Edgar Filing: AMBASE CORP

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials

AmBase Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:

________________________________________________________________________________

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):

________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:

________________________________________________________________________________
5) Total fee paid:

________________________________________________________________________________
[_] Fee paid previously with preliminary materials:

________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

1) Amount previously paid:

________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:

________________________________________________________________________________
3) Filing Party:

________________________________________________________________________________
4) Date Filed:

________________________________________________________________________________

NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT

2007

AMBASE CORPORATION
100 Putnam Green, 3rd Floor
Greenwich, CT 06830-6027

AMBASE CORPORATION
100 PUTNAM GREEN, 3RD FLOOR
GREENWICH, CT 06830-6027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2007

The 2007 Annual Meeting of Stockholders of AmBase Corporation (the
"Company") will be held at the Hyatt Regency Hotel, 1800 East Putnam Avenue,
Greenwich, Connecticut, on Friday, May 18, 2007 at 9:00 a.m., Eastern Daylight
Time, to consider and act upon the following matters:

1. The election of one director to hold office for a three-year term
expiring in 2010;

2. The approval of the appointment of PricewaterhouseCoopers LLP as the
independent registered public accounting firm of the Company for the year ending
December 31, 2007;

and such other matters as may properly come before the meeting or any
adjournments thereof.

The Board of Directors has fixed the close of business on Monday, April 2,
2007 as the record date for determining stockholders entitled to notice of and
to vote at the meeting.

Whether or not you plan to attend the Annual Meeting, please sign, date and
return the enclosed proxy card in the prepaid envelope provided, as soon as
possible, so your shares can be voted at the meeting in accordance with your
instructions. Your vote is important no matter how many shares you own. If you
plan to attend the meeting and wish to vote your shares personally, you may do
so at any time before your proxy is voted. Your prompt cooperation is greatly
appreciated.

All stockholders are cordially invited to attend the Annual Meeting.

Admission to Annual Meeting

Attendance at the meeting is limited to shareholders of the Company as of
the April 2, 2007, record date. For safety and security reasons, video and audio
recording devices and other electronic devices will not be allowed in the
meeting.

If your shares are held in the name of your bank, brokerage firm or other
nominee, you must bring to the meeting an account statement or letter from the
nominee indicating that you beneficially owned the shares as of the April 2,
2007, record date for voting. If you do not have proof of share ownership, you
will not be admitted to the meeting.

For registered shareholders, a copy of your proxy card can serve as
verification of stock ownership. Shareholders who do not present a copy of their
proxy card at the meeting, will be admitted only upon verification of stock
ownership, as indicated herein. If you do not have proof of share ownership, you
will not be admitted to the meeting.

In addition, all meeting attendees will be asked to present a valid,
government-issued photo identification, such as a driver's license or passport,
as proof of identification before entering the meeting, and attendees may be
subject to security inspections.

By Order of the Board of Directors

John P. Ferrara
Secretary

Greenwich, Connecticut
April 2, 2007

AMBASE CORPORATION
100 PUTNAM GREEN, 3RD FLOOR
GREENWICH, CT 06830-6027

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2007

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of AmBase Corporation (the "Company") of proxies to be
voted at the Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held at the Hyatt Regency Hotel, 1800 East Putnam Avenue,
Greenwich, Connecticut, at 9:00 a.m., Eastern Daylight Time, on Friday, May 18,
2007, and at any adjournments thereof. This Proxy Statement and the accompanying
proxy are being mailed to stockholders commencing on or about April 2, 2007.

Shares represented by a duly executed proxy in the accompanying form
received by the Company prior to the Annual Meeting will be voted at the Annual
Meeting in accordance with instructions given by the stockholder in the proxy.
Any stockholder granting a proxy may revoke it at any time before it is
exercised by granting a proxy bearing a later date, by giving notice in writing
to the Secretary of the Company or by voting in person at the Annual Meeting.

At the Annual Meeting, the stockholders will be asked (i) to re-elect
Salvatore Trani as a director of the Company to serve a three-year term ending
in 2010; and (ii) to approve the appointment of PricewaterhouseCoopers LLP as
the Company's independent registered public accounting firm for the year ending
December 31, 2007. The persons acting under the accompanying proxy have been
designated by the Board of Directors and, unless contrary instructions are
given, will vote the shares represented by the proxy (i) for the election of the
nominee for director named above; and (ii) for the approval of the appointment
of PricewaterhouseCoopers LLP as the Company's independent registered public
accounting firm.

The close of business on Monday, April 2, 2007, has been fixed by the Board
of Directors as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting or any adjournments thereof. Only
the holders of record of common stock of the Company, par value $0.01 per share
(the "Common Stock") at the close of business on April 2, 2007, are entitled to
vote on the matters presented at the Annual Meeting. Each share of Common Stock
entitles the holder to one vote on each matter presented at the Annual Meeting.
As of Monday, April 2, 2007, there were 44,968,519 shares of Common Stock issued
and outstanding. The holders of a majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting shall constitute a quorum. If there
is less than a quorum, a majority of those present in person or by proxy may
adjourn the Annual Meeting. A plurality vote of the holders of the shares of
Common Stock represented in person or by proxy and voting at the Annual Meeting,
a quorum being present, is required for the election of directors. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented in person or by proxy and voting at the Annual Meeting, a quorum
being present, is necessary for the approval of PricewaterhouseCoopers LLP as
the Company's independent registered public accounting firm.

Abstentions, votes withheld and shares not voted, including broker
non-votes, are not included in determining the number of votes cast for the
approval of PricewaterhouseCoopers LLP as the Company's independent registered
public accounting firm. Abstentions, votes withheld and broker non-votes, are
counted for purposes of determining whether a quorum is present at the Annual
Meeting.

PROPOSAL NO. 1 - ELECTION OF DIRECTORS

In accordance with the method of electing directors by class with terms
expiring in different years, as required by the Company's Restated Certificate
of Incorporation, one director will be elected at the Company's 2007 Annual
Meeting of Stockholders to hold office until the Company's Annual Meeting of
Stockholders for the year 2010. The director will serve until his successor
shall be elected and shall qualify.

The person named below has been nominated for directorship. The nominee is
a director now in office, and has indicated a willingness to accept re-election.
It is intended that at the Annual Meeting the shares represented by the
accompanying proxy will be voted for the election of the nominee unless contrary
instructions are given. In the event that the nominee should become unavailable
for election as a director at the time the Annual Meeting is held, shares
represented by proxies in the accompanying form will be voted for the election
of a substitute nominee selected by the Board of Directors, unless contrary
instructions are given or the Board by resolution shall have reduced the number
of directors. The Board is not aware of any circumstances likely to render the
nominee unavailable.

Information Concerning the Nominee for Election as a Director

The name, age, principal occupation, other business affiliations, and
certain other information concerning the nominee for election as director of the
Company is set forth below.

Salvatore Trani, 66. Mr. Trani was elected a director of the Company in
January 2006. Mr. Trani has over 40 years of experience on Wall Street and
currently serves as an Executive Vice President at BGC Partners, L.P., a leading
inter-dealer brokerage firm which provides integrated voice and electronic
services to wholesale fixed income, interest rate, foreign exchange, and
derivatives markets worldwide. If elected, his term will expire in 2010.

The Board of Directors recommends a vote FOR the election of the nominee as
director.

Information Concerning Directors Continuing in Office

Certain information concerning the directors of the Company whose terms do
not expire in 2006 is set forth below.

Richard A. Bianco, 59. Mr. Bianco was elected a director of the Company in
January 1991, and has served as President and Chief Executive Officer of the
Company since May 1991. On January 26, 1993, Mr. Bianco was elected Chairman of
the Board of Directors of the Company. He served as Chairman, President and
Chief Executive Officer of Carteret Savings Bank, FA, then a subsidiary of the
Company, from May 1991 to December 1992. His term will expire in 2008.

Philip M. Halpern, 50. Mr. Halpern was elected a director of the Company in
January 2006. Mr. Halpern is currently the Managing Partner of the law firm,
Collier, Halpern, Newberg, Nolletti and Bock, LLP, and has been a partner at the
firm since 1985. Mr. Halpern received his undergraduate degree from Fordham
University and his law degree from Pace University School of Law. His term will
expire in 2008.

Robert E. Long, 75. Mr. Long was elected a director of the Company in
October 1995. Mr. Long is currently the President of Ariba GLB Asset Management,
Inc., a registered investment advisor. He has been the Chairman of Emerald City
Radio Partners since 1997. From 1991 to 1995, Mr. Long was President and CEO of
Southern Starr Broadcasting Group, Inc. Prior to 1991, Mr. Long was President of
Potomac Asset Management, Inc., a registered investment company. Mr. Long is a
Chartered Financial Analyst and a graduate of George Washington University
School of Law. In addition to his service as a director of the Company, Mr. Long
serves as a director of Allied Capital Corporation, CSC Scientific, Inc., and
Advanced Solutions International, Inc. His term will expire in 2009.

Director Independence

The Company periodically reviews the independence of each director.
Pursuant to this review, the directors and officers of the Company on an annual
basis, are required to complete and forward to the Corporate Secretary a
detailed questionnaire to determine if there are any transactions or
relationships between any of the directors and/or officers of the Company
(including immediate family and affiliates). If any transactions or
relationships exist, the Company then considers whether such transaction(s) or
relationship(s) are inconsistent with a determination that the director is
independent. Pursuant to this process, in February 2007, the Company conducted
its annual review of director independence and determined that no transactions
or relationships existed that would disqualify any of our directors, under
NASDAQ independence rules. Mr. Richard A. Bianco, who serves as the Chairman of
the Board of Directors also serves as the Company's President and Chief
Executive Officer. Mr. Bianco does not serve as a member of the Company's
Accounting and Audit Committee or the Company's Personnel Committee. Based on a
review of the information provided by the directors and other information
reviewed, the Company has concluded that none of the Company's non-employee
directors have any relationship with the Company other than as a director or
shareholder of the Company. Based upon that finding, our Board of Directors
determined that Messrs. Halpern, Long and Trani are "independent".

INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES

Meetings and Attendance

During 2006, the Company's Board of Directors held seven (7) meetings.
Matters were also addressed by unanimous written consent in accordance with
Delaware law. All directors attended at least 75% of the meetings of the Board
of Directors and the committees of the Board on which they served during 2006.

Committees of the Board

The Board of Directors currently has (i) an Accounting and Audit Committee
and (ii) a Personnel Committee.

The Accounting and Audit Committee met one (1) time during 2006. Matters
were also addressed by unanimous written consent in accordance with Delaware
law. The Accounting and Audit Committee consists of Robert E. Long, Chairman,
Philip M. Halpern and Salvatore Trani, who are all independent directors of the
Company. The Board of Directors has determined that Mr. Long is an "audit
committee financial expert" as that term is defined in Item 401(h) of Regulation
S-K promulgated by the Securities and Exchange Commission (the "SEC").

The Accounting and Audit Committee is directly responsible for the
appointment, compensation and oversight of the audit and related work of the
Company's independent auditors. The Accounting and Audit Committee reviews the
degree of their independence; approves the scope of the audit engagement,
including the cost of the audit; approves any non-audit services rendered by the
auditors and the fees for these services; reviews with the auditors and
management the Company's policies and procedures with respect to internal
accounting and financial controls and, upon completion of an audit, the results
of the audit engagement; and reviews internal accounting and auditing procedures
with the Company's financial staff and the extent to which recommendations made
by the independent auditors have been implemented. The Accounting and Audit
Committee has adopted a charter, which has been approved by the Company's Board
of Directors. A copy of the Audit Committee Charter is attached as Exhibit A.

The Personnel Committee held three (3) meetings in 2006. Matters were also
addressed by unanimous written consent in accordance with Delaware law. The
Personnel Committee consists of Mr. Halpern and Mr. Trani, Co-Chairpersons, and
Mr. Long, who are all independent directors of the Company.

The principal functions of the Personnel Committee, which is equivalent to
a compensation committee, are to consider and recommend nominees for the Board,
to oversee the performance and approve the remuneration of officers and senior
employees of the Company and its subsidiaries and to oversee and approve the
employee benefit and retirement plans of the Company and its subsidiaries. The
Personnel Committee is also responsible for reviewing and approving the goals
and objectives relevant to compensation of officers and senior employees,
evaluating the performance in light of those goals and objectives and
determining and approving the compensation levels based on this evaluation. The
Personnel Committee is responsible for setting and approving salary, bonus and
other employment terms for the Company's Chief Executive Officer. The Chief
Executive Officer recommends salary and bonus awards for other officers of the
Company, which are subject to the modification and/or approval by the Personnel
Committee. In connection therewith, the Personnel Committee approves and makes
recommendations with respect to bonus and incentive-based compensation plans and
equity based plans. The Personnel Committee will consider stockholder
recommendations for director, submitted in accordance with the Company's
By-Laws. The Personnel Committee does not currently have a written charter.

The Company's By-Laws require that in the event a stockholder wishes to
nominate a person for election as a director, advance notice must be given to
the Secretary of the Company not less than 120 days in advance of the date on
which the Company's proxy statement is released to stockholders in connection
with the previous year's annual meeting of stockholders, except that if no
annual meeting was held in the previous year or if the date of the annual
meeting has been changed by more than 30 calendar days from the date
contemplated at the time of the previous year's proxy statement, such a proposal
must be received by the Company a reasonable time before the solicitation is
made, together with the name and address of the stockholder and of the person to
be nominated; a representation that the stockholder is entitled to vote at the
meeting and intends to appear in person or by proxy to make the nomination; a
description of arrangements or understandings between the stockholder and others
pursuant to which the nomination is to be made; such other information regarding
the nominee as would be required in a proxy statement filed under the proxy
rules as set forth in the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"); and the consent of the nominee to serve as a
director if elected.

Communications with Directors

In order to provide the Company's security holders and other interested
parties with a direct and open line of communication to the Board of Directors,
the Board of Directors has adopted the following procedures for communications
to directors. The Company's security holders and other interested persons may
communicate with the Chairman of the Company's Accounting and Audit Committee,
either of the Co-Chairman of the Personnel Committee, or with the non-management
directors of the Company as a group, by mailing a letter addressed in care of
the Corporate Secretary, AmBase Corporation, 100 Putnam Green, 3rd Floor,
Greenwich, Connecticut 06830.

All communications received in accordance with these procedures will be
reviewed initially by the Company. The Company will relay all such
communications to the appropriate director or directors unless the Secretary
determines that the communication:

o does not relate to the business or affairs of the Company or the
functioning or constitution of the Board of Directors or any of its committees;
o relates to routine or insignificant matters that do not warrant the
attention of the Board of Directors;
o is an advertisement or other commercial solicitation or
communication;
o is frivolous or offensive; or
o is otherwise not appropriate for delivery to directors.

The director or directors who receive any such communication will have
discretion to determine whether the subject matter of the communication should
be brought to the attention of the full Board of Directors or one or more of its
committees, and whether any response to the person sending the communication is
appropriate. Any such response will be made only in accordance with applicable
law and regulations relating to the disclosure of information.

The Secretary will retain copies of all communications received pursuant to
these procedures for a period of at least one year. The Personnel Committee of
the Board of Directors will review the effectiveness of these procedures from
time to time and, if appropriate, recommend changes.

Board Attendance at Annual Meetings

We have not established a formal policy regarding director attendance at
our annual meetings of shareholders, but our directors generally do attend the
annual meeting. The Chairman of the Board presides at the annual meeting of
shareholders, and the Board of Directors holds one of its regular meetings in
conjunction with the annual meeting of shareholders. Accordingly, unless one or
more members of the Board are unable to attend, all members of the Board are
expected to be present for the annual meeting. All of the four members of the
Board at the time of the Company's 2006 annual meeting of shareholders attended
that meeting.

Nomination of Directors

The Personnel Committee has adopted specifications applicable to members of
the Board of Directors, and nominees for the Board of Directors recommended by
the Personnel Committee must meet these specifications. The specifications
provide that a candidate for director should:

o have a reputation for industry, integrity, honesty, candor, fairness and
discretion;
o be knowledgeable in his or her chosen field of endeavor, which field
should have such relevance to our businesses as would contribute to the
Company's success;
o be knowledgeable, or willing and able to become so quickly, in the critical
aspects of our businesses and operations; and
o be experienced and skillful in communicating with and serving as a
competent overseer of, and trusted advisor and confidant to senior
management, of a publicly held corporation or other corporation.

In addition, nominees for the Board of Directors should contribute to the
mix of skills, core competencies and qualifications of the Board through
expertise in one or more of the following areas: accounting and finance, the
financial industry, international business, mergers and acquisitions,
leadership, business and management, strategic planning, government relations,
investor relations, executive leadership development, and executive
compensation. The Personnel Committee will consider nominees recommended by
stockholders for election at the 2008 Annual Meeting of Stockholders that are
submitted prior to December 2, 2007, to our Secretary at the Company's offices,
100 Putnam Green, 3rd Floor, Greenwich, Connecticut 06830. Any recommendation
must be in writing and must include a detailed description of the business
experience and other qualifications of the recommended nominee as well as the
signed consent of the nominee to serve if nominated and elected, so that the
candidate may be properly considered. All stockholder recommendations will be
reviewed in the same manner as other potential candidates for Board membership.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of the forms filed with the SEC and written
representations received by the Company pursuant to the requirements of Section
16(a) of the Securities Exchange Act, the Company believes that, during 2006,
there were no transactions with respect to the Company's equity securities which
were not reported on a timely basis to the SEC, no late reports nor other
failure to file a required form by any director, officer or 10% stockholder of
the Company.

Settlement of Delaware Court of Chancery Section 220 Books and Records
Action

Two Stockholders who owned approximately 14.4% of the Company's outstanding
common stock (the "Stockholders") had previously made demand in January 2004 to
inspect certain Company books and records pursuant to Section 220 of the
Delaware General Corporation Law. The Company opposed the request on various
grounds, and the Stockholders brought suit in March 2004 to compel inspection of
certain Company books and records. In August 2005, the Court of Chancery issued
a Memorandum Opinion finding that the Stockholders had met the technical
requirements of Section 220 and had stated a proper purpose under Section 220,
and were legally entitled to inspect specified books and records, but declined
to find the Company liable for the Stockholders' attorneys' fees.

In October 2006, in order to eliminate continued involvement in the above
referenced action or potential future actions, and the resultant time, expense
and potential adverse impact on the Company's current operations and litigation
claims, the Company, its Chief Executive Officer and principal stockholder, and
the Company's Directors entered into an agreement with the Stockholders who had
initiated the action to obtain Company books and records. Pursuant to the
agreement: (i) the Company's Chief Executive Officer agreed to purchase
6,615,531 shares of Company common stock (representing approximately 14.4% of
the Company's outstanding common stock and all of the Company stock beneficially
owned by the Stockholders), for a cash purchase price of $0.55 per share
($3,638,542 in the aggregate for all of the shares); (ii) the Stockholders
agreed to dismiss the books and records action and release any additional claims
the Stockholders might have, including claims the Stockholders said they had
been considering litigating against the Company, its Directors and its Chief
Executive Officer; (iii) the Stockholders entered into a standstill and other
agreements which will preclude them from taking a position in the Company for a
period of time; and (iv) the Company agreed to pay the Stockholders $1.1
million. No portion of the purchase price for the shares acquired by the
Company's Chief Executive Officer was provided by or financed by the Company.
Although the shares were not offered to the Company for purchase, the Company's
Board of Directors declined to purchase the shares at the price they were
offered to the Company's Chief Executive Officer. A settlement charge of
$1,100,000 recorded as other expense and related insurance recovery of $400,000
recorded as other income, have been reflected the Company's consolidated
statement of operations for the year ended December 31, 2006. The net cost to
the Company of the settlement was approximately $700,000. This matter is,
therefore, concluded.

Certain Relationships and Related Party Transactions

Pursuant to the Company's Code of Business Conduct and Ethics ("Code of
Conduct"), all employees (including our Named Executive Officers) who have, or
whose immediate family members have, any direct or indirect financial or other
participation in any business that competes with, supplies goods or services to,
or is a customer of the Company or its subsidiaries, are required to disclose to
us and receive written approval prior to transacting such business. No such
relationships have been reported. Our employees are expected to make reasoned
and impartial decisions in the workplace. As a result, approval of a business
relationship would be denied if it is believed that the employee's interest in
such a relationship could influence decisions relative to the Company's
business, or have the potential to adversely affect the Company's business or
the objective performance of the employee's work. In addition, the Company's
Code of Conduct requires adherence to a number of other underlying principles
which are important to the Company. These items include, but are not limited to,
restrictions on disclosure of Company information, insider trading, and the
protection and use of Company assets.

In connection with the Company's annual review of Directors independence,
as described under "Director Independence" above, the Company reviews whether or
not there have been any related party transactions by a Director, including any
such transactions with the Company's directors and/or officers. If a transaction
was deemed to be a related party transaction, that transaction would be reviewed
by the Company's Board of Directors.

Corporate Governance

In addition to the various procedures followed by the Company's Board of
Directors, as described herein, the Company maintains a separate Audit Committee
and Personnel Committee. The Company believes the functions of its Board of
Directors and existing committees essentially perform the responsibilities of a
nominating and a corporate governance committee, and therefore, the Company does
not maintain these additional separate committees.

INDEPENDENT REGISTERED PUBLIC ACCOUNTANT MATTERS

Report of the Accounting and Audit Committee

As set forth in more detail in the Accounting and Audit Committee (the
"Audit Committee") charter (attached as Exhibit A) the primary purpose of the
Audit Committee is to assist the Board of Directors in fulfilling its
responsibility to oversee management's conduct of the Company's financial
reporting process, including the oversight of the following:

o financial reports and other financial information provided by the Company
to any governmental or regulatory body, the public or other users thereof;

o the Company's systems of internal accounting and financial controls; and

o the annual independent audit of the Company's financial statements.

The Audit Committee reviewed the Company's audited financial statements and
met with both Company management and PricewaterhouseCoopers LLP, the Company's
registered independent public accounting firm, to discuss those financial
statements. Management has represented to us that the financial statements were
prepared in accordance with accounting principles generally accepted in the
United States of America.

The Audit Committee has received from and discussed with
PricewaterhouseCoopers LLP the written disclosure and the letter required by
Independence Standards Board Standard No. 1 "Independence Discussions with Audit
Committees". These items relate to that firm's independence from the Company.
The Audit Committee also discussed with PricewaterhouseCoopers LLP any matters
required to be discussed by Statement on Auditing Standards No. 61
"Communication with Audit Committees".

Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2006.

Audit Committee: Robert E. Long, Chairman
Philip M. Halpern
Salvatore Trani

Audit Fees

Aggregate fees billed by PricewaterhouseCoopers LLP for professional
services rendered for the audit of our annual consolidated financial statements
included in the Annual Report on Form 10-K and the review of interim
consolidated financial statements included in Quarterly Reports on Form 10-Q and
the review and audit of the application of new accounting pronouncements and SEC
releases were $68,000 and $58,000 for the years ended December 31, 2006 and
2005, respectively.

Audit Related Fees

Aggregate fees billed by PricewaterhouseCoopers LLP for assurance and
related services that are reasonably related to the performance of the audit or
review of our financial statements and that are not disclosed under "Audit Fees"
above were $0 and $8,000 for the years ended December 31, 2006 and 2005,
respectively. These audit related services were for regulatory reporting
services in connection with the sale of real estate by the Company during 2005.

Tax Fees and All Other Fees

No other fees relating to tax advisory or other services were paid to
PricewaterhouseCoopers LLP for professional services rendered to the Company for
the years ended December 31, 2006 and 2005.

Audit Committee Pre-Approval Policy

Pursuant to its charter, the Audit Committee is responsible for selection,
approving compensation and overseeing the independence, qualifications and
performance of the Company's independent accountants. The Audit Committee has
adopted a pre-approval policy pursuant to which certain permissible audit and
non-audit services may be provided by the independent accountants. Pre-approval
is generally provided for up to one year, is detailed as to the particular
service or category of services and may be subject to a specific budget. The
Audit Committee may also pre-approve particular services on a case-by-case
basis. In assessing requests for services by the Company's independent
accountants, the Audit Committee considers whether such services are consistent
with the auditor's independence; whether the Company's independent accountants
are likely to provide the most effective and efficient service based upon their
familiarity with the Company; and whether the service could enhance our ability
to manage or control risk or improve audit quality.

There was no non audit-related tax or other services provided by
PricewaterhouseCoopers in fiscal year 2006.

EXECUTIVE COMPENSATION

Compensation Discussion & Analysis

The following Compensation Discussion and Analysis ("CDA") describes the
material elements of compensation for the Company's officers identified in the
Summary Compensation Table ("Named Executive Officers"). As more fully described
above herein, the Personnel Committee consists of three independent directors of
the Company.

The Personnel Committee is responsible for establishing the Company's
compensation programs including benefit plans, retirement plans and the
Company's stock option program, including approving the granting of stock option
awards to the Company's officer and employees. The Personnel Committee annually
reviews and approves all compensation decisions relating to the Company's
officers, including Named Executive Officers.

The day-to-day design and administration of health, welfare and paid
time-off plans and policies applicable to salaried employees in general are
handled by the Company's management. The Personnel Committee is responsible for
certain plan design changes outside the day-to-day requirements necessary to
maintain these plans and policies.

The Personnel Committee has the ability to, and may from time to time
utilize the services of independent compensation consultants or other outside
advisors in reviewing the Company's compensation programs, as they deem
necessary.

Objectives of the Compensation Program

The Personnel Committee's overall objective in administering the Company's
compensation programs is to attract, motivate and retain qualified personnel,
reward corporate performance and recognize individual contributions on both a
short-term and long-term basis. The Personnel Committee seeks to align the
interests of these executives with those of the Company's stockholders by
encouraging stock ownership by executive officers to promote a proprietary
interest in the Company's success, and to provide incentives to achieve the
Company's goals. In furtherance of these objectives, the Company's executive
compensation policies are designed to focus the executive officers on the
Company's goals. The Personnel Committee determines salary, bonuses and equity
incentives based upon the performance of the individual executive officer and
the Company. Management compensation is intended to be set at levels that the
Personnel Committee believes fully reflects the challenges confronted by
management.

The Company strives to provide a combined, overall competitive salary and
benefits package, including annual cash bonus incentives, to retain qualified
personnel who are familiar with the Company's operations and critical to the
long-term success of the Company. The Company rewards personnel for
contributions to a variety of matters, including the pursuit of claims recovery,
compromising of actual and contingent liabilities and attention to the
maintenance of a controlled level of expenditures. Cash bonus incentives are
utilized to reward above average corporate performance and recognize individual
initiative and achievement which provide immediate and/or long-term value to the
Company. Due to the nature of the Company's operations, focusing on the recovery
of assets, with an emphasis on the recovery of the Company's investment in
Carteret Savings Bank ("Carteret") through the Supervisory Goodwill litigation
and other proceedings, the Personnel Committee intends to continue its strategy
of compensation through programs that provide an incentive for performance and
for contributions to the Company's efforts to realize recoveries, achieve asset
appreciation, eliminate liabilities and control costs.

Elements of Compensation

The Company's total compensation program for its officers consists of
competitive market salaries, annual cash bonus awards, stock option awards and
other benefits such as health and other insurance programs and a retirement plan
in the form of a 401(k) Savings Plan, which is a qualified plan, within the
meaning of the Internal Revenue Code of 1986, as amended (the "Code"). The
Company's Supplemental Retirement Plan (the "Supplemental Plan"), as further
discussed below, is scheduled for termination upon the previously agreed to
lump-sum benefit payment in May 2007, to the Company's President and Chief
Executive Officer.

Due to cost considerations, administrative requirements and as part of an
overall compensation philosophy, the Company seeks to maintain a minimal level
of benefit programs and other perquisites.

Section 162(m) of the Code, as amended, imposes a limitation on the
deduction for certain executive officers' compensation unless certain
requirements are met. In that regard, the Company maintains a Senior Management
Incentive Compensation Plan (the "1994 Plan"), which provides for an annual
bonus pool based on a percentage of an increase in the Company's total
stockholders equity and/or an increase in the Company's market value. Payments
pursuant to the 1994 Plan are intended to qualify as performance based
compensation, which is deductible under Section 162(m). The 1994 Plan is not the
exclusive plan under which the Executive Officers may receive cash or other
incentive compensation or bonuses. No bonuses were paid attributable to the 1994
Plan for 2006.

The Company has paid in the past, and reserves the right to pay in the
future, compensation that is not deductible if it believes it is in the best
interests of the Company. The Personnel Committee considered the provisions of
Section 162(m) in setting compensation paid in 2006.

Base Annual Salary

Base annual salaries for executive officers are determined initially by
evaluating the responsibilities of the position, the experience of the
individual and the competition in the marketplace for management talent,
including companies confronting problems of the magnitude and complexity faced
by the Company.

Base annual salaries are intended to be competitive to the overall market
place, commensurate with the qualifications and experience of the Named
Executive Officer. They are intended to provide the necessary incentive to
retain and motivate qualified personnel. Individuals are encouraged to add value
and provide benefit to the Company in all aspects of the Company's operations
currently and in the future.

Base annual salaries and salary adjustments are evaluated on a number of
factors. The most important factor is the executive's performance and
contribution to the Company, followed by the performance of the Company, any
increased responsibilities assumed by the executive and the competition in the
marketplace for similarly experienced executives.

The salaries of the Named Executive Officers are reviewed on an annual
basis typically at the end of each year and may also be adjusted from time to
time based on changes in responsibilities, changes in benefit programs or as a
result of other external and economic factors.

The base annual salary for Mr. Bianco of $625,000 per year remained
unchanged for 2006 and has been at the same level as originally set forth in the
January 1, 2001, amendment to his current employment agreement. See additional
information herein for a discussion of Mr. Bianco's new employment agreement
effective June 1, 2007 (the "2007 Employment Agreement"). The base annual salary
of $157,500 for Mr. Ferrara and $132,500 for Mr. J. Bianco remained the same in
2006 as compared with 2005.

Annual Bonus Awards

The Personnel Committee approved cash bonuses for officers and employees
for 2006. Factors considered included performance of the executive, performance
of the Company, total compensation level, the Company's financial position and
other pertinent factors. This analysis was necessarily a subjective process
which utilized no specific weighting or formula with respect to the described
factors in determining cash bonuses.

Mr. Bianco was paid a bonus of $625,000 for 2006, which was the same amount
as in 2005 and a reduction from the $800,000 received in 2004. Mr. Ferrara was
paid a bonus of $150,000 in 2006, a reduction from the $175,000 received in
2005. Mr. J. Bianco was paid a bonus of $100,000 in 2006, a reduction from the
$135,000 received in 2005.

For 2006, the Personnel Committee considered the Named Executive Officer's
continuing, integral roles in the Company's Supervisory Goodwill case, and other
pending proceedings which are significant to the Company, as well as the
Company's receipt of the $1.2 million Internal Revenue Service ("IRS") interest
refund. The Personnel Committee also recognized management's role in the
maintenance of a controlled level of expenditures. Mr. Bianco was additionally
recognized for his management of the Company's investment returns and his role
in pursuing several potential acquisitions.

2007 Employment Agreement with the Company's President and Chief Executive
Officer

A major objective and focus for the Company continues to be the recovery of
the value of the Company's investment in Carteret Savings Bank ("Carteret"),
through successful litigation efforts (the "CSB Recovery Litigation"). Due to a
number of reasons as summarized below, the Personnel Committee and the Board of
Directors of the Company believe Mr. Bianco's continued employment beyond his
current contract end date of May 31, 2007, is essential to the Company's pursuit
of the CSB Recovery Litigation. In particular, Mr. Bianco has been instrumental
in managing the Company's overall litigation effort and in developing and
executing litigation strategies being pursued. In addition, as the former
President and Chief Executive Officer from May 1991 to December 1992, and one of
the individuals who led the recapitalization efforts during that time frame, Mr.
Bianco has intimate knowledge of Carteret, its operations and financial position
which will provide a basis for the CSB Recovery Litigation.

As part of the Board of Directors efforts to extend Mr. Bianco's employment
contract, the Board of Directors determined that it wished to eliminate the
current employment agreement language, providing for a minimum annual bonus
equal to annual base salary, but wanted to continue annual bonus eligibility at
the discretion of the Personnel Committee. In addition, the Personnel Committee
believed it was important to replace future Supplemental Plan accruals and the
portion of annual cash bonuses paid on progress in the CSB Recovery Litigation
effort with an incentive arrangement, contingent solely upon the eventual
success of the CSB Recovery Litigation.

The Board of Directors and Personnel Committee considered the impact of
continuing Mr. Bianco's current contract to May 31, 2012, the potential increase
to the Company's Supplemental Plan liability and Mr. Bianco's integral
involvement in the CSB Recovery Litigation effort. The Board of Directors and
Personnel Committee also considered the obstacles the Company faces in its
efforts and the probable extended length of time to obtain a recovery and;
therefore, believe, given the demands of the task, it was appropriate to provide
an incentive arrangement to Mr. Bianco.

The Personnel Committee reviewed the Supplemental Plan and the Company's
related liability, including the desirability of continuing to maintain and
administer the Supplemental Plan, the untying of Mr. Bianco's future employment
with the Company from the timing of his Supplemental Plan benefit payment(s),
the Company's overall financial position, and the desirability of continued
accruals under the Supplemental Plan after Mr. Bianco's current employment
contract expires on May 31, 2007. In connection with this review, the Personnel
Committee considered various options, including whether or not to terminate
and/or curtail the Supplemental Plan.

Mr. Bianco is the only current employee of the Company who participates in
the Supplemental Plan and his Supplemental Plan benefit is fully vested. For
purposes of computing his accrued benefit under the Supplemental Plan, assuming
his continued employment with the Company, Mr. Bianco will have 16.08 years of
credited service upon the expiration of his current employment contract on May
31, 2007. His accrual percentage under the Supplemental Plan is 4%, in effect
from the time of his initial employment with the Company, and in accordance with
the Supplemental Plan (prior to the amendment described below), he had the
entitlement to receive his Supplemental Plan benefit in either a lump-sum or an
annuity upon termination of his employment with the Company.

As a result of the above considerations, during 2006, the Company entered
into a new employment agreement with Mr. Bianco to extend his employment with
the Company for an additional five (5) years beyond May 31, 2007, until May 31,
2012 (the "2007 Employment Agreement"). As part of the 2007 Employment Agreement
terms: (i) Mr. Bianco's annual rate of base salary will not increase from his
current rate of base salary during the first three years of the 2007 Employment
Agreement (the amount of Mr. Bianco's base salary for the fourth and fifth years
of the 2007 Employment Agreement term to be determined by the Personnel
Committee, in its sole discretion, although in no event less than $625,000 per
annum); (ii) Mr. Bianco's service accruals under the Supplemental Plan will
cease as of May 31, 2007; (iii) Mr. Bianco's Final Average Earnings (as defined
in the Supplemental Plan) for Supplemental Plan benefit calculation purposes,
are capped as of December 31, 2004; and (iv) Mr. Bianco's annual bonus
opportunity will no longer be linked to recovery efforts in connection with the
Company's Supervisory Goodwill litigation. Instead on or about May 31, 2007, Mr.
Bianco will receive a lump-sum payment of his Supplemental Plan benefit of
$16,676,115, which amount was calculated on the basis of a 5.75% discount rate,
a "RP-2000" projected to 2004 mortality table, and 16.08 years of credited
service, and the Company and Mr. Bianco have agreed to a long term incentive
bonus formula, at varying percentages ranging from 5% to 10%, or more, based
upon recoveries received by the Company for its investment in Carteret, through
litigation or otherwise (including the Company's Supervisory Goodwill
litigation).

The Supplemental Plan has been amended to provide for its automatic
termination immediately following the payment to Mr. Bianco of his Supplemental
Plan lump-sum benefit on or about May 31, 2007.

The Board of Directors and Personnel Committee utilized the services of an
independent outside compensation consultant, Pearl Meyer & Partners, other
outside advisors and independent legal counsel in connection with the 2007
Employment Agreement and the amendment to the Supplemental Plan.

With the advice and consultation of outside advisors and given the
challenges faced by the Company in its efforts to obtain a CSB Litigation
Recovery, including the projected timeframe to achieve such a recovery; the
Personnel Committee believes the 2007 Employment Agreement with Mr. Bianco, and
the lump-sum Supplemental Plan benefit payment and its termination, provide the
necessary and appropriate incentives for the best interests of the Company and
its shareholders. See Employment Contracts, below for a further discussion of
Mr. Bianco's employment agreements.

etirement/Pension Benefits

Supplemental Plan

As more fully described above, the Company currently has an unfunded
non-tax qualified retirement plan which has been in effect since 1985, the
Supplemental Plan.

Mr. Bianco is currently the only individual who participates in the
Supplemental Plan and his Supplemental Plan benefits are fully vested effective
with the terms of his initial employment with the Company in 1991. No other
employee or officer of the Company is a participant under the Supplemental Plan.
The materials terms of the Supplemental Plan are described under Pension
Benefits below.

As noted above, as part of the 2007 Employment Agreement between the
Company and Mr. Bianco, in consideration for Mr. Bianco's agreement to extend
his employment with the Company for an additional five (5) years (beyond his
current May 31, 2007 contract expiration date), with no further Supplemental
Plan accruals for the extension period, the Company has amended the Supplemental
Plan to provide for the payment to Mr. Bianco of his Supplemental Plan benefit
in a lump-sum on or about May 31, 2007 (the date of his Supplemental Plan
benefit entitlement had he not agreed to extend his employment with the Company
beyond May 31, 2007). The Company and Mr. Bianco further agreed that for
purposes of computing his Supplemental Plan benefit as of May 31, 2007, his
Final Average Earnings (as defined in the Supplemental Plan) would be capped as
of December 31, 2004, a 5.75% discount rate would be used and a "RP-2000"
projected to 2004 mortality table would be used, resulting in a Supplemental
Plan lump-sum benefit payment to Mr. Bianco of $16,676,115. The Company has
further amended the Supplemental Plan to automatically terminate following the
lump-sum payment of $16,676,115 to Mr. Bianco on or about May 31, 2007.

401(k) Savings Plan

Other than the Supplemental Plan, the only other retirement type plan
maintained by the Company, is the Company's 401(k) Savings Plan (the "Savings
Plan"). Pursuant to the terms of the Savings Plan, employees can make
contributions which are 100% matched by the Company. The employee and the
employer matching contribution are subject to the maximum limitations as set
forth in the Internal Revenue Code of 1986, as amended.

During 2006, the Company's matching contributions to the Named Executive
Officers aggregated $55,000.

Stock Options

The Company maintains the 1993 Stock Incentive Plan, which authorizes the
grant of stock options. The Personnel Committee has not granted any stock
options since 2004.

If awarded, stock option grants are generally awarded as incentive stock
options intended to qualify for favorable tax treatment under Federal tax law.
The exercise price of stock option grants is set at the fair market value of the
Company's common stock on the date of grant. Accordingly, stock option grants
would only have value if the market price of the common stock increases after
the date of grant. Stock option grants generally have a 10 year term and vest in
equal installments over a 2 year period. In determining the size of stock option
grants to officers, the Personnel Committee considers the individual's
contributions to the Company, Company performance and previously issued stock
options grants.

Stock option awards are granted to encourage stock ownership by the Named
Executive Officers, to provide further incentive to the achievement of the
Company's goals and to align the interests of the Named Executive Officers with
those of the Company's stockholders.

Practices Regarding the Grant of Stock Options Awards

If granted, the Personnel Committee makes grants of stock options or other
equity based awards to the Named Executive Officers or employees of the Company
generally at the beginning of each year. The Company does not have any program,
plan or practice to time grants of stock options or other equity based awards in
coordination with the release of material non-public information or otherwise.

All stock option awards made to the Company's Named Executive Officers, or
any of our other employees, are made pursuant to the Company's 1993 Stock
Incentive Plan with an exercise price equal to the fair market value of the
Company's common stock on the date of grant. Fair market value is determined
based upon the closing market price of a share of the Company's common stock on
the date of grant. The Company's does not have any program, plan or practice of
awarding options and setting the exercise price based upon a stock price other
than on the fair market value on the date of grant. The Company does not have a
practice of determining the exercise price of options grants by using the lowest
prices of the Company's common stock in a period preceding, surrounding or
following the date of grant.

Other Benefits

The Company provides only a limited number of additional benefits and
perquisites. Such additional items, to the extent provided, are included as
Other Compensation in the Summary Compensation table presented herein. The
benefits and other perquisites are reasonably consistent with general
competitive market practices.

Items provided by the Company include, depending on the Named Executive
Officer, Company paid term life insurance at two times the individuals base
annual salary, Company paid long-term disability with a monthly benefit up to
60% of the individuals base monthly salary, supplemental medical and dental
coverage for costs not covered under the base health insurance plans, and
depending on the Named Executive Officer, reimbursement for income tax services
and Company provided transportation. Health and welfare plans are provided
through outside insurance carriers. Benefits generally available to all
full-time employees of the Company are not included herein.

The Company does not provide any other type of deferred compensation
programs nor does it provide or have outstanding loans with the Named Executive
Officers or any other employee of the Company.

Personnel Committee Report

The Personnel Committee believes that its compensation programs, mixing
equity and cash incentives, will continue to focus the efforts of the Company's
executive officers on long-term growth for the benefit of the Company and its
stockholders. The Personnel Committee has found all the components of Company's
officers' compensation to be fair, reasonable and appropriate.

The Personnel Committee has reviewed and discussed the Company's
Compensation Discussion and Analysis ("CDA") (included herein above), with the
Company's management and has recommended that the CDA be included in the
Company's 2007 Proxy Statement.

Personnel Committee: Philip M. Halpern, Esq., Co-Chairperson
Salvatore Trani, Co-Chairperson
Robert E. Long, Member

The following table sets forth the total compensation earned by the Chief
Executive Officer and each other executive officer of the Company and its
subsidiaries (the "Named Executive Officers") for services rendered to the
Company during the last fiscal year:

Summary Compensation Table - 2006

($) (d)
Change In
($) (c) Pension Value and
($)(b) Non-Equity Non-qualified
Name and Principal ($) ($)(a) ($) Stock Incentive Deferred ($)(e)(f)
Position Year Salary Bonus Stock Option Plan Compensation All Other ($)
Awards Awards Compensation Earnings Compensation Total

Richard A. Bianco, 2006 $625,000 $625,000 - $80,201 - $1,687,000 $95,953 $3,113,154
Chairman, President
and Chief Executive
Officer

John P. Ferrara, 2006 $157,500 $150,000 - $3,937 - - $40,282 $351,719
Vice President/
Chief Financial
Officer & Controller

Joseph R. Bianco, 2006 $132,500 $100,000 - $3,937 - - $33,084 $269,521
Treasurer

(a) Amounts include bonuses earned for the year indicated and paid in the
following fiscal year, consistent with past practice of the Company. (b) The
dollar value for Stock Option Awards in the table above represents the
compensation expense recognized by the Company for financial statement reporting
purposes for the fiscal year ended December 31, 2006. Such amounts were
determined in accordance with Statement of Financial Accounting Standards No.
123 (revised 2004), "Share-Based Payment" ("SFAS 123R") utilizing the
assumptions discussed in Note 8 to the Company's consolidated financial
statements for the fiscal year ended December 31, 2006, but disregarding the
estimate of forfeitures related to service-based vesting. The amounts shown for
2006 reflects the aggregate of the grant date fair value of stock option awards
previously granted and vesting in 2006. The values shown for stock options are
theoretical. The value a Named Executive Officer may actually realize will
depend on the amount by which the Company's common stock market value exceeds
the exercise price of the stock option award when the stock options are actually
exercised. (c) See the discussion in Employment Contracts below, for information
relating to the 2007 Employment Agreement between Mr. Bianco and the Company and
the amounts which could be payable to Mr. Bianco in the future in connection
with a recovery received by the Company for its investment in Carteret Savings
Bank, F.A. (d) The dollar value indicated in "Change in Pension Value and
Non-qualified Deferred Compensation Earnings" represents the actuarial increase
in the named executive's Supplemental Pension Plan benefit, as accrued on the
Company's financial statements in accordance with generally accepted accounting
principles. (e) Amounts for personal use of a Company provided automobile for
Mr. Bianco, included in table below for other compensation, includes mileage,
fuel, maintenance, insurance and other miscellaneous fees.

(f) All Other Compensation in the table above consists of the following:

Mr. Bianco Mr.Ferrara Mr. J. Bianco
---------- ---------- -------------
Company contributions to 401(k) savings plan $20,000 $15,000 $20,000
Supplemental life insurance premiums 13,347 1,574 1,968
Long-term disability insurance premiums 13,672 1,092 3,312
Supplemental medical and dental insurance 12,043 20,902 4,490
Reimbursement of income tax costs for
participation in life insurance plans 8,268 1,012 1,184
Reimbursement of income tax costs for
participation in long-term disability plans 8,468 702 2,130
Company provided automobile (e) 3,605 - -
Reimbursement for tax services 7,550 - -
Director's fees 9,000 - -
--------- --------- -----------
Total $95,953 $40,282 $33,084
========= ========= ===========

Grants of Plan Based Awards During 2006

No stock options, SARs, or any other type of stock award grants were
granted to the Named Executive Officers during the year ended December 31, 2006.

EMPLOYMENT CONTRACTS

An employment agreement, as amended, is in effect between Mr. Bianco and
the Company, which provides for him to serve as Chairman, President and Chief
Executive Officer of the Company at an annual base salary of $625,000 through
May 31, 2007 (the "Current Employment Agreement"). The employment agreement also
provides for additional benefits, including his participation in various
employee benefit plans, annual bonus eligibility, certain long-term disability
benefits and the accrual of benefits under the Company's Supplemental Plan at 4%
of his average base salary and bonus (averaged over the three years of credited
service that will produce the highest benefit), and 100% vesting in his
Supplemental Plan accrued benefit. (See Retirement/Pension Benefits above, for
further information with regard to the lump-sum payment of Mr. Bianco's
Supplemental Plan benefits of $16,676,115 on or about May 31, 2007.) In the
event the Company was to terminate his employment other than for reasons
permitted in the employment agreement, Mr. Bianco would be entitled to receive a
lump-sum amount equal to the salary payments provided for in the employment
agreement for the remaining term thereof following the passage of a six (6)
month period from his date of termination. As of December 31, 2006, the
aggregate lump-sum amount of such salary payments, pursuant to the Current
Employment Agreement, would be approximately $260,000.

During March 2006, an additional employment agreement between Mr. Bianco
and the Company, effective June 1, 2007, was executed (the "2007 Employment
Agreement"). The terms of the 2007 Employment Agreement provide for Mr. Bianco
to continue to serve as Chairman, President and Chief Executive Officer of the
Company from June 1, 2007 through May 31, 2012 (the "Employment Period"). Under
the terms of the 2007 Employment Agreement, Mr. Bianco will continue to receive
an annual base salary of $625,000 for the first three (3) years and then is
eligible for discretionary increases to the amount of his base salary in the
fourth and fifth years. The 2007 Employment Agreement continues to provide for
discretionary annual bonuses (which may not take into consideration his efforts
to obtain a recovery for the Company of its investment in Carteret Savings Bank,
FA), employee benefit plans participation, and certain long-term disability
benefits; however, there will be no further Supplemental Plan benefit accruals.
(See Retirement/Pension Benefits above, for further information with regard to
the lump-sum payment of Mr. Bianco's Supplemental Plan benefits or $16,676,115
on or about May 31, 2007.) The 2007 Employment Agreement provides a long-term
incentive arrangement for Mr. Bianco (the "Long-Term Incentive Award"), whereby,
should the Company receive a recovery of its investment in Carteret Savings
Bank, FA, through litigation or otherwise (including the Company's Supervisory
Goodwill litigation) (the "Recovery Amount"), Mr. Bianco will receive (with
certain exceptions), a lump-sum payment equal to a percentage of that recovery,
as follows:

Long-Term Incentive Award = 5% of the first $50,000,000 of Recovery Amount;

Plus

8% of Recovery Amount in excess of $50,000,000 but not greater than
$150,000,000;

Plus

10% of Recovery Amount in excess of $150,000,000 but not greater than
$250,000,000;

Plus

Discretionary amount (not less than 10%), to be determined by the Board, of
Recovery Amount in excess of $250,000,000.

Under the terms of the 2007 Employment Agreement, if no recovery has been
obtained by the Company by the expiration of the five-year term of the 2007
Employment Agreement, the Company and Mr. Bianco will enter into a consulting
arrangement pursuant to which, following his employment with the Company, he
will continue to provide services to the Company as an independent contractor,
solely for the purpose of assisting the Company in obtaining such a recovery.
The Long-Term Incentive Award to Mr. Bianco is to be paid in the future (i.e.,
whether during or after the Employment Period and/or the Consulting Period)
except if Mr. Bianco willfully refuses to cooperate in a reasonable fashion with
the Company and/or the Board in connection with the Company's efforts to obtain
a Recovery Amount, in which case he would forfeit his entitlement to receive a
Long-Term Incentive Award.

During the Employment Period, if Mr. Bianco voluntarily resigns or has his
employment with the Company terminated by the Company for cause (as set forth in
the 2007 Employment Agreement), Mr. Bianco will forfeit his entitlement to
receive the Long-Term Incentive Award. If Mr. Bianco becomes disabled (as set
forth in the 2007 Employment Agreement) or dies, Mr. Bianco or his estate, as
applicable, would be entitled to receive the Long-Term Incentive Award upon the
Company's receipt of the Recovery Amount, regardless of when the Recovery Amount
is received by the Company. If the Company terminates Mr. Bianco's employment
with the Company without cause, Mr. Bianco or his estate, as applicable would be
entitled to receive the Long-Term Incentive Award upon the Company's receipt of
the Recovery Amount, regardless of when the Recovery Amount is received by the
Company.

Mr. Bianco's employment under the 2007 Employment Agreement automatically
terminates if Mr. Bianco dies during the term of the Employment Period and can
be terminated by the Company at its option for cause (as set forth in the 2007
Employment Agreement) or Mr. Bianco's inability to engage in any substantial
gainful activity (as set forth in the 2007 Employment Agreement).

In the event the Company terminates Mr. Bianco's employment for any reason
other than those permitted pursuant to the 2007 Employment Agreement, Mr. Bianco
would be entitled to receive a lump-sum amount equal to the salary payments
provided for in the 2007 Employment Agreement for the remaining term thereof,
following the passage of a six (6) month period from the date of his
termination.

Outstanding Equity Awards at December 31, 2006

The Company does not have any outstanding SARs or any other type of stock
award grants outstanding. The following table sets forth information concerning
the fiscal year-end value of unexercised options held by the Named Executive
Officers on December 31, 2006.

--------------------------------------------------------- -----------------------------------------------
Option Awards Stock Awards
------------ ----------------------------------------------------------------- -----------------------------------------------

(#)
Equity
Incentive ($)
# Plan Equity
Equity Awards Incentive
Incentive ($) of Plan
Plan (#) Market Unearned Awards:
Awards; Number Value of Shares, Market or
Number of Securities Number of of Shares Units or Payout Value
Underlying Unexercised Securities Shares or Units Other of Unearned
Options/SARs at December Underlying, $ or Units of Stock Rights Shares,
31, 2006 Unexercised Option Option of Stock that that Units or
Unearned Exercise Expiration that Have Not Have Not Other Rights
Options Price Date Have Not Vested Vested that Have
--------------------------- Vested Not Vested
# #
Exercisable Unexercisable
-------------------- ---------------------------- ------------ ---------- ------------ ---------- ---------- ---------- -----------

Richard A. Bianco 280,000 84,000 - 1.19 1/02/2007 - - - -
136,000 - - 1.09 1/02/2012 - - - -
200,000 - - 0.64 1/06/2014 - - - -
100,000 100,000 - 0.81 1/03/2015 - - - -

John P. Ferrara 5,000 - - 3.65 1/23/2008 - - - -
10,000 - - 2.56 1/04/2009 - - - -
10,000 - - 0.95 1/03/2010 - - - -
10,000 - - 0.60 1/02/2011 - - - -
100,000 - - 1.09 1/02/2012 - - - -
20,000 - - 0.64 1/06/2014 - - - -
10,000 10,000 - 0.81 1/03/2015 - - - -

Joseph R. Bianco 5,000 - - 3.65 1/23/2008 - - - -
5,000 - - 2.56 1/04/2009 - - - -
5,000 - - 0.95 1/03/2010 - - - -
10,000 - - 0.60 1/02/2011 - - - -
100,000 - - 1.09 1/02/2012 - - - -
20,000 - - 0.64 1/06/2014 - - - -
10,000 10,000 - 0.81 1/03/2015 - - - -

No awards under the long-term incentive plan were made to the Named
Executive Officers in 2006, and there were no stock options previously awarded
to any of the Named Executive Officers that were repriced during 2006.

Option Exercises and Stock Vested Table During Fiscal 2006

None of the Named Executive Officers exercised stock options during 2006.
The Company does not have any SARs or other stock award grants outstanding.

Pension Benefits

The AmBase Supplemental Retirement Plan, as amended and restated (the
"Supplemental Plan"), is an unfunded, non tax-qualified retirement plan which
has been in effect since 1985, under which benefits are based on a varying
percentage accrual (historically ranging from 2.5% to 4%, determined on an
individual basis by the Personnel Committee) of the participant's average base
salary and bonus (averaged over the three years of credited service that produce
the highest average) multiplied by the number of years of the participant's
credited service, up to 20 years, plus 1% of his or her average base salary and
bonus multiplied by his or her years of credited service from 20 to 25 years,
plus 0.5% of his or her average base salary and bonus multiplied by his or her
years of credited service in excess of 25 years. Benefits vest after ten years
of service although the Personnel Committee may waive or reduce the ten-year
service requirement for individual participants. Benefits are generally payable
in the form of a 10-year life and certain annuity or upon the election of a
vested participant whose employment has terminated after ten years of service or
after a change in control of the Company, in the form of an actuarially
equivalent lump-sum payment. Mr. Bianco is the only current executive officer of
the Company who participates in the Supplemental Plan and his Supplemental Plan
benefits are fully vested, effective with the terms of his initial employment
with the Company in 1991. Mr. Bianco received no benefit under the AmBase
Retirement Plan, a tax-qualified retirement plan, which was terminated in 1993.
No other employee or officer of the Company is a participant under the
Supplemental Plan. Other than the Company's 401(K) Savings Plan, the Company
maintains no other retirement or deferred compensation type plans.

The actuarial present value of accumulated plan benefits for Mr. Bianco
under the Supplemental Plan as of December 31, 2006 is as follows:

#
Number of $ $
Years of Present Value Payments
Credited of Accumulated During Last
Name Plan Name Service Benefit Fiscal Year
Richard A. Bianco AmBase Supplemental
Retirement Plan 15.67 $16,282,000 -
===== =========== ====================

For the purposes of computing accrued benefits under the Supplemental Plan,
Mr. Bianco had 15.67 years of credited service as of December 31, 2006 and his
accrual percentage is 4% in effect from the time of his initial employment with
the Company. Assuming Mr. Bianco's continued employment with the Company until
the expiration of his current employment contract on May 31, 2007, he will have
16.08 years of credited service for the computation of accrued benefits under
the Supplemental Plan.

In consideration for Mr. Bianco's agreement to extend his employment with
the Company for an additional five (5) years, (beyond his current May 31, 2007
contract expiration date), with no further Supplemental Plan accruals for the
extension period (pursuant to the 2007 Employment Agreement more fully described
herein below), the Company has amended the Supplemental Plan to provide for the
payment to Mr. Bianco of his Supplemental Plan benefit in a lump-sum on or about
May 31, 2007 (the date of his Supplemental Plan benefit entitlement had he not
agreed to extend his employment with the Company beyond May 31, 2007). The
Company and Mr. Bianco have further agreed that for purposes of computing his
Supplemental Plan benefit as of May 31, 2007, his Final Average Earnings (as
defined in the Supplemental Plan) will be capped as of December 31, 2004, a
5.75% discount rate will be used and a "RP-2000" projected to 2004 mortality
table will be used, resulting in a Supplemental Plan lump-sum benefit payment to
Mr. Bianco of $16,676,115. The Company has further amended the Supplemental Plan
to automatically terminate following the lump-sum payment of $16,676,115 to Mr.
Bianco on or about May 31, 2007. See Employment Contracts, above for a more
complete description of Mr. Bianco's employment agreements with the Company.

Nonqualified Deferred Compensation

The Company does not maintain any other type of nonqualified deferred
compensation plan.

Potential Payments Upon Termination or Change in Control

Other than Mr. Bianco, there are no employment agreements or employment
contracts with any other officer or employee of the Company. See Employment
Contracts above, for information concerning potential payments due to Mr. Bianco
upon termination, pursuant to the employment agreement(s) between Mr. Bianco and
the Company.

The Company does not have any severance or termination payment plans in
effect.

Generally, subject to the terms of the individual stock options agreements,
in the event the employment of an employee is terminated (other than by reason
of retirement or death) without cause, as defined, the employee may exercise the
vested and previously unexercised portion of their option agreement, as of such
date, at any time within (i) one year after the termination of the employee's
employment due to their "total and permanent disability", as defined, or (ii)
three months after the termination of the employee's employment for any other
reason, but, in either case, in no event after the expiration of the option
terms.

In the event that the employment of an employee terminates by reason of
retirement, option agreements generally shall be exercisable for a period of
three years after such retirement date. If an option is exercised after
cessation of employment for any reason, including retirement, it may only be
exercised to the extent of shares previously vested, as of such date, provided,
however, that the option may not be exercised after the expiration of the option
term.

Additionally, stock options may, in the sole discretion of the Personnel
Committee, become exercisable at any time prior to the expiration date of the
option award for the full number of awarded shares or any part thereof, (less
any options previously exercised under the option agreement) (i) after the
employee ceases to be an employee of the Company as a result of the sale or
other disposition by the Company of assets or property (including shares of any
subsidiary), or (ii) in the case of a change in control of the Company. As of
December 31, 2006, the intrinsic value of all outstanding options to the Named
Executive Officers was $0.

COMPENSATION OF DIRECTORS

Effective for 2006, each director of the Company, including Mr. Bianco, who
is the Company's Chairman, President and Chief Executive Officer, are to be paid
an annual fee of $7,500. In addition, each Chairperson and/or Co-Chairperson of
a Board committee is to be paid an additional fee of $1,000 per year, and after
four (4) Board and/or committee meetings, each director is to be paid a $500 per
meeting attendance fee. Pursuant to the Company's By-Laws, directors may be
compensated for additional services for the Board of Directors or for any
committee at the request of the Chairman of the Board or the Chairman of any
committee.

Directors Compensation Table

Details of amounts paid to the Company's directors in their capacities as
directors and/or board committee members for the year ending December 31, 2006
is as follows:

($)
Fees Earned ($)
Name and Position or Paid in Cash Totals(b)
Richard A. Bianco (a)
Chairman of the Board $9,000 $9,000

Philip M. Halpern
Board Member
Co-Chair Personnel Committee
Member Audit Committee $10,500 $10,500

Robert E. Long
Board Member
Chairman Audit Committee
Member Personnel Committee $10,000 $10,000

Salvatore Trani
Board Member
Co-Chair Personnel Committee
Member Audit Committee $9,500 $9,500

(a) Amounts in the table above for Mr. Bianco, exclude amounts received by
him in his capacity as the Company's President and Chief Executive Officer,
pursuant to his Employment Agreement; details of such compensation amounts and
the terms of his Employment Agreement are provided herein.

(b) With the exception of Mr. Bianco (as noted above), no other additional
fees or any other type of compensation, including equity and/or deferred
compensation payments or awards were paid or granted to any of the Company's
outside directors in 2006.

Personnel Committee Interlocks and Insider Participation

The members of the Personnel Committee during 2006 were Philip M. Halpern,
Co-Chairperson, Salvatore Trani, Co-Chairperson, and Robert E. Long. No
executive officer serves, or in the past has served, as a member of the Board of
Directors or Personnel Committee of any entity that has any of its executive
officers serving as a member of the Company's Board of Directors or Personnel
Committee.

STOCK OWNERSHIP

Stock Ownership of Certain Beneficial Owners

The following information is set forth with respect to persons known by the
Company to be the beneficial owners of more than 5% of the outstanding Common
Stock, the Company's only class of voting securities, as of February 28, 2007,
except as set forth below.

Amount and Percentage
Name and Address of Nature of Beneficial of Common
Beneficial Owner Ownership Stock Owned

Richard A. Bianco 16,853,531 (a) 37.04%
Chairman, President and (direct)
Chief Executive Officer
AmBase Corporation
100 Putnam Green, 3rd Floor
Greenwich, CT 06830-6027

(a) Includes 536,000 shares that could be purchased by the exercise of
options as of February 28, 2007 or within 60 days thereafter, under the
Company's stock option plans.

Stock Ownership of Directors and Executive Officers

According to information furnished by each nominee, continuing director and
executive officer included in the Summary Compensation Table, the number of
shares of the Company's Common Stock beneficially owned by them as of February
28, 2007 was as follows:

Amount Percentage
Name of Beneficial and Nature of of Common
Owner Beneficial Ownership(a)(c) Stock Owned

Richard A. Bianco.................................... 16,853,531 (b) 37.04%
John P. Ferrara...................................... 276,029 (b) *
Philip M. Halpern.................................... -- --
Robert E. Long....................................... 25,000 *
Salvatore Trani...................................... -- --
All Directors and Officers as a group,
(5 persons).......................................... 17,154,560 (b) 37.55%

* Represents less than 1% of Common Stock outstanding

(a) All of the named individuals have sole voting and investment power with
respect to such shares.

(b) Includes 536,000 shares for Mr. Bianco and 175,000 shares for Mr.
Ferrara that could be purchased by the exercise of stock options as of February
28, 2007, or within 60 days thereafter, under the Company's stock option plans.

PROPOSAL NO. 2 - APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

Based on the direction of the Audit Committee, the Board of Directors is
proposing that the stockholders approve the appointment of
PricewaterhouseCoopers LLP as the independent registered public accounting firm
for the Company for the year ending December 31, 2007. The Company has been
advised by PricewaterhouseCoopers LLP that neither that firm nor any of its
partners had any direct financial interest or any material indirect financial
interest in the Company, or any of its subsidiaries, except as independent
certified public accountants. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Annual Meeting with the opportunity to make a
statement, if he or she desires to do so, and to respond to appropriate
questions from the stockholders.

The Board of Directors recommends a vote FOR approval of the appointment of
PricewaterhouseCoopers LLP.

ADDITIONAL INFORMATION

The Annual Report of the Company on Form 10-K, covering the fiscal year
ended December 31, 2006, is being mailed with this Proxy Statement to each
stockholder entitled to vote at the Annual Meeting.

Any stockholder who wishes to submit a proposal for action to be included
in the Proxy Statement for the Company's 2008 Annual Meeting of Stockholders
must submit such proposal so that it is received by the Secretary of the Company
by December 2, 2007.

The accompanying proxy is solicited by and on behalf of the Company's Board
of Directors. The cost of such solicitation will be borne by the Company. In
addition to solicitation by mail, regular employees of the Company may, if
necessary to assure the presence of a quorum, solicit proxies in person, or by
telephone, facsimile or other electronic means. Arrangements have been made with
brokerage houses and other custodians, nominees and fiduciaries, for the
forwarding of solicitation material to the beneficial owners of Common Stock
held of record by such persons, and the Company will reimburse such entities for
reasonable out-of-pocket expenses incurred in connection therewith. The Company
has engaged American Stock Transfer & Trust Company to assist in the tabulation
of proxies.

If any matter not described in this Proxy Statement should properly come
before the Annual Meeting, the persons named in the accompanying proxy will vote
the shares represented by that proxy in accordance with their best judgment
unless a stockholder, by striking out the appropriate provision of the proxy,
chooses to withhold authority to vote on such matters.

As of the date this Proxy Statement was printed, the directors knew of no
other matters to be brought before the Annual Meeting.

Stockholder inquiries, including requests for the following: (i) change of
address; (ii) replacement of lost stock certificates; (iii) Common Stock name
registration changes; (iv) Quarterly Reports on Form 10-Q; (v) Annual Reports on
Form 10-K; (vi) proxy material; and (vii) information regarding stockholdings,
should be directed to:

American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Attention: Stockholder Services
(800) 937-5449 or (718) 921-8200 Ext. 6820

Copies of Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and
Proxy Statements can also be obtained directly from the Company free of charge
by sending a request to the Company by mail as follows:

AmBase Corporation
100 Putnam Green 3rd Floor
Greenwich, CT 06830
Attn: Shareholder Services

In addition, the Company's public reports, including Quarterly Reports on
Form 10-Q, Annual Reports on Form 10-K and Proxy Statements, can be obtained
through the SEC's EDGAR Database over the World Wide Web at www.sec.gov.
Materials filed with the SEC may also be read or copied by visiting the SEC's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information
on the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.

AMBASE CORPORATION

PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, MAY 18, 2007
This Proxy is solicited on Behalf of the Board of Directors

The undersigned revoking all prior proxies, hereby appoints Richard A.
Bianco and John P. Ferrara and each of them, with full power of substitution, as
proxies to represent and vote, as designated on the reverse, all shares of
Common Stock of AmBase Corporation (the "Company"), held or owned by the
undersigned on April 2, 2007, at the Annual Meeting of Stockholders of the
Company, to be held on Friday, May 18, 2007 at 9:00 a.m. Eastern Daylight Time,
at the Hyatt Regency Hotel, 1800 East Putnam Avenue, Old Greenwich, Connecticut
06870 and at any adjournment(s) or postponement(s) thereof, with all powers
which the undersigned would possess if personally present, and in their
discretion upon such other business as may properly come before the meeting or
any adjournment(s) or postponement(s) thereof.

This proxy is given with authority to vote FOR Proposals (1) and (2),
unless a contrary choice is specified.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN
THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
(Please detach along perforated line and mail in the envelope provided)

The Board of Directors recommends a vote "FOR" the election of the nominee
as director and "FOR" proposal 2. Please sign, date and return promptly in the
enclosed envelope. Please mark your vote in blue or black ink as shown here. X

Proposal (1) Election of Director.
Nominee: Salvatore Trani

/ / For Nominee / / Withhold Authority for Nominee

Proposal (2) Approval of appointment of PricewaterhouseCoopers LLP as the
Company's Independent Registered Public Accounting Firm for the calendar year
2007.

FOR / / AGAINST / / ABSTAIN / /

THE PROXY WILL BE USED IN CONNECTION WITH THE PROPOSALS ABOVE AS SPECIFIED
BY YOU. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE USED IN ACCORDANCE WITH
THE DIRECTORS' RECOMMENDATIONS, FOR THESE PROPOSALS.

DISCRETIONARY AUTHORITY IS HEREBY GRANTED WITH RESPECT TO SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.

THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND THE PROXY STATEMENT FURNISHED THEREWITH.

PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE
ENCLOSED ENVELOPE.

SIGNATURE OF STOCKHOLDER _ _ _ _ _ _ _ _ _ DATE _ _ _ _ _ _ _ _ _ _ _
SIGNATURE OF STOCKHOLDER _ _ _ _ _ _ _ _ _ _ DATE _ _ _ _ _ _ _ _ _ _ _
--------------------------------------------------------------------------------

To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method___
--------------------------------------------------------------------------------

NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.