JUDGE CROTTY

CV 2231

Carla R. Walworth (CW-5401)

Cynthia A. Curtin
PAUL, HASTINGS,
JANOFSKY & WALKER LLP
75 East 55th Street
New York, New York
Telephone: 212-318-6000
Facsimile: 212-319-4090
carlawalworth@paulhastings.com
cynthiacurtin@paulhastings.com

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK
CAPITAL ONE, NATIONAL ASSOCIATION,
Plaintiff,

Civil Action No.

- against JACOB FRYDMAN

Defendant.
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.

Count 1
(Breach of Contract Under the Restated Elite Agreement and the Elite Guaranty Against
Defendant Frydman)
B.
6.

The Restated Elite Agreement

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
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required to make monthly payments equal to the sum of (a) 1/60 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

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 the
payment 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, to
extend or continue credit or other financial accommodations to Frydman, defendant Frydman
executed and delivered to the Bank that certain Guaranty dated July 19, 2004 (the "Elite
Guaranty"), in connection with an Elite Plus Credit Application. The Elite

Guaranty

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 Guaranty
is attached hereto as Exhibit 3.
15.

On July 29, 2010 , Frydman failed to pay the monthly payment due under

the Restated Elite Agreement, and failed to pay monthly payments due thereafter.

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16.

As of July 29, 2010, Frydman has defaulted and remains in default of the

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

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

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including

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

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.
17.

Breach of the Restated Elite Agreement and the Elite Guaranty

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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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

above.

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.

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:

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(a)

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

Restated Elite Agreement and the Elite Guaranty, and related documents and on all attorney's
fees incurred in enforcing its rights as set forth therein;
(b)

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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;

damages

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

On the First Count, a judgment against Frydman in the amount to

(c)

On the Third 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;

(d)

The costs and disbursements as taxed by the Clerk of the Court;

and

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(e)

Awarding Capital One such other and further relief as the Court

may deem just and proper under the circumstances.

Dated: New York, New York

March 31, 2011

75 East 55th Street New

York, New York
Telephone: 212-318-6000
Facsimile: 212-319-4090
carlawalworth@paulhastings.com
cynthiacurtin@paulhastings.com

LEGAL_US_E # 92289559.1

ATTORNEYS FOR PLAINTIFF CAPITAL ONE,

NATIONAL ASSOCIATION

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NORTH FORK BANK

RESTATED ELITE PLUS CREDIT ACCOUNT AGREEMENT
0759022881
Account No.: 759022881
Name: Jacob Frydman
Address: 111Fulton Street
New York, NY 10038
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

Date: October 29, 2004

Credit Limit: Sl00,000.00
Demand Deposit Account No.: 9054020038

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
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payment. If a refund reduces principal, the reduction will

be treated as a partial payment.

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.

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.

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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 in
this 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 ARRANTIES
You 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

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
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 the
governed
the Yorlc without regard to its
laws of
State by
of New

Banx

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, 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
due amount
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,G)
presentment,
protest;
you waive alland
defenses, rights to setoff and the

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
unpaid
balance. 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
Bank
andyou
mayand
notthe
be modified or tenninated orally and

amount.

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
that
youagree
have received the fully completed copy of this
remainder shall remain in full force and effect.

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 the
amount
owed, plus court costs and disbursements,

court, or
otherwise.
regardless of whether an action is commenced and, if
so,
whether in the trial court, appellate court, bankruptcy

Agreement
andofhave
read it and fully
understand it;the
(p) if
any provision
this Agreement
is unenforceable,

DELAY lN ENFORCEMENT/W AJVER:

The Bank does not give up any of its rights by not

OTHER PROVISIONS :

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.
3

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NORTH FORK BANK
RESTATED ELITE PLUS CREDIT ACCOUNT AGREEMENT

Account No.: 759022881

Name: JACOB FRYDMAN
Address: 80 DONALD DRIVE

HASTINGS ON HUDSON, NY 10706

Date: 1/9/08

Credit Limit: $450,000.00

Demand Deposit Account No.: 9054020038

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 LoanAccount. 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.

I1

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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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 360day 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

unless you report any errors to the Bank within sixty

(60) days of the statement date.

payment. If a refund reduces principal, the reduction

will be treated as a partial payment.

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.

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.

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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 to
make 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 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 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.

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:

COVENANTS/R.EPRESENTATIONS/W ARRANTIES
You 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) years
2

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 and
remedies 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

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.

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 Ellte
Credit 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 Suffolk
County, 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
agree
that 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.

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.

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.

CHANGES:

JACOB FRYDMAN

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.
3

JACOB FRYDMANl/9noos

November 22, 2010

Sent by Certified Mail No. 7008 3230 0003 0923 1809
Jacob Frydman
885 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 FDIC

265 Bro11dhollow Road, Melville, New York 11747

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

and
by applicable law are hereby expressly reserved and may be enforced or exercised at any time and from time to
time. 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 Frydman
Loan Number

From

To

Davs

Interest Rate

6129/2010
7/30/2010
8/29/2010
917/2010
9/29/2010

7/30/2010
8/29/2010
917/2010
9/29/2010
3/31/2011

31

4.25%
9.25%
9.25%
9.25%
9.25%

30
9

22
183

Principal Balance

355,827 .13
355,827 .13
355,827 .13
345,689.92
345,689 .92

Principal Balance:
Interest Balance:
Less payment on 917/10

345,689 .92
23,076 .65
22,255 .77

Late Fees:
Total:

2,196 .06
370.141.75

Interest Accrued

1,302.23
2,742.83
822 .85
1,954.11
16,254.63

Principal Payment

10,137.21

Interest Payment

820.88

Payment Date

917/2010