UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
Coda Music Technology, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
19188P 10 8
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(CUSIP Number)
Benson K. Whitney
821 Marquette Avenue, Suite 1900
Minneapolis, MN 55402
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
May 29, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. 19188P 10 8 Page 2 of Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
J.M. Hixon Partners, LLC
41-1875485
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DE
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NUMBER OF 7 SOLE VOTING POWER
SHARES 1,153,846 (includes 384,615 shares which
may be purchased upon exercise of warrants)
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,153,846 (includes 384,615 shares which
may be purchased upon exercise of warrants)
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10 SHARED DISPOSITIVE POWERPERSON
WITH 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,153,846 (includes 384,615 shares which may be purchased upon
exercise of warrants)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.5%
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES
TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE,
AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 19188P 10 8 Page 3 of Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Benson K. Whitney
###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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NUMBER OF 7 SOLE VOTING POWER
SHARES 1,171,346 (includes 384,615 shares which
may be purchased upon exercise of warrants)
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 65,834
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,171,346 (includes 384,615 shares which
may be purchased upon exercise of warrants)
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10 SHARED DISPOSITIVE POWERPERSON
WITH 65,834
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,237,180 (includes 384,615 shares which may be purchased upon
exercise of warrants)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.8%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
This filing relates to Common Stock, without par value, of
Coda Music Technology, Inc. (the "Issuer"), 6210 Bury Drive, Eden Prairie,
Minnesota 55346.
Item 2. Identity and Background.
Persons Filing:
(a-1) Name: J. M. Hixon Partners, LLC ("Hixon")
(a-2) State of Incorporation: Delaware
(a-3) Principal Business and Address: Investments;
821 Marquette Avenue, Suite 1900, Minneapolis,
Minnesota 55402
(a-4) Hixon has not, during the last five years, been
convicted in a criminal proceeding.
(a-5) Hixon was not, during the last five years, a party to
any civil proceeding as a result of which it was or
is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with respect
to such laws.
(b-1) Name: Benson K. Whitney
(b-2) Business Address: 821 Marquette Avenue, Suite 1900,
Minneapolis, Minnesota 55402
(b-3) Principal Occupation: Self-employed venture
capitalist
(b-4) Mr. Whitney has not, during the last five years,
been convicted in a criminal proceeding.
(b-5) Mr. Whitney was not, during the last five years, a
party to any civil proceeding as a result of which he
was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state
securities laws or finding any violation with respect
to such laws.
<PAGE>
Controlling Persons of Hixon:
(c-1) Name: TLDC, LLC ("TLDC")
(c-2) Business Address: 821 Marquette Avenue,
Minneapolis, Minnesota 55402
(c-3) Principal Occupation: Managing Member of Hixon
(c-4) No controlling person of TLDC was, during the last
five years, convicted in a criminal proceeding.
(c-5) No controlling person of TLDC was, during the last
five years, a party to any civil proceeding as a
result of which he was or is subject to a judgment,
decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to,
federal or state securities laws or finding any
violation with respect to such laws.
(c-6) State of Incorporation: Delaware
Item 3. Source and Amount of Funds or Other Consideration.
Hixon acquired from the Issuer, for cash consideration of
$1,000,000, 769,231 shares of Common Stock and warrants to purchase 384,615
shares of Common Stock (the "Securities"). Working capital funds were used for
such acquisition.
Item 4. Purpose of the Transaction.
The Securities were acquired for investment purposes in
connection with the Issuer's private placement. Hixon may acquire additional
shares of Common Stock upon exercise of the warrants. The warrants are
exercisable for the period May 29, 1997 through November 28, 2000 at an exercise
price of $2.00 per share. In connection with the acquisition of the Securities,
the Issuer and Hixon entered into an Investor Rights Agreement providing for the
grant to Hixon of a right of first refusal to purchase, with certain exceptions,
all or part of its pro rata share of any new securities which the Issuer may
from time to time propose to issue. The Investor Rights Agreement also gives
Hixon the right, so long as it owns or controls 4% or more of the Issuer's
Common Stock, to designate an individual to serve on the Issuer's Board of
Directors. In addition, the Issuer entered into a Registration Rights Agreement
with all purchasers in its private placement, including Hixon, which provides
certain piggy back and demand registration rights with respect to the shares of
Common Stock purchased in the private placement and any shares which may be
purchased upon exercise of the warrants.
<PAGE>
Item 5. Interest in Securities of the Issuer.
Hixon beneficially owns 1,153,846 shares of the Issuer's
Common Stock, representing 17.5% of the shares of Common Stock outstanding. Such
amount includes 384,615 shares which may be purchased upon exercise of warrants.
Hixon has sole voting and investment power over such shares.
Benson K. Whitney beneficially owns 1,237,180 shares of the
Issuer's Common Stock, representing 18.8% of the shares of Common Stock
outstanding. Such amount includes 769,231 shares and a warrant to purchase
384,615 shares owned by Hixon and 65,834 shares owned by Gideon Hixon Ventures,
a limited partnership. Mr. Whitney has sole voting and dispositive power over
17,500 shares owned by him direct and, by virtue of being the Managing Member of
TLDC, LLC, may be deemed to have sole voting and investment power over the
1,153,846 shares beneficially owned by Hixon. Mr. Whitney has shared voting and
dispositive power over the shares owned by Gideon Hixon Ventures.
On May 29, 1997, Hixon acquired from the Issuer, in a private
placement, 769,231 shares of Common Stock and a warrant to purchase 384,615
shares of Common Stock for aggregate consideration of $1,000,000.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
In connection with the acquisition of the Securities, the
Issuer and Hixon entered into an Investor Rights Agreement providing for the
grant to Hixon of a right of first refusal to purchase, with certain exceptions,
all or part of its pro rata share of any new securities which the Issuer may
from time to time propose to issue. The Investor Rights Agreement also gives
Hixon the right, so long as it owns or controls 4% or more of the Issuer's
Common Stock, to designate an individual to serve on the Issuer's Board of
Directors. In addition, the Issuer entered into a Registration Rights Agreement
with all purchasers in its private placement, including Hixon, which provides
certain piggy back and demand registration rights with respect to shares of
Common Stock purchased in the private placement and any shares which may be
purchased upon exercise of the warrants.
Item 7. Material to be Filed as Exhibits.
1. Agreement relating to filing of Joint Acquisition
Statement
2. Investor Rights Agreement
3. Registration Rights Agreement
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: June 2, 1997.
J. M. HIXON PARTNERS, LLC
By: TLDC, LLC, its Managing Member
By /s/ Benson K. Whitney
Benson K. Whitney, Managing Member
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
1 Agreement Relating to Joint Acquisition Statement
2 Investor Rights Agreement
3 Registration Rights Agreement
Exhibit 1
AGREEMENT TO FILE JOINT SCHEDULE 13D
The undersigned hereby agree and consent to the filing of a joint
Schedule 13D pursuant to the Securities Exchange Act of 1934 on behalf of each
of the undersigned. The parties hereto agree that the information in such
Schedule 13D is true and correct as to each of them.
J. M. HIXON PARTNERS, LLC
By: TLDC, LLC, its Managing Member
By: /s/ Benson K. Whitney
Benson K. Whitney, Managing Member
Exhibit 2
INVESTOR RIGHTS AGREEMENT
THIS AGREEMENT is entered into as of May 29, 1997 by and between Coda
Music Technology, Inc. (the "Company"); John W. Paulson, Ronald B. Raup, Karl T.
Bruhn, David A. Henderson, Larry A. Pape, Gordon F. Stofer, Founding Partners II
Limited Partnership and Cherry Tree Ventures IV (collectively, the "Insiders");
and J. M. Hixon Partners LLC ("Hixon").
RECITALS:
A. Pursuant to a Confidential Private Placement Memorandum dated May 5,
1997 (the "Memorandum"), the Company is offering (the "Offering") for sale a
minimum of 1,153,846 and a maximum of 1,730,769 shares (the "Shares") of its
common stock, $.01 per share par value ("Common Stock"), at $1.30 per Share. In
addition, the Company will issue to purchasers of the Shares warrants
("Warrants") to purchase one share of Common Stock for every two Shares
purchased. The Shares and Warrants are collectively referred to herein as the
"Securities." All capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them under the Memorandum.
B. Contemporaneously with the execution of this Agreement, Hixon has
executed a subscription agreement for the purchase (the "Hixon Purchase") of
769,231 Shares and Warrants to purchase an additional 384,615 Shares.
C. As partial inducement for the Hixon Purchase, the Company has agreed
that the obligation of Hixon to consummate the Hixon Purchase be conditioned
upon the execution and delivery of this Agreement by all of the parties hereto.
AGREEMENT:
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Right of First Refusal.
a. Grant of Right. The Company hereby grants to Hixon upon the closing of
the Hixon Purchase a right of first refusal to purchase all or part of
its pro rata share of any New Securities (as defined below) which the
Company may, from time to time, propose to sell and issue, subject to
the terms and conditions set forth below.
i. Pro Rata Share. Hixon's pro rata share, for purposes of this
Section, shall equal a fraction:
(1) the numerator of which is the number of shares of Common
Stock then held by Hixon or issuable upon the conversion or
exercise of any convertible securities, options, rights or
warrants then held by Hixon, and
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<PAGE>
(2) the denominator of which is the total number of shares of
Common Stock then outstanding plus the number of shares of
Common Stock issuable upon conversion or exercise of then
outstanding convertible securities, options, rights or
warrants.
ii. New Securities. "New Securities" shall mean any capital stock of
the Company whether now authorized or not, and rights, options or
warrants to purchase capital stock, and securities of any type
whatsoever which are, or may become, convertible into capital
stock; provided, however, that the term New Securities does not
include
(1) Shares or Warrants issued as part of the Offering or the
shares of Common Stock issued or issuable upon exercise of
the Warrants ("Warrant Shares");
(2) securities offered to the public pursuant to registration
under the Securities Act of 1933, as amended;
(3) securities issued for the acquisition of another corporation
by the Company by merger, purchase of substantially all the
assets of such corporation or another reorganization
resulting in the ownership by the Company of not less than a
majority of the voting power of such corporation;
(4) securities issued pursuant to convertible securities,
warrants or options outstanding on the date hereof;
(5) shares of Common Stock issued to directors or employees of
or consultants to the Company, or to endorsers of the
Company's products or services, pursuant to a stock option
plan, employee stock purchase plan, restricted stock plan or
other employee stock plan or agreement approved by the board
of directors and shareholders of the Company (and, in the
case of rights, options or warrants, the Common Stock issued
or issuable upon exercise thereof); or
(6) securities issued as a result of any stock split, stock
dividend or reclassification of Common Stock, distributable
on a pro rata basis to all holders of Common Stock.
iii. Required Notices. In the event the Company intends to issue New
Securities, it shall give Hixon written notice of such intention,
describing the type of New Securities to be issued, the price
thereof and the general terms upon which the Company proposes to
effect such issuance. Hixon shall have 30 days from the date of
any such notice to agree to purchase all or part of its pro rata
share of such New Securities for the price and upon the general
terms and conditions specified in the Company's notice by giving
written notice to the Company stating the quantity of New
Securities to be so purchased.
2
<PAGE>
iv. Failure to Exercise Rights. In the event Hixon fails to exercise
the foregoing right of first refusal with respect to any New
Securities within such 30-day period, the Company may within 180
days thereafter sell any or all of such New Securities not agreed
to be purchased by Hixon, at a price and upon general terms no
more favorable to the purchasers thereof than specified in the
notice given to Hixon pursuant to Section 1.a.(iii) above. In the
event the Company has not sold such New Securities within such
180-day period, the Company shall not thereafter issue or sell
any New Securities without first offering such New Securities to
Hixon in the manner provided above.
v. Termination. Hixon's right of first refusal under this Section 1
shall terminate upon the earlier to occur of the complete
exercise or expiration of the Warrants issued to Hixon in
connection with the Hixon Purchase.
2. Board Representation. Upon the closing of the Hixon Purchase and so long as
Hixon owns or controls four percent (4%) or more of the Company's
outstanding Common Stock, Hixon shall have the right to designate one
individual to serve on the Board of Directors of the Company (the "Board")
and the Company and Insiders shall use their best efforts to cause such
individual's election to the Board, including the following:
a. Voting by Insiders. In any and all elections of directors of the
Company (whether at a meeting or by written consent in lieu of a
meeting), each Insider shall vote or cause to be voted all shares of
Common Stock owned by him, her or it, or over which he, she or it has
voting control, in favor of electing to the Board the one individual
designated by Hixon pursuant to this Section 2.
b. Notice of Election of Directors. The Company shall provide Hixon with
20 days' prior written notice of any intended mailing of a notice to
stockholders for a meeting at which directors are to be elected. Hixon
shall give written notice to the Company, no later than 10 days prior
to such mailing, of the person designated by Hixon pursuant to this
Section 2 as nominee for election as director. If Hixon shall fail to
give notice to the Company as provided above, it shall be deemed that
the designee of Hixon then serving as a director shall be its designee
for reelection.
3. Director and Officer Insurance. The Company shall as soon as practicable
increase its director and officer insurance coverage to an amount to be
determined by negotiation between the Company and Hixon.
4. Information Rights. The Company shall as soon as practicable notify Hixon
of the occurrence of any event materially affecting the business, business
prospects, properties, management, financial position, stockholders'
equity, results of operations or general condition of the Company,
including, but not limited to, litigation and alleged violations of
contracts or obligations. Hixon's rights to such information under this
Section 4 shall terminate upon the earlier to occur of the complete
exercise or expiration of the Warrants issued to Hixon in connection with
the Hixon Purchase.
5. Merger/Sales. During the twenty-four (24) month period beginning on the
date of first closing of the Offering, any transaction that would result in
the division or separate sale
3
<PAGE>
of the Finale and Vivace product lines must be approved by Hixon unless
such transaction is unanimously approved by the Company's directors
excluding the director designated by Hixon pursuant to Section 2 above.
6. Opinion of Counsel. Fredrikson & Byron, P.A., counsel for the Company,
shall have furnished to Hixon as of the closing of the Hixon Purchase such
opinion in form and substance satisfactory to Hixon, to the effect that:
a. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Minnesota with the corporate
power to own, lease and operate its properties and conduct its
business as described in the Memorandum.
b. The number of authorized shares of capital stock of the Company are as
set forth in the Memorandum and the outstanding capital stock have
been duly authorized and validly issued, and are fully paid and
nonassessable. Upon delivery of and payment for the Securities, Hixon
will acquire the Securities free and clear of all liens, encumbrances
or claims created by actions of the Company. To such counsel's
knowledge, no preemptive rights, contractual or otherwise, of
securities holders of the Company exist with respect to the issuance
or sale of the Securities by the Company pursuant to the Memorandum or
the issuance of the Warrant Shares upon exercise of the Warrants. The
Shares and Warrants conform as to matters of law in all material
respects to the description of these securities made in the Memorandum
and such description accurately sets forth the material legal
provisions thereof required to be set forth in the Memorandum.
c. The Shares have been duly authorized and, upon delivery to Hixon
against payment therefor, will be validly issued, fully paid and
nonassessable.
d. The certificates evidencing the Shares comply as to form with the
applicable provisions of the laws of the State of Minnesota.
e. The Warrants have been duly authorized, executed and delivered by the
Company and are the valid and binding obligations of the Company,
enforceable in accordance with their terms, except as enforceability
may be limited by the application of bankruptcy, insolvency,
moratorium, or other laws of general application affecting the rights
of creditors generally and by judicial limitations on the right of
specific performance and other equitable remedies, and except as the
enforceability of indemnification or contribution provisions hereof
may be limited by federal or state securities laws. The Warrant Shares
when issued in accordance with the terms of the Memorandum and
pursuant to the Warrants will be validly issued, fully paid and
nonassessable. A sufficient number of shares of Common Stock has been
reserved for issuance upon exercise of the Warrants.
f. No authorization, approval or consent of any governmental authority or
agency is necessary in connection with the issuance and sale of the
Securities as contemplated under the Memorandum, except such as may be
required and obtained under the Securities Act of 1933, as amended or
under state or other securities laws in connection with the sale of
the Securities.
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<PAGE>
g. This Agreement and the Registration Rights Agreement have been duly
authorized, executed and delivered by, and, assuming the due
authorization, execution and delivery of thereof by the other parties
thereto, is a valid and binding agreement of the Company, enforceable
in accordance with its terms, except as enforceability may be limited
by the application of bankruptcy, insolvency, moratorium or similar
laws affecting the rights of creditors generally and judicial
limitations on the right of specific performance, and except as the
enforceability of indemnification or contribution provisions hereof
may be limited by federal or state securities laws.
7. Expenses. Upon closing of the Hixon Purchase, the Company shall promptly
pay the accountable expenses of Hixon related to the Offering (including
but not limited to reasonable legal fees), to a maximum amount of $15,000.
8. General.
a. No Assignment. The rights granted pursuant to this Agreement may not
be transferred or assigned by any party.
b. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
c. Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and Hixon. No
waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term,
condition or provision.
d. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
e. Headings. The headings of the sections, subsections, and paragraphs of
this Agreement have been added for convenience only and shall not be
deemed to be a part of this Agreement.
f. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision.
g. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without giving
effect to conflict of laws provisions.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
CODA MUSIC TECHNOLOGY, INC.
By: /s/ John W. Paulson /s/ John W. Paulson
Its: Chief Executive Officer John W. Paulson
FOUNDING PARTNERS II LIMITED /s/ David A. Henderson
PARTNERSHIP David A. Henderson
By: /s/ David A. Henderson /s/ Gordon F. Stofer
Its: Managing General Partner Gordon F. Stofer
CHERRY TREE VENTURES IV /s/ Larry A. Paper
Larry A. Pape
By:/s/ Gordon F. Stofer
Its: General Partner /s/ Karl T. Bruhn
Karl T. Bruhn
J. M. HIXON PARTNERS LLC /s/ Ronald B. Raup
Ronald B. Raup
By:/s/ Benson K. Whitney
Its: Managing Member
6
Exhibit 3
CODA MUSIC TECHNOLOGY, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made this 29th day of May, 1997 by
and between Coda Music Technology, Inc., a Minnesota corporation (the
"Company"), and the shareholders of the Company purchasing shares of the
Company's Common Stock and receiving warrants to purchase the Company's Common
Stock pursuant to the Company's Private Placement Memorandum dated May 5, 1997
(the "Memorandum"). Such shareholders are individually referred to herein as an
"Investor" and collectively referred to herein as the "Investors."
The parties hereto agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings:
(a) "SEC" shall mean the U.S. Securities and Exchange Commission.
(b) "Registrable Shares" shall mean (i) the shares of Common Stock
issued to the Investors pursuant to the Memorandum; (ii) shares of Common Stock
issued to the Investors upon exercise of the warrants issued to the Investors
pursuant to the Memorandum; and (iii) any further securities issued with respect
thereto upon any stock split, stock dividend, recapitalization or similar event,
so long as such shares or other securities are owned by the Investors.
(c) The terms "register," "registered," and "registration" shall mean a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended, and the declaration or
ordering of the effectiveness of such registration statement.
(d) "Registration Expenses" shall mean all expenses incurred by the
Company in registration, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses (including
those of counsel for the underwriter), marketing expenses and the expense of any
special audit incident to or required by any such registration, as well as the
compensation of regular employees of the Company.
(e) "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered.
(f) "Securities Act" shall mean the Securities Act of 1933, as amended.
2. PIGGYBACK REGISTRATION RIGHTS
(a) Notice of Registration. Whenever the Company shall determine to
register any of its securities (other than (i) a registration relating solely to
employee benefit plans, or (ii) a registration relating solely to an SEC Rule
145 transaction) the Company will:
C-1
<PAGE>
(i) promptly give to the Investors written notice thereof; and
(ii) except as provided herein, register pursuant to such
registration statement such number of Registrable Shares as shall be
specified in a written request or requests by the Investors made
within 30 days after such written notice from the Company.
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Investors as a part of the written notice given pursuant to
Section 2 (a) above. In such event, the right of the Investors to registration
pursuant to Section 2 (a) shall be conditioned upon such Investors'
participation in such underwriting and the inclusion of Registrable Shares in
the underwriting to the extent provided herein on the same terms as the
securities otherwise being sold through the underwriting. The Investors, if they
are proposing to distribute their Registrable Shares through such underwriting,
shall (together with the Company) enter into an underwriting agreement in
customary form with the underwriter(s) selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 2, if the number of
Registerable Shares requested for inclusion exceeds 20% of the total number of
shares to be included in the offering and, the managing underwriter determines
that marketing factors require a limitation of the number of Registrable Shares
to be underwritten, the managing underwriter may limit the Registrable Shares to
be included in such registration, such limitation to be on a pro rata basis
based on the relation that such Registrable Shares bear to the total number of
securities (including, without limitation, Registrable Shares) proposed to be
registered pursuant to the registration statement covered by this Section 2 by
the Investors and by other persons selling securities pursuant to registration
rights granted them by the Company or otherwise; provided, however, that no such
reduction may reduce below 20% of the total number of shares being offered the
number of Registrable Shares participating in such offering without the consent
of holders of a majority of the Registrable Shares to be included in such
offering. No Registrable Shares excluded from the underwriting by reason of the
underwriters' marketing limitation shall be included in such registration. The
Company shall advise the Investors of the number of Registrable Shares that may
be included in the registration and underwriting. If the Investors do not
approve of the terms of any such underwriting, they may elect to withdraw
therefrom, without loss to the Investors of any rights under this Section 2, by
written notice to the Company and the managing underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration and shall not be transferred in a public distribution prior to 90
days after the effective date of the registration statement relating thereto.
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2
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prior to the effectiveness of such registration, whether or not the Investors
have elected to include securities in such registration; provided, however, that
if the Company's decision not to proceed is primarily based upon the anticipated
public offering price of the securities to be sold by the Company, the Company
shall promptly complete the registration for the benefit of those Investors who
wish to proceed with a public offering of their securities and who bear all
expenses in excess of $25,000 incurred by the Company as the result of such
registration after the Company has decided not to proceed.
(d) Expenses of Registration. All Selling Expenses incurred in
connection with any registration pursuant to this Section 2 shall be borne by
the Investors and all Registration Expenses as well as the fees and expenses of
one counsel for the Investors incurred in connection with any registration shall
be borne by the Company.
(e) Holdback. Each holder of Registrable Securities agrees not to
effect any public sale or distribution of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the 90-day period following the effective date of any
underwritten registration in which Registrable Shares are included (except as
part of such underwritten registration), unless the underwriter(s) managing the
registered public offering otherwise agree; provided, however, that the
registration rights provided by this Section 2 had not terminated as of such
effective date.
3. DEMAND REGISTRATION RIGHT
(a) Rights. Upon request, at any time after the six-month anniversary
of the date hereof, by Investors holding at least 150,000 Registrable Shares,
the Company will promptly take all necessary steps to register or qualify, on
Form S-3 (or successor form) under the Securities Act and the securities laws of
such states as the holders may reasonably request, the Registrable Shares
requested to be registered by such Investors in their request to the Company;
provided, however, that the Company need not take such steps if the aggregate
offering price of the Registrable Shares to be registered or qualified is
$500,000 or less. Requests by Investors for registration pursuant to this
paragraph 3(a) shall not be more frequent than once in any six-month period.
(b) Expenses of Registration. All Selling Expenses incurred in
connection with any registration pursuant to this Section 3 shall be borne by
the Investors and all Registration Expenses as well as the fees and expenses of
one counsel for the Investors incurred in connection with any registration shall
be borne by the Company.
(c) Holdback. Each holder of Registrable Securities agrees not to
effect any public sale or distribution of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the 90-day period following the effective date of any
underwritten registration of the Company (except as part of such underwritten
registration), unless the underwriter(s) managing the registered public offering
otherwise agree; provided, however, that the registration rights provided by
this Section 3 had not terminated as of such effective date.
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4. REQUIRED REGISTRATION
(a) Registration. Within thirty (30) days of the date hereof the
Company will promptly take all necessary steps to register or qualify the
Registerable Shares on Form S-3 (or successor form) under the Securities Act and
the securities laws of such states as the holders may reasonably request.
(b) Expenses of Registration. All Selling Expenses incurred in
connection with the registration pursuant to this Section 4 shall be borne by
the Investors and all Registration Expenses as well as the fees and expenses of
one counsel for the Investors incurred in connection with such registration
shall be borne by the Company.
(c) Holdback. Each holder of Registrable Securities agrees not to
effect any public sale or distribution of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the 90-day period following the effective date of any
underwritten registration of the Company (except as part of such underwritten
registration), unless the underwriter(s) managing the registered public offering
otherwise agree.
5. REGISTRATION PROCEDURES
If and whenever the Company is required by the provisions of Sections 2, 3 or 4
to effect the registration of any Registrable Shares under the Securities Act,
the Company will:
(a) prepare and file with the SEC a registration statement
with respect to such securities, and use its best efforts to
cause such registration statement to become and remain
effective for such period as may be reasonably necessary to
effect the sale of such securities, not to exceed twelve (12)
months;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus
contained herein as may be necessary to keep such registration
statement effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed
twelve (12) months;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the
registration statement, preliminary prospectus, final
prospectus and such other documents as such security holders
and underwriters may reasonably request in order to facilitate
the public offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such
participating holders may reasonably request within 20 days
following the original filing of such registration statement,
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except that the Company shall not for any purpose be
required to execute a general consent to service of process
or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(e) notify the security holders participating in such
registration, promptly after it shall receive notice
thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
(f) notify such holders promptly of any request by the SEC
for the amending or supplementing of such registration
statement or prospectus or for additional information,
provided that such notification shall be given only to
holders of 250,000 or more Registrable Shares;
(g) prepare and file with the SEC, promptly upon the request
of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion
of counsel for such holders (and concurred in by counsel for
the Company), is required under the Securities Act or the
rules and regulations thereunder in connection with the
distribution of the Registrable Shares by such holder;
(h) prepare and promptly file with the SEC and promptly
notify such holders of the filing of such amendment or
supplement to such registration statement or prospectus as
may be necessary to correct any statements or omissions if,
at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein, in the light of the circumstances in which they
were made, not misleading;
(i) advise such holders, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such
registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
(j) not file any amendment or supplement to such
registration statement or prospectus to which a majority in
interest of such holders shall have reasonably objected on
the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the
Securities Act or the rules and regulations thereunder,
after having been furnished with a copy thereof at least
five business days prior to the filing thereof, unless in
the opinion of counsel
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for the Company the filing of such amendment or supplement
is reasonably necessary to protect the Company from any
liabilities under any applicable federal or state law and
such filing will not violate applicable law, provided that
the Company shall be required to furnish such advance copy
only to holders of 250,000 or more Registrable Shares; and
(k) at the request of any such holder of 250,000 or more
Registrable Shares, furnish on the effective date of the
registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in
the underwriting agreement: (i) opinions, dated such
respective dates, of the counsel representing the Company
for the purposes of such registration, addressed to the
underwriters, if any, and to the holder or holders making
such request, covering such matters as such underwriters and
holder or holders may reasonably request, in which opinion
such counsel shall state (without limiting the generality of
the foregoing) that (a) such registration statement has
become effective under the Securities Act; (b) to the best
of such counsel's knowledge no stop order suspending the
effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated under the Securities Act; (c) the registration
statement and each amendment or supplement thereto comply as
to form in all material respects with the requirements of
the Securities Act and the applicable rules and regulations
of the Commission thereunder (except that such counsel need
express no opinion as to financial statements contained
therein); (d) to the best of the knowledge of such counsel
neither the registration statement nor any amendment nor
supplement thereto contains any untrue statement of a
material fact or omits to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading (except that such counsel need
express no opinion as to financial statements contained
therein); (e) the description in the registration statement
or any amendment or supplement thereto of legal and
governmental proceedings and contracts are accurate and
fairly present the information required to be shown; and (f)
such counsel does not know of any legal or governmental
proceedings, pending or threatened, required to be described
in the registration statement or any amendment or supplement
thereto which are not described as required nor of any
contracts or documents or instruments of the character
required to be described in the registration statement or
amendment or supplement thereto or to be filed as exhibits
to the registration statement, which are not described or
filed as required; and (ii) letters, dated such respective
dates, from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and to
the holder or holders making such request, covering such
matters as such underwriters and holder or holders may
reasonably request, in which letters such accountants shall
state (without limiting the generality of the foregoing)
that they are independent certified public accountants
within the meaning of the Securities Act and that in the
opinion of such accountants the financial statements and
other financial data of the Company included in the
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registration statement or any amendment or supplement thereto
comply in all material respects with the applicable accounting
requirements of the Securities Act.
6. INDEMNIFICATION
(a) Indemnification by Company. The Company will indemnify, to the extent
permitted by law, each holder of Registrable Shares, its officers and directors
and each person who controls such holder (within the meaning of the Securities
Act) of the Investors against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), commenced or threatened, arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of circumstances in which they were made, not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse the Investors, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by the member of
the Investors seeking indemnification or any such controlling person expressly
for use therein.
(b) Indemnification by Investors. Each holder of Registrable Shares, to the
extent permitted by law, will indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement and each person who controls the Company or such
underwriter (within the meaning of the Securities Act), against all expenses,
claims, losses, damages or liabilities, commenced or threatened, arising out of
or based on any untrue statement (or alleged untrue statement) of material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any such
registration, or based on any omission (or alleged omission) of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, and will
reimburse the Company, each such underwriter and each person who controls the
Company or any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such member of
the Investors for use therein.
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(c) Notice Requirements. Each party entitled to indemnification under
this Section 6 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought. The failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
6, unless the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action. Upon notice thereof, the
Indemnifying Party shall be permitted to assume the defense of any such claim or
any litigation resulting therefrom; provided, however, that (i) counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and (ii) the Indemnified Party may participate in
such defense at such party's expense; provided, further, that if the defendants
in any action include both the indemnified party and the indemnifying party and
there is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties and at the
expense of the indemnifying party. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as a unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
7. INFORMATION BY INVESTORS
It shall be a condition precedent to the obligations of the Company to
effect a registration pursuant to this Agreement, that each of the Investors
shall furnish to the Company any and all information regarding such Investor or
the Registrable Shares held by him or her, as the Company may reasonably request
in writing in connection with any registration referred to in this Agreement.
8. TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register the Registrable Shares
granted to the Investors hereunder may be assigned in connection with a sale,
transfer or assignment to a transferee or assignee of 250,000 Registrable Shares
in a transaction other than a sale in the public market, provided that such
transferee or assignee agrees to be bound by the terms and conditions set forth
in this Agreement.
9. TERMINATION OF REGISTRATION RIGHTS. Notwithstanding anything to the contrary
in this Agreement, the Investors' registration rights under this Agreement shall
terminate as to any individual Investor on the date that such Investor holds
less than 1% of the then outstanding Common Stock of the Company and the
Registrable Shares held by such Investor are eligible for resale under Rule
144(k) promulgated under the Securities Act.
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10. MISCELLANEOUS
(a) Assignability. This Agreement shall be binding upon and inure to
the benefit of the respective successors (or in the case of the Investors, their
respective heirs, administrators, executors and personal representatives) and
permitted assigns of the parties hereto.
(b) Governing Law and Forum. The parties have agreed that the validity,
construction, operation and effect of any and all of the terms and provisions of
this Agreement, and the respective rights, duties and obligations of the parties
hereunder, shall be determined and enforced in accordance with the laws of the
State of Minnesota without giving effect to principles of conflicts of law
thereunder.
(c) Amendment. Any modification, amendment or waiver of this Agreement
or any provision hereof shall be in writing and executed by the Company and
holders of not less than a majority of the Registrable Shares outstanding at
such time.
(d) Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof, and supersedes and
terminates all prior agreements, arrangements and understandings among the
parties with respect to the subject matter hereof.
(e) Notices. All notices and other communications hereunder shall be
deemed given if given in writing and delivered personally, by registered or
certified mail (return receipt requested postage prepaid) or by overnight
courier (postage prepaid) to the Company at its principal office and to a member
of the Investors at his/her address as shown in the records of the Company.
Notice shall be deemed given upon deposit in a U.S. mail receptacle and
otherwise upon delivery.
(f) Severability. The invalidity of any portion of this Agreement shall
not affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted herein conditionally on them being valid
in law. In the event that any portion contained herein shall be invalid, this
Agreement shall be construed so as to make such portion valid or, if such
construction is not legally possible, as if such invalid portion had not been
inserted.
(g) Counterparts/Execution on Behalf of Investors. This Agreement may
be executed in two or more counterparts, any one of which need not contain the
signature of more than one party, but all such counterparts together will
constitute one and the same agreement. This Agreement may also be executed by
the President of the Company on behalf of the Investors pursuant to the
authority vested in him under the Subscription Agreements signed by the
Investors in connection with their purchase of securities of the Company
pursuant to the Memorandum ("Subscription Agreements").
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
CODA MUSIC TECHNOLOGY, INC.
By /s/ Joan K. Berg
Its Chief Financial Officer
"INVESTORS"
By /s/ Ronald B. Raup
on behalf of the Investors pursuant to authority
vested in him under the Subscription Agreements
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