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                                                                   Exhibit 10.35

                      FORM OF SUBSIDIARY SECURITY AGREEMENT
                      -------------------------------------


         THIS SECURITY AGREEMENT entered into this ____ day of October, 1997, by
and between [SUBSIDIARY], having its principal office at [422 Wards Corner Road,
Loveland, Ohio 45140] ("Debtor") and THE FIFTH THIRD BANK, an Ohio banking
corporation as Agent, ("Secured Party").

         1.       GRANTING CLAUSE.

         To secure the Obligations (as defined in Section 2 hereof), Debtor
hereby grants to Secured Party a security interest in all of the property of the
type described in Exhibit A attached hereto and incorporated herein by reference
now or hereafter acquired by Debtor, including all substitutions, replacements,
additions and accessions thereto and therefor and all cash and noncash proceeds
from the sale, exchange, collection or other disposition thereof (such property
is hereinafter referred to as the "Collateral"). Terms used herein but not
otherwise defined shall have the meanings set forth in that certain Credit
Agreement dated as of October __, 1997 by and among Baldwin Piano & Organ
Company ("Baldwin"), Secured Party, as Agent and various lenders as the same may
be amended, modified, supplemented or restated from time to time (the "Credit
Agreement").

         2.       OBLIGATIONS SECURED HEREBY.

         The security interest in the Collateral granted hereby secures and
covers the payment and performance by Debtor of all of its obligations under
that certain Guaranty of Debtor in favor of the Secured Party dated as of the
date hereof (the foregoing are referred to herein as the "Obligations").

         3.       DEBTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

                  (a) COLLATERAL. Debtor hereby represents and warrants that (i)
         except for the security interest granted hereby, Debtor is, or to the
         extent that this Agreement provides that the Collateral is to be
         acquired after the date hereof will be, the owner of the Collateral
         free and clear of all liens, pledges, security interests or other
         encumbrances of any nature whatsoever; and (ii) upon execution of this
         Security Agreement and recording of applicable financing statements,
         the security interest granted hereby will be the first, best and only
         security interest in the Collateral subject to Permitted Liens.

                  (b) ENFORCEABILITY. Debtor represents and warrants that the
         execution and performance of this Security Agreement has been duly
         authorized by all appropriate action of Debtor and this Security
         Agreement has been duly executed by Debtor, delivered to 
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         Secured Party and constitute legal, valid and binding obligations of
         Debtor, enforceable against it in accordance with their respective
         terms, subject to applicable bankruptcy laws. Neither the execution or
         delivery by Debtor of this Security Agreement nor the consummation by
         Debtor of the transactions contemplated hereby nor compliance by Debtor
         with the provisions hereof, conflicts with or results in a breach of
         any of the provisions of the Articles of Incorporation or Code of
         Regulations of Debtor or of the provisions of any other agreement,
         instrument or understanding to which it is a party or by which it or
         any of its assets or properties are bound.

                  (c) PROTECTION OF COLLATERAL. (i) Debtor will keep the
         Collateral free from any lien, security interest or other encumbrance,
         other than Permitted Liens, adverse to the security interest granted
         hereby and in good order and repair and will not waste or destroy the
         Collateral or any part thereof; (ii) Debtor will not use the Collateral
         in violation of any statute, ordinance or regulation; (iii) in
         accordance with the terms and conditions of the Credit Agreement and
         applicable to Debtor to the same extent as applicable to Baldwin
         therein, Secured Party may examine and inspect the Collateral at any
         time, wherever located; (iv) Debtor will at any time and from time to
         time execute and deliver all such supplements and amendments hereto and
         all such financing statements, continuation statements, instruments of
         further assurance and other instruments and will take such other
         action, as the Secured Party reasonably requests and reasonably deems
         necessary or advisable to (a) grant Secured Party a security interest
         in all or any portion of the Collateral, (b) maintain or preserve the
         lien of this Agreement to carry out more effectively the purpose
         hereof, (c) perfect, publish notice of or protect the validity of or of
         any grant made or to be made by this Agreement, (d) enforce this
         Agreement, or (e) preserve and defend the Collateral and the rights of
         the Secured Party therein against the claims and demands of all persons
         and entities claiming the same or any interest therein.

                  (d) PERFORMANCE OF OBLIGATIONS. Debtor will punctually perform
         and observe all of the Obligations.

                  (e) MAINTENANCE AND INSPECTION OF RECORDS. In accordance with
         the terms and conditions of the Credit Agreement and applicable to
         Debtor to the same extent as applicable to Baldwin therein, Debtor will
         maintain accurate and complete records in respect of the Collateral and
         shall at all reasonable times allow Secured Party by any officer,
         employee or agent to examine, audit or inspect (including making
         extracts from) such records and to arrange for verification of the
         Collateral. Debtor also agrees to furnish such information or reports
         relating to the Collateral as Secured Party may from time to time
         reasonably request.

                  (f)   INSURANCE AND TAXES.

                           (i) INSURANCE OF COLLATERAL. In accordance with the
                  terms and conditions of the Credit Agreement and applicable to
                  Debtor to the same extent as applicable to 


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                  Baldwin therein, Debtor agrees to maintain insurance at all
                  times with respect to the Collateral and to deliver to Secured
                  Party, upon Secured Party's request, all such policies of
                  insurance. Such insurance policies shall comply with the
                  requirements of the Loan Agreement and applicable to Debtor to
                  the same extent as applicable to Baldwin therein and contain
                  such terms, be in such form, for such periods and be written
                  by such companies as are reasonably satisfactory to Secured
                  Party and shall be payable to Secured Party and Debtor as
                  their interests may appear. All policies of insurance shall
                  provide for not less than thirty (30) days written notice to
                  Secured Party prior to any cancellation of such policies.
                  Debtor hereby makes, constitutes and appoints Secured Party as
                  its true and lawful attorney-in-fact for it and in its name
                  and place for the purpose of obtaining, adjusting, settling
                  and canceling such policies of insurance and endorsing any
                  drafts in respect thereof. The rights, powers and authority of
                  Secured Party herein granted shall commence and be in effect
                  on the date of this Agreement and shall remain in full force
                  and effect thereafter until the Obligations have been paid and
                  performed in full. If Debtor fails to maintain such insurance,
                  Secured Party may, at its option, maintain such insurance and
                  all premiums so paid by Secured Party will be payable upon
                  Secured Party's demand and until paid by Debtor will accrue
                  interest at the highest rate of interest provided for in the
                  Note.

                           (ii) PAYMENT OF TAXES AND ASSESSMENTS. In accordance
                  with the terms of the Credit Agreement and applicable to
                  Debtor to the same extent as applicable to Baldwin therein,
                  Debtor agrees to promptly pay when due all taxes and
                  assessments imposed on or with respect to all the Collateral.
                  If such taxes and assessments are not paid when due, the
                  Secured Party may do so for Debtor's account and all
                  expenditures so paid by Secured Party will be added to the
                  principal balance of the Note, will be payable upon Secured
                  Party's demand and until paid by Debtor will accrue interest
                  at the highest rate of interest provided for in the Note.

                  (g) LOCATION OF COLLATERAL. Debtor covenants that the
         Collateral will be kept at all times on the premises of the real estate
         referred to in Exhibit A of this Agreement (the "Premises"), and Debtor
         will not hold Collateral at locations other than the Premises, except,
         in each case, to the extent that such Collateral is Inventory in
         transit; provided, however, as contemplated by and provided for in
         Section 1 hereof, Secured Party agrees that Debtor may, at any time and
         from time to time, substitute or replace the Collateral ("Substituted
         or Replaced Collateral") with Collateral of equal or greater value and
         that Debtor may, in connection with each such substitution or
         replacement, remove the Substituted or Replaced Collateral from such
         premises.

                  (h) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
         representations and warranties made by Debtor in this Security
         Agreement shall survive the execution and 




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         delivery of this instrument until such time as the Note and all other
         Obligations shall have been paid or otherwise satisfied in full.

         4.       DEBTOR'S RIGHTS WITH RESPECT TO COLLATERAL.

         Unless and until the occurrence of an Event of Default, Debtor shall
have the right to utilize the Collateral in the ordinary course of its business
and to substitute or replace the Collateral in accord with Section 3g hereof,
but shall not have the right to sell, lease or otherwise dispose of or transfer
the Collateral or any interest therein without the prior written consent of
Secured Party; provided, however, so long as an Event of Default shall not have
occurred and be continuing, any portion of the Collateral which constitutes
inventory or accounts receivable may be sold or transferred in the ordinary
course of business consistent with the past business practices of Debtor.

         5.       EVENTS OF DEFAULT AND REMEDIES.

                  (a) RIGHTS AND REMEDIES UPON DEFAULT. If any Event of Default
         under the Loan Agreement shall have occurred and be continuing, Secured
         Party may proceed to protect and enforce its rights under this
         Agreement by suit in equity, action at law or any other appropriate
         proceeding and Secured Party shall have, without limitation, all of the
         rights and remedies provided by applicable law, including, without
         limitation, the rights and remedies of a secured party under the
         Uniform Commercial Code of the state governing disposition of the
         Collateral. Debtor shall be liable for any deficiency remaining after
         the collection of the Collateral and application of the proceeds to the
         Obligations to the fullest extent permitted by applicable law.


                  (b) POWER OF ATTORNEY WITH RESPECT TO THE COLLATERAL. Secured
         Party shall have the right upon the occurrence of an Event of Default
         with respect to the payment of the Obligations, whether as scheduled,
         by acceleration, or otherwise, to notify account debtors of its
         security interest in the Accounts and to require payments to be made
         directly to Secured Party at such address or in such manner as Secured
         Party may deem appropriate. Upon request of Secured Party at any time,
         Borrowers will so notify the account debtors and will indicate on all
         billings to the account debtors that the Accounts are payable to
         Secured Party. To facilitate direct collection, Debtor hereby appoints
         Secured Party and any officer or employee of Secured Party, as the
         agent to (i) receive, open and dispose of all mail addressed to Debtor
         and take therefrom any payments on or proceeds of other arrangements,
         in which Debtor shall cooperate, to receive Debtor's mail, including
         notifying the post office authorities to change the address for
         delivery of mail addressed to Debtor to such address as Secured Party
         shall designate, (ii) endorse the name of Debtor in favor of Secured
         Party upon any and all checks, drafts, money orders, notes, acceptances
         or other evidences or payment or Collateral that may come into Secured
         Party's possession, (iii) sign and endorse the name of Debtor on any
         invoice or bill of lading relating to any of the Accounts, on
         verifications of 




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         Accounts sent to any Debtor, to drafts against account debtors, to
         assignments of Accounts and to notices to account debtors, and (iv) do
         all acts and things necessary to carry out this Agreement, including
         signing the name of Debtor on any instruments required by law in
         connection with the transactions contemplated hereby and on financing
         statements as permitted by the Uniform Commercial Code. Debtor hereby
         ratifies and approves all acts of such attorneys-in-fact, and neither
         Secured Party nor any other such attorney-in-fact shall be liable for
         any acts of commission or omission, or for any error of judgment or
         mistake of fact or law. This power, being coupled with an interest, is
         irrevocable so long as any of the Obligations remain unsatisfied.

                  Secured Party shall not, under any circumstances, be liable
         for any error or omission or delay of any kind occurring in the
         settlement, collection or payment of any Accounts or any instrument
         received in payment thereof or for any damage resulting therefrom
         except for such acts or omissions resulting from Secured Party's gross
         negligence or willful misconduct. Upon the occurrence of an Event of
         Default, Secured Party may, without notice to or consent from Debtor,
         sue upon or otherwise collect, extend the time of payment of, or
         compromise or settle for cash, credit or otherwise upon any terms, any
         of the Accounts or any securities, instruments or insurance applicable
         thereto and/or release the obligor thereon. Secured Party is authorized
         to accept the return of the goods represented by any of the Accounts
         without notice to or consent by Debtor, or without discharging or any
         way affecting the Obligations hereunder.

                  Secured Party shall not be liable for or prejudiced by any
         loss, depreciation or other damage to Accounts or other Collateral
         unless caused by Secured Party's gross negligence or willful
         misconduct, and Secured Party shall have no duty to take any action to
         preserve or collect any Account or other Collateral.

                  (c) DISTRIBUTION OF COLLATERAL. Upon enforcement of this
         Agreement following the occurrence of an Event of Default, the proceeds
         of the Collateral shall be applied as received from time to time by the
         Secured Party as follows:

                           FIRST: To the payment of all costs and expenses
                  incurred or accrued by the Secured Party (including the fees
                  and expenses of its attorneys, appraisers and agents) in
                  connection with any proceeding commenced to enforce this
                  Security Agreement or in connection with the taking, holding,
                  maintaining, preparing for sale, selling and the like of the
                  Collateral.

                           SECOND: To the payment of all amounts then due and
                  payable on the Note (first to the payment of delinquency
                  charges, then to the payment of default charges, then to the
                  payment of accrued interest and then to the payment of unpaid
                  principal).




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                           THIRD: To the payment of any surplus to Debtor or any
                  other person or entity legally entitled thereto.

                  (d) COSTS AND EXPENSES. Borrower absolutely and
         unconditionally agrees to pay to Secured Party upon demand by Secured
         Party all reasonable out-of-pocket costs and expenses which shall be
         incurred or sustained by Secured Party or any of its directors,
         officers, employees or agents as a consequence of, on account of, in
         relation to or any way in connection with the exercise, protection or
         enforcement (whether or not suit is instituted) any of its rights,
         remedies, powers or privileges under this Agreement or any of the Loan
         Documents or in, to or under all or any part of the Collateral or in
         connection with any litigation, proceeding or dispute in any respect
         related to this Agreement or any of the Loan Documents (including, but
         not limited to, all of the reasonable fees and disbursements of
         consultants, legal advisers, accountants, experts and agents for
         Secured Party, the reasonable travel and living expenses away from home
         of employees, consultants, experts or agents of Secured Party, and the
         reasonable fees of agents, consultants and experts not in the full-time
         employ of Secured Party for services rendered on behalf of Secured
         Party).

                  (e) Debtor hereby confirms to Secured Party the continuing and
         immediate right of set-off of Secured Party with respect to all
         deposits, balances and other sums credited by or due from Secured Party
         or any of the offices or branches of Secured Party to Debtor, which
         right is in addition to any other rights which Secured Party may have
         under applicable law. Regardless of the adequacy of any Collateral, if
         any principal, interest or other sum payable by Debtor to Secured Party
         under the Note or any of the Loan Documents is not paid to Secured
         Party punctually when the same shall first become due and payable
         (after giving effect to any applicable grace period), or if any Event
         of Default shall at any time occur, any deposits, balances or other
         sums credited by or due from Secured Party or any of the offices or
         branches of Secured Party to Debtor may, without any prior notice of
         any kind to Debtor or compliance with any other conditions precedent
         now or hereafter imposed by statute, rule or law or otherwise (all of
         which are hereby expressly and irrevocably waived by Debtors to the
         extent permitted by law), be immediately set off, appropriated and
         applied by Secured Party toward the payment and satisfaction of the
         Obligations (but not to any other obligations of such Debtor to Secured
         Party until all of the Obligations have been paid in full) in such
         order and manner as Secured Party (in its sole and complete discretion)
         may determine.

         6.       NO WAIVER; CUMULATIVE REMEDIES.

         Secured Party shall not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder and no waiver
shall be valid unless in writing, signed by the Secured Party, and then only to
the extent therein set forth. A waiver by Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Secured Party would otherwise have had on any future occasion. No
failure to exercise or any delay in exercising on the part of Secured Party any
right, power or privilege hereunder, shall operate 





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as a waiver thereof; nor shall any single or partial exercise of any right,     
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights and remedies
provided by law.

         7.       SEVERABILITY OF PROVISIONS.

         The provisions of this Security Agreement are severable, and if any
clause or provision hereof shall be held invalid or unenforceable in whole or in
part, then such invalidity or unenforceability shall attach only to such clause
or provision, or part thereof and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision in this
Security Agreement in any jurisdiction.

         8.       AMENDMENTS; CHOICE OF LAW; BINDING EFFECT.

                  (a) None of the terms or provisions of this Security Agreement
         may be altered, modified or amended except by an instrument in writing,
         duly executed by each of the parties hereto.


                  (b) This Security Agreement shall be governed by and be
         construed and interpreted in accordance with the laws of the State of
         Ohio.

                  (c) This Security Agreement shall be binding upon and inure to
         the benefit of the parties hereto and their respective successors and
         assigns.

         9.       NOTICES.

         All notices and demands hereunder shall be deemed to have been
delivered if made in accordance with the Credit Agreement. Such notices, if to
Secured Party, shall be to it at its address set forth therein, or if to Debtor,
shall be to it in care of Baldwin at Baldwin's address set forth in the Credit
Agreement. Either of the foregoing parties may change its address for notices
hereunder by giving notice of such change to the other party in accordance with
the provisions of the Credit Agreement.

         10.      HEADINGS.

         The descriptive headings herein used are for convenience only and shall
not be deemed to limit or otherwise effect the construction of any provisions
hereof.



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         11.      COUNTERPART EXECUTION.

         Security Agreement may be executed in several counterparts each of
which together shall constitute one and the same agreement.

         12.      DEFEASANCE CLAUSE.

         If the Debtor shall pay the Note secured by this Agreement and perform
the other Obligations, then this Agreement and the security interest in the
Collateral granted hereby shall be void and terminated and Secured Party agrees
to execute such documents and do such acts as are necessary to release and
terminate such liens.

      [Remainder of page intentionally left blank. Signature page follows.]


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         IN WITNESS WHEREOF, the undersigned have caused this Security Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized, at _________________________ on the day and year first above
written.


WITNESSES:                                      DEBTOR


                                                [SUBSIDIARY]




                                                By:
-----------------------------                      ---------------------------
                                                Name:
                                                     -------------------------
                                                Title:
-----------------------------                         ------------------------



                                                AGENT

                                                THE FIFTH THIRD BANK, AS AGENT



                                                By:
-----------------------------                      ---------------------------
                                                Name:
                                                     -------------------------
                                                Title:
-----------------------------                         ------------------------

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