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The Inventory Financing Agreement is a crucial financing instrument in Malaysia's commercial landscape, designed to help businesses leverage their inventory to obtain working capital. This document is particularly relevant for companies with significant inventory holdings seeking to optimize their working capital cycle. The agreement must comply with Malaysian legal requirements, including the Contracts Act 1950, Companies Act 2016, and where applicable, Islamic Financial Services Act 2013. It typically includes detailed provisions on inventory valuation, monitoring mechanisms, security creation, and enforcement rights, while accommodating Malaysia's dual banking system. The document is essential for businesses requiring regular financing against their inventory and provides a structured framework for both conventional and Shariah-compliant financing options.

1. Parties: Identification of the financing party (Financier) and the borrowing party (Borrower)

2. Background: Context of the financing arrangement and brief description of the business relationship

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and rules of interpretation

4. Facility Amount and Purpose: Details of the financing amount, purpose, and any sub-limits or tranches

5. Security Interest: Creation and perfection of security interest over the inventory

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

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

8. Interest and Fees: Interest rates, calculation methods, and applicable fees

9. Inventory Management: Requirements for storage, maintenance, and handling of financed inventory

10. Representations and Warranties: Statements of fact and assurances given by the Borrower

11. Covenants: Ongoing obligations of the Borrower including financial covenants and reporting requirements

12. Monitoring and Inspection Rights: Financier's rights to monitor and inspect the inventory

13. Events of Default: Circumstances constituting default and consequences

14. Enforcement Rights: Financier's rights and remedies upon default

15. Payments and Calculations: Payment mechanics, calculations, and currency provisions

16. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law