**Exhibit 10.59**
**FORBEARANCE AGREEMENT**
     This FORBEARANCE AGREEMENT (the “Agreement”), dated as of February 11, 2005, by andamong Maxtor Receivables LLC, a Delaware limited liability company (the “Borrower”), MaxtorCorporation, a Delaware corporation (“Maxtor”), as servicer (the “Servicer”) underthe 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 usedand not otherwise defined herein shall have the meanings assigned to such terms in the LoanAgreement.
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, theLender, 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-OffDates 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 ServicerDefault under clause (iv) of the definition thereof on account of such Dilution Trigger Event andto 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 todeclare an Amortization Commencement Date pursuant to Section 7.01 of the Loan Agreement or toterminate Maxtor as Servicer, and the Agent is willing, upon the satisfaction of certain conditionsprecedent 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 theTransaction Documents and this Agreement, and other good and valuable consideration, the receiptand 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 theperiod from the time this Agreement becomes effective pursuant to Section 2 hereof until9:00 a.m. New York time on March 7, 2005 (such period, as it may be prematurely terminated at theoption of the Agent pursuant to the terms of this Agreement, the “Forbearance Period”), toforbear temporarily from exercising its rights, solely on account of the Dilution Trigger Event, todeclare an Amortization Commencement Date or to terminate Maxtor as Servicer under the LoanAgreement. This agreement to forbear solely on account of the Dilution
 

 

Trigger Event as provided herein expires at the conclusion of the Forbearance Period and theAgent may, at any time thereafter, exercise any of its rights and remedies with respect to theDilution Trigger Event to the same extent as if this Agreement did not exist, including withoutlimitation, the right to declare the occurrence of the Amortization Commencement Date, terminateMaxtor as Servicer, and exercise any remedies set forth in the Transaction Documents which areexercisable from and after the Amortization Commencement Date. Notwithstanding the foregoing, theAgent agrees that that it shall also forbear from exercising its rights, solely on account of theDilution Trigger Event, to declare an Amortization Commencement Date or to terminate Maxtor asServicer under the Loan Agreement after the conclusion of the Forbearance Period if a MonthlyRemittance Report delivered on March 7, 2005 demonstrates that the average of theDilution-to-Liquidation Ratios for the three Cut-Off Dates immediately preceding March 7, 2005 doesnot exceed 17.50%.
          1.2 The specific agreements to forbear described in Section 1.1 above apply only tothe Dilution Trigger Event and not to any other facts or circumstances giving rise to an EarlyAmortization Event or Servicer Default which may have occurred or may hereafter occur, and nothingin this Agreement shall be deemed to restrict any right or remedy the Agent may have on account ofany such other Early Amortization Event or Servicer Default, including the right to declare theoccurrence of the Amortization Commencement Date at any time during the Forbearance Period orthereafter on account of any such other Early Amortization Event or to terminate the Servicerduring the Forbearance Period or thereafter on account of any such other Servicer Default. TheAgent is not hereby waiving the existence of any Early Amortization Event or Servicer Default andis merely agreeing to forbear as provided herein during the Forbearance Period and/or thereafter asexpressly set forth above in Section 1.1. Except for the forbearance expressly set forthabove in Section 1.1, the Agent expressly reserves each and every right and remedy it hasunder the Transaction Documents and under applicable law, and nothing in this Agreement shall bedeemed to constitute a waiver of any Early Amortization Event or Servicer Default whether nowexisting or hereafter arising, or, constitute a waiver of, or, except for the forbearance expresslyset forth above in Section 1.1, forbearance of, any right or remedy the Agent may haveunder any of the Transaction Documents or applicable law.
          1.3 Each of the Borrower and the Servicer expressly acknowledge and agree that the agreementof the Agent under Section 1.1 to forbear as provided herein is expressly conditioned oncompliance by each of the Borrower and the Servicer with the covenants, agreements, terms andconditions contained herein and that if the Borrower or the Servicer fails to comply with any suchcovenants, agreements, terms or conditions for any reason, the Agent shall have the right, bywritten notice to the other parties hereto, to declare that the Forbearance Period has terminatedupon which declaration this Agreement shall no longer be of any force and effect and the Agentshall be entitled to exercise all rights the exercise of which are otherwise temporarily postponedunder Section 1.1 above.
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     **II. ****Condition Precedent****.**This Agreement shall become effective, as of the date firstabove written, upon (i) execution by each of the parties hereto and (ii) the Agent’s receipt of theAgent Administration Fee (as defined below) from the Borrower.
     **III.****Agent Administration Fee****.**In connection with the foregoing, the Borrower herebyagrees to pay the Agent an administration fee in the amount of $50,000 (the “AgentAdministration Fee”) on the date hereof.
     **IV. ****Representations and Warranties****.**
          4.1 Upon the effectiveness of this Agreement, each of the Borrower and the Servicer herebyreaffirms all representations and warranties made by it in the Transaction Documents (except forany representations or warranties which would be incorrect solely due to the occurrence of theabove described Early Amortization Event and/or Servicer Default related to the Dilution TriggerEvent) and agrees that all such representations and warranties shall be deemed to have been re-madeas of the effective date of this Agreement (except for any representations or warranties whichspeak 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 theTransaction Documents individually or as Originator (except for any representations or warrantieswhich would be incorrect solely due to the occurrence of the above described Early AmortizationEvent and/or Servicer Default related to the Dilution Trigger Event), and agrees that all suchcovenants, representations and warranties shall be deemed to have been re-made as of the effectivedate of this Agreement (except for any representations or warranties which speak as of a specificdate 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 andwarrants, as to itself, that (a) this Agreement constitutes its legal, valid and bindingobligation, 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 ormaterially delay its ability to perform its obligations under this Agreement, the Loan Agreement orthe 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 theBorrower, 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 forbearancein respect of any rights, powers or remedies of the Agent or the Lender of any provision containedin 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 reaffirmsall of its payment and performance obligations, contingent or otherwise, under each TransactionDocument to which it is a party, (ii) agrees and acknowledges that such ratification andreaffirmation 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 respectto 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) itdoes not have any grounds, and hereby agrees not to challenge (or to allege or to pursue anymatter, cause or claim arising under or with respect to), in any case based upon acts or omissionsof the Agent occurring prior to the date hereof or facts otherwise known to it as of the datehereof, the effectiveness, genuineness, validity, collectibility or enforceability of anyTransaction Document, or any ownership interests, security interests or other Liens createdthereunder and (ii) it does not possess (and hereby forever waives, remises, releases, dischargesand 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 actionwhatsoever, whether in law, equity or otherwise (which it, all those claiming by, through or underit, or its successors or assigns, have or may have) against the Indemnified Parties, or any ofthem, by reason of, any matter, cause or thing whatsoever, with respect to events or omissionsoccurring or arising on or prior to the date hereof and relating to any of the TransactionDocuments.
     **VI. ****Miscellaneous****.**
          **6.1****Severability****.**Any provision of this Agreement held by a court of competentjurisdiction to be invalid or unenforceable shall not impair or invalidate; the remainder of thisAgreement and the effect thereof shall be confined to the provision so held to be invalid orunenforceable.
          **6.2****Counterparts****.**This Agreement may be executed in one or more counterparts, each ofwhich shall constitute an original, but all of which taken together shall be one and the sameinstrument. This Agreement may also be executed by facsimile and each facsimile signature heretoshall be deemed for all purposes to be an original signature page.
          **6.3****Governing Law****.**THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THEGENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK BUT OTHERWISE WITHOUT REFERENCE TO ITS CONFLICT OFLAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BEDETERMINED 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 bewithout substance, meaning or content of any kind whatsoever and are not a part of the agreementbetween the parties hereto.
          **6.5****Transaction Documents****.**Each of the parties hereto irrevocably agrees that thisAgreement constitutes a “Transaction Document” within the meaning of the Loan Agreement and thatthe 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 thisAgreement.
          **6.6****Binding Effect****.**This Agreement shall become effective when it shall have beenexecuted by the parties hereto and thereafter shall be binding upon and inure to the benefit of theparties hereto and their respective successors and assigns.
          **6.7****Expenses****.**The Servicer hereby agrees to promptly reimburse the Agent and theLender for all reasonable out-of-pocket expenses, including, without limitation, reasonableattorneys’ and other professionals’ fees, either such party has heretofore or hereafter incurred orincurs in connection with the preparation, negotiation, execution and/or enforcement of thisAgreement or any document, instrument, agreement delivered pursuant to this Agreement, and theBorrower acknowledges that the Borrower is obligated to pay such amounts under the Loan Agreementin the event the Servicer does not do so and that such obligations are secured under the LoanAgreement.
          **6.8****Integration****.**This Agreement contains the final and complete understanding by theparties hereto with respect to the subject matter hereof and shall supersede all other oral orwritten 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 February11, 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 LYNCHCOMMERCIAL FINANCE CORP.,