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Hon. Gerald E. Lynch
July 16, 2001
Page 2

     On the other hand, we readily concede that, on the basis of the Sponsor's interpretation of the Condominium and Cooperative Conversion Relief and Abuse Act ("the Act") and a rigorous scrutiny of the present record, the new matter and arguments raised in the Co-op's reply papers should be considered irrelevant. However, traditional motion practice does not invite the Court to make such an assessment until the record is complete and the Sponsor has no reason to believe that the usual practice will not be operative in the context of the pending cross-motions. Moreover, since appellate review of the order (and/or judgement) disposing of the cross-motion is likely, the need for a complete record is all the more compelling.

     In light of these considerations, the Sponsor seeks leave to serve and file the following affidavits as part of the record for the pending cross-motions:

     1.     A joint affidavit submitted by either or both Kathleen and Anatole Iwanczuk attesting to the fact that they never received written notice of the June 27, 2000 meeting, contrary to assertions made in the Reply Affidavit of Marc Lilien. Their joint affidavit will be very short and in substantially the same form as the joint affidavit of Shirley and Anthony Lomanto, already part of the record.

     2.     A supplemental affidavit from Mr. Newman addressing certain factual assertions and misleading statements in Mr. Lilien's Reply Affidavit, including the following points:

     (a)     neither the Sponsor nor the Co-op has had any authority or legal obligation, without the unit owner's consent, to amend Proprietary Leases and Related Shares by reducing the number of units designated by those documents when the owner's contiguous apartments were physically combined; when unit owners signed paper work authorizing physical combinations of their apartments, the paper work contained no provisions by which the unit owners agreed to change the unit designations on their Proprietary Leases or Related Shares; physical combinations of apartments did not occur on the dates they were considered by the board of directors (and in some cases they actually occurred years after such consideration); there have been no reliable records of the Co-op reflecting the dates upon which such physical combinations were actually completed; the board minutes were not prepared by Mr. Newman but by other board members, usually the board member serving as corporate secretary; the content of some of the minutes noted by Mr. Lilien were contested; and Mr. Newman, as a board member, usually abstain from voting on any consideration of combinations of apartments.

     (b)     Mr. Newman's roles as a principal of the managing agent and transfer agent and his role as a board member of the Co-op (while he was also the representative of the Sponsor) were known to and approved by the Co-op's shareholders and independent board of directors; Mr. Newman did not take any actions with regard to combinations of apartments on behalf of the

Hon. Gerald E. Lynch
July 16, 2001
Page 3

Co-op as a representative of the managing or transfer agent without the approval and direction of the Co-op's independent board of directors or that otherwise constituted a dereliction of duty or negligent failure to fulfill any management responsibility; Mr. Newman acted as counsel for the Co-op only for the refinancing of its mortgage; Mr. Newman did not act or purport to act as general council for the Co-op; and the Co-op's board from time to time engaged several outside counsel for specific matters;

     (c)     the Sponsor was under no legal duty to perfect the Lomanto's and the Iwanczuk's status as holders of unsold shares under the Co-op's By-laws or regulations of the New York Department of Law; neither of them has ever had any sales office in the building; and the By-law provision cited by the Co-op only allowed them to use their units for office purposes and did not entitle them to have any sales office in any part of the building.

     (d)     the Sponsor never exercised any power that it may have to veto any capital expenditures;

     (e)     during and in written notices preceding the 1999 shareholder's meeting, the Sponsor explained only that the Sponsor should not have to bear indirectly, through assessments by the Co-op with respect to the Sponsor's retained share in the Co-op, the expenses of litigation over termination of the Garage Lease under the Act if the Sponsor prevailed in the litigation and were awarded its litigation expenses against the Co-op; the Co-op's counsel who was present during the shareholders' meeting did not deny that the ability of the Co-op to pass such expenses to shareholders who did not vote in favor of termination (including the Sponsor) was an open question under the Act; in the circumstances, it was therefore appropriate for the Sponsor to disclose to the shareholders the Sponsor's intention to press that position in court, if necessary; that, in the context of a discussion of the Co-op's failure to give the Sponsor proper written notice of the meeting, Mr. Lilien made a statement indicating that he knew that the Co-op did not mail notice of the June 27, 2000 shareholder's meeting to the Sponsor (and possibly others) but would submit a contrary affidavit in any litigation, if necessary;

     (f)     the Co-op has made admissions in its newsletters (which Mr. Lilien usually authors) that contradict assertions made in Mr. Lilien's reply affidavit and the Co-op's reply papers, such as Mr. Lilien's statements implying that it was the common understanding of shareholders that there were fewer than 137 units in the building (because of physical combinations of apartments) at the time of the 1999 and 2000 shareholder meetings at which resolutions for termination of the Garage Lease under the Act were considered and that the actual count of the vote at 2000 shareholder meeting was by units without regard to physical combinations of apartments.

Hon. Gerald E. Lynch
July 16, 2001
Page 4

     If leave to serve and file these two additional affidavits is granted by Your Honor, the Sponsor will do so within ten days of the granting of such leave.

     We also note that counsel for both the Sponsor and the Co-op have requested oral argument on the pending cross-motions. Accordingly, we would like to schedule a date and time for oral argument at the court's earliest convenience. If Your Honor indicates that he would be willing to hear oral argument, we will work with opposing counsel to schedule the oral argument at a time convenient to all concerned.

Enclosures

cc:     Robert N. Fass, Esq. (By Fax)
          Vincent Syracuse, Esq. (By Fax)

Permission to file additional affidavits is granted.
The Court will notify the parties if and when oral argument is desired.

SO ORDERED

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