FORBEARANCE AND CONSENT AGREEMENT

WHEREAS, Borrowers, Administrative Agent and Lenders are parties to that certain Credit Agreement dated as of August 29, 2005 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; capitalized terms not otherwise defined herein having the definitions provided therefor in the Credit Agreement);

WHEREAS, Events of Default exist under Section 8.1(b) of the Credit Agreement as a result of violations of each of the financial covenants set forth in Sections 6.2, 6.3 and 6.4 of the Credit Agreement for the period ending December 31, 2006 (collectively, the "Existing Defaults");

WHEREAS, Administrative Agent and Lenders are willing to agree to forbear from exercising certain of their rights and remedies with respect to the Existing Defaults solely for the period and on the terms and conditions specified herein;

WHEREAS, Borrowers have requested that Administrative Agent and Lenders consent to (i) the formation by LOUD of a Wholly-Owned Subsidiary organized under the laws of England and Wales and the acquisition (the "Martin Audio Acquisition") by such Wholly-Owned Subsidiary of all of the outstanding equity securities of Martin Audio Limited, a limited company organized under the laws of England and Wales ("Martin Audio"), and (ii) the departure by Borrowers from certain provisions of the Credit Agreement in order to facilitate the consummation of the Martin Audio Acquisition; and

WHEREAS, Administrative Agent and Lenders are willing to consent to the consummation of the Martin Audio Acquisition and the departure by Borrowers from certain provisions of the Credit Agreement in order to facilitate the consummation of the Martin Audio Acquisition, in each case subject to the terms and conditions specified herein and certain other agreements of Borrowers as specified herein;

NOW, THEREFORE, in consideration of the foregoing, and the respective agreements, warranties and covenants contained herein, the parties hereto agree as follows:

1.2.          Acknowledgment of Security Interests.  Borrowers hereby acknowledge, confirm and agree that Administrative Agent has and shall continue to have valid, enforceable and perfected first-priority liens upon and security interests in the Collateral heretofore granted to Administrative Agent pursuant to the Financing Documents or otherwise granted to or held by Administrative Agent, subject only to Permitted Liens.

1.3.          Binding Effect of Documents.  Borrowers hereby acknowledge, confirm and agree that:  (a) each of the Financing Documents to which any Credit Party is a party has been duly executed and delivered to Administrative Agent or Lenders by such Credit Parties, and each is and shall remain in full force and effect as of the date hereof, (b) the agreements and obligations of the Credit Parties contained in such documents and in this Agreement constitute the legal, valid and binding obligations of Borrowers and the other Credit Parties, as applicable, enforceable against them in accordance with their respective terms, and Borrowers and the other Credit Parties have no valid defense to the enforcement of such obligations, and (c) Administrative Agent and Lenders are and shall be entitled to the rights, remedies and benefits provided for under the Financing Documents and applicable law.

2.2.          Forbearance.

(a)           In reliance upon the representations, warranties and covenants of Borrowers contained in this Agreement, and subject to the terms and conditions of this Agreement and any documents or instruments executed in connection herewith, Administrative Agent and Lenders agree to forbear from exercising their rights and remedies under the Financing Documents or applicable law in respect of or arising out of the Existing Defaults, for the period (the "Forbearance Period") commencing on the date hereof and ending on the date which is the earliest of:  (i) April 7, 2007 or (ii) the occurrence or existence of any Event of Default, other than the Existing Defaults.

2

(b)           Upon the termination of the Forbearance Period, the agreement of Administrative Agent and Lenders to forbear shall automatically and without further action terminate and be of no force and effect, it being expressly agreed that the effect of such termination will be to permit Administrative Agent and Lenders to exercise immediately all rights and remedies under the Financing Documents and applicable law, including, but not limited to, (i) ceasing to make any further Revolving Loans and (ii) accelerating all of the Obligations; in each case without any further notice, passage of time or forbearance of any kind.

2.3.          No Other Waivers; Reservation of Rights.

(a)           Neither Administrative Agent nor any Lender has waived, is not by this Agreement waiving, and has no intention of waiving, any Events of Default which may be continuing on the date hereof or any Events of Default which may occur after the date hereof (whether the same or similar to the Existing Defaults or otherwise), and neither Administrative Agent nor any Lender has agreed to forbear with respect to any of its rights or remedies concerning any other Events of Default (other than, during the Forbearance Period, the Existing Defaults to the extent expressly set forth herein), occurring at any time.

(b)           Subject to Section 2.2 above (solely with respect to the Existing Defaults), Administrative Agent and each Lender reserve the right, in their discretion, to exercise any or all of their rights and remedies under the Credit Agreement and the other Financing Documents as a result of any other Events of Default occurring at any time.  Neither Administrative Agent nor any Lender has waived any of such rights or remedies, and nothing in this Agreement, and no delay on its part in exercising any such rights or remedies, should be construed as a waiver of any such rights or remedies.

2.4.          Additional Events of Default.  This Agreement shall be deemed to be a Financing Document.  The parties hereto acknowledge, confirm and agree that any representation by any Borrower being incorrect in any respect (or any material respect if such representation is not already qualified as to materiality), or any failure of any Borrower to comply with the covenants, conditions and agreements contained in this Agreement, any other Financing Document or in any other agreement, document or instrument at any time executed and/or delivered by Borrowers with, to or in favor of Administrative Agent or any Lender shall constitute an immediate Event of Default under this Agreement, the Credit Agreement and the other Financing Documents.  In the event any Person (including without limitation any holder of Subordinated Debt), other than Administrative Agent or any Lender, shall at any time exercise for any reason (including, without limitation, by reason of any Existing Default or any other present or future Event of Default, or otherwise) any of its rights or remedies against any Borrower or any obligor providing credit support for any Borrower’s obligations to such other Person, or against any Borrower’s or any such obligor’s properties or assets, such event shall constitute an immediate Event of Default hereunder and an immediate Event of Default under the Credit Agreement.

2.5.          Minimum Excess Availability.  Borrowers, Administrative Agent and Lenders agree that until such time, if any, that the Existing Defaults have been waived pursuant

3

to the terms of the Credit Agreement:  (i) at no time may the amount (such amount, the "Excess Availability Amount") equal to the Revolving Loan Limit minus the Revolving Loan Outstandings be less than $2,000,000; and (ii) none of Administrative Agent, any Lender nor any other Person shall be obligated to make Loans or extend any other financial accommodations to any Borrower if after giving effect thereto, the Excess Availability Amount would be less than $2,000,000.  A violation of clause (i) of this Section 2.5 shall constitute an immediate Event of Default.

3.2.          Additional Consents and Agreements.  In connection with the consents provided pursuant to Section 3.1 above, and in connection with the consummation of the Martin Audio Acquisition, Borrowers, Administrative Agent and Lenders hereby agree to the following, notwithstanding any provision of the Credit Agreement or any of the other Financing Documents to the contrary:

(a)           To the extent that the New Equity is used to consummate the Martin Audio Acquisition and pay costs, fees and expenses in connection therewith, Borrowers shall not be required to prepay any of the Loans with the proceeds of the New Equity, as would otherwise be required pursuant to the provisions of Section 2.1(c)(iii) of the Credit Agreement;

(b)           Amounts expended to consummate the Martin Audio Acquisition pursuant to the Martin Audio Purchase Agreement shall be excluded for purposes of calculating "Capital Expenditures";

4

(c)           Except for the contribution by LOUD to Martin Audio of proceeds of the New Equity, prior to or concurrently with the closing of the Martin Audio Acquisition, neither Borrowers nor any other Credit Party shall directly or indirectly make any loan to, make any Investment in, or extend any other financial accommodations (including without limitation trade credit) to, Martin Holdco, Martin Audio or any Subsidiary of Martin Holdco or Martin Audio;

(d)           No Borrower or any other Credit Party will, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with Martin Holdco, Martin Audio or any Subsidiary of Martin Holdco or Martin Audio;

(e)           Subject to the limitations contained in this Section 3.2, for all purposes of the Credit Agreement and the other Financing Documents, each of Martin Holdco and Martin Audio will be a "Consolidated Subsidiary"; and

(f)            For purposes of calculating the financial covenants set forth in Article 6 of the Credit Agreement, Martin Holdco and Martin Audio and all Subsidiaries thereof (including without limitation the assets, liabilities, revenues, expenses, gains and losses thereof) will be excluded.

3.3.          Payment of SLM Holdback Payment Obligations.  Administrative Agent and Lenders hereby expressly consent to the payment of the SLM Holdback Payment Obligations by SLM.

4.1.          Representations in Financing Documents.  Each of the representations and warranties made by or on behalf of each Credit Party to Administrative Agent or any Lender in any of the Financing Documents is true and correct on and as of the date of this Agreement as if each of such representations and warranties has been made by each Credit Party on the date hereof with the same force and effect, except:  (i) with respect to any representation that no Default or Event of Default has occurred or is continuing, for