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                         MORTGAGE AND SECURITY AGREEMENT



         This Mortgage and Security Agreement ("Mortgage") made as of August 31,

2000 between ONKYO AMERICA,  INC., an Indiana corporation,  having its principal

office  at 3030  Barker  Drive,  Columbus,  Indiana  47201  (together  with  its

successors and assigns  "Mortgagor"),  and GMAC BUSINESS CREDIT, LLC, a Delaware

limited  liability  company,   having  its  principal  office  at  300  Galleria

Officentre, Suite 110, Southfield, Michigan 48034 ("Mortgagee"), in its capacity

as agent for the Lenders (as defined below).



                              W I T N E S S E T H:

                               - - - - - - - - - -



         WHEREAS,  Mortgagor,  as  successor  by  merger  to  Onkyo  Acquisition

Corporation, an Indiana corporation,  entered into that certain Credit Agreement

dated as of August 31, 2000 (as amended, modified or restated from time to time,

the "Credit  Agreement")  with the  Mortgagee  in its  capacity as agent for the

lenders party thereto (the  "Lenders"),  and the Lenders,  pursuant to which the

Lenders have made a loan to  Mortgagor  and agreed to make  additional  loans to

Mortgagor in the  aggregate  principal  amount of Thirty One Million Two Hundred

Thirty Thousand and 00/100 Dollars  ($31,230,000.00)  (the "Loan"), as evidenced

by (i) those certain Revolving Notes of even date herewith executed by Mortgagor

in favor of the  Lenders in the  maximum  aggregate  principal  amount of Twenty

Million and 00/100 Dollars ($20,000,000.00) (as amended, modified,  substituted,

or restated from time to time, the "Revolving  Notes"),  (ii) those certain Term

Notes  executed by Mortgagor  in favor of the Lenders in the original  principal

amount of up to Five  Million Two Hundred  Thirty  Thousand  and 00/100  Dollars

($5,230,000.00)  (as amended,  modified,  substituted  or restated  from time to

time,  the "Term Note As"),  and (iii)  those  certain  Term Notes  executed  by

Mortgagor in the original  aggregate  principal amount of Six Million and 00/100

Dollars ($6,000,000.00) (as amended, modified, substituted or restated from time

to time,  the "Term Note Bs") (the  Revolving  Notes,  each Term Note A and each

Term Note B, as each may be amended, substituted, restated or modified from time

to time,  are  hereafter  collectively  referred  to as, the  "Notes"),  whereby

Mortgagor  promises to pay the said principal  amount, or so much thereof as may

be  advanced  by the holder or holders of the Notes from time to time,  together

with  interest  thereon,  from the time and at the rate set forth therein at the

office of  Mortgagee,  or at such other place as may be designated in writing by

the legal holder or holders thereof, until August 30, 2003 (the "Maturity Date")

at which time the principal sums secured hereby and all accrued interest thereon

shall immediately become due and payable; and



         WHEREAS,  it was an express  condition to  Mortgagee,  on behalf of the

Lenders,  consenting to the  aforesaid  merger under the Credit  Agreement,  and

permitting  Mortgagor to assume the liabilities  and obligations  thereof and to

receive the benefits of the financing  thereof,  that Mortgagor  enter into this

Mortgage.



         NOW, THEREFORE,  Mortgagor,  to secure (i) the payment of all principal

and  interest  as and when the same  become  due and  payable  under  the  Notes

(whether by lapse of time,  acceleration or otherwise);  (ii) the payment of all

other  indebtedness,  obligations  and liabilities  which this Mortgage  secures

pursuant to any of its terms,  including  but not limited to, all  indebtedness,

obligations and liabilities of Mortgagor after giving effect to the Merger;  and

(iii) the  performance of all covenants and agreements  (and the accuracy of all

representations  and  warranties)  contained  in this  Mortgage and in any other

instrument  securing  the  Notes  including,   without  limitation,  the  Credit

Agreement  (the  Notes,  the  Credit  Agreement,  this  Mortgage  and any  other

instrument  securing the Notes or executed and delivered in connection  with the

indebtedness   represented   by  the  Notes,   together  with  any   amendments,

modifications or restatements thereof, are hereinafter  collectively referred to

as the "Loan Documents"),  does hereby Mortgage and Warrant unto Mortgagee,  its

successors and assigns forever,  the real estate described on Exhibit A attached

hereto and all of its  estate,  right,  title and  interest  therein  (the "Real

Estate")  situated,  lying  and  being  in  the  City  of  Columbus,  County  of

Bartholomew, and State of Indiana, together with all of Mortgagor's right, title

and interest in and to the following described property now owned or hereinafter

acquired  (which  property,  together  with the  Real  Estate,  is  collectively

referred to as, the "Premises"), to wit:



(1) any  after-acquired  title or  reversion  in and to the beds of any  vaults,

streets, avenues, alleys and other passageways adjoining the Real Estate.



(2) all estates,  appurtenances,  tenements,  easements,  licenses,  franchises,

royalties and hereditaments, all gas, oil and mineral rights and privileges, all

riparian,  irrigation  and drainage  rights and privileges and all other rights,

liberties and  privileges  thereof or in any way now or hereafter  appertaining,

including any after-acquired  title,  franchise or license and the reversion and

reversions and remainder and remainders  thereof,  relating to or benefiting the

Real Estate;



(3) all of Mortgagor's interest and rights as lessor in and to all leases now or

hereafter  affecting  the  Premises or any part  thereof and all rents,  issues,

proceeds and profits  accruing and to accrue from the Premises,  whether payable

pursuant  to any  present  or  future  lease  or  otherwise  growing  out of any

occupancy or use of the Premises  (which are pledged  primarily  and on a parity

with the Real Estate and not secondarily);



(4) all proceeds or sums payable in lieu of or as  compensation  for the loss of

or damage to the Premises,  all rights in and to all present and future fire and

other hazard insurance policies  pertaining to the Premises,  any and all monies

or other assets (including  prepaid  insurance  policies) at any time on deposit

with Mortgagee or a depository  designated by Mortgagee (whether deposited by or

on behalf of Mortgagor or anyone else) pursuant to any of the provisions of this

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