Document:

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                                                                    EXHIBIT 10.3

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                        BALDWIN CANADA SECURITY AGREEMENT

                            Made as of March 24, 2000

                                     Between

                   THE BALDWIN PIANO COMPANY (CANADA) LIMITED
                                     Grantor

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION
                              as Agent for Lenders

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                                 MCMILLAN BINCH
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                            BARRISTERS & SOLICITORS

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
RECITALS..........................................................................................................1

Section 1 - INTERPRETATION........................................................................................1
         1.1    Terms Defined in PPSA.............................................................................1
         1.2    Other Defined Terms...............................................................................2
                (1)     Agreement.................................................................................2
                (2)     Credit Agreement..........................................................................2
                (3)     Collateral................................................................................2
                (4)     Contract..................................................................................2
                (5)     Guarantee.................................................................................2
                (6)     Inventory.................................................................................2
                (7)     Obligations...............................................................................2
                (8)     Receiver..................................................................................2
                (9)     Security Interest.........................................................................2
         1.3    Terms Defined in Credit Agreement.................................................................2

Section 2 - grant of security.....................................................................................3
         2.1    Grant of Security.................................................................................3
         2.2    Exception Respecting Trade-Marks..................................................................3
         2.3    Exception to Last Day.............................................................................4
         2.4    Liability for Deficiency..........................................................................4

Section 3-- AGENT'S AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S AND LENDERS' OBLIGATIONS..........................4
         3.1    Continued Liability of Grantor under Licenses, etc................................................4
         3.2    Notice to Account Debtors.........................................................................4
         3.3    Verification of Accounts..........................................................................5

Section 4-- REPRESENTATIONS AND WARRANTIES OF GRANTOR.............................................................5
         4.1    Representations and Warranties....................................................................5

Section 5-- COVENANTS OF THE GRANTOR..............................................................................7
         5.1    Covenants.........................................................................................7
                (1)     Limitation on Liens on Collateral.........................................................8
                (2)     Limitations on Disposition................................................................8
                (3)     Notice to Agent...........................................................................8
                (4)     No Accessions.............................................................................8
                (5)     Maintenance of Records....................................................................8
                (6)     Further Assurances; Pledge of Instruments.................................................8
                (7)     Indemnification...........................................................................9
                (8)     Compliance with Terms of Accounts, etc....................................................9
                (9)     Intellectual Property Collateral..........................................................9
                (10)    Further Identification of Collateral.....................................................10

Section 6-- REMEDIES.............................................................................................10
         6.1    Appointment of Receiver..........................................................................10
         6.2    Exercise of Rights by Agent......................................................................11
         6.3    Taking Possession of Collateral..................................................................11
         6.4    Rights and Remedies under PPSA...................................................................11
</TABLE>

                                      (i)

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<TABLE>
<S>                                                                                                              <C>
         6.5    Co-operation of Grantor with respect to Taking Possession........................................11
         6.6    Costs............................................................................................11
         6.7    Notice of Sale...................................................................................12
         6.8    Grant of Licence to Use Intellectual Property Collateral.........................................12
         6.9    Limitation on Agent's and Lenders' Duty in Respect of Collateral.................................12

Section 7-- MISCELLANEOUS........................................................................................12
         7.1    Performance by Agent.............................................................................12
         7.2    Extensions, etc..................................................................................13
         7.3    No Waiver........................................................................................13
         7.4    Waiver of Protest................................................................................13
         7.5    Assignment and Enurement.........................................................................13
         7.6    Amendment........................................................................................13
         7.7    Notices..........................................................................................13
         7.8    Remedies Cumulative..............................................................................14
         7.9    Headings.........................................................................................14
         7.10   Reinstatement....................................................................................14
         7.11   Number and Gender................................................................................14
         7.12   Limitation By-Law; Severability..................................................................15
         7.13   Attachment.......................................................................................15
         7.14   Amalgamation.....................................................................................15
         7.15   Agent's Appointment as Attorney-In-Fact..........................................................15
         7.16   Termination of This Agreement....................................................................16
         7.17   Further Assurances...............................................................................16
         7.18   Governing Law....................................................................................16
         7.19   Counterparts.....................................................................................16
         7.20   No Strict Construction...........................................................................16
         7.21   Advice of Counsel................................................................................16
         7.22   Benefit of Lenders...............................................................................16

Section 8-- COPY OF AGREEMENT....................................................................................16
         8.1    Copy.............................................................................................16
         8.2    Waiver...........................................................................................16

Schedule 4.1(4) - Financing Statements

Schedule 4.1(5) - Instruments and Chattel Paper

Schedule 4.1(6) - Locations

Schedule 4.1(10) - Designs, Patents, Trademarks and Copyrights
</TABLE>

                                      (ii)

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                        BALDWIN CANADA SECURITY AGREEMENT

This Agreement is made as of March 24, 2000, between

                  THE BALDWIN PIANO COMPANY (CANADA) LIMITED, a corporation
                  incorporated under the laws of Canada ("GRANTOR")

                                      and

                  GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation,
                  as agent (together with its successors and assigns, "AGENT")
                  for the financial institutions and other entities that are
                  from time to time signatories, as lenders ("LENDERS") to the
                  Credit Agreement (as hereinafter defined)

RECITALS

A. Pursuant to that certain Credit Agreement dated as of the date hereof between
Baldwin Piano & Organ Company ("BORROWER"), as borrower, the other Credit
Parties signatory thereto, the Lenders signatory thereto from time to time and
Agent (as from time to time amended, restated, supplemented and otherwise
modified, the "CREDIT AGREEMENT"), Lenders have agreed to make Loans to Borrower
and to incur Letter of Credit Obligations on behalf of Borrower.

B. Grantor is a direct wholly-owned subsidiary of Borrower.

C. Pursuant to a Guarantee dated as of the date hereof, given by Grantor in
favour of Agent and Lenders (as from time to time amended, restated,
supplemented and otherwise modified, the "GUARANTEE"), Grantor has guaranteed
the payment and performance of all obligations of Borrower to Agent and Lenders.

D. In connection with the making of the Loans and the incurrence of Letter of
Credit Obligations under the Credit Agreement and as a condition precedent
thereto, Lenders require that Grantor shall have executed and delivered this
Agreement as security for all its obligations under the Guarantee, the Credit
Agreement, this Agreement and any of the other Loan Documents to which Grantor
is party.

FOR VALUE RECEIVED, the parties agree as follows:

SECTION 1 - INTERPRETATION

1.1 TERMS DEFINED IN PPSA. The terms "Chattel Paper", "Document of Title",
"Goods", "Instrument", "Intangible", "Security", "Proceeds", "inventory",
"Accession", "Money",

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                                      -2-

"Account", "financing statement" and "financing change statement" whenever used
herein shall be interpreted in accordance with their respective meanings when
used in the Personal Property Security Act (Ontario), as amended from time to
time, which Act, including amendments thereto and any Act substituted therefor
and amendments thereto, is herein referred to as the "PPSA". Any reference
herein to "Collateral" shall, unless the context otherwise requires, be deemed a
reference to "Collateral or any part thereof ". The term "Proceeds", whenever
used herein and interpreted as above, shall, by way of example, include
trade-ins, equipment, Money, bank accounts, notes, Chattel Paper, Goods,
contracts rights, Accounts and any other personal property or obligation
received when such Collateral or Proceeds are sold, exchanged, collected or
otherwise disposed of.

1.2 OTHER DEFINED TERMS. Unless otherwise defined, capitalized terms used herein
have the following meanings:

(1) AGREEMENT means this agreement and all schedules attached hereto as the same
may be amended, restated, supplemented and otherwise modified from time to time.
All uses of the words "hereto", "herein", "hereof ", "hereby" and "hereunder"
and similar expressions refer to this security agreement and not to any
particular section or portion of it.

(2) CREDIT AGREEMENT has the meaning given to it in paragraph A of the Recitals.

(3) COLLATERAL has the meaning given to it in Section 2.1.

(4) CONTRACT has the meaning given to it in the Credit Agreement.

(5) GUARANTEE has the meaning given to it in paragraph C of the Recitals.

(6) INVENTORY has the meaning given to it in Section 2.1.

(7) OBLIGATIONS means any and all indebtedness, liabilities and obligations, now
or hereafter existing, direct or indirect, absolute or contingent, as principal
or surety, of Grantor to Agent and Lenders or any of them arising under, by
virtue of or otherwise in connection with the Guarantee, this Agreement, the
Credit Agreement or any other Loan Document.

(8) RECEIVER has the meaning given to it in Section 6.1.

(9) SECURITY INTEREST has the meaning given to it in Section 2.1.

1.3 TERMS DEFINED IN CREDIT AGREEMENT. Other capitalized terms used herein and
not otherwise defined have the meanings given to them in the Credit Agreement or
in Annex "A" thereto.

SECTION 2 - GRANT OF SECURITY

2.1 GRANT OF SECURITY. As continuing collateral security for the due payment and
performance by Grantor of all of the Obligations, Grantor hereby grants,
assigns, conveys, mortgages, pledges, hypothecates and transfers to Agent, for
itself and for the benefit of Lenders, and grants to Agent, for itself and for
the benefit of Lenders, a security interest (collectively, the

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"SECURITY INTEREST") in, all of its right, title and interest in, to and under
all of Grantor's present and after acquired personal property including, without
limitation, in all Goods (including all parts, accessories, attachments, special
tools, additions and accessions thereto), Chattel Paper, Documents of Title
(whether negotiable or not), Instruments, Money and Securities now owned or
hereafter owned or acquired by or on behalf of Grantor (including such as may be
returned to or repossessed by Grantor) and in all Proceeds and renewals thereof,
accretions thereto and substitutions therefor and, further including, without
limitation, all of the following now owned or hereafter owned or acquired by or
on behalf of Grantor:

(1) all Accounts and book debts and generally all debts, dues, claims, choses in
action and demands of every nature and kind howsoever arising or secured
including letters of credit and advices of credit, which are now due, owing or
accruing or growing due to or owned by or which may hereafter become due, owing
or accruing or growing due to or owned by Grantor ("DEBTS");

(2) all deeds, documents, writings, papers, books of account and other books
relating to or being records of Debts, Chattel Paper or Documents of Title or by
which such are or may hereafter be secured, evidenced, acknowledged or made
payable;

(3) all inventory of whatever kind and wherever situate, including, for greater
certainty, all raw materials, work in process or materials used or consumed or
to be used or consumed in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies (collectively,
"INVENTORY");

(4) all Equipment (other than Inventory) of whatever kind and wherever situate,
including, without limitation, all machinery, tools, apparatus, plant,
furniture, fixtures and vehicles of whatsoever nature or kind;

(5) all Intangibles and General Intangibles;

(6) all present and future Contracts, contract rights and insurance claims;

(7) all Intellectual Property;

(8) all present and future Instruments; and

(9) all Money, Securities and Investment Property.

The foregoing property is collectively referred to as the "COLLATERAL". In
addition, to secure the prompt and complete payment, performance and observation
of the Obligations, Grantor hereby grants to Agent, for itself and for the
benefit of Lenders, a right of set-off against Collateral now or hereafter in
the possession or custody of or in transit to Agent or any Lender for any
purpose.

2.2 EXCEPTION RESPECTING TRADE-MARKS. Notwithstanding Section 2.1, Grantor's
grant of security in trademarks (as defined in the Trademarks Act (Canada))
under this Agreement shall be limited to a grant by Grantor of a security
interest in all of Grantor's right, title and interest in such trademarks.

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2.3 EXCEPTION TO LAST DAY. The Security Interest granted hereby shall not extend
or apply to, and Collateral shall not include, the last day of the term of any
lease or agreement therefor, but upon the enforcement of the Security Interest,
Grantor shall stand possessed of such last day in trust to assign the same to
any person acquiring such term.

2.4 LIABILITY FOR DEFICIENCY. If the Collateral is realized upon and the
Security Interest in the Collateral is not sufficient to satisfy all
Obligations, Grantor acknowledges and agrees that, subject to the provisions of
the PPSA, Grantor shall continue to be liable for any Obligations remaining
outstanding and Agent shall be entitled to pursue full payment thereof.

SECTION 3 - AGENT'S AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S AND LENDERS'
OBLIGATIONS

3.1 CONTINUED LIABILITY OF GRANTOR UNDER LICENSES, ETC. It is expressly agreed
by Grantor that, anything herein to the contrary notwithstanding, 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. Neither Agent nor any Lender shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Agreement or the granting herein of a Security Interest therein 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 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.

3.2 NOTICE TO ACCOUNT DEBTORS. Agent may, at any time after a Default or an
Event of Default shall have occurred and be continuing, or, upon Agent's
reasonable determination that notice to third parties is necessary to protect
the Security Interest or any other of its Liens, without prior notice to
Grantor, notify any Account Debtors obligated under any Account of Grantor,
parties to any Contracts of Grantor and obligors in respect of Instruments and
Chattel Paper, that such Accounts and the right, title and interest of Grantor
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. Upon the request of Agent, Grantor shall so notify such
Account Debtors, parties to Contracts and obligors in respect of Instruments and
Chattel Paper. Grantor acknowledges that any payments on or other proceeds of
Collateral received by Grantor from such Account Debtors, whether before or
after notification of the Security Interest to such Account Debtors and whether
before or after the occurrence of a Default or an Event of Default, shall be
received and held by Grantor in trust for Agent and shall be deposited in a
Borrower Account in the name of Grantor in accordance with Annex C to the Credit
Agreement.

3.3 VERIFICATION OF ACCOUNTS. Agent may at any time, in Agent's own name or in
the name of 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

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                                      -5-

Chattel Paper. If a Default or an Event of Default shall have occurred and be
continuing, Grantor, at its own expense, shall cause the independent chartered
accountants then engaged by such Grantor 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 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. Grantor, at its own expense,
shall deliver to Agent the results of each physical verification, if any, which
Grantor may in its discretion have made, or caused any other Person to have made
on its behalf, of all or any portion of its Inventory.

SECTION 4 - REPRESENTATIONS AND WARRANTIES OF GRANTOR

4.1 REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants that:

(1) Grantor's correct legal name is "THE BALDWIN PIANO COMPANY (CANADA)
LIMITED";

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

(3) 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 Grantor in favour of Agent, pursuant to this Agreement or the
other Loan Documents, and (ii) in connection with any other Permitted
Encumbrances;

(4) this Agreement is effective to create a valid and continuing Security
Interest on and, upon the filing of the appropriate financing statements listed
on Schedule 4.1(4) hereto, a perfected Security Interest in favour of Agent, for
itself and the benefit of Lenders, on the Collateral with respect to which a
security interest may be perfected by filing pursuant to the PPSA. Such Security
Interest is prior to all other Liens, except Permitted Encumbrances that would
be prior to the Security Interest in favour 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 Grantor (other than purchasers of Inventory
in the ordinary course of business). All action by Grantor necessary or
desirable to protect and perfect such Security Interest on each item of the
Collateral has been duly taken;

(5) Schedule 4.1(5) hereto lists all Instruments and Chattel Paper of Grantor.
All action by Grantor necessary or desirable to protect and perfect the Security
Interest of Agent on each item set forth on Schedule 4.1(5) (including the
delivery of all originals thereof to Agent and the legending of all Chattel
Paper as required by Section 5.1(5) hereof) has been duly taken. The Security
Interest of Agent, for the benefit of Agent and Lenders, on the Collateral
listed on Schedule 4.1(5) hereto is prior to all other Liens, except Permitted
Encumbrances that would be prior to the Security Interest in favour of Agent as
a matter of law, and is enforceable as such against any and all creditors of and
purchasers from Grantor;

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(6) Grantor's chief executive office, principal place of business, domicile
(within the meaning of the Civil Code of Quebec), 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 and all Account
Debtors are set forth on Schedule 4.1(6) hereto;

(7) with respect to the Accounts of Grantor, except as specifically disclosed in
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 Grantor's business and are not evidenced by a judgment,
Instrument or Chattel Paper; (ii) there are no set-offs, claims or disputes
existing or asserted with respect thereto and Grantor has made no 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 Grantor in the ordinary course of its business
for prompt payment and disclosed to Agent; (iii) to 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 Grantor's books and records and any invoices,
statements and Collateral Reports delivered to Agent and Lenders with respect
thereto; (iv) Grantor has no 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) Grantor has
no knowledge that any Account Debtor is unable generally to pay its accounts 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 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 applicable Borrower
Accounts in the name of Grantor or Agent as required pursuant to the terms of
Annex C of the Credit Agreement; and (z) to Grantor's knowledge, all Account
Debtors have the capacity to contract;

(8) all Inventory purchased by Grantor is purchased free and clear of any and
all Liens and other adverse claims other than unpaid suppliers' rights to
repossess goods under Section 81.1 of the Bankruptcy and Insolvency Act (Canada)
and such suppliers' substantially similar rights under the Civil Code of Quebec;

(9) with respect to any Inventory scheduled or listed on any Collateral Report
delivered to Agent pursuant to the terms of this Agreement or the Credit
Agreement, (i) such Inventory is located at one of Grantor's locations set forth
on Schedule 4.1(6) 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, Grantor will concurrently therewith obtain, to
the extent required by the Credit Agreement, bailee, landlord and mortgagee
agreements, (iii) the Grantor has good and marketable title to such property
and, subject to Section 4.1(8) hereof, such property is not subject to any Lien
or security interest or document whatsoever except for the Security Interest
granted to Agent, for the benefit of Agent and Lenders, and except for Permitted
Encumbrances, (iv) except as specifically disclosed in a Collateral Report
delivered to Agent, such Inventory is Eligible Inventory of good and
merchantable quality, free from any defects, (v) such property is not subject to
any licensing,

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                                      -7-

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 property 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 Grantor
is a party or to which such property is subject; and

(10) Grantor has no interest in, or title to, any Design, Patent, Trademark or
Copyright except as set forth in Schedule 4.1(10) hereto. This Agreement is
effective to create a valid and continuing Security Interest on and, upon filing
this Agreement with the applicable Canadian Intellectual Property Office and
filing of the financing statement listed on Schedule 4.1(4) hereto under the
PPSA (which has been completed), perfected Security Interests in favour of Agent
on Grantor's Designs, Patents, Trademarks and Copyrights and such perfected
Liens are enforceable as such as against any and all creditors of and purchasers
from Grantor. Upon completion of the filings referred to in the immediately
preceding sentence, all action necessary or desirable to protect and perfect
Agent's Security Interests on Grantor's Designs, Patents, Trademarks or
Copyrights shall have been duly taken.

(11) 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 for the
grant by Grantor of Liens on the Collateral pursuant to this Agreement or for
the execution, delivery or performance of this Agreement by Grantor.

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

SECTION 5 - COVENANTS OF THE GRANTOR

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

(1) LIMITATION ON LIENS ON COLLATERAL. Grantor will not create, permit or suffer
to exist, and Grantor 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 Grantor's rights in respect of the Collateral against the
claims and demands of all Persons whomsoever.

(2) LIMITATIONS ON DISPOSITION. 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.

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                                      -8-

(3) NOTICE TO AGENT. 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.

(4) NO ACCESSIONS. Grantor shall prevent Collateral, except for Collateral
disposed of as permitted hereby or under the Credit Agreement, from being or
becoming an accession to other property not covered by this Agreement.

(5) MAINTENANCE OF RECORDS. 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. Grantor shall mark
its books and records pertaining to the Collateral to evidence this Agreement
and the Security Interests 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."

(6) 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 Grantor,
Grantor shall promptly and duly execute and deliver any and all such further
instruments and documents (including deeds of hypothec with respect to
Collateral located in the Province of Quebec) and take such further actions as
Agent may reasonably deem desirable to obtain the full benefits of this
Agreement and the other Loan Documents to which Grantor is a party and of the
rights and powers herein and therein 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 (or the applicable
equivalent) under applicable law with respect to the Security Interests granted
hereunder or under any other Loan Document to which Grantor is a party, (iii)
transferring Collateral to Agent's possession (for the benefit of Agent and
Lenders) if such Collateral consists of Chattel Paper or Instruments or if a
Security Interest on such Collateral can be perfected only by possession, or if
requested by Agent, and (iv) obtaining, or using its commercially reasonable
efforts to obtain, waivers of Liens if any exist, from landlords and mortgagees
in accordance with the Credit Agreement. Grantor also hereby authorizes Agent,
for the benefit of Agent and Lenders, to file any such financing or continuation
statements (or the applicable equivalent) without the signature of 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 cheques and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Agent immediately upon Grantor's receipt thereof.

(7) INDEMNIFICATION. In any suit, proceeding or action brought by Agent or any
Lender relating to any Account, Chattel Paper, Contract, Document of Title,
Intangible or Instrument for any sum owing thereunder or to enforce any
provision of any Account, Chattel Paper, Contract, Document of Title, Intangible
or Instrument, Grantor will save, indemnify and keep Agent and Lenders harmless
from and against all expense (including reasonable legal fees and expenses),

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                                      -9-

loss or damage suffered by reason of any defence, set-off, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by Grantor of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to, or in
favour of, such obligor or its successors from 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 wilful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. All such obligations of
Grantor shall be and remain enforceable against and only against Grantor and
shall not be enforceable against Agent or any Lender.

(8) COMPLIANCE WITH TERMS OF ACCOUNTS, ETC. In all material respects, 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.

(9) INTELLECTUAL PROPERTY COLLATERAL.

         (a)      Grantor shall notify Agent immediately if it knows or has
                  reason to know that any application or registration relating
                  to any of Grantor's Designs, Patents, Trademarks or Copyrights
                  (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 any Canadian Intellectual Property Office or
                  the United States Patent and Trademark Office or the United
                  States Copyright Office or any court) regarding Grantor's
                  ownership of any Design, Patent, Trademark or Copyright, its
                  rights to register the same, or to keep and maintain the same.

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

         (c)      Grantor shall take all actions necessary or reasonably
                  requested by Agent to maintain and pursue each application, to
                  obtain the relevant registration and to maintain the
                  registration of each of Grantor's Designs, Patents, Trademarks
                  and Copyrights (now or hereafter existing), including the
                  filing of applications for renewal, affidavits or declarations
                  of use, affidavits of non-contestability and opposition and
                  interference and cancellation proceedings, unless Grantor
                  shall determine that such Design, Patent, Trademark or
                  Copyright is not material to the conduct of its business.

         (d)      In the event that any of Grantor's Design, Patent, Trademark
                  or Copyright Collateral is infringed upon, or misappropriated
                  or diluted by a third party, Grantor shall notify Agent
                  promptly after Grantor learns thereof. Grantor shall,

<PAGE>   13

                                      -10-

                  unless Grantor shall reasonably determine that such Design,
                  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 reasonably deem appropriate under the
                  circumstances to protect such Design, Patent, Trademark or
                  Copyright Collateral.

(10) FURTHER IDENTIFICATION OF COLLATERAL. Grantor will, if so requested by
Agent, furnish to Agent, as often as Agent reasonably 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.

SECTION 6 - REMEDIES

6.1 APPOINTMENT OF RECEIVER. Upon the occurrence of and during the continuance
of any Event of Default, Agent may appoint or reappoint by instrument in
writing, any Person or Persons, whether an officer or officers or an employee or
employees of Agent or not, to be an interim receiver, receiver or receivers
(hereinafter called a "RECEIVER", which term when used herein shall include a
receiver and manager) of Collateral (including any interest, income or profits
therefrom) and may remove any Receiver so appointed and appoint another in
his/her/its stead. Any such Receiver shall, so far as concerns responsibility
for his/her/its acts, be deemed the agent of Grantor and not Agent or any of
Lenders, and neither Agent nor any of Lenders shall be in any way responsible
for any misconduct, negligence or non-feasance on the part of any such Receiver,
his/her/its servants, agents or employees. Subject to the provisions of the
instrument appointing him/her/it, any such Receiver shall have power to take
possession of Collateral, to preserve Collateral or its value, to carry on or
concur in carrying on all or any part of the business of Grantor and to sell,
lease, license or otherwise dispose of or concur in selling, leasing, licensing
or otherwise disposing of Collateral. To facilitate the foregoing powers, any
such Receiver may, to the exclusion of all others, including Grantor, enter
upon, use and occupy all premises owned or occupied by Grantor wherein
Collateral may be situate, maintain Collateral upon such premises, borrow money
on a secured or unsecured basis and use Collateral directly in carrying on
Grantor's business or as security for loans or advances to enable the Receiver
to carry on Grantor's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Agent, all Money
received from time to time by such Receiver in carrying out his/her/its
appointment shall be received in trust for and be paid over to Agent. Every such
Receiver may, in the discretion of Agent, be vested with all or any of the
rights and powers of Agent.

6.2 EXERCISE OF RIGHTS BY AGENT. Upon and during the continuance of any Event of
Default, Agent may, either directly or through its agents or nominees, exercise
any or all of the powers and rights given to a Receiver by virtue of Section
6.1.

6.3 TAKING POSSESSION OF COLLATERAL. Upon the occurrence and during the
continuance of an Event of Default, Agent may take possession of, collect,
demand, sue on, enforce, recover and receive Collateral and give valid and
binding receipts and discharges therefor and in respect thereof and, upon the
occurrence and during the continuance of any Event of Default, Agent may

<PAGE>   14
                                      -11-

sell, license, lease or otherwise dispose of Collateral in such manner, at such
time or times and place or places, for such consideration and upon such terms
and conditions as to Agent may seem reasonable and in compliance with applicable
law.

6.4 RIGHTS AND REMEDIES UNDER PPSA. In addition to those rights granted herein
and in any other agreement now or hereafter in effect between Grantor and Agent
and any Lender, and in addition to any other rights Agent or Lenders may have at
law or in equity, Agent shall have, both before and after the occurrence of any
Event of Default, all rights and remedies of a secured party under the PPSA.
However, Agent shall not be liable or accountable for any failure to exercise
its remedies, take possession of, collect, enforce, realize, sell, lease,
license or otherwise dispose of Collateral or to institute any proceedings for
such purposes. Furthermore, none of Agent or Lenders shall have any obligation
to take any steps to preserve rights against prior parties to any Instrument or
Chattel Paper, whether Collateral or proceeds and whether or not in Agent's or
any Lender's possession, and shall not be liable or accountable for failure to
do so.

6.5 CO-OPERATION OF GRANTOR WITH RESPECT TO TAKING POSSESSION. Grantor
acknowledges that, after and during the continuance of an Event of Default,
Agent or any Receiver appointed by it may take possession of Collateral wherever
it may be located and by any method permitted by law and Grantor agrees upon
request from Agent or any such Receiver to assemble and deliver possession of
Collateral at such place or places as directed.

6.6 COSTS. Grantor agrees to be liable for and to pay all costs, charges and
expenses reasonably incurred by Agent, any Lender or any Receiver appointed by
Agent, whether directly or for services rendered (including reasonable legal and
auditors' costs and expenses and Receiver remuneration), in operating Grantor's
accounts, in preparing or enforcing this Agreement, taking and maintaining
custody of, preserving, repairing, processing, preparing for disposition and
disposing of Collateral and in enforcing or collecting indebtedness and all such
costs, charges and expenses, together with any amounts owing as a result of any
borrowing by Agent, any Lender or any Receiver appointed by Agent, as permitted
hereby, shall be a first priority Security Interest on the proceeds of
realization, collection or disposition of Collateral and shall be secured
hereby.

6.7 NOTICE OF SALE. The Agent will give Grantor such notice, if any, of the
date, time and place of any public sale or of the date after which any private
disposition of Collateral is to be made as may be required by the PPSA.

6.8 GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the purpose of
enabling Agent to exercise rights and remedies under Section 6 hereof
(including, without limiting the terms of Section 6 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, Grantor hereby grants to
Agent, for the benefit of Agent and Lenders, an irrevocable, non-exclusive
licence (exercisable without payment of royalty or other compensation to
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by 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.

<PAGE>   15
                                      -12-

6.9 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.

SECTION 7 - MISCELLANEOUS

7.1 PERFORMANCE BY AGENT. Upon Grantor's failure to perform any of its duties
hereunder, Agent may, but shall not be obligated to, perform any or all of such
duties, and Grantor shall pay to Agent, forthwith upon written demand therefor,
an amount equal to the expense incurred by Agent in so doing plus interest
thereon from the date such expense is incurred until it is paid at an annual
rate of interest equal to 15% on the basis of a three hundred and sixty (360)
day year, in each case, for the actual number of days occurring in the period
for which such interest is payable. For the purposes of the Interest Act
(Canada), such rate of interest shall be equivalent to a rate based on a
calendar year equal to such rate of interest multiplied by the actual number of
days in the calendar year of calculation and divided by 360.

7.2 EXTENSIONS, ETC. Agent may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromise, settle,
grant releases and discharges and otherwise deal with Grantor, debtors of
Grantor, any other Credit Party, sureties and others and with Collateral and
other security as Agent may see fit without prejudice to the liability of
Grantor or Agent's right to hold and realize the Security Interest. Furthermore,
without limiting any other provision hereof, after and during the continuance of
an Event of Default, Agent may demand, collect and sue on Collateral in either
Grantor's or Agent's name, at Agent's option, and may endorse Grantor's name on
any and all cheques, commercial paper, and any other Instruments pertaining to
or constituting Collateral. Nothing herein contained shall in any way obligate
Agent to grant, continue, renew, extend time for payment of or accept anything
which constitutes or would constitute Obligations.

7.3 NO WAIVER. No delay or omission by Agent in exercising any right or remedy
hereunder or with respect to any of the Obligations shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. Furthermore, Agent may remedy any default by Grantor
hereunder or with respect to any Obligations in any reasonable manner without
waiving the default remedied and without waiving any other prior or subsequent
default by Grantor. All rights and remedies of Agent granted or recognized
herein are cumulative and may be exercised at any time and from time to time
independently or in combination.

7.4 WAIVER OF PROTEST. Grantor waives protest of any Instrument constituting
Collateral at any time held by Agent on which Grantor is in any way liable and,
subject to Section 6.7 hereof, notice of any other action taken by Agent, each
to the extent permitted by applicable law.

7.5 ASSIGNMENT AND ENUREMENT. This Agreement and all obligations of Grantor
hereunder shall be binding upon the successors and assigns of Grantor (including
any debtor-in-possession on behalf of 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 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
obligations of Borrower or any portion thereof or interest therein shall in any
manner affect the Security Interest granted to Agent, for the benefit of

<PAGE>   16
                                      -13-

Agent and Lenders, hereunder. Grantor may not assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Agreement.

7.6 AMENDMENT. Save for any schedules which may be added hereto pursuant to the
provisions hereof, no modification, variation or amendment of any provision of
this Agreement shall be made except by a written agreement, executed by the
parties hereto and no waiver of any provision hereof shall be effective unless
in writing.

7.7 NOTICES. Except as otherwise provided herein, each notice, demand, request,
consent, approval, declaration or other communication which shall or may be
given hereunder shall be in writing and shall be deemed to have been validly
served, given or delivered if served, given or delivered in accordance with
Section 11.10 of the Credit Agreement. Such communications shall be faxed, given
or delivered to Grantor at the following address:

         The Baldwin Piano Company (Canada) Limited
         c/o 4680 Parkway Drive
         Mason, Ohio
         45040-5301
         Attention:                 Chief Financial Officer
         Telecopier No.:            (513) 754-4664
         Telephone No.:             (513) 754-4647

with a copy to:

         Graydon Head & Richey
         511 Walnut Street, #1900
         Cincinnati, Ohio
         45202
         Attention:                 Jeffrey Rohr
         Telecopier No.:            (513) 651-3836
         Telephone No.:             (513) 629-2852

7.8 REMEDIES CUMULATIVE. This Agreement and the security afforded hereby is in
addition to and not in substitution for any other security now or hereafter held
by Agent and is intended to be a continuing security agreement and shall remain
in full force and effect until all Obligations and any extensions or renewals
thereof together with interest accruing thereon shall be paid in full.

7.9 HEADINGS. The headings used in this Agreement are for convenience only and
are not to be considered a part of this Agreement and do not in any way limit or
amplify the terms and provisions of this Agreement.

<PAGE>   17

                                      -14-

7.10 REINSTATEMENT. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Grantor for
liquidation or reorganization, should Grantor become insolvent or make an
assignment for the benefit of any creditor or creditors or should a receiver or
trustee or similar Person be appointed for all or any significant part of
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 Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the 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
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

7.11 NUMBER AND GENDER. When the context so requires, the singular number shall
be read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.

7.12 LIMITATION BY-LAW; SEVERABILITY. All rights, remedies and powers provided
in this 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
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 Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law. In the event any provisions of this Agreement, as amended
from time to time, shall be deemed invalid or void, in whole or in part, by any
Court of competent jurisdiction, the remaining terms and provisions of this
Agreement shall remain in full force and effect.

7.13 ATTACHMENT. The Security Interest created hereby is intended to attach when
this Agreement is signed by Grantor and delivered to Agent.

7.14 AMALGAMATION. Grantor acknowledges and agrees that, in the event it
amalgamates with any other company or companies, it is the intention of the
parties hereto that the term "Grantor", when used herein, shall apply to each of
the amalgamating companies and to the amalgamated company, such that the
Security Interest granted hereby:

(1) shall extend to "Collateral" (as that term is herein defined) owned by each
of the amalgamating companies and the amalgamated company at the time of
amalgamation and to any "Collateral" thereafter owned or acquired by the
amalgamated company, and

(2) shall secure the "Obligations" (as that term is herein defined) of each of
the amalgamating companies and the amalgamated company to Agent and Lenders at
the time of amalgamation and any "Obligations" of the amalgamated company to
Agent and Lenders thereafter arising. The Security Interest shall attach to
"Collateral" owned by each company amalgamating with Grantor, and by the
amalgamated company, at the time of the amalgamation, and shall attach to any
"Collateral" thereafter owned or acquired by the amalgamated company when such
becomes owned or is acquired.

<PAGE>   18
                                      -15-

7.15 AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. On the Closing Date, 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
of attorney or authority granted under the Power of Attorney unless an Event of
Default has occurred and is continuing, and (b) Agent shall account for any
money received by Agent in respect of any foreclosure on or disposition of
Collateral pursuant to the Power of Attorney provided that none of Agent or
Lenders shall have any duty as to any Collateral, and Agent and Lenders shall be
accountable only for amounts that 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 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.

7.16 TERMINATION OF THIS AGREEMENT. Subject to Section 7.10 hereof, this
Agreement shall terminate upon the Termination Date.

7.17 FURTHER ASSURANCES. Grantor hereby authorizes Agent to file such financing
statements, financing change statements and other documents and do such acts,
matters and things (including completing and adding schedules hereto identifying
Collateral or any Permitted Encumbrances affecting Collateral or identifying the
locations at which Grantor's business is carried on and Collateral and records
relating thereto are situate) as Agent may reasonably deem appropriate to
perfect on an ongoing basis and continue the Security Interest, to protect and
preserve Collateral and, following an Event of Default, to realize upon the
Security Interest.

7.18 GOVERNING LAW. This Agreement and the transactions evidenced hereby shall
be governed by and construed in accordance with the laws of the province of
Ontario and the federal laws of Canada applicable therein, as the same may from
time to time be in effect, including, where applicable, the PPSA.

7.19 COUNTERPARTS. This Agreement may be executed in any number of counterparts
which shall, collectively and separately constitute one agreement.

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

<PAGE>   19
                                      -16-

7.21 ADVICE OF COUNSEL. Each of the parties represents to each other party
hereto that it has discussed this Agreement with its counsel.

7.22 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 Obligations in
accordance with the terms of the Credit Agreement.

SECTION 8 - COPY OF AGREEMENT

8.1 COPY. Grantor hereby acknowledges receipt of a copy of this Agreement.

8.2 WAIVER. To the extent permitted by applicable law, Grantor waives Grantor's
right to receive a copy of any financing statement or financing change statement
registered by Agent, or of any verification statement with respect to any
financing statement or financing change statement registered by Agent.

                           [INTENTIONALLY LEFT BLANK]

<PAGE>   20
                                      -17-

The parties have executed this Agreement.

                                    THE BALDWIN PIANO COMPANY (CANADA) LIMITED

                                    By: /s/ DUANE KIMBLE
                                       ----------------------------
                                       Duane Kimble
                                       Chief Financial Officer

                                    GENERAL ELECTRIC CAPITAL CORPORATION

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

<PAGE>   21

                                    EXHIBIT A

                                POWER OF ATTORNEY

         This Power of Attorney is executed and delivered by The Baldwin Piano
Company (Canada) Limited, a corporation incorporated under the laws of Canada
("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 Security Agreement, dated as of March _____, 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 fulfilment 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 irrevocably 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 cancelled 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) continue or 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 money due
to Grantor whenever payable and to enforce any other right in respect of
Grantor's property; (f) cause the public chartered accountants then engaged by
Grantor to 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, and (4) test
verifications of such accounts as Attorney

                                      A-1

<PAGE>   22
                                      -2-

may request; (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.

         THIS POWER OF ATTORNEY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE PROVINCE OF ONTARIO APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT PROVINCE.

IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor pursuant to
the authority of its board of directors this _______ day of March, 2000.

                                    THE BALDWIN PIANO COMPANY (CANADA) LIMITED

                                    By:                                   c/s
                                       -----------------------------------
                                       Duane Kimble
                                       Chief Financial Officer

                                      A-2<PAGE>   1
                                                                    EXHIBIT 10.4

                          COPYRIGHT SECURITY AGREEMENT

                  COPYRIGHT 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"), in favor of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, in its capacity as Agent for Lenders.

                              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 Persons named therein as Credit
Parties, Agent and the Persons signatory thereto from time to time as Lenders
(including all annexes, exhibits or 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, Agent and Lenders are willing to make the Loans and
to incur Letter of Credit Obligations as provided for in the Credit Agreement,
but only upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for itself and the ratable benefit of Lenders, that certain
Security Agreement dated as of the date herewith (including all annexes,
exhibits or schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the "Security Agreement");

                  WHEREAS, pursuant to the Security Agreement, Grantors are
required to execute and deliver to Agent, for itself and the ratable benefit of
Lenders, this Copyright Security Agreement;

                  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 hereby
agrees as follows:

                  1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in Annex A to the Credit
Agreement.

                  2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL.
Grantors hereby grant to Agent, on behalf of itself and Lenders, a continuing
first priority security interest in all of Grantors' right, title and interest
in, to and under the following, whether presently existing or hereafter created
or acquired (collectively, the "Copyright Collateral"):

                  (a) all of its Copyrights and Copyright Licenses to which it
is a party including those referred to on Schedule I hereto;

                  (b) all reissues, continuations or extensions of the
foregoing; and

                  (c) all products and proceeds of the foregoing, including,
without limitation, any claim by Grantors against third parties for past,
present or future

<PAGE>   2

infringement or dilution of any Copyright or any Copyright licensed under any
Copyright License.

                  3. SECURITY AGREEMENT. The security interests granted pursuant
to this Copyright Security Agreement are granted in conjunction with the
security interests granted to Agent, on behalf of itself and Lenders, pursuant
to the Security Agreement. Grantors hereby acknowledge and affirms that the
rights and remedies of Agent with respect to the security interest in the
Copyright Collateral made and granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.

                            [signature page follows]

                                       2
<PAGE>   3

                  IN WITNESS WHEREOF, each of the parties has caused this
Copyright 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>   4

                         "Agent"
                         -------

                         GENERAL ELECTRIC CAPITAL CORPORATION

                         By: /s/ CHARLES CHIODO
                            --------------------------
                            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>   5

ACKNOWLEDGMENT OF GRANTOR
STATE OF NEW YORK   )
                    )       ss.
COUNTY OF NEW YORK  )

                  On this 24th day of March, 2000 before me personally appeared
Duane D. Kimble, proved to me on the basis of satisfactory evidence to be the
person who executed the foregoing instrument on behalf of Baldwin Piano & Organ
Company, who being by me duly sworn did depose and say that he is an authorized
officer of said corporation, that the said instrument was signed on behalf of
said corporation as authorized by its Board of Directors and that he
acknowledged said instrument to be the free act and deed of said corporation.

                                                /s/ MARIA C. SANTIAGO
                                                ---------------------------
                           {seal}               Notary Public

<PAGE>   6

ACKNOWLEDGMENT OF GRANTOR
STATE OF NEW YORK          )
                           )       ss.
COUNTY OF NEW YORK         )

                  On this 24th day of March, 2000 before me personally appeared
Duane D. Kimble, proved to me on the basis of satisfactory evidence to be the
person who executed the foregoing instrument on behalf of The Wurlitzer Company,
who being by me duly sworn did depose and say that he is an authorized officer
of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged
said instrument to be the free act and deed of said corporation.

                                            /s/ MARIA C. SANTIAGO
                                            --------------------------------
                           {seal}           Notary Public

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