Exhibit 10.59

FORBEARANCE AGREEMENT

     This FORBEARANCE AGREEMENT (the “Agreement”), dated as of February 11,
2005, by and among Maxtor Receivables LLC, a Delaware limited liability company
(the “Borrower”), Maxtor Corporation, a Delaware corporation (“Maxtor”), as
servicer (the “Servicer”) under the Loan Agreement (as defined below), and
Merrill Lynch Commercial Finance Corp., as Lender (the “Lender”) and Agent (the
“Agent”) under the Loan Agreement. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in the Loan
Agreement.

PRELIMINARY STATEMENTS

          Reference is hereby made to that certain Receivables Loan and Security
Agreement (the “Loan Agreement”) dated as of June 24, 2004, by and among the
Borrower, the Servicer, the Lender, the Agent, U.S. Bank National Association
and Lyon Financial Services, Inc.

          WHEREAS, an Early Amortization Event has occurred under
Section 7.01(m) of the Loan Agreement, in that the rolling average of the
Dilution-to-Liquidation Ratios for the preceding three Cut-Off Dates as reported
in the Monthly Remittance Report delivered on February 7, 2005, exceeded 17.50%,
and such Early Amortization Event (the “Dilution Trigger Event”) gives the Agent
the right (i) to declare the Amortization Commencement Date to have occurred and
(ii) to declare a Servicer Default under clause (iv) of the definition thereof
on account of such Dilution Trigger Event and to terminate the rights and
obligations of the Servicer under the Loan Agreement.

          WHEREAS, the Borrower has requested that the Agent forbear from the
exercise of its rights to declare an Amortization Commencement Date pursuant to
Section 7.01 of the Loan Agreement or to terminate Maxtor as Servicer, and the
Agent is willing, upon the satisfaction of certain conditions precedent and
subject to the terms herein, to forbear temporarily from the exercise of such
rights.

          NOW THEREFORE, in consideration of the mutual conditions and
agreements set forth in the Transaction Documents and this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     I. Forbearance.

          1.1 Subject to the terms and conditions set forth herein, the Agent
hereby agrees, during the period from the time this Agreement becomes effective
pursuant to Section 2 hereof until 9:00 a.m. New York time on March 7, 2005
(such period, as it may be prematurely terminated at the option of the Agent
pursuant to the terms of this Agreement, the “Forbearance Period”), to forbear
temporarily from exercising its rights, solely on account of the Dilution
Trigger Event, to declare an Amortization Commencement Date or to terminate
Maxtor as Servicer under the Loan Agreement. This agreement to forbear solely on
account of the Dilution

 

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Trigger Event as provided herein expires at the conclusion of the Forbearance
Period and the Agent may, at any time thereafter, exercise any of its rights and
remedies with respect to the Dilution Trigger Event to the same extent as if
this Agreement did not exist, including without limitation, the right to declare
the occurrence of the Amortization Commencement Date, terminate Maxtor as
Servicer, and exercise any remedies set forth in the Transaction Documents which
are exercisable from and after the Amortization Commencement Date.
Notwithstanding the foregoing, the Agent agrees that that it shall also forbear
from exercising its rights, solely on account of the Dilution Trigger Event, to
declare an Amortization Commencement Date or to terminate Maxtor as Servicer
under the Loan Agreement after the conclusion of the Forbearance Period if a
Monthly Remittance Report delivered on March 7, 2005 demonstrates that the
average of the Dilution-to-Liquidation Ratios for the three Cut-Off Dates
immediately preceding March 7, 2005 does not exceed 17.50%.

          1.2 The specific agreements to forbear described in Section 1.1 above
apply only to the Dilution Trigger Event and not to any other facts or
circumstances giving rise to an Early Amortization Event or Servicer Default
which may have occurred or may hereafter occur, and nothing in this Agreement
shall be deemed to restrict any right or remedy the Agent may have on account of
any such other Early Amortization Event or Servicer Default, including the right
to declare the occurrence of the Amortization Commencement Date at any time
during the Forbearance Period or thereafter on account of any such other Early
Amortization Event or to terminate the Servicer during the Forbearance Period or
thereafter on account of any such other Servicer Default. The Agent is not
hereby waiving the existence of any Early Amortization Event or Servicer Default
and is merely agreeing to forbear as provided herein during the Forbearance
Period and/or thereafter as expressly set forth above in Section 1.1. Except for
the forbearance expressly set forth above in Section 1.1, the Agent expressly
reserves each and every right and remedy it has under the Transaction Documents
and under applicable law, and nothing in this Agreement shall be deemed to
constitute a waiver of any Early Amortization Event or Servicer Default whether
now existing or hereafter arising, or, constitute a waiver of, or, except for
the forbearance expressly set forth above in Section 1.1, forbearance of, any
right or remedy the Agent may have under any of the Transaction Documents or
applicable law.

          1.3 Each of the Borrower and the Servicer expressly acknowledge and
agree that the agreement of the Agent under Section 1.1 to forbear as provided
herein is expressly conditioned on compliance by each of the Borrower and the
Servicer with the covenants, agreements, terms and conditions contained herein
and that if the Borrower or the Servicer fails to comply with any such
covenants, agreements, terms or conditions for any reason, the Agent shall have
the right, by written notice to the other parties hereto, to declare that the
Forbearance Period has terminated upon which declaration this Agreement shall no
longer be of any force and effect and the Agent shall be entitled to exercise
all rights the exercise of which are otherwise temporarily postponed under
Section 1.1 above.

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     II. Condition Precedent. This Agreement shall become effective, as of the
date first above written, upon (i) execution by each of the parties hereto and
(ii) the Agent’s receipt of the Agent Administration Fee (as defined below) from
the Borrower.

     III. Agent Administration Fee. In connection with the foregoing, the
Borrower hereby agrees to pay the Agent an administration fee in the amount of
$50,000 (the “Agent Administration Fee”) on the date hereof.

     IV. Representations and Warranties.

          4.1 Upon the effectiveness of this Agreement, each of the Borrower and
the Servicer hereby reaffirms all representations and warranties made by it in
the Transaction Documents (except for any representations or warranties which
would be incorrect solely due to the occurrence of the above described Early
Amortization Event and/or Servicer Default related to the Dilution Trigger
Event) and agrees that all such representations and warranties shall be deemed
to have been re-made as of the effective date of this Agreement (except for any
representations or warranties which speak as of a specific date only, in which
event they are reaffirmed as of such date). Additionally, Maxtor hereby
reaffirms all representations and warranties made by it in the Transaction
Documents individually or as Originator (except for any representations or
warranties which would be incorrect solely due to the occurrence of the above
described Early Amortization Event and/or Servicer Default related to the
Dilution Trigger Event), and agrees that all such covenants, representations and
warranties shall be deemed to have been re-made as of the effective date of this
Agreement (except for any representations or warranties which speak as of a
specific date only, in which event they are reaffirmed as of such date).

          4.2 Each of the Borrower and Maxtor (individually and as the Servicer)
hereby represents and warrants, as to itself, that (a) this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms and (b) there is no consent, approval or other
requirement known to it which could reasonably be expected to impair or
materially delay its ability to perform its obligations under this Agreement,
the Loan Agreement or the Transaction Documents as proposed to be modified
hereby.

     V. Ratification and Release.

          5.1 Each Transaction Document is in all respects hereby ratified and
confirmed by the Borrower, Maxtor and the Servicer and, except to the extent
expressly provided in this Agreement, none of the execution, delivery or
effectiveness of this Agreement shall operate as a forbearance in respect of any
rights, powers or remedies of the Agent or the Lender of any provision contained
in any Transaction Document, whether as a result of any Early Amortization
Event, Servicer Default, or otherwise. Each of the Borrower, Maxtor and the
Servicer hereby: (i) ratifies and reaffirms all of its payment and performance
obligations, contingent or otherwise, under each Transaction Document to which
it is a party, (ii) agrees and acknowledges that such ratification and
reaffirmation is not a condition to the continued effectiveness of such
Transaction Document and (iii) acknowledges that the Agent has not made any
promises, covenants or commitments with respect to whether or not it is willing
to waive the Dilution Trigger Event described above.

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          5.2 Each of the Borrower, Maxtor and the Servicer hereby acknowledges
and confirms that (i) it does not have any grounds, and hereby agrees not to
challenge (or to allege or to pursue any matter, cause or claim arising under or
with respect to), in any case based upon acts or omissions of the Agent
occurring prior to the date hereof or facts otherwise known to it as of the date
hereof, the effectiveness, genuineness, validity, collectibility or
enforceability of any Transaction Document, or any ownership interests, security
interests or other Liens created thereunder and (ii) it does not possess (and
hereby forever waives, remises, releases, discharges and holds harmless the
Agent, the Lender and their respective affiliates, stockholders, directors,
officers, employees, attorneys, agents and representatives and each of their
respective heirs, executors, administrators, successors and assigns
(collectively, the “Indemnified Parties”) from and against, and agrees not to
allege or pursue) any action, cause of action, suit, debt, claim, counterclaim,
cross-claim, demand, defense, offset, opposition, and other right of action
whatsoever, whether in law, equity or otherwise (which it, all those claiming
by, through or under it, or its successors or assigns, have or may have) against
the Indemnified Parties, or any of them, by reason of, any matter, cause or
thing whatsoever, with respect to events or omissions occurring or arising on or
prior to the date hereof and relating to any of the Transaction Documents.

     VI. Miscellaneous.

          6.1 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate; the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

          6.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument. This Agreement may also be
executed by facsimile and each facsimile signature hereto shall be deemed for
all purposes to be an original signature page.

          6.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK BUT OTHERWISE WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

          6.4 Section Titles. The section titles contained in this Agreement are
and shall be without substance, meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.

          6.5 Transaction Documents. Each of the parties hereto irrevocably
agrees that this Agreement constitutes a “Transaction Document” within the
meaning of the Loan Agreement and that the provisions of Article IX of the Loan
Agreement with respect to amendments, notices to be given, and waivers of jury
trial shall apply to any amendments of this

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Agreement, any notices to be given hereunder or any action or proceeding with
respect to this Agreement.

          6.6 Binding Effect. This Agreement shall become effective when it
shall have been executed by the parties hereto and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

          6.7 Expenses. The Servicer hereby agrees to promptly reimburse the
Agent and the Lender for all reasonable out-of-pocket expenses, including,
without limitation, reasonable attorneys’ and other professionals’ fees, either
such party has heretofore or hereafter incurred or incurs in connection with the
preparation, negotiation, execution and/or enforcement of this Agreement or any
document, instrument, agreement delivered pursuant to this Agreement, and the
Borrower acknowledges that the Borrower is obligated to pay such amounts under
the Loan Agreement in the event the Servicer does not do so and that such
obligations are secured under the Loan Agreement.

          6.8 Integration. This Agreement contains the final and complete
understanding by the parties hereto with respect to the subject matter hereof
and shall supersede all other oral or written understandings with respect to the
subject matter hereof.

Signature page to follow.

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     IN WITNESS WHEREOF, the parties hereto have executed this Forbearance
Agreement as of February 11, 2005.

                  MAXTOR RECEIVABLES LLC
 
           
 
                By:  /s/ Glen T. Haubl

      Name: Glen T. Haubl    

      Title: Treasurer    
 
                MAXTOR CORPORATION, individually and as Servicer
 
                By:  /s/ Glen T. Haubl

      Name: Glen T. Haubl    

      Title: Treasurer    
 
                MERRILL LYNCH COMMERCIAL FINANCE CORP.,
as Agent and as Lender
 
                By:  /s/ James B. Carson

      Name: James B. Carson
   

      Title: Vice President    

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