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The Purchase Order Financing Agreement is a crucial financial instrument in Indonesian business operations, particularly for companies requiring working capital to fulfill their customer orders. This document is typically used when a business has received purchase orders but lacks the immediate funds to procure the necessary goods or materials from suppliers. The agreement, governed by Indonesian law and regulations including Law No. 10 of 1998 on Banking and OJK regulations, establishes the terms under which a financial institution will provide advance funding against confirmed purchase orders. It includes detailed provisions for security arrangements, compliance requirements, operational procedures, and risk mitigation measures. The document is essential for businesses seeking to bridge the funding gap between receiving orders and delivering products, particularly in manufacturing, trading, and import/export sectors.

1. Parties: Identifies the financing party (typically a bank or financial institution), the client (borrower), and any guarantors

2. Background: Sets out the context of the financing arrangement, including the client's business and purpose of the facility

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Facility and Purpose: Details of the financing facility, including amount, purpose, and terms of availability

5. Purchase Order Requirements: Criteria for eligible purchase orders and verification procedures

6. Conditions Precedent: Conditions that must be satisfied before the facility becomes available

7. Drawdown Mechanics: Procedures and requirements for requesting and receiving financing

8. Payment Terms: Payment obligations, including repayment schedule, interest, fees, and calculation methods

9. Security and Collateral: Details of security arrangements and collateral requirements

10. Representations and Warranties: Standard declarations made by the client regarding their business and the transaction

11. Covenants: Ongoing obligations of the client throughout the facility period

12. Events of Default: Circumstances constituting default and consequences thereof

13. Indemnification: Client's obligations to indemnify the financing party

14. Confidentiality: Obligations regarding confidential information

15. Notices: Communication procedures between parties

16. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

17. Miscellaneous: Standard boilerplate provisions including amendments, assignments, and severability