Note 10 – Litigation Funding Agreement(s) - 2026

 

The Company had been considering and evaluating various strategic funding and financing alternatives in order to raise capital. Possible funding alternatives considered have included a variety of sources, including but not limited to litigation funding agreements, offerings of equity or debt securities, loans, or any combination thereof with third parties, existing shareholders of the Company and/or Company management.

 

In order to provide the necessary cash resources to continue operations and continue the litigation related to the 111 West 57th Property, and pay amounts owed, the Company and RAB entered into a litigation funding agreement (the “RAB 2026 LFA”).  Pursuant to the RAB 2026 LFA, the Company and RAB agreed that RAB would provide up to an aggregate initial amount as noted below, plus such additional amounts as may be necessary from time to time and as agreed to by the Company and RAB at such time to be retained and used by the Company for working capital needs and certain other litigation related expenses, including expert witness fees, consulting fees and disbursements incurred by the Company or reasonably anticipated to be incurred by the Company (the “Litigation Fund Amount”). As detailed below, pursuant to the RAB 2026 LFA, the aggregate principal amount of promissory notes between RAB and the Company outstanding as of the date of the RAB 2026 LFA (the “RAB Promissory Notes”) were deemed converted to the RAB 2026 LFA.  The accrued but unpaid interest on the RAB Promissory Notes stayed outstanding and will continue to accrue interest on the same terms as the RAB Promissory Notes as further detailed in Note 9, herein. The date that the entire initial litigation funding amount was received by the Company was deemed to be the “Funding Date.”  Additional amounts contributed by RAB pursuant to the RAB 2026 LFA are detailed herein below.

 

In July 2026, the Company and RAB entered into a letter agreement (the “July 2026 Letter Agreement”) pursuant to which RAB paid the Company additional amount(s) as detailed below, for use by the Company for working capital needs and continuing litigation related expenses with respect to the 111 West 57^th Property. The additional amounts contributed by RAB were made pursuant to the same terms and conditions of the RAB 2026 LFA.

 

Information relating to the RAB 2026 LFA is as follows (in thousands):

 

In October 2026, the Company and RAB entered into a letter agreement (the “October 2026 Letter Agreement”) pursuant to which RAB paid the Company an additional $1,500,000, for use by the Company for working capital needs and continuing litigation related expenses with respect to the 111 West 57^th Property. The additional amounts contributed by RAB were made pursuant to the same terms and conditions of the RAB 2026 LFA.

 

In consideration for RAB’s commitment to provide the Litigation Fund Amount, the Company shall distribute any and all consideration it actually receives in connection with the 111 West 57^th litigations, 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:

 

 

 

 

The Company also had a note payable to BARC Investments LLC (“BARC”) plus accrued interest (the “2024 BARC Note”). Pursuant to the 2024 BARC Note, the amounts due BARC, at its option, could be converted into a litigation funding agreement pari-passu with other litigation funding entity(ies).  In order to allow the Company to use its existing working capital and the proceeds of the Litigation Fund Amount (as defined in the LFA agreements) to be provided by other Funders to finance the Company’s continued expenses with respect to the Future Recovery Litigation, rather than be required to apply or reserve such working capital and proceeds for repayment of the 2024 BARC Note, BARC exercised its option under the 2024 BARC Note and the Company and BARC have entered into an agreement (the “BARC 2026 LFA”) pursuant to which BARC converted the principal amount of the 2024 BARC Note, (plus such additional amounts as may be necessary from time to time and as agreed to by the Company and BARC at such time), into a right to receive Litigation Proceeds on terms pari-passu with those provided under the RAB 2026 LFA. The accrued but unpaid interest on the 2024 BARC Note stayed outstanding and will continue to accrue interest on the same terms as the 2024 BARC Note as further detailed in Note 8, herein.

Information relating to BARC 2026 LFA is as follows (in thousands):

 

 

As part of the RAB 2026 LFA and the BARC 2026 LFA, the Company shall distribute any consideration it actually receives in connection with the 111 West 57^th Litigations in accordance with the terms of the RAB 2026 LFA and BARC 2026 LFA. The terms of the RAB 2026 LFA and BARC 2026 LFA will therefore further reduce the Company’s share of any future litigation proceeds.

 

The RAB 2026 LFA and the BARC 2026 LFA also contain customary representations and warranties and agreements of the parties and customary indemnification rights and obligations of the parties. The foregoing description(s) of the RAB 2026 LFA and the BARC 2026 LFA are qualified entirely by reference to the agreements, a copy of the RAB 2026 LFA and the BARC 2026 LFA were filed as an exhibit to the Company’s previously filed reports with the Securities and Exchange Commission and are incorporated herein by reference.