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                                                                    EXHIBIT 10.2


                               SECURITY AGREEMENT

                  SECURITY AGREEMENT, dated as of March 24, 2000, by and among
the Grantors identified as such on the signature pages hereof (each a "Grantor"
and collectively "Grantors"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, in its capacity as Agent for itself and Lenders ("Agent").

                              W I T N E S S E T H:

                  WHEREAS, pursuant to that certain Credit Agreement dated as of
the date hereof by and among Baldwin, the other Persons named therein as Credit
Parties, Agent and the Persons party thereto from time to time as Lenders
(including all annexes, exhibits and schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
Lenders have agreed to make the Loans and to incur Letter of Credit Obligations
on behalf of Baldwin;

                  WHEREAS, in order to induce Agent and Lenders to enter into
the Credit Agreement and the other Loan Documents and to induce Lenders to make
the Loans and to incur Letter of Credit Obligations as provided for in the
Credit Agreement, Grantors have agreed to grant a continuing Lien on the
Collateral (as hereinafter defined) to secure the Secured Obligations (as
hereinafter defined); and

                  WHEREAS, Grantors (excluding Baldwin) have guarantied the
obligations of Baldwin under the Credit Agreement pursuant to that certain
Subsidiary Guaranty dated as of the date hereof between Grantors and Agent; and

                  NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


                  1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Credit Agreement or in
Annex A thereto. All other undefined terms contained in this Security Agreement,
unless the context indicates otherwise, have the meanings provided for by
Article 9 of the Code to the extent the same are used or defined therein.

                  2. GRANT OF LIEN.

                  (a) To secure the prompt and complete payment in full when
due, whether at stated maturity, by acceleration or otherwise, and performance
and observance of all of the Obligations of any kind under or in connection with
the Credit Agreement, the Subsidiary Guaranty and the other Loan Documents and
all obligations of Grantors hereunder now or hereafter existing under this
Agreement, including, without limitation, all fees, costs and expenses whether
in connection with collection actions hereunder or otherwise (collectively, the
"Secured Obligations"), each Grantor hereby grants, assigns, conveys, mortgages,
pledges, hypothecates and transfers to Agent, for itself and the benefit of
Lenders, a Lien upon all of its right, title and interest in, to and under the
following property, whether now owned by or owing


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to, or hereafter acquired by or arising in favor of such Grantor (including
under any trade names, styles or derivations thereof), and whether owned or
consigned by or to, or leased from or to, such Grantor, and regardless of where
located (all of which being hereinafter collectively referred to as the
"Collateral"), provided, that each Grantor's grant of security in any Canadian
trademarks (as defined in the Trademarks Act (Canada)) under this Security
Agreement shall be limited to a grant by such Grantor of a security interest in
all of such Grantor's right, title and interest in such trademarks:

                       (i)     all Accounts;

                       (ii)    all Chattel Paper;

                       (iii)   all Contracts;

                       (iv)    all Documents;

                       (v)     all Equipment;

                       (vi)    all Fixtures;

                       (vii)   all General Intangibles;

                       (viii)  all goods;

                       (ix)    all Instruments;

                       (x)     all Raw Materials;

                       (xi)    all Inventory;

                       (xii)   all Investment Property;

                       (xiii)  all Borrower Accounts, Concentration Accounts,
                               Disbursement Accounts, and all other deposit and
                               other bank accounts and all deposits therein;

                       (xiv)   all money, cash or cash equivalents of such
                               Grantor; and

                       (xv)    to the extent not otherwise included, all
                               Proceeds and products of the foregoing and all
                               accessions to, substitutions and replacements
                               for, and rents and profits of, each of the
                               foregoing.

                  (b) In addition, to secure the prompt and complete payment,
performance and observance of the Secured Obligations and in order to induce
Agent and Lenders as aforesaid, each Grantor hereby grants to Agent, for itself
and the benefit of Lenders, a right of setoff, exercisable in accordance with
the terms hereof and of the Loan Documents, against the property of such Grantor
held by Agent or any Lender, consisting of property described above in Section
2(a) now or hereafter in the possession or custody of or in transit to Agent or
any Lender, for any purpose, including safekeeping, collection or pledge, for
the account of such Grantor, or as to which such Grantor may have any right or
power.




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                  3. AGENT'S AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S AND
LENDERS' SECURED OBLIGATIONS.

                  (a) It is expressly agreed by Grantors that, anything herein
to the contrary notwithstanding, each Grantor shall remain liable under each of
its Contracts and each of its Licenses to observe and perform all the conditions
and obligations to be observed and performed by it thereunder until such time as
such contracts and licenses and such conditions and obligations expire or
terminate in accordance with their respective terms. Neither Agent nor any
Lender shall have any obligation or liability under any Contract or License by
reason of or arising out of this Security Agreement or the granting herein of a
Lien thereon or the receipt by Agent or any Lender of any payment relating to
any Contract or License pursuant hereto. Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the obligations
of any Grantor under or pursuant to any Contract or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract or License, or to present or file any claims, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.

                  (b) Agent may at any time after a Default or an Event of
Default shall have occurred and be continuing, without prior notice to any
Grantor, notify Account Debtors, parties to the Contracts and obligors in
respect of Instruments and Chattel Paper, that the Accounts and the right, title
and interest of Grantors in and under such Contracts, Instruments and Chattel
Paper have been assigned to Agent, and that payments shall be made directly to
Agent, for itself and the benefit of Lenders; except that without limiting the
foregoing, with respect to any Accounts, Contracts, Instruments or Chattel Paper
of Biasco Musical Instrument Co. or to which Biasco Musical Instrument Co. is a
party or obligor, Agent may at any time, whether or not a Default or an Event of
Default shall have occurred or be continuing, without prior notice to any
Grantor, notify Biasco Musical Instrument Co. that such Accounts and the right,
title and interest of Grantors in and under such Contracts, Instruments and
Chattel Paper have been assigned to Agent. Upon the request of Agent, Grantors
shall so notify Account Debtors, parties to Contracts and obligors in respect of
Instruments and Chattel Paper.

                  (c) Agent may at any time, in Agent's own name or in the name
of a Grantor, communicate with Account Debtors, parties to Contracts, obligors
in respect of Instruments and obligors in respect of Chattel Paper to verify
with such Persons, to Agent's satisfaction, the existence, amount and terms of
any such Accounts, Contracts, Instruments or Chattel Paper. If a Default or
Event of Default shall have occurred and be continuing, Grantors, at their own
expense, shall cause the independent certified public accountants then engaged
by Grantors to prepare and deliver to Agent and each Lender at any time and from
time to time promptly upon Agent's request the following reports with respect to
each Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as
Agent may request. Grantors, at their own expense, shall deliver to Agent the
results of each physical verification, if any, which Grantors may in their
discretion have made, or caused any other Person to have made on their behalf,
of all or any portion of their Inventory.



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                  4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants that:

                  (a) Such Grantor is the sole owner of each item of the
Collateral upon which it purports to grant a Lien hereunder, and has good and
marketable title thereto free and clear of any and all Liens other than
Permitted Encumbrances.

                  (b) No effective security agreement, 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 such Grantor in favor of Agent pursuant to
this Security Agreement or the other Loan Documents, and (ii) in connection with
any other Permitted Encumbrances.

                  (c) This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
in the locations listed on Schedule I hereto, a perfected Lien in favor of
Agent, for itself and the benefit of Lenders, on the Collateral with respect to
which a Lien may be perfected by filing pursuant to the Code. Such Lien is prior
to all other Liens, except Permitted Encumbrances that would be prior to Liens
in favor of Agent for the benefit of Agent and Lenders as a matter of law, and
is enforceable as such as against any and all creditors of and purchasers from
such Grantor (other than purchasers of Inventory in the ordinary course of
business). All action by such Grantor necessary or desirable to protect and
perfect such Lien on each item of the Collateral has been duly taken.

                  (d) Schedule II hereto lists all Instruments and Chattel Paper
of such Grantor. All action by each Grantor necessary or desirable to protect
and perfect the Lien of Agent on each item set forth on Schedule II (including
the delivery of all originals thereof to Agent and the legending of all Chattel
Paper as required by Section 5(b) hereof) has been duly taken. The Lien of
Agent, for the benefit of Agent and Lenders, on the Collateral listed on
Schedule II hereto is prior to all other Liens, except Permitted Encumbrances
that would be prior to the Liens in favor of Agent as a matter of law, and is
enforceable as such against any and all creditors of and purchasers from any
Grantor.

                  (e) Such Grantor's chief executive office, principal place of
business, corporate offices, all warehouses and premises where Collateral is
stored or located, and the locations of all of its books and records concerning
the Collateral are set forth on Schedule III hereto and none of such locations
has changed within the twelve (12) months preceding the Closing Date.

                  (f) With respect to the Accounts, except as specifically
disclosed on the most recent Collateral Report delivered to Agent (i) they
represent bona fide sales of Inventory or rendering of services to Account
Debtors in the ordinary course of such Grantor's business and are not evidenced
by a judgment, Instrument or Chattel Paper; (ii) there are no setoffs, claims or
disputes existing or asserted with respect thereto, and such Grantor has not
made any agreement with any Account Debtor for any extension of time for the
payment thereof, any compromise or settlement for less than the full amount
thereof, any release of any Account Debtor from liability therefor, or any
deduction therefrom except a discount or allowance allowed by such Grantor in




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the ordinary course of its business for prompt payment and disclosed to Agent;
(iii) to such Grantor's knowledge, there are no facts, events or occurrences
which in any way impair the validity or enforceability thereof or could
reasonably be expected to reduce the amount payable thereunder as shown on such
Grantor's books and records and any invoices, statements and Collateral Reports
delivered to Agent and Lenders with respect thereto; (iv) such Grantor has not
received any notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any adverse change in such
Account Debtor's financial condition; and (v) such Grantor has no knowledge that
any Account Debtor is unable generally to pay its debts as they become due.
Further with respect to the Accounts (x) the amounts shown on all invoices,
statements and Collateral Reports which may be delivered to Agent with respect
thereto are actually and absolutely owing to such Grantor as indicated thereon
and are not in any way contingent; (y) no payments have been or shall be made
thereon except payments immediately delivered to the Borrower Accounts or Agent
as required pursuant to the terms of Annex C to the Credit Agreement; and (z) to
such Grantor's knowledge, all Account Debtors have the capacity to contract.

                  (g) With respect to any Inventory scheduled or listed on the
most recent Collateral Report delivered to Agent pursuant to the terms of this
Security Agreement or the Credit Agreement, (i) such Inventory is located at one
of such Grantor's locations set forth on Schedule III hereto, (ii) no Inventory
is now, or shall at any time or times hereafter be stored at any other location
without Agent's prior consent, and if Agent gives such consent, such Grantor
will concurrently therewith obtain, to the extent required by the Credit
Agreement, bailee, landlord and mortgagee agreements, (iii) such Grantor has
good, indefeasible and merchantable title to such Inventory and such Inventory
is not subject to any Lien or security interest or document whatsoever except
for the Lien granted to Agent, for the benefit of Agent and Lenders, and except
for Permitted Encumbrances, (iv) except as specifically disclosed in the most
recent Collateral Report delivered to Agent, such Inventory is Eligible
Inventory of good and merchantable quality, free from any defects, (v) such
Inventory is not subject to any licensing, patent, royalty, trademark, trade
name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party as a precondition of such sale or other
disposition, and (vi) the completion of manufacture, sale or other disposition
of such Inventory by Agent following an Event of Default shall not require the
consent of any Person and shall not constitute a breach or default under any
contract or agreement to which such Grantor is a party or to which such property
is subject.

                  (h) Such Grantor does not have any interest in, or title to,
any Patent, Trademark or Copyright except as set forth in Schedule IV hereto.
This Security Agreement is effective to create a valid and continuing Lien on
and, upon filing of the Copyright Security Agreement with the United State
Copyright Office and of the Patent Security Agreement and the Trademark Security
Agreement with the United States Patent and Trademark Office and the filing of
appropriate Financing Statements in the locations listed on Schedule I hereto,
perfected Liens in favor of Agent on such Grantor's Copyrights, Patents and
Trademarks and such perfected Liens are enforceable as such as against any and
all creditors of and purchasers from such Grantor. Upon filing of the Copyright
Security Agreement with the United State Copyright Office and of the Patent
Security Agreement and the Trademark Security Agreement with the United States
Patent and Trademark Office and the filing of appropriate Financing Statements
in






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the locations listed on Schedule I hereto, all action necessary or desirable to
protect and perfect Agent's Lien on such Grantor's Copyrights, Patents or
Trademarks shall have been duly taken.

                  (i) Except for those filings contemplated by the Loan
Documents, no consent, approval, authorization or other order or other action
by, and no notice to or filing with, any Governmental Authority or any other
Person is required (i) for the grant by such Grantor of the Collateral pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement by such Grantor, or (ii) for the exercise by Agent of the rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally or
except for such consents from the Lenders as may be required with respect to
Agent's authority under the Loan Documents to act on their behalf.

                  (j) This Agreement has been duly authorized, executed and
delivered by such Grantor and constitutes a legal, valid and binding obligation
of such Grantor enforceable against such Grantor in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and similar laws affecting creditors' rights generally and
to general equitable principles.

                  5. COVENANTS. Each Grantor covenants and agrees with Agent,
for the benefit of Agent and Lenders, that from and after the date of this
Security Agreement and until the Termination Date:

                  (a) Further Assurances; Pledge of Instruments. At any time and
from time to time, upon the written request of Agent and at the sole expense of
such Grantor, such Grantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further actions as
Agent may deem desirable to obtain the full benefits of this Security Agreement
and of the rights and powers herein granted, including (i) using its best
efforts to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Agent of any License or Contract held by
such Grantor or in which such Grantor has any rights not heretofore assigned,
(ii) filing any financing or continuation statements under the Code with respect
to the Liens granted hereunder or under any other Loan Document, (iii)
transferring Collateral to Agent's possession (for the benefit of Agent and
Lenders) if such Collateral consists of Chattel Paper, Instruments or if a Lien
on such Collateral can be perfected only by possession, or if requested by
Agent, and (iv) obtaining, or using its best efforts to obtain, waivers of
Liens, if any exist, from landlords and mortgagees in accordance with the Credit
Agreement. Such Grantor also hereby authorizes Agent, for the benefit of Agent
and Lenders, to file any such financing or continuation statements without the
signature of such Grantor to the extent permitted by applicable law. If any
amount payable under or in connection with any of the Collateral is or shall
become evidenced by any Instrument, such Instrument, other than checks and notes
received in the ordinary course of business, shall be duly endorsed in a manner
satisfactory to Agent immediately upon such Grantor's receipt thereof.

                  (b) Maintenance of Records. Such Grantor shall keep and
maintain, at its own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Such Grantor shall mark its books and records pertaining to




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the Collateral to evidence this Security Agreement and the Liens granted hereby.
All Chattel Paper shall be marked with the following legend: "This writing and
the obligations evidenced or secured hereby are subject to the security interest
of General Electric Capital Corporation, as Agent, for the benefit of Agent and
certain Lenders."

                  (c) Covenants Regarding Patent, Trademark and Copyright
Collateral.

                  (i) Such Grantor shall notify Agent immediately if it knows or
                  has reason to know that any application or registration
                  relating to any Patent, Trademark or Copyright (now or
                  hereafter existing) may become abandoned or dedicated, or of
                  any adverse determination or development (including the
                  institution of, or any such determination or development in,
                  any proceeding in the United States Patent and Trademark
                  Office, the United States Copyright Office or any court)
                  regarding such Grantor's ownership of any Patent, Trademark or
                  Copyright, its right to register the same, or to keep and
                  maintain the same.

                  (ii) In no event shall such Grantor, either directly or
                  through any agent, employee, licensee or designee, file an
                  application for the registration of any Patent, Trademark or
                  Copyright with the United States Patent and Trademark Office,
                  the United States Copyright Office or any similar office or
                  agency without giving Agent prior written notice thereof, and,
                  upon request of Agent, such Grantor shall execute and deliver
                  any and all Patent Security Agreements, Copyright Security
                  Agreements or Trademark Security Agreements as Agent may
                  request to evidence Agent's Lien on such Patent, Trademark or
                  Copyright, and the General Intangibles of such Grantor
                  relating thereto or represented thereby.

                  (iii) Such Grantor shall take all actions necessary or
                  requested by Agent to maintain and pursue each application, to
                  obtain the relevant registration and to maintain the
                  registration of each of the Patents, Trademarks and Copyrights
                  (now or hereafter existing), including the filing of
                  applications for renewal, affidavits of use, affidavits of
                  noncontestability and opposition and interference and
                  cancellation proceedings.

                  (iv) In the event that any of the Patent, Trademark or
                  Copyright Collateral is infringed upon, or misappropriated or
                  diluted by a third party, such Grantor shall notify Agent
                  promptly after such Grantor learns thereof. Such Grantor
                  shall, unless it shall determine in such Grantor's reasonable
                  business judgment that the infringement of such Patent,
                  Trademark or Copyright Collateral is in no way material to the
                  conduct of its business or operations, promptly sue for
                  infringement, misappropriation or dilution and to recover any
                  and all damages for such infringement, misappropriation or
                  dilution, and shall take such other actions as Agent shall
                  deem appropriate under the circumstances to protect such
                  Patent, Trademark or Copyright Collateral.

                  (d) Indemnification. In any suit, proceeding or action brought
by Agent or any Lender relating to any Account, Chattel Paper, Contract,
Document, General Intangible or Instrument for any sum owing thereunder or to
enforce any provision of any Account, Chattel Paper, Contract, Document, General
Intangible or Instrument, such Grantor will save, indemnify



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and keep Agent and Lenders harmless from and against all expense (including
reasonable attorneys' fees and expenses), loss or damage suffered by reason of
any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by any Grantor of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from any Grantor, except in the case of Agent or any Lender, to the extent such
expense, loss, or damage is attributable solely to the gross negligence or
willful misconduct of Agent or such Lender as finally determined by a court of
competent jurisdiction. All such obligations of such Grantor shall be and remain
enforceable against and only against Grantors and shall not be enforceable
against Agent or any Lender.

                  (e) Compliance with Terms of Accounts, etc. In all material
respects, such Grantor will perform and comply with all obligations in respect
of its Accounts, Chattel Paper, Contracts and Licenses and all other agreements
to which it is a party or by which it is bound relating to the Collateral.

                  (f) Limitation on Liens on Collateral. Such Grantor will not
create, permit or suffer to exist, and will defend the Collateral against, and
take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Encumbrances, and will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.

                  (g) Limitations on Disposition. Such Grantor will not sell,
lease, transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so except as permitted by the Credit Agreement.

                  (h) Further Identification of Collateral. Such Grantor will,
if so requested by Agent, furnish to Agent, as often as Agent requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Agent may reasonably
request, all in such detail as Agent may specify.

                  (i) Notices. Such Grantor will advise Agent promptly, in
reasonable detail, (i) of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and (ii) of the occurrence of
any other event which would have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.

                  6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.

                  On the Closing Date each Grantor shall execute and deliver to
Agent a power of attorney (the "Power of Attorney") substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to the
Power of Attorney is a power coupled with an interest and shall be irrevocable
until the Termination Date. The powers conferred on Agent, for the benefit of
Agent and Lenders, under the Power of Attorney are solely to protect Agent's
interests (for the benefit of Agent and Lenders) in the Collateral and shall not
impose any duty upon Agent or any Lender to exercise any such powers. Agent
agrees that (a) it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred



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and is continuing, and (b) Agent shall account for any moneys received by Agent
in respect of any foreclosure on or disposition of Collateral pursuant to the
Power of Attorney provided that none of Agent nor any Lender shall have any duty
as to any Collateral, and Agent and Lenders shall be accountable only for
amounts they actually receive as a result of the exercise of such powers. NONE
OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY
ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN
RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR
ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

                  7. REMEDIES; RIGHTS UPON DEFAULT.

                  (a) In addition to all other rights and remedies granted to it
under this Security Agreement, the Credit Agreement, the other Loan Documents
and under any other instrument or agreement securing, evidencing or relating to
any of the Secured Obligations, if any Event of Default shall have occurred and
be continuing, Agent may exercise all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, Grantors
expressly agree that in any such event Agent, without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon any Grantor or any
other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the Code and other
applicable law), may forthwith enter upon the premises of any Grantor where any
Collateral is located through self-help, without judicial process, without first
obtaining a final judgment or giving such Grantor or any other Person notice and
opportunity for a hearing on Agent's claim or action and may collect, receive,
assemble, process, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. Agent or any Lender shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or sales,
to purchase for the benefit of Agent and Lenders, the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption Grantors hereby release. Such sales may be adjourned and continued
from time to time with or without notice. Agent shall have the right to conduct
such sales on any Grantor's premises or elsewhere and shall have the right to
use Grantors' premises without charge for such time or times as Agent deems
necessary or advisable.

                  Grantors further agree, at Agent's request, to assemble the
Collateral and make it available to Agent at places which Agent shall select,
whether at any Grantor's premises or elsewhere. Until Agent is able to effect a
sale, lease, or other disposition of Collateral, Agent shall have the right to
hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or its value or for any
other purpose deemed appropriate by Agent. Agent shall have no obligation to any
Grantor to maintain or preserve the




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rights of such Grantor as against third parties with respect to Collateral while
Collateral is in the possession of Agent. Agent may, if it so elects, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of Agent's remedies (for the benefit of Agent and Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Secured Obligations
as provided in the Credit Agreement, and only after so paying over such net
proceeds, and after the payment by Agent of any other amount required by any
provision of law, need Agent account for the surplus, if any, to any Grantor. To
the maximum extent permitted by applicable law, Grantors waive all claims,
damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. Grantors agree that ten
(10) days prior notice by Agent of the time and place of any public sale or of
the time after which a private sale may take place is reasonable notification of
such matters. Grantors shall remain jointly and severally liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys' fees or other
expenses incurred by Agent or any Lender to collect such deficiency.

                  (b) Except as otherwise specifically provided herein, Grantors
hereby waive presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

                  8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the
purpose of enabling Agent to exercise rights and remedies under Section 7 hereof
(including, without limiting the terms of Section 7 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, Grantors hereby grant to
Agent, for the benefit of Agent and Lenders, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to any
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by any Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

                  9. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF
COLLATERAL. Agent and each Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Agent or such Lender, or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto.

                  10. REINSTATEMENT. This Security Agreement shall remain in
full force and effect and continue to be effective should any petition be filed
by or against any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Grantor's assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations, or any part



                                       10
<PAGE>   11



thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.

                  11. NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person or
sent by registered or certified mail, return receipt requested, with proper
postage prepaid, or by facsimile transmission and confirmed by delivery of a
copy by personal delivery or United States Mail as otherwise provided herein to
the address set forth next the parties' names on the signature page hereto.

                  12. SEVERABILITY. Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Agent, Lenders and
Grantors with respect to the matters referred to herein and therein.

                  13. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any
Lender shall by any act, delay, omission or otherwise be deemed to have waived
any of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and then only to the extent therein set forth. A waiver
by Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise have had
on any future occasion. No failure to exercise nor any delay in exercising on
the part of Agent or any Lender, any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.
None of the terms or provisions of this Security Agreement may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by Agent and Grantors.

                  14. LIMITATION BY LAW. All rights, remedies and powers
provided in this Security Agreement may be exercised only to the extent that the
exercise thereof does not violate any applicable provision of law, and all the
provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be limited
to the extent necessary so that they shall not render this Security Agreement
invalid, unenforceable, in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law.



                                       11
<PAGE>   12


                  15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section
10 hereof, this Security Agreement shall terminate upon the Termination Date.

                  16. SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of Grantors hereunder shall be binding upon the successors and
assigns of any Grantor (including any debtor-in-possession on behalf of any
Grantor) and shall, together with the rights and remedies of Agent, for the
benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Secured
Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any manner affect the Lien granted
to Agent, for the benefit of Agent and Lenders, hereunder. No Grantor may
assign, sell, hypothecate or otherwise transfer any interest in or obligation
under this Security Agreement.

                  17. COUNTERPARTS. This Security Agreement may be executed in
any number of separate counterparts, each of which shall collectively and
separately constitute one and the same agreement.

                  18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE SECURED
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
GRANTOR, AGENT AND LENDERS PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT,
LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, NEW
YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND



                                       12
<PAGE>   13



HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH
ON THE SIGNATURE PAGE HERETO AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.

                  19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS,
AND ANY GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

                  20. SECTION TITLES. The Section titles contained in this
Security Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.

                  21. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Security Agreement.
In the event an ambiguity or question of intent or interpretation arises, this
Security Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Security
Agreement.

                  22. ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 18 and Section 19, with its counsel.

                  23. BENEFIT OF LENDERS. All Liens granted or contemplated
hereby shall be for the benefit of Agent and Lenders, and all proceeds or
payments realized from Collateral in accordance herewith shall be applied to the
Secured Obligations in accordance with the terms of the Credit Agreement.


                            [signature pages follow]




                                       13
<PAGE>   14



                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.

                               "Grantors"
                               ----------


                               BALDWIN PIANO & ORGAN COMPANY, a Delaware
                               corporation


                               By: /s/ DUANE D. KIMBLE
                                  ------------------------------
                                  Duane D. Kimble
                                  Executive Vice President and Chief Financial
                                  Officer

                               Address for Notices:
                               --------------------

                               4680 Parkway Drive
                               Mason, OH 45040-5301
                               Attention: Chief Financial Officer
                               Telecopier No.: (513) 754-4579
                               Telephone No.: (513) 754-4647


                               THE WURLITZER COMPANY, a Delaware corporation


                               By: /s/ DUANE D. KIMBLE
                                  ------------------------------
                                  Duane D. Kimble
                                  Vice President and Chief Financial Officer

                               Address for Notices:
                               --------------------

                               c/o Baldwin Piano & Organ Company
                               4680 Parkway Drive
                               Mason, OH  45040-5301
                               Attention: Chief Financial Officer
                               Telecopier No.:  (513) 754-4579
                               Telephone No.:  (513) 754-4647


                                      S-1

<PAGE>   15

                               BALDWIN TRADING COMPANY, an Ohio corporation

                               By: /s/ DUANE D. KIMBLE
                                  ------------------------------
                                  Duane D. Kimble
                                  Vice President and Chief Financial Officer


                               Address for Notices:
                               --------------------

                               c/o Baldwin Piano & Organ Company
                               4680 Parkway Drive
                               Mason, OH  45040-5301
                               Attention: Chief Financial Officer
                               Telecopier No.:  (513) 754-4579
                               Telephone No.:  (513) 754-4647


                               "Agent"
                               -------

                               GENERAL ELECTRIC CAPITAL CORPORATION


                               By: /s/ CHARLES CHIODO
                                  ------------------------------
                                  Name: Charles Chiodo
                                        A Duly Authorized Signatory



                               Address for Notices:
                               --------------------

                               800 Connecticut Avenue, Two North
                               Norwalk, Connecticut 06854
                               Attention: Account Manager - Baldwin Piano
                               Telecopier No.: (203) 852-3630
                               Telephone No.: (203) 852-3616



                                      S-2

<PAGE>   16




                                    EXHIBIT A

                                POWER OF ATTORNEY


                  This Power of Attorney is executed and delivered by [NAME OF
GRANTOR], a __________ Corporation ("Grantor"), to GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (hereinafter referred to as "Attorney"), as
Agent for the benefit of Agent and Lenders, under a Credit Agreement and a
Security Agreement, both dated as of March 24, 2000 and other related documents
(the "Loan Documents"). No person to whom this Power of Attorney is presented,
as authority for Attorney to take any action or actions contemplated hereby,
shall be required to inquire into or seek confirmation from Grantor as to the
authority of Attorney to take any action described below, or as to the existence
of or fulfillment of any condition to this Power of Attorney, which is intended
to grant to Attorney unconditionally the authority to take and perform the
actions contemplated herein, and Grantor irrevocable waives any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by Grantor without Attorney's
written consent.

                  Grantor hereby irrevocably constitutes and appoints Attorney
(and all officers, employees or agents designated by Attorney), with full power
of substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Loan Documents and, without limiting the generality of the
foregoing, Grantor hereby grants to Attorney the power and right, on behalf of
Grantor, without notice to or assent by Grantor, and at any time, to do the
following: (a) change the mailing address of Grantor, open a post office box on
behalf of Grantor, open mail for Grantor, and ask, demand, collect, give
acquittances and receipts for, take possession of, endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, and notices in connection with any property
of Grantor; (b) effect any repairs to any asset of Grantor, or continue to
obtain any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and adjust all claims under such policies of
insurance, and make all determinations and decisions with respect to such
policies; (c) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against Grantor or its property;
(d) defend any suit, action or proceeding brought against Grantor if Grantor
does not defend such suit, action or proceeding or if Attorney believes that
Grantor is not pursuing such defense in a manner that will maximize the recovery
to Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Grantor whenever
payable and to enforce any other right in respect of Grantor's property; (f)
cause the certified public accountants then engaged by Grantor to





<PAGE>   17


prepare and deliver to Attorney at any time and from time to time, promptly upon
Attorney's request, the following reports: (1) a reconciliation of all accounts;
(2) an aging of all accounts, (3) trial balances, (4) test verifications of such
accounts as Attorney may request, and (5) the results of each physical
verification of inventory; (g) communicate in its own name with any party to any
Contract with regard to the assignment of the right, title and interest of such
Grantor in and under the Contracts and other matters relating thereto; and (h)
execute, in connection with any sale provided for in any Loan Document, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral and to otherwise direct such sale or resale, all as
though Attorney were the absolute owner of the property of Grantor for all
purposes, and to do, at Attorney's option and Grantor's expense, at any time or
from time to time, all acts and other things that Attorney reasonably deems
necessary to perfect, preserve, or realize upon Grantor's property or assets and
Attorney's Liens thereon, all as fully and effectively as Grantor might do.
Grantor hereby ratifies, to the extent permitted by law, all that said Attorney
shall lawfully do or cause to be done by virtue hereof.

                  IN WITNESS WHEREOF, this Power of Attorney is executed by
Grantor and Grantor has caused its seal to be affixed pursuant to the authority
of its board of directors this 24th day of March, 2000.



                                            [NAME OF GRANTOR]

                                            By: _____________________________
                                            Name:
                                            Title:


ATTEST:


By:    ______________________________ (SEAL)

Title: ______________________________