

                  16. Assignment. No assignment, as that term is defined in the
Investment Advisors Act of 1940, of this Agreement shall be made by Manager
without the written consent of Client.

                  17. Notices. Unless otherwise specified herein, all notices
with respect to this Agreement shall be deemed duly given only when received in
writing by the other party or the custodian at such address as shall be
specified by notice similarly given. Manager may rely upon any notice,
instruction or other

                                       6
<PAGE>

communication from any person reasonably believed by Manager to be genuine and
authorized.

                  18. Client Authority. Client represents and confirms that the
execution and performance of this Agreement is authorized by the governing
documents relating to the Account and that the terms hereof do not violate any
obligations by which Client is bound, and that (a) this Agreement has been duly
authorized by appropriate action and when executed and delivered will be binding
upon Client in accordance with its terms, and (b) Client will deliver to Manager
such evidence of such authority as Manager may reasonably require, whether by
way of a certified resolution or otherwise. Client agrees to promptly advise
Manager of any event which might affect this authority or the propriety of this
Agreement.

                  19. Representations by Manager. Manager represents and
confirms that it is registered as an investment advisor under the Investment
Advisors Act of 1940.

                  20. Modification. This Agreement shall not be changed,
modified, terminated, or discharged in whole or in part, except by an instrument
in writing signed by both parties hereto or their respective successors or
assigns or except as set forth in Paragraph 16 above.

                                       7
<PAGE>

                  21. Governing Law. This Agreement is made in and shall be
construed under the laws of the State of _________ without giving effect to
principles of conflicts of law.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Management Agreement on the day and year first above written.

                                            -------------------------------
                                            INSURANCE COMPANY



                                            By:
                                               --------------------------------
                                            Name:
                                                 ------------------------------
                                            Title:
                                                  -----------------------------


                                            WOODHAVEN INVESTORS, INC.



                                            By:
                                               --------------------------------
                                            Name:
                                                 ------------------------------
                                            Title:
                                                  -----------------------------