TERMINATION AGREEMENT



         Agreement made this 6th day of December, 1996 by and between Home State
Holdings, Inc., a Delaware Corporation with offices at Three South Revmont
Drive, Shrewsbury, New Jersey 07702 (the "Company") and Robert Abidor, an
individual residing at 55 Shrewsbury Drive, Rumson, New Jersey 07760 ("Abidor").

                               W I T N E S S E T H


                  WHEREAS, the Company and Abidor are parties to that certain
employment agreement entered into the 1st day of June 1993, as amended by an
agreement entered into the 13th day of June 1996 (as amended, the "Employment
Agreement"); and

                  WHEREAS, Abidor's recuperation from his recent surgery has
progressed more slowly than anticipated, as a result of which the services he
will be able to perform under the Employment Agreement would be materially
curtailed; and

                  WHEREAS, differences have arisen between Abidor and the
Company which have diminished the likelihood of Abidor being utilized in the
capacities contemplated by the Employment Agreement; and

                  WHEREAS, the Company and Abidor desire to terminate Abidor's
relationship as an employee and independent consultant to the Company under the
Employment Agreement.

                  NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Abidor
hereby agree as follows:

                  1. Effective immediately, the Employment Agreement is
terminated and shall be of no further force and effect (except for those
provisions which by the terms of this Termination Agreement expressly survive
termination of the Employment Agreement).

                  2. Abidor is entitled to no compensation or benefits from the
Company other than amounts paid to him prior to the date of this Termination
Agreement. Furthermore, Abidor acknowledges that there are no unreimbursed
business expenses of Abidor. Abidor shall, however, be given the opportunity (if
and for so long as permitted by the insurance policies then in effect) to
continue his

<PAGE>


group health insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act ("COBRA") and to transfer the ownership of any term life
insurance insuring his life and owned by the Company or any other insurance
policies on or for Abidor to himself (or his designee) upon such person assuming
all obligations thereunder.

                  3. Abidor agrees to cooperate with the Company in responding
to requests by the Company and its subsidiaries and affiliates and by Home
Mutual Insurance Company of Binghamton, New York ("HMI") for information
concerning events, actions and transactions which occurred during his tenure
with the Company, and in the defense of any claims asserted or enforced against
any of such persons or their directors, officers, employees or affiliates.

                  4. The provisions of Section 7 of the Employment Agreement
relating to confidential information will remain in force. The Obligation to
return proprietary information and copies thereof will commence on the date of
this Termination Agreement to the extent, if any, requested by the Company from
time to time.

                  5. The provisions of Section 8 of the Employment Agreement
relating to non-competition shall continue in force until June 13, 1999.

                  6. The provisions of Section 9 of the Employment Agreement
relating to Proprietary Intellectual Property will remain in effect.

                  7. The provisions of Section 10 of the Employment Agreement
relating to Enforcement will remain in effect.

                  8. The provisions of Section 11 of the Employment Agreement
relating to Survival will remain in effect.

                  9. The provisions of Section 14(b) of the Employment Agreement
relating to indemnification of Abidor will continue in full force and effect.

                  10. The obligation of Abidor not to communicate with employees
of the Company in a manner which disrupts the relations between the Company and
such employee will remain in full force and effect. Should any potential or
future employer contact the Company for a reference, the Company may, pursuant
to its established procedures, limit its response to verify only Abidor's job
title and dates of employment. The reciprocal obligations to refrain from
disparagement set forth in Section 10 of the Employment Agreement will remain in
full force and effect and as to Abidor will include subsidiaries and affiliates
of the Company and the directors, officers and shareholders of the Company, its
subsidiaries and affiliates; provided, however, this paragraph will not be
deemed breached by any disclosure

<PAGE>


which has been advised by counsel as necessary or appropriate to comply with
applicable securities laws, insurance laws, or regulations.

                  11. The Company releases, and as controlling shareholder of
each of its subsidiaries will cause each subsidiary to release Abidor and his
heirs from and in respect of any causes of action, suits, claims, demands,
charges, judgments, damages, levies and executions of whatsoever kind, nature
and/or descriptions, whether legal or equitable, whether known or unknown,
liquidated or contingent, direct or indirect, which it may have from the
beginning of time to the date of this Agreement arising out of or related to any
matter whatsoever from the beginning of time to the date of this Agreement
excepting only Abidor's obligations under this Agreement and any matter as to
which Abidor committed fraud or any matter involving the performance by Abidor
of his duties as an officer or director of the Company or any of its
subsidiaries or affiliates which constituted wilfull misconduct on the part of
Abidor.

                  12. Abidor, on his own behalf and on behalf of his family,
releases the Company, its subsidiaries and their respective directors, officers,
and employees and agents, and affiliates of such officers and directors, and
their respective heirs, successors and assigns, from and in respect of any
causes of action, suits, claims, demands, charges, judgments, damages, levies
and executions of whatsoever kind, nature and/or descriptions, whether legal or
equitable, whether known or unknown, liquidated or contingent, direct or
indirect, which he or members of his family may have from the beginning of time
to the date of this Agreement arising out of or related to any matter
whatsoever, including, without limitation, their status as an employee or
sharehoder of the Company or any subsidiary or affiliate, excepting only the
obligations of the Company and its subsidiaries set forth in this Agreement.

                  13. Abidor acknowledges and agrees that he fully understands
this Termination Agreement and has signed it voluntarily after consultation with
counsel.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Termination Agreement to be duly executed on the date first above written.


                                                  HOME STATE HOLDINGS, INC.

/s/ Robert Abidor
-----------------
Robert Abidor
                                                  By:  /s/ Mark Vaughn
                                                       ----------------------
                                                       Mark Vaughn
                                                  Its: President and CEO