UNIVERSAL RECOVERIES INC.
                                     D.B.A.
                              SUBROGATION PARTNERS


                          SUBROGATION SERVICE AGREEMENT

         This AGREEMENT is made on behalf of Universal Recoveries Inc. d.b.a.
Subrogation Partners with offices located at 420 Lexington Ave., New York, NY
10170 (hereinafter referred to as "SUBROGATION PARTNERS") and Empire Insurance
Company and Allcity Insurance Company and successors and assigns, with offices
located at 335 Adams Street, Brooklyn, NY 11201 (hereinafter referred to as
"CLIENT").

                                   WITNESSETH

         WHEREAS, SUBROGATION PARTNERS is engaged in the business of reviewing
insurance carriers claim files to which subrogation and recovery rights apply
and recovering monies due by exercising an insurance carrier's rights of
subrogation; ("Subrogation Services"); and

         WHEREAS, CLIENT desires to retain SUBROGATION PARTNERS to perform
Subrogation Services for the CLIENT with respect to certain insurance policies
issued by the CLIENT throughout the New York and United States; and

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, SUBROGATION PARTNERS and CLIENT hereby agree as follows:

            ARTICLE ONE: CLAIMS SERVICE AUTHORITY & POWER OF ATTORNEY

         The CLIENT hereby retains SUBROGATION PARTNERS and grants SUBROGATION
PARTNERS the limited authority to settle designated claims arising from the
Subrogation Services hereunder. Such authority shall include, generally, the
processing, investigating, adjusting, compromising, and collecting of
subrogation recoveries from claims paid including, but not limited to, no fault,
workers compensation, general liability, property and comprehensive and
collision claims. The CLIENT grants to SUBROGATION PARTNERS authority to
compromise and settle claims relating to the Subrogation Services only.

         The CLIENT hereby authorizes SUBROGATION PARTNERS to act on its behalf
solely to accomplish the aforesaid ends, and hereby grants a limited power of
attorney solely for the purpose set forth above.

                               ARTICLE TWO: SCOPE

         This AGREEMENT shall include all claims originating from Commercial and
Personal insurance policies; i.e. Workers Compensation, General Liability, Home
Owners, Property, Personal Injury Protection (No Fault) and Comprehensive and
Collision issued by the CLIENT

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for all loss  years  through  June 28,  2001.  Specifically  excluded  from this
agreement is any  subrogation  claim  originating  from the New York Public Auto
Pool.

                           ARTICLE THREE: DEFINITIONS

         The following terms shall have the indicated meanings;

         ALLOCATED LOSS EXPENSES shall include,  the following items;  appraisal
         fees,  accident scene  investigation,  product  liability,  Engineering
         investigations,  fees for  obtaining  photocopies,  Department of Motor
         Vehicle fees. total Loss evaluations,  Central Index Bureau (CIB), Skip
         Tracer fees,  Arbitration  fees, fees for filing liens,  Attorney fees,
         overnight  mail  expenses,   medical  and  other  records,   and  other
         reasonable and necessary expenses.

                             ARTICLE FOUR: THE TERM

         This AGREEMENT SHALL COMMENCE on the 15th day of June 1999 for a two
         year period. Either party may terminate this AGREEMENT by submitting to
         the other party in writing, at the address noted above, notice of its
         intent to terminate and in accordance with Article 12.

                   ARTICLE FIVE: SUBROGATION SERVICES & DUTIES

A.       EXERCISE  THE  CLIENT'S  RIGHTS OF  SUBROGATION:  SUBROGATION  PARTNERS
         duties shall include  generally  identifying,  pursuing and  collecting
         subrogation and deductible recoveries for all claims currently reported
         to the CLIENT and all future  claims  reported to the CLIENT during the
         term of this AGREEMENT.

B.       ON-SITE STAFF (4): SUBROGATION PARTNERS will establish permanent onsite
         staff  of at  least  four  (4) full  time  subrogation  specialists  in
         Empire's  offices.  Each of these  specialists  would be  assigned to a
         claim  department,  i.e. Auto Physical  Damage,  Workers  Compensation,
         No-fault,  Uninsured  Motorist  and  Property.  At  the  expiration  or
         termination  of this  agreement  the  CLIENT  will  option to offer the
         onsite staff permanent employment positions.

C.       OFF-SITE  COLLECTION:  Once a subrogation  claim has been identified by
         our specialist it will be forwarded to SUBROGATION  PARTNERS,  Medford,
         NY, facilities for collection.  SUBROGATION PARTNERS would retain those
         files with  subrogation  potential and provide  Empire with a immediate
         inventory.

         All ON-SITE and OFF-SITE  SUBROGATION PARTNERS employees are solely the
         responsibility   of  SUBROGATION   PARTNERS.   These   individuals  are
         SUBROGATION  PARTNERS  employees and as such,  SUBROGATION  PARTNERS is
         solely  responsible  for, but not limited to the following;  all wages,
         Workers Compensation Insurance,  payroll taxes, unemployment insurance,
         discrimination and benefits.

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D.       BEST PRACTICES: Each on-site specialist will coordinate with a specific
         claim  department on how Empire processes claims and how subrogation is
         impacted.  We will analyze department  structure,  work flows, and best
         practice issues inclusive of:

                       Regulatory and Case Law Applications
                       Loss Transfer Issues
                       Coverage Investigation
                       Medical and Wage Loss Analysis
                       Liability Analysis
                       Negotiation and Settlement
                       File Management & Administration

E.       FORENSIC FILE REVIEW: SUBROGATION PARTNERS will conduct a forensic file
         review  of all  closed  files  and  files  located  within  the  claims
         department and off premises (warehouse).  The purpose of this review is
         to   identify,   process  and  collect   any   overlooked   subrogation
         opportunities.

F.       COLLECTION STAFF (9): In our Medford,  NY,  collection  facilities,  we
         anticipate  utilizing six (6) experienced  subrogation claim adjusters,
         one (1) full time manager and two (2) clerical assistants  dedicated to
         the Empire subrogation process.

G.       REPORTING TO  SUBROGATION  PARTNERS  will report to Empire on a monthly
         basis (or as often as Empire may require) all gross and net subrogation
         collections and all open and closed  inventory.  We will include in our
         monthly  reporting,  an estimation of  anticipated  recoveries for each
         line of  business,  which will allow Empire to properly  forecast  its,
         monthly, quarterly and annual recovery results.

H.       ELECTRONIC  DATA:  SUBROGATION  PARTNERS  will  provide the CLIENT with
         monthly  updates  of  the  subrogation  claim  database  in a  mutually
         agreeable electronic format.

I.       RECOVERY  CHECKS:  SUBROGATION  PARTNERS will have all recovery  checks
         made payable to the CLIENT.  SUBROGATION  PARTNERS will bill the CLIENT
         in accordance with Article Seven.

J.       HIRE & TRAIN  REPLACEMENT  STAFF:  During the final  four-month term of
         this  agreement,  SUBROGATION  PARTNERS  will  assist the CLIENT in the
         hiring  and  training  of  a  new   subrogation   staff.  In  addition,
         SUBROGATION  PARTNERS  grants the CLIENT  permission to offer full time
         employment to any  SUBROGATION  PARTNERS  ON-SITE  employee  during the
         final four month term of this agreement.

                ARTICLE SIX: CLIENT'S DUTIES AND RESPONSIBILITIES

A.       MANDATORY  REFERRAL:  The CLIENT shall refer to all CLAIMS  meeting the
         requirements specified in Article 2 hereof.

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B.       FACILITIES,   TELEPHONE,   UTILITIES  AND   LEASEHOLD:   In  order  for
         SUBROGATION  PARTNERS to perform its DUTIES under this  agreement,  the
         CLIENT agrees to provide Subrogation  Partners with a minimum of 5 work
         - stations  at its offices and the  appropriate  space in the  CLIENT'S
         warehouse.  Access  to  these  facilities  will be  limited  to  normal
         business hours.

                               ARTICLE SEVEN: FEES

         Fees for Transfer Files

         SUBROGATION  PARTNERS  will  subrogate  on behalf of the  CLIENT on all
         subrogation claims currently identified or being pursued by the CLIENT.
         SUBROGATION PARTNERS is to receive a fee equal to fifteen (15%) percent
         of  any  recovery  made  on  the  CLIENT'S   behalf  on  a  transferred
         subrogation  claim.  The  fifteen  percent  (15%)  service  fee  is for
         processing the subrogation  claim until conclusion or the "life" of the
         transferred file.

         Fees for the First Twelve (12) Months for "New" Subrogation Claims

         For all  subrogation  claims  identified  and collected by  SUBROGATION
         PARTNERS for the first twelve (12) months of this agreement SUBROGATION
         PARTNERS  is to receive a fee equal to  twenty-two  and one half 22.5%)
         percent of any recovery made on the Client's behalf.

         Fees for the Subsequent Twelve (12) Months for New Subrogation Claims

         For all  Subrogation  claims  identified  and collected by  SUBROGATION
         PARTNERS  for any  subsequent  twelve  (12)  month  of  this  agreement
         SUBROGATION  PARTNERS is to receive a fee equal to twenty (20%) percent
         of any recovery made on the Client's behalf.

         SUBROGATION  PARTNERS  rights to  receive  fees  under  this  AGREEMENT
         continue beyond the expiration and/or termination.  It is agreed by the
         CLIENT that SUBROGATION  PARTNERS is authorized to collect  subrogation
         and  receive  its  service  fees  for all  subrogation  transferred  or
         identified  while this  agreement was in force but not collected  until
         after the expiration and or termination of this agreement.

                        ARTICLE EIGHT: PAYMENT SCHEDULE

         All recovered monies will be issued and payable directly to the CLIENT.
All Subrogation  Service Fees  contemplated and collectable  under Article Seven
herein  shall  be  invoiced  to the  CLIENT  upon  receipt  and  will be paid to
SUBROGATION  PARTNERS  no later  than eight (8)  business  days from the date of
invoice.

                             ARTICLE NINE: EXPENSES

         All  expenses   associated  with  this  AGREEMENT  shall  be  the  sole
responsibility  of

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SUBROGATION PARTNERS,  with the exception any Allocated Loss Expense incurred on
the transferred  files before June 15, 1999,  before  Allocated Loss Expenses as
defined in Article Three herein.

                          ARTICLE TEN: INDEMNIFICATION

         SUBROGATION  PARTNERS  will  indemnify,  defend and hold  harmless  the
CLIENT for all claims,  actions,  suits, fines,  penalties and/or losses arising
out of or based upon any negligent act,  omission,  tort, other  negligence,  or
intentional act on the part of SUBROGATION PARTNERS and/or its agents, servants,
and/or  employees,  in the course of  performance  of the  SUBROGATION  SERVICES
herein and in which  claims,  actions,  judgments,  suits,  and/or  losses,  are
rendered  in favor of  Plaintiff  unless  based upon  action(s)  of  SUBROGATION
PARTNERS,  its agents,  servants,  and/or  employees that were undertaken at the
specific written direction of CLIENT.

                    ARTICLE ELEVEN: CONFIDENTIAL INFORMATION

         CLIENT and SUBROGATION  PARTNERS  acknowledge that each may acquire and
develop knowledge,  and information and materials  concerning the other party or
their  affiliated  companies  ("CONFIDENTIAL  INFORMATION").  Such  CONFIDENTIAL
INFORMATION being the trade secrets and confidential and proprietary information
of the parties.  Each party shall hold such  CONFIDENTIAL  INFORMATION in strict
confidence  and shall not  disclose  to  others,  shall not use it in any way or
permit others to use it in any way,  commercially  or  otherwise,  and shall not
allow any unauthorized person, firm or corporation access to it either before or
after  termination  of the AGREEMENT,  without the prior written  consent of the
other party. This provision shall survive termination of this AGREEMENT.

                          ARTICLE TWELVE: TERMINATION

         Either party may  terminate  this  AGREEMENT by submitting to the other
party in writing, at the address noted below, notice of its intent to terminate.
Such notice to terminate  shall be submitted by the party  desiring to terminate
the AGREEMENT no later than ninety (90) days prior to the date of termination.

                        ARTICLE THIRTEEN: MISCELLANEOUS

         Entire  AGREEMENT;  Modifications;  Waivers.  The  provisions  of  this
AGREEMENT  constitute the whole and entire agreement  between the parties hereto
and supersede any and all prior written or oral  negotiations  and/or agreements
between the parties.  No  modification  or alteration of this AGREEMENT shall be
deemed or construed to be a waiver of any other  provisions  hereof  (whether or
not  similar)  not shall any waiver be  construed  a  continuing  waiver  unless
expressly so stated.  If any portion of this AGREEMENT  shall be held invalid or
unenforceable for any reason, then the remaining provisions shall continue to be
valid and enforceable.

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         Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance of the Laws of the State of New York,  without regard to
choice of law principles.

         Notice.  Any  notice  required  or  permitted  to be given  under  this
Agreement  shall  be in  writing  and  either  delivered  personally  or sent by
telefax,  telegram,  or deposited in the mail,  postage  prepaid,  registered or
certified,  return  receipt  requested,  addressed to the parties at the address
specified  below and shall be deemed  received  three (3) days after the date of
mailing  or on the date of  mailing if  certified,  or on the date of  personal,
telex, telefax.

As to SUBROGATION PARTNERS

SUBROGATION PARTNERS
420 Lexington Ave., Suite 3103
New York, NY  10170

As to Empire Insurance Company / Allcity Insurance Company
Empire Insurance Company / Allcity Insurance Company
335 Adams Street
Brooklyn, NY 11201

         Assignment.  This  Agreement and the rights,  obligations  and benefits
hereunder  shall  inure to the  benefit  of the  parties  and  their  respective
successors. SUBROGATION PARTNERS may not assign or delegate the rights or duties
hereunder to any party without the prior written consent of the CLIENT.

         Use of Affiliated Service  Companies.  It is agreed between the parties
that, where appropriate,  SUBROGATION PARTNERS shall be permitted to utilize the
services of its affiliates.

                          ARTICLE FOURTEEN: INSURANCE

A.       SUBROGATION  PARTNERS  shall  maintain  errors and omissions  insurance
         issued by an  insurer  acceptable  to the  CLIENT  and will  purchase a
         policy limit of no less than  $1,000,000 and a deductible of no greater
         than $2,500 for the duration of the performance of SUBROGATION PARTNERS
         SERVICES under the AGREEMENT. (See Attached Copy of Insurance)

B.       SUBROGATION   PARTNERS  shall,  at  its  own  expense,   carry  Workers
         Compensation  insurance and  Disability  Benefits  insurance  providing
         coverage for its employees whom may be working in the office or storage
         facilities of the CLIENT.

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IN WITNESS  WHEREOF,  the parties  hereto,  Universal  Recoveries  Inc.,  d.b.a.
SUBROGATION PARTNERS and EMPIRE INSURANCE  COMPANY/ALLCITY INSURANCE COMPANY and
its  successor,  assigns  and by their  duly  authorized  representatives,  have
executed this AGREEMENT on the date first above written.



UNIVERSAL RECOVERIES INC.
d.b.a. SUBROGATION PARTNERS


By:
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Title:
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EMPIRE INSURANCE COMPANY / ALLCITY INSURANCE COMPANY


By:
   -----------------------------------------


Title:
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