THIS
PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND
NOT FOR DISTRIBUTION AND MAY BE TRANSFERRED OR OTHERWISE DISPOSED
OF ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF l933, AS AMENDED
(THE “ACT”).
DCAP GROUP, INC.
June __, 2009
PROMISSORY NOTE
Due July 10, 2011
(or Later Under Certain
Circumstances)
DCAP GROUP, INC. , a Delaware corporation (the
“Company”), for value received, hereby promises to pay
to ____________________________________________ or
order (the “Holder”) on the later of (i) July 10, 2011
or (ii) two years and ten days following the effective date on
which Commercial Mutual Insurance Company (“CMIC”) is
converted from an advance premium cooperative to a stock property
and casualty insurance company, and the surplus notes of CMIC held
by the Company are converted into a 100% equity interest in
CMIC’s successor, Kingstone Insurance Company, but in no
event later than October 10, 2011 (the “Maturity Date”)
at the offices of the Company, 1158 Broadway, Hewlett,
New York, the principal sum of
__________________________________________________
($___________) DOLLARS in such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public and private debts and to pay interest on
said principal sum at the rate of twelve and five-eighths percent
(12.625%) per annum through the Maturity Date. Interest
on the principal balance of this Promissory Note
(“Note”) from the date hereof (the “Issue
Date”) shall be payable on each July 10 and January 10
commencing on July 10, 2009.
1. Series of
Notes . This Note is one of a series of
Promissory Notes, identical in form (the “Notes”),
issued on or about the date hereof, in the aggregate principal
amount of $500,000. All Notes in such series shall rank
equally and ratably without preference or priority of any said
Notes over any others thereof.
2. Registered
Owner . The Company may consider and treat the
person in whose name this Note shall be registered as the absolute
owner thereof for all purposes whatsoever (whether or not this Note
shall be overdue) and the Company shall not be affected by any
notice to the contrary. Subject to the provisions
hereof, the registered owner of this Note shall have the right to
transfer it by assignment and the transferee thereof, upon its
registration as owner of this Note, shall become vested with all
the powers and rights of the transferor. Registration of
any new owner shall take place upon presentation of this Note to
the Company at its offices together with the Note Assignment Form
attached hereto duly executed. In case of transfers by
operation of law, the transferee shall notify the Company of such
transfer and of its address, and shall submit appropriate evidence
regarding the transfer so that this Note may be registered in the
name of the transferee. This Note is transferable only
on the books of the Company by the Holder on the surrender hereof,
duly endorsed. Communications sent to any registered owner shall be
effective as against all holders or transferees of this Note not
registered at the time of sending the communication.
3. Consent
Required . Except with the prior written consent
of the Holder, the Company shall not grant a security interest in
any of its assets to secure the repayment of any indebtedness
incurred by it for borrowed funds.
4.1 Redemption
Right . The Holder, by its acceptance of this Note, hereby
acknowledges that, at any time, and from time to time, prior to the
Maturity Date, the Company may, at its option, by written notice
given to the Holder, elect to redeem and prepay all or any portion
of the outstanding principal indebtedness evidenced by this Note,
without premium or penalty. Any such notice of the
Company’s election to redeem and prepay as provided for
hereinabove shall indicate the principal amount to be redeemed and
prepaid (the “Redemption Amount”) and shall be given
not less than thirty (30) days prior to the date fixed in such
notice as the date for the redemption of this Note (the
“Redemption Date”).
4.2
Interest . In the event the Company so
elects to redeem and prepay this Note, in whole or in part,
pursuant to Section 4.1 hereof, it shall pay to the Holder, in
addition to the principal amount being prepaid, accrued interest
thereon through the Redempti
