Document:

Exhibit 10(v) Surplus Note Purchase Agreement

    SURPLUS
      NOTE PURCHASE AGREEMENT, dated
      as
      of January 31, 2006 (the “Agreement”),
      by
      and between DCAP
      GROUP, INC.,
      a
      Delaware corporation (“Purchaser”),
      and
EAGLE
      INSURANCE COMPANY,
      a New
      Jersey domiciled stock insurance company (“Seller”).

     

    RECITALS

     

    Seller
      is
      the holder of a Surplus Note, dated April 1, 1998, in the principal amount
      of
      three million dollars ($3,000,000) and a Surplus Note, dated March 12, 1999,
      in
      the principal amount of seven hundred fifty thousand dollars ($750,000), each
      of
      which is payable to the order of Seller by  Commercial
      Mutual Insurance Company,
      a
      New
      York cooperative insurance company (“CMIC”)
      (collectively, the “Surplus
      Notes”).
      Copies
      of the Surplus Notes are attached hereto as Exhibit
      A.

     

    Seller
      desires to sell, and Purchaser desires to purchase, the Surplus Notes on the
      terms and conditions of this Agreement. 

     

    NOW,
      THEREFORE,
      in
      consideration of the recitals and the respective covenants, representations,
      warranties and agree-ments herein contained, and intending to be legally bound
      hereby, the parties hereto hereby agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE

     

    1.1  Sale
      of Surplus Notes.
      At the
      Closing (as hereinafter defined), upon and subject to the terms and conditions
      of this Agreement, Seller shall grant, sell, convey, assign, transfer and
      deliver to Purchaser all of its right, title and interest in and to the Surplus
      Notes, free and clear of all mortgages, liens, pledges, security interests,
      charges, claims, restrictions and encumbrances of any nature whatsoever
      (collectively, “Liens”),
      other
      than those restrictions on payment provided for in the Surplus Notes themselves
      or in the New York State Insurance Law or in any rule, regulation, order or
      opinion of the Insurance Department of the State of New York (the “New
      York Insurance Department”)
      relating to surplus notes (collectively, “Statutory
      Restrictions”).
      

     

    1.2  Purchase
      of Surplus Notes.
      At the
      Closing, upon and subject to the terms and conditions of this Agreement and
      in
      reliance on the representa-tions, warranties and covenants of Seller contained
      herein, Purchaser shall purchase the Notes from Seller in consideration for
      the
      Purchase Price (as hereinafter defined). 

     

    1.3  Purchase
      Price.
      

     

    1.3.1  Purchase
      Price.
      The
      purchase price for the Surplus Notes (the “Purchase
      Price”)
      shall
      be three million seventy-five thousand one hundred forty-one dollars
      ($3,075,141) (which the parties acknowledge is the dollar amount reflected
      in
      Column 1 (Current Statement Date) of Line 35 (Surplus as regards
      policyholders) of the “Liabilities, Surplus and Other Funds” section of CMIC’s
      Quarterly Statement to the New York Insurance Department for the quarter ended
      September 30, 2005).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.3.2  Payment
      of Purchase Price.
      At the
      Closing, Purchaser shall pay the Purchase Price to Seller as follows:

     

    (a)  one
      million seven hundred seventy-one thousand seven hundred seven dollars
      ($1,771,707) by certified or bank check or a wire transfer (the “Cash
      Payment”);
      provided,
      however,
      that if
      a wire transfer is to be utilized, wiring instructions must be provided by
      Seller to Purchaser at least two (2) days prior to the Closing Date (as
      hereinafter defined); and

     

    (b)  one
      million three hundred three thousand four hundred thirty-four dollars
      ($1,303,434) by the delivery of a promissory note in, or substantially in,
      the
      form attached hereto as Exhibit 1.3.2, in such principal amount (the
“Promissory
      Note”).

     

    1.4  No
      Assumption of Liabilities.
      Other
      than as expressly set forth in this Agreement, it is expressly understood and
      agreed that in no event shall Purchaser or Seller assume or agree to pay or
      incur any liability or obligation of the other or CMIC.

     

    1.5  Commutation
      Agreement.
      Simultaneously herewith, Seller and CMIC are entering into a 90% Quota Share
      Mutual Release, Settlement and Commutation Agreement pursuant to which,
      simultaneously herewith, Seller is paying to CMIC, by certified or bank check,
      the amount of two hundred thirty-four thousand one hundred thirty-six dollars
      ($234,136).

     

    ARTICLE
      II

     

    REPRESENTATIONS
      AND WARRANTIES OF SELLER

     

    Seller
      makes the following representations and warranties to Purchaser:

     

    2.1  Valid
      Existence.
      Seller
      is a property and casualty insurance company validly existing and in good
      standing under the laws of the State of New Jersey. 

     

    2.2  Authority;
      Binding Nature of Agreement.
      Seller
      has the power and authority to enter into this Agreement and to carry out its
      obligations hereunder and to consummate the transactions contemplated hereby.
      The execution and delivery by Seller of this Agreement and the consummation
      by
      Seller of the transactions contemplated hereby have been duly authorized by
      all
      necessary corporate action, and no other corporate proceedings on the part
      of
      Seller are necessary to authorize the execution and delivery by Seller of this
      Agreement or the consummation of the transactions contemplated hereby. Subject
      to the receipt of the consent referred to in Section 2.3 below, this Agreement
      will constitute the valid and binding obligation of Seller and will be
      enforceable in accordance with its terms. The individual who executed this
      Agreement on behalf of Seller was duly authorized and empowered to take such
      action on Seller’s behalf and to bind Seller by his signature
      hereto.

     

    2.3  Consents.
      Other
      than the consent of Department of Banking and Insurance of the State of New
      Jersey (the “New
      Jersey Insurance Department”),
      no
      consents of any governmental or other regulatory agencies or of other person
      or
      entity (collectively, “Person”)
      are
      required to be received on the part of Seller to enable it to enter into and
      carry out this Agreement and the transactions contemplated hereby. 

     

    
      
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    2.4  No
      Breach. Subject
      to the receipt
      of the consent referred to in Section 2.3 above, neither the execution and
      delivery of this Agreement by Seller, nor compliance by Seller with any
      provision hereof nor consummation of the transactions contemplated hereby,
      will:
      (a) violate or conflict with any provision of the Certificate of Incorporation
      or Bylaws of Seller; (b) violate
      or, alone or with notice or the passage of time, result in the breach or
      termination of, or otherwise give any contracting party the right to terminate,
      or declare a default under, the terms of any contract, agreement, lease,
      arrangement, commitment, understanding or obligation (collectively,
“Contract”)
      to
      which Seller is a party, or by which Seller or any of its assets may be
      bound;
      (c)
      violate any order, injunction, judgment, award or decree (collectively
“Decree”)
      against, or binding upon, Seller; or (d) subject to the accuracy of Purchaser’s
      representations and warranties in Article III hereof, violate any law or
      regulation relating to Seller.

     

    2.5  Untrue
      or Omitted Facts.
      No
      representation, warranty or statement by Seller in this Agreement contains
      any
      untrue statement of a material fact, or omits to state a fact necessary in
      order
      to make such representations, warranties or statements not materially
      misleading. Without limiting the generality of the foregoing, to Seller’s
      knowledge, there is no fact known to Seller that has had, or which may be
      reasonably expected to have, a materially adverse effect on CMIC or any of
      its
      assets or business that has not been disclosed in this Agreement or in the
      due
      diligence process.

     

    2.6  Ownership
      of Surplus Notes.
      Seller
      owns the Surplus Notes free and clear of all Liens (other than Statutory
      Restrictions) and the Surplus Notes may be transferred to Purchaser hereunder
      free of any restriction with regard to transferability. No Person other than
      Seller has any rights directly or indirectly, to the Surplus Notes. There are
      no
      Contracts with any Person to acquire the Surplus Notes or any right or interest
      therein. The Surplus Notes are payable by CMIC in accordance with their terms
      and, subject to the Statutory Restrictions, are not subject to any offset,
      claim
      or reduction of any kind or nature. No payment of principal or interest or
      other
      amount has been made by or in behalf of CMIC pursuant to or with respect to
      either of the Surplus Notes.

     

    2.7  Brokers.
      Seller
      has not engaged, consented to, or authorized any broker, finder, investment
      banker or other third party to act on its behalf, directly or indirectly, as
      a
      broker or finder in connection with the transactions contemplated by this
      Agreement.

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    Purchaser
      makes the following representations and warranties to Seller: 

     

    3.1  Valid
      Existence.
      Purchaser is a corporation validly existing and in good standing under the
      laws
      of the State of Delaware. 

     

    3.2  Consents.
      Except
      for the consents referred to in this Agreement, no consents of governmental
      or
      other regulatory agencies, foreign or domestic, or of other parties are required
      to be received by or on the part of Purchaser to enable it to enter into and
      carry out this Agreement and the transactions contemplated hereby. 

     

    
      
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    3.3  Authority;
      Binding Nature of Agreement.
      Purchaser has the power and authority to enter into this Agreement and to carry
      out its obligations hereunder. The execution and delivery of this Agreement
      and
      the consummation of the transactions contemplated hereby have been duly
      authorized by the Insurance Committee and Audit Committee of the Board of
      Directors of Purchaser and no other proceedings on the part of Purchaser are
      necessary to authorize the execution and delivery of this Agreement and the
      consummation of the transactions contemplated hereby. This Agreement constitutes
      the valid and binding obligation of Purchaser and is enforceable in accordance
      with its terms. The individual who executed this Agreement on behalf of
      Purchaser was duly authorized and empowered to take such action on Purchaser’s
      behalf and to bind Purchaser by his signature hereto.

     

    3.4  No
      Breach.
      Neither
      the execution and delivery of this Agreement nor compliance by Purchaser with
      any of the provisions hereof nor the consummation of the transactions
      contemplated hereby, will:

     

    
      	(a)  	
              violate
                or conflict with any provision of the Certificate of Incorporation
                or
                By-laws of Purchaser;

            

    

     

    
      	(b)  	
              violate
                or, alone or with notice or the passage of time, result in the breach
                or
                termination of, or otherwise give any contracting party the right
                to
                terminate, or declare a default under, the terms of any Contract
                to which
                Purchaser is a party, or by which Purchaser or any of its assets
                may be
                bound;

            

    

     

    
      	(c)  	
              violate
                any Decree against, or binding upon, Purchaser; or
                

            

    

     

    
      	(d)  	
              subject
                to the accuracy of Seller=s
                representations and warranties in Article II hereof, violate any
                law or
                regulation of any jurisdiction relating to
                Purchaser.

            

    

     

    3.5  Brokers.
      Purchaser has not engaged, consented to, or authorized any broker, finder,
      investment banker or other third party to act on its behalf, directly or
      indirectly, as a broker or finder in connection with the transactions
      contemplated by this Agreement.

     

    3.6  Directors.
      Attached hereto as Schedule 3.6 is a true and complete list of the individuals
      who Purchaser is seeking to have elected to the Board of Directors of
      CMIC.

     

    ARTICLE
      IV

     

    CONDITIONS
      PRECEDENT TO THE

    OBLIGATION
      OF PURCHASER TO CLOSE

     

    The
      obligation of Purchaser to consummate the transactions contemplated hereby
      is
      subject to the fulfillment, prior to or at the Closing, of each of the following
      conditions, any one or more of which may be waived by Purchaser (except when
      the
      fulfillment of such condition is a requirement of law):

     

    4.1  Assignment
      of Surplus Notes.
      Seller
      shall have (a) tendered to Purchaser the original Surplus Notes and (b) executed
      and tendered to Purchaser a Surplus Note Assignment Form, in form mutually
      satisfactory to the parties (the “Surplus
      Note Assignment Form”),
      with
      regard to each of the Surplus Notes.

     

    
      
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    4.2  Consents;
      License and Permits. Seller
      and Purchaser shall have obtained all consents, licenses and permits of third
      parties, including, without limitation, from the New Jersey Insurance Department
      and other regulatory authorities, necessary for the performance by Seller of
      all
      of its obligations under this Agreement, including, without limitation, the
      transfer of the Surplus Notes as contemplated hereby, and the acquisition of
      the
      Surplus Notes by Purchaser.

     

    ARTICLE
      V

     

    CONDITIONS
      PRECEDENT TO THE OBLIGATION OF

    SELLER
      TO CLOSE

     

    The
      obligation of Seller to consummate the transactions contemplated hereby is
      subject to the fulfillment, prior to or at the Closing, of each of the following
      conditions, any one or more of which may be waived by Seller (except when the
      fulfillment of such condition is a requirement of law):

     

    5.1  Cash
      Payment; Promissory Note. 
      Purchaser shall have tendered to Seller the Cash Payment and the Promissory
      Note.

     

    5.2  Escrow
      Agreement.
      Purchaser shall have executed and tendered to Seller and Manufacturers and
      Traders Trust Company, as escrow agent (the “Escrow
      Agent”),
      an
      Escrow Agreement with respect to the Surplus Notes (the “Escrow
      Agreement”).

     

    5.3  Consents;
      Licenses and Permits.
      Seller
      shall have obtained all consents, licenses and permits of third parties,
      including, without limitation, from the New Jersey Insurance Department and
      other regulatory authorities, necessary for the performance by Seller of all
      of
      its obligations under this Agreement, including, without limitation, the
      transfer of the Surplus Notes as contemplated hereby.

     

    ARTICLE
      VI

     

    CLOSING

     

    6.1  Location.
      The
      closing (the “Closing”)
      provided for herein shall take place at the offices of Certilman Balin Adler
      & Hyman, LLP, 90 Merrick Avenue, East Meadow, New York at 10:00 a.m.
      concurrently with the execution hereof.

     

    ARTICLE
      VII

     

    CLOSING
      DELIVERIES

     

    7.1  Items
      to be Delivered by Seller.
      At the
      Closing, Seller will deliver or cause to be delivered to Purchaser or the Escrow
      Agent, as the case may be:

     

    (a)  to
      Purchaser, the original Surplus Notes and the Surplus Note Assignment Form
      required by Section 4.1 hereof;

     

    
      
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    (b)  to
      Purchaser and the Escrow Agent, the Escrow Agreement;

     

    (c)  to
      Purchaser, the consents required by Section 4.2 hereof; and

     

    (d)  to
      Purchaser, certified copies of all actions necessary to authorize the execution
      of this Agreement by Seller and the consummation of the transactions
      contemplated hereby. 

     

    7.2  Items
      to be Delivered by Purchaser.  At
      the
      Closing, Purchaser will deliver or cause to be delivered to Seller or the Escrow
      Agent, as the case may be: 

     

    (a)  to
      Seller, a certified or bank check or wire transfer for the Cash
      Amount;

     

    (b)  to
      Seller, the Promissory Note; 

     

    (c)  to
      Seller
      and the Escrow Agent, the Escrow Agreement; 

     

    (d)  to
      the
      Escrow Agent, the original Surplus Notes registered in the name of Purchaser
      and
      an executed Surplus Note Assignment Form, pursuant to the terms of the Escrow
      Agreement; and

     

    (e)  certified
      copies of all actions necessary to authorize the execution of this Agreement
      by
      Purchaser and the consummation of the transactions contemplated hereby.

     

    ARTICLE
      VIII

     

    POST-CLOSING
      MATTERS

     

    8.1  Further
      Assurances.
      On and
      after the Closing Date, (a) upon the request of Purchaser, Seller shall take
      all
      such further actions and execute, acknowledge and deliver all such further
      instruments and documents as may be necessary or desirable to convey and
      transfer to, and vest in, Purchaser, and to protect Purchaser's right, title
      and
      interest in and to, and enjoyment of, the Surplus Notes intended to be assigned,
      transferred, conveyed and delivered pursuant to this Agreement, and (b) the
      parties shall take all such further actions and execute and deliver all such
      further instruments and documents as may be necessary or appropriate to carry
      out the transactions contemplated by this Agreement.

     

    8.2  Power
      of Attorney.
      Without
      limitation of any provision of this Agreement, effective upon the Closing Date,
      Seller constitutes and appoints Purchaser and its successors and assigns, and
      each of them, the true and lawful attorney of Seller, with full power of
      substitution, in their own names or in the name of Seller, but for their own
      benefit and at their own expense, to institute and prosecute all proceedings
      which any of them may deem proper in order to collect, assert or enforce any
      claim, right or title of any kind in or to the Surplus Notes transferred to
      Purchaser hereunder, and to do all such acts and things in relation thereto
      as
      any of them shall deem advisable. Seller acknowledges that the foregoing powers
      are coupled with an interest and shall not be revocable in any manner or for
      any
      reason. The foregoing does not grant to Purchaser any power to take any action,
      as Seller’s attorney in fact, which would serve to amend or avoid Purchaser’s
      obligations under the Promissory Note or the Escrow Agreement and/or have a
      material negative impact upon the value of the Surplus Notes.

     

    
      
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    ARTICLE
      IX

     

    MISCELLANEOUS
      PROVISIONS

     

    9.1  Expenses.
      Each of
      the parties shall bear its own expenses in connection herewith.

     

    9.2  Publicity.
      The
      parties agree that no publicity, release or other public announcement
      (collectively, “Announcement”)
      concerning the transactions contemplated by this Agreement shall be issued
      by
      either party or any of its affiliates without the advance approval of both
      the
      form and substance of the same by the other party, which approval, in the case
      of any Announcement required by applicable law, shall not be unreasonably
      withheld or delayed. The parties agree further that neither the terms of this
      Agreement nor any other transaction contemplated hereby shall be divulged to
      any
      third party without the written consent of Seller and Purchaser, and such terms
      shall be divulged only to such of their employees and representatives who shall
      have a “need to know,” in each case except to the extent that such terms have
      been publicly released in accordance with the provisions hereof. Notwithstanding
      the foregoing, either party may make any Announcement or other disclosure which
      it determines in its sole discretion should be made in any required regulatory
      report or filing.

     

    9.3  Sales,
      Transfer and Documentary Taxes.
      Seller
      shall pay all federal, state and local sales, documentary and other transfer
      taxes, if any, due as a result of the purchase, sale and transfer of the Surplus
      Notes in accordance herewith, whether imposed by law on Seller or Purchaser,
      and
      Seller shall indemnify, reimburse and hold harmless Purchaser in respect of
      the
      liability for payment of or failure to pay any such taxes or the filing of
      or
      failure to file any reports required in connection therewith.

     

    9.4  Equitable
      Relief.
      The
      parties acknowledge and agree that, in the event either party shall violate
      or
      threaten to violate any of the restrictions of Section 9.2 hereof, the aggrieved
      party will be without an adequate remedy at law and will, therefore, be entitled
      to enforce such restrictions by preliminary, temporary or permanent injunctive
      or mandatory relief in any court of competent jurisdiction without the necessity
      of proving damages, without the necessity of posting any bond or other security,
      and without prejudice to any other rights and remedies which it may have at
      law
      or in equity.

     

    9.5  Entire
      Agreement.
      This
      Agreement, including the exhibits attached hereto, which are a part hereof,
      constitutes the entire agreement of the parties with respect to the subject
      matter hereof. No
      change, modification, amendment, addition or termination of this Agreement
      or
      any part thereof shall be valid unless in writing and signed by or on behalf
      of
      the party to be charged therewith.

     

    9.6  Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      given or made pursuant to any of the provisions of this Agreement shall be
      deemed to have been duly given or made for all purposes when hand delivered
      or
      sent by certified or registered mail, return receipt requested and postage
      prepaid, overnight mail or courier, or telecopier as follows:

     

    
      
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    If
      to
      Purchaser, at:

    

    1158
      Broadway

    Hewlett,
      New York 11557

    Attn:
      Barry B. Goldstein, Chief Executive Officer

    Telecopier
      Number: (516) 295-7216

    

    With
      copies to:

    

    Certilman
      Balin Adler & Hyman, LLP

    90
      Merrick Avenue

    East
      Meadow, New York 11554

    Attn:
      Fred Skolnik, Esq.

    Telecopier
      Number: (516) 296-7111

    

    American
      Insurance Management

    7808
      Ardmore Avenue

    Suite
      200

    Wyndmoor,
      Pennsylvania 19038

    Attn:
      Alexander T. Farley, President

     

    If
      to
      Seller, at:

    

    Eagle
      Insurance Company

    999
      Stewart Avenue

    Bethpage,
      New York 11714

    Attn:
      Philbert Nezamoodeen, President

    Telecopier
      Number: (516) 393-4653

    

    With
      copies to:

    

    Jasper
      J.
      Jackson, Esq.

    Secretary,
      Eagle Insurance Company

    999
      Stewart Avenue

    Bethpage,
      New York 11714

    Telecopier
      Number: (516) 393-4561

    

    American
      Insurance Management

    7808
      Ardmore Avenue

    Suite
      200

    Wyndmoor,
      Pennsylvania 19038

    Attn:
      Alexander T. Farley, President

    

    or
      at
      such other address as either party may specify by notice given to the other
      party in accordance with this Section 9.6.

     

    
      
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    9.7  Choice
      of Law; Exclusive Jurisdiction.
      This
      Agreement shall be governed by, and interpreted and construed in accordance
      with, the laws of the State of New York, excluding choice of law principles
      thereof. Each of the parties hereby irrevocably and unconditionally: (i)
      consents and submits for itself and its property in any action or proceeding
      relating to this Agreement to the exclusive jurisdiction of the federal courts
      located within the Eastern District of the State of New York and the state
      courts located within the County of Nassau in the State of New York; and (ii)
      consents that any such action or proceeding may be brought in such courts,
      and
      waives any objection that it may now or hereafter have to the venue of any
      such
      action or proceeding in any such court or that such action or proceeding was
      brought in an inconvenient court and agrees not to plead or claim the same.
      

     

    9.8  Severability.
      In the
      event any clause, section or part of this Agreement shall be held or declared
      to
      be void, illegal or invalid for any reason, all other clauses, sections or
      parts
      of this Agreement which can be effected without such void, illegal or invalid
      clause, section or part shall nevertheless continue in full force and
      effect.

     

    9.9  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns.

     

    9.10  Headings.
      The
      headings or captions under sections of this Agreement are for convenience of
      reference only and do not in any way modify, interpret or construe the intent
      of
      the parties or affect any of the provisions of this Agreement.

     

    9.11  No
      Third Party Beneficiaries.
      No
      Person not a party to this Agreement shall be entitled to rely upon or enforce
      any of the provisions of this Agreement.

     

    9.12  Representation
      by Counsel; Interpretation.
      The
      parties acknowledge that they have been represented by counsel in connection
      with this Agreement and the transactions contemplated hereby. Accordingly,
      any
      rule or law or any legal decision that would require the interpretation of
      any
      claimed ambiguities in this Agreement against the party that drafted it has
      no
      application and is expressly waived by the parties. The provisions of this
      Agreement shall be interpreted in a reasonable manner to give effect to the
      intent of the parties hereto.

     

    9.13  Counterparts. This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original and all of which together shall constitute one
      instrument.

     

    9.14  Facsimile
      Signatures. 
      Signatures hereon which are transmitted via facsimile shall be deemed original
      signatures.

     

    {Remainder
      of page intentionally left blank. Signature page
      follows.}

     

    
      
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    WITNESS
      the
      execution of this Surplus Note Purchase Agreement as of the date first above
      written.

    

    DCAP
      GROUP, INC.

    

    

    By:_______________________________

    Name: Barry
      B.
      Goldstein

    Title: Chief
      Executive Officer

    

    EAGLE
      INSURANCE COMPANY

    

    

    By:_______________________________

    Name:
      Philbert Nezamoodeen

    Title:
      President

    

    

     

    

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Exhibits

    

    Exhibit
      A Surplus
      Notes

    Exhibit
      1.3.2 Promissory
      Note

    

    

    

    Schedules

    

    3.6  New
      DirectorsExhibit 10(w) $1,303,434 Promissory Note

     

    PROMISSORY
      NOTE

    

    

    January
      31, 2006

    

    $1,303,434

    

    FOR
      VALUE RECEIVED,
      DCAP
      GROUP, INC.,
      a
      Delaware corporation (the “Maker”), having an address as indicated under its
      name, hereby promises to pay to the order of EAGLE
      INSURANCE COMPANY,
      a New
      Jersey domiciled stock insurance company (the “Payee”), at 999 Stewart Avenue,
      Bethpage, New York 11714, or at such other place as the Payee may from time
      to
      time designate in writing, in immediately available funds, the principal sum
      of
ONE
      MILLION THREE HUNDRED THREE THOUSAND FOUR HUNDRED THIRTY-FOUR DOLLARS
      ($1,303,434),
      together with interest thereon from the date hereof at the rate of seven and
      one-half percent (7.5%) per annum, six (6) months from the date hereof (the
      “Maturity Date”).

     

    This
      Note
      is given pursuant to the Surplus Note Purchase Agreement of even date by and
      between the Maker and the Payee.

     

    The
      Maker
      may, at its option, at any time and from the time to time, prepay all or any
      part of the principal balance of this Note, without penalty or
      premium.

     

    In
      the
      event the Maker (a) makes a general assignment for the benefit of creditors;
      (b)
      is adjudicated a bankrupt or insolvent; (c) files a voluntary petition in
      bankruptcy or a petition or an answer seeking an arrangement with creditors;
      (d)
      takes advantage of any bankruptcy, insolvency or readjustment of debt law or
      statute or files an answer admitting the material allegations of a petition
      filed against the Maker in any proceeding under any such law; or (e) has entered
      against the Maker a court order approving a petition filed against the Maker
      under the Federal Bankruptcy Act (provided that, in the case of an involuntary
      petition, such petition shall not have been dismissed or stayed within sixty
      (60) days following the filing thereof), then in each and every such event,
      the
      Payee may, by written notice to the Maker, declare the entire unpaid principal
      amount of this Note then outstanding, together with accrued interest thereon,
      to
      be forthwith due and payable, whereupon the same shall become forthwith due
      and
      payable. 

     

    If
      this
      Note is not paid when due and payable, the interest rate payable hereon shall
      increase, commencing and effective with the date on which payment was due and
      payable, to the rate of twelve percent (12%) per annum.

     

    This
      Note
      may not be waived, changed, modified or discharged orally, but only by an
      agreement in writing, signed by the party against whom enforcement of any
      waiver, change, modification or discharge is sought.

     

    The
      Maker
      agrees to pay all costs of collection including reasonable attorney’s
      fees.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
      Maker
      and any endorsers hereof, for themselves and their respective representatives,
      successors and assigns, expressly waive presentment, protest, notice of
      dishonor, notice of maturity and notice of protest.

     

    Any
      notice or other communication or delivery required or permitted to be given
      or
      made pursuant to this Note shall be in writing and shall be deemed to have
      been
      duly given or made when delivered by hand or sent by certified or registered
      mail (return receipt requested and postage prepaid), or overnight mail or
      courier, to the Maker at the address stated herein or at such other address
      of
      which the Maker shall have notified the Payee in writing as aforesaid and to
      the
      Payee at 999 Stewart Avenue, Bethpage, New York 11714, Attention: Philbert
      Nezamoodeen or at such other address of which the Payee shall have notified
      the
      Maker in writing as aforesaid. Copies of any notice or other communication
      or
      delivery to the Maker shall be sent to Certilman Balin Adler & Hyman, LLP,
      90 Merrick Avenue, East Meadow, New York 11554, Attention: Fred Skolnik, Esq.
      and American
      Insurance Management, 7808 Ardmore Avenue, Suite 200, Wyndmoor, Pennsylvania
      19038, Attention: Alexander T. Farley, President. Copies of any notice or other
      communication or delivery to the Payee shall be sent to Jasper Jackson, Esq.
      Eagle Insurance Company, 999 Stewart Avenue, Bethpage, New York 11714 and
      American Insurance Management, 7808 Ardmore Avenue, Suite 200, Wyndmoor,
      Pennsylvania 19038, Attention: Alexander T. Farley, President.

    

    This
      Note
      shall be governed by, and construed in accordance with, the laws of the State
      of
      New York, excluding conflict of law principles thereof. 

     

    The
      individual who executed this Note on behalf of the Maker was duly authorized
      and
      empowered to take such action on the Maker’s behalf and to bind the Maker by his
      signature hereto.

     

    
      	 	 	 
	 	DCAP
              GROUP, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Barry
              B. Goldstein, President
	 	
              Address:  1158
                Broadway

                                
                Hewlett,
                New York 11557

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