<PAGE>
                 THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

     THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of August 31, 2005, 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 and
the Second Amendment to Loan and Security Agreement dated as of December 30,
2004 (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, Wachovia and Borrowers are now
willing to amend the Loan Agreement 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
Lender's 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:

     1.   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, is hereby reduced to Two Million Dollars
($2,000,000). Such Reserve shall be eliminated upon Agent's receipt and
satisfactory review of Borrower Agent's Form 10-K or Form 10-Q (as applicable
and as filed with the Securities and Exchange Commission) and its financial
statements (as required in Section 9.6(a) of the Loan Agreement) for any fiscal
year or fiscal quarter, commencing with the fiscal year ending December 31,
2005, if the Fixed Charge Coverage Ratio of Borrowers and their Subsidiaries
(on a consolidated basis) for the twelve (12)
<PAGE>
months ending on the last day of such fiscal year or fiscal quarter is not less
than 1.25 to one and if no Default or Event of Default has occurred and is
continuing.

     2.   Amendments to Loan Agreement.

          (a)  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 three percent (3.00%) per
     annum; provided, that, on the first day of each fiscal quarter, 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 before giving effect to 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:

<TABLE>
<CAPTION>
       Excess Availability                          Eurodollar Rate Margin
       -------------------                          ----------------------
<S>                                          <C>
Equal to or greater than $10,000,000         Two and three-quarters percent (2.75%)

Less than $10,000,000 but equal to or        Three percent (3.00%)
greater than $9,000,000

Less than $9,000,000 but equal to or         Three and one-quarter percent (3.25%)
greater than $8,000,000

Less than $8,000,000                         Three and one-half percent (3.50%)"
</TABLE>


          (b)  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, 2008, as such
     date may be extended from year to year pursuant to Section 14.1(a) hereof."

          (c)  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:

          "1.56     'Letter of Credit Rate' shall mean three percent (3.00%) per
     annum; provided, that, on the first day of each fiscal quarter, 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 before giving effect to 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:


                                       2
<PAGE>
      Excess Availability                            Letter of Credit Rate

Equal to or greater than $10,000,000      Two and three-quarters percent (2.75%)

Less than $10,000,000 but equal to or     Three percent (3.00%)
greater than $9,000,000

Less than $9,000,000 but equal to or      Three and one-quarter percent (3.25%)
greater than $8,000,000

Less than $8,000,000                      Three and one-half percent (3.50%)"

     (d)  The definition of "Maximum Credit" in Section 1.60 of the Loan
Agreement is hereby amended and restated to read in its entirety as follows:

     "1.60 'Maximum Credit' shall mean the amount of Twenty-Five Million
Dollars ($25,000,000)."

     (e)  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 the first day of each fiscal quarter, 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 before
giving effect to 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:

      Excess Availability                            Prime Rate Margin


Equal to or greater than $10,000,000       Three-quarters of one percent (0.75%)

Less than $10,000,000 but equal to or      One percent (1.00%)
greater than $9,000,000

Less than $9,000,000 but equal to or       One and one-quarter percent (1.25%)
greater than $8,000,000

Less than $8,000,000                       One and one-half percent (1.50%)"

     (f)  Revolving Loan Limit. The definition of "Revolving Loan Limit" in
Section 1.89 of the Loan Agreement is hereby amended and restated to read in
its entirety as follows:

                                       3
<PAGE>
          "1.89 'Revolving Loan Limit' shall mean the amount of Twenty-Five
     Million Dollars ($25,000,000)."

          (g) The first sentence of Section 3.1(b) of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:

          "Borrowers may from time to time request Eurodollar Rate Loans or may
     request that Prime Rate Loans be converted to Eurodollar Rate Loans or that
     any existing Eurodollar Rate Loans continue for an additional Interest
     Period."

          (h) Section 9.17 of the Loan Agreement is hereby amended and restated
to read in its entirety as follows:

          "9.17 Fixed Charge Coverage Ratio. On or before November 30, 2005,
     Borrowers shall provide Agent with their financial projections for the
     fiscal year ending December 31, 2006 which shall be in form and substance
     reasonably satisfactory to Agent. Agent will then reasonably establish a
     Fixed Charge Covenant Ratio covenant for Borrowers, and Borrowers shall,
     upon Agent's request, duly execute and deliver an amendment to this
     Agreement in form and substance reasonably satisfactory to Agent to set
     forth such covenant."

          (i) 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, calculated as of the last day of each month set forth
below on the basis of the trailing twelve (12) months or, if less, the number
of months that have elapsed from and including November 2004, of not less than
the amount set forth opposite such month:

<TABLE>
<CAPTION>
          Month                                         Amount
          -----                                         ------
<S>                                                   <C>
          July 2005                                   $1,000,000
          August 2005                                 $1,500,000
          September 2005                              $2,100,000
          October 2005                                $2,200,000
          November 2005                               $3,500,000
          Each month thereafter                       $3,700,000
</TABLE>

          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



                                       4

<PAGE>
        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)."

              (j)   Term. Section 14.1(a) of the Loan Agreement is hereby
amended and restated to read in its entirety as follows:

              "(a)   Unless sooner terminated pursuant to the terms hereof, this
        Agreement and the other Financing Agreements shall become effective as
        of the date set forth on the first page hereof and shall continue in
        full force and effect for a term ending on the Final Maturity Date,
        provided, that, the Final Maturity Date shall automatically be extended
        from year to year to each anniversary of the Final Maturity Date,
        subject to the following provisions. Agent or Borrowers may terminate
        this Agreement and the other Financing Agreements effective on the
        initial Final Maturity Date or on an anniversary of such Final Maturity
        Date by giving to the other party at least one hundred twenty (120) days
        prior written notice; provided, that, this Agreement and all other
        Financing Agreements must be terminated simultaneously. In addition,
        Borrowers may terminate this Agreement at any time upon ten (10) days
        prior written notice to Agent (which notice shall be irrevocable) and
        Agent may terminate this Agreement at any time during the continuance of
        an Event of Default. Upon the Final Maturity Date or any other effective
        date of termination of the Financing Agreements, Borrowers shall pay to
        Agent all outstanding and unpaid Obligations and shall furnish cash
        collateral to Agent (or at Agent's option, a letter of credit issued for
        the account of Borrowers and at Borrower's expense, in form and
        substance satisfactory to Agent, by an issuer acceptable to Agent and
        payable to Agent as beneficiary) in such amounts as Agent determines are
        reasonably necessary to secure Agent and Lenders from loss, cost, damage
        or expense, including reasonable attorneys' fees and legal expenses, in
        connection with any contingent Obligations, including issued and
        outstanding Letter of Credit Accommodations and checks or other payments
        provisionally credited to the Obligations and/or as to which Agent has
        not yet received final and indefeasible payment and any continuing
        obligations of Agent under or pursuant to any Deposit Account Control
        Agreement. The amount of such cash collateral (or letter of credit, as
        Agent may determine) as to any Letter of Credit Accommodations shall be
        in the amount equal to one hundred ten (110%) percent of the amount of
        the Letter of Credit Accommodations plus the amount of any fees and
        expenses payable in connection therewith through the end of the latest
        expiration date of the Letter of Credit Accommodations. Such payments in
        respect of the Obligations and cash collateral shall be remitted by wire
        transfer in Federal funds to the Payment Account or such other bank
        account of Agent, as Agent may, in its discretion, designate in writing
        to Borrowers for such purpose. Interest shall be due until and including
        the next business day, if the amounts so paid by the Borrowers to the
        Payment Account or other bank account designated by Agent are received
        in such bank account later than 12:00 noon, Los Angeles time."

              (k)   Early Termination Fee. Section 14.1(c) of the Loan Agreement
is hereby amended and restated to read in its entirety as follows:

              "(c)   If for any reason this Agreement is terminated prior to the
        then current Final Maturity Date (as it may have been extended), in view
        of the impracticality and extreme difficulty of ascertaining actual
        damages and by mutual agreement of the parties

                                       5
<PAGE>
     as to a reasonable calculation of Lenders' lost profits as a result
     thereof, Borrowers agree to pay to Agent for the benefit of Lenders, upon
     the effective date of such termination, an early termination fee in the
     amount set forth below if such termination is effective in the period
     indicated:


<TABLE>
<CAPTION>
              Amount                                      Period
              ------                                      ------
<S>                                        <C>
(i)  two percent (2.0%) of the             From the date hereof to and including
     Maximum Credit                        March 24, 2006

(ii) one percent (1.0%) of the             After March 24, 2006
     Maximum Credit
</TABLE>


     Such early termination fee shall be presumed to be the amount of damages
     sustained by Lenders as a result of such early termination and Borrowers
     agree that it is reasonable under the circumstances currently existing. In
     addition, Lenders shall be entitled to such early termination fee upon the
     occurrence of any Event of Default described in Sections 10.1(g) and
     10.1(h) hereof, even if Lenders do not exercise their right to terminate
     this Agreement, but elect, at their option, to provide financing to
     Borrowers or permit the use of cash collateral under the United States
     Bankruptcy Code. The early termination fee provided for in this Section
     14.1 shall be deemed included in the Obligations."

          (l)  California Judicial Reference.  The following is hereby added at
the end of Section 11.1(d) of the Loan Agreement:

          "If any action or proceeding is filed in a court of the State of
     California by or against any party hereto in connection with any of the
     transactions contemplated by this Agreement or any document related hereto,
     (a) the court shall, and is hereby directed to, make a general reference
     pursuant to California Code of Civil Procedure Section 638 to a referee or
     referees to hear and determine all of the issues in such action or
     proceeding (whether of fact or of law) and to report a statement of
     decision, provided that at the option of the Agent, any such issues
     pertaining to a 'provisional remedy' as defined in California Code of Civil
     Procedure Section 1281.8 shall be heard and determined by the court, and
     (b) Borrowers shall be solely responsible to pay all fees and expenses of
     any referee appointed in such action or proceeding."

     3.   Turnaround Consultant.  Section 3 of the Second Amendment to Loan and
Security Agreement dated as of December 30, 2004, is hereby deleted in its
entirety.

     4.   Effectiveness of this Amendment.  Agent must have received the
following items, in form and content acceptable to Agent, before this Amendment
and the waivers provided herein are 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.


                                       6


<PAGE>
          (b)  Representations and Warranties. The representations and
warranties set forth herein and in the Loan Agreement must be true and correct.

          (c)  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.

     5.   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.

     6.   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.

     7.   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 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.

     8.   Reference to and Effect on the Financing Agreements.

                                       7
<PAGE>
          (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.

     9. Integration. This Amendment, 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.

     10. 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.

                                       8
<PAGE>
     IN WITNESS WHEREOF, the parties have entered into this Amendment as of the
date first above written.


                                       ROCKFORD CORPORATION


                                       By:    /s/ Richard G. Vasek
                                              ------------------------
                                       Name:  Richard G. Vasek
                                              ------------------------
                                       Title: CFO
                                              ------------------------


                                       AUDIO INNOVATIONS, INC.


                                       By:    /s/ Richard G. Vasek
                                              ------------------------
                                       Name:  Richard G. Vasek
                                              ------------------------
                                       Title: CFO
                                              ------------------------


                                       WACHOVIA CAPITAL FINANCE
                                       CORPORATION (WESTERN),
                                       as Agent and as a Lender



                                       By:    /s/ Jeffrey K. Scott
                                              ------------------------
                                       Name:  Jeffrey K. Scott
                                              ------------------------
                                       Title: V.P.
                                              ------------------------



                                       9
<PAGE>
                         ACKNOWLEDGEMENT BY GUARANTORS

                          Dated as of August 31, 2005

     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
Third 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.

     If any action or proceeding is filed in a court of the State of California
by or against any Guarantor in connection with any of the transactions
contemplated by the Loan Agreement or any document related thereto, the court
shall, and is hereby directed to, make a general reference pursuant to
California Code of Civil Procedure Section 638 to a referee or referees to hear
and determine all of the issues in such action or proceeding (whether of fact or
of law) and to report a statement of decision, provided that at the option of
Lender, any such issues pertaining to a "provisional remedy" as defined in
California Code of Civil Procedure Section 1281.8 shall be heard and determined
by the court.

                                   ROCKFORD SINGAPORE CORPORATION



                                   By: /s/ Richard G. Vasek
                                      ----------------------------------
                                   Name: Richard G. Vasek
                                        --------------------------------
                                   Title: CFO
                                         -------------------------------



                                   ROCKFORD SALES.COM, INC.



                                   By: /s/ Richard G. Vasek
                                      ----------------------------------
                                   Name: Richard G. Vasek
                                        --------------------------------
                                   Title: CFO
                                         -------------------------------


                                       10
<PAGE>
                                        MB QUART SHANGHAI, INC.



                                        By:  /s/ Richard G. Vasek
                                            ----------------------------
                                        Name:  Richard G. Vasek
                                              --------------------------
                                        Title:  CFO
                                               -------------------------






                                       11