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 ”).

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:

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).

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.

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.

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.

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