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Form #804

Addenda - Capital Standard

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Capital Standard Addendum to "XYZ" Corporation. Dealer Sales and Service Agreement - Free Legal Form

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Addenda—Capital standard.

CAPITAL STANDARD ADDENDUM TO _________ CORPORATION

Dealer Sales and Service Agreement

This Capital Standard Addendum is executed effective as of _________ pursuant to Section F of Article II of the Dealer Sales and Service Agreement  in effect between Manufacturer and Dealer.

An explanation of the purposes and objectives of the Manufacturer Dealers Capital Standard Program is provided on the reverse side of this form.

Dealer and Manufacturer agree as follows:

(1). The actual dealer net working capital to be compared to the standard is defined on the reverse side.

(2). Manufacturer has determined that the minimum net working capital required by Dealer to properly conduct complete Dealership Operations is $_____.

(3). Dealer has established, or will, within a reasonable time, establish and maintain actual dealer net working capital in an amount not less than the minimum amount specified in Paragraph (2) above.

_________Dealer Firm Name

MANUFACTURER CORPORATION

_________CityState

 

By _________Signature and Title

By _________

By _________Signature and Title

_________ Manager

By _________Signature and Title

_________ Division

 

DEALERS CAPITAL STANDARD PROGRAM

Manufacturer has endeavored, through the Manufacturer Dealers Capital Standard Program to help dealers develop sound financial positions. Over the years, this Program has contributed substantially to the effectiveness and relative permanency of Manufacturer's dealers as a whole.

The purpose of the Manufacturer Dealers Capital Standard Program is to establish the minimum amount of regularly needed net working capital which should be provided by the owners through capital stock, other investment and earnings.

A minimum net working capital standard is established for each dealer based on the dealership operations it is expected to conduct under its Dealer Sales and Service Agreement(s). A dealer having actual net working capital equal to the standard established for the dealership operations contemplated at its dealership location should have net working capital sufficient to operate through normal variations in the business cycle, provided its management prudently maximizes the use of those funds.

Net working capital, as it is commonly understood, is the difference between current assets and current liabilities without reference to the source from which the working capital has been obtained. As used here, however, the actual dealer net working capital to be compared to the standard shall be determined by subtracting Total Liabilities, with the exception of those noted below, from the sum of Total Current Assets and the book value of Driver Training Vehicles and Lease and Rental Units.

Those liabilities which are not subtracted are:

(1). Long term notes payable which meet the following criteria:

a. The note must be payable to the owner of a substantial equity interest.

b. Principal payments must be restricted to profits.

c. The amount to be excluded is limited to _________ percent of the standard.

This exception is made because an owner would be less inclined to collect a note payable at maturity than an outside creditor when payment of such a note would place the dealership in financial jeopardy.

(2). Long term notes payable secured by real property.

This exception is made because dealers are not required to own land and buildings which they use. Many dealers, however, elect to acquire and hold title to all or a portion of such real property, thereby investing a portion of the total equity capital in land and buildings which would otherwise be available for working capital purposes.

Contributed by
Asian Investment Advisers
 
Name of Firm Asian Investment Advisers
Total Forms Contributed 61
 

See All Asian Investment Advisers's Forms
 

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Terms Of Use

Submissions to this site, including any legal or business forms, posts, responses to questions or other communications by contributors are not intended as and should not be construed as legal advice. You are strongly encouraged to consult competent legal council before engaging in any action based upon content contained on this site.

These downloadable forms are only for personal use. Retransmission, redistribution, or any other commercial use is prohibited. This includes reposting forms from this site to another site offering free legal or other document forms for download.

Please note that the donator may have included different usage terms regarding this form, and you agree to abide by these terms. It is highly recommended that you have a licensed attorney review any legal documents for which you are searching in order to make sure that your needs are being properly and completely satisfied.

Your use of this site constitutes your acceptance of our terms of use and your agreement to hold this site, its officers, employees and any contributors to this site harmless for any damage you might incur from your use of any submissions contained on this site. If you do not agree to the above terms, please do not proceed.

These forms are provided to assist business owners and others in understanding important points to consider in different transactions. They are offered with the understanding that no legal advice, accounting, or other professional service is being offered by these documents or on this website. Laws vary in the different states. Agreements acceptable in one state may not be enforced the same way under the laws of another state. Also, agreements should relate specifically to the particular facts of each situation. Therefore, it is important to consult legal counsel whenever utilizing these forms. The Forms are not a substitute for legal advice YourFreeLegalForms.com is not engaged in recommending or referring members on the site or making claims about the competence, character or qualifications of its participating members.
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