Exhibit-10.79
SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
     THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”),
dated as of November ___, 2007, is entered into among WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN), a California corporation formerly known as Congress
Financial Corporation (Western) (“Agent”), as administrative and collateral
agent for the Lenders party to the Loan Agreement (as defined below) from time
to time (“Lenders”), WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN), a
California corporation formerly known as Congress Financial Corporation
(Western), as a Lender (“Wachovia”), ROCKFORD CORPORATION, an Arizona
corporation (“Borrower Agent”), and AUDIO INNOVATIONS, INC., an Oklahoma
corporation (“AII” and together with Rockford, collectively, “Borrowers”).
RECITALS
     A. Agent, Wachovia, Wachovia Bank, National Association, as arranger, and
Borrowers have previously entered into that certain Loan and Security Agreement
dated March 29, 2004 as amended by the First Amendment to Loan and Security
Agreement and Conditional Default Waiver dated as of June 10, 2004, the Second
Amendment to Loan and Security Agreement dated as of December 30, 2004, the
Third Amendment to Loan and Security Agreement dated as of August 31, 2005, the
Fourth Amendment to Loan and Security Agreement and Consent dated as of
March 21, 2006, the Fifth Amendment to Loan and Security Agreement dated as of
August 31, 2006 and the Sixth Amendment to Loan and Security Agreement dated as
of March 7, 2007 (the “Loan Agreement”), pursuant to which Wachovia has made
certain loans and financial accommodations available to Borrowers. Terms used
herein without definition shall have the meanings ascribed to them in the Loan
Agreement.
     B. Borrowers have requested Agent and Wachovia to amend the Loan Agreement
in certain respects, and Agent and Wachovia are willing to accommodate such
request on the terms and conditions set forth herein.
     C. Borrowers are entering into this Amendment with the understanding and
agreement that, except as specifically provided herein, none of Agent’s or
Lenders’ rights or remedies as set forth in the Loan Agreement is being waived
or modified by the terms of this Amendment.
AGREEMENT
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

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     1. Amendments to Loan Agreement.
          (a) Permanent Reserve. The amount of the Reserve established pursuant
to Section 1 of the First Amendment to Loan and Security Agreement and
Conditional Default Waiver dated as of June 10, 2004, as amended by the Third
Amendment to Loan and Security Agreement dated as of August 31, 2005 and the
Fifth Amendment to Loan and Security Agreement dated as of August 31, 2006, is
hereby reduced to One Million Dollars ($1,000,000). Such Reserve is a permanent
Reserve under the Loan and Security Agreement and shall not be reduced or
eliminated without the written consent of Agent, and will be referred to as the
“Permanent Reserve”.
          (b) Eligible In Transit Inventory. The amount “One Million Dollars
($1,000,000)” in clause (m) of the definition of “Eligible Inventory” in
Section 1.25 of the Loan Agreement (as amended by the Second Amendment to Loan
and Security Agreement dated as of December 30, 2004) is hereby replaced with
“Three Million Dollars ($3,000,000)”.
          (c) Eurodollar Rate Margin. The definition of “Eurodollar Rate Margin”
in Section 1.34 of the Loan Agreement is hereby amended and restated to read in
its entirety as follows:
     “1.34 ‘Eurodollar Rate Margin’ shall mean five percent (5.00%) per annum;
provided, that, on December 1, 2007, then on January 1, 2008, and on the first
day of each fiscal quarter (March 1, July 1, October 1 and January 1)
thereafter, the Eurodollar Rate Margin shall be adjusted as follows based upon
the average daily Excess Availability during the immediately preceding sixty
(60) days as determined by Agent after giving effect to the Permanent Reserve:

      Excess Availability   Eurodollar Rate Margin
 
   
Equal to or greater than $4,000,000
  Two percent (2.00%)
 
   
Less than $4,000,000 but equal to or greater than $1,000,000
  Two and one-half percent (2.50%)
 
   
Less than $1,000,000
  Three percent (3.00%)”

          (d) Final Maturity Date. The definition of “Final Maturity Date” in
Section 1.39 of the Loan Agreement is hereby amended and restated to read in its
entirety as follows:
     “1.39 ‘Final Maturity Date’ shall mean March 24, 2011, as such date may be
extended from year to year pursuant to Section 14.1(a) hereof.”
          (e) Letter of Credit Rate. The definition of “Letter of Credit Rate”
in Section 1.56 of the Loan Agreement is hereby amended and restated to read in
its entirety as follows:

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     “1.56 ‘Letter of Credit Rate’ shall mean five percent (5.00%) per annum;
provided, that, on December 1, 2007, then on January 1, 2008, and on the first
day of each fiscal quarter (March 1, July 1, October 1 and January 1)
thereafter, the Letter of Credit Rate shall be adjusted as follows based upon
the average daily Excess Availability during the immediately preceding sixty
(60) days as determined by Agent after giving effect to the Permanent Reserve:

      Excess Availability   Eurodollar Rate Margin
 
   
Equal to or greater than $4,000,000
  Two percent (2.00%)
 
   
Less than $4,000,000 but equal to or greater than $1,000,000
  Two and one-half percent (2.50%)
 
   
Less than $1,000,000
  Three percent (3.00%)”

          (f) Prime Rate Margin. The definition of “Prime Rate Margin” in
Section 1.76 of the Loan Agreement is hereby amended and restated to read in its
entirety as follows:
     “7.76 ‘Prime Rate Margin’ shall mean one percent (1.00%) per annum;
provided, that, on December 1, 2007, then on January 1, 2008, and on the first
day of each fiscal quarter (March 1, July 1, October 1 and January 1)
thereafter, the Prime Rate Margin shall be adjusted as follows based upon the
average daily Excess Availability during the immediately preceding sixty
(60) days as determined by Agent after giving effect to the Permanent Reserve:

      Excess Availability   Eurodollar Rate Margin
 
   
Equal to or greater than $4,000,000
  Zero percent (0.00%)
 
   
Less than $4,000,000 but equal to or greater than $1,000,000
  One-half of one percent (0.50%)
 
   
Less than $1,000,000
  One percent (1.00%)”

          (g) Eurodollar Rate Loans. Clause (v) of Section 3.1 of the Loan
Agreement is hereby amended and restated to read in its entirety as follows:
     “(v) each Eurodollar Rate Loan must be in the amount of One Million Dollars
($1,000,000) or an integral multiple of Five Hundred Thousand Dollars ($500,000)
in excess thereof,”
          (h) Servicing Fee. The amount “Four Thousand Dollars ($4,000)” in
Section 3.4 of the Loan Agreement is hereby replaced with “Two Thousand Dollars
($2,000)”.

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          (i) Unused Line Fee. The percentage “three-eighths of one percent
(0.375%)” in Section 3.5 of the Loan Agreement is hereby replaced with
“one-quarter of one percent (0.25%)”.
          (j) Inventory Appraisals. Clause (d) of Section 7.3 of the Loan
Agreement is hereby amended and restated to read in its entirety as follows:
     “(d) upon Agent’s request, Borrowers shall, at their expense, no more than
one (1) time in any twelve (12) month period if the average daily Excess
Availability after giving effect to the Permanent Reserve exceeded $3,000,000
during the sixty (60) days immediately preceding the subject request by Agent,
and no more than two (2) times in any twelve (12) month period if the average
daily Excess Availability after giving effect to the Permanent Reserve was equal
to or less than $3,000,000 during the sixty (60) days immediately preceding the
subject request by Agent, but at any time or times as Agent may request on or
after an Event of Default, deliver or cause to be delivered to Agent full
written appraisals as to the Inventory in form, scope and methodology reasonably
acceptable to Agent and by an appraiser reasonably acceptable to Agent,
addressed to Agent and Lenders and upon which Agent and Lenders are expressly
permitted to rely;”
          (k) EBITDA. Section 9.17.1 of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
     “9.17.1 EBITDA. Borrowers and their Subsidiaries, on a consolidated basis,
shall earn EBITDA, during each period of twelve (12) consecutive months ending
on the last day of any fiscal quarter, of not less than $4,000,000.
Notwithstanding the foregoing, if on the last day of any of the foregoing
periods, the Excess Availability before giving effect to the Permanent Reserve,
minus the sum of (a) all of the Borrowers’ trade payables that are then more
than thirty (30) days past due, plus (b) all of the Borrowers’ obligations and
liabilities (other than trade payables) that are then past due, exceeds
$3,000,000, then Borrowers will not be required to comply with the foregoing
minimum consolidated EBITDA covenant for the specific period then ending.
     For the purposes hereof, ‘EBITDA’ shall mean the net income of Borrowers
and their Subsidiaries determined on a consolidated basis in accordance with
GAAP consistently applied, but excluding any extraordinary or one-time gains,
plus (a) depreciation, amortization and other non-cash charges (to the extent
deducted in the computation of such net income), plus (b) Interest Expense (to
the extent deducted in the computation of such net income), plus (c) charges for
federal, state, local and foreign income taxes (to the extent deducted in the
computation of such income).”
          (l) Early Termination Fee. Clauses (i) and (ii) of Section 14.1(c) of
the Loan Agreement are hereby amended and restated to read in their entirety,
and a new clause (iii) is hereby added to read in its entirety, as follows:

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“(i) One percent (1.00%) of the Maximum Credit
  On or before March 24, 2009
 
   
(ii) One-half of one percent (0.50%) of the Maximum Credit
  After March 24, 2009 but on or before March 24, 2010
 
   
(iii) Zero
  After March 24, 1010.”

     2. Consent.
          (a) Notwithstanding anything to the contrary contained in
Sections 9.10 and 9.11 of the Loan Agreement, Agent and Wachovia hereby consent
to Borrower Agent fully or partially paying the principal balances owing on its
4.5% Convertible Senior Subordinated Secured Notes due 2009 and to Borrower
Agent redeeming, purchasing or otherwise acquiring its Capital Stock, in
consideration of its cash payments not to exceed $1,500,000 in the aggregate,
provided that in each case, (a) the Excess Availability, after giving effect to
the Permanent Reserve and any such payment, would be greater than $1,000,000 and
(b) no Default or Event of Default has occurred and is continuing or would
result therefrom. The foregoing consent shall apply only to the specific
transactions described above and shall be subject to the conditions set forth
above, and in all other respects, Agent and Lenders shall reserve and preserve
their rights to require the Borrowers’ strict compliance with Sections 9.10 and
9.11 of the Loan Agreement and all other terms and provisions of the Financing
Agreements.
          (b) Notwithstanding anything to the contrary contained in the Loan
Agreement or in any Guaranty and Security Agreement dated March 29, 2004 (a
“Guaranty”), Agent and Wachovia hereby acknowledge that in order to simplify its
corporate structure Borrower Agent is in the process of dissolving each of its
subsidiaries, including AII and each Guarantor. Borrower Agent has determined
that such subsidiaries no longer hold material assets and serve no continuing
business purpose. Borrower Agent confirms and represents that, upon such
dissolution, Borrower Agent will succeed to all of the assets of AII and each
Guarantor and will assume all obligations to Agent and Lenders of AII and each
Guarantor. In consideration of such confirmation and representation, Agent and
Wachovia consent to the dissolution of the subsidiaries, including AII and each
Guarantor. Upon completion of the dissolutions, the Loan Agreement is amended to
remove each reference to AII and each Guarantor, so that all references to
“Borrowers” will refer solely to Borrower Agent as the sole remaining entity in
Borrower Agent’s corporate organization, and each Guaranty of the Guarantors is
terminated and merged into the Loan Agreement.
     3. Effectiveness of this Amendment. Agent must have received the following
items, in form and content acceptable to Agent, before this Amendment is
effective.
          (a) Amendment; Acknowledgement. This Amendment and the attached
Acknowledgement by Guarantors, each fully executed in a sufficient number of
counterparts for distribution to all parties.

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          (b) Amendment Fee. An amendment fee in the amount of Fifty Thousand
Dollars ($50,000), which fee shall be paid to Agent by Borrowers on or before
the date hereof and is fully earned as of the date hereof.
          (c) Representations and Warranties. The representations and warranties
set forth herein and in the Loan Agreement must be true and correct.
          (d) Other Required Documentation. All other documents and legal
matters in connection with the transactions contemplated by this Amendment shall
have been delivered or executed or recorded and shall be in form and substance
satisfactory to Agent.
     4. Representations and Warranties. Each Borrower represents and warrants as
follows:
          (a) Authority. Such Borrower has the requisite corporate power and
authority to execute and deliver this Amendment, and to perform its obligations
hereunder and under the Financing Agreements (as amended or modified hereby) to
which it is a party. The execution, delivery and performance by such Borrower of
this Amendment have been duly approved by all necessary corporate action and no
other corporate proceedings are necessary to consummate such transactions.
          (b) Enforceability. This Amendment has been duly executed and
delivered by such Borrower. This Amendment and each Financing Agreement (as
amended or modified hereby) is the legal, valid and binding obligation of such
Borrower, enforceable against such Borrower in accordance with its terms, and is
in full force and effect.
          (c) Representations and Warranties. The representations and warranties
contained in each Financing Agreement (other than any such representations or
warranties that, by their terms, are specifically made as of a date other than
the date hereof) are correct on and as of the date hereof as though made on and
as of the date hereof.
          (d) Due Execution. The execution, delivery and performance of this
Amendment are within the power of such Borrower, have been duly authorized by
all necessary corporate action, have received all necessary governmental
approval, if any, and do not contravene any law or any contractual restrictions
binding on such Borrower.
          (e) No Default. No event has occurred and is continuing that
constitutes an Event of Default.
     5. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by, and construed in accordance with the internal
laws of the State of California governing contracts only to be performed in that
State.
     6. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and

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delivered, shall be deemed an original, and all of which, when taken together,
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telefacsimile shall be
effective as delivery of a manually executed counterpart of this Amendment.
     7. Reference to and Effect on the Financing Agreements.
          (a) Upon and after the effectiveness of this Amendment, each reference
in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import referring to the Loan Agreement, and each reference in the other
Financing Agreements to “the Loan Agreement”, “thereof” or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as modified and amended hereby.
          (b) Except as specifically amended above, the Loan Agreement and all
other Financing Agreements, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed and shall
constitute the legal, valid, binding and enforceable obligations of Borrowers to
Agent and Lenders.
          (c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of Agent or any Lender under any of the Financing Agreements,
nor constitute a waiver of any provision of any of the Financing Agreements.
          (d) To the extent that any terms and conditions in any of the
Financing Agreements shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this Amendment, such
terms and conditions are hereby deemed modified or amended accordingly to
reflect the terms and conditions of the Loan Agreement as modified or amended
hereby.
     8. Integration. This Amendment and the Loan Agreement as amended, together
with the other Financing Agreements, incorporates all negotiations of the
parties hereto with respect to the subject matter hereof and is the final
expression and agreement of the parties hereto with respect to the subject
matter hereof.
     9. Severability. In case any provision in this Amendment shall be invalid,
illegal or unenforceable, such provision shall be severable from the remainder
of this Amendment and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

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     IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first above written.

            ROCKFORD CORPORATION
      By:           Name:           Title:           AUDIO INNOVATIONS, INC.
      By:           Name:           Title:           WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN),
as Agent and as a Lender
      By:           Name:           Title:      

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ACKNOWLEDGEMENT BY GUARANTORS
Dated as of November      , 2007
     Each of the undersigned, being a guarantor (each a “Guarantor” and
collectively, the “Guarantors”) under their Guaranty and Security Agreement
dated March 29, 2004, made in favor of Agent and Lenders (as amended, modified
or supplemented, the “Guaranty”) hereby acknowledges and agrees to the foregoing
Seventh Amendment to Loan and Security Agreement (the “Amendment”) and confirms
and agrees that the Guaranty is and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except that, upon
the effectiveness of, and on and after the date of the Amendment, each reference
in the Guaranty to the Loan Agreement (as defined in the Amendment),
“thereunder”, “thereof” or words of like import referring to the “Loan
Agreement”, shall mean and be a reference to the Loan Agreement as amended or
modified by the Amendment. Although Lender has informed Guarantors of the
matters set forth above, and Guarantors have acknowledged the same, each
Guarantor understands and agrees that Lender has no duty under the Loan
Agreement, the Guaranty or any other agreement with any Guarantor to so notify
any Guarantor or to seek such an acknowledgement, and nothing contained herein
is intended to or shall create such a duty as to any advances or transaction
hereafter.

            ROCKFORD SINGAPORE CORPORATION
      By:           Name:           Title:           ROCKFORD SALES.COM, INC.
      By:           Name:           Title:           MB QUART SHANGHAI, INC.
      By:           Name:           Title:        

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