REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 5th day
of December 2005, by Ameritrans Capital Corporation, a Delaware corporation (the
"Company") and the undersigned (the "Purchaser").
WHEREAS, the Company wishes to sell shares of its common stock,
$.0001 par value (the "Common Stock") and warrants to purchase shares of Common
Stock (the "Warrants") to the Purchaser pursuant to the Company's July 29, 2005
offering of Common Stock and Warrants (the "Offering"), and
WHEREAS, Purchaser desires to purchase Shares and Warrants in the
Offering,
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.0. Definitions. As used in this Agreement, the terms defined in
the preamble and recitals have the meanings set forth in the preamble and
recitals, and the following terms have the meanings set forth below:
a) "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the
Securities Act.
b) "Form N-2" means Form N-2 promulgated by the Commission or any
substantially similar or successor form then in effect.
c) "Purchasers" means all the purchasers of Common Stock and
Warrants in the Offering.
d) The terms "Register," "Registered" and "Registration" refer to
a registration affected by preparing and filing a Registration
Statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such
Registration Statement.
e) "Registrable Securities" means the Shares and Warrant Shares
until such time as such Shares and Warrants Shares become
eligible for sale under subparagraph (k) of Rule 144 or any
successor thereto.
f) "Registration Expenses" means all expenses incurred by the
Company in complying with Section 2, including, without
limitation, all federal and state registration, qualification
and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any
such Registration and the reasonable fees not to exceed twenty
thousand dollars ($20,000) and disbursements of counsel for
the Selling Shareholders, as selling shareholders.
g) "Registration Statement" means Form N-2 or such other form
prescribed by the Commission, as applicable.
h) "Restriction Termination Date" means, with respect to any
Registrable Securities, the earliest of (i) the date that such
Registrable Securities shall have been Registered and sold or
otherwise disposed of in accordance with the intended method
of distribution by the seller or sellers thereof set forth in
the Registration Statement covering such securities or
transferred in compliance with Rule 144, and (ii) the date
that an opinion of counsel to the Company containing
reasonable assumptions (which opinion shall be subject to the
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reasonable approval of counsel to any affected Purchaser)
shall have been rendered to the effect that any restrictive
legend placed upon the Registrable Securities under the
Securities Act can be properly removed and such legend shall
have been removed.
i) "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act and any successor rules
thereto.
j) "Securities Act" means the Securities Act of 1933, as amended.
k) "Selling Expenses" means all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities pursuant to this Agreement.
l) "Selling Shareholder(s)" means a holder of Registrable
Securities.
m) "Shares" means the Common Stock issued to Purchasers.
n) "Warrant Shares" means the Common Stock underlying the
Warrants issuable to Purchasers in connection with the
Offering.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Warrant Agreement.
2. REGISTRATION RIGHTS.
2.1 Required Registration. If the Registrable Securities have not
been included in a Registration Statement which has been declared effective by
the Commission in accordance with Section 2.2 herein, the holders of at least a
majority of the outstanding Registrable Securities can request the Company to
effectuate the Registration of the Registrable Securities. If the Company
receives such a request, the Company shall promptly give written notice of such
proposed Registration to all holders of Registrable Securities, and thereupon
the Company shall promptly use its best efforts to effectuate the Registration
of the Registrable Securities that the Company has been requested to Register
for disposition as described in the request of such holders of Registrable
Securities and in any response received from any of the holders of Registrable
Securities within thirty (30) days after the giving of the written notice by the
Company; provided however, that the Company shall not be obligated to effectuate
any Registration except in accordance with the following provisions:
(a) The Company shall not be obligated to file and cause to become
effective more than one (1) Registration Statement in which Registrable
Securities are Registered pursuant to this Section 2.1.
(b) Notwithstanding the foregoing, the Company may include in each
such Registration requested pursuant to this Section 2.1 any authorized but
unissued shares of its capital stock (or authorized treasury shares) for sale by
the Company or any issued and outstanding shares of Common Stock for sale by
others.
(c) The Company shall not be required to file a Registration
Statement pursuant to this Section 2.1: for ninety (90) days after the request
for Registration under this Section 2.1 if the Company is then engaged in
negotiations regarding a material transaction which has not otherwise been
publicly disclosed, or such shorter period ending on the date, whichever first
occurs, that such transaction is publicly disclosed, abandoned or consummated.
2.2. Preparation and Filing. As soon as practicable but no later
than ninety (90) days after completion of the Offering, the Company will use its
best efforts to effectuate the Registration of any and all Registrable
Securities, and shall, as expeditiously as practicable:
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a) Prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities and use its best
efforts to cause such Registration Statement to become and
remain effective in accordance with Section 2.2(b) hereof,
keeping each Selling Shareholder reasonably advised as to the
initiation, progress and completion of the Registration;
b) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such
Registration Statement effective until the expiration of the
Warrants or until such earlier date by which all the
Registrable Securities can be sold pursuant to paragraph (k)
of Rule 144 and to comply with the provisions of the
Securities Act with respect to the sale or other disposition
of all Registrable Securities covered by such Registration
Statement;
c) Furnish to each Selling Shareholder such number of copies of
any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as such Selling
Shareholder may reasonably request in order to facilitate the
public sale or other disposition of such Registrable
Securities;
d) Use its best efforts to register or qualify the Registrable
Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as each
Selling Shareholder shall reasonably request and do any and
all other acts or things which may be necessary or advisable
to enable such holder to consummate the public sale or other
disposition in such jurisdictions of such Registrable
Securities; provided however, that the Company shall not be
required to consent to general service of process, qualify to
do business as a foreign corporation where it would not be
otherwise required to qualify or submit to liability for state
or local taxes where it is not liable for such taxes; and
e) At any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 2.2(b)
hereof, notify each Selling Shareholder of the happening of
any event as a result of which the prospectus included in such
Registration, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing and, at the request of such seller, prepare, file and
furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statement therein not misleading in the
light of the circumstances then existing.
2.3. Expenses. The Company shall pay all Registration Expenses
incurred by the Company in complying with this Section 2; provided however that
all underwriting discounts, if any, and selling commissions applicable to the
Registrable Securities covered by registrations effected pursuant to this
Section 2 shall be borne by the seller or sellers thereof, with respect to the
Registrable Securities sold by each such seller or sellers.
2.4. Information Furnished by Purchaser. It shall be a condition
precedent to the Company's obligations under this Agreement as to any Selling
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Shareholder that each Selling Shareholder furnish to the Company in writing such
information regarding such Selling Shareholder and the distribution proposed by
such Selling Shareholder as the Company may reasonably request.
2.5. Indemnification.
a) Company's Indemnification of Purchasers. The Company shall
indemnify each Selling Shareholder, each of its officers,
directors and constituent partners, and each person
controlling such Selling Shareholder, and each underwriter
thereof, if any, and each of its officers, directors,
constituent partners, and each person who controls such
underwriter, against all claims, losses, damages or
liabilities (or actions in respect thereof) suffered or
incurred by any of them, to the extent such claims, losses,
damages or liabilities arise out of or are based upon any
untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus or any related Registration
Statement incident to any such Registration, or any omission
(or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to
actions or inaction required of the Company in connection with
any such Registration; and the Company will reimburse each
such Selling Shareholder, each such underwriter, each of their
officers, directors and constituent partners and each person
who controls any such Selling Shareholder or underwriter, for
any legal and any other expenses as reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action; provided however, that the
indemnity contained in this Section 2.5(a) shall not apply to
amounts paid in settlement of any such claim, loss, damage,
liability or action if settlement is effected without the
consent of the Company (which consent shall not unreasonably
be withheld); and provided however, that the Company will not
be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based
upon any untrue statement or omission based upon written
information furnished to the Company by such Selling
Shareholder, underwriter, controlling - person or other
indemnified person and stated to be for use in connection with
the offering of securities of the Company.
b) Selling Shareholder's Indemnification of Company. Each Selling
Shareholder shall indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's
Registrable Securities covered by a Registration Statement,
each person who controls the Company or such underwriter
within the meaning of the Securities Act, and each other
Selling Shareholder, each of its officers, directors and
constituent partners and each person controlling such other
Selling Shareholder, against all claims, losses, damages and
liabilities (or actions in respect thereof) suffered or
incurred by any of them and arising out of or based upon any
untrue statement (or alleged untrue statement) of a material
fact contained in such Registration Statement or related
prospectus, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
any violation by such Selling Shareholder of any rule or
regulation promulgated under the Securities Act applicable to
such Selling Shareholder and relating to actions or inaction
required of such Selling Shareholder in connection with the
Registration of the Registrable Securities pursuant to such
Registration Statement; and will reimburse the Company, such
other Selling Shareholders, such directors, officers,
partners, persons, underwriters and controlling persons for
any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action; such indemnification and
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reimbursement shall be to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Registration
Statement or prospectus in reliance upon and in conformity
with written information furnished to the Company by such
Selling Shareholder and stated to be specifically for use in
connection with the offering of Registrable Securities.
Anything in the foregoing to the contrary notwithstanding, in
no event shall the aggregate obligations of a Selling
Shareholder under this Section 2.5(b) to all parties that may
be entitled to indemnification hereunder exceed the amount of
proceeds received by such Selling Shareholder in connection
with such offering of Registrable Securities.
c) Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 2.5 of notice of the
commencement of any action which may give rise to a claim for
indemnification hereunder, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party under this Section 2.5, notify the indemnifying party in
writing of the commencement thereof and generally summarize
such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim, and
shall be entitled to select counsel for the defense of such
claim with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably
withheld. Notwithstanding the foregoing, the parties entitled
to indemnification shall have the right to employ separate
counsel (reasonably satisfactory to the indemnifying party) to
participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified
parties unless the named parties to such action or proceedings
include both the indemnifying party and the indemnified
parties and the indemnifying party or such indemnified parties
shall have been advised by counsel that there are one or more
legal defenses available to the indemnified parties which are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified parties
notify the indemnifying party in writing that they elect to
employ separate counsel at the reasonable expense of the
indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action or proceeding on
behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection
with any such action or proceeding or separate or
substantially similar or related action or proceeding in the
same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and
expenses of more than one separate counsel at any time for all
indemnified parties, which counsel, where the indemnified
party or parties are the Purchasers, shall be designated in
writing by the Purchasers of a majority of the Registrable
Securities).
d) Contribution. If the indemnification provided for in this
Section 2.5 from an indemnifying party is unavailable to an
indemnified party hereunder in respect to any losses, claims,
damages, liabilities or expenses referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and
indemnified party in connection with the statements or
omissions which result in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to
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information supplied by such indemnifying party or indemnified
party and the parties' relative intent, knowledge, access to
information supplied by such indemnifying party or indemnified
party and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred
to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with
investigating or defending any action, suit, proceeding or
claim.
3. COVENANTS OF THE COMPANY.
(a) The Company shall notify the holders of Registrable Securities
included in a Registration Statement of the issuance by the
Commission of any stop order suspending the effectiveness of
such Registration Statement or the initiation of any
proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible time.
(b) The Company shall use its best efforts to cause the
Registrable Securities to be listed on NASDAQ SmallCap or any
other exchange where the Common Stock is traded. If the Common
Stock is not then listed on a national securities exchange,
use its best efforts to facilitate the reporting of the
Registrable Securities on NASDAQ SmallCap.
(c) The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition of the Registrable
Securities by the holders thereof pursuant to the Registration
Statement.
(d) With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the
Commission that may at any time permit the Purchasers to sell
securities of the Company to the public without registration,
the Company shall:
a. Make and keep public information available, as those
terms are understood and defined in Rule 144, at all
times after 90 days after the effective date of the
Registration Statement filed by the Company for the
offering of its securities to the general public;
b. File with the Commission in a timely manner all reports
and other documents required of the Company under the
Securities Act and the Securities and Exchange Act of
1934 (the "1934 Act"); and
c. Furnish to each holder of Registrable Securities, so
long as such holder of Registrable Securities owns any
Registrable Securities, forthwith upon written request:
(a) a written statement by the Company that it has
complied with the reporting requirements of Rule 144 (at
any time after 90 days after the effective date of the
first registration statement filed by the Company), the
Securities Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), (b)
a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so
filed by the Company and (c) such other information as
may be reasonably requested and as is publicly available
in availing the holders of Registrable Securities of any
rule or regulation of the Commission which permits the
selling of any such securities without registration.
(e) Prior to the filing of the Registration Statement or any
amendment thereto (whether pre-effective or post-effective),
and prior to the filing of any prospectus or prospectus
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supplement related thereto, the Company shall provide each
Selling Shareholder with copies of all pages thereto, if any,
which reference such Selling Shareholder.
4. MISCELLANEOUS.
(a) Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return
receipt requested, addressed:
a. If to the Company, at Ameritrans Capital Corporation,
000 Xxxxx Xxxxxx, 0XXxxXX Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, and
b. If to a Purchaser, at the address set forth in his
Offering subscription agreement, or at such other
address as each such party furnishes by notice given in
accordance with this Section 4 (a).
(b) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising
such right or remedy, will not operate as a waiver thereof. No
waiver will be effective unless and until it is in writing and
signed by the party giving the waiver.
(c) This Agreement shall be enforced, governed and construed in
all respects in accordance with the laws of the State of New
York, as such laws are applied by New York courts to
agreements entered into and to be performed in New York by and
between residents of New York and without regard to its
conflict of laws provisions. In the event that any provision
of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall
be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(d) This Agreement may not be assigned by the Purchaser other than
to the purchaser or transferee of more than 50% of the
Purchaser's Registrable Securities.
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and
may be amended only by a writing executed by the Company and
the holders of a majority in interest of the Registrable
Securities.
(f) This Agreement may be executed in two or more counterparts,
each of which when so executed and delivered shall be deemed
to be an original and all of which together shall be deemed to
be one and the same Agreement.
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IN WITNESS WHEREOF, the Company has executed this Agreement for the benefit of
the Purchasers by its duly authorized officer as of the date first above
written.
AMERITRANS CAPITAL CORPORATION
By:
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Xxxx Xxxxxxx, President and Chief Executive Officer
PURCHASER
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By:
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