Exhibit 10(x) $3,000,000 Surplus Note


    COMMERCIAL
      MUTUAL INSURANCE COMPANY

    15
      JOYS
      LANE, KINGSTON, NEW YORK 12401/TELEPHONE (845) 331-3288 FAX (845)
      340-8393

    


    ORGANIZED
      1886


    


    


    THIS
      SURPLUS NOTE SUPERCEDES AND REPLACES THE SURPLUS NOTE, DATED 1998, IN THE
      PRINCIPAL AMOUNT OF THREE MILLION DOLLARS ($3,000,000) ISSUED BY COMMERCIAL
      MUTUAL INSURANCE COMPANY TO EAGLE INSURANCE COMPANY (THE “ORIGINAL
      NOTE”).

    


    SURPLUS
      NOTE

     

    

      
        	
                $3,000,000

              	
                Kingston,
                  New York

                April
                  1, 1998

              


      

       

    

    FOR
      VALUE
      RECEIVED, COMMERCIAL MUTUAL INSURANCE COMPANY, (“Borrower”) a New York advance
      premium co-operative property/casualty insurance company with its principal
      office at 15 Joys Lane, Kingston, New York 12401 which, effective as of April
      1,
      1998, in consideration of a Three Million Dollar ($3,000,000) surplus loan
      received by Borrower on the date thereof from Eagle Insurance Company, a New
      Jersey Stock casualty insurance company with its principal office at 999 Stewart
      Avenue, Bethpage, New York 11714 (“Eagle”), hereby promises and agrees to pay to
      the order of DCAP Group, Inc., a Delaware corporation with its principal office
      at 1158 Broadway, Hewlett, New York 11557 (“Lender”), as assignee of the right,
      title and interest of Eagle in and to the Original Note, the principal amount
      of
      Three Million Dollars ($3,000,000) in accordance with the terms and conditions
      of this Note, plus interest thereon at the rate specified in Section 2 hereof
      from the date hereof until paid.

     

    1.  Payment
      of Principal Amount.

     

    (a)  Subject
      to prior compliance with the provisions of subsection (c) of this Section 1,
      the
      principal amount outstanding hereunder shall be payable by Borrower to Lender
      in
      one payment which shall be due on the earlier of (i) March 31, 2003 or (ii)
      the
      occurrence of an Event of Default as specified in Section 5 hereof.

     

    (b)  Subject
      to prior compliance with the provisions of subsection (c) of this Section l
      and
      Section 2 hereof, Borrower shall have the right to prepay all or any part of
      this Note from time to time without premium or penalty by paying to Lender
      the
      principal amount being prepaid together with all accrued but unpaid interest
      thereon to the date of prepayment.

     

    (c)  No
      payments of the principal amount of this Note shall be made unless: (i) at
      least
      30 days prior to making such payment, Borrower shall file with the New York
      Superintendent of Insurance (the “Superintendent”) all information required by
      the Superintendent’s then current regulations, (ii) such payment shall be made
      only out of the surplus of Borrower existing at the time of payment, provided
      that principal on this Note shall be paid only to the extent that after any
      such
      payment Borrower has remaining surplus in excess of the minimum amount of
      statutory surplus required of Borrower by the law of the State of New York
      at
      the time of payment for the issuance of a certificate of authority to transact.
      For the purpose of determining surplus, the outstanding principal amount of
      this
      Note and any other surplus notes similarly restricted as to payment shall not
      be
      counted as a liability of Borrower. If required by applicable law, the prior
      written approval of the Superintendent shall be obtained prior to making such
      payment, provided, however, that Lender may elect to cancel this Note and treat
      the proceeds as a contribution to the capital of Borrower, as permitted by
      and
      subject to compliance with the laws of the State of New York.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)  Any
      payment made shall first apply to accrued interest, and the balance of such
      payment shall apply to reduce the principal of this Note.

     

    (e)  For
      the
      purposes of this Note, the surplus of Borrower shall be as reported on line
      35
      of page 3 of Borrower’s annual statement as filed with the Superintendent.


     

    (f)  The
      entire unpaid principal amount of this Note and any accrued but unpaid interest
      hereon shall be carried, considered and reported as a footnote in all financial
      statements published by Borrower or filed with any insurance regulatory
      authority.

     

    2.  Interest.
      Interest shall accrue on the outstanding principal amount hereunder at an annual
      rate equal to the lesser of: (a) 8.5% per annum, (b) the prime rate charged
      from
      time to time by Citibank, N.A. or (c) that rate permitted pursuant to the
      provisions of Section 5-501 of the General Obligations Law of the State of
      New
      York. Interest payable hereunder shall be payable in arrears on the last day
      of
      each month during which any portion of the principal amount hereof is
      outstanding commencing on April 1, 1998 and at maturity; provided that payments
      of interest on this Note shall be made only out of the surplus of Borrower
      existing at the time of payment, provided that no such payment shall be made
      if
      the effect thereof is to reduce the surplus of Borrower below the minimum amount
      of statutory surplus required of Borrower by the laws of the State of New York
      at the time of payment for the issuance of a certificate of authority to
      transact the class or classes of insurance which Borrower is then authorized
      to
      transact and the prior written approval of the Superintendent is obtained with
      respect to such payment to the extent then required by applicable law. The
      inability or failure of Borrower to pay interest as specified herein on this
      Note shall not relieve Borrower of the obligation to pay such
      interest.

     

    3.  Place
      of Payment.
      All
      amounts payable by Borrower to Lender hereunder shall be paid in lawful money
      of
      the United States of America directly to Lender at Lender’s address set forth
      above or at such other address of which Lender shall give written notice to
      Borrower.

     

    4.  Affirmative
      Covenants of Borrower.

     

    (a)  From
      the
      date of this Note and so long as this Note shall be outstanding, Borrower will
      furnish to Lender:

     

    (i)  within
      45
      days after the close of each of the first three quarters of each of Borrower’s
      fiscal years, a balance sheet of Borrower as of the end of such quarter and
      a
      statement of operations for the period commencing at the end of the previous
      fiscal year and ending with the end of such quarter, each certified by the
      Chief
      Financial Officer of Borrower; and

     

    
      
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    (ii)  within
      60
      days after the close of each fiscal year of Borrower, a balance sheet of
      Borrower as of the end of such fiscal year and a statement of operations of
      Borrower for such fiscal year accompanied by (A) the unqualified opinion with
      respect thereto of Ernst & Young or other independent public accountants of
      recognized national standing and acceptable to Lender and (B) a certificate
      of
      such independent public accountants stating that they are familiar with the
      terms of this Note and that no event which constitutes an Event of Default
      or
      which would become an Event of Default, with the passage of time or the giving
      of notice or both, has occurred or is continuing.

     

    (b)  From
      the
      date of this Note and so long as this Note shall be outstanding, Borrower will
      furnish to Lender:

     

    (i)  promptly
      upon their becoming available, all regular and periodic financial and other
      reports which Borrower shall file with any regulatory authority having
      jurisdiction over it or its operations;

     

    (ii)  immediately
      upon receipt, a copy of all written communications and a written summary of
      all
      oral communications which Borrower shall receive from any regulatory agency
      having jurisdiction over it or its operations;

     

    (iii)  within
      five days after the occurrence of each event which constitutes an Event of
      Default specified in Section 5 hereof or which would become an Event of Default,
      with the passage of time or the giving of notice or both, notice of such
      occurrence together with a detailed statement by the President of Borrower
      of
      the steps being taken by Borrower to cure the effect of such event;
      and

     

    (iv)  such
      other information respecting the financial condition and operations of Borrower
      as Lender may from time to time reasonably request.

     

    (c)  From
      the
      date of this Note and so long as this Note shall be outstanding, Borrower
      will:

     

    (i)  Duly
      pay
      and discharge all taxes, assessments and governmental charges or levies imposed
      upon it or upon its income, premiums or profits or upon any properties belonging
      to it prior to the date on which penalties attach thereto, and all lawful claims
      which, if unpaid, might become a Lien upon any properties of Borrower, provided
      that Borrower shall not be required to pay any such tax, assessment, charge,
      levy or claim which is being contested by it in good faith and by proper
      proceedings;

     

    (ii)  Maintain
      the insurance of Borrower’s facilities and Operations;

     

    (iii)  Preserve
      and keep in full force and effect its existence as an advance premium
      co-operative property/casualty insurance company under the laws of the State
      of
      New York and its admission to transact an insurance business in each
      jurisdiction in which it is licensed to transact such an insurance business
      as
      of the date of this Note;

     

    
      
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    (iv)  Comply
      in
      all material respects with Borrower’s underwriting manual as in effect on the
      date of this Note with respect to all insurance business written or renewed
      after the date of this Note;

     

    (v)  At
      any
      reasonable time and from time to time, permit Lender or any agents or
      representatives thereof to examine and make copies of and take abstracts from
      the records and books of account of, and visit the properties of, Borrower,
      and
      to discuss the affairs, finances and accounts of Borrower with Borrower’s
      officers;

     

    (vi)  Conduct
      its business only in the ordinary course and keep accurate and complete records
      of its assets, liabilities and operations consistent with sound business
      practices and in accordance with SAP;

     

    (vii)  Maintain
      its equipment, real property and other properties in good condition and repair,
      normal wear and tear excepted, and pay and discharge the cost of repairs thereto
      or maintenance thereof;

     

    (viii)  Pay
      all
      rent or other sums required by every lease to which Borrower is a party as
      the
      same becomes due and payable, perform all its obligations as tenant or lessee
      thereunder except where contested in good faith by lawful and appropriate
      proceedings and where adequate reserves therefore have been set
      aside;

     

    (ix)  Give
      immediate notice to Lender of the institution of any litigation, administrative
      proceeding or governmental investigation, other than routine litigation
      ordinarily incident to Borrower’s insurance business or the entry of any
      judgment, decree or Order against or involving Borrower which might affect
      the
      enforceability of this Note or Borrower’s ability to obtain approval of the
      Superintendent to make payments of principal on this Note; and

     

    (x)  Pay
      or
      cause to be paid when due, or within applicable grace periods, all indebtedness
      of Borrower, and give immediate notice to Lender of the occurrence of any event
      of default under any outstanding indebtedness of Borrower or any fact, condition
      or event which, with the giving of notice or the passage of time or both, would
      constitute such an event of default.

     

    5.  Event
      of Default.
      An
      event of default (an “Event of Default”) shall exist hereunder if (i) Borrower
      fails to pay any amount of principal or interest in full when due hereunder
      whether or not Borrower has obtained the approval of the Superintendent for
      such
      payment, (ii) Borrower shall fail to perform or observe any other term, covenant
      or agreement contained in this Note or the Services Agreement on its part to
      be
      performed or observed, and any such failure remains unremedied for 30 days
      after
      written notice thereof shall have been given to Borrower by Lender, (iii)
      Borrower shall fail to pay any indebtedness, other than as evidenced by this
      Note, or any interest or premium thereon, when due, whether such indebtedness
      shall become due by scheduled maturity, required prepayment, acceleration,
      demand or otherwise, (iv) any Required Filing or Approval shall at any time
      for
      any reason cease to be in full force and effect or shall be declared to be
      null
      or void, or the enforceability or validity thereof shall be contested by
      Borrower and an insurance Governmental Entity, (v) a final judgment or judgments
      are entered, or an Order or Orders of any judicial authority or Governmental
      Entity are issued against Borrower (collectively, a “Judgment”) for (a) payment
      of money, which judgment, in the aggregate, exceeds $1,000,000 outstanding
      at
      any time or (b) injunctive or declaratory relief and such Judgment is not
      discharged or execution thereon or enforcement thereof stayed pending appeal
      within 30 days after entry or issuance thereof, or, in the event of such a
      stay,
      such Judgment is not discharged within 30 days after such stay expires; (vi)
      Borrower shall be adjudicated as bankrupt or insolvent, or admit in writing
      its
      inability to pay its debts as they mature, or Borrower shall apply for or
      consent to the appointment of any receiver, trustee, liquidator or similar
      officer for it or for all or any substantial part of its property, or such
      receiver, trustee, liquidator or similar officer shall be appointed without
      the
      application or consent of Borrower and such appointment shall continue
      undischarged for a period of 60 days, or Borrower shall institute, by petition,
      application, answer, consent or otherwise, any bankruptcy, insolvency,
      reorganization, arrangement, readjustment of debt, dissolution, rehabilitation,
      liquidation or similar proceeding, or any such proceeding shall be instituted
      against Borrower and shall remain undismissed for a period of 60 days, or any
      judgment, writ, warrant of attachment or execution or similar process shall
      be
      issued or levied against a substantial part of the property of Borrower and
      such
      judgment, writ or similar process shall not be released, vacated or fully bonded
      within 60 days after its issue or (vii) the amount of Borrower’s surplus,
      excluding any surplus notes and all accrued but unpaid interest thereon, shall
      be less than the amount of Borrower's surplus on the effective date of the
      Conversion without giving effect to Borrower’s receipt of the proceeds of this
      Note.

     

    
      
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    6.  Remedies.
      Upon
      the occurrence of an Event of Default and subject to the limitations set forth
      in Sections 1 (c) and 2 hereof, Lender may (a) by notice to Borrower, declare
      the entire unpaid principal amount of this Note, all interest accrued and unpaid
      hereon and all other amounts payable hereunder to be forthwith due and payable,
      whereupon this Note, all such accrued interest and all such amounts shall become
      and be forthwith due and payable, without presentment, demand, protest or
      further notice of any kind, all of which are hereby expressly waived by Borrower
      and (b) proceed to enforce its rights under this Note by exercising such
      remedies as are available to Lender in respect thereof under applicable law,
      either by suit in equity or by action at law, or both, whether for specific
      performance of any agreement contained in this Note or in aid of exercise of
      any
      power granted in this Note. No remedies are intended to be exclusive and each
      such remedy shall be cumulative.

     

    7.  Subordination.
      The
      indebtedness of Borrower evidenced by this Note, including the principal hereof
      and the interest hereon, shall be subordinate and junior in right of payment
      to
      Borrower’s obligations to its policyholders and all other creditors, whether now
      outstanding or hereafter incurred, and in the event of any insolvency
      proceedings, rehabilitation, receivership, conservatorship, reorganization,
      readjustment of debt, marshalling of assets and liabilities or similar
      proceedings or any liquidation or winding-up of Borrower, whether voluntary
      or
      involuntary, all such obligations (herein-after collectively, “Senior
      Obligations”) shall be entitled to be paid in full before any payment shall be
      made on account of the principal of, or interest on, this Note. In the event
      of
      any such proceeding, liquidation or winding-up, after payment in full of all
      sums owing with respect to Senior Obligations, Lender shall be entitled to
      be
      paid from the remaining assets of Borrower the unpaid principal amount of this
      Note and interest accrued and unpaid hereon. The foregoing subordination
      provisions of this Note are solely for the purpose of defining the relative
      rights of the holders of Senior Obligations and Lender, and none of such
      provisions shall impair, as between Borrower and Lender, the obligation of
      Borrower to pay Lender the principal hereof and the interest hereon and any
      other sums payable hereunder in accordance with the terms hereof, nor shall
      such
      subordination provisions prevent Lender from exercising all remedies otherwise
      permitted under the terms hereof upon an Event of Default hereunder, subject
      to
      the rights, if any, of the holders of Senior Obligations to be paid in full
      before any payment shall be made on account of this Note.

     

    
      
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    8.  No
      Waiver.
      Neither
      the failure of Lender nor any delay on the part of Lender to exercise any right,
      power or privilege under this Note shall operate as a waiver thereof, nor shall
      any single or partial exercise by Lender of any right, power or privilege
      hereunder preclude any other or further exercise of that or any other right,
      power or privilege. No modification or waiver of any provision of this Note
      nor
      consent to any departure therefrom by Borrower shall in any event be effective
      unless (i) the same shall be in writing and (ii) approved in writing by each
      applicable insurance regulatory authority then having jurisdiction over
      Borrower. Each such waiver or consent shall be effective only in the specific
      instance and for the purpose for which given. No notice to or demand on Borrower
      in any case shall entitle Borrower to any other or further notice in similar
      or
      other circumstances.

     

    9.  Payment
      Due on Holidays.
      If the
      interest on this Note falls due on a Saturday, Sunday or legal holiday at the
      place of payment, such payment shall be made on the next succeeding business
      day.

     

    10.  Conversion.
      In the
      event Borrower converts to a stock property/casualty insurance company, Lender
      shall have the option, in its sole discretion, of canceling this Note in
      exchange for such number of shares of stock in the corporation resulting from
      such conversion as the amount of unpaid principal and interest will purchase
      at
      the price specified in Borrower's plan of conversion or taking any such other
      action permitted under the laws of the State of New York. If such unpaid
      principal and interest would entitle Lender to a fractional share of stock
      in
      exchange for the cancellation of this Note, Lender shall have the option, in
      its
      sole discretion, of being paid the value of such fractional share in cash or
      of
      purchasing such additional fractional interest as will entitle Lender to
      purchase a full share.

     

    
      11.  Applicable
        Law.
        The
        construction, interpretation and enforcement of this Note shall be governed
        by
        the internal laws of the State of New York.

    

     

    
      
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    IN
      WITNESS WHEREOF, and intending to be legally bound hereby, Borrower has executed
      this Note on January 31, 2006 but effective as of the date and year first above
      written.

     

    
      	 	 	 
	 [SEAL]	COMMERCIAL
              MUTUAL
              INSURANCE COMPANY
	 
 	 
 	 
 
	Attest:	By: