EXHIBIT 10.89 FORBEARANCE AGREEMENT

 

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                                                                   EXHIBIT 10.89

 

                              FORBEARANCE AGREEMENT

 

 

      This FORBEARANCE AGREEMENT (the "Agreement") dated as of March 10, 2004 by

and among Radian Reinsurance Inc., as insurer (the "Facility Insurer"), Maxtor

Funding LLC, as borrower (the "Borrower"), Maxtor Corporation (individually,

"Maxtor"), as servicer under the Loan Agreement (as defined below), (together

with its successors and assigns in such capacity, the "Servicer"), and Merrill

Lynch Commercial Finance Corp., as Lender and Agent under the Loan Agreement (in

each such capacity, the "Lender" and the "Agent", respectively), and U.S. Bank

National Association, ("US Bank") in its capacities as "Backup Servicer",

"Trustee", "Collateral Agent" and "Collection Account Bank" under the Loan

Agreement. Capitalized terms used and not otherwise defined herein shall have

the meanings assigned to such terms in the Loan Agreement defined below.

 

                             PRELIMINARY STATEMENTS

 

            Reference is hereby made to that certain Receivables Loan and

Security Agreement (the "Loan Agreement") dated as of May 9, 2003, by and among

the Facility Insurer, the Borrower, the Servicer, the Lender , the Agent, the

Backup Servicer, Trustee, Collateral Agent and the Collection Account Bank.

 

            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 three preceding Cut-Off Dates as reported

in the Monthly Remittance Report delivered on March 8, 2004, exceeded 15.00%,

and such Early Amortization Event (the "Dilution Trigger Event") gives either

the Agent or the Facility Insurer 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 each of the Agent and the

Facility Insurer (collectively, the "Forbearance Parties") forbear from the

exercise of their rights to declare an Amortization Commencement Date pursuant

to Section 7.01 of the Loan Agreement or to terminate Maxtor as Servicer, and

the Forbearance Parties are willing, upon the satisfaction of certain conditions

precedent and subject to the terms herein, to forbear temporarily from the

exercise of such right.

 

            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:

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      I. FORBEARANCE.

 

            1.1 Subject to the terms and conditions set forth herein, each

Forbearance Party hereby agrees, during the period from the time this Agreement

becomes effective pursuant to Section 2 until 9:00 a.m. New York time on March

31, 2004 (such period, as it may be prematurely terminated at the option of the

Facility Insurer or the Agent pursuant to the terms of this Agreement, the

"Forbearance Period"), to forbear temporarily from exercising its rights, 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 on account of the Dilution Trigger Event as provided herein expires

at the conclusion of the Forbearance Period and any or each Forbearance Party

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.

 

            1.2 The specific agreement to forbear described in Section 1.1 above

applies 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 any Forbearance Party 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 on account of any such other

Early Amortization Event or to terminate the Servicer during the Forbearance

Period on account of any such other Servicer Default. The Forbearance Parties

are not hereby waiving the existence of any Early Amortization Event or Servicer

Default, and are merely agreeing to forbear as provided herein during the

Forbearance Period. Except for the forbearance expressly set forth above in

Section 1.1, each Forbearance Party 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

Forbearance Parties may have under any of the Transaction Documents or

applicable law.

 

            1.3 The Borrower acknowledges and agrees that, due to the existence

of the Dilution Trigger Event, the conditions precedent to borrowing under

Section 3.02(c)(ii) of the Loan Agreement are not satisfied and the Lender is

not required to advance, nor is the Borrower entitled to receive, any Loans

under the Loan Agreement. The Borrower hereby irrevocably agrees that it shall

not seek any further Loans under the Loan Agreement and will not be entitled to

receive any further Loans hereafter unless the Dilution Trigger Event has been

waived by the Facility Insurer, the Agent and the Lender. The Borrower further

acknowledges that, due to the existence of the Dilution Trigger Event, the

Facility Insurer is entitled to receive Default Premium and the Lender is

entitled to receive Default Yield and such amounts shall be paid from the

Collection Account in accordance with Section 2.05(c) of the Loan Agreement.

 

 

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            1.4 Each of the Borrower, the Agent, the Lender and the Facility

Insurer hereby irrevocably directs the Trustee, Collateral Agent and Collection

Account Bank, and the Trustee, Collateral Agent and Collection Account Bank

hereby agree, that, notwithstanding anything to the contrary in the Loan

Agreement, during the Forbearance Period, (i) the Trustee shall not release any

funds in the Collection Account to the Originator or the Borrower under Section

2.05(f) of the Loan Agreement until such time as the Loans have been prepaid in