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October 23, 2002

Board of Directors
350 Bleecker Street Apartment Corp.
350 Bleecker Street
New York, New York 10014

Attention: Alfred Del Vecchio, Chairman

Ladies and Gentlemen:

As you know, I am the liquidating partner of Bleecker Charles Company ("the Sponsor"), the sponsor of the conversion to cooperative ownership by 350 Bleecker Street Apartment Corp. ("the Corporation") of the building and land at 350 Bleecker Street in the City, County and State of New York ("the Building").

The Sponsor still retains ownership of 4,042 shares of the Corporation's stock, of which the Sponsor is both the record and beneficial owner. The Sponsor's shares consist of 23.46% of the 17,222 issued and outstanding shares of the Corporation's stock and relate to 30 apartment units in the Building, for each of which the Sponsor owns a separate proprietary lease. The Sponsor has been a shareholder of the Corporation continuously from 1984 to date. In addition, the Sponsor is the tenant under the Agreement of Lease dated July 3 1, 1985 ("the Lease") with the Corporation, as landlord, covering the parking garage ("the Garage") and two ground-floor commercial spaces in the Building. As a shareholder, unit lease owner and tenant under the Lease, the Sponsor has a substantial stake in the welfare of the Corporation and the Building.

This letter constitutes the Sponsor's demand, pursuant §626(c) of the New York Business Corporation Law ("BCL"), that the Corporation institute a law suit against Mark Lilien and James D. Kafadar for their breaches of fiduciary duty, waste and mismanagement, in their respective capacities as directors of the Corporation, in violation of their respective directorial duties under BCL, §717 and under New York common law, by virtue of their deliberate refusal to disclose to the Corporation's shareholders and/or the Corporation's

BLEECKER CHARLES COMPANY

Board of Directors
350 Bleecker Street Apartment Corp.
October 23, 2002
Page 2

Board of Directors ("the Board") the option of the shareholders to terminate the portion of the Lease covering the Garage ("the Garage Portion") under federal Condominium and Cooperative Conversion Protection and Abuse Relief Act, 15 U.S.C. §§3601 et seq. ("the Act") and their deliberate refusal, once they had knowledge of that option, to act upon that option in a timely, honest and open manner.

As you know, the Corporation purported to terminate the Garage Portion by its notice dated July 19, 2000 ("the Termination Notice"). The Sponsor sued in federal court ("the Federal Action") for a judgment, among other things, declaring that the Termination Notice was invalid, enjoining enforcement of the Termination Notice and granting the Sponsor its litigation expenses which were recoverable under the Act as of right if the Sponsor prevailed. In its complaint in the Federal Action, the Sponsor asserted, among several grounds, that the Termination Notice was invalid because it was not effective until a date more than a year after the two-year window period under the Act had closed. In the Federal Action, the trial court agreed with the Sponsor's position and granted the Sponsor the requested relief. The Corporation appealed the trial court's judgment. The appellate court's decision is expected imminently and the Sponsor believes that the decision will uphold the trial court's determination.

After the entry of the judgment adverse to the Corporation in the Federal Action, the Corporation instituted an action under the caption 350 Bleecker Street Apartment Corporation v. Kenneth B. Newman et al., Index No. 11327/02, in Supreme Court of the State of New York ("the Main Action") against the Sponsor, its liquidating partner Kenneth B. Newman, and the Corporation's former managing agent Kenneth B. Newman Realty Corp. In the Main Action, the Corporation has asserted, among other things, that Mr. Newman, in his capacity as a director of the Corporation, allegedly failed to disclose to the shareholders and/or the Board the shareholders' option under the Act, subject to certain limitations, to terminate the Garage Portion and that, as a consequence, the shareholders did not have sufficient time to seek to exercise that option within the two-year window period provided by the Act.

As you also know, Mr. Newman denies that he knew about the Act before Mr. Lilien sent his notice dated June 1, 1999 pursuant to which he called a meeting of the Corporation's shareholders for June 24, 1999 to vote on a resolution to terminate the Garage Portion under

BLEECKER CHARLES COMPANY

Board of Directors
350 Bleecker Street Apartment Corp.
October 23, 2002
Page 3

the Act. However, the specific allegations of the Corporation's complaint in the Main Action (verified under oath as they are by Mr. Lilien himself) stated that Mr. Lilien, who served on the Board as a director with Mr. Newman and Mr. Kafadar during the two-year window period, in fact knew about the Act over a year and one half before his notice was given and a year and one half before Mr. Newman had any knowledge of the Act./P>

Mr. Lilien's concealment of this information from the Board and the Corporation's shareholders is indisputably established by a documentary record consisting of minutes of Board deliberations, the Co-op's authorized news letters, and correspondence (by email and otherwise) between and among directors and shareholders. It is confirmed by Mr. Lilien's admission (made under oath) on the face of the Corporation's complaint in the Main Action. Moreover, the same record shows that Mr. Kafadar knew of the Act as well, long before the 1999 shareholders vote and probably as long as did Mr. Lilien. From abundant available evidence, it appears that, beginning in 1998, Messrs Lilien and Kafadar were secretly working in league to organize a shareholder's vote under the Act and to call the vote just before the expiration of the window period under the Act. They thus appear to have concealed information regarding the Act from all constituencies who could have acted upon such information, namely, the Board and the shareholders, in a more deliberate and less frenetic manner than did Messrs. Lilien and Kafadar and instead Messrs. Lilien and Kafadar appropriated this information for themselves and their group to be used for their own advantages as they perceived them to be./P>

Based upon the available evidence, as part of the Main Action, Mr. Newman has filed a third-party action ("the Third-Party Action") against Messrs. Lilien and Kafadar seeking contribution from them in event he is found liable to the Corporation. Mr. Newman, of course, denies that he can be found liable, but, in his complaint in the Third-Party Action, Mr. Newman points out that, if he Mr. Newman can be found liable to the Corporation in the Main Action for failure to disclose knowledge that he, Mr. Newman, did not possess, then surely Messrs. Lilien and Kafadar are likewise liable to the Corporation for their failure to disclose knowledge that they concededly had but deliberately concealed.

Yet, despite the public record on these matters, the Corporation has filed suit only against Mr. Newman and his affiliates but not against Mr. Lilien or Mr. Kafadar. This glaring

BLEECKER CHARLES COMPANY

Board of Directors
350 Bleecker Street Apartment Corp.
October 23, 2002
Page 4

inconsistency can be explained only by the fact that Mr. Lilien, with or without the assistance of Mr. Kafadar, has led the Corporation's efforts to continue litigation against the Sponsor and Mr. Newman. After all, the Corporation filed the Main Action, acting under the direction of Mr. Lilien who was then Board Chairman and who apparently conducted negotiations with and provided information to the counsel retained by the Corporation for this purpose.

Of course, the Sponsor believes that the Corporation's bringing of the Main Action was caused by Mr. Lilien's continuing vendetta against the Sponsor and Mr. Newman and has been aided and abetted by the Board's uncritical supervision of his activities. An objective assessment of the situation would have indicated that the Corporation's shareholders had more than enough time to exercise their option under the Act to terminate the Garage Portion and that the timing of the shareholder vote was a function not of Mr. Newman's conduct but of Messrs. Lilien and Kafadar's deliberate decision, in seeking termination of the Garage Portion under the Act, to delay the vote until the end of the window period and to refuse to cooperate with the Board members serving in June 1999 to obtain a better understanding of all implications of the termination vote. Messrs. Lilien and Kafadar seemed to want to jam through a shareholders' vote on their terms or not at all. They had no right to try to appropriate this process to themselves for their own ends and they have never, in the Sponsor's judgment, adequately explained their behavior.

In end, for reasons that have been presented in court papers already and are familiar to the Board, even a timely vote and timely termination notice would not have been enforceable -under the Act, because the Sponsor had at least two additional defenses other than the window period defense that succeeded. Thus, in appropriating to themselves the process of considering how to deal with the shareholders' option under the Act, Messrs. Lilien and Kafadar have brought unnecessary expense and discord to the Corporation and are now seeking to compound the damage by continuing litigation against the Sponsor and Mr. Newman in the Main Action.

More particularly, the Board should also now be aware that, in the Main Action, Mr. Newman has asserted counterclaims against the Corporation for indemnification for any liability that he may have in the Main Action, as well as his defense costs, which he is entitled to have paid as such costs are incurred. Now that he has filed his counterclaims, Mr. Newman intends to apply to the Court for an order directing the Corporation to pay his

BLEECKER CHARLES COMPANY

Board of Directors
350 Bleecker Street Apartment Corp.
October 23, 2002
Page 5

defense costs as they are incurred. Presumably, Messrs. Lilien and Kafadar will also seek payment of their defense costs in defending Mr. Newman's contribution claims and in any action that the Corporation directly or the Sponsor on behalf of the Corporation may also bring against them. In these circumstances, the Sponsor believes that the Board cannot legally authorize the payment of Messrs. Lilien and Kafadar's defense costs without also authorizing the payment of Mr. Newman's defense costs and seeing that all such payments are timely made. In the Sponsor's view, any discrimination by the Board in favor of Messrs. Lilien and Kafadar and against Mr. Newman will constitute additional wrongful conduct. In this regard, the Board is presumably aware that, at least to date, the Corporation's insurer, a Chubb subsidiary, has disclaimed coverage completely and will not provide any funds to pay any defense costs. Thus, as matters now stand, all defense costs will have to be borne by the Corporation.

In the Sponsor's view, the reckless enterprise upon which Mr. Lilien and his group have caused the Corporation to embark is destroying the Corporation's financial condition and will soon adversely affect the quality of life at the Building and the investments of its shareholders in the Building. It is time for the Board members to reflect upon their own individual accountability for these consequences, almost all of which were predicted and widely publicized among the shareholders when Mr. Lilien first disclosed his campaign in early June 1999 to attempt to terminate the Garage Portion under the Act.

Accordingly, unless the Board discontinues the Main Action promptly and with prejudice, the Sponsor hereby demands that the Board institute suit against Messrs. Lilien and Kafadar forthwith on the grounds stated. The Sponsor and Mr. Newman will consent to the consolidation of this new action with the Main Action so that there may be a single adjudication of the respective responsibilities, if any, of Messrs. Newman, Lilien and Kafadar.

This letter is written without prejudice to the Sponsor's rights, remedies and defenses, including its right to sue Messrs. Lilien and Kafadar derivatively on behalf of the Corpora-

BLEECKER CHARLES COMPANY

Board of Directors
350 Bleecker Street Apartment Corp.
October 23, 2002
Page 6

tion if the Corporation refuses to file suit promptly as demanded and otherwise to take such actions against current Board members as it deems advisable.

Copy: Ms. Laura Herbert
Ms. Elizabeth Hockbrueckner
Mr. James D. Kafadar
Ms. Susan Kim Mr. Mark Lilien
Father Gregory Colucci
Dale A. Schreiber, Esq. (by fax)

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