CAPITAL ONE, NATIONAL ASSOCIATION,

Plaintiff,

- against -

JACOB FRYDMANDefendant.

JUDGE CROTTYCarla R. Walworth (CW-5401) Cynthia A. CurtinPAUL, HASTINGS, JANOFSKY & WALKER LLP 75 East 55th StreetNew York, New York Telephone: 212-318-6000Facsimile: 212-319-4090 carlawalworth@paulhastings.com cynthiacurtin@paulhastings.com

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

CV 2231

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Civil Action No.

Complaint

COMPLAINT

Capital One, National Association, by its attorneys Paul, Hastings, Janofsky & Walker

LLP, hereby files its Complaint, and states as follows:

INTRODUCTION

1. Plaintiff Capital One, National Association, ("Capital One" or "Bank")

brings this action to recover approximately $370,141.75 owed to it by Jacob Frydman

("Frydman"), under a credit account agreement and guaranty. Frydman borrowed money and

received other financial accommodations from Capital One, and Frydman promised to pay

certain amounts, including principal and interest, totaling $370,141.75, on the conditions set

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forth therein. In addition, in order to induce Capital One to extend or continue to extend credit or

other financial accommodations, Frydman executed a guaranty unconditionally guaranteeing his

obligations to the Bank. Frydman has defaulted on his obligations. Although Capital One

promptly provided Frydman with a Demand Letter notifying him of his default, Frydman has not

paid Capital One the outstanding balance owed. Therefore, Capital One brings this action for

breach of contract, among other claims, in order to recover the debt owed to it by Frydman .

Parties

2. Plaintiff Capital One is a national bank with its principal place of business

located at 1680 Capital One Drive, McLean, Virginia 22102. Capital One is a successor by

merger to North Fork Bank ("North Fork"), which merged with and into Capital One, N.A. on or

about August 1, 2007.

3. On information and belief, Defendant and Interpleader Defendant Jacob

Frydman ("Frydman") is a New York resident, residing at 40 Fulton Street, Floor 6, New York,

NY 10038.

Jurisdiction and Venue

4. This Court has jurisdiction over the subject matter of this action pursuant

to 28 U.S.C. §1332 because (i) complete diversity of citizenship exists between the parties; and

(ii) the amount in controversy exceeds $75,000.00 exclusive of interest and costs.

5. Venue in this District is proper under 28 U.S.C. § 1391 because Frydman

is subject to personal jurisdiction in this District and the events at issue occurred in this venue.

Thus venue is not inconvenient for the parties.

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Count 1 (Breach of Contract Under the Restated Elite Agreement and the Elite Guaranty Against

Defendant Frydman)

B. The Restated Elite Agreement

6. On or about October 29, 2004, pursuant to a credit account agreement by

and between North Fork and Frydman, Capital One agreed to make available to Frydman a line

of credit up to the aggregate amount of $100,000.00 as evidenced by an Elite Plus Credit

Account Agreement, dated October 29, 2004 (the "Elite Agreement"). The Elite Agreement is

attached hereto as Exhibit 1.

7. On or about January 9, 2008, defendant Frydman executed the Restated

Elite Plus Credit Account Agreement, (the "Restated Elite Agreement "), by and between North

Fork and Frydman, increasing the maximum credit limit available to Frydman under the Restated

Elite Agreement to the aggregate amount of $450,000.00. By its terms, the Elite Agreement was

replaced, superseded, and modified by the Restated Elite Agreement. A copy of the Restated

Elite Agreement is attached hereto as Exhibit 2.

8. Under the terms and conditions of the Restated Elite Agreement, Frydman

borrowed money and received other financial accommodations from plaintiff Bank, and

Frydman promised to pay the principal amount plus interest thereon from the date thereof as

provided therein.

9. Pursuant to the Paragraph "Method of Payment" of the Restated Elite

Agreement, Frydman was required to make monthly payments equal to the sum of (a) 1/601 of

the then unpaid principal balance at the end of the statement period or $200, whichever is

greater, plus (b) any amount loaned over the credit limit, plus (c) all interest at a rate provided

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therein (North Fork's prime rate plus 1.0%), plus (d) late charges and (e) any unpaid prior

minimum payment. Exhibit 2 at 1.

10. Pursuant to the paragraph "Entire Balance Due/Default" of the Restated

Elite Agreement , upon an event of default, as prescribed in the Restated Elite Agreement (the

"Restated Elite Agreement Events of Default"), the Bank may declare the entire unpaid

balance due and payable . Exhibit 2 at 2.

11. Among the other Restated Elite Agreement Events of Default, the Bank

may declare the entire unpaid balance due and payable upon the happening of the (i) failure to

pay any amount required by the Restated Elite Agreement when due, or failure to have sufficient

funds in the demand deposit account to permit automatic debit of any amount due; (ii) failure to

make any other payment to the Bank when due and (iii) the occurrence of default under any

instrument or agreement, whether direct or contingent, for the payment of money. Exhibit 2 at 2.

12. Pursuant to the paragraph "Interest Rate" of the Restated Elite Agreement,

from and after the occurrence of an Event of Default, the interest rate payable increases to five

percent (5%) over the then applicable interest rate under the Restated Elite Agreement. Exhibit 2

at 1.

13. Pursuant to the paragraph "Late Charges" of the Restated Elite

Agreement, if there are insufficient funds in the demand deposit account, or a minimum monthly

payment is not paid when due, Frydman will pay a late charges of four percent (4%) of thepayment due plus the applicable overdraft charge. Exhibit 2 at 1.

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14. In order to induce plaintiff bank from time to time, in its discretion, tot

extend or continue credit or other financial accommodations to Frydman, defendant FrydmanIj executed and delivered to the Bank that certain Guaranty dated July 19, 2004 (the "Elitel

Guaranty"), in connection with an Elite Plus Credit Application. The Elite Guarantyti

unconditionally guaranteed the payment obligations of Frydman to plaintiff Bank, including but

not limited to loans, interest, late charge, fees and attorney's fees. A copy of the Elite Guarantyli is attached hereto as Exhibit 3.

15. On July 29, 2010 , Frydman failed to pay the monthly payment due under1l the Restated Elite Agreement, and failed to pay monthly payments due thereafter.J!:i1 16. As of July 29, 2010, Frydman has defaulted and remains in default of the

f obligation to pay Capital One on all amounts due under the Restated Elite Agreement, including

I but not limited to, all interest and associated commissions, fees, expenses and costs. By letter

l dated November 22, 2010, plaintiff Bank made a demand for payment on Frydman for thej

I amounts owing under the Restated Elite Agreement and the Elite Guaranty (the "Elite Demand

Letter"). Pursuant to the Elite Demand Letter, plaintiff Bank declared the entire unpaid balance

of principal and interest, and all other amounts payable under the Restated Elite Agreement

immediately due and payable . A copy of the Elite Demand Letter is attached hereto as Exhibit 4.

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C. Breach of the Restated Elite Agreement and the Elite Guaranty

17. To date, Frydman has not paid the outstanding principal balance of the

Restated Elite Agreement.

18. Frydman has breached the Restated Elite Agreement, for those reasons

stated above, including but not limited to the failure to comply with the obligations under the

Restated Elite Agreement to pay to Capital One the full amount of the unpaid principal in the

amount of $370, 141.75 together with interest and all associated commissions, fees, expenses,

and costs, which became due and payable on demand from Capital One. A schedule showing the

calculation of the amounts of principal, interest and late charges due as of March 31, 2011 under

the Restated Elite Agreement is attached hereto as Exhibit 5.

19. Frydman' s breach of contract has resulted in damages to Capital One in an

amount to be determined at trial, which is far in excess of the jurisdictional amount of this Court.

20. Pursuant to the paragraph "Collection Costs" of the Restated Elite

Agreement, Frydman agreed to pay the Bank's attorney's fees in the event that the Bank retains

counsel with respect to enforcement of the Restated Elite Agreement.

21. Capital One has incurred and continues to incur costs and expenses,

including fees and disbursements of in-house and outside counsel, to enforce the obligations

under the Agreement.

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above.

Count 2 (Estoppel Against Frydman)

22. Capital One repeats and realleges each and every allegation as set forth

23. In entering into the transactions at issue, Capital One relied directly upon

the express representations of Frydman with regard to the Restated Elite Agreement and the Elite

Guaranty (the "Agreements").

24. Frydman entered into the Agreements with full knowledge of Capital

One's reliance upon his representations therein and, indeed, made such representations to induce

Capital One to rely thereon.

25. Capital One has been injured as a direct and proximate result of

Frydman's failure to honor the express representations in the Agreements.

26. Based upon the foregoing, Frydman is now estopped from disputing the

representations and promises in the Agreements.

Count 3 {Uniust Enrichment and Quantum Meruit Against Frydman)

27. Capital One repeats and realleges each and every allegation as set forth

above.

28. As a result of Frydman's conduct as set forth above, Frydman has been

unjustly enriched.

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29. Capital One is entitled to recovery under the doctrines of quasi-contract,

quantum meruit and unjust enrichment.

WHEREFORE, Plaintiff Capital One respectfully requests that this Court enter

judgment in its favor and against Frydman as follows:

(a) On the First Count, a judgment against Frydman in the amount to be determined at trial, including all damages sustained, rights and remedies available as provided

under the Restated Elite Agreement and the Elite Guaranty, costs and expenses incurred in this

action, including attorney's fees, and any other expenses, and all interest on the damages

j sustained as a result of the breach, on all commissions, costs, and expenses applicable under the

Restated Elite Agreement and the Elite Guaranty, and related documents and on all attorney'sI

fees incurred in enforcing its rights as set forth therein;i

l(b) On the Second Count, a judgment against Frydman in the amount

to be determined at trial, including all damages sustained, rights and remedies, reasonable costs

and expenses incurred in this action, including attorney's fees, and any other expenses;

J (c) On the Third Count, a judgment against Frydman in the amount to

I be determined at trial, including all damages sustained, rights and remedies, reasonable costs and

f! expenses incurred in this action, including attorney's fees, and any other expenses;!i

l (d) The costs and disbursements as taxed by the Clerk of the Court;-

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(e) Awarding Capital One such other and further relief as the Court

may deem just and proper under the circumstances.

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Dated: New York, New York March 31, 2011

LEGAL_US_E # 92289559.1

75 East 55th Street New York, New YorkTelephone: 212-318-6000Facsimile: 212-319-4090 carlawalworth@paulhastings.com cynthiacurtin@paulhastings.com

ATTORNEYS FOR PLAINTIFF CAPITAL ONE, NATIONAL ASSOCIATION

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0759022881

Account No.: 759022881 Name: Jacob Frydman Address: 111Fulton Street

New York, NY 10038

NORTH FORK BANKRESTATED ELITE PLUS CREDIT ACCOUNT AGREEMENT

Date: October 29, 2004 Credit Limit: Sl00,000.00Demand Deposit Account No.: 9054020038

DEFINITIONS:The words "you" and "yow'' mean each and all persons who submitted the application for the account and who are bound by this Elite Credit Account Agreement. The word "the Bank" means North Fork Bank its successors and assigns. The word "Agreement" meaus this Elite Credit Account Aeement. The word "Loan Account" means the Elite Credit Loan Account established pursuant to the terms of this Agreement.

EFFECT OF USING LOAN ACCOUNT:When you use this account, you are agreeing to and will be bolllld by the terms and conditions of this Agreement. You certify that all information you gave the Banlc to obtain the Loan Account is true and correct. Each person who signed the application for this acco\Ult will be individually and jointly responsible for all amounts due on the Loan Account.

METHOD OF USE AND LIMITATIONS:The Bank will supply you with Elite Credit Account drafts. So long as no Event of Default, as defined herein, bas occurred and this Agreement has not been cancelled, you may obtain loans for yourself up to your credit limit by writing drafts on the Loan Account. Drafts must then be deposited to your demand deposit account indicated above. The Bank will supply you with twelve (12) drafts at no charge. You must pay for drafts in excess of twelve (12). You must pay a fee of $150.00 per year for each year or part of a year this Agreement is in effect.

MAXIMUM CREDIT:Your credit limit is shown above and will be shown on each monthly statement which the Bank will send you. You are not permitted to exceed your credit limit. The Bank may change your credit limit up or down at any time by giving notice in writing to you. If you write a draft which would cause the unpaid principal balance in your Loan Account to exceed your credit limit, the Bank may either refuse to honor your draft or may honor your draft and malce you a loan in excess of your credit limit. Any such loan together with interest must be repaid immediately upon demand of the Bank.

PROMISE TO PAY:You promise to pay to the order of the Bank all amounts owed under this Agreement, plus interest, collection costs, (including, without limiting attorney fees permitted under this agreement) and all other amounts due. Payment will be made as set forth inthis Agreement.

PERIODIC STATEMENT:Each month the Bank will send you a statement on your Elite Credit Account. This statement will list all transactions that you made in the Loan Account during the previous month. It will show what you have borrowed, what you have repaid, items credited and debited and what you owe (new balance). It will also show interest rate

changes. This statement shall be deemed to be accurate unless you report any errors to the Banlc within sixty (60) days of the statement date.

METHOD OF PAYMENT:The "minimum monthly payment" (as defined herein) will be debited from your demand deposit account with the Bank when due. You agree to have sufficient funds in .your demand deposit account to pennit such debits without creating an overdraft. Your "minimum monthly payment" is equal to the sum of (a) l/601h of the unpaid principal balance as of the end of the statement period or $200, whichever is greater, plus (b) any amount loaned over your credit limit, plus (c) all interest due as computed below, plus (d} all late charges, plus (e) any unpaid prior minimum payment. Notwithstanding the foregoing, you may pay the entire amount owed (plus interest to the date of payment) in full at any time.

PAYMENT - TIME AND APPLICATION:There must be sufficient funds in your demand deposit account so that the minimum payment may be debited by the Bank on the 29th day of each month. This is the "payment due date". Each month's payment will be applied in the following order: (1) Interest; (2) Principal; (3) Late charges and other fees. You may make pre-payments at any time in whole or in part. Prepayments will be applied first to principal, nellt to interest, and the remainder to late charges.

LATE CHARGES:If there are insufficient funds in your demand deposit account to malce the required minimum monthly payment when due, you will pay a late fee of 4% of the payment due plus the applicable overdraft charge.

INTEREST RATE:Interest is payable at a rate equal to 1.00 % above the

Bank's Prime Rate, adjusted as and when such Prime Rate changes. The Bank's Prime Rate is not necessarily the lowest rate charged to its customers and nothing herein shall prevent the Bank from lending at less than its Prime Rate. Interest shall be calculated on a daily basis on the average daily balance of your Loan Account and shall be based upon the actual nwnber of days elapsed and a 360- day year. From and after the occurrence of an Event of Default hereunder, the interest rate payable hereunder shall be increased by 5% over the then applicable interest rate. Ifa law which applies to this Loan Account and which sets maximum loan charges is finally interpreted so that the interest or other loan charges collected or to be collected in connection with your Loan Acco\Ult ellceed the permitted limits, then (i) any such loan charges shall be reduced by the . amount necess to reduce the charges to the permitted limit; and {ii) any sums aheady collected which exceeded permitted limits will be refunded. You may choose to take this refund by accepting a reduction in the principal owed under this Agreement or by taking a direct

ecaplusunsoc.doo 9/01

payment. If a refund reduces principal, the reduction will be treated as a partial payment.

CHANGES IN INTEREST RATE:The interest rate set forth above is based upon the Bank's review of yoW' fmanciaJ condition (and that of any guarantors) and the deposit relationship with the Bank. The Bank may hereafter change your interest rate on thirty days written notice to you. Any change will be effective immediately and will apply to all amounts then outstanding and any amowits incurred thereafter.

ENTIRE BALANCE DUE/DEFAULT:You will be in default, and the Bank need not permit any

further draws against your Loan Account and may require that you pay everything that you owe to it if one or more of the following occur (each such event being referred to

as an "Event of Default"): (1) You fail to make any payment required hereunder when due or fail to have

sufficient funds in your demand deposit account to pennit automatic debit of any amount due; (2) you or any

guarantor fail to make any other payment to the Bank when due; (3) you or any guarantor default under any

instrument or agreement, whether direct or contingent, for the payment of money; (4) you fail to comply with any

other tenn, covenant, or condition contamed inthis Agreement; (5) any

representation or warranty made in this Agreement or any instrument, document, or certificate, furnished by you or any guarantor in connection with this Agreement is false or misleading; (6) a petition in bankruptcy is filed by or against you or any guarantor; (7) an action or proceeding

is commenced by or against you or any guarantor seeking dissolution, liquidation, composition, or

arrangement or the appointment of a receiver; (8) you or any guarantor admit in writing an inability to pay debts as they mature, make a general assignment for the benefit of

creditors, fail to maintain a satisfactory fmancial condition in a manner in which the Bank reasonably

believes is necessary to repay the Loan Account; (9) a judgment or other judicial or administrative

detennination requiring the payment of money is entered against you or any guarantor, ( 10) the guaranty of any

guarantor tenninates or is U11Cnforceable for any reason such as a guarantor dies; (11) your assets or those of any

guarantor are pledged or become liened or impaired such that the Bank believes your ability or that of

any guarantor to repay the Loan Account is impaired; (12) you or any guarantor becomes disabled or dies; (13) you or any guarantor fail to furnish any financial infonnation or financial statements to the Bank or fail to permit an inspection of books, records or property by the Bank or its agents; (14) you grant or cause to exist a security interest in any of your assets, except that of the Bank; (15) you fail to use the Bank as your primary Bank for deposits and loans;(16) you fail to pay any tax assessment when due; or (17) the Banlt determines in good faith that it will not be repaid herewider according to the terms of this Agreement.

COVENANTSIREPRESlNTATIONS/W ARRANTIESYou hereby covenant, represent, and warrant as follows (which representations and warranties are true as of the date hereof and shall be true on the date of any draft against the Loan Account): (a) upon request you will furnish the Bank a copy of your personal financial statement, as well as the personal financial statements of the guarantors, all in form and substance acceptable to the Bank; (b) upon request, you will furnish the Bank with copies of the signed tax returns (with schedules) filed by you or any of your guarantors for the past three (3) years

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and throughout the term of this Agreement; (c) you have full power and authority to enter into this Agreement, and nothing in this Agreement contravenes any law, regulation, by-law or contractual obligation binding upon you and you will furnish proof of same to the Bank; (d) this Agreement constitutes your valid and legally binding obligation in accordance with its terms and has been fully authorized by all necessary action; (e) there are no pending nor, to the best of your knowledge, any threatened actions or proceedings before any court or administrative agency which, if detennined against you, (or any guarantor) would have a material adverse effect on your (or any guarantor's) financial condition, operations, or ability to repay; (f) the reports and infonnation furnished by you and all suarantors are true and accurate in all material respects; (g) you will maintain your principal demand deposit account with the Bank; (h) you will keep your assets insured against theft and destruction; (i) you will pennit the Bank to examine your books and records, and audit your inventory.

RIGHT OF OFFSET:Upon the occurrence of an Event of Default, the Bank may take any amount you have on deposit with it or any affiliate of the Bank and apply it toward the amount due without limiting the foregomg, the Bank may excerise any and all rights of offset it may have pursuant to statute and conunon law.

SECURITY INTEREST:As collateral security for all of your obligations and liabilities to the Bank, rou grant the Bank a continuing security interest in and lien on the following property: All money or other property in the Bank's possession, whether now held or later coming into the Bank's possession whether on deposit or in safekeeping, custody, pledge, transmission, collection or otherwise for your account or to your credit or belonging to you or in which you may have an interest, including but not limited to all proceeds, products, replacements, renewals, substitutions, msurance proceeds, present or future, with respect to the foregoing, (all of which property above is called "Collateral Security"). Your obligations and liabilities to the Bank (which will be called "Liabilities"), mean all amounts due to the Bank from you of any nature, including, but not limited to, amounts due under this Agreement whether they already exist, are incurred at this time, or are incurred in the future, whether they are direct or indirect, whether they are absolute or contingent, whether they are secured or unsecured, whether tliey are matured or unmatured, whether ther were incurred by you alone or jointly or severally Wlth others or whether they were originally contracted with the Bank or others and are now or later owing to the Bank.

REMEDIES UNDER DEFAULT:Upon the occurrence of an Event of Default the Bank

shall have in addition to any other right or remedy granted under this Agreement or by law, the right of a secured party under the Uniform Commercial Code.

All rights and remedies of the Bank shall be cumulative and not mutually exclusive and may be obtained singly or

together at any time or times. Such rights and remedies shall also include, but not be limited to, the following: (a) the Bank may transfer into or out of their own name or that of its designee any or all of the Collateral Security including stock, bonds and other securities and the Bank or itll designees may

demand, sue for, collect, reserve, and hold as like Collateral Security any or all interest. dividends and

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.. . ..income therefrom and exercise all voting and other rights with respect thereto; (b) the Bank shall not be obligated to demand payment-o( protest, or take any steps to preserve any rights in such Collateral Security, all of which remain your obligation; (c) the Bank may sell any or all Collateral Security without notice to you (except where required by law, in which case S days notice by ordinary mail shall be deemed reasonable notice) at public or private sale at such price and upon such tenns as it deem.1 advisable; (d) the Bank shall have the right to bid and purchase at any such sale; (e) the proceeds of any such sale shall first be applied to the costs, expenses, and attorney fees in connection with the sale, and the remainder to the Liabilities in such manner as the Bank shall determine; (f) you and any guarantor and any other obligor shall remain liable for any deficiency; (g) the Bank need not liquidate Collateral Security before seeking payment from you or any guarantor or any other obligor on the liabilities; (h) the Bank .is authorized to take possession of the Collateral Security and may enter any premises where such Collateral Security is located and remove same, (i) you will assemble the Collateral Security and make it available to the Bank at such place and time as the Bank may designate; (j) the Bank may notify any account debtor to make payments to

''PERIODIC REVIEW:The Bank will review your handling of the Loan Account and your credit on a periodic basis. You must supply all financial statements and tax returns requested by the Bank. Based upon the review, the Bank may decrease or tenninate the Loan Account and this Agreement.

MISCELLANEOUS:(a) You agree that a microfilm or other photographic copy of an instrument or docmnent used in connection with the Elite Credit Account will establish the amount you owe; (b) you permit the Bank to order a credit report or consumer report and to receive, obtain, and exchange credit information on you and any guarantor. The will tell you upon request whether or not a consumer report was reported, and, if so, the name and address of the consumer reporting agency; (c) you agree that the Bank may accept late or partial payments, as well as payments that are marked "paid in full" or contain other restrictive endorsements, without losing any rights under thi Agreement; (d) you agree not to draw on the Loan Account except by use of Elite Credit Account drafts provided by l

the Bank.

CANCELLATION:Either you or the Bank may cancel this Agreement at anytime by giving written notice to the other. Even if the

the Bank; (e) you agree to pay for copies and other Elite Credit Account and check related services accor to the Bank's schedule of fees, as amended from time to time; (f) you agree that this Agreement shall be governed by thelaws of the State of New Yorlc without regard to its I

Agreement is canceled, you must still pay the Bank what you owe. In the event of cancellation, you may no longer write drafts against the Loan Account. If no Event of Default has occurred or occurs, you may pay the amountdue hereunder by making thirty-six monthly payments each

conflicts of laws rules; (g) you consent to the jurisdiction of the Court of the State of New York and venue in Suffolk County, New York; (h) you and the Bank waive the right to trial by jury; (i) you waive demand, presentment, andprotest; G) you waive all defenses, rights to setoff and the I

consisting of l/36th of the principal balance outstanding at the time of cancellation plus interest at the rate of the Bank's Prime Rate plus 2 1/2% per annum, adjusted as and when the Bank's Prime Rate changes on the unpaidbalance. The monthly payments may not be equal in

right to impose any counterclaims in any election brought by the Bank (although you may assert such claims in a separate lawsuit); (k) you agree that this Agreement represents the entire understanding between you and theBank and may not be modified or tenninated orally and l

amount.

COLLECTION COSTS:If you do not pay the Bank what you owe and the Bank sends the matter to an attomey for collection, then you agree to pay a reasonable attorney's fee up to 20% of theamount owed, plus court costs and disbursements,

that all waivers by the Bank must be in writing; (1) the Bank has made no representations, warranties, or agreement except as set forth herein; (m) you may not assign or transfer your rights under this Agreement; (n) if this Aw.cement applies to more than one of you, notice to one will be considered notice to all of you; (o) you agreethat you have received the fully completed copy of this

court, or

otherwise.

remainder shall remain in full force and effect. Iregardless of whether an action is commenced and, if so,whether in the trial court, appellate court, bankruptcy

Agreement and have read it and fully understand it; (p) ifany provision of this Agreement is unenforceable, the

DELAY lN ENFORCEMENT/W AJVER:The Bank does not give up any of its rights by not enforcing them right away. The Bank may enforce or waive any right with respect to you or any guarantor without waiving it as to any other party or guarantor. The Bank need not give anyone notice of any waiver, delay or release. Your obligations and those of any guarantors are not affected by the Bahk's release of any party or guarantor, releasing any security or collateral, or extending or modifying any obligation hereunder.

CHANGES:The Bank may change this Agreement at any time. If it does, you will be tol3 in writing at your address shown in its records. Unless you tell the Bank in writing to cancel this Aeement within fifteen (15) days after the Bank's transnussion of notice, all changes will become binding on you.

OTHER PROVISIONS :

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..NORTH FORK BANK

RESTATED ELITE PLUS CREDIT ACCOUNT AGREEMENT

Account No.: 759022881 Name: JACOB FRYDMAN Address: 80 DONALD DRIVEHASTINGS ON HUDSON, NY 10706

DEFINITIONS:The words ''you" and "your" mean each and all persons who submitted the application for the account and who are bound by this Elite Credit Account Agreement The word "the Bank" means North Fork Bank its successors and assigns. The word "Agreement" means this Elite Credit Account Ar,rnent. The word "Loan Account" means the Elite Credit Loan Account established pursuant to the tenns of this Agreement.

EFFECT OF USING LOAN ACCOUNT:When you use this account, you are agreeing to and will be bound by the tenns and conditions of this Agreement. You certify that all infonnation you gave the Bank to obtain the Loan Account is true and correct Each person who signed the application for this account will be individually and jointly responsible for all amounts due on the Loan Account.

METHOD OF USE AND LIMITATIONS:The Bank will supply you with Elite Credit Account drafts. So long as no Event of Default, as defined herein, has occurred and this Agreement has not been cancelled, you may obtain Joans for yourself up to your credit limit by writini drafts on the Loan- Account. Drafts must then be depo&1tcd to your demand deposit account indicated above. You. must pay a fee of $1SO.OO per year for each year or part of a year this Agreement is in effect.

MAXIMUM CREDIT:Your credit limit is shown above and will be shown on each monthly statement which the Bank will send you. You are not permitted to exceed your credit limit. The Bank may change your credit limit up or down at any time by giving notice in writing to you. If you write a draft which would cause the unpaid principal balance in your Loan Account to exceed your credit fimit, the Bank may either refuse to honor your draft or may honor your draft and make you a loan in excess of your credit limit. Any such loan together with interest must be repaid immediately upon demand of the Bank.

PROMISE TO PAY:You promise to pay to the order of the Bank all amounts owed under thls Agreement, plus interest, collection costs, (including, without limiting attorney fees permitted under this agreement) and all other amounts due. Payment will be made as set forth in this Agreement.

PERIODIC STATEMENT:Each month the Bank will send you a statement on your Elite Credit Account. This statement will list all transactions that you made_ in the Loan Account during the previous month. It will show what you have borrowed, what you have repaid, items credited and debited and what you owe (new balance). It will also show interest rate changes. This statement shall be deemed to be accurate .

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Date: 1/9/08Credit Limit: $450,000.00Demand Deposit Account No.: 9054020038

unless you report any errors to the Bank within sixty (60) days of the statement date.

METHOD OF PAYMENT:The "minimum monthly payment" (as defined herein) will be debited from your demand deposit account with the Banlc when due. You agree to have sufficient funds in your demand deposit account to permit such debits without creating an overdraft. Your "mimum monthly payment" is equal to the sum of (a) 1/60 of the unpaid principal balance as of the end of the- statement period or $200, whichever is greater, plus (b) any amount loaned over your credit limit, plus (c) all interest due as computed below, plus (d) all late charges, plus (e) any unpaid prior minimum payment. Notwithstanding the foregoing, you may pay the entire amount owed (plus interest to the date of payment) in full at any time.

PAYMENT - TIME AND APPLICATION:There must be sufficient funds in your demand deposit account so tl1at the minimum payment may be debited by the Bank on the 29TH day of each month. This Is the "payment due date". Each month's payment will be applied io the following order: (1) Interest; (2) Principal; (3) Late charges and other fees. You may make pre-payments at any time in whole or in part. Prepayments will be applied first to principal, next to interest, and the remainder to late charges.

LATE CHARGES:If there are insufficient funds in your demand deposit account to make the required minimwn monthly payment when due, you will pay a late fee of 4% of the payment due plus the applicable overdraft charge. ·

INTEREST RATE:Interest is payable at a rate equal to 1.0 % above the Bank's Prime Rate, adjusted as and when. such Prime Rate changes. The Bank's Prime Rate is not necessarily tho lowest rate charged to its customers and nothing herein shall prevent the Bank from lending at Jess than its Prime Rate. Interest shall be calculated on a daily basis on the average daily balance of your Loan Account and shall be based upon the actual number of days elapsed and a 360- day year. From and after the occurrence of an Event of Default hereunder, the interest rate payable hereunder shall be increased by 5% over the then applicable interest rate. If a Jaw which awlics to this Loan Account and which sets maximum loan charges is finally interpreted so that the interest or other loan charges collected or to be collected in co1U1CClion with your Loan Account exceed the pcnnitted limits, then (i) any such loan charges shall be reduced by the amount necess to reduce the charges to the permitted limit; and (it) any sums already collected which exceeded permitted limits will be ·refunded. You may choose to take this refund by accepting a reduction in the principal owed under this Agreement or by taking a direct

JACOB FRYDMANI/9n008

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payment. If a refund reduces principal, the reduction will be treated as a partial payment.

CHANGES IN INTEREST RATE:The interest rate set forth above is based upon the Bank's review of your financial condition (and that of any guarantors) and the deposit relationship with the Bank. The Bank may hereafter change your interest rate on thirty days written notice to you. Any change will be effective immediately and will apply to all amounts then outstanding and any amounts incurred thereafter.

ENTIRE BALANCE DUFJDEFAULT:You will be in default, and the Bank need not pennit any further draws against your Loan Account and may require that you pay everything that you owe to it ifone or more of · the following occur (each such event being referred to as an "Event of Default"): (1) You fail to make any payment required hereunder when due or fail to have sufficient funds in your demand deposit account to permit automatic debit of any amount due; (2) you or any guarantor fail tomake any other payment to the Bank when due; (3) you or · any guarantor default IUlder any instrument or agreement, whether direct or continl'ent, for the payment of money; {4) you fail to comply with· any other tenn, covenant, or condition contained in this Agreement; {5) any representation or wamuity made in this Agreement or any instrument, document, or certificate, furnished by you or any guarantor in coMection with this Agreement is false or misleading; (6) a petition in bankruptcy is filed by or against you or any guarantor; (7) an action or proceedin, is commenced by or against you or any guarantor seeking dissolution, liquidation, composition, or arrangement or the appointment of a receiver; (8) you or any guarantor admitin writing an inability to pay debts as they mature, make a general assignment for the benefit of creditors, fail to maintain a satisfactory financial condition in a manner in which the Bank reasonably believes is necessary to repay the Loan Account; {9) a judgment or other judicial or administrative detennination requiring the payment of money is entered against you or any guarantor; (10) the guaranty of any guarantor tenninates or is unenforceable for any reason such as a guarantor dies; (11) your assets or those of any guarantor arc pledged or become licncd or impaired such that the Bank believes your ability or that of any guarantor to repay the Loan Account is impaired; (12) you or any guarantor becomes disabled or dies; ( 13) you or any guarantor fail to furnish any financial infonnation or financial statements to the Bank or fail to pemut an inspection of books, records or property by the Bank or its agents; {14) you grant or cause to exist a security interest in any of your assets, except that of the Bank; (IS) you fail to use the Bank as your pnmary Bank for deits and loans;(16) you fail to pay any tax assessment when due; or {17) the Bank detemunes in good faith that it will not be repaid hereunder according to the terms of this Agreement.

COVENANTS/R.EPRESENTATIONS/W ARRANTIESYou hereby covenant, represent, and warrant as follows (which representations and warranties are true as of the date hereof and shall be true on the date of any draft against the Loan Account): (a) upon request you will furnish the Banlc a copy of your personal financial statement, as well as the personal financial statements of the guarantors, all in fonn and substance acceptable to the Bank; (b) upon request, you will furnish the Bank with copies of the signed tu returns (with schedules) filed by

· you or any of your guarantors for the past three (3) years21

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lIi1

and throughout the tenn of this Agreement; (c) you have full power and authority to enter into this Agreement, and nothing in this Agreement contravenes any Jaw, regulation, by-law or contractual obligation binding upon you and you will furnish proof of same to the Bank; (d) this Agreement constitutes your valid and legally binding obligation in accordance with its terms and has been fully authorized by all necessary action; (e) there are no pending nor, to the

. best of your knowledge, any threatened actions or proceedings before any court or administrative agency which, if determined agaillit you, {or any guarantor) would have a material adverse effect on your (or any guarantor's) financial condition. operations, or ability to repay; (f) the reports and infonnation furnished by you and all guarantors are true and accurate in all material respects; (g) you will maintain your principal demand ;deposit account with the Bank; (h) you will keep your assets insured against theft and destruction; (i) you will pennit the Bank to examine your books and records, and audit your inventory.

RIGHT OF OFFSET:Upon the occurrence of an Event of Default, the Bank may take any amount yau have on deposit with it or any affiliate of the Bank and apPlY it toward the amount due without limiting the foregoing, the Bank: may excerise any and all rights of offset it may have pursuant to statute and common law.

SECURITY INTEREST:A$ collateral security for all of your obligations and liabilities to the Bank, you grant the Bank a continuing security interest in and lien on the following property: All money or other property in the Bank's possession, whether now held or later coming into the Bank's possession whether on deposit or in safekeeping, custody, pledge, transmission, collection or otherwise for your account or to your credit or belonging to you or in which you may have an interest, includb;lg but not' limited to and all proceeds. products, replacenients, renewals, substitutions, insurance proceeds, present or future, with respect to the foregoing, (all of which property above is called "COilaterai Security"). Your obligations and liabilities to the Bank (which will be called "Liabilities"), mean all amounts due to the Bank from you of any nature, including, but not limited to, amounts due under this Agreement whether they already exist, are incurred at this time, or are incurred in the future, whether they are direct or indirect, whether they are absolute or contingent, whew they arc secured or unsecured , whether they are matured or unmatured, whether they were incuned by you alone or jointly or severally with others or whether they were originally contracted with the Bank: or others and are now or later owing to the Bank.

REMEDIES UNDER DEFAULT:Upon the occurrence of an Event of Default the Bank shall have inaddition to any other right or remedy granted under this Agreement or by law, the right of a secured party under the Uniform Conunercial Code. All rights andremedies of the Bank shall be cumulative and not mutually exclusive and may be obtained singly or together at any time or times. Suen rights and remedies shall also include,but not be limited' to, the following: (a) the Bank may transfer into or out of their own l1MlC or that of its designee any or all of the Collateral Security including stock, bonds and other securities and the Bank or its designees may demand, sue for, collect, reserve, and hold as like Collateral Security any or all interest. dividends and

JACOB FRYDMANlflJnoos

JACOB FRYDMANl/9noos

income therefrom and exercise all voting and other rights with respect thereto; (b) the Bank shall not be obligated to demand parment of, protest, or take any steps to preserve any rights m such Collateral Security, all of which remain your obligation; (c) the Bank may sell any or all Collateral Security without notice to you (except where required by law, in which case 5 days notice by ordinary mail shall be deemed reasonable notice) at public or private sale at such price and upon such terms as it deems advisable; (d) the Bank shall have the right to bid and purchase at any such sale; (e) the proceeds of any such sale shall first be applied to the costs, expenses, and attorney fees in co1U1Cction with the sale, and the remainder to the Liabilities in such manner as the Bank shall detennine; (f) you and any guarantor and any other obligor shall remain liable for any deficiency; (g) the Banlc need not liquidate Collateral Security before seeking payment from you or any guarantor or any other obligor on the liabilities; (h) the Banlc is authorized to take possession of the Collateral Security and may enter any premises where such Collateral Security is located and remove same, (i) you will assemble the Collateral Security and make it available to the Bank at such place and time as the Bank may designate; (j) the Dank may notify any account debtor to make payments to the Bank.

CANCELLATION:Either you or the Bank may cancel this Agreement at any time by giving written notice to the other. Even if the Agreement is canceled, lou must still pay the Bank what you owe. In the event o cancellation, you may no longer write drafts against the Loan Account. If no Event of Default has occurred or occurs, you may pay the amount due hereunder by making thirty-six monthly payments each consisting of l/36th of the principal balance outstanding at the time of cancellation plus interest at the rate of the Bank's Prime Rate plus 2 1/2% per IUlllWD, adjusted as and when the Bank's Prime Rate changes on the unpaid balance. The monthly payments may not be equal in amount.

COLLECfiON COSTS:If you do not pay the Bank what you owe and the Bank sends the matter to an attorney for collection, then you agree to pay a reasonable attorney's fee up to 20% of the amount owed, plus court , costs and disbursements, regardless of whether an action is commenced and, if so, whether in the trial court, appellate court, bankruptcy court, or otherwise.

. DELAY INENFORCEMENT/WAIVER:The Bank does not give up any of its rights by not enforcing them right away. The Bank may enforce or waive any right with respect to you or any guarantor without waiving it as to any other party or guarantor . The Bank need not give anyone notice of any waiver, delay or release. Your obligations and those of any guarantors are not affected by the Bank's release of any party or guarantor, releasing any security or collateral, or extending or modifying any obligation hereunder.

CHANGES:The Bank may change this Agreement at any time. If it does, you will be told in writing at your address shown In its records. Unless you tell the Bank in writing to cancel this AF.JnCnt within fifteen (15) days after the Bank's transmission of notice, all changes will become binding on you.

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PERIODIC REVIEW:The Bank will review your handling of the Loan Account and your credit on a periodic basis. You must supply all financial statements and tax. returns requested by the Bank. Based upon the review, the Bank may decrease or terminate the Loan Account and this Agreement.

MISCELLANEOUS:(a) You agree that a microfilm or other photographic copy of an mstrument or document used in connection with the Elite Credit Account will establish the amowit you owe; (b) you permit the Bank to order a credit report or consumer report and to receive, obtain, and exchange credit information .on yo'u and any guarantor. The Bank will tell you upon request whether or not a consumer report was reported, and, if so, the name and address of the consumer reporting agency; (c) you agree that the Bank may accept late or partial payments, as well as payments that are marked "paid in full" or contain other restrictive endorsements, without losing any rights under this Agreement; (d) you agree not to draw on the Loan Account except by use of Elite Credit Account drafts provided by the Bank; (e) you agree to pay for copies and other EllteCredit Account and_ ck related services accordin to the Bank's schedule of fees, as amended from time to tune; (f) you agree that this Agreement shall be governed by the laws of the State of New York without re,ard to its conflicts of laws rules; (g) you consent to the Jurisdiction of the Court of the State of New York and venue in SuffolkCounty, New York; (h) you and the Bank waive the right to trial by Jury; (i) you waive demand. presentment, and protest; (j) you waive all defenses, rights to setoff and the right to impose any countcrclalms in any election brought by the. Bank (although you may assert such claims in a separate lawsuit); ·(k) you a that this Agreement represents the entire understaniling between you and the Bank and may not be modified or tenninated orally and that all waivers by the Bank must be in writing; (I) the Bank has made no representations, warranties, or agreement except ii.s set forth herein; (m) you may not assign or transfer your rights under this Agreement; (n) if this .Apment applies to more than one of you, notice to one will be considered notice to all of you; (o) you agreethat you have received the fully completed copy of this Agreement and have read it and fully understand it; (p) if any provision of this Agreement is unenforceable, the remainder shall remain in full force and effect.

OTHER PROVISIONS: This Agreement restates and supersedes the North Fork Bank Elite Phu Credit Account Agreement dated October 2!J, 2004, lo the amount ot$100,000.00, u signed by the Borrower.

JACOB FRYDMAN

November 22, 2010

Sent by Certified Mail No. 7008 3230 0003 0923 1809

Jacob Frydman885 2nd Avenue, Floor 34 New York, NY 10017-2201

Re: Capital One Bank, N.A., (the "Bank") - Jacob Frydman, {the "Borrower")Loan No. 759022881

NOTICE OF DEFAULT

Dear Mr. Frydman:

The above captioned loan, dated January 9, 2008 in the original amount of $450,000.00, is past due for the July 29, 2010 payment, and all subsequent monthly payments thereafter. As a result of your failure to make timely payments, you are in default under the terms of your Restated Elite Plus Credit Account Agreement and all other agreements, instruments and documents, at any time executed and delivered in connection therewith, each as amended, restated, supplemented or otherwise modified from time to time are collectively referred to as the "Loan Documents".

Accordingly, the Bank hereby elects to declare the entire principal balance of $345,689.92, plus interest in the current amount of $6,426.17, together with late fees in the current amom1t of $2,196.06, immediately due and payable.

The Bank is entitled to default interest pursuant to the terms of your Restated Elite. Plus Credit Account Agreement.

Any payments received after this date will not reinstate the loan, which will remain due and payable. Partial payment of the amount due may, at the Bank's sole discretion, be accepted and applied to the amounts due pursuant to the terms of the Loan Documents. If so accepted, however, such partial payment shall be without waiver of or prejudice to any rights or remedies available to the Bank pertaining to the Loan. 'This matter will be turned over to the Bank's attorneys to take whatever legal action is necessary to recover the monies owing to the Bank

You may contact the undersigned to obtain final payoff amounts. Please direct payment by bank or certified check and all notices:

Capital One, N.A. Attn: Marcy McLoone 265 Broadhollow Road

Melville, NY 11747(631) 577-2388

Capital One Bank. Member FDIC265 Bro11dhollow Road, Melville, New York 11747

I All rights and remedies accorded the Bank under the Promissory Note, the other Loan Documents

andby applicable law are hereby expressly reserved and may be enforced or exercised at any time and from time totime. Any delay or forbearance by the Bank in the enforcement or pursuit of any rights and remedies accorded to it under the Term Loan Note the other Loan Documents or by applicable law shall not constitute a waiver thereof, nor shall it be a bar to the exercise of such rights or remedies at a later date.

Nothing in this letter, any other correspondence or any oral communications between the Bank and the Borrower or any guarantor should be construed to be a waiver, modification or release of any breach, default or event of default, whether now existing or hereafter arising, or of any of the Bank's rights and remedies under the Term Loan Note, the other Loan Documents and at law.

Sincerely,

Marcy Mcloone Vice President

Capital One Bank

Jacob FrydmanLoan Number•••

From To Davs Interest Rate Principal Balance Interest Accrued Principal Payment Interest Payment Payment Date

6129/2010 7/30/2010 31 4.25% 355,827 .13 1,302.237/30/2010 8/29/2010 30 9.25% 355,827 .13 2,742.838/29/2010 917/2010 9 9.25% 355,827 .13 822 .85917/2010 9/29/2010 22 9.25% 345,689.92 1,954.11 10,137.21 820.88 917/20109/29/2010 3/31/2011 183 9.25% 345,689 .92 16,254.63

Principal Balance: 345,689 .92Interest Balance: 23,076 .65Less payment on 917/10 22,255 .77

Late Fees: 2,196 .06Total: 370.141.75