exv10w59



 






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



 









 





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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