<PAGE>   1

                                                                    EXHIBIT 10.2

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                                 LOAN AGREEMENT


                                  BY AND AMONG


                         BALDWIN PIANO & ORGAN COMPANY,

                                    BORROWER,


                              THE FIFTH THIRD BANK,

                                     AGENT,

                                       AND

                            THE FIFTH THIRD BANK AND
                                 NBD BANK, N.A.,

                                     LENDERS







                                  MAY 15, 1998


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AMENDED AND RESTATED TERM LOAN AGREEMENT                               
Baldwin Piano & Organ Company



<PAGE>   2




                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                 Page
<S>              <C>                                                                                             <C>
ARTICLE 1.        RECITALS........................................................................................1

ARTICLE 2.        INTERPRETATION..................................................................................1
         Section 2.1       Provisions Pertaining to Definitions...................................................1
         Section 2.2       Definitions............................................................................2

ARTICLE 3.        THE LOANS......................................................................................12
         Section 3.1       Commitments...........................................................................12
         Section 3.2       Term Loan.............................................................................12
         Section 3.3       The Notes.............................................................................12
         Section 3.4       Interest and Principal Payable on the Loans; Fees; Maturity...........................13
                   (a)     Interest..............................................................................13
                   (b)     Principal and Interest Payments.......................................................13
                   (c)     Fees..................................................................................13
                   (d)     Maturity..............................................................................14
         Section 3.5       Billing Statement.....................................................................14
         Section 3.6       Loan Proceeds.........................................................................14
         Section 3.7       Increased Cost........................................................................14
                   (a)     Increased Costs.......................................................................14
                   (b)     Dollar Deposits Unavailable or Interest Rate Unascertainable..........................15
                   (c)     Changes in Law Rendering LIBOR Loans Unlawful.........................................15
                   (d)     Capital Adequacy......................................................................15
                   (e)     Discretion as to Manner of Funding....................................................16
         Section 3.8       Advancements..........................................................................16
         Section 3.9       All Loans One Obligation..............................................................17
         Section 3.10      Payments of Principal and Interest....................................................17
         Section 3.11      Collection Days.......................................................................17
         Section 3.12      Application of Funds..................................................................17
                   (a)     No Default............................................................................17
                   (b)     Default...............................................................................17
         Section 3.13      Use of Proceeds.......................................................................18
                   (a)     Permitted Uses of Loan Proceeds.......................................................18
                   (b)     Prohibited Uses.......................................................................18
         Section 3.14      Additional Costs, Etc.................................................................18
         Section 3.15      LIBOR Break Funding Costs.............................................................18

ARTICLE 4.        SECURITY FOR THE OBLIGATIONS...................................................................18
         Section 4.1       Grant of Security Interest............................................................18
         Section 4.2       Future Advances.......................................................................19
         Section 4.3       Financing Statements..................................................................19
         Section 4.4       Guaranties............................................................................19
</TABLE>


AMENDED AND RESTATED TERM LOAN AGREEMENT
Baldwin Piano & Organ Company
<PAGE>   3


                                       ii



<TABLE>
<CAPTION>
<S>              <C>                                                                                            <C>
         Section 4.5       Further Assurances....................................................................19

ARTICLE 5.        CONDITIONS PRECEDENT...........................................................................20
         Section 5.1       Conditions Precedent..................................................................20
                   (a)     Real Property; Fixtures...............................................................20
                   (b)     Agent's Counsel.......................................................................20
                   (c)     Material Change.......................................................................20
                   (d)     Perfected Liens.......................................................................20
                   (e)     Insurance.............................................................................20
                   (f)     Laws..................................................................................21
                   (g)     Certificate of Good Standing..........................................................21
                   (h)     Opinion of Baldwin's Counsel..........................................................21
                   (i)     Lien  Searches........................................................................21
                   (j)     Other Documents.......................................................................21
                   (k)     Officer's Certificate.................................................................21
                   (l)     Secretary's Certificate of Resolution and Incumbency..................................21
                   (m)      Guaranties...........................................................................22
                   (n)     Payoff................................................................................22

ARTICLE 6.        REPRESENTATIONS AND WARRANTIES.................................................................22
         Section 6.1       Financial Statements..................................................................22
         Section 6.2       Non-Existence of Defaults.............................................................23
         Section 6.3       Litigation............................................................................23
         Section 6.4       Material Adverse Changes..............................................................23
         Section 6.5       Title to Collateral...................................................................23
         Section 6.6       Corporate Status......................................................................23
         Section 6.7       Subsidiaries..........................................................................23
         Section 6.8       Power and Authority...................................................................23
         Section 6.9       Place of Business.....................................................................24
         Section 6.10      Enforceability of the Loan Documents..................................................24
         Section 6.11      Taxes.................................................................................24
         Section 6.12      Compliance with Laws..................................................................24
         Section 6.13      Consents..............................................................................24
         Section 6.14      Purpose...............................................................................24
         Section 6.15      Condition of the Business.............................................................24
         Section 6.16      Capital...............................................................................24
         Section 6.17      Location of Collateral................................................................25
         Section 6.18      Environmental, Health and Safety Matters..............................................25
         Section 6.19      Intellectual Property:  Patents.  Copyrights. Trademarks. Etc.........................25
         Section 6.20      Employee Benefit Plans................................................................25
         Section 6.21      Solvency..............................................................................26
         Section 6.22      Leases................................................................................26
         Section 6.23      Labor Relations.......................................................................26
         Section 6.24      Business Locations; Agent for Process.................................................26
</TABLE>


AMENDED AND RESTATED TERM LOAN AGREEMENT
Baldwin Piano & Organ Company
<PAGE>   4


                                       iii


<TABLE>
<CAPTION>
<S>                        <C>                                                                                 <C>
         Section 6.25      General Collateral Representation.....................................................26
         Section 6.26      Survival of  Representations and Warranties...........................................27

ARTICLE 7.        BALDWIN'S COVENANTS............................................................................27
         Section 7.1       Affirmative Covenants.................................................................27
                   (a)     Payment and Performance...............................................................27
                   (b)     Insurance.............................................................................27
                   (c)     Notice of Litigation and Proceedings..................................................28
                   (d)     Payment of Indebtedness to Third Persons..............................................28
                   (e)     Notice of Change of Business Location.................................................28
                   (f)     Payment of Taxes......................................................................29
                   (g)     Employee Benefit Plans and Guaranteed Pension Plans...................................29
                   (h)     Further Assurances....................................................................29
                   (i)     Maintenance of Status.................................................................30
                   (j)     Financial Statements; Reporting Requirements; Certification as to Defaults............30
                   (k)     Notice of Existence of Default........................................................31
                   (l)     Compliance with Laws..................................................................31
                   (m)     Maintenance of Collateral.............................................................31
                   (n)     Reimbursement for Bank Charges........................................................31
         Section 7.2       Negative Covenants....................................................................31
                   (a)     Change of Name. Etc...................................................................32
                   (b)     Sale or Transfer of Assets............................................................32
                   (c)     Encumbrance of Assets.................................................................32
                   (d)     Acquisition of Stock or Assets; New Subsidiaries......................................32
                   (e)     False Certificates or Documents.......................................................32
                   (f)     Assignment............................................................................32
                   (g)     Transactions with Affiliates..........................................................32
                   (h)     Loans by Baldwin......................................................................32
                   (i)     Fiscal Year...........................................................................33
                   (j)     Total Indebtedness....................................................................33
                   (k)     Adverse Transactions..................................................................33
                   (l)     Guaranties............................................................................34
                   (m)     Margin Securities.....................................................................34
                   (n)     Leases................................................................................34
                   (o)     Tax Consolidation.....................................................................34
                   (p)     Stock Redemption......................................................................34
         Section 7.3       Financial Covenants...................................................................34
                   (a)     Amounts...............................................................................34
                   (b)     Limitations on Capital Expenditures...................................................35
                   (c)     Covenant Compliance Certificate.......................................................36

ARTICLE 8.        DEFAULT/REMEDIES...............................................................................36

ARTICLE 9.        SALE OF COLLATERAL.............................................................................39
</TABLE>



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   5


                                       iv


<TABLE>
<S>                       <C>                                                                                  <C>
ARTICLE 10.       INDEMNIFICATIONS...............................................................................39
         Section 10.1      General Indemnity.....................................................................39
         Section 10.2      Environmental and Safety and Health Indemnity.........................................40

ARTICLE 11.       CONCERNING THE AGENT AND THE LENDERS...........................................................40
         Section 11.1      Appointment of the Agent..............................................................40
         Section 11.2      Authority.............................................................................40
         Section 11.3      Acceptance of Appointment.............................................................41
         Section 11.4      Collateral Matters....................................................................41
                   (a)     Release of Collateral.................................................................41
                   (b)     Confirmation of Authority; Execution of Releases......................................41
                   (c)     Absence of Duty.......................................................................42
         Section 11.5      Agency for Perfection.................................................................42
         Section 11.6      Application of Moneys.................................................................42
         Section 11.7      Reliance by the Agent.................................................................43
         Section 11.8      Exculpatory Provisions................................................................43
         Section 11.9      Action by the Agent...................................................................43
         Section 11.10     Amendments, Waivers and Consents......................................................44
         Section 11.11     Indemnification.......................................................................44
         Section 11.12     Reimbursement of the Agent............................................................45
         Section 11.13     Sharing of Funds Received.............................................................45
         Section 11.14     Dealing with Lenders..................................................................45
         Section 11.15     Agent as Lender.......................................................................45
         Section 11.16     Duties Not to be Increased............................................................45
         Section 11.17     Lender Credit Decisions...............................................................46
         Section 11.18     Resignation of Agent..................................................................46
         Section 11.19     Assignment of Notes; Participation....................................................46

ARTICLE 12.       OTHER TERMS....................................................................................47
         Section 12.1      Amendment Changes and Modification....................................................47
         Section 12.2      Binding Effect........................................................................47
         Section 12.3      Broker Fee............................................................................47
         Section 12.4      Entire Agreement......................................................................47
         Section 12.5      Headings..............................................................................48
         Section 12.6      Incorporation by Reference............................................................48
         Section 12.7      Interpretation........................................................................48
         Section 12.8      Governing Law;  Jurisdiction and Venue................................................48
         Section 12.9      Waiver of Jury Trial..................................................................48
         Section 12.10     Notices...............................................................................49
         Section 12.11     No Third Party Beneficiary Rights and Reliance........................................50
         Section 12.12     Protection or Preservation of Collateral..............................................50
         Section 12.13     Relationship of the Parties...........................................................50
         Section 12.14     Reversal of Payments..................................................................50
</TABLE>



AMENDED AND RESTATED TERM LOAN AGREEMENT                 
Baldwin Piano & Organ Company


<PAGE>   6

                                       v


<TABLE>
<S>                           <C>                                                                              <C>
         Section 12.15     Severability..........................................................................50
         Section 12.16     Maximum Interest......................................................................50
         Section 12.17     Waivers by the Lenders................................................................51
         Section 12.18     Survival..............................................................................51
         Section 12.19     Participations; Assignments...........................................................51
         Section 12.20     Counterparts..........................................................................51
         Section 12.21     Information...........................................................................51
         Section 12.22     Miscellaneous.........................................................................51
         Section 12.23     Waivers by Baldwin....................................................................52
         Section 12.24     No Oral Agreements....................................................................52
         Section 12.25     Supplement............................................................................52
         Section 12.26     Use of Counsel and Receipt of Loan Agreement..........................................52
         Section 12.27     Facsimiles, Etc.......................................................................52
         Section 12.28     Power of Attorney.....................................................................52
         Section 12.29     Expenses..............................................................................53
</TABLE>




AMENDED AND RESTATED TERM LOAN AGREEMENT       
Baldwin Piano & Organ Company



<PAGE>   7





                    AMENDED AND RESTATED TERM LOAN AGREEMENT


         THIS AMENDED AND RESTATED TERM LOAN AGREEMENT (this "Loan Agreement" or
this "Agreement") dated as of May 15, 1998 is by and among BALDWIN PIANO & ORGAN
COMPANY, a Delaware corporation, (hereinafter, together with its successors in
title and assigns called "Borrower" or "Baldwin"), THE FIFTH THIRD BANK, an Ohio
banking corporation, as Agent (in such capacity, the "Agent"), THE FIFTH THIRD
BANK ("Fifth Third"), as a Lender, and NBD BANK, N.A., a national banking
association, ("NBD") as a Lender, (Fifth Third and NBD are hereinafter
collectively the "Lenders" and each individually a "Lender").


                                   ARTICLE 1.

                                    RECITALS

         WHEREAS, Fifth Third and Baldwin have entered into a General Loan and
Security Agreement dated as of June 15, 1989, as amended by an Amended and
Restated General Loan and Security Agreement dated as of February 24, 1994
(collectively, the "Original Loan Agreement" );

         WHEREAS, Baldwin has requested that Fifth Third amend and restate the
Original Loan Agreement, pursuant to the terms herein, to provide Baldwin with a
loan for working capital purposes;

         WHEREAS, Fifth Third has agreed to amend and restate the Original Loan
Agreement and now wishes to assign to NBD part of the rights and obligations of
Fifth Third under the Original Loan Agreement, as amended, with respect to the
Loan, as hereinafter defined, in an amount equal to Five Million and 00/100
Dollars ($5,000,000.00) on the terms and subject to the conditions set forth
herein, and NBD wishes to accept such assignment of rights and to assume such
obligations from Fifth Third on such terms and subject to the conditions set
forth herein; and

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




AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   8
                                       2



                                   ARTICLE 2.

                                 INTERPRETATION

         Section 2.1 Provisions Pertaining to Definitions. For all purposes of
this Loan Agreement (except where such interpretations would be inconsistent
with the context or the subject matter):

                  (a) The expression "this Loan Agreement" shall mean this Loan
         Agreement, as amended and restated, (including all of the Schedules and
         Exhibits annexed hereto) as originally executed, or, if supplemented,
         amended or restated from time to time, as so supplemented, amended or
         restated. All references to Schedules and Exhibits refer to the
         Schedules and Exhibits attached hereto, unless otherwise indicated;

                  (b) Where appropriate, words importing the singular only shall
         include the plural and vice versa, and all references to dollars shall
         be United States Dollars; and

                 (c) Accounting terms not otherwise defined herein shall have
         the meanings customarily given in accordance with GAAP (as hereinafter
         defined) and all financial computations or determinations to be made
         under this Loan Agreement shall, unless otherwise specifically provided
         herein, be made in accordance with the financial statements delivered
         pursuant to Section 7.1(j) and shall be made on a consolidated basis.

         Section 2.2       Definitions.

                  "Accounts" shall have the meaning given to that term in the
         UCC and, to the extent not included therein, shall also mean all
         accounts, leases, contract rights, chattel paper, general intangibles,
         chooses in action and instruments, including any Lien or other security
         interest that secures or may secure any of the foregoing, plus all
         books, invoices, documents and other records in any form evidencing or
         relating to any of the foregoing, now owned or hereafter acquired by
         Baldwin; provided, however, that KAC Accounts shall not constitute
         "Accounts" under this Loan Agreement or the other Loan Documents.

                  "Affiliates" shall mean: (i) any individual who is an officer
         or director of a Person; and (ii) any Person who directly or indirectly
         controls, is controlled by, or is under common control or ownership
         with, a Person. For the purposes of this definition, the term "control"
         shall mean the ownership of or the ability to direct or control 10% or
         more of the beneficial interest in the applicable entity.

                  "Baldwin/KAC Purchase Agreement" means the Retail Accounts
         Receivable Purchase Agreement dated as of October 1, 1990 among
         Baldwin, The Wurlitzer Company and KAC, as amended, supplemented or
         otherwise modified from time to time with the written consent of Agent.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   9


                                       3

                  "Business" shall mean the manufacture and distribution of
         keyboard musical instruments, contract furniture, contract music,
         contract electronics and other similar business in which Borrower may
         engage from time to time.

                  "Business Day" shall mean any day on which banks are open for
         business in Cincinnati, Ohio.

                  "Capital Expenditure" shall mean any amount debited to the
         fixed asset account on the consolidated balance sheet of Baldwin and
         the Subsidiaries in respect of: (a) the acquisition (including. without
         limitation, acquisition by entry into a capitalized lease),
         construction, improvement, replacement or betterment of land,
         buildings, machinery, equipment or of any other fixed assets or
         leaseholds, and (b) to the extent related to and not included in clause
         (a), materials, contract labor and direct labor (excluding expenditures
         properly chargeable to repairs or maintenance in accordance with GAAP).

                  "Capital Lease" means any lease of Property which has been or
         is required to be capitalized on a Borrower's financial statements in
         accordance with GAAP.

                  "Closing Date" means the day on which the Loans are amended
         pursuant to this Agreement.

                  "Collateral" shall mean all items described in Section 4.1.

                  "Contingent Obligation" means any direct or indirect
         liability, contingent or otherwise, with respect to any Indebtedness,
         lease, dividend, letter of credit, banker's acceptance or other
         obligation of another if the primary purpose or intent thereof in
         incurring the Contingent Obligation is to provide assurance to the
         obligee of such obligation of another that such obligation of another
         will be paid or discharged, or that any agreements relating thereto
         will be complied with, or that the holders of such obligation will be
         protected (in whole or in part) against loss in respect thereof.
         Contingent Obligations shall include, without limitation, (i) the
         direct or indirect guaranty, endorsement (otherwise than for collection
         or deposit in the ordinary course of business), co-making, discounting
         with recourse or sale with recourse by such Person of the obligation of
         another; (ii) any liability for the obligations of another through any
         agreement (contingent or otherwise) (A) to purchase, repurchase or
         otherwise acquire such obligation or any security therefor, or to
         provide funds for the payment or discharge of such obligation (whether
         in the form of loans, advances, stock purchases, capital contributions
         or otherwise), (B) to maintain the solvency of any balance sheet item,
         level of income or financial condition of another, or (C) to make
         take-or-pay, pay-or-play or similar payments if required regardless of
         nonperformance by any other party or parties to an agreement, if in the
         case of any agreement described under subclauses (A), (B) or (C) of
         this sentence the primary purpose or intent thereof is as described in
         the preceding sentence. The amount of any Contingent Obligation shall
         be equal to the amount of the 




AMENDED AND RESTATED TERM LOAN AGREEMENT                              
Baldwin Piano & Organ Company



<PAGE>   10
                                       4

         obligation so guaranteed or otherwise supported."Debt" shall have the 
         meaning set forth in Section 7.3(a).

                  "Default" shall have the meaning set forth in Article 8.

                  "Default Interest Rate" means an annual rate of interest which
         shall (to the extent permitted by applicable law) at all times be equal
         to three percent (3%) above the Interest Rate applicable at the time of
         such default.

                  "EBITDA" for any period shall mean without duplication, (i)
         Net Income; plus (ii) for such period any Interest Expense deducted in
         the determination of Net Income; plus (iii) any income and franchise
         taxes paid in cash and included in the determination of Net Income;
         plus (iv) amortization and depreciation deducted in determining Net
         Income for such period; minus (v) the sum for such period of interest
         income, extraordinary non-cash gains, gains from sales of assets (other
         than sales of inventory in the ordinary course of business) and
         unrealized losses from changes in currency; plus (vi) extraordinary
         non-cash losses.

                  "Effective Date" shall mean the date set forth in the heading
         on page 1 of this Loan Agreement.

                  "Employee Benefit Plan" means an "employee benefit plan" as
         defined in Section 3(3) of ERISA.

         "Environmental Laws" shall mean the Resource Conservation and Recovery
Act, as amended, the Toxic Substances Control Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Solid
Waste Disposal Act, as amended, the Water Pollution Control Act, as amended, the
Clean Air Act, as amended, the Clean Water Act, as amended, and any successor or
comparable federal or state statutes, or any regulation promulgated under any of
such federal or state statutes relating to the protection of the environment.

                  "Environmental Lien" shall mean a Lien in favor of any
         governmental entity for: (a) any liability under any Environmental Law,
         or (b) damages arising from or costs incurred by such governmental
         entity in response to a spillage, disposal, or release into the
         environment of any Hazardous Material or other hazardous, toxic or
         dangerous waste, substance or constituent, or other substance.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974 and regulations issued thereunder, as amended from time to time
         and any successor statute.

                  "ERISA Affiliate" means, in relation to any Person, any trade
         or business (whether or not incorporated) which is a member of a group
         of which that Person is a member and 


AMENDED AND RESTATED TERM LOAN AGREEMENT                               
Baldwin Piano & Organ Company


<PAGE>   11


                                       5


         which is under common control within the meaning of the regulations
         promulgated under Section 414 of the Internal Revenue Code of 1986, as
         amended.

                  "ERISA Liabilities" means the aggregate of all unfunded vested
         benefits under any employee pension benefit plan, within the meaning of
         Section 3(2) of ERISA, of Borrower or any ERISA Affiliate of Borrower
         under any Plan covered by ERISA that is not a Multiemployer Plan and
         all potential withdrawal liabilities of any thereof under all
         Multiemployer Plans.

                  "Eurocurrency Liabilities" has the meaning specified in
         Regulation D of the Board of Governors of the Federal Reserve System,
         as in effect from time to time.

                 "Eurocurrency Reserve Percentage" means the daily average
         reserve percentage applicable during each day of such Loans under
         regulations issued from time to time by the Board of Governors of the
         Federal Reserve System (or any successor) for determining the maximum
         reserve requirement (including without limitation any emergency,
         supplemental or other marginal reserve requirement for a member bank of
         the Federal Reserve System in New York City) with respect to
         liabilities or assets consisting of or including Eurocurrency
         Liabilities (or with respect to any other category of liabilities that
         includes deposits by reference to which the interest rate on Loans is
         determined).

                  "FEMA" means the Federal Emergency Management Agency, or any
         similar successor agency of the federal government.

                  "Fixed Charges" means, for any period, the following, each
         calculated for such period, without duplication: (i) Interest Expense
         paid on accrual; plus (ii) any income and franchise taxes paid in cash;
         plus (iii) scheduled payments of principal with respect to all
         Indebtedness for Borrowed Money of Borrower including the principal
         component of any cash payments made on any Capital Lease.

                  "Funding Date" shall mean the date designated by Baldwin for
         the making of a Loan hereunder.

                  "GAAP" shall mean generally accepted accounting principles,
         consistently applied.

                  "GECC" means General Electric Capital Corporation, a New York
         corporation.

                  "Guarantor" shall mean a guarantor of any of the Obligations.

                  "Guaranteed Pension Plan" means any pension plan maintained by
         Borrower or an ERISA Affiliate of Borrower, or to which Borrower or an
         ERISA Affiliate contributes, some or all of the benefits under which
         are guaranteed by the United States Pension Benefit Guaranty
         Corporation ("PBGC").


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   12


                                       6

                  "Hazardous Material" shall mean any and all hazardous or toxic
         substances, materials or wastes as defined or listed under the
         Environmental Laws.

                  "Head Office" means The Fifth Third Bank, Fifth Third Center,
         Cincinnati, Ohio 45263.

                  "Indebtedness" shall mean any sum for borrowed money owed by
         Baldwin or any Subsidiary (other than by KAC and other than any
         guaranty of indebtedness of KAC) to a Person and shall include any debt
         guaranteed by Baldwin or any Subsidiary (other than KAC), any debt as
         to which the Baldwin has granted or permitted to exist a Lien on any
         asset even if non-recourse, letter of credit reimbursement obligations,
         and capitalized lease obligations.

                  "Indebtedness for Borrowed Money" means at any particular
         time, all Indebtedness (i) in respect of any money borrowed; (ii) under
         or in respect of any Contingent Obligation (whether direct or indirect)
         of any money borrowed; (iii) evidenced by any loan or credit agreement,
         promissory note, debenture, bond, guaranty or other similar written
         obligation to pay money; or (iv) Capital Lease obligations.

                  "Indemnified Liabilities" shall have the meaning set forth in
         Section 10.1.

                  "Indemnitees" shall have the meaning set forth in Section
         10.1.

                  "Intangibles" shall have the meaning set forth in Section
         7.3(a).

                  "Interest Expense" means, for any period, the total amount of
         all charges for the use of funds (whether characterized as interest,
         debt service or otherwise) payable during such period with respect to
         all Indebtedness for Borrowed Money of a Borrower for such period
         including the amortization of debt discounts and the amortization of
         all fees payable in connection with the incurrence of such
         Indebtedness.

                  "Interest Rate" means, with respect to the Term Loan, the rate
         of interest per annum equal to the LIBOR Rate plus one-hundred
         seventy-five (175) basis points.

                  "Inventory" means all of Baldwin's now owned and hereafter
         acquired inventory, goods, merchandise, and other personal property,
         wherever located, to be furnished under any contract or service or held
         for sale or lease, including, without limitation, all returned goods,
         finished goods and other materials and supplies of any kind, nature or
         description which are or might be consumed in Baldwin's Business or
         used in connection with the packing, shipping, advertising, selling or
         furnishing of such goods, merchandise and such other personal property,
         and all documents of title or other documents representing them;
         provided, however, that returned and repossessed goods relating to any
         KAC Accounts shall not constitute "Inventory" under this Loan Agreement
         or the other Loan Documents unless and until such returned or
         repossessed goods have been resold by GECC to 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   13

                                       7

          Baldwin pursuant to the Purchase and Sales Agreement and GECC or its
          assignee has received the purchase price therefor provided under such
          agreement.

                  "KAC" means Keyboard Acceptance Corporation, a Delaware
         corporation and a Subsidiary of Baldwin (formerly known as BPO Finance
         Corporation).

                  "KAC Accounts" shall mean retail installment contracts which
         result from the sale of inventory to consumers and which are sold or
         otherwise transferred to KAC pursuant to the Baldwin/KAC Purchase
         Agreement, and contributed, sold or otherwise transferred by KAC under
         the Purchase and Sale Agreement or which are acquired by KAC in the
         normal course of its business, including accounts which result from the
         sale of products to consumers which products are manufactured or
         distributed by parties other than Baldwin or its Subsidiaries.

                  "LIBOR Break Funding Costs" means an amount sufficient to
         reimburse each Lender for any and all loss, cost or expense (including
         without limitation, any loss incurred in obtaining, liquidating or
         reemploying deposits from third parties acquired to maintain the Loan
         or any part thereof as a LIBOR Rate Loan) incurred or sustained by each
         of them as the consequence of the occurrence of any prepayment. Such
         indemnification shall include, without limitation, an amount equal to
         the excess, if any, of (i) the amount of interest that otherwise would
         have accrued on the principal amount so prepaid, beginning with the
         date of such prepayment until the first day of each January, April,
         July and October that would have otherwise have been in effect for the
         Loan, at the Interest Rate over (ii) the amount of interest (determined
         by Agent) that otherwise would have accrued on such principal amount by
         reemploying such amount at a rate equal to LIBOR for such period or
         nearest available period for deposits bearing a rate equal to LIBOR.

                  "LIBOR Rate" means, for each quarter, the London Interbank
Offered Rate (LIBOR) for three-month deposits in U.S. dollars that appears on
Page 3750 of the Dow Jones Telerate Service (or any other page that may replace
any such page on such service in the judgment of Agent) as of the last Business
Day of the prior calendar quarter, provided, however, for the period from the
Closing Date through June 30, 1998 such term shall mean the LIBOR Rate as of the
Business Day preceding the Closing Date.

                  "LIBOR Rate (Reserve Adjusted)" shall mean, the rate per annum
         obtained by dividing the LIBOR Rate by a percentage equal to one
         hundred percent (100%) minus the Eurocurrency Reserve percentage for
         such interest period.

                  "Lien" shall mean any security interest, mortgage, pledge,
         lien, hypothecation, judgment lien or similar legal process, charge,
         encumbrance, title retention agreement or analogous instrument or
         device (including, without limitation, the interest of lessors under
         capitalized leases and the interest of a vendor under any conditional
         sale or other title retention agreement), reservations, exceptions,
         encroachments, easements, rights-of-


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   14


                                       8


         way, covenants, conditions, restrictions, leases and other title
         exceptions and encumbrances affecting any of Baldwin's property.

                  "Liquidity Agreement" means the Liquidity Agreement dated as
         of October 1, 1990 between Retail Funding Corporation and GECC, as
         amended, supplemented or modified from time to time.

                  "Loan" shall mean the Term Loan made to or for the benefit of
         Baldwin pursuant to this Loan Agreement.

                  "Loan Documents" shall mean all documents executed by Baldwin
         pursuant to any financial accommodation between Baldwin and the Lenders
         (other than pursuant or with respect to the Previous Fifth Third
         Transactions) and all documents entered into in connection with the
         transaction with the Lenders herein contemplated. The term "Loan
         Documents" includes, but is not limited to, this Loan Agreement, all
         financing statements, all pledges, security agreements, guaranties,
         assignments, subordination agreements, and any future or additional
         documents or writings executed under the terms of this Loan Agreement
         or any amendments or modifications hereto.

                  "Loan Year" means each period of twelve (12) consecutive
         calendar months, commencing on the Closing Date and on each anniversary
         thereof.

                  "Monthly Compliance Certificate" shall have the meaning set
         forth in Section 7.3(c).

                  "Multiemployer Plan" means a "multiemployer plan" as defined
         in Section 4001(a)(3) of ERISA which is maintained for employees of
         Borrower, or any ERISA Affiliate of Borrower.

                  "Net Income" means, for any period, the aggregate of the net
         income (or net loss) of a Borrower for such period, determined in
         accordance with GAAP, but excluding, without duplication: (i) the
         income of any Person in which a Borrower has an ownership interest,
         unless received by such Borrower in a cash distribution; (ii) any
         after-tax gains or losses attributable to dispositions of assets; (iii)
         the income of any Subsidiary of a Borrower to the extent that the
         declaration or payment of dividends or similar distributions by that
         Subsidiary of that income is not at that time permitted by operation of
         the terms of its charter or any agreement, instrument, judgment,
         decree, order, statute, rule or governmental regulation applicable to
         that Subsidiary; and (iv) any after-tax extraordinary non-cash gains or
         extraordinary non-cash losses.

                  "Notes" mean, collectively, the amended and restated Term Loan
         Promissory Notes, each of which are to be dated, executed and delivered
         to Lenders by Borrower on the Closing Date. "Note" shall mean any one
         of the Notes.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   15

                                       9

                  "Obligations" shall mean all liabilities and Indebtedness of
         any kind and nature whatsoever now or hereafter arising, owing, due or
         payable from Baldwin (and/or any of its Subsidiaries and Affiliates) to
         any Lender arising under the Loan Documents, whether primary or
         secondary, joint or several, direct, contingent, fixed or otherwise,
         secured or unsecured or whether arising under this Loan Agreement, any
         other Loan Document or any other agreement now or hereafter executed by
         Baldwin (or any of its Subsidiaries or Affiliates) and delivered to the
         Lenders in connection with the Loan or this Agreement. Obligations will
         include, without limitation, any third party claims against Baldwin (or
         any of its Subsidiaries or Affiliates) satisfied or acquired by the
         Lenders. Obligations will also include all obligations of Baldwin to
         pay to the Lenders: (a) any and all sums reasonably advanced by the
         Lenders to preserve or protect the Collateral or the value of the
         Collateral or to preserve, protect or perfect the Lenders' security
         interests in the Collateral; (b) in the event of any proceeding to
         enforce the collection of the Obligations after a Default, the
         reasonable expenses of retaking, holding, preparing for sale, selling
         or otherwise disposing of or realizing on the Collateral, or expenses
         of any exercise by any Lender of its rights, together with reasonable
         attorneys' fees, expenses of collection and court costs, as provided in
         the Loan Documents; and (c) any other indebtedness or liability of
         Baldwin to the Lenders, whether direct or indirect, absolute or
         contingent now or hereafter arising; provided, however, that any
         liabilities and Indebtedness resulting from the Securitization and from
         the Previous Fifth Third Transactions are specifically excluded from
         the definition of Obligations.

                  "OSHA Law" shall mean the Occupational Safety and Health Act
         of 1970, any successor thereto, and any other federal, state or local
         statute, law, ordinance, code, rule, regulation, order or decree
         regulating, relating to or imposing liability or standards of conduct
         concerning employee health and/or safety.

                  "Participation Percentage" for each Lender means the
         percentage set forth below opposite such Lender.

        ================================================================
                 LENDER                  PARTICIPATION PERCENTAGE
        ----------------------------------------------------------------
              Fifth Third                           50%
        ----------------------------------------------------------------
                   NBD                              50%
        ================================================================

                  "Patents" shall mean all of the following in which Borrower
         now holds or hereafter acquires any interest: (i) all letters patent of
         the United States or any country, all registrations and recordings
         thereof, and all applications for letters patent of the United States
         or any other country, including registrations, recordings and
         applications in the United States Patent and Trademark Office or in any
         similar office or agency of the United States, any state or territory
         thereof or any other country, and (ii) all reissues, continuations,
         continuations-in-part or extensions thereof.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   16

                                       10

                  "Permitted Liens" shall mean: (a) Liens for taxes, assessments
         or other governmental charges or levies not yet delinquent or which are
         being contested in good faith by appropriate action and as to which
         adequate reserves shall have been set aside in conformity with GAAP;
         (b) Liens of mechanics, materialmen, landlords, warehousemen, carriers
         and similar Liens arising in the future in the ordinary course of
         business for sums not yet delinquent, or being contested in good faith
         if a reserve or other appropriate provision in accordance with GAAP
         shall have been made therefor and which are, in addition, satisfactory
         to Agent in its reasonable discretion; (c) statutory Liens incurred in
         the ordinary course of business in connection with workers'
         compensation, unemployment insurance, social security, and similar
         items for sums not yet delinquent or being contested in good faith, if
         a reserve or other appropriate provision in accordance with GAAP shall
         have been made therefor and which are, in addition, satisfactory to
         Agent in its reasonable discretion; (d) lessor's Liens arising from
         operating leases entered into in the ordinary course of business; (e)
         Liens arising from legal proceedings, so long as such proceedings are
         being contested in good faith by appropriate proceedings, appropriate
         reserves have been established therefor in accordance with GAAP and
         which are, in addition, satisfactory to Agent in its reasonable
         discretion, and so long as execution is stayed and bonded on appeal on
         all judgments resulting from any such proceedings; (f) Liens in favor
         of Agent for the benefit of the Lenders granted hereunder; (g) Liens
         arising pursuant to the Permitted Securitization Documents; and (h)
         Liens arising pursuant to the Previous Fifth Third Transaction.

                  "Permitted Securitization Documents" shall mean: (i) the
         Purchase and Sale Agreement, (ii) Liquidity Agreement, as amended,
         supplemented or otherwise modified from time to time with the prior
         written consent of Agent and (iii) the Baldwin/KAC Purchase Agreement.

                  "Person" shall mean an individual, a partnership, a joint
         venture, a corporation, a trust, a limited liability company, an
         unincorporated organization, and a government or any department or
         agency thereof.

                  "Previous Fifth Third Transaction" shall mean that certain
         Credit Agreement by and among Baldwin, Fifth Third and NBD dated as of
         October 16, 1997, as amended by a First Amendment to Credit Agreement
         dated as of October 16, 1997 and a Second Amendment to Credit Agreement
         dated as of April 27, 1998.

                  "Prime Rate" shall mean a fluctuating interest rate per annum
         equal to the prime, base or reference rates of interest announced
         publicly from time to time (whether or not charged in each instance) by
         Agent (or any successor thereof) as such bank's prime, base, or
         reference rate. Each change in the Prime Rate shall become effective on
         the day the applicable reference bank announces a change in its prime
         or reference rate. Baldwin acknowledges that Agent may extend credit at
         rates of interest less than its announced prime, base or reference
         rate.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   17
                                       11

                  "Prime Rate Loans" shall mean Loans bearing interest at a rate
         determined by reference to the Prime Rate.

                  "Property" means all types of real, personal, tangible,
         intangible or mixed property.

                  "Purchase and Sale Agreement" shall mean the Purchase and
         Administration Agreement dated as of October 1, 1990 among Retailer
         Funding Corporation, KAC, Baldwin and GECC, as amended, supplemented or
         otherwise modified from time to time.

                  "Rentals" shall have the meaning set forth in Section 7.2(n).

                  "Requisite Lenders" means the Lenders whose aggregate
         Participation Percentages are greater than or equal to sixty-six and
         two-thirds percent (66-2/3%).

                  "Securitization" shall mean the transaction whereby Baldwin
         sells retail installment contracts to KAC who thereupon sells such
         retail installment contracts to Retail Funding Corporation which sells
         an undivided pool interest in such contracts.

                  "Standard Flood Hazard Determination Form" means Form 81-93 or
         any successor or replacement thereof developed by FEMA pursuant to
         Section 528 of the National Flood Insurance Reform Act of 1994 (42
         U.S.C. 1365(a)), for determining whether a building or structure is
         located in an area identified as an area having special flood hazards,
         whether flood insurance is required and whether flood insurance is
         available under 42 U.S.C. 4001. et seq.

                  "Subordinated Debt" shall have the meaning set forth in
         Section 7.3.

                  "Subsidiaries" shall mean any corporation in which a Person
         owns or controls greater than fifty percent (50%) of the voting
         securities, or any partnership or joint venture in which a Person owns
         or controls greater than fifty percent (50%) of the aggregate equitable
         interest. The term "Subsidiary" means any one of the Subsidiaries.

                  "Tangible Net Worth" shall have the meaning set forth in
         Section 7.3.

                  "Term Loan" means the Loan made pursuant to Section 3.2
         hereof.

                  "Term Loan Promissory Notes" means, collectively, the amended
         and restated promissory notes of Borrower, in the face amounts of each
         Lender's Participation Percentage of the Term Loan in or substantially
         in the form of Exhibit A hereto. "Term Loan Promissory Note" shall mean
         any one of the Term Loan Promissory Notes.

                  "Termination Date" means, with respect to the Term Loan, the
         earlier of (i) five (5) years following the Closing Date; (ii) the date
         upon which the entire principal of the Notes shall become due pursuant
         to the provisions hereof (whether as a result of 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   18

                                       12

         acceleration by Agent or the Requisite Lenders or otherwise); or (iii)
         the date upon which the Term Loan shall be paid in full.

                  "Termination Event" means (i) a "Reportable Event" described
         in Section 4043 of ERISA and the regulations issued thereunder, but not
         including any such event for which the thirty (30) day notice
         requirement has been waived by applicable PBGC regulation; or (ii) the
         withdrawal of Borrower or an ERISA Affiliate of Borrower from a
         Guaranteed Pension Plan during a plan year in which it was a
         "substantial employer" as defined in Section 4001(a)(2) of ERISA; or
         (iii) the filing of a notice of intent to terminate a Guaranteed
         Pension Plan or the treatment of a Guaranteed Pension Plan amendment as
         a termination under Section 4041 of ERISA; or (iv) the institution of
         proceedings to terminate a Guaranteed Pension Plan by the Pension
         Benefit Guaranty Corporation; or (v) the withdrawal or partial
         withdrawal of Borrower or an ERISA Affiliate of Borrower from a
         Multiemployer Plan; or (vi) any other event or condition which might
         reasonably be expected to constitute grounds under ERISA for the
         termination of, or the appointment of a trustee to administer, any
         Guaranteed Pension Plan.

                  "Total Commitment" shall mean Ten Million and 00/100 Dollars
         ($10,000,000.00).

                  "Trademarks" shall mean all of the following in which Borrower
         now holds or hereafter acquires any interest: (i) all trademarks, trade
         names, corporate names, business names, trade styles, service marks,
         logos, other source or business identifiers, prints and labels on which
         any of the foregoing have appeared or appear, designs and general
         intangibles of like nature, all registrations and recordings thereof,
         and all applications in connection therewith, including registrations,
         recordings and applications in the United States Patent and Trademark
         Office or in any similar office or agency of the United States, any
         state or territory thereof or any other country, and (ii) all reissues,
         extensions or renewals thereof.

                  "UCC" shall mean the Uniform Commercial Code as in effect in
         the State of Ohio and any successor statute, together with any
         regulations thereunder, in each case as in effect from time to time.
         References to sections of the UCC shall be construed to also refer to
         any successor sections.

                  "UCC Financing Statements" mean the UCC financing statements
         naming the Borrower, as debtor, and Agent, for the ratable benefit of
         Lenders, as creditor, which UCC financing statements describe all or
         some portion of the Collateral and which together perfect Agent's
         security interest in the Collateral.

                  "Unmatured Default" shall mean any event which, but for the
         passage of time or notice, or both, would be a Default.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   19

                                       13


                                   ARTICLE 3.

                                    THE LOANS

         Section 3.1 Commitments. Subject to the terms of this Loan Agreement,
each Lender severally and not jointly agrees, for so long as no Default or
Unmatured Default exists and upon the terms of and subject to the conditions
contained in this agreement, to make the Term Loans on the Closing Date in a
principal amount equal to such Lender's Participation Percentage of the
aggregate principal amount of such Loan.

         Section 3.2 Term Loan. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, each Lender severally agrees to lend to Borrower on the
Closing Date its Participation Percentage of the Term Loan. The aggregate amount
of the Term Loan shall be Ten Million and 00/100 Dollars ($10,000,000.00). The
Term Loan shall be funded in one drawing on the Closing Date. Amounts borrowed
under this Section 3.2 and repaid or prepaid may not be reborrowed.

         Section 3.3 The Notes. The absolute and unconditional obligation of
Borrower to repay to each Lender its respective Participation Percentage of the
principal of the Loan and the interest thereon shall be evidenced by separate
Term Loan Promissory Notes for each Lender in the amount of its respective
Participation Percentage of the Total Commitment dated as of the Closing Date.
All payments under the Notes shall be made to Agent at its Head Office, for the
account of Lenders, and Agent shall allocate all payments on the Loan received
from Borrower among all Lenders in accordance with each Lender's Participation
Percentage of such Loan.

         Section 3.4       Interest and Principal Payable on the Loans; Fees;
Maturity.

                  (a)      Interest.

                           (i) Determination of Interest Rate. Agent shall
                  determine the Interest Rate in effect from time to time in
                  accordance with the terms of this Agreement. Any change in the
                  Interest Rate shall, for all purposes of this Agreement and
                  any of the other Loan Documents, become effective on the
                  effective date of such change as announced by Agent in
                  accordance with Agent's customary practices.

                           (ii) Interest on Overdue Payments; Default Interest
                  Rate. If any amount of principal or interest or any other
                  Obligation is not paid when due, or upon the occurrence and
                  during the continuance of any Event of Default, or if the
                  Agent exercises its rights hereunder to accelerate any of the
                  Notes pursuant to Section 8.19(a), the outstanding principal
                  and all accrued and unpaid interest, as well as any other
                  Obligations due Lenders or Agent hereunder or under any Loan
                  Document, shall bear interest at the Default Interest Rate,
                  from the date on which such amount shall have first become due
                  and payable to Lenders or Agent or the date on which such
                  Event of Default shall have occurred, to the date on which



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   20

                                       14


                  such amount shall be paid to Lenders or Agent (whether before
                  or after judgment) or such Event of Default shall have been
                  waived or cured. Interest will continue to accrue until the
                  Obligations in respect of the payment are discharged (whether
                  before or after judgment).

                           (iii) Interest Rate After Certain Events. If a
                  judgment is entered against Baldwin for sums due under any of
                  the Obligations, as applicable, the amount of the judgment
                  entered (which may include principal, interest, reasonable
                  attorneys' fees and costs) shall bear interest at the Default
                  Interest Rate as of the date of entry of the judgment. All
                  Obligations of Baldwin described in clauses (a) and (b) of the
                  definition thereof shall bear interest at the Default Interest
                  Rate.

                  (b) Principal and Interest Payments. Borrower shall pay to
         Agent, beginning on July 1, 1998 and on each January 1, April 1, July 1
         and October 1, thereafter, equal quarterly installments of principal in
         the amount of Two Hundred Fifty Thousand and 00/100 Dollars
         ($250,000.00) (or such lesser principal amount of the Term Loan as
         shall then be outstanding), plus accrued and unpaid interest thereon at
         the Interest Rate; provided that in any event the last installment of
         principal on the Term Loan shall be due and payable on the Termination
         Date (if not earlier prepaid) and shall be in an amount sufficient to
         pay in full the entire unpaid principal amount of the Term Loan.

                  (c) Fees. Borrower shall pay to Agent the commitment fees, to
         be distributed pro rata among the Lenders in accordance with their
         respective Participation Percentages, equal to thirty-five basis points
         or Thirty-Five Thousand and 00/100 Dollars ($35,000.00) to be paid on
         the Closing Date.

                  (d) Maturity. The Term Loan Notes shall, if not sooner paid or
         due, be in any event absolutely and unconditionally due and payable in
         full by Borrower on May 1, 2003.

         Section 3.5 Billing Statement Agent will send Baldwin a monthly billing
statement identifying all charges due on Baldwin's account with the Lenders,
provided, however, failure of Agent to send to Borrower any such statement shall
not in any manner relieve Borrower of its obligations as set forth herein. The
charges specified on each billing statement will be: (a) due and payable in full
immediately on receipt; and (b) for an amount stated, absent manifest error.
Agent may adjust the billing statement at any time to conform to applicable law
and this Loan Agreement.

         Section 3.6 Loan Proceeds. The parties intend that all indebtedness
incurred hereunder shall be governed exclusively by the terms of this Loan
Agreement and the other Loan Documents, and shall not, unless requested by the
Lenders, be evidenced by notes or other evidences of indebtedness. Upon any such
request, Baldwin will immediately execute and deliver any such note or other
evidence reasonably requested by the Lenders. Any fees, charges or expenses
charged to the Lenders by any bank for payments made by the Lenders at Baldwin's

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   21

                                       15

request shall be immediately payable by Baldwin. All advances and other
obligations of Baldwin made hereunder will constitute a single obligation.

         Section 3.7  Increased Cost.

                  (a)      Increased Costs. If, as a result of any law, 
         regulation, treaty or directive, or any change therein, or in the
         interpretation or application thereof or compliance by the Lenders with
         any request or directive (whether or not having the force of law) from
         any court or governmental authority, agency or instrumentality:

                           (i) the basis of taxation of payments to the Lenders
                  (for purposes of this Section 3.7(a), a Lender shall also
                  refer to any affiliates of such Lender engaged in the funding
                  of the lending obligations hereunder) of the principal of or
                  interest on any Loan (other than taxes imposed on the overall
                  net income of such Lender by the jurisdiction in which such
                  Lender has its principal office) is changed;

                           (ii) any reserve, special deposit or similar
                  requirements against assets of, deposits with or for the
                  account of a Lender are imposed, modified or deemed
                  applicable; or

                           (iii) any other condition affecting this Loan
                  Agreement or the Loans is imposed on a Lender or the interbank
                  Eurodollar market;

         and a Lender determines that, by reason thereof, the cost to such
         Lender of making or maintaining any of the Loans is increased, or the
         amount of any sum receivable by such Lender hereunder in respect of any
         of the Loans is reduced;

         then, Baldwin shall pay such Lender upon thirty (30) days written
         notice from such Lender (which notice shall be accompanied by a
         statement setting forth the basis for the calculation thereof but only
         to the extent not theretofore provided to Baldwin) such additional
         amount or amounts as will compensate such Lender for such additional
         cost or reduction (provided such amount has not been compensated for in
         the calculation of the currency Reserve Percentage). Notwithstanding
         the foregoing, no Lender will be entitled to the amount of such
         additional cost or reduction for any period which is more than six (6)
         months prior to the date of notice by such Lender to Baldwin hereunder.
         Determinations by a Lender for purposes of this Section of the
         additional amounts required to compensate such Lender in respect of the
         foregoing shall be conclusive, absent manifest error.

                  (b)      Dollar Deposits Unavailable or Interest Rate
         Unascertainable. If Baldwin has any Loan outstanding, or has notified
         Agent of the intention to obtain a Loan as provided herein, then if
         prior to the date that the LIBOR Rate is determined, Agent determines
         (which determination shall be conclusive and binding on the parties
         hereto) 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   22


         that three-month deposits of the necessary amount are not available to
         the Lenders in the interbank dollar market or that by reason of
         circumstances affecting such market, adequate and reasonable means do
         not exist for ascertaining the LIBOR Rate applicable to such period or
         term, as the case may be, Agent shall promptly give notice of such
         determination to Baldwin, and any notice of new Loans previously given
         by Baldwin and not yet borrowed shall be deemed a notice to make a
         Prime Rate Loan to the extent of the Lenders' proposed Loan.

                  (c) Changes in Law Rendering LIBOR Loans Unlawful. If at any
         time due to any new law, treaty or regulation, or any change of any
         existing law, treaty or regulation, or any interpretation thereof by
         any governmental or other regulatory authority charged with the
         administration thereof, or for any other reason arising subsequent to
         the date hereof, it shall become unlawful for the Lenders to fund any
         Loan which it is committed to make hereunder, the obligation of the
         Lenders to provide Loans based on LIBOR shall, upon the happening of
         such event forthwith be suspended for the duration of such illegality.
         If any such change shall make it unlawful to continue Loans previously
         made by it hereunder, Agent shall, upon the happening of such event
         notify Baldwin thereof in writing stating the reasons therefor, and
         Baldwin shall, if required by such law, regulation or interpretation,
         on such date as shall be specified in such notice, or prepay all such
         Loans, without any penalty or premium whatsoever (except as provided in
         Section 3.7(e)), to the Lenders in full. Any such prepayment shall be
         subject to the provisions of Section 3.7(e).

                  (d) Capital Adequacy. If a Lender shall determine at any time
         after the Effective Date that the adoption of any law, rule, guideline
         or regulation regarding capital adequacy, or compliance with any law,
         rule, guideline or regulation regarding capital adequacy, or any change
         therein or in the interpretation or administration thereof by any
         governmental authority, central bank or comparable agency charged with
         the interpretation or administration thereof, or compliance by such
         Lender with any request or directive or compliance with any law, rule,
         guideline or regulation regarding capital adequacy (whether or not
         having the force of law) from any such authority, central bank or
         comparable agency, has or would have the effect of reducing the rate of
         return on a Lender's capital as a consequence of its obligations
         hereunder to a level below that which such Lender could have achieved
         but for such adoption, change or compliance (taking into consideration
         such Lender's policies with respect to capital adequacy) by an amount
         deemed by such Lender to be material, then Baldwin shall pay to such
         Lender upon demand such amount or amounts, in addition to the amounts
         payable under the other provisions of this Loan Agreement, as will
         compensate such Lender for such reduction. Any such demand by such
         Lender hereunder shall be in writing, and shall set forth the reasons
         for such demand and copies of all documentation reasonably relevant in
         support thereof. Notwithstanding the foregoing, no Lender will be
         entitled to receive such additional amount for any period which is more
         than six (6) months prior to the date of such Lender's written demand
         to Baldwin as provided hereunder. Determinations by a Lender for
         purposes of this Section 3.7(d) of the additional amount or amounts
         required 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   23

                                       17

         to compensate such Lender in respect of the foregoing shall be
         conclusive in the absence of manifest error. In determining such amount
         or amounts, a Lender may use any reasonable averaging and attribution
         methods.

                  (e) Discretion as to Manner of Funding. Notwithstanding any
         provision of this Loan Agreement to the contrary, a Lender may fund and
         maintain its funding of all or any part of its Loans in any manner it
         elects, it being understood, however, that for the purposes of this
         Loan Agreement all determinations hereunder shall be made as if such
         Lender had actually funded and maintained each Loan through the
         purchase of deposits having a maturity corresponding to the maturity of
         each Loan and bearing an interest rate equal to the LIBOR Rate. A
         Lender may, if it so elects fulfill any commitment to make Loans by
         causing an affiliate to make or continue such Loans, provided, however,
         that in such event such loans shall be deemed for the purposes of this
         Loan Agreement to have been made by such Lender, and the obligation of
         Baldwin to repay such Loans shall nevertheless be to the Lenders and
         shall be deemed held by such Lender on behalf of the Lenders, to the
         extent of such Loans, for the account of such branch or affiliate.

         Section 3.8 Advancements. If Baldwin fails to: (a) perform any of the
affirmative covenants contained herein, (b) protect or preserve the Collateral;
or (c) protect or preserve the status and priority of the Liens and security
interest of Agent for the benefit in the Collateral, the Lenders may make
advances to perform those obligations. Agent will use reasonable efforts to
attempt to give Baldwin notice prior to making such advancement. All sums so
advanced will be due and payable upon demand and will immediately upon
advancement become secured by the security interests created by this Loan
Agreement and will be subject to the terms and provisions of this Loan Agreement
and all of the Loan Documents. Agent may add all sums so advanced, plus any
expenses or costs incurred by Agent or any Lender, including reasonable
attorneys' fees, as outstanding Loans as Agent may designate in its sole
discretion. The provisions of this Section will not be construed to prevent the
institution of rights and remedies of Agent or any Lender upon the occurrence of
a Default. Any provisions in this Loan Agreement to the contrary
notwithstanding, the authorizations contained in this Section will impose no
duty or obligation on any Lender to perform any action or make any advancement
on behalf of Baldwin and are for the sole benefit and protection of the Lenders.

         Section 3.9 All Loans One Obligation. All Obligations of Baldwin to the
Lenders under the Loan Documents shall constitute one obligation to the Lenders
secured by the security interests granted in this Loan Agreement, and by all
other Liens heretofore, now, or at any time or times hereafter granted by
Baldwin. All of the rights of the Lenders set forth in this Loan Agreement shall
apply to any modification of or supplement to this Loan Agreement, or Exhibits
hereto, unless otherwise agreed in writing.

         Section 3.10 Payments of Principal and Interest. All payments and
amounts due hereunder by Baldwin shall be made or be payable without set-off or
counterclaim and shall be made to Agent on the date due at its Head Office or at
such other place which Agent may designate to Baldwin in writing. Any payments
received after 1:00 p.m. (EST) shall be deemed 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   24


                                       18


received on the next Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a date other than a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time shall be
included in the computation of payment of interest or any fees. In order to
cause timely payment to be made to Agent of all Obligations as and when due,
Borrower hereby authorizes and directs Agent, at Agent's option to debit the
account of Borrower maintained with Agent or by increasing the principal balance
of the Loan when such Obligations become due.

         Section 3.11 Collection Days. All payments and all amounts received
hereunder will be credited by Agent to Baldwin's account one (1) day after good
funds have been deposited into Agent's general operating account.

         Section 3.12 Application of Funds. Notwithstanding anything herein to
the contrary, the funds received by Agent with respect to the Obligations shall
be applied as follows:

                  (a) No Default. If the Notes have not been accelerated
         pursuant to Section 8.19(a) and if no Default or Event of Default
         hereunder or under the Notes or any of the other Loan Documents shall
         have occurred and be continuing at the time Agent receives such funds,
         in the following manner: (a) first, to the payment of all fees,
         charges, and other sums (with exception of principal and interest) due
         and payable to Agent or Lenders under the Notes, this Agreement or the
         other Loan Documents at such time; (b) second, to the payment of all of
         the interest which shall be due and payable on the principal of the
         Notes at the time of such payment in accordance with each Lender's
         Participation Percentage; (c) third, to the payment of such amount of
         principal of the Term Loan Notes that is then due in accordance with
         each Lender's Participation Percentage; and (d) fourth, to Borrower.

                  (b) Default. If the Notes have been accelerated pursuant to
         Section 8.19(a), or if a Default or Event of Default hereunder shall
         have occurred and be continuing hereunder or under the Notes or any of
         the other Loan Documents at the time Agent receives such funds, in the
         following manner: (a) first, to the payment or reimbursement of Lenders
         and Agent for all costs, expenses, disbursements and losses which shall
         have been incurred or sustained by Lenders or Agent in or incidental to
         the collection of the Obligations owed by Borrower hereunder or the
         exercise, protection, or enforcement by Lenders and Agent of all or any
         of the rights, remedies, powers and privileges of Lenders and Agent
         under this Agreement, the Notes, or any of the other Loan Documents and
         in and towards the provision of adequate indemnity to the Agent and any
         of the Lenders against all taxes or Liens which by law shall have, or
         may have priority over the rights of the Agent or Lenders in and to
         such funds and (b) second, to the payment of all of the Obligations in
         accordance with Section 3.12(a) above.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   25


                                       19


         Section 3.13  Use of Proceeds.

                  (a)  Permitted Uses of Loan Proceeds. Borrower represents,
warrants and covenants to Agent and each Lender that all proceeds of the Loans
shall be used by Borrower solely for the purpose of refinancing existing debt
and financing working capital.

                  (b)  Prohibited Uses. Borrower represents, warrants and
covenants to Agent and each Lender that no part of the proceeds of the Loans
will be used (directly or indirectly) so as to result in a violation under
Regulations G, T, U or X of the Board of Governors of the Federal Reserve System
or for any other purpose violative of any rule or regulation of such Board.

         Section 3.14  Additional Costs, Etc. If any Lender shall reasonably
determine that any future applicable law, rule or regulation, or any change in
any present law or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital, as a
consequence of its obligations hereunder, to a level below that which such
Lender could have achieved but for such adoption, change or compliance by any
amount deemed by such Lender to be material and is not otherwise reflected in
the interest and other charges payable by Borrower hereunder, then Borrower
shall pay to such Lender upon demand such amount or amounts, in addition to the
amounts payable under the other provisions of this Agreement, or the Notes, as
will compensate such Lender for such reduction. Determinations by any Lender of
the additional amount or amounts required to compensate such Lender in respect
of the foregoing shall be conclusive in the absence of manifest error. In
determining such amount or amounts, Lender may use any reasonable averaging and
attribution methods.

         Section 3.15  LIBOR Break Funding Costs. Upon any prepayment of the 
Loan not made on the first day of each January, April, July and October,
Borrower shall pay to Agent for the ratable benefit of the Lenders, the LIBOR
Break Funding Costs.


                                   ARTICLE 4.

                          SECURITY FOR THE OBLIGATIONS

         Section 4.1   Grant of Security Interest.

                  (a)  To secure payment of all of Baldwin's current and future
         Obligations and to secure Baldwin's performance of all of the
         provisions under this Loan Agreement and the other Loan Documents,
         Baldwin grants, and hereby pledges and collaterally assigns, to Agent,
         for the benefit of the Lenders, a lien and continuing security interest
         in all of 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   26

                                       20


         Baldwin's fixtures and personal property, other than Accounts and
         Inventory, wherever located, whether now or hereafter owned, existing
         or acquired or hereafter arising, including, without limitation, the
         Collateral. To secure further such liabilities and obligations,
         Baldwin has granted to Agent, on behalf of the Lenders, a first lien
         with respect to each parcel of land and those leasehold interests of
         Baldwin identified on Schedule 4.1(a) attached hereto (the "Real
         Estate"); has executed and delivered to Agent, on behalf of Lenders,
         mortgages or deeds of trust, amendments or modifications to leasehold
         mortgages and valid assignments of all other property rights
         (including, without limitation, rights to receive rents and rights
         with respect to judgments and claims) which now exist or which may
         arise hereafter from time to time; has executed and delivered to
         Agent, on behalf of Lenders, certificates of title and the like as
         necessary from time to time to secure the Obligations hereunder and
         shall deliver to Agent, on behalf of the Lenders, to the extent
         required herein or upon Agent's request in accordance with the terms
         of this Agreement, all instruments, documents and chattel paper in
         which Baldwin from time to time has an interest and such other
         documents as Agent may request to perfect a security interest in the
         Collateral.

                  (b) All such assets in Subsection (a) above are collectively
         referred to herein as the "Collateral." All such terms for which
         meanings are provided in the UCC are used herein with such meanings.
         All Collateral financed by the Lenders, and all proceeds thereof, will
         be held in trust by Baldwin for the Lenders, with such proceeds being
         payable in accordance with this Loan Agreement. Baldwin covenants with
         the Lenders that the Lenders may realize upon all or part of any
         Collateral in any order it desires and any realization by any means
         upon any Collateral will not bar realization upon any other collateral.
         Baldwin's liability under this Loan Agreement is direct and
         unconditional and will not be affected by the release or non-perfection
         of any security interest granted hereunder.

         Section 4.2 Future Advances. The Lenders' security interests shall
secure all current and all future advances to Baldwin made by the Lenders under
the Loan Documents.

         Section 4.3 Financing Statements. Baldwin shall execute and deliver to
Agent for the benefit of the Lenders such financing statements and original
documents as may be required by the Lenders with respect to the Lenders'
security interests.

         Section 4.4 Guaranties. Baldwin shall cause any and all Subsidiaries
(other than KAC and any other Subsidiary of Baldwin or KAC formed in connection
with the Securitization) whether now existing or hereafter acquired, to execute
and deliver guaranties of the Obligations which guaranties shall be
substantially in the form of Exhibit B and shall be secured by a perfected
security interest in all property, both real and personal, fixtures and
leasehold interests of such Subsidiaries pursuant to a Subsidiary Security
Agreement substantially in the form of Exhibit C.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   27

                                       21


         Section 4.5 Further Assurances. Baldwin will execute and deliver to
Agent, at such time or times as the Lenders may request, all financing
statements, security agreements, assignments, certificates, affidavits, reports,
schedules, and other documents and instruments that the Lenders may deem
necessary to perfect and maintain perfected the Lenders' security interests in
the Collateral and to fully consummate the transactions contemplated under all
Loan Documents. Baldwin will pay all filing, recording or registration fees.


                                   ARTICLE 5.

                              CONDITIONS PRECEDENT

         All duties and obligations of the Lenders under the Loan Documents on
the Effective Date, and at all times during the term of this Loan Agreement, are
specifically subject to the full and continued satisfaction by Baldwin of the
conditions precedent set forth below.

         Section 5.1 Conditions Precedent. The following conditions must be
satisfied as of the Closing Date:

                  (a) Real Property; Fixtures. On or prior to the Closing Date
         Borrower, at Borrower's cost and expense, shall provide with respect to
         the Real Estate: (i) Assignments and Amendments to Mortgages,
         Assignments of Rents and Security Agreements; (ii) updated title
         reports and/or updates or endorsements to title insurance policies, as
         requested by Agent; (iii) UCC Fixture Filings, if required by Agent;
         (iv) Owner's Affidavits substantially in the form of Exhibit D attached
         hereto, if required by Agent; and (v) Standard Flood Hazard
         Determination Forms issued or certified by a Person satisfactory to
         Agent.

                  (b) Agent's Counsel. Agent's counsel must approve of all
         matters pertaining to (i) title to the Collateral; (ii) the form,
         substance and due execution of all Loan Documents; (iii) Baldwin's
         organizational documents; and (iv) all other legal matters, including
         the application of any laws relating to usury.

                  (c) Material Change. There must not have been any material
         adverse change, between December 31, 1997 and the Closing Date, in the
         condition of Baldwin, the condition of the Business, the value and
         condition of the Collateral, the structure of Baldwin other than as
         contemplated herein, or in the financial information, audits and the
         like obtained by Fifth Third.

                  (d) Perfected Liens. Agent, for the benefit of the Lenders,
         shall have a perfected Lien and security interest in the Collateral,
         subject only to the Permitted Liens; and shall have received evidence
         in form and substance satisfactory to Agent that all filings,
         recordings, registrations and other actions, including without
         limitation, the filing of duly executed UCC Financing Statements on
         Form UCC-1, necessary or, in the 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company




<PAGE>   28

                                       22

         opinion of Agent, desirable to perfect the Liens created by the Loan
         Documents, shall have been completed.

                  (e) Insurance. Baldwin shall provide Agent with certificates
         of insurance evidencing that Baldwin has obtained the insurance as
         required in Section 7.1(b). Further, in the event such Standard Flood
         Hazard Determination Form evidences that the subject structure or
         improvement is located in a special flood hazard, as defined by FEMA,
         Borrower shall deliver to Agent and Lenders evidence of appropriate
         flood insurance in amounts and under such conditions as identified in
         Section 7.1(b)(i).

                  (f) Laws. Baldwin and its Subsidiaries shall be in compliance
         with all applicable laws and governmental regulations, including, but
         not limited to, all Environmental Laws, the failure to comply with
         which would have a material adverse effect on Baldwin, its Subsidiaries
         or the Business.

                  (g) Certificate of Good Standing. A certificate of good
         standing for Baldwin (or other similar certificate) must be delivered
         to Agent, from the appropriate governmental authority of Baldwin's
         state of incorporation and other jurisdictions in which Baldwin
         maintains an office or factory, dated not earlier than thirty (30) days
         prior to the Closing Date.

                  (h) Opinion of Baldwin's Counsel. Agent must receive a written
         opinion from counsel for Baldwin, dated the Effective Date, and
         addressed to and for the benefit of the Lenders, in form and substance
         of Exhibit E and reasonably satisfactory to Agent.

                  (i) Lien Searches. Agent shall have received the results of a
         recent search by a Person satisfactory to Agent, of the UCC, judgment
         and tax lien filings which may have been filed with respect to the
         property, both real and personal, fixtures and leasehold interests of
         Borrower or any of its Subsidiaries in the jurisdictions listed on
         Schedule 5.1(i), not more than five (5) days before the Closing Date,
         that pertain to the Collateral, and the results of such search shall be
         satisfactory to Agent.

                  (j) Other Documents. Baldwin shall provide Agent with such
         other documents, certificates, submissions, insurance policies and
         other matters as reasonably requested by Agent relating to the
         transaction herein contemplated.

                  (k) Officer's Certificate. Agent and each Lender shall have
         received from Borrower a certificate dated as of the Closing Date,
         signed by a duly authorized officer and certifying that each of the
         representations and warranties made by and on behalf of Borrower to
         Agent and each Lender in this Loan Agreement and in the other Loan
         Documents was true and correct when made, and is true and correct on
         and as of the Closing Date.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   29


                                       23

                  (l)      Secretary's Certificate of Resolution and Incumbency.
         Baldwin shall provide Agent with a copy of all actions taken by
         Borrower to authorize the execution by Borrower of the Loan Agreement,
         the Loan Documents and all other documents required under the
         provisions of the Loan Agreement, along with a certificates of the
         Secretary or Assistant Secretary of Borrower, dated as of the Closing
         Date, certifying:

                           (i) that the copies of such actions are true,
                  complete, are in full force and effect and have not been
                  amended, modified, or rescinded;

                           (ii) the name and bearing a specimen signature of
                  each individual who shall be authorized: i) to sign, in the
                  name and on behalf of Borrower, each of the Loan Documents to
                  which Borrower is or is to become a party on the Closing Date;
                  and ii) to give notices and to take other action on behalf of
                  Borrower under the Loan Documents; and

                           (iii)    the Articles of Incorporation and  By-Laws 
                  of Baldwin

                  (m)       Guaranties.  The Lenders shall

                           (i)      have received a duly executed Guaranty from 
                  Baldwin Piano Company (Canada) Limited,

                           (ii)     The Wurlitzer Company,

                           (iii)    Baldwin Trading Company and

                           (iv)     Signature Leasing Company and shall have
                  perfected a first priority Lien and security interest in the
                  collateral described in such Guaranty, subject to Permitted
                  Liens.

                  (n)       Payoff. A lien release and payoff letter executed by
          any and all lienholders on any of the Collateral, other than with
          respect to the Permitted Liens.


                                   ARTICLE 6.

                         REPRESENTATIONS AND WARRANTIES

         To induce the Lenders to enter into this Loan Agreement, Baldwin makes
the representations and warranties set forth below, all of which will remain
true in all material respects during the term of this Loan Agreement. Baldwin
acknowledges the Lenders' justifiable right to rely upon the representations and
warranties set forth below.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   30

                                       24

         Section 6.1 Financial Statements. Baldwin's audited consolidated
financial statements as of December 31, 1997 and Baldwin's unaudited
consolidated financial statement as of March 31, 1998, copies of which have been
previously submitted to Agent, have been prepared in conformity with GAAP and
present fairly the financial condition of Baldwin and its consolidated
Subsidiaries as at such dates and the results of their operations for the
periods then ended. Baldwin warrants and represents to the Lenders that all
financial statements and information relating to Baldwin or any Guarantor which
have been or may hereafter be delivered by Baldwin or any Guarantor are true and
correct and have been and will be prepared in accordance with GAAP and, with
respect to such previously delivered statements or information, there has been
no material adverse change in the financial or business condition of Baldwin or
any Guarantor since the submission to the Agent, either as of the date of
delivery, or, if different, the date specified therein, and Baldwin acknowledges
the Lenders' reliance thereon.

         Section 6.2 Non-Existence of Defaults. Neither Baldwin nor any of its
Subsidiaries is in default with respect to any material amount of its existing
Indebtedness. The making and performance of this Loan Agreement and all other
Loan Documents, will not immediately, or with the passage of time, the giving of
notice, or both: (a) violate the provisions of the bylaws or any other corporate
document of Baldwin; (b) violate any laws to the best of Baldwin's knowledge
after diligent inquiry; (c) result in a material default under any contract,
agreement, or instrument to which Baldwin is a party or by which Baldwin or its
properties are bound; or (d) result in the creation or imposition of any
security interest in, or Lien or encumbrance upon, any of the Collateral except
the Permitted Liens.

         Section 6.3 Litigation. Set forth on Schedule 6.3 is a list of all
actions, suits, investigations or proceedings pending or, to the knowledge of
Baldwin, threatened against Baldwin or any of its Subsidiaries, as of the date
hereof in which there is a reasonable probability of an adverse decision which
would materially and adversely affect Baldwin, the Business, or the value of the
Collateral in the aggregate.

         Section 6.4 Material Adverse Changes. Baldwin does not know of or
expect any material adverse change in the Business, or in Baldwin's or any of
the Subsidiaries' assets, liabilities, properties, or condition, financial or
otherwise, including changes in Baldwin's financial condition from December 31,
1997 through the Closing Date.

         Section 6.5 Title to Collateral. Except for the Permitted Liens,
Baldwin has good and marketable title to all of the Collateral, free and clear
of any and all Liens, claims and encumbrances.

         Section 6.6 Corporate Status. Baldwin and each of the Subsidiaries is a
corporation duly organized and validly existing, in good standing, with
perpetual corporate existence, under the laws of their respective jurisdictions
of formation. Baldwin and its Subsidiaries have the corporate power and
authority to own their properties and to transact the business in which they are
engaged and presently propose to engage. Baldwin and each Subsidiary is duly
qualified as a foreign corporation and in good standing in all states where the
nature of their business or the 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   31


                                       25


ownership or use of their property requires such qualification, and where
failure to so qualify would have a material adverse effect on its business,
operations or financial condition.

         Section 6.7 Subsidiaries.  All of the Subsidiaries of Borrower, as of 
the Effective Date., are set forth on Schedule 6.7.

         Section 6.8 Power and Authority. Baldwin has the corporate power to
borrow and to execute, deliver and carry out the terms and provisions of the
Loan Documents. Baldwin has taken or caused to be taken all necessary corporate
action to authorize the execution, delivery and performance of this Loan
Agreement and all other Loan Documents and the borrowing thereunder.

         Section 6.9 Place of Business. Baldwin's chief executive office and the
principal place of business is located at 422 Wards Corner Road, Loveland, Ohio
45140. Baldwin's records concerning the Collateral are kept at such chief
executive office, or will be kept at such other place that Baldwin informs Agent
of not less than thirty (30) days in advance of relocation

         Section 6.10 Enforceability of the Loan Documents. The Loan Documents
executed by Baldwin are the valid and binding obligations of Baldwin and are
enforceable against Baldwin in accordance with their terms, except as limited by
bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditors' rights.

         Section 6.11 Taxes. Baldwin's federal tax identification number is
31-1091812. Baldwin has (a) filed all federal, state and local tax returns and
other reports that it is required by law to file, (b) paid or caused to be paid
all taxes, assessments and other governmental charges that are due and payable,
the failure of which to pay would have a material adverse effect on the
Business, except those contested in good faith and in accordance with accepted
procedures, and for which adequate reserves have been established in accordance
with GAAP, and (c) made adequate provision for the payment of such taxes,
assessments or other charges accruing but not yet payable. Baldwin has no
knowledge of any deficiency or additional assessment in a material amount in
connection with any taxes, assessments or charges.

         Section 6.12 Compliance with Laws. Baldwin, to the best of its
knowledge, has complied, and shall cause each Subsidiary to comply, in all
material respects with all applicable laws, the failure to comply with which
would have a material adverse effect on Baldwin individually, or Baldwin and its
Subsidiaries on a consolidated basis.

         Section 6.13 Consents. Baldwin and each of the Subsidiaries have
obtained all material consents, permits, licenses, approvals or authorization
of, or effected the filing, registration or qualification with, any governmental
entity which is required to be obtained or effected by Baldwin and the
Subsidiaries in connection with the Business or the execution and delivery of
this Loan Agreement and the other Loan Documents the failure of which to obtain
or effect would have a material adverse effect on Baldwin individually, or on
Baldwin and its Subsidiaries on a consolidated basis.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   32

                                       26

         Section 6.14 Purpose. Baldwin will use the proceeds of the Term Loan
made hereunder solely for lawful purposes and as described in Article I hereof.

         Section 6.15 Condition of the Business. All material assets used in the
conduct of the Business are in good operating condition and repair and are fully
usable in the ordinary course thereof, reasonable wear and tear excepted.

         Section 6.16 Capital. All issued shares and all outstanding shares in
the Subsidiaries as reflected in Baldwin's financial statements are validly
issued pursuant to proper authorization of the board of directors of such
Subsidiary, and are fully paid, and non-assessable. Baldwin and the Subsidiaries
shall give Agent fifteen (15) days prior written notice before entering any
agreement to register its equity or debt securities under the Securities Act of
1933, as amended, or any state securities law. All Baldwin's and Subsidiaries'
issued shares and outstanding capital stock are fully paid and non-assessable,
and each such Person's capital structure is as set forth on Schedule 6.16.

         Section 6.17 Location of Collateral. Schedule 6.17 describes the
locations where any of the Collateral is located or stored as of the date
hereof.

         Section 6.18 Environmental, Health and Safety Matters. Except as set
forth on Schedule 6.18, the Borrower has obtained all material permits, licenses
and other authorizations which are required under the Environmental Laws
existing on the date hereof. To the best of Borrower's knowledge, Borrower is in
material compliance with all material terms and conditions of any and all
material required permits, licenses, and authorizations, required under the
Environmental Laws existing on the date hereof. Borrower has received no notice
of any facts, events or conditions that interfere with or prevent continued
compliance by Borrower with, or give rise to any present or potential legal,
common law or statutory liability against Borrower. The Borrower's
representations and warranties set forth in this Section 6.18 are its exclusive
representations as to the matter set forth herein regarding Environmental Laws
and no other Section of this Article 6 shall be construed as a representation on
Environmental Laws and Borrower's compliance therewith.

         Section 6.19 Intellectual Property: Patents. Copyrights. Trademarks.
Etc. The Borrower possesses and has made all filings with the United States
Patent and Trademark office and appropriate state agencies to evidence in it
full and complete title to all the patents, trademarks, service marks, trade
names, copyrights and licenses and rights in respect of the foregoing which are
material to the conduct of its business, without any known conflict with the
rights of others.

         Section 6.20  Employee Benefit Plans.

                  (a)  Except as described in Schedule 6.20 hereof, Borrower and
         its ERISA Affiliates are in compliance in all material respects with
         any applicable provisions of 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   33

                                       27



         ERISA and the regulations thereunder and of the Internal Revenue Code
         of 1986, as amended, with respect to all Employee Benefit Plans.

                  (b)  No Termination Event has occurred or is reasonably
         expected to occur with respect to any Guaranteed Pension Plan.

                  (c) Except as described in Schedule 6.20 hereof, the actuarial
         present value of all benefit commitments under each Guaranteed Pension
         Plan does not exceed the assets of that Plan.

                  (d) Neither Borrower nor any of its ERISA Affiliates is a
         party to or participates in any Multiemployer Plans.

         As used in this Subsection, the terms "actuarial present value" and
         "benefit commitments" shall have the meanings specified in Section 4001
         of ERISA.

         Section 6.21 Solvency. Baldwin and its Subsidiaries now have capital
sufficient to carry on their respective business and transactions and all
business and transactions in which they are about to engage and are now solvent
and able to pay their respective debts as they mature, and Baldwin and of the
Subsidiaries now owns property having a value, greater than the amount required
to pay Baldwin's or such Subsidiary's debts.

         Section 6.22 Leases. Schedule 6.22(a) attached hereto is a complete
listing of all capitalized leases of Baldwin and Schedule 6.22(b) attached
hereto is a complete listing of each operating lease of Baldwin which requires
payments of at least Two Million and 00/100 Dollars ($2,000,000.00) over the
remaining non-cancelable terms of such lease.

         Section 6.23 Labor Relations. Except as described on Schedule 6.23
attached hereto and made a part hereof, neither Baldwin nor any of its
Subsidiaries is a party to any collective bargaining agreement, and there are no
material grievances, disputes or controversies with any union or any other
organization of Baldwin's employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any union or
organization.

         Section 6.24 Business Locations; Agent for Process. Baldwin currently
has no office or place of business located in any state or county other than as
shown Schedule 6.17.

         Section 6.25      General Collateral Representation.

                  (a) Borrower is the sole owner of and has good and marketable
         title to the Collateral, free from all Liens, in favor of any Person
         other than the Agent and except Permitted Liens, and has full right and
         power to grant the Agent a security interest therein. All information
         furnished to the Agent concerning the Collateral is and will be
         complete, accurate and correct in all respects when furnished.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   34

                                       28


                  (b) No security agreement, UCC Financing Statement, equivalent
         security or Lien instrument or continuation statement covering all or
         any part of the Collateral is on file or of record in any public
         office, except such as may have been filed (i) by Borrower in favor of
         Agent pursuant to this Agreement, or (ii) in respect of the items of
         Collateral subject to the Permitted Liens.

                  (c) The provisions of this Agreement are sufficient to create
         in favor of the Agent, as of the Closing Date, a valid and continuing
         lien on, and first security interest in, the types of the Collateral
         hereunder in which a security interest may be created under Article 9
         of the UCC. UCC Financing Statements have been duly executed on behalf
         of Borrower and the description of such Collateral set forth therein is
         sufficient to perfect first priority security interests in such
         Collateral in which a security interest may be perfected by the filing
         of UCC Financing Statements. When such UCC Financing Statements are
         duly filed in the filing offices listed on Schedule 6.25(c), and the
         requisite filing fees are paid, such filings will be sufficient to
         perfect security interests in such of the Collateral described in the
         UCC Financing Statements as can be perfected by filing (other than
         Equipment affixed to real property so as to become fixtures), which
         perfected security interests will be prior to all other Liens in favor
         of others and rights of others, enforceable as such as against
         creditors of and purchasers from Borrower (other than purchasers of
         Inventory in the ordinary course) and as against any owner of the Real
         Estate where any of the Equipment is located and as against any
         purchaser of such Real Estate and any present or future creditor
         obtaining a Lien on such real property; and

         Section 6.26 Survival of Representations and Warranties. Baldwin
covenants, warrants and represents to the Lenders that all representations and
warranties of Baldwin contained in this Loan Agreement or any of the other Loan
Documents shall be true at the time of Baldwin's execution of this Loan
Agreement and the other Loan Documents, and shall survive the execution,
delivery and acceptance thereof by the Lenders and the parties thereto and the
closing of the transactions described therein or related thereto.


                                   ARTICLE 7.

                               BALDWIN'S COVENANTS

         Section 7.1 Affirmative Covenants. During the term of this Loan
Agreement and thereafter for so long as any Obligations are outstanding and
unpaid, Baldwin covenants that unless otherwise consented to by Agent in
writing, it shall perform all the acts and promises required by this Loan
Agreement and all the acts and promises set forth below.

                  (a) Payment and Performance. Baldwin will pay and perform all
         Obligations in full when and as due hereunder.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   35

                                       29


                  (b)      Insurance.

                           (i)      Type of Insurance. At its own cost and 
                  expense, Baldwin shall obtain and maintain during the term of
                  this Agreement (a) insurance against loss, destruction or
                  damage to the Business and the Collateral with insurers of
                  reasonable financial soundness and having an A. M. Best rating
                  of A or better, with such policies, against such risks and in
                  such amounts as are appropriate for reasonably prudent
                  businesses in Baldwin's industry and of Baldwin's size and
                  financial strength; and (b) minimum flood insurance as
                  required by FEMA or any other government agency or when
                  required by federal, state or local law, statute, regulation
                  or ordinance and as may be required by Agent and Lenders.

                           (ii)     Requirements as to Insurance Policies. The
                  policies of insurance which Baldwin is required to carry shall
                  comply with the requirements listed below:

                                    (1) Each such policy shall provide that it
                           may not be canceled or allowed to lapse at the end of
                           a policy period without at least thirty (30) days'
                           prior written notice to Agent;

                                    (2) Each liability and hazard insurance
                           policy shall name Agent as an additional insured; and

                                    (3) Each property insurance policy required
                           hereunder shall contain a standard lender's loss
                           payable clause in favor of Agent. Such insurance
                           policies shall also contain lender's loss payable
                           endorsements satisfactory to Agent providing, among
                           other things, that any loss shall be payable in
                           accordance with the terms of such policy
                           notwithstanding any act of Baldwin which might
                           otherwise result in forfeiture of such insurance;

                           (iii)    Collection of Claims. Baldwin will promptly
                  advise Agent of any insured casualty in excess of Five Hundred
                  Thousand and 00/100 Dollars ($500,000.00) and Baldwin agrees
                  that after Default Agent may direct all insurance proceeds
                  therefrom to be paid directly to the Lenders to the extent
                  that such loss is not adequately insured under an insurance
                  policy which names Agent as a loss payee, and hereby appoints
                  Agent its attorney-in-fact for such purpose.

                           (iv)     Blanket Policies. Any insurance required
                  hereunder may be supplied by means of a blanket or umbrella
                  insurance policy.

                           (v)      Delivery of Policies or Certificates of
                  Insurance. Baldwin shall deliver to Agent certificates of
                  insurance issued by insurers to evidence that the insurance
                  maintained by Baldwin complies with the requirements
                  hereunder.



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   36

                                       30



                  (c) Notice of Litigation and Proceedings. Baldwin will give
         prompt notice to Agent of: (a) any litigation or proceeding (including
         fines and penalties of any public authority) in excess of Five Hundred
         Thousand and 00/100 Dollars ($500,000.00) in which it, or any of the
         Subsidiaries is a party in which there is a reasonable possibility of
         an adverse decision which would require it or any of the Subsidiaries
         to pay money or deliver assets, whether or not the claim is considered
         to be covered by insurance; (b) any class action litigation against it,
         regardless of size; and (c) the institution of any other suit or
         proceeding that might materially and adversely affect its or any of its
         Subsidiary's operations, financial condition, property or the Business.

                  (d) Payment of Indebtedness to Third Persons. Baldwin will,
         and will cause each Subsidiary to, pay, when due, all Indebtedness and
         any other liability due third persons, except when the amount thereof
         is being contested in good faith by appropriate proceedings and with
         adequate reserves therefor satisfactory to Agent in accordance with
         GAAP being set aside by Baldwin or such Subsidiary. Agent will use
         reasonable efforts to attempt to give Baldwin notice before Agent
         requires Baldwin to set aside additional reserves.

                  (e) Notice of Change of Business Location. Baldwin will notify
         Agent thirty (30) days in advance of: (a) any change in or
         discontinuation of the location of the Collateral, Baldwin's principal
         place of business, or any of the Subsidiaries' existing offices or
         places of business, (b) the establishment of any new places of business
         relating to the Business, and (c) any change in or addition to the
         locations where Baldwin's Inventory or records are kept.

                  (f) Payment of Taxes. Baldwin will, and will cause each
         Subsidiary to, pay or cause to be paid, when and as due, all taxes,
         assessments and charges or levies imposed upon it or on any of its
         property or that it is required to withhold and pay over to the taxing
         authority or that it must pay on its income, the failure of which to
         pay would have a material adverse effect on Baldwin individually, or on
         Baldwin and the Subsidiaries on a consolidated basis, except where
         contested in good faith by appropriate proceedings with adequate
         reserves in accordance with GAAP, having been set aside by Baldwin or
         such Subsidiary. However, Baldwin will, and will cause each Subsidiary
         to, pay or cause to be paid all such taxes, assessments, charges or
         levies immediately whenever foreclosure of any Lien that attaches on
         the Collateral appears imminent.

                  (g) Employee Benefit Plans and Guaranteed Pension Plans.
         Borrower will and will cause each of its ERISA Affiliates to (i) comply
         with all requirements imposed by ERISA and the Internal Revenue Code of
         1986, as amended, applicable from time to time to any of its Guaranteed
         Pension Plans or Employee Benefit Plans, (ii) make full payment when
         due of all amounts which, under the provisions of Employee Benefit
         Plans or under applicable law, are required to be paid as contributions
         thereto, (iii) not permit to exist any accumulated funding deficiency,
         whether or not waived, (iv) file on a timely basis all reports, notices
         and other filings required by any governmental agency with 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   37

                                       31


         respect to any of its Employee Benefit Plans, (v) make any payments to
         Multiemployer Plans required to be made under any agreement relating to
         such Multiemployer Plans, or under any law pertaining thereto, (vi) not
         amend or otherwise alter any Guaranteed Pension Plan if the effect
         would be to cause the actuarial present value of all benefit
         commitments under each Guaranteed Pension Plan to be less than the
         current value of the assets of such Guaranteed Pension Plan allocable
         to such benefit commitments, (vii) furnish to all participants,
         beneficiaries and employees under any of the Employee Benefit Plans,
         within the periods prescribed by law, all reports, notices and other
         information to which they are entitled under applicable law, and (viii)
         take no action which would cause any of the Employee Benefit Plans to
         fail to meet any qualification requirement imposed by the Internal
         Revenue Code of 1986, as amended. As used in this Section 7.1, the term
         "accumulated funding deficiency" has the meaning specified in Section
         302 of ERISA and Section 412 of the Internal Revenue Code, and the
         terms "actuarial present value", "benefit commitments" and "current
         value" have the meaning specified in Section 4001 of ERISA.

                  (h) Further Assurances. Baldwin agrees to, and will cause each
         Subsidiary to, execute such other and further documents, including
         without limitation, deeds of trust, promissory notes, security
         agreements, financing statements, continuation statements, certificates
         of title, and the like as may from time to time in the reasonable
         opinion of Agent be necessary to perfect, confirm, establish,
         re-establish, continue, or complete the security interests, collateral
         assignments and Liens in the Collateral, and the purposes and
         intentions of this Loan Agreement.

                  (i) Maintenance of Status. Baldwin will take all necessary
         steps to (a) preserve its, and each Subsidiary's, existence as a
         corporation, (b) preserve Baldwin's and the Subsidiaries' franchises
         and permits, and (c) comply with all present and future material
         agreements to which Baldwin, or any of the Subsidiaries, is subject,
         and (d) maintain, and cause each Subsidiary to maintain, its
         qualification and good standing in all states in which such
         qualification is necessary or in which the failure to be so qualified
         might have a material adverse effect on the financial condition or
         properties of Baldwin or the Business. Baldwin will not change the
         nature of the Business during the term of this Loan Agreement.

                  (j) Financial Statements; Reporting Requirements;
         Certification as to Defaults. During the term of this Loan Agreement,
         Baldwin will furnish a copy of the following to Agent:


                      (i)  within one hundred twenty (120) days after the end of
                  each fiscal year, annual financial statements for Baldwin and
                  its Subsidiaries as of the end of such fiscal year, consisting
                  of a consolidated balance sheet, consolidated statement of
                  earnings, consolidated statements of consolidated cash flows
                  and consolidated statement of stockholder's equity, in
                  comparative form, together with a copy of Baldwin's 10-K for
                  such fiscal year. The statements and balance sheet 


AMENDED AND RESTATED TERM LOAN AGREEMENT
Baldwin Piano & Organ Company
<PAGE>   38


                                       32




                  will be audited by an independent firm of certified public
                  accountants selected by Baldwin and acceptable to Agent (any
                  Big 6 accounting firm being acceptable to Agent), and
                  certified by that firm of certified public accountants to have
                  been prepared in accordance with GAAP. The certified public
                  accountants will render an unqualified opinion as to such
                  statements and balance sheets. Agent will have the absolute
                  and irrevocable right, from time to time, to discuss the
                  affairs of Baldwin directly with the independent certified
                  public accountant after prior notice to Baldwin and the
                  reasonable opportunity of Baldwin to be present at any such
                  discussions;

                           (ii) by the twentieth (20th) day of each month,
                  financial statements for Baldwin and its Subsidiaries as of
                  the end of the immediately preceding month, consisting of
                  consolidated and consolidating balance sheet and statement of
                  operations prepared by Baldwin;

                           (iii) by the forty-fifth (45th) day of each fiscal
                  quarter, a Quarterly Compliance Certificate, in the form of
                  Exhibit F, of Baldwin's President or Chief Financial Officer,
                  stating that such person has reviewed the provisions of the
                  Loan Documents and that a review of the activities of Baldwin
                  during such quarter has been made by or under such person's
                  supervision with a view to determining whether Baldwin has
                  observed and performed all of Baldwin's obligations under the
                  Loan Documents, and that, to the best of such person's
                  knowledge, information and belief, Baldwin has observed and
                  performed each and every undertaking contained in the Loan
                  Documents and is not at the time in default in the observance
                  or performance of any of the terms and conditions thereof or,
                  if Baldwin will be so in default, specifying all of such
                  defaults and events of which such person may have knowledge;

                           (iv) by the end of each fiscal year, an annual budget
                  and income statement with cash flow projections for the
                  following fiscal year;

                           (v) promptly upon receipt thereof, copies of all
                  final reports and final management letters submitted to
                  Baldwin or any of the Baldwin's Subsidiaries by independent
                  accountants in connection with any annual or interim audit of
                  the books of Baldwin or such Subsidiaries made by such
                  accountants;

                           (vi) copies of any and all reports, filings and other
                  documentation delivered to the Securities and Exchange
                  Commission by or on behalf of Baldwin promptly after the
                  delivery thereof, if applicable; and

                           (vii) any other statements, reports and other
                  information as Agent may reasonably request concerning the
                  financial condition or operations of Baldwin and its
                  properties.


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   39
                                       33


                  (k) Notice of Existence of Default. Baldwin will, and will
         cause its Subsidiaries to, promptly notify Agent of: (a) the existence
         of any known condition or event, which constitutes a Default or an
         Unmatured Default; and (b) the actual or threatened termination,
         suspension, lapse or relinquishment of any material license,
         authorization, permit or other right granted Baldwin or for Baldwin's
         benefit and used in the Business, or granted to any of its Subsidiaries
         or for any such Subsidiaries' benefit, by any governmental agency
         material to the Business.

                  (l) Compliance with Laws. Baldwin will, and will cause its
         Subsidiaries to, comply in all material respects with all applicable
         laws, rules, regulations and orders.

                  (m) Maintenance of Collateral. Baldwin will maintain all
         material Collateral and every part thereof in good condition and repair
         (ordinary wear and tear excepted). Baldwin will not permit the
         aggregate value of the Collateral to be materially impaired. Baldwin
         will defend the Collateral against all claims and legal proceedings by
         Persons other than the Lenders and Permitted Liens. Baldwin will not
         permit the Collateral to be used in violation of any applicable law,
         regulations, or any policy of insurance. As to Collateral consisting of
         instruments and chattel paper, Baldwin will preserve rights in it
         against prior parties.

                  (n) Reimbursement for Bank Charges. Baldwin will reimburse the
         Lenders for all charges made by banks for collection of checks and
         other items of payment and for transfer of funds to or from Baldwin.

         Section 7.2 Negative Covenants. During the term of this Loan Agreement
and thereafter, for so long as any Obligations are outstanding and unpaid,
Baldwin covenants that unless otherwise consented to in writing by Agent,
Baldwin shall not perform or cause or permit to be performed the following acts:

                  (a) Change of Name. Etc. Baldwin and the Subsidiaries will not
         change their name or begin to trade under any assumed names or trade
         names without thirty (30) days prior written notice to Agent. Baldwin
         will not, and will not permit any Subsidiary to, change its manner of
         organization, enter into any mergers, consolidations, reorganizations
         or recapitalization (excluding such transactions where Baldwin is the
         surviving entity) without Agent's prior written consent other than as
         contemplated herein.

                  (b) Sale or Transfer of Assets. Except in the ordinary course
         of business or except as consented to in writing by Agent, or except
         for sales to a Lender or any affiliate thereof or except for sales to
         and by KAC as contemplated by the Permitted Securitization Documents,
         Baldwin and the Subsidiaries will not sell, transfer, lease (including
         sale-leaseback) or otherwise dispose of all or any substantial part of
         their assets; provided, however, that any sales of KAC Accounts by
         Baldwin to KAC under the Permitted Securitization Documentation, and
         sales, contributions or other transfers of KAC Accounts under the
         Permitted Securitization Documentation by KAC, shall be 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   40

                                       34


         permitted. This provision will not apply to any sale if the proceeds of
         such sale pay the Obligations in full.

                  (c) Encumbrance of Assets. Baldwin will not, and will not
         permit a Subsidiary other than KAC to, mortgage, pledge, grant or
         permit to exist a security interest in or Lien upon any of the
         Collateral, now owned or hereafter acquired except for the Permitted
         Liens.

                  (d) Acquisition of Stock or Assets; New Subsidiaries. Baldwin
         and the Subsidiaries will not, without Agent's prior written consent,
         acquire, or enter into any agreement, commitment letter or letter of
         intent to acquire, all or substantially all the assets of, equity
         interest or stock in, another business for an amount in excess of
         Twenty-five Million and 00/100 Dollars ($25,000,000.00); nor will
         Baldwin hereafter create any new Subsidiaries.

                  (e) False Certificates or Documents. Baldwin has not and will
         not, and will not permit any Subsidiary to, furnish Agent with any
         certificate or other document that contains any untrue statement of
         material fact or that omits to state a material fact necessary to make
         it not misleading in light of the circumstances under which it was
         furnished.

                  (f) Assignment. Baldwin will not assign or attempt to assign
         the Loan Documents or any of its interests under the Loan Documents,
         except in favor of Agent for the benefit of the Lenders.

                  (g) Transactions with Affiliates. Baldwin will not enter into
         any contracts, leases, sales or other transactions with any Affiliate
         (other than Subsidiaries) on terms less favorable than could be
         obtained generally by Baldwin from a non-Affiliate. For avoidance of
         doubt, Baldwin and KAC may enter into and perform any of its
         obligations under the Permitted Securitization Documents.

                  (h) Loans by Baldwin. Baldwin will not, and will not permit
         any Subsidiary to, make any loan to any Person in excess of the
         aggregate amount of Five Hundred Thousand and 00/100 Dollars
         ($500,000.00), except for loans in anticipation of reasonable and
         normally reimbursable business expenses and trade credit extended in
         the ordinary course of Business, and loans made by KAC under the
         Permitted Securitization Documentation.

                  (i) Fiscal Year. Baldwin will not, and will not permit any
         Subsidiary to, change its fiscal year-end without sixty (60) days prior
         written notice to Agent.

                  (j) Total Indebtedness. Baldwin shall not create, incur,
         assume, or suffer to exist, or permit any Subsidiary to create, incur
         or suffer to exist, any Indebtedness, except:


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   41
                                       35

                           (i)    the Obligations;

                           (ii)   Subordinated Debt;

                           (iii)  Capital Leases not prohibited by Section 7.3
                  (b) for Capital Expenditures;

                           (iv)   Indebtedness incurred in connection with the
                  Previous Fifth Third Transaction;

                           (v)    Indebtedness of any Subsidiary to Baldwin;

                           (vi)   accounts payable to trade creditors and 
                  current operating expenses (other than for money borrowed)
                  incurred in the ordinary course of business which are aged not
                  more than thirty (30) days past due, unless actively contested
                  in good faith and by appropriate and lawful proceedings and
                  for which adequate reserves have been established in
                  accordance with GAAP;

                           (vii)  obligations to pay Rentals permitted by 
                  Section 7.2(n);

                           (viii) obligations by Borrower to repurchase or
                  otherwise pay Indebtedness of KAC;

                           (ix)   any obligations incurred pursuant to the 
                  Permitted Securitization Documentation; and

                           (x)    guaranties permitted pursuant to Section 7.2
                  (l); and

                           (xi)   Reimbursement Obligations incurred in 
                  connection With Letters of Credit.

                  (k)       Adverse Transactions. Baldwin will not enter into 
         any transaction, or permit any Subsidiary to enter into any
         transaction, which materially and adversely affects or may materially
         and adversely affect the aggregate value of Collateral or Baldwin's
         ability to repay the Obligations.

                  (l)       Guaranties. Baldwin will not guarantee, assume, 
         endorse or otherwise, in any way, become directly or contingently
         liable with respect to the Indebtedness of any Person in excess of One
         Hundred Thousand and 00/100 Dollars ($100,000.00) other than guarantees
         of floor plan financing arrangements of Borrower or its Subsidiaries,
         or of any dealer, distributor or purchaser of inventory of Borrower or
         any Subsidiary.

                  (m)       Margin Securities. Baldwin will not own, purchase or
         acquire, or permit any Subsidiary to own, purchase or acquire, (or
         enter, or permit any Subsidiary to enter,

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   42

                                       36


         into any contract to purchase or acquire) any "margin security" as
         defined by any regulation of the Federal Reserve Board as now in effect
         or as the same may hereafter be in effect unless, prior to any such
         purchase or acquisition or entering into any such contract, Agent shall
         have received an opinion of counsel satisfactory to Agent to the effect
         that such purchase or acquisition will not cause this Loan Agreement to
         violate Regulations G or U or any other regulation of the Federal
         Reserve Board then in effect.

                  (n)      Leases. Baldwin will not become a lessee under any
         operating lease of property if the aggregate Rentals (defined below)
         payable during any current or future period of twelve (12) consecutive
         months under the lease in question and all other leases under which
         Baldwin is then lessee would exceed Two Million Five Hundred Thousand
         and 00/100 Dollars ($2,500,000.00). The term "Rentals" means, as of the
         date of determination, all payments which the lessee is required to
         make by the terms of any lease.

                  (o)      Tax Consolidation. Baldwin will not file or consent 
         to the filing of any consolidated income tax return with any Person
         other than a Subsidiary.

                  (p)      Stock Redemption. Baldwin will not redeem or purchase
         any of its outstanding capital stock, warrants in favor of anyone other
         than Agent, or stock options or convert or permit such stock, warrants
         or options to be converted into cash, nor has or shall Baldwin guaranty
         to any of its shareholders any minimum stock price or valuation, but
         excluding from all of the foregoing, the purchase of options and any
         other such transactions of Five Million Dollars ($5,000,000.00) or less
         in value.

         Section 7.3       Financial Covenants.

                  (a)      Amounts. Baldwin agrees that it will at all times 
                  maintain the following:

                           (i)  a Tangible Net Worth in the combined amount of
                  not less than Forty Million and 00/100 Dollars
                  ($40,000.000.00);

                           (ii)  a ratio of Debt to Tangible Net Worth of not 
                  more than Two and One-Half to One (2.5 to 1);

                           (iii) a ratio of Current Tangible Assets to current
                  liabilities of not less than One and Three Tenths to One (1.3
                  to 1);

                           (iv)  a ratio of EBITDA to Fixed Charges greater than
                  One and One-Half to One (1.50 to 1) on a four (4) quarter
                  rolling basis.

                           For purposes of this Section 7.3(a): (a) "Tangible
         Net Worth" means the book value of Baldwin's assets less liabilities
         (including as liabilities all reserves for contingencies and other
         potential liabilities), excluding from such assets all Intangibles; 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   43

                                       37

         (b) "Intangibles" means and includes general intangibles (as that term
         is defined in the UCC); accounts receivable and advances due from
         officers, directors, member, owner, employees, stockholders and
         affiliates; leasehold improvements net of depreciation; licenses; good
         will; prepaid expenses; escrow deposits; covenants not to compete; the
         excess of cost over book value of acquired assets; franchise fees;
         organizational costs; finance reserves held for recourse obligations;
         capitalized research and development costs; and such other similar
         items as Agent may from time to time determine in Agent's sole
         discretion; (c) "Debt" means all of Baldwin's liabilities and
         Indebtedness For Borrowed Money of any kind or nature whatsoever other
         than Subordinated Debt (as determined in accordance with GAAP), whether
         direct or indirect, absolute or contingent, and including obligations
         under capitalized leases, guaranties or with respect to which Baldwin
         has pledged assets to secure performance, whether or not direct
         recourse liability has been assumed by Baldwin, but specifically
         excluding any liability which Baldwin incurs pursuant to the Permitted
         Securitization Documentation; (d) "Subordinated Debt" means all of
         Baldwin's Debt which is subordinated to the payment of Baldwin's
         liabilities to the Lenders by an agreement in form and substance
         satisfactory to Agent; (e) "Current Tangible Assets" means Baldwin's
         current assets less, to the extent otherwise included therein, all
         Intangibles. The foregoing terms will be determined in accordance with
         GAAP consistently applied, and, if applicable, on a consolidated basis
         ("Financial Covenants").

                  (b) Limitations on Capital Expenditures. Borrower on a
         Consolidated basis shall not make, commit to make or incur any Capital
         Expenditures (including, without limitation, Capital Leases) in the
         aggregate during any of the periods set forth below in excess of the
         maximum amount set forth below for such period:


   ===========================================================================
          TWELVE (12) MONTH PERIOD                   MAXIMUM AMOUNT OF 
                   ENDING                          CAPITAL EXPENDITURES
   ===========================================================================
             December 31, 1998                         $10,000,000
   ---------------------------------------------------------------------------
               March 31, 1999                           $9,375,000
   ---------------------------------------------------------------------------
               June 30, 1999                            $8,750,000
   ---------------------------------------------------------------------------
             September 30, 1999                         $8,125,000
   ---------------------------------------------------------------------------
    December 31, 1999 and each March 31,                $7,500,000
   June 30, September 30 and December 31
                 thereafter
   ===========================================================================

provided, that, to the extent actual Capital Expenditures for any quarter of
1998 shall be greater than Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00) for such quarter, an amount equal to the difference shall be
added to the Capital Expenditures limitation in the 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   44

                                       38

next succeeding periods which included such quarters in its calculation. In no
event shall actual Capital Expenditures for the periods ending March 31, June 30
and September 30, 1999 exceed Ten Million and 00/100 Dollars ($10,000,000.00)
for the four quarter calculation.

         (c) Covenant Compliance Certificate. The President or Chief Financial
Officer of Baldwin will certify to Agent by the twentieth (20th) day of each
month, or more often if requested by Agent, that Baldwin is in compliance with
the Financial Covenants as set forth in a Monthly Compliance Certificate
substantially in the form of Exhibit G.


                                   ARTICLE 8.

                                DEFAULT/REMEDIES

         Baldwin will be in default (each a "Default") under this Loan Agreement
if there occurs and is continuing any of the following:

         Section 8.1 Baldwin fails to pay any amount of principal or interest on
the Loans when due and payable hereunder or Baldwin fails to pay any other sum
under the Loan Documents within three (3) days of the date when due and payable;
hereunder or thereunder.

         Section 8.2 Baldwin breaches any terms, covenants, warranties or
representations contained herein, or in any other Loan Document which is not
cured within thirty (30) days of written notice from Agent or any Lender to
Baldwin;

         Section 8.3 any Guarantor breaches any terms, covenants, warranties or
representations contained in any guaranty or other agreement between the
Guarantor and the Lenders which is not cured within thirty (30) days of written
notice from Agent or any Lender to Baldwin;

         Section 8.4 any representation, statement, report or certificate made
or delivered by Baldwin or any Guarantor to the Lenders is not accurate when
made in any material respect which is not cured within thirty (30) days of
written notice from Agent or any Lender to Baldwin;

         Section 8.5 Baldwin abandons any material Collateral;

         Section 8.6 Baldwin or any Guarantor is or becomes in default in the
payment or performance of any obligation owed to any third party for borrowed
money or there shall occur any Event of Default under the Previous Fifth Third
Transaction;

         Section 8.7 a default or termination event shall have occurred and be 
continuing under the Permitted Securitization Documentation;

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   45

                                       39

         Section 8.8 an unpaid money judgment issues against Baldwin or any
Guarantor in excess of Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00) and such judgment remains unsatisfied for a period of thirty (30)
days or is not stayed pending appeal;

         Section 8.9 an attachment, sale or seizure issues or is executed
against any assets of Baldwin or against any assets of any Guarantor in an
amount in excess of Ten Million and 00/100 Dollars ($10,000,000.00) which
remains unsatisfied or unreleased for a period of thirty (30) days;

         Section 8.10 Baldwin ceases existence as a corporation, partnership,
trust or limited liability company;

         Section 8.11 Baldwin ceases or suspends business;

         Section 8.12 Baldwin or any Guarantor makes a general assignment for
the benefit of creditors;

         Section 8.13 Baldwin or any Guarantor becomes insolvent or voluntarily
or involuntarily becomes subject to the Federal Bankruptcy Code, any state
insolvency law or any similar law;

         Section 8.14 any receiver is appointed for any of Baldwin's or any
Guarantor's assets;

         Section 8.15 any guaranty of Baldwin's debts to the Lenders is
terminated without the prior written consent of Agent and the Lenders;

         Section 8.16 Baldwin or any Guarantor misrepresents Baldwin's or such
Guarantor's financial condition or organizational structure;

         Section 8.17 any material item or portion of the Collateral becomes
subject to any Lien, claim, encumbrance or security interest other than a
Permitted Lien and such Lien is not released within thirty (30) days;

         Section 8.18 Baldwin shall be enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
any material part of its Business; or any material lease or agreement pursuant
to which Baldwin leases, uses or occupies any property shall be canceled or
terminated prior to the expiration of its stated term, or any part of the
Collateral shall be taken through condemnation or the value thereof shall be
impaired through condemnation; or

         Section 8.19 Any event shall occur which might, in Agent's opinion,
have a material adverse effect on Baldwin's financial or business condition,
operation or prospects.

         Upon the occurrence and continuation of an event of a Default:

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   46
                                       40

                  (a) Agent may at any time at Agent's election, without notice
         or demand to Baldwin, declare all or any of the Obligations immediately
         due and payable, together with all costs and expenses of the Lenders'
         collection activity, including, without limitation, all reasonable
         attorneys fees; and exercise any or all rights under applicable law
         (including, without limitation, the right to possess, transfer and
         dispose of the Collateral).

                  (b) Baldwin will segregate and keep the Collateral in trust
         for the Lenders, and in good order and repair, and will not sell, rent,
         lease, consign, otherwise dispose of or use any Collateral, nor further
         encumber any Collateral.

                  (c) Upon Agent's oral or written demand, Baldwin will
         immediately deliver the Collateral to Agent, in good order and repair,
         at a place specified by Agent, together with all related documents; or
         Agent may, in Agent's sole discretion and without notice or demand to
         Baldwin, take immediate possession of the Collateral together with all
         related documents.

                  (d) Agent may, without notice, apply the Default Interest Rate
         as provided in Sections 3.4(a)(ii) and (iii).

                  (e) Agent may at its sole election and without demand enter,
         with or without process of law, any premises where Collateral might be
         and, without charge or liability to the Lenders therefor do one or more
         of the following: (i) take possession of the Collateral and use or
         store it in said premises or remove it to such other place or places as
         Agent may deem convenient; (ii) take possession of all or part of such
         premises and the Collateral and place a custodian in the exclusive
         control thereof until completion of enforcement of the Lenders'
         security interest in the Collateral or until the Lenders' removal of
         the Collateral and, (iii) remain on such premises and use the same,
         together with Baldwin's materials, supplies, books and records, for the
         purpose of liquidating or collecting such Collateral and conducting and
         preparing for disposition of such Collateral.

                  (f) In addition to the Remedies provided herein or otherwise
         provided in law or equity, Agent may exercise any and all remedies
         available with respect to any First Mortgage, Assignment of Rents and
         Security Agreement executed pursuant to Section 5.1(a) herein.

                  (g) Upon the occurrence of a Default under Sections 8.12, 8.13
         or 8.14 all Obligations shall automatically be accelerated and due and
         payable and the Default Interest Rate shall automatically apply as of
         the date of the first occurrence of such Default, without any prior
         notice, demand or action of any type on the part of Agent.

All of the Lenders' rights and remedies are cumulative. The Lenders' failure to
exercise any of the Lenders' rights or remedies hereunder will not waive any of
the Lenders' rights or remedies as to any past, current or future Default.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company
<PAGE>   47

                                       41

                                   ARTICLE 9.

                               SALE OF COLLATERAL

         Baldwin agrees that if the Lenders conducts a private sale of any
Collateral by requesting bids from ten (10) or more dealers or distributors in
that type of Collateral, any sale by the Lenders of such Collateral in bulk or
in parcels within one hundred twenty (120) days of: (a) Agent's taking
possession and control of such Collateral; or (b) when Agent is otherwise
authorized to sell such Collateral; whichever occurs last, to the bidder
submitting the highest cash bid therefor, is a commercially reasonable sale of
such Collateral under the UCC. Baldwin agrees that the purchase of any
Collateral by a vendor, as provided in any agreement between Agent and the
vendor, if any, is a commercially reasonable disposition and private sale of
such Collateral under the UCC, and no request for bids shall be required.
Baldwin further agrees that seven (7) or more days prior written notice will be
commercially reasonable notice of any public or private sale (including any sale
to a vendor). Baldwin irrevocably waives any requirement that Agent retain
possession and not dispose of any Collateral until after an arbitration hearing,
arbitration award, confirmation, trial or final judgment If Agent disposes of
any such Collateral other than as herein contemplated, the commercial
reasonableness of such disposition will be determined in accordance with the
laws of the state governing this Loan Agreement.


                                   ARTICLE 10.

                                INDEMNIFICATIONS

         Section 10.1 General Indemnity. In addition to the payment of expenses
and attorneys' fees, if applicable, whether or not the transactions contemplated
hereby shall be consummated, Baldwin agrees to indemnify, pay and hold Agent and
the officers, directors, employees, agents, and affiliates of Agent and such
holders (collectively called the "Indemnitees") harmless from and against, any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto),
that may be imposed on, incurred by, or asserted against the Indemnitees, in any
manner relating to or arising out of the Loan Documents, the statements
contained in any commitment letters delivered by the Lenders. The Lenders'
agreement to make the Loans or any other payment hereunder, or the use or
intended use of the proceeds of any of the Loans hereunder (the "Indemnified
Liabilities"); provided, however, that Baldwin shall have no obligation to an
indemnitee hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of an Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   48

                                       42

any law or public policy, Baldwin shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them. The provisions of the undertakings and indemnification set out in this
Section 10.1 shall survive satisfaction and payment of the Obligations and
termination of this Loan Agreement.

         Section 10.2 Environmental and Safety and Health Indemnity. Baldwin
hereby indemnifies the Indemnitees and agrees to hold the Indemnitees harmless
from and against any and all losses, liabilities, damages, injuries, costs,
expenses and claims of any and every kind whatsoever (including, without
limitation, court costs and attorneys' fees) which at any time or from time to
time may be paid, incurred or suffered by, or asserted against, an Indemnitee
for, with respect to, or as a direct or indirect result of the violation by
Baldwin or any Subsidiary, of any Environmental Law; or with respect to, or as a
direct or indirect result of the escape, seepage, leakage, spillage, disposal,
discharge, emission or release from, properties utilized by Baldwin and/or any
Subsidiary in the conduct of its business into or upon any land, the atmosphere,
or any watercourse, body of water or wetland, of any Hazardous Material
(including, without limitation, any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under the Environmental Laws). The
provision of and undertakings and indemnification set out in this Section 10.2
shall survive satisfaction and payment of the Obligations and termination of
this Loan Agreement.


                                   ARTICLE 11.

                      CONCERNING THE AGENT AND THE LENDERS

         The Agent and the Lenders agree as follows:

         Section 11.1 Appointment of the Agent. Each of the Lenders hereby
appoints Fifth Third to serve as Agent, under this Loan Agreement and the other
Loan Documents, and in such capacity, to administer this Loan Agreement, and the
other Loan Documents.

         Section 11.2 Authority. Each of the Lenders hereby irrevocably
authorizes the Agent (i) to take such action on such Lender's behalf under this
Loan Agreement and the other Loan Documents and to exercise such powers and to
perform such duties hereunder and thereunder as are delegated to or required of
the Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; and (ii) to take such action on such Lender's
behalf as the Agent shall consider necessary or advisable for the protection,
collection or enforcement of any of the Obligations. The Agent will promptly
notify each of the Lenders as soon as it becomes aware of any Default or Event
of Default or any failure by Borrower to make any payment in respect of any of
the Notes, provided, however, that Agent shall not be deemed to have knowledge
of any item until such time as Agent's officers responsible for administration
of the Loans shall receive written notice thereof or have actual knowledge of
such event. If any Lender becomes aware of any Default or Event of Default by
Borrower, it shall promptly notify 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   49

                                       43

Agent thereof provided, however, that Lenders shall not be deemed to have
knowledge of any item until such time as Lenders' officers responsible for
administration of the Loans shall receive written notice thereof or have actual
knowledge of such event.

         Section 11.3 Acceptance of Appointment. The Agent hereby accepts its
appointment as Agent for each of the Lenders under this Loan Agreement and the
other Loan Documents, but only on the terms set forth in this Loan Agreement,
including the following:

                  (a) Agent makes no representation as to the value, validity or
         enforceability of this Loan Agreement or of any of the other Loan
         Documents or as to the correctness of any statement contained in this
         Loan Agreement or in any of the other Loan Documents;

                  (b) Agent may exercise its powers and perform its duties under
         this Loan Agreement and the other Loan Documents either directly or
         through its agents or attorneys;

                  (c) Agent shall be entitled to obtain from counsel selected by
         it with reasonable care advice with respect to legal matters pertaining
         to this Loan Agreement, or any of the other Loan Documents and shall
         not be liable for any action taken, omitted to be taken or suffered in
         good faith in accordance with the advice of such counsel;

                  (d) Agent shall not be required to use its own funds in the
         performance of any of its duties or in the exercise of any of its
         rights or powers, and Agent shall not be obligated to take any action
         which, in its reasonable judgment, would involve it in any expense or
         liability unless it shall have been furnished security or indemnity in
         an amount and in form and substance satisfactory to it; and

                  (e) Agent, in performing its duties and functions under this
         Loan Agreement and the other Loan Documents on behalf of the Lenders,
         will exercise the same care which it normally exercises in making and
         handling loans in which it alone is interested, but does not assume
         further responsibility.

         Section 11.4      Collateral Matters.

                  (a) Release of Collateral. Lenders hereby irrevocably
         authorize Agent, at its option and in its discretion, to release any
         Lien granted to or held by Agent upon any property covered by the Loan
         Documents (i) upon termination of the Total Commitments and payment and
         satisfaction of all Obligations; or (ii) constituting property being
         sold or disposed of if Borrower certifies to Agent that the sale or
         disposition is made in compliance with the provisions of this Loan
         Agreement (and Agent may rely in good faith conclusively on any such
         certificate, without further inquiry); or (iii) constituting property
         leased to Borrower under a lease which has expired or been terminated
         in a transaction permitted under this Loan Agreement or is about to
         expire and which has not been, and is not intended by Borrower to be,
         renewed or extended. Upon request by 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   50
                                       44


         Agent at any time, any Lender will confirm in writing Agent's
         authority to release particular types or items of property covered by
         the Loan Documents pursuant to this Subsection 11.4(a).

                  (b) Confirmation of Authority; Execution of Releases. Without
         in any manner limiting Agent's authority to act without any specific or
         further authorization or consent by Requisite Lenders (as set forth in
         Subsection 11.4(a)), each Lender agrees to confirm in writing, upon
         request by Borrower, the authority to release any property covered by
         the Loan Documents conferred upon Agent under clauses (i) through (iii)
         of Subsection 11.4(a). So long as no Event of Default is then
         continuing, upon receipt by Agent of confirmation from the Requisite
         Lenders of its authority to release any particular item or types of
         property covered by the Loan Documents, and upon at least five (5)
         Business Days prior written request by Borrower, Agent shall (and is
         hereby irrevocably authorized by Lenders to) execute such documents as
         may be necessary to evidence the release of the Liens granted to Agent
         for the benefit of Lenders herein or pursuant hereto upon such
         Collateral; provided, however, that (i) Agent shall not be required to
         execute any such document on terms which, in Agent's opinion, would
         expose Agent to liability or create any obligation or entail any
         consequence other than the release of such Liens without recourse or
         warranty, and (ii) such release shall not in any manner discharge,
         affect or impair the Obligations or any Liens upon (or obligations of
         Borrower, in respect of), all interests retained by Borrower, including
         (without limitation) the proceeds of any sale, all of which shall
         continue to constitute part of the property covered by the Loan
         Documents.

                  (c) Absence of Duty. Agent shall have no obligation whatsoever
         to any Lender or any other Person to assure that the property covered
         by the Loan Documents exists or is owned by Borrower or is cared for,
         protected or insured or has been encumbered or that the Liens granted
         to Agent herein or pursuant hereto have been properly or sufficiently
         or lawfully created, perfected, protected or enforced or are entitled
         to any particular priority, or to exercise at all or in any particular
         manner or under any duty of care, disclosure or fidelity, or to
         continue exercising, any of the rights, authorities and powers granted
         or available to Agent in this Section 11.4 or in any of the Loan
         Documents, it being understood and agreed that in respect of the
         property covered by the Loan Documents or any act, omission or event
         related thereto, Agent may act in any manner it may deem appropriate,
         it its discretion, given Agent's own interest in property covered by
         the Loan Documents as one of the Lenders and that Agent shall have no
         duty or liability whatsoever to any of the other Lenders; provided that
         Agent shall exercise the same care which it would in dealing with loans
         for its own account.

         Section 11.5 Agency for Perfection. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting Lenders' security interest
in assets which, in accordance with Article 6 of the Uniform Commercial Code in
any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Agent) obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   51
                                       45

such Collateral to Agent or in accordance with Agent's instructions.
Each Lender agrees that it will not have any right individually to enforce or
seek to enforce any Loan Document or to realize upon any collateral security for
the Loans, it being understood and agreed that such rights and remedies may be
exercised only by Agent.

         Section 11.6 Application of Moneys. All moneys realized by the Agent
under the Loan Documents shall be held by Agent to apply in accordance with the
provisions of this Loan Agreement.

         Section 11.7 Reliance by the Agent. Agent shall be entitled to rely on
any notice, consent, certificate, affidavit, letter, telegram, telecopy,
facsimile or teletype message, statement, order, instrument or other document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons. Agent shall deem and treat the payee of any Note as
the absolute owner thereof for all purposes hereof until such time as it
receives actual notice of an assignment permitted hereunder of such payee's
interest, together with the written agreement of the assignee in form and
substance satisfactory to Agent that such assignee is bound by this Loan
Agreement as a "Lender" hereunder.

         Section 11.8 Exculpatory Provisions. Neither Agent nor any of its
shareholders, directors, officers, employees or agents shall be liable in any
manner to any of the Lenders for any action taken, omitted to be taken or
suffered in good faith by it or them under any of the Loan Documents or in
connection therewith, or be responsible for the consequences of any oversight or
error of judgment, except for losses due to gross negligence or willful
misconduct of such Agent, shareholder, director, officer, employee or agent.
Without limiting the generality of the foregoing sentence of this Section 11.8,
under no circumstances shall the Agent be subject to any liability to any Lender
on account of any action taken or omitted to be taken by such Agent in
compliance with the direction of the Requisite Lenders or all of the Lenders, as
the case may be as provided for hereunder.

                  Agent shall not be responsible in any manner to any of the
Lenders for the due execution, effectiveness, genuineness, validity or
enforceability, perfection or recording of this Loan Agreement, any of the
Notes, any of the other Loan Documents or for any certificate, report or other
document used under or in connection with this Loan Agreement or any of the
other Loan Documents, or for the truth or accuracy of any recitals, statements,
warranties or representations contained herein or in any certificate, report or
other document at any time hereafter furnished or purporting to have been
furnished to it by or on behalf of Borrower, or any other Person, or be under
any obligation to any of the Lenders to ascertain or inquire as to the
performance or observance by Borrower, or any other Person of any of the
covenants, agreements or conditions set forth in this Loan Agreement, the Notes
or any of the other Loan Documents or as to the use of any moneys lent hereunder
or thereunder.

                  Agent shall not be obligated to take any action or refrain
from taking any action under any Loan Document that might, in its judgment,
involve it in any expense or liability until it shall have been indemnified to
its satisfaction by or received an agreement to indemnify from 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   52

                                       46

each Person which such Agent reasonably believes may be an intended recipient of
such distribution. If a court of competent jurisdiction shall adjudge that any
amount received and distributed by the Agent is to be repaid, each Person to
whom any such distribution shall have been made shall either repay to the Agent
its proportionate share of the amount so adjudged to be repaid or shall pay over
the same in such manner and to such Persons as shall be determined by such
court.

         Section 11.9 Action by the Agent. Except as otherwise expressly
provided under this Loan Agreement or in any other of the Loan Documents, Agent
will take such action, assert such rights and pursue such remedies under this
Loan Agreement and the other Loan Documents as the Requisite Lenders or all of
the Lenders, as the case may be as provided for hereunder shall direct. Except
as otherwise expressly provided in any of the Loan Documents, Agent will not
(and will not be obligated to) take any action, assert any rights or pursue any
remedies under this Loan Agreement or any of the other Loan Documents in
violation or contravention of any express direction or instruction of the
Requisite Lenders or all of the Lenders, as the case may be as provided for
hereunder. Agent may refuse (and will not be obligated) to take any action,
assert any rights or pursue any remedies under this Loan Agreement or any of the
other Loan Documents without the express written direction and instruction of
the Requisite Lenders or all of the Lenders, as the case may be as provided for
hereunder. In the event Agent fails, within a commercially reasonable time, to
take such action, assert such rights, or pursue such remedies as the Requisite
Lenders or all of the Lenders, as the case may be as provided for hereunder,
direct, the Requisite Lenders or all of the Lenders, as the case may be as
provided for hereunder, shall have the right to take such action, to assert such
rights, or pursue such remedies on behalf of all of the Lenders unless the terms
hereof otherwise require the consent of all the Lenders to the taking of such
actions. All notices and other material information required to be delivered by
Borrower to Agent hereunder shall be delivered within a reasonable time (and in
any event not more than five (5) days) after Agent's receipt of same by Agent to
each Lender. No Lender (other than the Agent, acting in its capacity as Agent)
shall be entitled to take any enforcement action of any kind under any of the
Loan Documents, except as expressly provided in this Loan Agreement. Action that
may be taken by Requisite Lenders or all of the Lenders, as the case may be as
provided for hereunder may be taken pursuant to a vote at a meeting (which may
be held by telephone conference call) of all of the Lenders, or pursuant to the
written consent of such Lenders.

         Section 11.10 Amendments, Waivers and Consents. Any provision of this
Loan Agreement, the Notes or the other Loan Documents may be amended or waived
upon the consent of the Requisite Lenders, and after such consent, Agent, on
behalf of the Lenders, may execute and deliver to Borrower a written instrument
waiving or amending such provision; provided, however, that neither this Loan
Agreement, the Notes, nor any of the other Loan Documents may be amended, waived
or a variation therefrom or forbearance with respect to such variation consented
to without the written consent of the Agent and all of Lenders which effect (i)
a change in the Total Commitment; (ii) a change in any Lender's Participation
Percentage; (iii) a reduction in the interest rates or reduction of the
principal set forth in the Notes; (iv) the extension of the maturity date on the
Notes; (v) a change in the payment schedule or scheduled 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company



<PAGE>   53

                                       47

date for the payment of or amount of any interest or principal; (vi) any change
in Section 7.3(a) ; (vii) a change in this Section, the definition of Requisite
Lender or any provision of this Loan Agreement which requires consent or action
of all the Lenders for action thereunder; (viii) a change in the obligations and
liabilities of Agent; (ix) a change which increases the obligations of any
Lender; or (x) a change in any fees or charges hereunder or in Sections 12.29 or
Article 10 hereof.

         Section 11.11 Indemnification. Each Lender agrees to indemnify Agent
(to the extent Agent is not promptly reimbursed by Borrower), in accordance with
its Participation Percentage from and against any and all liabilities,
obligations, losses, damages, penalties, interests, actions, judgments and suits
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent relating to or arising out of this Loan Agreement or any
of the other Loan Documents or relating to any action taken or omitted by such
Agent under this Loan Agreement or any of the other Loan Documents, provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, interest, actions, judgments or suits resulting from
Agent's own gross negligence or willful misconduct.

         Section 11.12 Reimbursement of the Agent. Each Lender further agrees to
reimburse Agent, in accordance with its Participation Percentage, for any
reasonable out-of-pocket costs or expenses incurred by Agent in connection with
its duties under this Loan Agreement (including, but not limited to, reasonable
fees and disbursements of counsel, travel and living expenses away from home of
employees or agents of the Agent and compensation of agents or of experts
employed by the Agent to render services for the Lenders hereunder), but only to
the extent such fees, disbursements, expenses and compensation have not been
promptly reimbursed to the Agent by Borrower. If any such sums are reimbursed to
the Agent by Borrower after one or more of the Lenders have reimbursed the Agent
for such sums, the Agent will refund such sums ratably to the Lenders who
contributed such sums.

         Section 11.13 Sharing of Funds Received. Each Lender and Agent agrees
with Agent and each of the other Lenders that if such Lender shall receive from
Borrower or any other Person or Persons, whether by payment received otherwise
than in accordance with the terms of the Loan Documents, exercise of the right
of set-off, counterclaim, cross-claim, enforcement of any claim, or proceedings
against Borrower or any other Person or Persons, proof of claim in bankruptcy,
reorganization, liquidation, receivership or other similar proceedings, or
otherwise, and shall retain and apply to the payment of any of the Obligations
owing to such Lender any amount in excess of its Pro Rata Share of the payments
received by all of the Lenders and the Agent in respect of all of the
Obligations, such Lender will promptly make such dispositions and arrangements
with the other Lenders and the Agent with respect to such excess, either by way
of distribution, pro tanto assignment of claim, subrogation or otherwise, as
shall result in each of the Lenders receiving in respect of the Obligations
owing to it, its Pro Rata Share of such payments.

         Section 11.14 Dealing with Lenders. Agent may at all times deal solely
with the several Lenders for all purposes of this Loan Agreement and the
protection, enforcement and collection of the Notes, including without
limitation the acceptance and reliance upon any 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   54


                                       48


certificate, consent or other document executed on behalf of one or more of the
Lenders and the division of payments pursuant to the provisions of this Loan
Agreement. The Agent shall not have a fiduciary relationship in respect of any
Lender by reason of this Loan Agreement. The Agent shall have no implied duties
to the Lenders, or any obligation to the Lenders to take any action hereunder
except any action specifically provided by this Loan Agreement to be taken by
the Agent.

         Section 11.15 Agent as Lender. Fifth Third shall have, in its capacity
as a Lender under the Loan Documents, the same obligations and the same rights,
remedies, powers and privileges under this Loan Agreement and the other Loan
Documents as it would have were it not also an Agent.

         Section 11.16 Duties Not to be Increased. The duties and liabilities of
Agent under this Loan Agreement and the other Loan Documents shall not be
increased or otherwise changed without its express prior written consent. The
Agent shall have no duty to provide information to the Lenders except as
expressly set forth herein.

         Section 11.17 Lender Credit Decisions. Each Lender acknowledges that it
has, independently of and without reliance upon Agent or any of the other
Lenders, made its own credit analysis and decision to enter into this Loan
Agreement and the other Loan Documents to which it is a party. Each Lender also
acknowledges that it will, independently of and without reliance upon Agent or
any of the other Lenders, continue to make its own credit decisions in taking or
not taking action under this Loan Agreement or any of the other Loan Documents
and in determining the compliance or lack thereof by Borrower and any other
Person with any provision of any Loan Document or other document or agreement.

         Section 11.18 Resignation of Agent. Fifth Third and any successor Agent
may resign as such at any time by giving thirty (30) days' prior written notice
of resignation to each Lender and Borrower, such resignation to be effective on
the date which is specified in such notice. Upon any such resignation by Fifth
Third as Agent, or in the event the office of Agent shall thereafter become
vacant for any other reason, the Requisite Lenders shall appoint a successor
Agent, by an instrument in writing signed by such Lenders and delivered to such
successor Agent and Borrower whereupon, such successor Agent shall succeed to
all of the rights and obligations of the retiring Agent as if originally named.
The retiring Agent shall duly assign, transfer and deliver to such successor
Agent all moneys at the time held by the retiring Agent hereunder after
deducting therefrom its expenses for which it is entitled to be reimbursed. Upon
such succession of any such successor Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder, except for its gross
negligence or willful misconduct arising prior to its retirement or removal
hereunder. After any Agent's resignation, the provisions of this Section 11
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   55

                                       49

         Section 11.19       Assignment of Notes; Participation.

                  (a) Each Lender may, with concurrent notice to Agent and, so
         long as no Event of Default has occurred nor is continuing, with the
         consent of Borrower, which shall not be unreasonably withheld or
         delayed, assign all or a portion of its rights and obligations under
         this Loan Agreement and the Notes; provided that (i) for each such
         assignment, the parties thereto shall execute and deliver an assignment
         and assumption agreement, in form and substance acceptable to Agent,
         together with any Notes subject to such assignment, (ii) no such
         assignment shall reduce the assigning Lender's Credit Commitment to
         less that Fifty-One Percent (51%) of such Lender's original Credit
         Commitment without the consent of Agent, and (iii) no such assignment
         shall be for less than Five Million and 00/100 Dollars ($5,000,000.00)
         of the aggregate of the Lender's Credit Commitment, unless such
         assignment is to a then-current holder of a Note. Upon such execution
         and delivery of such assignment and assumption agreement to Agent, from
         and after the date specified as the effective date in such Agreement
         (the "Acceptance Date"), (x) the assignee thereunder shall be a party
         hereto, and, to the extent that rights and obligations hereunder have
         been assigned to it pursuant to such agreement, such assignee shall
         have the rights and obligations of a Lender hereunder and (y) the
         assignor thereunder shall, to the extent that rights and obligations
         hereunder have been assigned by it pursuant to such agreement,
         relinquish its rights (other than any rights it may have pursuant to
         Section 12.29 which will survive) and be released from its obligations
         under this Loan Agreement (and, in the case of an assignment covering
         all or the remaining portion of an assigning Lender's rights and
         obligations under this Loan Agreement, such Lender shall cease to be a
         party hereto).

                  (b) Each Lender may sell participations of up to forty-nine
         percent (49%) of its rights and obligations under the Loan Documents
         (including, without limitation, up to such portion of its Participation
         Percentage with respect to the Total Commitment, the Loans owing to it,
         and the Note held by it); provided, however, that (i) such Lenders'
         obligations under the Loan Documents (including, without limitation,
         its Participation Percentage with respect to the Total Commitment
         hereunder) shall remain unchanged, (ii) such Lender shall remain solely
         responsible to the other parties hereto for the performance of such
         obligations, (iii) such Lender shall remain the holder of any such Note
         for all purposes of the Loan Documents, (iv) the participating banks or
         other entities shall be entitled to the cost protection provisions of
         Sections 3.7 and 12.29 hereof, but a participant shall not be entitled
         to receive pursuant to such provisions an amount larger than its share
         of the amount to which the Lender granting such participation would
         have been entitled, (v) Borrower, the Agent and the other Lenders shall
         continue to deal solely and directly with such selling Lender in
         connection with such Lender's rights and obligations under the Loan
         Documents, and (vi) no such transfer shall include the transfer of any
         of such Lender's rights to grant consents or approve amendments or
         modifications to the Loan Documents except with respect to those items
         requiring the action of or consent by all of the Lenders or affecting
         the rights and obligations of Agent. It is understood and agreed that
         each Lender may share any and all information received by it 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
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                                       50


         from or on behalf of Borrower pursuant to this Loan Agreement or any
         of the other Loan Documents with any participant or prospective
         participant of such Lender.

                                   ARTICLE 12.

                                   OTHER TERMS

         Section 12.1 Amendment Changes and Modification. The Loan Documents may
be amended, changed or modified only as may be agreed upon in writing by Baldwin
and all Lenders from time to time.

         Section 12.2 Binding Effect. The Loan Documents will be binding upon
the parties, their successors and assigns, provided, however, that Baldwin shall
not assign or attempt to assign this Loan Agreement, any other Loan Document or
any of its interests under the Loan Documents, without the prior written consent
of the Lenders.

         Section 12.3 Broker Fee. Neither party is obligated to pay any premium
or other charge, brokerage fee or commission in connection with the agreements
set forth herein. Each party will indemnify the other and hold it harmless from
any such claim arising out of such party's acts or those of its representatives.

         Section 12.4 Entire Agreement. The Loan Documents embody the entire
agreement of the parties relating to the Loan. There are no promises, terms,
conditions, obligations or warranties other than those contained in the Loan
Documents. The Loan Documents supersede all prior communications,
representations or agreements, verbal or written, between the parties relating
to the Loan.

         Section 12.5 Headings. The headings to the sections of this Loan
Agreement are included only for the convenience of the parties and will not have
the effect of defining, diminishing or enlarging the rights of the parties or
affecting the construction or interpretation of any portion of this Loan
Agreement.

         Section 12.6 Incorporation by Reference. All other Loan Documents are
incorporated herein by this reference and are made a part of this Loan Agreement
as if fully set forth herein. This Loan Agreement, prior to such incorporation,
controls in the event of any conflict with the terms of any other Loan
Documents.

         Section 12.7 Interpretation. For the purpose of construing this Loan
Agreement, unless the context otherwise requires, words in the singular will be
deemed to include words in the plural, and vice versa.

         Section 12.8 Governing Law; Jurisdiction and Venue. The undersigned
agree that inasmuch as this Loan Agreement, the Notes and the Loan Documents are
to be executed by Borrower and accepted by Agent and Lenders in Cincinnati, Ohio
and the funds to be disbursed 



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
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<PAGE>   57

                                       51

under the Loans are to be disbursed in Ohio, this instrument and the rights and
obligations of all parties hereunder shall be governed by and construed under
the substantive laws of the State of Ohio, without reference to the conflict of
laws principles of such state.

         The Agent, each Lender and Borrower hereby designate all courts of
record sitting in Cincinnati, Ohio, both state and federal, as forums where any
action, suit or proceeding in respect of or arising out of this Loan Agreement,
the Notes, Loan Documents, or the transactions contemplated by this Loan
Agreement may be prosecuted as to all parties, their successors and assigns, and
by the foregoing designations the Agent, each Lender, and Borrower consents to
the jurisdiction and venue of such courts. BORROWER WAIVES ANY AND ALL PERSONAL
RIGHTS UNDER THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN THE
STATE OF OHIO FOR THE PURPOSES OF LITIGATION TO ENFORCE SUCH OBLIGATIONS OF
BORROWER. In the event such litigation is commenced, Borrower agrees that
service of process may be made and personal jurisdiction over Borrower obtained
by service of a copy of the summons, complaint and other pleadings required to
commence such litigation upon Borrower's appointed Agent for Service of Process
in the State of Ohio, which the undersigned hereof designates to be: CT
Corporation Systems, Cincinnati, Ohio. Borrower recognizes and agrees that the
agency has been created for the benefit of Borrower, and Agent and each Lender
and agree that this agency shall not be revoked, withdrawn, or modified without
the consent of the Agent.

         Section 12.9 Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE LENDERS TO EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE
OPPORTUNITY TO CONSULT COUNSEL, BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS LOAN AGREEMENT OR
ARISING IN ANY WAY FROM THE OBLIGATIONS.

         Section 12.10 Notices. Any notice under the Loan Documents, will be in
writing. Any notice to be given or document to be delivered under the Loan
Documents will be deemed to have been duly given upon delivery, if delivered in
person or by any expedited delivery service which provides proof of delivery,
upon tested telex or facsimile transmission, or on the fifth Business Day after
mailing, if mailed by certified mail, return receipt requested, postage prepaid
mail, addressed to the Lenders or Baldwin at the appropriate addresses. The
Lenders will use reasonable efforts to deliver any notice the Lenders or Agent
are required to give to Baldwin; provided, however, that failure by the Lenders
to actually give any such notice will not be deemed to be a waiver of any rights
or remedies of the Lenders and will not give rise to any claims, defenses or
damages by Baldwin. The addresses for notices are those set forth below or such
other addresses as may be hereafter specified by written notice by the parties:

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   58

                                       52

         to the Lenders      The Fifth Third Bank
                             Fifth Third Center
                             Cincinnati, Ohio 45263
                             Attn:  Robert C. Ries, Vice President
                             Facsimile:  513/744-7711

                             and

                             NBD Bank, N.A.
                             One Indiana Square, Suite 302
                             Indianapolis, Indiana  46266
                             Attn:  Edward C. Hathaway, First Vice President
                             Facsimile:  (317) 266-6042

         with a copy to:     Keating, Muething & Klekamp, P.L.L.
                             1800 Provident Tower
                             One East Fourth Street
                             Cincinnati, Ohio 45202
                             Attn:  Michael F. Bigler
                             Facsimile:  (513) 579-6457

         to Baldwin:         Baldwin Piano & Organ Company
                             422 Wards Corner Road.
                             Loveland, Ohio 45140
                             Attn: Treasurer
                             Facsimile (513) 576-4664

         with a copy to:     Graydon, Head & Ritchey
                             511 Walnut Street, Suite 1900
                             Cincinnati, Ohio 45202
                             Attn: Thomas W. Kahle
                             Facsimile:  (513) 651-3836

         Section 12.11 No Third Party Beneficiary Rights and Reliance. No Person
not a party to this Loan Agreement will have any benefit under this Loan
Agreement nor have third-party beneficiary rights as a result of any of the Loan
Documents, nor will any party be entitled to rely on any actions or inactions of
the Lenders or their agents, all of which are done for the sole benefit and
protection of the Lenders.

         Section 12.12 Protection or Preservation of Collateral. The Lenders
will not have any contractual duty to protect, insure, collect or realize upon
the Collateral or preserve rights in it against prior parties. The Lenders will
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral regardless of the cause (excluding
actions of the Lenders).

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company

<PAGE>   59


                                       53

         Section 12.13 Relationship of the Parties. Neither the Lenders on the
one hand nor Baldwin on the other hand will be deemed a partner, joint venturer
or related entity of the other by reason of the Loan Documents.

         Section 12.14 Reversal of Payments. To the extent that Baldwin makes a
payment or payments to the Lenders, which payment or payments or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law, or
equitable cause, then to the extent of such payment or proceeds received, the
Obligations will be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Lenders.

         Section 12.15 Severability. If any provision of this Loan Agreement
(either generally, or as to a specific application to a set of facts) will be
held to be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability will not affect any other provision of this Loan Agreement
(either in its entirety, or as to or the application of such provision to any
other set of facts), but this Loan Agreement will be construed as if such
invalid, illegal or unenforceable provision never had been included in this Loan
Agreement.

         Section 12.16 Maximum Interest. Baldwin acknowledges that the Lenders
intend to strictly conform to the applicable usury laws governing this Loan
Agreement. Regardless of any provision contained herein or in any other document
executed or delivered in connection herewith or therewith, the Lenders shall
never be deemed to have contracted for, charged or be entitled to receive,
collect or apply as interest on this Loan Agreement (whether termed interest
herein or deemed to be interest by judicial determination or operation of law),
any amount in excess of the maximum amount allowed by applicable law, and, if
the Lenders ever receive, collect or apply as interest any such excess, such
amount which would be excessive interest will be applied first to the reduction
of the unpaid principal balances of advances under this Loan Agreement, and,
second, any remaining excess will be paid to Baldwin. In determining whether or
not the interest paid or payable under any specific contingency exceeds the
highest lawful rate, Baldwin and the Lenders shall, to the maximum extent
permitted under applicable law: (a) characterize any non-principal payment
(other than payments which are expressly designated as interest payments
hereunder) as an expense or fee rather than as interest; (b) exclude voluntary
pre-payments and the effect thereof; and (c) spread the total amount of interest
throughout the entire term of this Loan Agreement so that the interest rate is
uniform throughout such term.

         Section 12.17 Waivers by the Lenders. The Lenders may at any time or
from time to time waive all or any rights under any of the Loan Documents, but
any waiver or indulgence at any time or from time to time will not constitute,
unless specifically so expressed by the Lenders in writing, a future waiver by
the Lenders of performance by Baldwin.

         Section 12.18 Survival. The grant of security interest herein to secure
all Obligations, and all provisions relating to the Collateral will survive
termination of this Loan Agreement and 

AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company


<PAGE>   60
                                       54

will remain in full force and effect until all Obligations have been paid in
full and this Loan Agreement has been terminated.

         Section 12.19 Participations; Assignments. The Lenders may with sixty
(60) days prior notice to Baldwin, grant participations in or assign, at any
time and from time to time hereafter, its interest in this Loan Agreement or any
Loan Document, or of any portion thereof.

         Section 12.20 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Loan
Agreement by signing any such counterpart.

         Section 12.21 Information. The Lenders may provide to any third party
any credit, financial or other information on Baldwin that the Lenders may from
time to time possess.

         Section 12.22 Miscellaneous. Time is of the essence regarding Baldwin's
performance of its obligations to the Lenders notwithstanding any course of
dealing or custom on the Lenders' part to grant extensions of time. Baldwin's
liability under this Loan Agreement is direct and unconditional and will not be
affected by the release or non-perfection of any security interest granted
hereunder. The Lenders will have the right to refrain from or postpone
enforcement of this Loan Agreement or any other Loan Documents without prejudice
and the failure to strictly enforce the Loan Documents will not be construed as
having created a course of dealing between the Lenders and Baldwin contrary to
the specific terms of the Loan Documents or as having modified, released or
waived the same. The express terms of this Loan Agreement and the other Loan
Documents will not be modified by any course of dealing, usage of trade, or
custom of trade which may deviate from the terms hereof If Baldwin falls to pay
any taxes, fees or other obligations which may impair the Lenders' interest in
the Collateral, or fails to keep the Collateral insured, the Lenders may, but
shall not be required to, pay such taxes, fees or obligations and pay the cost
to insure the Collateral, and the amounts paid will be: (a) an additional debt
owed by Baldwin to the Lenders, which shall be subject to finance charges as
provided herein; and (b) due and payable immediately in full. Baldwin agrees to
pay all of the Lenders' reasonable attorneys' fees and expenses incurred by the
Lenders in enforcing the Lenders' rights hereunder.

         Section 12.23 Waivers by Baldwin. Baldwin irrevocably waives notice of:
the Lenders' acceptance of this Loan Agreement, presentment, demand, protest,
nonpayment, nonperformance, and dishonor. Baldwin and the Lenders irrevocably
waive all rights to claim any punitive and/or exemplary damages in excess of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00). Baldwin waives all
rights of offset and counter claims Baldwin may have against the Lenders.
Baldwin waives all notices of default and non-payment at maturity of any or all
of the Accounts.

         Section 12.24 No Oral Agreements. ORAL AGREEMENTS OR COMMITMENTS TO
LEND MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT
YOU, (BALDWIN) AND US (THE 


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
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<PAGE>   61



                                       55

LENDERS) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

         Section 12.25 Supplement. If Baldwin and the Lenders have heretofore
executed other agreements in connection with all or any part of the Collateral,
this Loan Agreement shall supplement each and every other agreement previously
executed by and between Baldwin and the Lenders, and in that event, this Loan
Agreement shall neither be deemed a novation nor a termination of such
previously executed agreement nor shall execution of this Loan Agreement be
deemed a satisfaction of any obligation secured by such previously executed
agreement.

         Section 12.26 Use of Counsel and Receipt of Loan Agreement. Baldwin
acknowledges that it has received a true and complete copy of this Loan
Agreement. Baldwin acknowledges that it has (a) had representation of counsel
during negotiation of this Loan Agreement, and (b) read and understood this Loan
Agreement.

         Section 12.27 Facsimiles, Etc. Notwithstanding anything herein to the
contrary: (a) Baldwin and the Lenders may rely on any facsimile copy, electronic
data transmission or electronic data storage of any statement, financial
statements or other reports, and (b) such facsimile copy, electronic data
transmission or electronic data storage will be deemed an original, and the best
evidence thereof for all purposes, including, without limitation, under this
Loan Agreement or any other Loan Document, and for all evidentiary purposes
before any arbitrator, court or other adjudicatory authority.

         Section 12.28 Power of Attorney. Baldwin irrevocably appoints Agent
(and any person designated by it) as Baldwin's true and lawful Attorney with
full power to at any time, in the discretion of Agent (whether or not Default
has occurred) to: (a) endorse the name of Baldwin upon any of the items of
payment of proceeds of the Collateral and deposit the same in the account of
Agent for application to the Obligations; (b) sign the name of Baldwin on any
document or instrument that Agent shall deem necessary or appropriate to perfect
and maintain perfected the security interests in the Collateral under this Loan
Agreement and other Loan Documents; (c) initiate and settle any insurance claim
and endorse Baldwin's name on any check, instrument or other item of payment;
(d) endorse the name of Baldwin upon financing statements, instruments,
Certificates of Title and Statements of Origin pertaining to the Collateral; and
(e) do anything to preserve and protect the Collateral and Agent's rights and
interest therein. This power of attorney is for value and coupled with an
interest and is irrevocable so long as any Obligations remain outstanding and by
Agent exercising such right, Agent shall not waive any right against Baldwin
until the Obligations are paid in full.

         Section 12.29 Expenses. Baldwin agrees, whether or not any Loan is made
hereunder, to pay Agent or the Lenders upon demand for all reasonable expenses,
including reasonable fees of attorneys for Agent or the Lenders (who may be
employees of the Lenders), incurred by (a) 


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                                       56


Agent or the Lenders in connection with the preparation, negotiation, and
execution of this Loan Agreement and any other Loan Document, (b) Agent or the
Lenders in connection with the preparation of any and all amendments to this
Loan Agreement and any other Loan Document, and all search, recording, filing,
and registration expenses, and (c) Agent or the Lenders in connection with the
enforcement of the Baldwin's obligations hereunder or under any other Loan
Document. Baldwin also agrees (i) to indemnify and hold Agent or the Lenders
harmless from any loss or expense which may arise or be created by the
acceptance of telephonic or other instructions for making Loans, except for any
loss & expense arising from Agent's or a Lender's gross negligence or willful
misconduct (provided, however, that reliance alone upon telephonic or other
instructions shall not itself be deemed to constitute gross negligence or
willful misconduct), (ii) to pay and save Agent and each Lender harmless from
all liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Loan Agreement or any of the other Loan
Documents. Baldwin's obligations under this Section 12.29 shall survive any
termination of this Loan Agreement, and (iii) upon failure of Borrower to
provide the insurance required under Section 7.1(b)(i), Agent, on behalf of the
Lenders, shall have the option to procure and maintain such insurance without
notice to Borrower.

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



AMENDED AND RESTATED TERM LOAN AGREEMENT                                
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                                       57
         IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by or on behalf of each of the parties as of the day and in the year first above
written in Cincinnati, Ohio.


                                    BORROWER

                                    BALDWIN PIANO & ORGAN COMPANY

                                    By: /s/ PERRY H. SCHWARTZ
                                       --------------------------------------
                                    Name:  Perry H. Schwartz
                                    Title: Executive Vice President

                                    AGENT

                                    THE FIFTH THIRD BANK, As Agent

                                    By: /s/ ROBERT C. RIES
                                       --------------------------------------
                                    Name:  Robert C. Ries
                                    Title: Vice President

                                    LENDERS

                                    THE FIFTH THIRD BANK

                                    By: /s/ ROBERT C. RIES
                                       --------------------------------------
                                    Name:  Robert C. Ries
                                    Title: Vice President


                                    NBD BANK, N.A.

                                    By: /s/ EDWARD C. HATHAWAY
                                       --------------------------------------
                                    Name:  Edward C. Hathaway
                                    Title: First Vice President


AMENDED AND RESTATED TERM LOAN AGREEMENT                                
Baldwin Piano & Organ Company