8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

^{______________}

FORM 8-K

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Current Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

May 24, 2010

Date of Report

(Date of Earliest Event Reported)

AMERITRANS CAPITAL CORPORATION

 (Exact name of Registrant as specified in its charter)

Delaware	333-63951	52-2102424
(State or other jurisdiction of incorporation or organiztion)	(Commission File No.)	(I.R.S. Employee I.D. Number)

747 Third Avenue, 4th Floor

New York, New York 10017

(Address of principal executive offices (Zip Code)

(212) 355-2449

 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[_]

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

[_]

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

[_]

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

[_]

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

Item 1.01.  Entry Into a Material Definitive Agreement.

On May 24, 2010, Ameritrans Capital Corporation ("Ameritrans") and its wholly-owned subsidiary, Elk Associates Funding Corporation ("Elk", and together with Ameritrans, the "Company"), entered into a Settlement Agreement and General Release (the "Settlement Agreement") between the Company and Granoff, Walker & Forlenza, P.C. ("GWF"), among other things, to terminate the Company's lease of its New York City office at 747 Third Avenue, New York, NY (the "Office Space") pursuant to the Sublease (the "Sublease"), dated December 10, 2003, between the Company and GWF, as amended.   

Pursuant to the Settlement Agreement, the Company paid approximately $260,000 in respect of termination fees and related payments on May 26, 2010 and will make payments under the lease for the month of June 2010 no later than June 10, 2010.  The Settlement Agreement provides that the Company will vacate the Office Space by June 30, 2010 and will be subject to a $1,000 per day payment to GWF to the extent the Company fails to vacate by such date.  The Company intends to vacate the premises by no later than June 30, 2010 as provided in the Settlement Agreement.    

Pursuant to the Settlement Agreement, the Company released GWF, Ellen M. Walker and Lee A. Forlenza from liabilities arising out of the Company's Sublease and the Office Space.  GWF also released the Company from liabilities arising out of the Sublease and the Office Space.  

Each of Gary Granoff, Chairman of the Board of Directors and an officer of Ameritrans and Elk, Ellen M. Walker, an Executive Vice President of Ameritrans and Vice President of Elk, and Lee A. Forlenza, the Senior Vice President of Ameritrans and Elk, is a shareholder of GWF.  The Settlement Agreement was negotiated on behalf of the Company and recommended to the Board of Directors of the Company by a committee of independent directors and was approved by the full Board of Directors, excluding Mr. Granoff.  

The foregoing description of the Settlement Agreement does not purport to describe all of the terms and provisions thereof  and is qualified in its entirety by reference to the Settlement Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.   

Item 1.02.  Termination of a Material Definitive Agreement.

As set forth in Item 1.01 of this Current Report on Form 8-k, which is incorporated herein by reference, the Settlement Agreement terminated the Sublease, effective June 30, 2010.  Absent the Settlement Agreement, the Sublease would expire in April 2014 in accordance with its terms.  

Under the Sublease, Elk is allocated a 48% utilization factor on all rent, additional rent and electricity charges billed by the landlord under the master lease between GWF and its landlord, subject to annual increases as per the master lease agreement.  Currently, Elk's rent share under the Sublease is $13,139 per month.  In addition, the Sublease provides for payment by Elk to GWF of a share of overhead expenses.  The Sublease provides for a minimum monthly payment of $3,500 for expenses, and Elk is also required to reimburse GWF for certain office and salary costs.  

The Company initiated discussions with GWF to terminate the Sublease in connection with the settlement of disputes between Elk and GWF related to the validity of the Sublease and based on the Company's assessment that rental and other amounts payable under the Sublease are significantly above current market rates. The Company believes that it can achieve long-term cost savings as a result of such termination.  The Company is in the process of finding new office space.

Item 8.01.  Other Events.

On May 24, 2010, the Company issued a press release announcing the termination of its lease for the Office Space, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.  

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
10.1	Settlement Agreement and General Release, dated May 24, 2010, among Ameritrans Capital Corporation, Elk Associated Funding Corporation and Granoff, Walker & Forlenza, P.C.
99.1	Press Release, dated May 24, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized and caused the undersigned to sign this Report on the Registrant’s behalf.

AMERITRANS CAPITAL CORPORATION

By:  /s/ Michael Feinsod                

Name:  Michael Feinsod

Title: Chief Executive Officer and President

Dated: May      , 2010

Exhibit Index

Exhibit No.	Description
10.1	Settlement Agreement and General Release, dated May 24, 2010, among Ameritrans Capital Corporation, Elk Associated Funding Corporation and Granoff, Walker & Forlenza, P.C.
99.1	Press Release, dated May 24, 2010

EX-10.1

Exhibit 10.1

SETTLEMENT AGREEMENT AND GENERAL RELEASE

This Settlement Agreement and General Release (the “Settlement Agreement”), is entered into the __ day of May 2010, by and among Ameritrans Capital Corporation (“AMTC”), Elk Associates Funding Corporation (“Elk” and, together with AMTC, collectively, the “Company”) and Granoff, Walker& Forlenza , P.C. (“GWF”).    

WITNESSETH:

WHEREAS, on or about February 14, 1994, GWF entered into that certain lease , as amended pursuant to a First Amendment, Second Amendment and Third Amendment to Lease (collectively, the “Lease”) with Sage Realty Corporation with respect toa portion of the Fourth Floor, known as Suite 4C, in the building known as 747 Third Avenue, New York, New York (the “Premises”);

WHEREAS, on or about December 10, 2003, Elk and GWF executed a sublease (along with all amendments thereto , collectively , the “Sublease”) with respect to a portion of the Premises, which is more fully described in the Sublease (the “Sublease Premises”);

WHEREAS, the Company has asserted that the Sublease is void and/or voidable ;

WHEREAS, GWF has asserted that the Sublease is a valid and binding contract ;

WHEREAS , the Lease is the subject of a number of disputes between the Company and GWF ;

WHEREAS, the parties have agreed to resolve the issues in dispute between them on the terms set forth herein without the need and expense of litigation;  

NOW, THEREFORE, in consideration of the payments and the mutual covenants and agreements set forth herein, the parties hereto hereby agree as follows:

1.

Payments by the Company.

a.

The Company will pay GWF $260,000.00 (Two Hundred Sixty Thousand Dollars) (the "Settlement Amount") on or before May 26, 2010, failing which this Settlement Agreement shall be null and void and of no further force or effect.  It being specifically understood and agreed that the Settlement Amount shall be non-refundable and be deemed reasonable liquidated damages under this Settlement Agreement.

b.

In addition, the Company will pay GWF the monthly base rent, shared overhead expense and all other items of additional rent pursuant to the Sublease (such invoices to be submitted to the Company by the 5th of each month) within three (3) days of the Company's receipt of the relevant invoices but in no event later than June 10, 2010, (respectively, the "June 2010 Rent").

2.

The Company to Vacate the Premises and Sublease Premises.

a.

The Company agrees to vacate the Premises and Sublease Premises (with the exception of that portion of Ellen M. Walker's office and Lee A. Forlenza's office, which are referred to in the Sublease), which are to be delivered to GWF in vacant and broom clean condition, by no later than June 30, 2010 (the "Vacate Date"), in accordance with the Surrender Declaration attached as Exhibit A.

b.

In the event the Company vacates prior to the Vacate Date, the May and June 2010 Rent shall nevertheless be paid in full and the Company shall not be entitled to any proration of rent due to an early vacate date.

c.

The Company shall give GWF at least ten (10) business days prior written notice of the date it will vacate.

d.

In the event the Company fails to vacate by the Vacate Date, it shall be liable to GWF for each additional day, beyond the Vacate Date, that it occupies the Premises and Sublease Premises until the actual date the Company vacates at the rate of $1,000.00 per day.

3.

Conditions relating to Company's Vacating the Premises and Sublease Premises.

a.

The move out by the Company from the Premises and Sublease Premises shall not unreasonably interfere with the day to day business operations of GWF.

b.

The Company shall bear any and all costs and expenses for the move out from the Premises and Sublease Premises including, but not limited to, the use of the service elevator at 747 Third Avenue and its building employees, move out deposits, if any, required by master landlord, Sage Realty Corporation and the like.   Upon completion of the move out by the Company, GWF is authorized to remove any listing of the Company names in the lobby of the 747 Third Avenue building, the floor directory and the door of the Premises, provided that GWF shall make available for pick up and retrieval by the Company any and all facsimiles, deliveries, mail or correspondence as well as phone messages to the Company, after such date for a period of ninety (90) days.

4.

Release of All Obligations Under the Sublease.  Other than the obligation to make the payments set forth in paragraphs 1 and 2 above, from and after the date of this Settlement Agreement, the Company will be released of all obligations under the purported Sublease.

5.

Relinquishment of Claims to Personal Property.  The Company hereby relinquishes any claim to personal property located in the kitchen, library, reception area, conference rooms and common areas of the Premises, such as the secretarial work stations, chairs, telephone equipment and instruments, computer servers, file cabinets, desktop computers and office furniture located in all common areas.  Notwithstanding the foregoing, the Company shall retain any personal property owned by the Company or its employees which is located at the Premises, including without limitation, the furniture, fixtures and equipement located in  Michael Feinsod’s office, Gary Granoff’s office, Margaret Chance’s office and Steve Tarnofsky’s office.  In addition, the Company shall retain its artwork.

6.

No Further Obligations.  Other than the payments set forth in paragraph 1 above and except as otherwise set forth in this Settlement Agreement, the Company shall have no obligation to make any payments, including but not limited to payments relating to bills from Katsky Korins LLP or for any amounts relating to the Sublease Premises or the leasing thereof, to GWF.  

7.

Release by the Company.  In consideration of the mutual execution of this Settlement Agreement and the mutual agreement to be legally bound by its terms, each of AMTC and Elk hereby releases, acquits and forever discharges GWF, Ellen M. Walker and Lee A. Forlenza from any and all pending and potential claims, demands, actions, causes of action, suits, debts, liabilities, losses, damages, awards, judgments, settlements, interest, and other fees (including attorneys’ fees), costs or expenses, of whatever nature, whether known or unknown, pending or future, asserted or unasserted, certain or contingent arising out of the Lease, the Sublease, the Premises or the Sublease Premises ..   Notwithstanding the foregoing, nothing contained herein shall discharge any obligation or release any claim or right under this Settlement Agreement or any other matter not specifically set forth herein.

8.

Release by GWF.  In consideration of the mutual execution of this Settlement Agreement and the mutual agreement to be legally bound by its terms and the payment in full of all amounts due and owing to GWF by the Company under Section 1 of this Settlement Agreement, GWF hereby releases, acquits and forever discharges AMTC and Elk from any and all pending and potential claims, demands, actions, causes of action, suits, debts, liabilities, losses, damages, awards, judgments, settlements, interest, and other fees (including attorneys’ fees), costs or expenses, of whatever nature, whether known or unknown, pending or future, asserted or unasserted, certain or contingent arising out of the Lease, the Sublease, the Premises or the Sublease Premises.  Notwithstanding the foregoing, nothing contained herein shall discharge any obligation or release any claim or right under this Settlement Agreement or any other matter not specif ically set forth herein.      

9.

Informed and Voluntary Settlement.  Each party hereto agrees that it has entered into this Settlement Agreement voluntarily as a free act and deed.  Furthermore, each party hereto additionally represents, warrants and agrees that such party has full power and authority to enter into this Settlement Agreement , attached as Exhibit B is a secretary’s certificate evidencing the authorization of this Settlement Agreement by the Board of Directors  of both  Elk and AMTC.

10.

Showing Sublease Premises.  GWF shall, upon execution of this Settlement Agreement, be permitted to offer the Sublease Premises for rent and show the Sublease Premises to third parties accordingly.

11.

Entire Agreement.  All prior or contemporaneous agreements, contracts, promises, representations and statements among the parties hereto as to the subject matter hereof are merged into this Settlement Agreement.  This Settlement Agreement constitutes the entire understanding among the parties with respect to the subject matter hereof.

12.

Waiver; Modification.  No waiver or modification of the terms hereof shall be valid unless in writing signed by each of the parties hereto.

13.

Best Efforts.  The parties used their respective best efforts to consummate the resolution of their disputes as evidenced by this Settlement Agreement.

14.

Governing Law; Consent to Jurisdiction.  This Settlement Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and wholly to be performed in such state by residents thereof without giving effect to the conflict of laws principles thereof.

15.

Binding Effect; Successors and Assigns.  This Settlement Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors, and assigns; provided, however, that neither this Settlement Agreement nor any of the provisions hereof may be assigned by any party hereto without the consent of the other parties hereto.

16.

Enforceability of Releases.  The invalidation of any portion of this Settlement Agreement for any reason whatsoever will have no effect on the enforceability and validity of the general releases contained herein.

17.

Counterparts.  This Settlement Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute a single instrument.

18.

Costs and Fees.  Each party hereto shall bear its, his or her own attorneys’ fees and costs in connection with the preparation and execution of this Settlement Agreement.

19.

Agreement Not Interpreted Against Drafter.  This Settlement Agreement shall be construed without regard to any presumptions against the party causing the same to be prepared.

IN WITNESS WHEREOF, the parties have executed this Settlement Agreement as of the date first set forth above.

GRANOFF, WALKER & FORLENZA, P.C.

___________________________________

_________________

By:

Date

___________________________________

Title

STATE OF NEW YORK

)

)  ss:

COUNTY OF _________

)

On the _____day of ___________ in the year _______ before me, the undersigned, personally appeared ______________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual

whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.  

_______________________________

         Notary Public

AMERITRANS CAPITAL CORPORATION

___________________________________

_________________

By:

Michael Feinsod

Date

___________________________________

Title      President

STATE OF NEW YORK

)

)  ss:

COUNTY OF NEW YORK

)

On the _____day of ___________ in the year _______ before me, the undersigned, personally appeared Michael Feinsod, personally known to me or proved to me on the basis of satisfactory evidence to be the individual

whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.  

_______________________________

         Notary Public

ELK ASSOCIATES FUNDING CORPORATION

___________________________________

_________________

    By:

Michael Feinsod

Date

___________________________________

Title      Vice President

STATE OF NEW YORK

)

 )  ss:

COUNTY OF NEW YORK

 )

On the _____day of ___________ in the year _______ before me, the undersigned, personally appeared Michael Feinsod, personally known to me or proved to me on the basis of satisfactory evidence to be the individual

whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.  

_______________________________

         Notary Public

EX-99.1

Exhibit 99.1

Ameritrans Capital Corporation Terminates New York City Office Lease

NEW YORK, May 24, 2010 (BUSINESS WIRE) -- Ameritrans Capital Corporation (NASDAQ: AMTC, AMTCP) today announced that it had reached an agreement related to the termination of the lease of its New York City office at 747 Third Avenue, New York, NY. As a result of the termination, Ameritrans will pay approximately $260,000 of termination fees and related payments as well as the monthly payments under the lease for the month of June.

Ameritrans is in preliminary discussions for new office space. As previously indicated, the Company has also terminated its lease for its Long Island City office. Both terminations are effective June 30, 2010. Future leasehold operating expenses are anticipated to be reduced as a result of the two lease terminations.

Michael Feinsod, Ameritrans' Chief Executive Officer stated, "We are pleased to have been able to expediently conclude our negotiations in connection with exiting our New York City office lease. We plan to quickly seek a suitable new office space that reflects our more efficient operational structure and the continued growth of our middle market lending. The shift in our portfolio, coupled with our affiliation with an independent advisory firm, should allow a continued reduction in general overhead expenses. While a space has not yet been identified, we are confident we will be able to secure suitable space on advantageous terms."

About Ameritrans

Ameritrans Capital Corporation is an internally managed, closed-end investment company that has elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended. Ameritrans originates, structures and manages a portfolio of secured business loans and selected equity securities. Ameritrans' wholly owned subsidiary Elk Associates Funding Corporation was licensed by the United States Small Business Administration as a Small Business Investment Company (SBIC) in 1980.

This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presently anticipated or projected. Ameritrans Capital Corporation cautions investors not to place undue reliance on forward-looking statements, which speak only as to management's expectations on this date.