AMBASE CORP (Form: 8-K, Received: 09/26/2017 16:40:54)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15 (d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 26, 2017

AMBASE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-07265	95-2962743
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

ONE SOUTH OCEAN BOULEVARD, SUITE 301

BOCA RATON, FLORIDA 33432

(Address of principal executive offices, including zip code)

(203) 532-2000

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ___

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ___

Item 8.01 OTHER EVENTS

The information contained in the Company's previously filed periodic reports is incorporated by reference herein and the defined terms set forth below have the same meaning as ascribed to them in the Company's previously filed reports. As previously disclosed in the Company's previously filed periodic reports, the Company has been involved in legal proceedings concerning the Company's equity investment in the 111 West 57 ^th Property.

On July 25, 2017, the Company filed a complaint against Spruce and the Sponsors and requested injunctive relief halting the Strict Foreclosure from the New York State Supreme Court for New York County, (the "NY Court") Index No . 655031/2017 , (the "111 West 57 ^th Spruce Action") . The defendants in the 111 West 57 ^th Spruce Action are 111 W57 Mezz Investor, LLC, Spruce Capital Partners LLC, 111 West 57th Sponsor LLC, Michael Z. Stern, and Kevin P. Maloney (collectively, "Defendants") and nominal defendants 111 West 57th Partners LLC and 111 West 57 ^th Mezz 1 LLC.

On July 26, 2017, the NY Court issued a temporary restraining order barring Spruce from accepting the collateral, pending a preliminary injunction hearing scheduled for August 14, 2017. Spruce and the Sponsors subsequently filed papers in opposition to the request for a preliminary injunction and cross-motions to dismiss and quash subpoenas. On August 14, 2017, the NY Court postponed the hearing until August 28, 2017, keeping the temporary restraining order preventing a Strict Foreclosure in effect until the August 28, 2017, hearing. Subsequently the Company filed response briefs in support of their request for injunctive relief halting the Strict Foreclosure process and briefs in opposition to the motions to quash the subpoenas.

On August 28, 2017, the NY Court held a preliminary injunction hearing, lifted the temporary restraining order, denied Plaintiffs' request for a preliminary injunction, and granted Defendants' cross-motions. In order to prevent the Strict Foreclosure process from going forward, the Company immediately obtained an interim stay from the New York Supreme Court Appellate Division, First Judicial Department ("Appellate Division"). That stay remained in place until four (4) P.M. August 29, 2017, permitting the Company to obtain an appealable order, notice an appeal, and move for a longer-term stay or injunctive relief pending appeal. The Appellate Division held a hearing on August 29, 2017, to consider the Company's motion for an interim stay or injunctive relief pending appeal, both of which it denied, thus allowing the start of the Strict Foreclosure process. The Company will continue to challenge the validity of the actions that led to this purported transfer of title, including appeal.

On August 30, 2017, Spruce issued a Notice of Retention of Pledged Collateral in Full Satisfaction of Indebtedness. By accepting the pledged collateral, pursuant to a Strict Foreclosure process, Spruce claims to have completed the retention of the collateral pledged by the junior mezzanine borrower, and therefore, the Company's interest in the 111 West 57th Street Property.

Retention by Spruce of the pledged collateral therefore includes all of the Company's equity investment in the 111 West 57th Street project. That investment represents a substantial portion of the Company's assets and net equity value.

The Company's motion for a stay or injunctive relief pending appeal has not yet been resolved. 111 W57 Mezz Investor, LLC and Spruce Capital Partners LLC filed an opposition to that motion on September 15, 2017, and subsequently the Company filed its reply brief.

While the Company's management is evaluating future courses of action to recover the value of that equity investment, the recent adverse developments make it uncertain as to whether any such courses of action will be successful in recovering value for the Company. Any such efforts are likely to require sustained effort over a period of time, and require substantial additional financial resources. Inability to recover all or most of such value would in all likelihood have a material adverse effect on the Company's financial condition and future prospects.

After review of the recent developments, the Company's executive officers and its Board of Directors have concluded that it is in the Company's interest to rapidly obtain without delay a litigation funding commitment to finance litigation with respect to the ongoing disputes with the Sponsors and the lenders in the 111 West 57 ^th Street Property project, and to seek to recover value for the Company with respect to its equity investment in 111 West 57 ^th Street Property, whether by direct recovery or from asserting claims against the Sponsors, their principals and/or certain of the lenders (collectively, "Future Recovery Litigation").

The Company has therefore, negotiated and accepted an offer from Mr. Richard Bianco, its long-time chief executive officer, to provide a litigation fund of seven million dollars (along with additional amounts as may be necessary from time to time as agreed to by the Company and Mr. Bianco at such time), as agreed to by the Company and Mr. Bianco, to fund the Company's litigation expenses in connection with Future Recovery Litigation. The Company shall not be obligated to repay such advances except as described below.

In consideration of such financial commitment, the Company has agreed that any financial recovery in such Future Recovery Litigation shall be distributed as follows:

i.	first, to reimburse Mr. Bianco on a dollar-for-dollar basis for any Company litigation expenses and/or other unpaid amounts advanced by him in connection with Future Recovery Litigation; and
ii.	thereafter, a percentage of the recovery to the Company and a percentage of the recovery to Mr. Bianco, respectively, (the "Recovery Sharing Ratio"); with the ratio and percentages of 30% to 45% depending on the length of time to obtain recovery.

The agreement described above has been approved by the Company's Board of Directors, a copy of which is attached as exhibit 10.1 hereto.

For additional information with regard to, the Company's equity investment in the 111 West 57 ^th Property, including, among other items, recent developments concerning the 111 West 57 ^th Property, the status of legal proceedings regarding the 111 West 57 ^th Property, information concerning the junior mezzanine lender prior declaration of an event of default and its proposal to take control of the collateral pledged by the junior mezzanine borrower and therefore, the Company's entire interest in the 111 West 57th Street Property, the Company's request for injunctive relief, and the NY Court's issuance of a temporary restraining order pending a preliminary injunction hearing, see Note 4 and Note 10 to the Company's consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as, Note 4, Note 9 and Note 11 to the Company's condensed consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and the Company's Current Reports on Form 8-K.

With respect to its disputes and litigation relating to its interest in the 111 West 57th Property, the Company is continuing to pursue various legal courses of action as well as considering other possible economic strategies, including the possible sale of the Company's interest in and/or rights with respect to the 111 West 57th Property. The Company is continuing to pursue other options to realize the Company's investment value and/or protect its legal rights.

The Company can give no assurances regarding the outcome of the matters described herein, including as to the effect of Spruce's actions described above, whether the Sponsors will perform their contractual commitments to the Company under the JV Agreement, as to what further action, if any, the lenders may take with respect to the project, as to the ultimate resolution of the ongoing litigation proceedings relating to the Company's investment interest in the 111 West 57 ^th Property, or as to the ultimate effect of the Sponsors', the Company's or the lenders' actions on the project, or as to the completion or ultimate success of the project, or the value or ultimate realization of any portion of the Company's equity investment in the 111 West 57 ^th Street Property.

Cautionary Statement for Forward-Looking Information

This Current Report or Form 8-K together with other statements and information publicly disseminated by the Company may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or make oral statements that constitute forward looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. The forward-looking statements may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, anticipated market performance, anticipated litigation results or the timing of pending litigation, and similar matters. When used in this Annual Report, the words "estimates," "expects," "anticipates," "believes," "plans," "intends" and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. The Company cautions readers that a variety of factors could cause the Company's actual results to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. These risks and uncertainties, many of which are beyond the Company's control, include, but are not limited to those set forth in "Item 1A, Risk Factors" and elsewhere in this Annual Report and in the Company's other public filings with the Securities and Exchange Commission including, but not limited to: (i) transaction volume in the securities markets; (ii) the volatility of the securities markets; (iii) fluctuations in interest rates; (iv) risks inherent in the real estate business, including, but not limited to, insurance risks, tenant defaults, risks associated with real estate development activities, changes in occupancy rates or real estate values; (v) changes in regulatory requirements which could affect the cost of doing business; (vi) general economic conditions; (vii) risks with regard to whether or not the Company's current financial resources will be adequate to fund operations over the next twelve months from financial statement issuance date and/or continue operations; (viii) changes in the rate of inflation and the related impact on the securities markets; (ix) changes in federal and state tax laws; (x) assumptions regarding the outcome of legal and/or tax matters, based in whole or in part upon consultation with outside advisors, (xi) risks arising from unfavorable decisions in tax, legal and/or other proceedings, and (xii) risks with regard to the ability of the Company to continue as a going concern. These are not the only risks that we face. There may be additional risks that we do not presently know of or that we currently believe are immaterial which could also impair our business and financial position.

Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. The Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report or to reflect the occurrence of unanticipated events. Accordingly, there is no assurance that the Company's expectations will be realized.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AMBASE CORPORATION

	By /s/ John Ferrara
	John Ferrara
	Vice President and Chief Financial Officer and Controller
	AmBase Corporation
	Date: September 26, 2017

	EXHIBITS

10.1	Future Recovery Litigation Funding Agreement, September 2017, between Mr. Richard A. Bianco, the Company's Chairman President and Chief Executive Officer ("R. A. Bianco") and the Company.

September 26, 2017

Mr. Richard A. Bianco

350 South Ocean Boulevard, Apt. 9A

Boca Raton, FL 33432

Re:	Future Recovery Litigation Funding

Dear Mr. Bianco:

This letter agreement (the " Agreement ") is by and between AmBase Corporation, a Delaware Corporation (the " Company "), and you, Richard A. Bianco (" Bianco ", and together with any entity that is currently in existence or is formed by Bianco hereafter that is either wholly-owned by, or controlled directly or indirectly by, Bianco, the " Funder ").

On June 28, 2013, 111 West 57th Investment LLC, a subsidiary of the Company (" Investment LLC "), entered into a joint venture agreement with 111 West 57th Sponsor LLC (the " Sponsors "), pursuant to which Investment LLC invested in a real estate development property to purchase and develop certain real property located at 111 West 57th Street (the " 111 West 57th Property "). In consideration for making the investment, Investment LLC was granted a membership interest in 111 West 57th Partners LLC (" 111 West 57th Partners "), which indirectly acquired the 111 West 57th Property (the " Joint Venture ").

On June 30, 2017, Spruce Capital Partners LLC, a junior mezzanine lender to the Joint Venture (" Spruce "), declared an event of default under its $25.2 million loan and demanded immediate payment of the full outstanding balance of the junior mezzanine loan. Spruce gave notice that it proposed to accept the pledged collateral (including the Joint Venture members' collective interest in the property) in full satisfaction of the Joint Venture's indebtedness under the junior mezzanine loan (i.e. a " Strict Foreclosure ").

On July 25, 2017, the Company filed a complaint against Spruce and the Sponsors and requested injunctive relief halting the Strict Foreclosure from the New York State Supreme Court for New York County, (the " NY Court ") Index No. 655031/2017. On July 26, 2017, the NY Court issued a temporary restraining order barring Spruce from accepting the collateral. After a hearing and an appeal the temporary restraining order was ultimately lifted and the Strict Foreclosure was permitted to proceed.

On August 30, 2017, Spruce issued a Notice of Retention of Pledged Collateral in Full Satisfaction of Indebtedness. By accepting the pledged collateral, pursuant to the Strict Foreclosure process, Spruce has taken control of, and asserts that it has completed retention of, collateral representing the Company's entire interest in the 111 West 57th Street Property. The pledged collateral includes all of the Company's equity investment in the 111 West 57th Street project and a substantial part the Company's assets and net equity value.

The Company intends to pursue litigation to recover the value of its equity investment in the 111 West 57th Street Property. The Company and the Funder have agreed that the Funder shall provide up to an aggregate amount of Seven Million Dollars ($7,000,000) plus such additional amounts as may be necessary from time to time and as agreed to by the Company and the Funder at such time (such amounts, collectively, the " Litigation Fund Amount "), to finance the Company's litigation expenses with respect to certain ongoing disputes with the Sponsors and the lenders in the 111 West 57th Street Property project, and to seek to recover value for the Company with respect to its equity investment in 111 West 57th Street Property, whether by direct recovery or from asserting claims against the Sponsors, their principals and/or certain of the lenders, and including any appeals with respect to such proceedings (collectively, " Future Recovery Litigation ").

This letter agreement shall memorialize the mutual agreement of the Funder and the Company with respect to any amounts to be provided by the Funder to fund Future Recovery Litigation and the sharing of any financial recovery resulting from such litigation. The parties hereto acknowledge and agree as follows:

•	The Funder shall, within ten (10) business days of a written request from the Company, provided any such request is received on or before September 30, 2024, pay to the Company by wire transfer of immediately available funds, such amounts as the Company shall reasonably request, up to the then agreed upon Litigation Fund Amount, to satisfy actual documented litigation costs and expenses, including attorneys' fees, expert witness fees, consulting fees and disbursements incurred by the Company or reasonably anticipated to be incurred by the Company within the next twenty (20) business days in connection with any proceedings (i) involving the Sponsors and/or the lenders in the 111 West 57th Street Property project, or (ii) seeking to recover value for the Company with respect to its equity investment in the 111 West 57th Street Property. For the purposes of this Agreement, "business day" means a day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required to close.
•	In consideration for the Funder's commitment to provide the Litigation Fund Amount, the Company shall distribute any and all consideration it actually receives in connection with any Future Recovery Litigation, including an amount in cash equal to the fair market value of any non-cash consideration received, whether by judgment, award, order, settlement or otherwise, including, without limitation, any damages (punitive or otherwise), penalties, or interest (such amounts, collectively, the " Litigation Proceeds ") as follows:
•	first, to reimburse the Funder on a dollar-for-dollar basis for (i) the then outstanding Litigation Fund Amount advanced by him to the Company or on behalf of the Company and not previously repaid, and (ii) any reasonable and documented costs and expenses incurred by the Funder in connection with any Future Recovery Litigation, until such amount is satisfied in full; and
•	thereafter, the remaining Litigation Proceeds, if any, shall be distributed as follows:
	• If and to the extent the Litigation proceeds are received on or before thirty-six (36) months from the date of this Agreement: (A) 70% to the Company and 30% to the Funder; and
	• If and to the extent the Litigation proceeds are received after thirty-six (36) months from the date of this Agreement until the termination of this Agreement: (A) 55% to the Company and 45% to the Funder.

For avoidance of doubt, Litigation Proceeds shall include anything of value, including any property or other non-cash consideration, received from any Sponsor, lender, and/or their respective affiliates, shareholders, partners, members, managers, officers and directors or any other individuals connected to the 111 West 57th Property project, as a result of any Future Recovery Litigation. If there is a dispute regarding the appropriate valuation of any non-cash portion of the Litigation Proceeds and the parties are unable to resolve such dispute within twenty (20) business days then either party may submit the dispute for arbitration pursuant to Section 10 of this Agreement.

•	The Company acknowledges and agrees that the Funder has previously provided the Company with One Million Six Hundred Fifty Thousand Dollars ($1,650,000) under a secured working capital line of credit and is the senior creditor to the Company on the date hereof. The Company hereby agrees that it shall not, without the prior written consent of the Funder, create, incur, assume or permit to exist any lien or encumbrance on the Litigation Proceeds, grant any other person or entity any rights in the Litigation Proceeds superior to the rights of the Funder, or otherwise grant any person or entity any rights that have the effect or could reasonably have the effect of hindering, delaying, or diluting the Funder's right to receive the payments provided in this Agreement.
•	The Company shall distribute any Litigation Proceeds it receives within five (5) business days of receipt of such amounts in accordance with the terms of this Agreement. For avoidance of doubt, the Litigation Fund Amount shall only become due and payable by the Company upon the receipt of, and to the extent of, any Litigation Proceeds.
•	This Agreement commenced on the date hereof and shall continue in effect until (a) the final resolution of all Future Recovery Litigation pursuant to (i) a final, nonappealable judgment of a court of competent jurisdiction or (ii) a written settlement agreement between the Company and the respective defendants in such proceedings, and (b) the disbursement in full of all Litigation Proceeds, if any, in accordance with this Agreement, unless the Agreement is earlier terminated by the mutual written agreement of both parties hereto.
•	This Agreement commenced on the date hereof and shall continue in effect until (a) the final resolution of all Future Recovery Litigation pursuant to (i) a final, nonappealable judgment of a court of competent jurisdiction or (ii) a written settlement agreement between the Company and the respective defendants in such proceedings, and (b) the disbursement in full of all Litigation Proceeds, if any, in accordance with this Agreement, unless the Agreement is earlier terminated by the mutual written agreement of both parties hereto.
•	This Agreement constitutes the entire agreement between the parties with respect to the subject matter contained herein and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.
•	This Agreement shall inure to the benefit of, and be binding upon, the successors, heirs and permitted assigns of each of the parties hereto. The Company may not assign the Agreement or its rights and obligations hereunder to another person without the Funder's prior written consent, which consent may be withheld in the Funder's sole discretion. The Funder may, at any time, without the consent of the Company, assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including the right to receive all or a portion of the Litigation Proceeds due to the Funder hereunder).
•	This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. Any claim or dispute arising out of or in any way relating to this agreement or its alleged breach shall be determined in a binding arbitration by a single arbitrator that is a retired State or Federal court judge. The arbitration shall be administered by the American Arbitration Association under its commercial dispute resolution procedures which are in effect at the time of the arbitration. The arbitration shall take place in New York City. The parties may seek, from a court of competent jurisdiction, provisional remedies or injunctive relief in support of their respective rights and remedies hereunder without waiving their right to arbitration and, for such purposes, each party irrevocably consents to the jurisdiction of any of the courts of the State of New York in New York County, and the United States District Court for the Southern District of New York. However, the merits of the action that involves such provisional remedies or injunctive relief, including without limitation, the terms of any permanent injunction, shall be determined by arbitration under this Section 10. Judgment on the arbitrator's award may be entered in any court of competent jurisdiction.
•	This Agreement shall not be modified, amended or supplemented except by a written agreement signed by the parties hereto. This Agreement may be executed in any number of counterparts (and by facsimile), each of which will be deemed an original, but all of which together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile, electronic portable document format (PDF) file or other means of electronic transmission will be as effective as delivery of a manually executed counterpart to this Agreement.

[Remainder of page left intentionally blank; signature page follows]

Please confirm your agreement to the foregoing by signing a copy of this Agreement where indicated below and returning it to the undersigned.

	Sincerely, AMBASE CORPORATION , a Delaware corporation By: /s/ John Ferrara John Ferrara Vice President and Chief Financial Officer and Controller

Acknowledged and Agreed:

/s/ Richard A. Bianco

Richard A. Bianco