CODA MUSIC TECHNOLOGY INC, S-4, 2000-08-11

CODA MUSIC TECHNOLOGY INC
S-4, 2000-08-11
PREPACKAGED SOFTWARE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 2000
REGISTRATION NO: 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CODA MUSIC TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

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MINNESOTA 511210 41-1716250
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

6210 BURY DRIVE
EDEN PRAIRIE, MN 55346
(952) 937-9611
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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JOHN W. PAULSON, CHIEF EXECUTIVE OFFICER
CODA MUSIC TECHNOLOGY, INC.
6210 BURY DRIVE
EDEN PRAIRIE, MN 55346
(952) 937-9611
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:

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MELODIE R. ROSE, ESQ. JEAN-FRANCOIS CARRERAS, ESQ.
BARBARA MULLER, ESQ. JOEL A. ADLER, ESQ.
Fredrikson & Byron, P.A Sokolow, Dunaud, Mercadier & Carreras
900 Second Avenue South, Suite 1100 50 Rockefeller Plaza
Minneapolis, Minnesota 55402 New York, New York 10020
(612) 347-7000 (212) 315-0173
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
UPON CONSUMMATION OF THE TRANSACTION, AS DESCRIBED IN THIS REGISTRATION
STATEMENT.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED SHARE PRICE REGISTRATION FEE (1)
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Common stock, par value $.01 per share 12,297,963 shares Not Applicable Not Applicable $93.00
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(1) The registration fee was calculated pursuant to Section 6 of the Securities
Act of 1933 (the "Securities Act") and Rule 457(f)(2) thereunder.

The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.

PRELIMINARY PROXY STATEMENT/PROSPECTUS, SUBJECT TO COMPLETION

TRANSACTION PROPOSED -- YOUR VOTE IS VERY IMPORTANT

The boards of directors of Coda Music Technology, Inc. and Net4Music S.A.
have unanimously approved a transaction by which Coda would (i) issue shares of
its common stock to certain shareholders of Net4Music in exchange for
approximately 82% of the outstanding stock of Net4Music (74% of the Net4Music
stock on a fully diluted basis) (ii) assume certain outstanding options and
warrants of Net4Music and (iii) enter into a put and call agreement with the
remaining shareholders and option holders of Net4Music to acquire their shares
in the future on the same terms and conditions. As a result of the proposed
transaction, the shareholders and option and warrant holders of Net4Music will
become shareholders and option and warrant holders, as the case may be, of Coda,
owning approximately 67% of the common stock of Coda on a fully diluted basis
and Coda will beneficially own 100% of Net4Music. Both boards of directors have
determined that the transaction is fair and in the best interests of their
respective shareholders.

Coda shareholders are invited to attend Coda's special meeting of
shareholders to vote on (i) a proposal to amend the Articles of Incorporation to
increase the authorized capital stock and to change the name of the company to
Net4Music Inc. upon the closing of the transaction, (ii) a proposal to approve a
1,700,000 share increase in the number of shares reserved for Coda's 1992 Stock
Option Plan and (iii) a proposal to approve the issuance of up to 16,600,000
shares of Coda common stock, which shares will be issued in the transaction with
Net4Music shareholders. The date, time and place of Coda's special meeting are:

, 2000; a.m., local time
Coda Music Technology, Inc.
6210 Bury Drive
Eden Prairie, MN 55346

We cannot complete the transaction with Net4Music without the approval of
these proposals by holders of a majority of the outstanding shares of Coda
common stock.

If the transaction is completed, Net4Music shareholders will receive a
number of shares of Coda common stock such that after the transaction the
Net4Music shareholders and option and warrant holders will beneficially own 67%
of the common stock of Coda on a fully diluted basis. Because the specific
conversion ratio will not be determinable until the closing of the transaction,
we have assumed that the conversion ratio will be .78 for purposes of this Proxy
Statement/ Prospectus (i.e., each share of Net4Music will be exchanged for .78
shares of Coda common stock).

Coda's common stock is quoted on the Nasdaq SmallCap Market under the
symbol "COMT." We have applied for listing on the Nasdaq National Market under
the symbol "NMUS" effective with the closing of the transaction.

Your vote at the special meeting, in person or by proxy, is very important.
Even if you plan to attend the meeting, please mark, sign, and return the
enclosed proxy card promptly, so that your shares of common stock are voted at
the special meeting. If you do not return your proxy card, the effect will be a
vote against the proposals unless you attend the meeting and vote for the
proposals. To change your vote, send in a later-dated, signed proxy card to the
address on the proxy card. If you do attend the meeting, you can, of course,
vote your shares in person.

This Proxy Statement/Prospectus gives you detailed information about the
transaction with Net4Music. You can also obtain information about Coda, some of
which has been expressly incorporated by reference herein, from documents filed
with the Securities and Exchange Commission. Please read this entire document
carefully.

We enthusiastically support the transaction and urge you to vote "FOR" each
of these proposals.

John W. Paulson
Chief Executive Officer
Coda Music Technology, Inc.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE CODA SECURITIES TO BE ISSUED IN THE
TRANSACTION OR DETERMINED IF THIS PROXY STATEMENT/ PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Proxy Statement/Prospectus dated , 2000, and first mailed to
shareholders on or about , 2000.
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CODA MUSIC TECHNOLOGY, INC.
6210 BURY DRIVE
EDEN PRAIRIE, MN 55346

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , 2000

To the Shareholders of Coda Music Technology, Inc.:

A Special Meeting of the shareholders of Coda Music Technology, Inc., a
Minnesota corporation ("Coda"), will be held at Coda's corporate headquarters,
located at 6210 Bury Drive, Eden Prairie, Minnesota, on , ,
2000, at a.m., local time, for the following purposes:

1. To consider and vote upon a proposal to amend the Articles of
Incorporation to increase the authorized common stock from 15,000,000 to
50,000,000 shares and to change the name of the company to Net4Music
Inc. effective upon the closing of the transaction with the Net4Music
S.A. shareholders.

2. To consider and vote upon a proposal to approve a 1,700,000 share
increase in the number of shares reserved for Coda's 1992 Stock Option
Plan.

3. To consider and vote upon a proposal to issue up to 16,600,000 shares of
common stock, which shares will be issued to shareholders of Net4Music
S.A. in exchange for the outstanding stock of Net4Music S.A. based upon
the conversion ratio described in the accompanying Proxy
Statement/Prospectus.

4. To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement, including a proposal to
adjourn or postpone the Special Meeting.

The record date for the Special Meeting is the close of business on
, 2000. Only Coda shareholders of record at that time are entitled to notice
of and to vote at the Special Meeting or any adjournment or postponement of it.
The holders of a majority of the outstanding shares of Coda common stock must
vote in favor of each proposal for them to be approved.

The attached Proxy Statement/Prospectus contains more detailed information
regarding the transaction and includes a copy of the Stock Purchase Agreement.

Your vote is important. Even if you expect to attend the Special Meeting,
please complete, sign and date the enclosed proxy and return it promptly in the
enclosed postage-paid envelope. If no instructions are indicated on your signed
proxy, your shares will be voted "FOR" each of the proposals. If you do not
return your proxy or vote in person, the effect is a vote against each of the
proposals. You can revoke your proxy at any time before it is exercised by
giving written notice to the Secretary of Coda, or filing another proxy, or
attending the Special Meeting and voting in person.

The Coda board of directors unanimously recommends that you vote FOR each
of the proposals. Further, the special committee of the Coda board of directors
unanimously approved the transaction with Net4Music and recommends that you vote
FOR proposal 3 above.
BY ORDER OF THE BOARD OF DIRECTORS

Barbara S. Remley
Secretary
, 2000
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TABLE OF CONTENTS

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Questions and Answers About the Transaction................. 1
Summary..................................................... 3
The Companies............................................. 3
Coda's Special Meeting.................................... 4
Summary of the Transaction................................ 6
Prices of Coda Common Stock............................... 6
Forward-Looking Statements................................ 7
Coda Summary Financial Data............................... 8
Net4Music S.A. Summary Financial Data..................... 9
Unaudited Pro Forma Condensed Consolidated Financial
Information............................................ 9
Coda Special Meeting........................................ 13
Date, Place and Time...................................... 13
Purpose................................................... 13
Record Date; Voting Rights; Quorum; Required Vote......... 14
Recommendation of the Board of Directors of Coda.......... 14
Proxies; Revocation....................................... 14
Solicitation of Proxies................................... 14
Proposal No. 1: Amendment of Articles of Incorporation...... 15
General................................................... 15
Vote Required............................................. 16
Proposal No. 2: Increase in Shares Under 1992 Stock Option
Plan...................................................... 17
General................................................... 17
Description of Plan....................................... 17
Vote Required............................................. 19
Proposal No. 3: The Transaction............................. 20
General................................................... 20
Closing of the Transaction................................ 20
Background of the Transaction............................. 20
Net4Music's Reasons for the Transaction................... 22
Coda's Reasons for the Transaction........................ 22
Opinion of Coda's Financial Advisor....................... 23
Exchange of Shares........................................ 26
Representations and Warranties............................ 27
Certain Covenants......................................... 28
Interests of Directors and Officers in the Transaction.... 28
Conditions to Completing the Transaction; Waiver.......... 28
Amendment and Termination of the Stock Purchase Agreement;
Effects of Termination................................. 29
Expenses and Fees......................................... 29
Restrictions on Resale of Coda Common Stock............... 29
Accounting Treatment of the Transaction................... 30
Certain Tax Consequences.................................. 30
Risk Factors................................................ 31
Market for Coda Common Stock................................ 37
Business of Coda............................................ 38
General................................................... 38
Coda Strategy............................................. 38
Products.................................................. 38
Marketing, Sales and Distribution......................... 41
Product Development....................................... 41
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Competition............................................... 43
Patents................................................... 43
Trademarks................................................ 44
Manufacturing............................................. 44
Employees................................................. 44
Properties................................................ 44
Legal Proceedings......................................... 44
Management's Discussion and Analysis of Financial Condition
and
Results of Operations for Coda............................ 45
General................................................... 45
Results of Operations..................................... 45
Income Taxes.............................................. 47
Liquidity and Capital Resources........................... 47
Shareholdings of Principal Shareholders and Management of
Coda...................................................... 49
Business of Net4Music S.A................................... 51
General................................................... 51
Market Overview........................................... 51
The Net4Music Solution.................................... 53
Strategy.................................................. 54
Products and Services..................................... 55
Agreements with Internet Distribution Sites............... 57
Partnerships with Music Associations...................... 58
Competition............................................... 58
Employees................................................. 59
Legal Proceedings......................................... 59
Management's Discussion and Analysis of Financial Condition
and
Results of Operations of Net4Music S.A.................... 60
Overview.................................................. 60
Results of Operations..................................... 60
Management of Net4Music Inc. Following the Transaction...... 63
Shareholdings of Principal Shareholders and Management of
Net4Music Inc. Following the Transaction (Pro Forma)...... 65
Description of Coda Music Capital Stock..................... 67
Comparison of Rights of Coda and Net4Music.................. 69
Classification, Removal and Nomination of Directors....... 69
Preferred Stock........................................... 70
Special Meetings of Shareholders.......................... 70
Voting Rights; Shareholder Approvals...................... 71
Cumulative Voting......................................... 71
Preemptive Rights......................................... 71
Amendment of the Articles of Incorporation................ 71
Business Combinations and Control Share Acquisitions...... 71
Legal Matters............................................... 72
Experts..................................................... 72
Where You Can Find More Information......................... 72
Index to Financial Statements............................... F-1
Appendices
Stock Purchase Agreement.................................. A
Miller, Johnson & Kuehn, Incorporated Fairness Opinion.... B
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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION

Q. PLEASE DESCRIBE THE TRANSACTION.

A. In the transaction, Coda (i) will issue common stock to certain
shareholders of Net4Music in exchange for approximately 82% of the outstanding
capital stock of Net4Music (74% of the Net4Music stock on a fully diluted basis)
(ii) assume certain options and warrants of Net4Music and (iii) enter into a put
and call agreement with the remaining shareholders and option and warrant
holders of Net4Music to acquire their shares in the future on the same terms and
conditions.

Q. WHAT WILL NET4MUSIC SHAREHOLDERS RECEIVE IN THE TRANSACTION?

A. If the transaction is completed, the shareholders and option and warrant
holders of Net4Music will receive a number of shares of Coda common stock such
that after the transaction they will beneficially own 67% of the common stock of
Coda on a fully diluted basis and Coda will beneficially own 100% of Net4Music.
Because the specific conversion ratio will not be determinable until the closing
of the transaction, we have assumed that the conversion ratio will be .78 for
purposes of this Proxy Statement/Prospectus. Net4Music shareholders will receive
cash instead of any fractional Coda shares that they would otherwise receive,
based on the closing price of Coda's common stock as reported by The Nasdaq
Stock Market on the day of closing.

Q. WHAT WILL HAPPEN TO CODA'S STOCK IN THE TRANSACTION?

A. Coda common stock will remain outstanding. The total number of shares of
Coda common stock outstanding will increase by approximately 11,400,000 shares,
assuming a conversion ratio of .78, as a result of the issuance of shares to
Net4Music's shareholders who are parties to the stock purchase agreement. Up to
an additional approximately 5,200,000 shares of Coda common stock may be issued
upon exercise of options and warrants to be assumed by Coda and upon exercise of
the put and call rights.

Q. WHAT DO I NEED TO DO NOW?

A. Coda shareholders should sign, date and mail their proxy cards in the
enclosed return envelope as soon as possible. As a Coda shareholder, you can
also attend the Special Meeting in person and vote, even though you may have
previously returned your proxy card. If you do not return your proxy or vote in
person, it will have the effect of a vote against the proposals, which must be
approved for us to complete the transaction of Net4Music stock.

Q. WHAT DO I DO IF I WANT TO CHANGE MY VOTE?

A. Just send in a later-dated, signed proxy card before the Special Meeting
to the address on the proxy card or attend the meeting in person and vote.

Q. WILL I HAVE THE RIGHT TO HAVE MY SHARES APPRAISED IF I DISSENT FROM THE
TRANSACTION?

A. No, this transaction does not give rise to dissenters' rights.

Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?

A. Your broker will vote your shares only if you provide instructions on
how to vote. You should instruct your broker to vote your shares, following the
procedure your broker gives you. Without instructions, your broker will not vote
your shares. If you do not vote, by proxy or in person, it will have the effect
of a vote against the proposals.

Q. WHEN DO YOU EXPECT TO COMPLETE THE TRANSACTION OF NET4MUSIC STOCK?

A. Coda and Net4Music and its shareholders are working toward completing
the transaction as quickly as possible. Approval for the proposals specified in
the notice to Coda shareholders is required. We hope to complete the transaction
shortly after the Special Meeting, if all required matters are completed by that
time.

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Q. WHOM SHOULD I CONTACT WITH QUESTIONS?

A. If you have any questions about the transaction, please contact Barbara
S. Remley, Coda's Chief Financial Officer, at 952-937-9611 or
[email protected].

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SUMMARY

This summary highlights selected information from this Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the transaction fully and for a more complete
description of the legal terms of the transaction, you should carefully read
this entire document and the documents to which you are referred. See "Where You
Can Find More Information" on page . Page references appear in
parentheses to direct you to a more complete description of some of the topics
presented in this summary.

THE COMPANIES

CODA MUSIC TECHNOLOGY, INC. (PAGE ).
6210 Bury Drive
Eden Prairie, MN 55346
(952)937-9611

Coda develops and markets proprietary music technology products including
Finale, the world's best-selling music notation software product and SmartMusic
Intelligent Accompaniment(R) products, a comprehensive music practice system
that listens to you sing or play and follows your spontaneous tempo changes.
SmartMusic makes practicing music fun, productive and entertaining and has over
5,000 accompaniment titles. Finale is the standard development tool for many
music publishers, which means most of their titles are already in the Finale
file format, ready to be customized for each consumer and distributed on the
Internet. SmartMusic Intelligent Accompaniments, assessment and instruction are
natural add-ons to digital print music products.

NET4MUSIC S.A. (PAGE ).
24, rue du President Wilson
92300 Levallois-Perret
France

Net4Music, using Internet technology, has revolutionized the distribution
of print music by licensing digital distribution rights to create the world's
largest catalogue of digital print music titles from all music genres and by
offering secure downloads of this print music. Net4Music's innovative services
empower the music end-user by providing musicians and composers with immediate
access to one of the largest collections of musical scores, while also providing
copyright protection for music publishing. Through Net4Music's website,
musicians can reference and download print music for faster and easier
distribution than was previously possible. Further, Net4Music's site is
available in five languages. With its cutting-edge services and growing number
of strategic partnerships, Net4Music is fast becoming the premier online portal
for musicians.

CODA'S SPECIAL MEETING (PAGE )

The Special Meeting of Coda's shareholders will be held on ,
2000, at , local time, at Coda's corporate headquarters, located
at 6210 Bury Drive, Eden Prairie, Minnesota. At Coda's Special Meeting, Coda's
shareholders will be asked to approve (i) a proposal to amend the Articles of
Incorporation to increase the authorized capital stock and to change the name of
the company to Net4Music Inc. upon the closing of the transaction (ii) a
proposal to approve a 1,700,000 share increase in the number of shares reserved
for Coda's 1992 Stock Option Plan and (iii) a proposal to approve the issuance
of up to 16,600,000 shares of Coda common stock, which shares will be issued in
the transaction with Net4Music shareholders.

You can vote at Coda's Special Meeting only if you owned shares of Coda
common stock at the close of business on , 2000, which is the
record date.

Each proposal requires the approval of the holders of a majority of the
outstanding shares of Coda common stock. If you do not return your proxy or vote
in person, it will have the effect of a vote against the proposals. Brokers who
hold your shares of Coda common stock as nominees cannot vote those shares
unless you instruct them to do so, following the procedure they give you.

On the record date, [6,427,004] shares of Coda common stock were
outstanding. Of

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these, [1,947,062] shares (approximately 30% of the shares entitled to vote)
were beneficially owned by directors and executive officers of Coda (not
including options held by such persons). Officers and directors of Coda that
hold in the aggregate approximately [1,770,955] shares (approximately 28% of the
shares entitled to vote) have agreed to vote their shares in favor of the
proposals. Each share of Coda common stock entitles the holder to one vote.

REVOKING PROXIES (PAGE )

Coda shareholders can revoke a proxy previously given by giving written
notice to Coda at the address on the proxy card, by filing another proxy, or by
attending Coda's Special Meeting and voting in person.

SUMMARY OF THE TRANSACTION

The stock purchase agreement (Appendix A) is attached at the back of this Proxy
Statement/ Prospectus. You are encouraged to read the stock purchase agreement,
as it is the legal document that governs the transaction.

In the proposed transaction, Coda will (i) issue shares of its common stock
to certain shareholders of Net4Music in exchange for approximately 82% of the
outstanding stock of Net4Music (74% of the Net4Music stock on a fully diluted
basis), (ii) assume certain options and warrants of Net4Music and (iii) enter
into a put and call agreement with the remaining shareholders and option and
warrant holders of Net4Music to acquire their shares in the future on the same
terms and conditions. As a result of the proposed transaction, Net4Music's
shareholders will become shareholders of Coda. Net4Music's shareholders and
option and warrant holders will beneficially own approximately 67% of the
capital stock of Coda on a fully diluted basis. Effective with the closing of
the transaction, Coda will change its name to Net4Music Inc.

EFFECTIVE TIME OF THE TRANSACTION (PAGE )

Coda and Net4Music hope to complete the transaction shortly after the
Special Meeting, if all required matters are completed by that time.

WHAT NET4MUSIC SHAREHOLDERS WILL RECEIVE IN THE TRANSACTION (PAGE )

If the transaction is completed, the shareholders of Net4Music S.A. will
receive a number of shares of Coda common stock such that after the transaction
is fully completed the Net4Music shareholders and option and warrant holders
will beneficially own 67% of the common stock of Coda on a fully diluted basis.
Because the specific conversion ratio will not be known until the closing of the
transaction, we have assumed that the conversion ratio will be .78 for purposes
of this Proxy Statement/ Prospectus (i.e., each share of Net4Music will be
exchanged for .78 shares of Coda common stock).

Coda shareholders will not receive any shares as a result of the
transaction.

Coda will not issue any fractional shares. Instead, Net4Music shareholders
will receive cash for fractional Coda shares that they would otherwise receive,
based on the closing price of Coda's common stock as reported by the Nasdaq
Stock Market on the date of closing.

TAX CONSEQUENCES (PAGE )

Coda shareholders will not be subject to any income tax consequences in
connection with this transaction. Net4Music shareholders may be subject to tax
consequences under the laws of their respective jurisdictions.

TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF THE TRANSACTION TO
THE NET4MUSIC SHAREHOLDERS WILL DEPEND ON THE FACTS OF THEIR INDIVIDUAL
SITUATION. THEY SHOULD CONTACT THEIR OWN TAX ADVISORS TO UNDERSTAND FULLY HOW
THE TRANSACTION WILL AFFECT THEM.

REASONS FOR THE TRANSACTION (PAGE )

The boards of directors of Coda and Net4Music and the special committee of
the Coda board of directors endorsed the transaction between Net4Music and Coda,
because the combination of the complementary products and services of each
company will provide the consolidated company with greater access to consumer
markets, industry participants and capital to fund growth and expansion, as well
as

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a greater opportunity for capital appreciation.
The boards also believe that the financial terms of the transaction are fair.

OPINION OF CODA'S FINANCIAL ADVISOR (PAGE )

The special committee of the Coda board of directors has received an
opinion of Miller Johnson & Kuehn, Incorporated ("MJK"), as to the fairness,
from a financial point of view, of the consideration to be paid by Coda the
transaction. MJK is a subsidiary of Stockwalk.com Group, Inc., which has signed
an agreement to acquire John G. Kinnard and Company, Incorporated, a market
maker for Coda common stock. The full text of MJK's written opinion dated August
11, 2000 is attached to the back of this document as Appendix B. We encourage
you to read this opinion carefully in its entirety for a description of the
assumptions made, matters considered and limitations on the review undertaken.
MJK'S OPINION IS DIRECTED TO THE CODA SPECIAL COMMITTEE AND DOES NOT CONSTITUTE
A RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW TO VOTE WITH RESPECT TO MATTERS
RELATING TO THE PROPOSED TRANSACTION.

INTERESTS OF OFFICERS AND DIRECTORS IN THE TRANSACTION (PAGE )

After the transaction, the following individuals will be directors of the
consolidated company: Francois Duliege, Claude Poletti, John Paulson, Benson
Whitney, Timothy Bajarin, Benoist Grossmann, William Avery, Patrick Revenu &
Martin Velasco. In addition, Coda will enter into employment agreements with
Francois Duliege, who will be the President of the consolidated company, and
John Paulson, who will be the President of the Coda division of the consolidated
corporation.

CONDITIONS TO THE TRANSACTION (PAGE )

The transaction with Net4Music will be completed only if certain
conditions, including the following, are met or waived:

- Each of the parties must perform in all material respects its obligations
under the stock purchase agreement;

- Each of the parties' representations and warranties contained in the
stock purchase agreement must continue to be true and correct in all
material respects;

- Coda's shareholders must approve the proposals relating to the
transaction;

- No material adverse change in the business of Coda or Net4Music has
occurred since March 31, 2000; and

- Employment agreements with Francois Duliege and John Paulson must be in
effect.

TERMINATION OF THE STOCK PURCHASE AGREEMENT (PAGE )

Even if the Coda shareholders approve the proposals, Coda, Net4Music and
Net4Music shareholders can agree at any time to terminate the stock purchase
agreement without completing the transaction. The stock purchase agreement can
also be terminated if:

- the transaction is not completed by December 31, 2000;

- if the closing conditions are not met; or

- if either party commits a breach of its obligations under the stock
purchase agreement.

TERMINATION FEES AND EXPENSES (PAGE )

If either Net4Music or Coda commits a breach of a provision of the stock
purchase agreement prior to closing, the party committing the breach must pay
the other party a termination fee equal to the reasonable expenses and fees
incurred in connection with the transaction plus $750,000 in cash.

NET4MUSIC AND CODA CANNOT SOLICIT OTHER OFFERS (PAGE )

Net4Music and Coda have agreed not to solicit or discuss with third parties
an offer or possible offer to acquire all or a portion of either's assets or
stock or to merge with either company.

ACCOUNTING TREATMENT (PAGE )

Coda and Net4Music expect to account for the transaction as a purchase for
accounting and

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financial reporting purposes under generally accepted accounting principles.

PRICES OF CODA COMMON STOCK (PAGE )

Coda common stock is quoted on the Nasdaq SmallCap Market. On June 20,
2000, the last trading day before the public announcement of the proposed
transaction, the closing price of Coda common stock was $3.375. On August 10,
2000, Coda common stock closed at $3.813. We expect to apply for listing on the
Nasdaq National Market under the symbol "NMUS" effective with the closing of the
transaction.

FLUCTUATIONS IN MARKET PRICE (PAGE )

The market value of Coda common stock is likely to change, both before and
after the Special Meeting and the transaction with Net4Music. No one can
accurately predict what the market value will be at any particular time.

DIFFERENCES IN RIGHTS OF CODA'S AND NET4MUSIC'S SHAREHOLDERS (PAGE )

Net4Music was organized under the laws of the Republic of France and Coda
was incorporated under the laws of the State of Minnesota. The rights of
Net4Music's shareholders are governed by the statutes (articles of incorporation
and bylaws) of Net4Music. After the transaction, when Net4Music's shareholders
become shareholders of Coda, their rights will be governed by Coda's Articles of
Incorporation and Bylaws.

FORWARD-LOOKING STATEMENTS (PAGE )

This document (and documents referred to in this document) includes various
forward-looking statements about Coda, Net4Music and the consolidated company
that are subject to risks and uncertainties. You are cautioned that actual
results of future operations may differ from those anticipated in
forward-looking statements due to a number of factors. Forward-looking
statements provide current expectations or forecasts of future events and can be
identified by the use of terminology such as "believe," "estimate," "expect,"
"intend," "may," "could," "will" and similar words or expressions.
Forward-looking statements of Coda, Net4Music and the consolidated company
generally relate to growth strategy, financial results, product development and
sales efforts. Forward-looking statements cannot be guaranteed and actual
results may vary materially due to the uncertainties and risks, known and
unknown, associated with such statements. None of Coda, Net4Music or the
consolidated company undertakes any obligation to update any forward-looking
statements. Coda has a limited operating history from which you might judge its
ability to market at a profit its SmartMusic Studio products. Similarly,
Net4Music has a limited operating history from which you might judge its ability
to market at a profit its digitized sheet music products. You should also
consider: The continuation and further development of licensing arrangements
with sheet music publishers; sales and distribution issues and expenses; rapidly
changing laws and regulations affecting these businesses; future website
development expenses; the potential need for additional capital; additional
development work required for new products; dependence on accompaniment sales
and development; competition; dependence on suppliers; dependence on proprietary
technology and those matters discussed under the caption "Risk Factors." These
factors are noted as permitted by the Private Securities Litigation Reform Act
of 1995. It is not possible to foresee or identify all factors that could cause
actual results to differ from expected or historic results. As such, you should
not consider any list of such factors to be an exhaustive statement of all
risks, uncertainties or potentially inaccurate assumptions.

6
<PAGE> 12

CODA SUMMARY FINANCIAL DATA

The following table sets forth selected consolidated financial information
of Coda. The information set forth should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Coda" and the consolidated financial statements and notes thereto
included elsewhere in this Proxy Statement/ Prospectus. The consolidated
statements of operations data set forth below for the years ended December 31,
1998 and 1999 and the consolidated balance sheet data as of December 31, 1998
and 1999 are derived from Coda's audited consolidated financial statements
included in this Proxy Statement/Prospectus which have been audited by McGladrey
& Pullen, LLP, independent auditors, whose report is also included in this Proxy
Statement/Prospectus. The consolidated statements of operations data for the
three-month period ended March 31, 2000 are derived from Coda's unaudited
consolidated financial data and in the opinion of Coda's management include all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation as of or for the period shown. Results for the first quarter ended
March 31, 2000 are not necessarily indicative of results to be expected for the
full fiscal year. Historical financial information may not be indicative of
Coda's future performance.

CONSOLIDATED STATEMENTS OF OPERATIONS DATA

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED
------------------ MARCH 31,
1998 1999 2000
------- ------- -------------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net Sales.................................... $6,413 $6,356 $1,804
Cost of Sales................................ 1,160 772 231
------ ------ ------
Gross Profit.......................... 5,253 5,584 1,573
------ ------ ------
Operating Expenses:
Product Development........................ 1,657 1,341 358
Sales and Marketing........................ 1,698 2,041 598
General and Administrative................. 1,935 2,729 577
Product Repositioning...................... 856 -- --
------ ------ ------
Total Operating Expenses.............. 6,146 6,111 1,533
------ ------ ------
Operating Income (Loss)...................... (893) (527) 40
Interest and Other Income.................... 89 71 20
------ ------ ------
Income (Loss) Before Income Taxes..... (804) (456) 60
Income Tax Provision......................... 0 0 0
------ ------ ------
Net Income (Loss)............................ $ (804) $ (456) $ 60
====== ====== ======
Basic and Diluted Net Income (Loss) Per
Share...................................... $(0.13) $(0.07) $ 0.01
====== ====== ======
</TABLE>

CONSOLIDATED BALANCE SHEET DATA

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1998 1999 2000
------ ------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Working Capital.................................... $1,765 $1,290 $1,654
Total Assets....................................... 3,965 3,987 4,033
Total Current Liabilities.......................... 1,011 1,469 1,053
Other non-current liabilities...................... -- -- 175
Total Stockholders' Equity......................... 2,954 2,518 2,806
</TABLE>

7
<PAGE> 13

NET4MUSIC S.A. SUMMARY FINANCIAL DATA

The following table sets forth selected consolidated financial information
of Net4Music S.A. The information set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Net4Music" and the consolidated financial statements and notes
thereto included elsewhere in this Proxy Statement/Prospectus. The consolidated
statements of operations data set forth below for the years ended December 31,
1998 and 1999 and the consolidated balance sheet data as of December 31, 1998
and 1999 are derived from Net4Music's audited consolidated financial statements
included in this Proxy Statement/Prospectus which have been audited by Ernst &
Young Audit, independent auditors, whose report is also included in this Proxy
Statement/Prospectus. The unaudited consolidated statements of operations data
for the three-month period ended March 31, 2000 are derived from Net4Music's
internal unaudited consolidated financial statements and records and in the
opinion of Net4Music's management include all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation as of or for the period
shown. Results for the first quarter ended March 31, 2000 are not necessarily
indicative of results to be expected for the full fiscal year. Historical
financial information may not be indicative of our future performance.

CONSOLIDATED STATEMENTS OF OPERATIONS DATA

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------
1998 1999
------- --------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Revenues.................................................. $1,151 $ 299
Cost of Sales............................................. 475 578
------ -------
Gross Profit (Loss)................................ 676 (279)
------ -------
Operating Expenses:
Website Development..................................... -- 386
Content Development..................................... 281 310
Selling and Marketing................................... 40 1,173
General and Administrative.............................. 454 2,366
Restructuring Charges................................... -- 1,201
------ -------
Total Operating Expenses........................... 775 5,436
------ -------
Operating Loss............................................ (99) (5,715)
Interest and Other Income (Expense), Net.................. (83) (109)
------ -------
Loss Before Income Taxes........................... (182) (5,824)
Income Tax Provision...................................... 2 7
------ -------
Net Loss.................................................. $ (184) $(5,831)
====== =======
Loss Per Share............................................ $(0.08) $ (1.15)
====== =======
</TABLE>

CONSOLIDATED BALANCE SHEET DATA

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1999
------ ------
(IN THOUSANDS)
<S> <C> <C>
Working Capital (Working Capital Deficit)................... $ (466) $2,975
Total Assets................................................ 1,912 5,840
Total Current Liabilities................................... 881 1,847
Other non-current liabilities............................... 1,507 994
Total Stockholders' Equity (Deficit)........................ (476) 2,999
</TABLE>

8
<PAGE> 14

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma combined financial statements give effect to the
transaction between Net4Music and Coda, as described under "Proposal No. 3: The
Transaction". For accounting purposes the transaction is accounted for as a
reverse acquisition. The unaudited pro forma combined financial statements have
been prepared on the basis of assumptions described in the notes to the
unaudited pro forma combined financial statements and include assumptions
relating to the allocation of the consideration paid for Net4Music to the
consolidated assets and liabilities of Coda, based on preliminary estimates of
their respective fair values. The actual allocation of such consideration may
differ from that reflected in the pro forma combined financial statements after
an appropriate review of the fair values of the consolidated assets and
liabilities of Coda has been completed. Amounts allocated will be based upon the
estimated fair values at the time of the transaction which could vary
significantly from the amounts reflected in the unaudited pro forma combined
financial statements. The unaudited pro forma combined financial statements do
not reflect any cost of other merger-related expenses anticipated by Coda's
management. The transaction will be accounted for using the purchase method of
accounting. The unaudited pro forma combined financial statements should be read
in conjunction with the respective financial statements of Coda and Net4Music
and the related notes incorporated by reference in the Proxy
Statement/Prospectus. See "Where You Can Find More Information".

Please note that Coda and Net4Music may be unable to complete the proposed
transaction. The transaction is subject to various conditions, any of which may
fail to be satisfied.

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)

The unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1999 has been prepared by combining the 1999
consolidated statement of operations of Coda with the 1999 consolidated
statement of operations of Net4Music adjusted to give effect to the transaction
as if it had occurred on January 1, 1999. The unaudited pro forma condensed
combined statement of operations for the first quarter ended March 31, 2000, has
been prepared by combining the unaudited first quarter consolidated statement of
operations of Coda with the unaudited consolidated statement of operations of
Net4Music adjusted to give effect to the transaction as if it had occurred on
January 1, 2000. The unaudited pro forma condensed combined statements do not
necessarily reflect the actual results of operations of Coda which would have
resulted had the transaction occurred as of the date presented. The pro forma
information is not necessarily indicative of future results of operations for
the combined companies.

9
<PAGE> 15

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
-----------------------------------------------------------
CODA MUSIC NET4
TECHNOLOGY, INC. MUSIC S.A. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------------- ---------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................ $ 6,356 $ 299 -- $ 6,655
Cost of sales........................ 772 578 -- 1,350
--------- --------- --------- ----------
Gross profit (loss)................ 5,584 (279) -- 5,305
--------- --------- --------- ----------
Sales and marketing.................. 2,041 1,173 -- 3,214
Product development.................. 1,341 -- -- 1,341
Website development.................. -- 386 -- 386
Content development.................. -- 310 -- 310
General and administrative........... 2,729 2,366 3,074(B) 8,169
Restructuring charges................ -- 1,201 -- 1,201
--------- --------- --------- ----------
Operating expenses................. 6,111 5,436 3,074 14,621
Operating loss....................... (527) (5,715) (3,074) (9,316)
Other income (expense)............... 71 (109) -- (38)
Minority interest.................... -- -- 1,045(D) 1,045
--------- --------- --------- ----------
Loss before income taxes............. (456) (5,824) (2,029) (8,309)
Income tax expense................... -- 7 -- 7
--------- --------- --------- ----------
Net (loss)........................... $ (456) $ (5,831) $ (2,029) $ (8,316)
========= ========= ========= ==========
Weighted average common shares
outstanding
Basic.............................. 6,202,036 5,084,867 6,279,491(C) 17,566,394
Diluted............................ 6,202,036 5,084,867 6,279,491(C) 17,566,394
Net loss per share
Basic.............................. $ (0.07) $ (1.15) -- $ (0.47)
Diluted............................ $ (0.07) $ (1.15) -- $ (0.47)
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
-----------------------------------------------------------
CODA MUSIC NET 4
TECHNOLOGY, INC. MUSIC S.A. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------------- ---------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................ $ 1,804 $ 27 -- $ 1,831
Cost of sales........................ 231 19 -- 250
--------- --------- --------- ----------
Gross profit (loss)................ 1,573 8 -- 1,581
--------- --------- --------- ----------
Sales and marketing.................. 598 1,175 -- 1,773
Product development.................. 358 -- -- 358
Website development.................. -- 233 -- 233
Content development.................. -- 187 -- 187
General and administrative........... 577 928 768(B) 2,273
--------- --------- --------- ----------
Operating expenses................. 1,533 2,523 768 4,824
Operating income (loss).............. 40 (2,515) (768) (3,243)
Other income......................... 20 12 -- 32
Minority interest.................... -- -- 448(D) 448
--------- --------- --------- ----------
Income (loss) before income taxes.... 60 (2,503) (320) (2,763)
Income tax expense................... -- -- -- --
--------- --------- --------- ----------
Net income (loss).................... $ 60 $ (2,503) $ (320) $ (2,763)
========= ========= ========= ==========
Weighted average common shares
outstanding
Basic.............................. 6,288,101 5,084,867 6,303,858(C) 17,676,826
Diluted............................ 7,289,862 5,084,867 5,302,097(C) 17,676,826
========= ========= ========= ==========
Net income (loss) per share
Basic.............................. $ 0.01 $ (0.49) -- $ (0.16)
Diluted............................ $ 0.01 $ (0.49) -- $ (0.16)
========= ========= ========= ==========
</TABLE>

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements

10
<PAGE> 16

PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)

The unaudited pro forma condensed combined balance sheet as of March 31,
2000, has been prepared by combining the unaudited consolidated balance sheet of
Coda as of March 31, 2000 with the unaudited consolidated balance sheet of
Net4Music as of March 31, 2000, adjusted to give effect to the transaction as if
it had occurred on March 31, 2000. The pro forma statements do not necessarily
reflect the actual financial position of Coda that would have resulted had the
transaction occurred as of the date presented. The pro forma information is not
necessarily indicative of the future financial position for the combined
companies.

<TABLE>
<CAPTION>
MARCH 31, 2000
----------------------------------------------------------
CODA MUSIC NET 4
TECHNOLOGY, INC. MUSIC S.A. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------------- ---------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents..... $ 1,155 $ 1,378 $ -- $ 2,533
Short term investments........ 717 -- -- 717
Accounts receivable........... 498 56 -- 554
Inventories................... 247 -- -- 247
Prepaid expenses.............. -- 23 -- 23
Other current assets.......... 90 1,062 -- 1,152
-------- ------- ------- --------
Total current assets............. 2,707 2,519 -- 5,226
-------- ------- ------- --------
Property and equipment, net...... 250 582 -- 832
-------- ------- ------- --------
Other assets
Software deposit.............. 332 -- -- 332
Repertoire development
costs....................... 439 -- -- 439
Prepaid royalties............. 205 -- -- 205
Other assets.................. 101 38 -- 139
Intangible assets............. -- 414 46,117(A) 46,531
-------- ------- ------- --------
1,077 452 46,117 47,646
-------- ------- ------- --------
$ 4,034 $ 3,553 $46,117 $ 53,704
======== ======= ======= ========
Liabilities and Stockholders'
Equity
Current liabilities:
Current portion of long-term
debt........................ $ 75 $ 115 $ -- $ 190
Current portion of capital
lease obligations........... -- 559 -- 559
Accounts payable.............. 314 863 -- 1,177
Reserve for product returns... 180 -- -- 180
Accrued expenses.............. 405 686 -- 1,091
Deferred revenue.............. 79 -- -- 79
-------- ------- ------- --------
Total current liabilities........ 1,053 2,223 -- 3,276
-------- ------- ------- --------
Long-term debt, less current
portion.......................... 175 407 -- 582
Long-term portion of capital lease
obligations...................... -- 572 -- 572
-------- ------- ------- --------
175 979 -- 1,154
-------- ------- ------- --------
Minority interest.................. -- -- 63(D) 63
</TABLE>

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements

11
<PAGE> 17

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements

Notes to Unaudited Pro Forma Condensed Combined Financial Statements
-------------------------
(A) The transaction will be accounted for as a reverse acquisition with
Net4Music being the acquirer. Per share data are based upon the weighted
average number of shares of Coda, including those to be issued to Net4Music
shareholders upon combination. No determination has yet been made regarding
the reevaluation of the assets acquired and accordingly, the cost in excess
of fair value of the net assets acquired for the pro forma presentation has
been recorded as goodwill. The actual purchase price and allocation may vary
from the amounts reflected in the unaudited pro forma condensed combined
financial statements.

(B) To amortize over fifteen years the cost in excess of fair value of net
assets acquired.

(C) To increase common shares outstanding for the estimated 12,297,963 shares to
be issued in the transaction based on an assumed Coda common stock price of
$3.75 per share.

(D) To record minority interest relating to the approximately 18 percent of Net
4 Music shareholders who will not be parties to the stock purchase
agreement.

12
<PAGE> 18

CODA SPECIAL MEETING

Coda is sending this Proxy Statement/Prospectus to Coda's shareholders in
connection with the solicitation by the board of directors of Coda of proxies to
be voted at the Coda Special Meeting. This Proxy Statement/Prospectus is first
being mailed to shareholders of Coda on or about , 2000.

DATE, PLACE AND TIME

Coda's Special Meeting will be held at a.m., local time, on
, 2000, at Coda's corporate headquarters, located at 6210 Bury Drive,
Eden Prairie, Minnesota.

PURPOSE

The shareholders of Coda are being asked to vote upon (i) a proposal to
amend the Articles of Incorporation to increase the authorized capital stock and
to change the name of the company to Net4Music Inc. upon the closing of the
transaction; (ii) a proposal to approve a 1,700,000 share increase in the number
of shares reserved for Coda's 1992 Stock Option Plan; and (iii) a proposal to
approve the issuance of up to 16,600,000 shares of Coda common stock, which
shares will be issued in the transaction with Net4Music S.A. shareholders.

Coda shareholders may also be asked to vote upon a proposal to adjourn or
postpone the Special Meeting, in order to (among other things) allow additional
time for the companies to solicit additional votes to approve the proposals. If
any matters other than approval of these proposals are properly presented for
consideration at the Special Meeting, the persons named by shareholders in the
enclosed form of proxy will have discretion, as proxies, to vote on those
matters.

Under Minnesota law, shareholders can consider at the Special Meeting only
the matters contained in the notice for the Special Meeting.

RECORD DATE; VOTING RIGHTS; QUORUM; REQUIRED VOTE

The close of business on , 2000 is the record date for
determining the holders of Coda common stock who are entitled to receive notice
of and to vote at the Special Meeting or at any adjournment or postponement of
the Special Meeting.

Coda has only one class of capital stock outstanding, which is common
stock, par value $.01 per share. Each holder of Coda common stock outstanding on
the record date is entitled to one vote for each share held. The holders of a
majority of the outstanding shares of Coda common stock entitled to vote must be
present at the Special Meeting, in person or by proxy, to constitute a quorum to
transact business.

The holders of a majority of the outstanding shares of Coda common stock as
of the record date must vote in favor of each proposal in order to approve them.
On the record date, [6,427,004] shares of Coda common stock were outstanding,
held by approximately [ ] holders of record. Certain of the directors of
Coda who hold in the aggregate approximately [1,779,955] shares (approximately
28%) have agreed to vote their shares in favor of the proposals.

13
<PAGE> 19

Abstentions will be treated as shares present in determining whether Coda
has a quorum for the Special Meeting, but abstentions will have the same effect
as a vote against approval of the proposals.

RECOMMENDATION OF THE BOARD OF DIRECTORS OF CODA

THE BOARD OF DIRECTORS OF CODA RECOMMENDS THAT THE CODA SHAREHOLDERS VOTE
FOR THE APPROVAL OF THE PROPOSALS.

FURTHER, THE SPECIAL COMMITTEE OF CODA'S BOARD OF DIRECTORS, WHICH
COMMITTEE UNANIMOUSLY APPROVED THE TRANSACTION WITH NET4MUSIC, RECOMMENDS THAT
THE CODA SHAREHOLDERS VOTE FOR THE APPROVAL OF THE PROPOSAL REGARDING THE
NET4MUSIC TRANSACTION.

PROXIES; REVOCATION

A blue proxy card is enclosed for use by Coda shareholders. The board of
directors of Coda requests that shareholders SIGN AND RETURN THE PROXY CARD IN
THE ACCOMPANYING ENVELOPE. No postage is required if mailed within the United
States. If you have questions or requests for assistance in completing and
submitting proxy cards, please contact Barbara S. Remley at the following
address and telephone number:
Coda Music Technology, Inc.
6210 Bury Drive
Eden Prairie, MN 55346
Telephone: (952) 937-9611
[email protected]

All properly executed proxies that are not revoked will be voted at the
Special Meeting as instructed on those proxies. Proxies containing no
instructions will be voted in favor of the proposals. A shareholder who executes
and returns a proxy may revoke it at any time before it is voted, but only by
executing and returning a proxy bearing a later date, by giving written notice
of revocation to an officer of Coda, or by attending the Special Meeting and
voting in person.

SOLICITATION OF PROXIES

In addition to soliciting proxies by mail, Coda's directors, officers, and
employees may, if they do not receive extra compensation for doing so, solicit
proxies personally or by telephone or fax. Coda intends to reimburse brokerage
houses and other custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred in forwarding copies of solicitation material to
beneficial owners of Coda common stock held of record by those persons. Coda is
responsible for all expenses relating to the printing and mailing of this Proxy
Statement/Prospectus and the filing of it with the Securities and Exchange
Commission.

14
<PAGE> 20

PROPOSAL NO. 1: AMENDMENT OF ARTICLES OF INCORPORATION

GENERAL

On August 11, 2000, the board of directors unanimously approved an
amendment to Coda's Articles of Incorporation to increase the authorized common
stock from 15,000,000 shares to 50,000,000. If this proposal is approved, Coda's
authorized capital will consist of 50,000,000 common and 15,000,000 undesignated
shares. As of [record date], there were [6,427,004] shares of common stock
issued and outstanding. Of the unissued shares, 2,017,618 shares have been
reserved for future issuances pursuant to Coda's 1992 Stock Option Plan,
including the increased shares under such Plan in Proposal #2 below, and 994,047
shares for outstanding stock warrants outside of any plan.

Coda's board desires to increase the number of authorized shares to give
the board flexibility to declare stock dividends or stock splits at such times
as the board may deem appropriate; to give the board flexibility to make
acquisitions using stock, including the transaction with Net4Music described in
Proposal #3 below; to adopt additional employee benefit plans or increase the
shares available under existing plans; to raise equity capital or to use the
additional shares for other general corporate purposes. Aside from shares
currently reserved for issuance as described above, the board has not authorized
the issuance of any additional shares, and there are no current agreements or
commitments for the issuance of any additional shares.

Coda's Articles of Incorporation permit the board to establish from the
undesignated shares, by resolution adopted and filed with the Secretary of State
of the State of Minnesota in the manner provided by law, one or more classes or
series and to fix the relative rights and preferences of each such class or
series, including the establishment of additional shares of common stock. These
shares are available for issuance by the board at such times and for such
purposes as the board may deem advisable without further action by the
shareholders, except as may be required by law or regulatory authorities.

In the event of a proposed merger, tender offer or other attempt to gain
control of Coda of which the board does not approve, Coda's Articles of
Incorporation permit the board to authorize the issuance of a series of stock
with rights and preferences which could impede the completion of such a
transaction. The board will have the authority, for example, to adopt a
shareholder rights plan or "poison pill" without additional shareholder
approval. The board has the authority to issue shares to purchasers who would
support the board in opposing a hostile takeover bid. The board does not intend
to issue any shares except on terms which the board deems to be in the best
interests of Coda and its then existing shareholders.

Shareholders of Coda have no preemptive rights with respect the common
stock of Coda. If this proposed amendment is adopted, the additional authorized
shares of common stock will be available for issuance from time to time at the
discretion of the board without further action by the shareholders, except where
shareholder approval is required by law, regulatory authorities or to obtain
favorable tax treatment for certain employee benefit plans. Although an increase
in the authorized shares could, under certain circumstances, also be construed
as having an anti-takeover effect (for example, by diluting the stock ownership
of a person seeking to effect a change in the composition of the board of
directors or contemplating a tender offer or other transaction for the
combination of Coda with another company), Coda is not proposing the increase in

15
<PAGE> 21

authorized shares in response to any effort to accumulate Coda's stock or to
obtain control of Coda by means of a merger, tender offer or solicitation in
opposition to management.

VOTE REQUIRED

Coda's board of directors recommends that the shareholders approve the
increase of authorized shares of Coda. Under applicable Minnesota law and Coda's
current Articles of Incorporation, approval of the amendment to increase the
authorized shares requires the affirmative vote of the holders of the greater of
(i) a majority of the voting power of the shares represented in person or by
proxy at the meeting with authority to vote on such matter, or (ii) a majority
of the voting power of the minimum number of shares that would constitute a
quorum for the transaction of business at the meeting.

16
<PAGE> 22

PROPOSAL NO. 2: INCREASE IN SHARES UNDER 1992 STOCK OPTION PLAN

GENERAL

Coda's board of directors has adopted, subject to shareholder approval, an
increase in the number of shares of Coda's common stock reserved for issuance
under Coda's 1992 Stock Option Plan (the "Plan") from 975,000 to 2,675,000
shares.

A general description of the Plan is set forth below, but such description
is qualified in its entirety by reference to the full text of the Plan, a copy
of which may be obtained without charge upon written request to Coda's Chief
Financial Officer.

DESCRIPTION OF PLAN

Purpose. The purpose of the Plan is to promote the success of Coda by
facilitating the employment and retention of competent personnel and by
furnishing incentives to directors, officers and employees upon whose efforts
the success of Coda will depend to a large degree.

Term. Incentive stock options may be granted under the Plan for a period of
ten years from the date of adoption of the Plan by the board of directors.
Nonqualified stock options may be granted pursuant to the Plan until the Plan is
discontinued or terminated by the board.

Administration. The Plan is administered by the Compensation Committee of
the board of directors (the "Committee"). The Plan gives broad powers to the
Committee to administer and interpret the Plan, including the authority to
select the individuals to be granted options and to prescribe the particular
form and conditions of each option granted.

Eligibility. All employees of Coda or any subsidiary are eligible to
receive incentive stock options pursuant to the Plan. All employees, directors
and officers of, and consultants and advisors to, Coda or any subsidiary are
eligible to receive nonqualified stock options. As of August 1, 2000, Coda had
approximately 50 employees (of which 4 are officers), five directors who are not
employees and several consultants and advisors. After the transaction with
Net4Music, Coda will have more than 180 employees (of which 3 are officers),
seven directors who are not employees and several consultants and advisors.

Options. When an option is granted under the Plan, the Committee at its
discretion specifies the option price, the type of option (either "incentive" or
"nonqualified") to be granted, and the number of shares of common stock which
may be purchased upon exercise of the option. The exercise price of an incentive
stock option may not be less than 100% of the fair market value of Coda's common
stock and, unless otherwise determined by the Committee, the option price of a
nonqualified option will not be less than 100% of the fair market value of
Coda's common stock on the date of grant. The closing sale price of Coda's
common stock as reported by the Nasdaq SmallCap Market on August 10, 2000 was
$3.813 per share. The term during which the option may be exercised and whether
the option will be exercisable immediately, in stages or otherwise are set by
the Committee, but the term of an incentive stock option may not exceed ten
years from the date of grant. Optionees may pay for shares upon exercise of
options with cash, certified check or common stock of Coda valued at the stock's
then fair market value. Each incentive stock option granted under the Plan is
nontransferable during the lifetime of the optionee. Each outstanding option
under the Plan may terminate earlier than its stated expiration date in the
event of the optionee's termination of employment or directorship.

17
<PAGE> 23

In addition to other options which may be granted under the Plan, each
nonemployee director of Coda (excluding persons who were nonemployee directors
on the date such provision was adopted by the Board) will automatically be
granted a nonqualified option for 5,000 shares of common stock upon his or her
initial election as a director and for 1,500 shares upon each re-election
thereafter. Each such option will be exercisable at any time for a period of
five years, unless earlier terminated in accordance with the Plan, at an
exercise price per share equal to 100% of the fair market value of the common
stock on the date of grant. Options to purchase 54,000 shares are currently
outstanding as a result of the nonemployee director automatic option provisions
of the Plan.

Amendment. The board of directors may from time to time suspend or
discontinue the Plan or revise or amend it in any respect; provided, (i) no such
revision or amendment may impair the terms and conditions of any outstanding
option to the material detriment of the optionee without the consent of the
optionee except as authorized in the event of merger, consolidation or
liquidation of Coda, (ii) the provisions relating to the formula grant to
nonemployee directors may not be amended more than once every six months except
to conform to certain changes in the laws, and (iii) the Plan may not, without
the approval of the shareholders, be amended in any manner that will (a)
materially increase the number of shares subject to the Plan except as provided
in the case of stock splits, consolidations, stock dividends or similar events;
(b) change the designation of the class of employees eligible to receive
options; (c) decrease the price at which options will be granted; or (d)
materially increase the benefits accruing to optionees under the Plan.

Federal Income Tax Consequences of the Plan. Under present law, an optionee
will not realize any taxable income on the date a nonqualified option is granted
pursuant to the Plan. Upon exercise of the option, however, the optionee must
recognize, in the year of exercise, ordinary income equal to the difference
between the option price and the fair market value of Coda's common stock on the
date of exercise. Upon the sale of the shares, any resulting gain or loss will
be treated as capital gain or loss. Coda will receive an income tax deduction in
its fiscal year in which nonqualified options are exercised, equal to the amount
of ordinary income recognized by those optionees exercising options, and must
withhold income and other employment-related taxes on such ordinary income.

Incentive stock options granted under the Plan are intended to qualify for
favorable tax treatment under Section 422 of the Internal Revenue Code. Under
Section 422, an optionee recognizes no taxable income when the option is
granted. Further, the optionee generally will not recognize any taxable income
when the option is exercised if he or she has at all times from the date of the
option's grant until three months before the date of exercise been an employee
of Coda. Coda ordinarily is not entitled to any income tax deduction upon the
grant or exercise of an incentive stock option. Certain other favorable tax
consequences may be available to the optionee if he or she does not dispose of
the shares acquired upon the exercise of an incentive stock option for a period
of two years from the granting of the option and one year from the receipt of
the shares.

18
<PAGE> 24

Plan Benefits. The table below shows the total number of stock options that
have been received by the following individuals and groups under the Plan as of
August 1, 2000:

<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION/GROUP OPTIONS RECEIVED(1)
----------------------- -------------------
<S> <C>
John W. Paulson, Chief Executive Officer 237,500
Mark E. Dunn, Senior Vice President 145,000
Barbara S. Remley, Chief Financial Officer 70,000
Glenna A. Dibrell, Vice President of Marketing 50,000
Current Executive Officer Group 502,500
Current Non-Executive Officer Director Group 57,000
Current Non-Executive Officer Employee Group 174,500
</TABLE>

-------------------------
(1) This table reflects only the total stock options grant as of August 1, 2000,
without taking into account exercises or cancellations. Because future
grants of stock options under the Plan are subject to the discretion of the
Board of Directors, the future benefits that may be received by such
individuals or groups under the Plan cannot be determined at this time.

VOTE REQUIRED

Because of the employees' positive response to the Plan, the planned
transaction with Net4Music and the belief that making a greater number of shares
available to employees, directors and advisors is an effective means to insure
the future growth and development of Coda, the board of directors recommends
that the shareholders approve the increase in the number of shares reserved
under the Plan to 2,675,000 shares. Approval of such increase requires the
affirmative vote of the greater of (i) a majority of the shares represented at
the meeting with authority to vote on such matter or (ii) a majority of the
voting power of the minimum number of shares that would constitute a quorum for
the transaction of business at the meeting.

19
<PAGE> 25

PROPOSAL NO. 3: THE TRANSACTION

The following summary of the transaction with Net4Music by Coda and certain
terms of the stock purchase agreement and related matters is not complete and is
qualified in its entirety by reference to the stock purchase agreement, which is
attached as Appendix A and is incorporated into this document by reference.

GENERAL

Coda, Net4Music and certain shareholders of Net4Music have entered into the
stock purchase agreement, which provides that Coda will (i) acquire
approximately 82% of the stock of Net4Music (74% of Net4Music's stock on a fully
diluted basis) in exchange for shares of Coda common stock, (ii) assume certain
options and warrants of Net4Music and (iii) enter into a put and call agreement
with the remaining shareholders and option and warrant holders of Net4Music to
acquire their shares in the future on the same terms and conditions. If the
transaction is completed, the shareholders and option and warrant holders of
Net4Music will receive a number of shares of Coda common stock such that after
the transaction is fully completed the Net4Music shareholders and option and
warrant holders will own 67% of the common stock of Coda on a fully diluted
basis and Coda will own 100% of Net4Music. Because the specific conversion ratio
will not be known until the closing of the transaction, we have assumed that the
conversion ratio will be .78 for purposes of this Proxy Statement/Prospectus
(i.e., each share of Net4Music stock is exchangeable into .78 shares of Coda
common stock). For a more detailed description of the exchange, see "The
Transaction -- Exchange of Shares."

CLOSING OF THE TRANSACTION

As soon as practicable after the conditions to consummation of the
transaction described below have been satisfied or waived, and unless the stock
purchase agreement has been terminated as provided below, the transaction will
close. It is presently contemplated that the closing will be as soon as
practicable after approval of the proposals at Coda's Special Meetings. See "The
Transaction -- Conditions to the Transaction; Waiver."

BACKGROUND OF THE TRANSACTION

The terms of the stock purchase agreement are the result of arm's-length
negotiations between representatives of Coda and Net4Music. The following is a
brief discussion of the background of these negotiations and the proposed
transaction.

From time to time, Coda and Net4Music engaged in discussions regarding
various licensing agreements that would have permitted Net4Music to incorporate
Finale and SmartMusic Studio into Net4Music's website. On April 25, 2000, John
Paulson, the Chief Executive Officer of Coda, notified Francois Duliege, the
President of Net4Music, that further discussions regarding licensing agreements
would be conducted with the understanding that Coda was generally considering
various avenues to grow and diversify its business, and that such avenues
included strategic alliances with various companies in the music industry. On
April 27, Mr. Paulson, Mr. Ben Whitney, a Coda board of director member, and Mr.
Duliege met in New York, New York to further discuss potential licensing
arrangements for Finale and SmartMusic Studio. At this meeting, Messrs.

20
<PAGE> 26

Paulson and Duliege for the first time also discussed the potential of a
strategic alliance between Coda and Net4Music.

On May 15, 2000, Mr. Duliege visited the facilities of Coda in Minneapolis,
Minnesota. At this time, Mr. Duliege also held exploratory discussions regarding
the nature of Coda's business with certain members of Coda's management as well
as two members of Coda's board of directors. Subsequent to his visit to
Minneapolis, Mr. Duliege invited members of Coda management to make a formal
presentation regarding Coda and a potential strategic alliance between Coda and
Net4Music. On May 24, 2000, Messrs. Paulson and Whitney made a formal
presentation in Paris, France to various Net4Music representatives regarding
Coda's business and the potential for a strategic alliance involving Coda and
Net4Music, and delivered to the Net4Music representatives a proposed letter of
intent. The letter of intent set forth for the first time the preliminary terms
for Coda's acquisition of the outstanding Net4Music capital shares in exchange
for shares of Coda common stock. On May 25, 2000, Messrs. Paulson and Duliege,
each acting upon tentative approval in principle from the board of directors of
each respective company, formally executed the letter of intent.

At a board meeting held on June 19, 2000, the Coda board of directors
ratified the executed letter of intent. Also on June 19, 2000, the Coda board of
directors created a special committee to further consider, evaluate and
negotiate the terms of the proposed transaction. The special committee was
created in compliance with Section 302A.673 of the business combinations statute
of the Minnesota Business Corporations Act for the purpose of preserving the
opportunity for the consolidated company to engage in financing and other
transactions with certain shareholders of Net4Music. The special committee
consists of Gordon Stofer, Larry Pape, Timothy Bajarin and Timothy Heaney, the
disinterested directors of Coda's board. On June 21, 2000, the special committee
held a meeting to further discuss the proposed terms of Coda's acquisition of
Net4Music's shares. At this meeting, the special committee authorized Mr.
Paulson to contact various investment banking firms to undertake, from a
financial point of view, an evaluation of the proposed terms of the proposed
transaction. On June 20, Coda and Net4Music began initial preparation of a stock
purchase agreement regarding Coda's proposed purchase of Net4Music's outstanding
capital shares.

From July 5 - 7, 2000, Ms. Barbara Remley, Coda's Chief Financial Officer,
conducted a due diligence review in Paris, France of various aspects of
Net4Music's business. During the week of July 10, 2000, Mr. Paulson engaged MJK
and Company, Incorporated to perform a fairness evaluation, from a financial
point of view, of the proposed terms of the proposed stock purchase transaction.
On July 20, the special committee held another meeting to discuss the status of
the proposed transaction, as well as various other related issues. During the
week of July 26, 2000, Mr. Whitney traveled to Paris to meet with Francois
Duliege in order to discuss certain planning and operational issues involving
the companies. During the week of July 3, 2000, Mr. Duliege traveled to
Minneapolis for further negotiations and planning discussions regarding the
transaction and the respective companies' operations.

On August 11, the special committee again met to discuss the terms of the
proposed transaction. Representatives of MJK were in attendance at this meeting
and presented the special committee with its fairness evaluation, from a
financial point of view, of the proposed consideration to be paid by Coda in the
transaction. Based upon the foregoing series of events and activities, on August
11, 2000, the special committee unanimously approved the terms of the
transaction, which are reflected in the stock purchase agreement dated August
11, 2000.

21
<PAGE> 27

NET4MUSIC'S REASONS FOR THE TRANSACTION

Net4Music believes the proposed transaction with Coda will further its
strategic goal to grow and diversify its business. The Net4Music board of
directors endorsed the transaction with Coda after considering the following
factors:

- The effect on shareholder value of Net4Music remaining an independent
entity. The board of directors considered benefits and costs of Coda's
current and prospective efforts at diversifying and growing its business
and the increasing competition in the Internet music industry.

- A review of (a) the business, operations, earnings and financial
condition, including technological capabilities, capital levels and asset
quality, of Coda on both an historical and prospective basis; (b) the
business fit of Net4Music and Coda; and (c) the operating philosophy,
competence, experience and integrity of Coda and its management.

- The adequacy of the consideration. A comparison of the financial terms of
recent comparable transactions indicated that the financial terms of the
stock purchase agreement compared favorably with other recent
transactions.

- The terms of the stock purchase agreement, including the per share
exchange rate and the ability of Net4Music to terminate the agreement
under certain circumstances.

- The opportunity to leverage Coda's infrastructure and technological
capabilities to grow earnings.

- The ability of Coda to contribute to Net4Music's business strategy.

- The economic effect of the transaction on Net4Music, as well as the
employees of and customers served by Net4Music.

While each member of the Net4Music board of directors individually
considered the foregoing and other factors, the board of directors did not
collectively assign any specific or relative weights to the factors considered
and did not make any determination as to any individual factor.

CODA'S REASONS FOR THE TRANSACTION

Coda believes the proposed transaction with Net4Music will further its
strategic goal to grow and diversify its operations, particularly with respect
to its Internet business. The Coda board of directors endorsed the transaction
with Net4Music after considering the following factors:

- The benefits and costs of Net4Music's current and prospective efforts at
growing its business and the increasing competition in the music
industry.

- A review of (a) the business, operations, earnings and financial
condition, including Net4Music's licensing relationships with music
publishers, technological capabilities, capital levels and asset quality,
on both an historical and prospective basis; (b) the business fit of
Net4Music and Coda; (c) the operating philosophy, competence, experience
and integrity of Net4Music and its management and (d) market share and
growth prospects;

22
<PAGE> 28

- The financial terms of the transaction, including the relationship of the
value of the consideration Coda will provide Net4Music shareholders in
relation to Net4Music's historical book value and earnings and a
comparison of the financial terms of recent comparable transactions;

- Net4Music's access to capital resources;

- The opportunity to leverage Net4Music's Internet operations;

- The ability of the operations of Net4Music after the closing to
contribute to Coda's consolidated earnings; and

- The ability of Net4Music to contribute to Coda's business strategy.

While each member of Coda's board of directors individually considered the
foregoing factors, the board of directors did not collectively assign any
specific or relative weights to the factors considered and did not make any
determination with respect to any individual factor. Coda's board of directors
collectively made its determination with respect to the transaction based on the
unanimous conclusion reached by its members, in light of the factors that each
of them considered appropriate, that the transaction is in Coda's best interests
and the best interests of its shareholders.

OPINION OF CODA'S FINANCIAL ADVISOR

Coda engaged Miller, Johnson & Kuehn, Incorporated ("MJK") to provide an
opinion to the Board of Directors as to the fairness, from a financial point of
view, of the consideration to be paid by Coda in connection with the
transaction. The amount and form of consideration to be paid by Coda was
determined through negotiations between management of Coda and Net4Music, and
not by MJK. In addition, the decision to enter into the transaction was solely
that of Coda's special committee.

At the August 11, 2000 meeting of the Coda special committee of the board,
MJK delivered to the special committee of the board its oral opinion that the
consideration to be paid by Coda in the transaction is fair to Coda from a
financial point of view. This opinion was subsequently delivered in writing to
Coda on August 11, 2000. A copy of the opinion of MJK is attached as Appendix B
to this Proxy Statement and is incorporated into this document by reference.
This summary of MJK's opinion is qualified in its entirety by reference to the
full text of the opinion. Coda' stockholders are encouraged to read MJK's
opinion carefully and in its entirety for the procedures followed, assumptions
made, other matters considered, and limits of review by MJK in its opinion.

No limitations were imposed on MJK with respect to the scope of its
investigation. MJK was not authorized to, and did not, solicit interest from any
other party with respect to the transaction, or any other transaction involving
all or a part of Coda. In conducting its review and in rendering its opinion,
MJK assumed and relied upon the accuracy, completeness, and fairness of the
financial and other information provided to it, or publicly available, and did
not assume any responsibility for independent verification of the accuracy or
completeness of such information. MJK has further relied upon the assurances of
the management of Coda that it is not aware of any facts that would make the
information supplied to MJK, or publicly available, inaccurate or misleading.
With respect to the financial projections for Coda and pro forma combined
information for Coda and Net4Music, the management of Coda has represented that
such projections and pro forma combined information have been reasonably
prepared on a basis reflecting management's

23
<PAGE> 29

best currently available estimates and judgment as to the future financial
performance of Coda and the projected combined financial performance of Coda and
Net4Music. With respect to the projected financial information relating to
Net4Music used in MJK's analyses, MJK assumed that such information was
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of Net4Music as to the future financial
performance of Net4Music.

MJK did not make or obtain an independent appraisal of the assets or
liabilities of Coda or Net4Music, and did not conduct a physical inspection of
any of the properties or assets. Also, MJK does not express an opinion regarding
the liquidation value or solvency of either company separately, or the
consolidated company following the transaction. Furthermore, MJK does not
express any opinion as to the prices at which shares of Coda's common stock may
trade following the date of its opinion, at the closing date for the
transaction, or at any later time in the future. MJK's opinion is limited to the
fairness to Coda, from a financial point of view, of the consideration to be
paid by Coda in connection with the transaction, and does not address Coda's
underlying business decision to proceed with the transaction. The opinion is
based solely on information made available to MJK on or before the date of its
opinion and reflects general market, economic, financial, monetary, and other
conditions as of that date. MJK'S OPINION IS DIRECTED TO THE SPECIAL COMMITTEE
OF THE CODA BOARD AND ADDRESSES ONLY THE FAIRNESS OF THE CONSIDERATION TO BE
PAID BY CODA FROM A FINANCIAL POINT OF VIEW. THE OPINION DOES NOT ADDRESS THE
MERITS OF THE UNDERLYING DECISION BY CODA TO ENGAGE IN THE TRANSACTION AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW TO VOTE WITH
RESPECT TO MATTERS RELATING TO THE PROPOSED TRANSACTION.

In connection with its opinion, MJK reviewed, among other things, (i)
drafts of the stock purchase agreement and certain other agreements related to
the transaction; (ii) certain historical financial information for Coda and
Net4Music; (iii) certain projected financial information for Net4Music prepared
for financial planning purposes and furnished by the management of Net4Music;
and (iv) certain projected data relative to Coda prepared and furnished by
Coda's management. MJK made inquiries of the management of Net4Music and Coda
regarding the past and current business operations, financial condition, and
future prospects for Coda and Net4Music and the futures prospects for the
consolidated company after the transaction. In addition, MJK visited Coda's
facility and held discussions with the senior management of both companies to
understand their reasons for completing the transaction.

For purposes of rendering its opinion, MJK assumed that, in all respects
material to its analysis, the representations and warranties of the parties to
the stock purchase agreement contained in that agreement were true and correct,
the parties to the stock purchase agreement will each perform all of the
covenants and agreements to be performed by it under that agreement and all
conditions to the obligations of each to consummate the transaction will be
satisfied without any waiver. MJK also assumed that no limitations, restrictions
or conditions will be imposed or amendments, modifications or waivers made that
would have a material adverse effect on Coda or Net4Music or materially reduce
the contemplated benefits of the transaction to each or the consolidated
company.

In conducting the review and in performing the analyses described below,
MJK did not attribute any particular weight to any information or analysis
considered by it, but

24
<PAGE> 30

rather made qualitative judgments as to the significance and relevance of each
factor and analysis. Accordingly, MJK believes that the information reviewed and
the analysis conducted must be considered as a whole and that considering any
portion of such information, without considering all of such information and
analyses, could create a misleading or incomplete view of the process underlying
the opinion. THE FINANCIAL ANALYSES SUMMARIZED BELOW INCLUDE INFORMATION
PRESENTED IN TABULAR FORMAT. IN ORDER TO FULLY UNDERSTAND MJK'S FINANCIAL
ANALYSES, THE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE
TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES.
CONSIDERING THE DATA SET FORTH BELOW WITHOUT CONSIDERING THE FULL NARRATIVE
DESCRIPTION OF THE FINANCIAL ANALYSES, INCLUDING THE METHODOLOGIES AND
ASSUMPTIONS UNDERLYING THE ANALYSES, COULD CREATE A MISLEADING OR INCOMPLETE
VIEW OF MJK'S FINANCIAL ANALYSES.

Analysis of Selected Publicly Traded Companies. MJK compared Coda's and
Net4Music's financial information to similar information for publicly traded
companies that offer digital music products and services over the Internet.
Based upon the type and scope of products sold or services offered, size and
stage of development, as measured by sales, relative profitability, as measured
by operating and net income margins, and capitalization, as measured by
aggregate market value, MJK focused its analysis on eight companies: Excalibur
Technologies Corporation, EMusic.com, InterTrust Technologies Corporation,
Liquid Audio, Inc., musicmaker.com, Inc., Preview Systems, Inc., RealNetworks,
Inc. and Sunhawk.com Corporation (the "Comparable Companies").

MJK calculated valuation ratios based on published stock prices for each of
the Comparable Companies. The valuation ratios expressed the market value of
each of the Comparable Companies as a multiple of several variables, including
revenue for the latest twelve months and revenue, operating income, and net
income per share for calendar 2000 and 2001. The projections for the Comparable
Companies were based upon consensus estimates for these companies as reported by
nationally recognized organizations that track research reports published by
analysts from various investment firms. Valuation ratios based on operating
income and net income per share could not be meaningfully calculated for the
most part because all of the Comparable Companies are currently incurring
operating losses and substantially all of them are projected to continue
generating operating losses in the near term.

After examining the historical performance and expectations for Coda,
Net4Music and the Comparable Companies, and the market capitalizations of the
Comparable Companies, MJK determined that the median revenue multiple for
projected revenue in 2000 for the Comparable Companies was the most appropriate
ratio for valuing Net4Music and the consolidated company under the Discounted
Cash Flow Analysis. Also, MJK determined that a discounted multiple from the
median revenue multiple was the most appropriate ratio for valuing Coda. This
discounted multiple reflected differences in the projected growth rates and
market potential for Coda's products and services compared to those of the
Comparable Companies and Net4Music. Based on the near term projections for Coda
and Net4Music, MJK did not calculate values for the two companies based on
revenue multiples for the latest twelve months or calendar 2000 and 2001.

Discounted Cash Flow Analysis. MJK assessed the present values of future
cash flows that Coda's and Net4Music's business activities could be expected to
generate over a

25
<PAGE> 31

defined time period and the residual value of each of the two companies at the
end of the projected period (the "DCF Analysis"). In addition, MJK prepared a
DCF Analysis for the consolidated company based on a pro forma combined set of
projections for the two companies. The projected cash flows and residual value
for each DCF Analysis were discounted to the present and adjusted for the debt
and cash of Coda, Net4Music, and the consolidated company, as the case may be,
estimated as of September 30, 2000 to determine values for Coda, Net4Music and
the consolidated company.

Based on Coda's capital structure and financial condition, the expected
rates of return of investors in companies such as Coda, current capital market
conditions, valuation ratios for the Comparable Companies, and other relevant
factors, MJK determined that the most appropriate discount rates for Coda were
between 32% and 42% and that the most appropriate multiples of revenue to
determine residual value at the end of the projected period were between 3.5 and
5.1 times revenue. Based on Net4Music's capital structure and financial
condition, the expected rates of return of investors in companies such as
Net4Music, current capital market conditions, valuation ratios for the
Comparable Companies, and other relevant factors, MJK determined that the most
appropriate discount rates for Net4Music were between 42% and 52% and that the
most appropriate multiples of revenue to determine residual value at the end of
the projected period were between 6.2 and 7.8 times revenue. Based on the
assessment done separately for Coda and Net4Music, MJK determined that the most
appropriate discount rates for the consolidated company were between 37% and 47%
and that the most appropriate multiples of revenue to determine residual value
at the end of the projected period were between 6.2 and 7.8 times revenue. After
applying these discount rates and residual multiples to the projections, MJK
computed ranges of values based upon the DCF Analysis for Coda, Net4Music and
the consolidated company. The ranges in estimated values for Coda, Net4Music and
the consolidated company resulting from this analysis were as follows:

<TABLE>
<S> <C>
Coda on a stand alone basis........... $16.5 million - $30.3
million
Net4Music on a stand alone basis...... $50.7 million - $79.2
million
Consolidated company.................. $77.7 million - $126.3
million]
</TABLE>

Pro Forma Valuation Analysis. Using forecasts and assumptions provided by
Coda and Net4Music, MJK presented to Coda's special committee an analysis which
compared estimated pro forma value (price) per share for the consolidated
company as of the end of the calendar years 2001, 2002, 2003, and 2004 to the
estimated value per share of Coda on a stand alone basis. The analysis did not
assume any explicit synergies or cost savings from the transaction and assumed
that the consolidated company raised an additional $20 million of equity capital
in 2001. This analysis indicated that the transaction and assumed financing
would result in dilution to Coda's earnings per share in calendar years 2000
through 2003, and accretion in earnings per share in fiscal 2004, assuming there
would not be any synergies or cost savings from the transaction, and regardless
of whether the shares subject to the put/call agreements were converted into
shares of Coda. The analysis also indicated that the value per share of the
consolidated company could be substantially greater in 2004 than the estimated
value per share of Coda on a stand alone basis and could be lower in the earlier
years, based on assumed earnings multiples computed on the basis of the
estimated growth rates in revenue and operating income. Discounting the
estimated future values per share back to the present at discount rates of

26
<PAGE> 32

37% to 47% for the consolidated company and at discount rates of 32% to 42% for
Coda on a stand alone basis resulted in the following range of values for Coda's
common shares:

<TABLE>
<CAPTION>
PRESENT VALUE OF ESTIMATED FUTURE PRICES PER SHARE
----------------------------------------------------------------------------
2003 2004
AT END OF: ------------------------------------ ------------------------------------
CODA STAND ALONE CONSOLIDATED CO. CODA STAND ALONE CONSOLIDATED CO.
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Before conversion of
Put/Call shares
With NOLs............ $3.09 - $6.44 $2.47 - $4.02 $4.40 - $9.85 $7.38 - $13.47
Fully Taxed.......... 1.95 - 4.06 0.43 - 0.70 2.77 - 6.20 3.86 - 7.04
Fully Diluted
(after conversion)
With NOLs............ $3.09 - $6.44 $2.69 - $4.39 $4.40 - $9.85 $7.67 - $14.00
Fully Taxed.......... 1.95 - 4.06 0.81 - 1.31 2.77 - 6.20 4.42 - 8.06
</TABLE>

Analysis of Selected Merger and Acquisition Transactions. MJK reviewed
numerous transactions that were selected on the basis of the comparability of
the acquired companies to Net4Music with respect to several factors (the
"Comparable Transactions"). Criteria used in the selection of the Comparable
Transactions included, but were not limited to, the following: the importance of
the Internet for the business and distribution channels of the acquired company;
the type and scope of products or services sold over the Internet; the size and
stage of development of the acquired company, as measured by sales; and relative
profitability, as measured by operating and net income margins. In addition, MJK
concentrated on transactions that were announced since April 1, 1999, and those
for which relevant financial data was available. The following table lists the
transactions that MJK summarized (the "Comparable Transactions "):

<TABLE>
<CAPTION>
EFFECTIVE DATE OF TRANSACTION ACQUIRING COMPANY ACQUIRED COMPANY
----------------------------- ----------------- ----------------
<S> <C> <C>
August 10, 1999 RealNetworks, Inc. Xing Technology
November 15, 1999 Homestore.com Homefair.com
November 16, 1999 EMusic.com Cductive.com
November 30, 1999 EMusic.com Tunes.com
December 16, 1999 Mediaconsultant Physicians' Online
January 25, 2000 RealNetworks, Inc. Netzip, Inc.
</TABLE>

Valuation ratios were calculated for each of the Comparable Transactions
based upon the revenue for the Acquired Companies during the latest twelve
months before completion of the Comparable Transactions. Other valuation ratios
based upon other operating parameters were not calculated because all of the
Comparable Transactions were generating losses. The average revenue valuation
ratio for the Comparable Transactions was then applied to Net4Music's projected
revenue for calendar 2000 through 2004 to compute an estimated range of future
values for Net4Music's business. These values were then discounted to the
present using a cost of capital of 47% and adjusted for the net cash of
Net4Music estimated at September 30, 2000 to arrive at a range of present equity
values of approximately $20 million to $195 million. These aggregate estimated
equity values were then compared to the implied value of approximately $63
million for Net4Music in the transaction, based upon the number of fully diluted
shares of Coda to be issued to shareholders of Net4Music and Coda's share price
as of August 9, 2000.

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<PAGE> 33

Acquisition Premium Analysis. MJK also looked at the relative values of
Coda and Net4Music from the perspective of an acquisition of Coda by Net4Music,
given that the shareholders of Coda will own less than 50% of the consolidated
company after the transaction. MJK applied an acquisition premium of 58 percent
to the market capitalization of Coda on June 20 2000, the day before the
announcement of the transaction with Net4Music. This premium was based upon the
median percent premium paid for transactions involving companies in the computer
software and services industry as reported by MergerStat Review 2000. In
addition, MJK applied an acquisition premium of 35 percent to the market
capitalization of Coda on June 20, 2000. This premium was based upon the median
percent premium paid for transactions involving companies with a transaction
value between $25 million and $50 million, as reported by MergerStat Review
2000. Using these premiums, MJK computed an estimated range of values for Coda
of approximately $33 million to $39 million in a transaction involving the
purchase of Coda. These values for Coda were then compared to the estimated
value for Net4Music computed in the DCF analysis. Based on this comparison,
Coda's value, after adding an acquisition premium, ranged from 34% to 38% of the
combined value of Coda and Net4Music.

Contribution Analysis. MJK compared the relative contribution to revenue
and operating income for the projected consolidated results from both Coda and
Net4Music. Based on the projections for the two companies, Coda is projected to
contribute, on average, 51.1% of the combined revenue for each of the calendar
years 2001, 2002, 2003, and 2004. Based on the projections for the two
companies, Coda is projected to contribute, on average, 35.0% of the combined
revenue, and, on average, 23.2% of the combined operating income for each of the
calendar years 2003 and 2004. For the period 2001 through 2004, Coda is
projected to contribute 41% of the cumulative revenue and 33% of the cumulative
operating income.

Coda selected MJK on the basis of its experience in valuing securities in
connection with mergers and acquisitions, and its knowledge of Coda and its
marketplace. MJK and its affiliates are regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate, and other
purposes. MJK and its affiliates maintain a market in Coda common stock. In the
ordinary course of business, MJK and its affiliates may actively trade or hold
the securities and other instruments and obligations of Coda for their own
account and for the accounts of customer and, accordingly, may at anytime hold a
long or short position in those securities, instruments or obligations. Coda has
agreed to pay MJK a fixed fee of $175,000 for providing the opinion and has
agreed to reimburse MJK for its reasonable out-of-pocket expenses and to
indemnify MJK against certain liabilities, including those arising under
securities laws. MJK is a subsidiary of Stockwalk.com Group, Inc., which has
entered into an agreement to acquire John G. Kinnard and Company, Incorporated,
which is another market maker of Coda common stock.

EXCHANGE OF SHARES

At the closing, (i) certain shareholders of Net4Music will receive a number
of shares of Coda common stock, (ii) certain Net4Music option and warrant
holders will receive Coda options and warrants and (iii) the remaining
shareholders and option and warrant holders of Net4Music will enter into a put
and call agreement with Coda such that after the transaction the Net4Music
shareholders and option and warrant holders will

28
<PAGE> 34

beneficially own 67% of the common stock of Coda on a fully diluted basis. The
put and call agreement provides that the shareholders or option and warrant
holders of Net4Music who are parties to the agreement can, at any time during
the five-year period following closing of the transaction under the stock
purchase agreement, require Coda to acquire their shares of Net4Music exchange
for Coda common stock based on the same conversion ratio applicable to the
Net4Music shareholders who shall receive Coda stock at the closing. Because the
specific conversion ratio will not be known until the closing of the
transaction, Coda has assumed that the conversion ratio will be .78 for purposes
of this Proxy Statement/Prospectus. Under the stock purchase agreement, the
conversion ratio is to be calculated by dividing (i) the product obtained by
multiplying 2.0303 by the number of shares of Coda common stock outstanding on a
fully diluted basis by (ii) the number of shares of Net4Music stock outstanding
on a fully diluted basis. Based on an assumed conversion ratio of .78, Coda will
issue approximately 16,565,075 shares of Coda common stock in exchange for
Net4Music stock upon consummation of the transaction under the stock purchase
agreement and the put and call agreement. Certificates representing these shares
shall be delivered to the Net4Music shareholders at closing or upon exercise of
the put and call rights.

Because the value of Coda shares fluctuates, the market value of the Coda
common stock that Net4Music shareholders will receive in the transaction may
increase or decrease following the transaction.

Coda will not issue any certificates or scrip representing fractional
shares of Coda common stock in the transaction. If a fractional share results
from the application of the conversion ratio to the number of shares of
Net4Music common stock owned, then, in lieu of any such fractional share, each
holder of Net4Music common stock who otherwise would be entitled to receive a
fractional share of Coda common stock in the exchange will receive an amount of
cash (without interest) determined by multiplying (1) the closing price of
Coda's common stock as reported by the Nasdaq Stock Market on the date of
closing, by (2) the fractional share interest of Coda common stock to which such
holder would otherwise be entitled. Coda is not obligated to make any such
payment if it is less than $1.00.

REPRESENTATIONS AND WARRANTIES

In the stock purchase agreement, Net4Music makes certain representations
and warranties to Coda regarding Net4Music and its subsidiaries, including,
among others, as to:

- their corporate existence;

- the authorization, execution, and enforceability of the stock purchase
agreement and related agreements;

- Net4Music's capital structure;

- the accuracy of Net4Music's recent financial statements;

- the absence of material litigation and undisclosed liabilities;

- the absence of material adverse changes since March 31, 2000;

- certain tax matters;

- the absence of violations of material agreements;

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<PAGE> 35

- intellectual property rights;

- compliance with regulatory requirements;

- the adequacy of insurance;

- the need for third party consents to the transaction; and

- certain employment matters.

Coda makes substantially similar representations and warranties to
Net4Music and its shareholders regarding Coda and its subsidiary.

The Net4Music shareholders also make certain representations and warranties
to Coda regarding their ownership of Net4Music stock and their ability to
transfer the stock to Coda free and clear of any liens and without the need for
any specific consents of third parties.

CERTAIN COVENANTS

Net4Music, its shareholders and Coda have each agreed to the following
covenants, among others:

- to obtain all required approvals and consents to the transaction;

- to preserve the accuracy of their respective representations and
warranties;

- to maintain the business operations of Net4Music and Coda, as the case
may be, in accordance with past practices and sound business judgment;
and

- to refrain from soliciting any proposal regarding the sale, merger or
other transaction with Net4Music or Coda, as the case may be.

In addition, Net4Music and Coda have agreed to the following covenants,
among others:

- to provide each other and their representatives with access to examine
such information as reasonably requested, subject to confidentiality
obligations; and

- to use their best efforts to obtain the necessary authorizations for the
quotation of Coda common stock on the Nasdaq National Market following
the transaction of Net4Music stock.

Further, Coda has agreed to take all action necessary to register with the
SEC the shares to be issued to the Net4Music shareholders. Finally, the
shareholders of Net4Music have agreed to deliver at closing agreements under
which they agree to vote their shares in favor of certain board of director
designees of Coda such that these designees would constitute at least one-third
of the board of directors of the consolidated company.

INTERESTS OF DIRECTORS AND OFFICERS IN THE TRANSACTION

Coda and Net4Music each believe that, except as described below, its
officers and directors do not have any material interest in the transaction that
is different from those of the Coda and Net4Music shareholders, respectively.
Immediately after the transaction, the following members of Coda's board of
directors and Net4Music's board of directors will become members of the board of
directors of the consolidated company: Francois Duliege,
30
<PAGE> 36

Claude Poletti, Benoist Grossmann, Patrick Revenu, Bill Avery, Martin Velasco,
John Paulson, Benson Whitney and Timothy Bajarin. The other members of the
Net4Music and Coda boards of directors will resign effective with the closing of
the transaction. In addition, the consolidated company will enter into
employment agreements with Francois Duliege, who will be the consolidated
company's Chief Executive Officer, and John Paulson, who will be the President
of the Coda division of the consolidated company.

CONDITIONS TO COMPLETING THE TRANSACTION; WAIVER

The respective obligations of Coda, Net4Music and Net4Music's shareholders
to effect the transaction are subject to the satisfaction at or prior to the
closing of certain conditions, including, among others:

- the representations and warranties of each are true as of closing and
that each has complied with its respective obligations under the
agreement;

- the approval of the proposals by the Coda shareholders;

- the receipt of any other required consents or approvals;

- the absence of any litigation or order by any court or governmental
authority restraining, enjoining or otherwise prohibiting the
transaction;

- the satisfactory completion of an investigation of the business of Coda
by Net4Music and of the business of Net4Music by Coda; and

- the execution and delivery of employment agreements from Francois Duliege
and John Paulson.

In addition, the obligations of Coda to effect the transaction are subject
to the satisfaction at or prior to the closing of certain conditions, including
the receipt of voting agreements from the Net4Music shareholders regarding the
composition of the board of directors of the consolidated company.

Either Coda, Net4Music or Net4Music's shareholders may waive (to the extent
permitted by applicable law) any failure to comply with any obligation,
covenant, agreement, or condition in the stock purchase agreement that is for
the benefit of that party.

AMENDMENT AND TERMINATION OF THE STOCK PURCHASE AGREEMENT; EFFECTS OF
TERMINATION

Subject to applicable law, any of the provisions of the stock purchase
agreement may be amended by written agreement of the respective parties at any
time prior to the closing of the transaction. Even if the Coda shareholders
approve the proposals, Coda, Net4Music and Net4Music shareholders can agree at
any time to terminate the stock purchase agreement without completing the
transaction. The stock purchase agreement can also be terminated if:

- the transaction is not completed by December 31, 2000;

- if the closing conditions are not met; or

- there is a breach by a party of its obligations under the stock purchase
agreement.

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<PAGE> 37

EXPENSES AND FEES

If either Net4Music or Coda commits a material breach of a provision of the
stock purchase agreement prior to closing, the party committing the breach must
pay the other party a termination fee equal to the reasonable expenses and fees
incurred in connection with the transaction plus $750,000 in cash.

RESTRICTIONS ON RESALE OF CODA COMMON STOCK

The Coda common stock issuable in connection with the transaction has been
registered under the Securities Act and will be freely transferable by the
recipients, except that this registration does not cover resales by shareholders
of Net4Music who may be deemed to control the consolidated company after the
transaction. These persons may not sell their shares of Coda common stock
acquired in connection with the transaction except pursuant to an effective
registration statement under the Securities Act covering such shares, or in
compliance with Rule 144 under the Securities Act or another applicable
exemption from the registration requirements of the Securities Act. It is
expected that these persons will be able to sell their shares in accordance with
the volume, manner of sale, and other applicable limitations of the Securities
Act and the rules and regulations of the SEC thereunder.

ACCOUNTING TREATMENT OF THE TRANSACTION

The parties intend to account for the transaction as a purchase for
accounting and financial reporting purposes under generally accepted accounting
principles. Because of the treatment of the transaction as a reverse
acquisition, the financial statements of Net4Music will be the financial
statements of the surviving corporation. Under the purchase method, Coda's
results of operations will be included in Net4Music's results of operations from
and after the closing of the transaction. For purposes of preparing Net4Music's
results of operations, Net4Music will establish a new accounting basis for
Coda's identifiable tangible and intangible assets and liabilities based upon
the fair values thereof, and record goodwill for the difference between the
purchase price, including the direct costs of the transaction, and the fair
value of such net assets. A final determination of required purchase accounting
adjustments and of the fair value of the assets and liabilities of Coda has not
yet been made. Accordingly, the purchase accounting adjustments made in
connection with the development of the comparative pro forma per share financial
information appearing elsewhere in this Proxy Statement/Prospectus are
preliminary and subject to change.

CERTAIN TAX CONSEQUENCES

There will be no tax consequences to the shareholders of Coda. The
shareholders of Net4Music may be subject to certain tax consequences.

NET4MUSIC SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE CONSEQUENCES OF THE TRANSACTION, INCLUDING THE APPLICABLE TAX CONSEQUENCES
TO THEM.

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<PAGE> 38

RISK FACTORS

An investment in Coda common stock involves a high degree of risk. You should
invest only after carefully considering the risks described below and elsewhere
in this Proxy Statement/Prospectus and only if you can afford to lose your
entire investment. References to "we," "our" and "us" refer to the consolidated
company after the transaction with Net4Music.

WE WILL NEED ADDITIONAL CAPITAL.

We believe that existing cash and proceeds from line of credit borrowings,
together with funds generated from the sale of products, will be sufficient to
fund our possible capital expenditure, product development and working capital
requirements for at least 12 months. Any significant change in our product
development plans or marketing and distribution methods would require additional
capital prior to that time. If additional capital is sought through a new line
of credit, asset-based lending or the sale of equity, there can be no assurance
that such capital will be available or available on terms favorable to us. The
sale of equity interests would likely dilute the ownership of our shareholders.
We anticipate raising additional funds through equity sales in the near future.

WE NEED TO CONTINUE OUR NEW PRODUCT DEVELOPMENT EFFORTS.

Additional development work is required to increase the breadth of our
Internet business and our repertoire for SmartMusic Studio products. We plan to
launch new innovation products and services to meet the electronic commerce,
publishing, communications, education and information needs of our customers. We
also plan to develop new training and assessment products using technologies
developed while producing Finale and SmartMusic Studio. We continue to explore
the possibilities of licensing the rights necessary to use Finale to sell sheet
music which can be downloaded by the consumer via the Internet and change clef
and key as desired. We are also exploring the possibilities of using SmartMusic
Studio to provide music education options via the Internet. There can be no
assurance that our timetable for any of these development plans will be
achieved, that sufficient development resources will be available or that
development efforts will be successful.

WE ARE DEPENDENT ON OUR INTERNET BUSINESS AND ACCOMPANIMENT SALES AND
DEVELOPMENT.

The penetration of the Net4Music solution is closely linked to intensive
use of the Internet. As a result, our success depends on continued growth in
Internet use. A number of uncertainties related to the Internet, particularly
for end users, have not yet been resolved (security of transactions,
adaptability, costs, ease of access, quality of service and increase in
available bandwidth). Consumer perceptions of these problems could have negative
consequences for us. Our growth also will depend on variables inherent in
Internet markets, such as technologies that facilitate interactive communication
between organizations and targeted audiences, and regulatory constraints. If the
Internet develops more slowly than projected, our sales, operating results and
financial condition could be adversely affected. Our future success is also
dependent on our ability to obtain significant ongoing accompaniment sales. Our
Internet business and accompaniment sales are both dependent upon relationships
with publishers.

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<PAGE> 39

WE ARE ALSO DEPENDENT ON A LIMITED NUMBER OF PUBLISHERS.

The world market for sheet music publishers is notable for the high
concentration of the world catalogue among a limited number of publishers. We
have entered into two major publishing contacts with two important players in
the market of sheet music publishers. The titles assigned under these two
contracts will, once digitalized, represent approximately 25% of our global
catalogue. We have not been granted exclusivity under either of these
agreements, which means that similar agreements may be made with our competitors
or that the publishers themselves may sell the same titles. Further, the
agreement concluded with EMI contains a clause by which we have committed to
enter and digitize 100,000 titles within a reasonable period of time. EMI is
entitled to terminate the agreement without notice or compensation should we
fail to complete performance within the given 12 month period. We, however,
believe that the minimum number should be processed without difficulty.

The Company has entered into license agreements with leading music
publishers, which provide the Company with access to certain musical titles for
accompaniment development. While the Company believes that its relationships
with these publishers are good, there can be no assurance that the Company will
be able to maintain these relationships or make satisfactory arrangements to
receive access to additional styles of music in a timely manner. The lack of a
sufficient number and variety of musical arrangements would greatly limit our
ability to market our Internet products and services and our SmartMusic
products.

WE HAVE HAD LIMITED AND FLUCTUATING SALES OF OUR PRODUCTS.

We have only recently begun sales of sheet music on the Internet. Coda's
initial Vivace product was introduced in 1994, and new Vivace products (renamed
SmartMusic Studio) were introduced in 1997 and 1998 but we have achieved only
limited sales of these products. We have expanded and utilized new methods of
distribution but there can be no assurance that sales of SmartMusic Studio
products will achieve significantly higher levels.

Sales of Finale products historically fluctuated with higher sales levels
achieved following the release of product upgrades. Internet sales of sheet
music have also fluctuated. We believe that our results of operations may
fluctuate as a result of, among other things, the purchasing cycle of the
education market and the timing of releases of new products and product
upgrades.

THE RATE OF CONVERSION OF VISITS TO OUR WEBSITE INTO ORDERS FOR SHEET MUSIC OR
MIDI FILES REMAINS LOW AND THE DIFFERENCE BETWEEN THE TWO GROWTH CURVES
CONTINUES TO INCREASE.

The average number of daily visits to the Net4Music website is at present
8,000 for 80 orders for goods on offer. The number of visits to our website has
increased by 800% over the 5 months, whereas the number of orders for goods has
increased by only 600% over the same period. Should this trend be confirmed in
the medium term, our sales forecasts will need to be reduced and an adjustment
made to the estimated turnover.

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<PAGE> 40

WE HAVE INCURRED OPERATING LOSSES IN THE PAST AND EXPECT SUCH LOSSES TO
CONTINUE.

On a pro forma basis, we incurred a net loss of $8,316,000 for the year
ended December 31, 1999 and $2,763,000 for the quarter ended March 31, 2000.
Since inception, on a pro forma basis, we have an accumulated deficit of
$9,391,000 as of March 31, 2000. We expect operating losses to continue for the
foreseeable future, which losses will include noncash losses due to the
amortization of goodwill to be recorded as a result of the transaction between
Coda and Net4Music.

WE FACE INTENSE COMPETITION AND LIMITED BARRIERS TO ENTRY.

Competition in the digital sheet music distribution is strong and may
increase if the few major traditional music distributors and publishers decide
to become Internet providers of digital sheet music. While competition for the
SmartMusic Studio products is limited, there can be no assurance that others,
such as large electronic and musical instrument manufacturers, will not enter
this market. Competition in the sale of music notation products such as Finale,
Finale Allegro and PrintMusic! centers principally on the basis of price,
features and ease of use. Some of the companies with which we may compete,
including music publishers who may enter the Internet market, have significantly
greater financial and other resources than we our resources.

THE PDF FORMAT MAY BECOME OBSOLETE.

The sheet music that we market has been entered and stored in PDF (portable
document files) files. In the medium term, this format may disappear and be
replaced by a format offering more functions and interactivity. Depending on the
type of new format developed internationally, the PDF files of our database may
or may not utilized without modification. Should an international format be
adopted which is incompatible with the PDF format, part of the digitalization of
the musical works will have to be redone.

CONTINUED DELAYS IN THE PRODUCTION OF OUR CATALOGUE AND QUALITY CONTROL MAY
CAUSE HARM TO OUR BUSINESS.

We are currently entering and digitizing approximately 4,000 new titles per
month. We anticipate an increase of the capacity of production to 20,000 titles
per month within the next 6 to 9 months, which would entail an increase in
entering and digitalization costs. In addition, the quality control team will
have to be strengthened. Our catalogue production capacity is an important
element in negotiations with publishers. Should our business of our company
continue to develop, it may reach the limits of its capacity for entering and
digitalization.

OUR ACTIVITY MAY BE AFFECTED BY TECHNOLOGY FOR TRANSCRIPTION OF MIDI FILES INTO
SHEET MUSIC.

Several transcription programs of MIDI (musical instruments digital
interference) files into sheet music are available on Internet and can be
downloaded free of charge. In the present state of technology, this
transcription entails a considerable loss of information between the MIDI file
and the sheet music. However, the result obtained by such transcription may
interest amateur musicians or beginners who thus have access to free sheet
music. If this type of alternative technology develops or becomes widely used,
we could face market share losses or fail to win future market shares.

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<PAGE> 41

OUR SECURITY SYSTEM FOR TRANSACTIONS MAY BECOME OBSOLETE SHOULD AN INTERNATIONAL
STANDARD BE ADOPTED.

Based on software for which we have been granted a license, we have
internally developed a proprietary technology for securing transactions (secure
music distribution engine) with end users. This proprietary technology today is
one of our main arguments to convince sheet music publishers to entrust us with
the online distribution of their catalogue, since it protects us against digital
copying of our catalogue or multiple printing of the sheet music downloaded.
However, this security system will be effective for only a limited period by
reason of technological change. We must, therefore, devote new resources to the
improvement or modification of the system. Furthermore, there is no system
available at present on the market affording our company protection against the
risk of photo-pirating of printed works. We will bear the entire loss of
earnings caused by such process.

PAYMENT OF ROYALTIES TO COPYRIGHT COLLECTION AGENCIES FOR ONLINE SALES OF MIDI
FILES MAY BE GREATER THAN ANTICIPATED.

With the exception of royalties paid to American copyright collection
agencies, we pay at present no royalty on the sales of MIDI files due to the
current debate surrounding the legal categorization of MIDI files. We believe
that copyright collection societies in our target countries will adopt a general
position on this question in the short or medium term, and that we will have to
pay royalties to these societies for the marketing of the MIDI files.

THE LAWS AND REGULATIONS THAT GOVERN OUR BUSINESS CHANGE RAPIDLY.

Governments have attempted to regulate activities on the Internet. The
following are some of the evolving areas of law that are relevant to our
business:

- Privacy Law. Current and proposed United States federal, state and
foreign privacy regulations and other laws restricting the collection,
use and disclosure of personal information could limit our ability to use
the information in our data bases to generate revenues.

- Encryption Laws. Record industry associations have lobbied the United
States federal government for laws requiring music transmitted over the
Internet to be digitally encrypted in order to track music rights and
prevent unauthorized use of copyright music. If such laws are adopted, we
may need to incur substantial costs to comply with these requirements or
change the way the Company does business.

- Content Regulation. Both foreign and domestic governments have adopted
and proposed laws governing the content of material transmitted over the
Internet. These include laws relating to obscenity, indecency, libel and
defamation. We could be liable if content delivered by us or placed on
our website violates these regulations.

- Sales and Use Tax. We do not currently collect sales, use or other taxes
on the sale of goods and services on our website into the United States
other that on sales in Minnesota. However, states or foreign
jurisdictions may seek to impose tax collection obligations on companies
that engage in online commerce. If they do, these obligations would limit
the growth of electronic commerce in general and

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<PAGE> 42

limit our ability to profit from the sale of goods and services over the
Internet. On May 10, 2000, the United States House of Representatives
voted overwhelmingly to extend until 2006 the tax moratorium on Internet
commerce.

Because of this rapidly evolving and uncertain regulatory environment, we cannot
predict how these laws and regulations might affect our business. In addition,
these uncertainties make it difficult to ensure compliance with the laws and
regulations governing the Internet. These laws and regulations would harm us by
subjecting us to liabilities or forcing us to change the way we do business.

WE ARE DEPENDENT UPON CERTAIN KEY PERSONNEL.

We are highly dependent on a limited number of key management, including
Francois Duliege and John Paulson, and technical personnel, including software
programmers who are in limited supply in the current labor market. Our future
success will depend, in part, on our ability to attract and retain highly
qualified personnel. There can be no assurance that we will be successful in
hiring or retaining qualified personnel. The loss of key personnel, or inability
to hire and retain qualified personnel, could have an adverse effect on our
business, financial condition and results of operations. We do not have
key-person life insurance on any of our key personnel.

WE ARE DEPENDENT UPON PROPRIETARY TECHNOLOGY AND WE CANNOT ASSURE PROTECTION OF
SUCH TECHNOLOGY.

We are dependent on proprietary technology. A number of patents have been
issued to or licensed to us. There can be no assurance that our proprietary
technology will provide us with significant competitive advantages, that other
companies will not develop substantially equivalent technology or that we will
be able to protect our patented and nonpatented technologies. We could incur
substantial costs in seeking enforcement of our patents or in defending ourself
against patent infringement claims by others. We are not aware of any patents
held by others that would prohibit the use of technology currently used by us.
Further, there can be no assurance that we will be able to obtain or maintain
patent protection in the markets in which we intend to offer products.

WE ARE DEPENDENT UPON CERTAIN SUPPLIERS.

We are dependent on certain suppliers for delivery of components and
assembly of its SmartMusic products. While we believe that alternative suppliers
are available, any interruption of supply from current vendors could cause
delays in the shipment of such products. We will likely have to subcontract part
of our music sheet engraving. Should a subcontractor terminate its agreement
with us, the selection and training of new subcontractors may affect our
production capacity.

OUR INTERNATIONAL DEVELOPMENT PLANS ARE SUBJECT TO NUMEROUS RISKS.

One of the components of our long-term strategy is international expansion.
There can be no guarantee that we will be able to promote, sell and market our
solution successfully on the international market, or that we will be able to
offset the cost of the resources allocated to such efforts. Moreover, we could
be faced with the risks inherent in any international development, such as
unpredictable changes by governmental bodies in export restrictions, quotas and
customs rates, currency risks, the difficulty of managing foreign

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<PAGE> 43

operations, the differences in technological standards among countries, labor
laws and practices in certain countries, the differences in payment terms,
collection problems, political instabilities, seasonal reductions in business,
and unforeseen taxes and events. Such risk factors could harm our international
operations and, therefore, our sales, operating results and financial condition.

FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.

The Private Securities Litigation Reform Act of 1995 (the "Reform Act")
provides a safe harbor for forward-looking statements made by us or on our
behalf. We have made, and may continue to make, various written or verbal
forward-looking statements with respect to business and financial matters,
including statements contained in this documents, other filings with the
Securities and Exchange Commission, and reports to stockholders. All statements
which address our beliefs regarding our market, strategy, events or developments
that we expect or anticipate will occur in the future, including those expected
as a result of the proposed transaction between Coda and Net4Music are
forward-looking statements within the meaning of the Reform Act. The
forward-looking statements are and will be based on management's then current
views and assumptions regarding future events and operating performance. Certain
factors that could affect financial performance or cause actual results to vary
significantly from estimates contained in or underlying forward-looking
statements include:

- The failure to achieve any of the economic benefits from the proposed
transaction with Net4Music.

- Competitive pressures.

- Changes in laws and regulations.

- Those risks identified under the Section entitled "Risk Factors."

- General market conditions.

- Other risks and uncertainties as detailed from time to time in our
filings with the Securities and Exchange Commission.

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<PAGE> 44

MARKET FOR CODA COMMON STOCK

Coda's common stock trades on the Nasdaq SmallCap Market tier of The Nasdaq
Stock Market under the symbol: COMT. Coda intends to apply for listing on the
Nasdaq National Market under the symbol "NMUS" effective with the closing of the
transaction with Net4Music.

The following table sets forth the quarterly high and low trade prices for
the years ended December 31, 1999 and 1998 and for the first and second quarters
of the year 2000:

<TABLE>
<CAPTION>
2000 1999 1998
-------------- -------------- --------------
COMMON STOCK HIGH LOW HIGH LOW HIGH LOW
------------ ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
First quarter......................... $5.40 $2.50 $2.13 $1.31 $1.58 $ .50
Second quarter........................ 4.25 3.38 2.50 1.19 2.00 1.00
Third quarter......................... 6.00 2.41 1.37 .56
Fourth quarter........................ 3.88 2.19 1.50 .62
</TABLE>

As of August 10, 2000, the closing sale price of Coda's common stock as
reported by the Nasdaq SmallCap Market was $3.813. As of [record date], 2000
there were approximately shareholders of record of Coda common
stock. In addition, Coda estimates that an additional 1,500 shareholders own
stock held for their accounts at brokerage firms and financial institutions.
Coda has never paid cash dividends on any of its securities. Coda currently
intends to retain any earnings for use in its operations and does not anticipate
paying cash dividends in the foreseeable future. Coda's bank line of credit
prohibits the payment of dividends without prior approval of the lender.

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<PAGE> 45

BUSINESS OF CODA

GENERAL

Coda Music Technology, Inc. develops and markets proprietary music
technology products designed to enhance music learning and composition, increase
productivity and make practicing and performing music fun. Since 1988, Coda and
its predecessor have marketed the award-winning Finale(R) music notation family
of software products which eliminate the restrictiveness and tedium of music
notation and have established Coda as a leader in this market. In June 1994,
Coda introduced the Vivace(R)system, currently called SmartMusic Studio(TM), an
innovative musical accompaniment system that responds to the musician in
real-time. For students, educators, adult music hobbyists, professional
musicians and composers in the approximately $6 billion music products industry,
Coda's innovative products provide easy to use, efficient alternatives to
traditional practice, education and composition techniques.

CODA STRATEGY

Coda's goal is to become the leading provider of music education services
and content for significant Internet sites that wish to attract and retain
active music makers. Throughout the 1990s Coda developed music technologies and
content designed to enhance the music-making experiences of students, teachers,
hobbyists and professionals. These Coda assets, which are currently being made
ready for Internet deployment, include the following:

- Music notation technology, used by the largest music publishers in the
world, expertly formats music notation on screen and paper and can also
deliver sheet music electronically over the Internet.

- Over 5,000 music accompaniment titles in a wide range of musical genres
and skill levels ranging from beginner to professional.

- Intelligent Accompaniment(R) technology that listens to solo vocalists or
instrumentalists and follows their spontaneous tempo changes in a manner
similar to a human accompanist.

- Pitch recognition technology that translates audio data from a microphone
into musical data in real time.

- Software synthesis technology that uses only the computer's processing
power to play music, no additional hardware or soundcards are required.

Coda is combining these technologies to create compelling online music
making and music education experiences that will be as useful and instructive as
they are fun and entertaining.

PRODUCTS

SMARTMUSIC STUDIO

The SmartMusic Studio (formerly Vivace) technology is currently offered in
a CD-ROM format, with optional hardware accessories available to enable the
technology to work on slower computers. The prototype technology upon which the
SmartMusic Studio

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<PAGE> 46

system is based was patented by Carnegie Mellon University and is licensed to
Coda. Coda then significantly enhanced the prototype technology with its own
proprietary technology and additional patented features, producing a marketable
product.

SmartMusic Studio's Intelligent Accompaniment software allows the user to
start playing at any point in a musical piece, repeat difficult-to-play
segments, change instrumentation and adjust the degree to which the
accompaniment follows the musician. In addition, the musician can control tempo
and reverb, transpose the music into any key, play with or without repeats and
designate sections of the music to cut. With a feature called "Remember Tempos,"
the system can adjust the accompaniment to handle even the most extreme
interpretation of a passage where there is little input, or few notes, from the
musician. The products also feature warm-up exercises for vocalists, the ability
to tap in-tempo changes with variations in speed, and the ability to insert
breath marks and cues to wait for a particular tone. These "variables" can be
saved with the music, creating a personally customized version of the
accompaniment.

SmartMusic Studio's Intelligent Accompaniment software is available for 17
standard band instruments, such as flutes, clarinets, saxophones, trumpets,
trombones and tubas; in 1996, it also became available for vocal applications.

SMARTMUSIC ACCOMPANIMENTS

The sale of a single SmartMusic Studio system has the ability to generate
multiple and ongoing sales of repertoire as musicians build their own library of
accompaniments. The accompaniment delivery system consists of a computer floppy
disk. The accompaniment computer floppy disk will only work with Coda's
SmartMusic Studio system and has been specially designed by Coda to protect
against illegal duplication. A typical accompaniment computer floppy disk
retails for $24.95, and usually contains more than one musical accompaniment.

Coda has entered into license agreements with top music publishers
including Hal Leonard Publishing Corporation and Warner Bros. Publications Inc.
These license agreements allow Coda to produce synthesized versions of musical
arrangements for use with the SmartMusic Studio system. Coda's royalty
arrangements range from payments of $.75 per accompaniment SKU to five percent
of the suggested retail price of the accompaniment SKU. Coda has also received
the exclusive rights from certain major publishers to all solo classical works
for voice, wind, brass, percussion, string and keyboard for the purpose of
musical accompaniment products that respond in real time to the musician.

Coda has created over 5,000 individual classical and jazz accompaniments,
which are contained on approximately 500 computer floppy disks, for its
SmartMusic Accompaniment product as well as accompaniments for the Belwin 21st
Century Elementary Band Methods I, II and III. Coda made its accompaniment
selection based on a review of the most frequently performed titles in state
academic solo contests as well as popular titles of sheet music sold at retail
outlets. These accompaniments vary in complexity from easy to challenging and
cover a broad range of musical genres for almost all band instruments and
voices. Coda intends to use its relationships with key publishers and other
sources to select the most popular titles for development as accompaniments for
SmartMusic Studio products. Further, Coda plans to expand its library of
accompaniments to cover a broad spectrum of music genres, instruments and skill
levels.

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<PAGE> 47

FINALE

Coda's Finale family of products, for use with Macintosh(R) and Windows(R)
PC operating systems, is a market leader in the music notation software product
market. Coda is a market leader in music notation software with its Finale
family of products for use with and Windows(R) PC operating systems. Music
notation software enables a musician to enter musical data into a computer using
either the computer keyboard, a MIDI equipped electronic music keyboard or other
MIDI equipped instruments and contemporaneously display the data on a computer
screen as a musical score. The dramatic improvements in speed and flexibility
provided by programs like Finale software have made such software the dominant
method for composers, arrangers, publishers and music teachers to create printed
music.

The Finale product is among those products generally recognized as one of
the most powerful and comprehensive notation software products in the world.
Finale music notation software products retail for $545. Finale software is
differentiated from other music notation software by its breadth and depth of
features, including patented capabilities such as its "hyperscribe" feature.
Hyperscribe(TM) allows users to freely play music with varying tempos via a MIDI
keyboard while the software interpolates the rhythms and accurately notates the
music in real time.

Coda offers periodic updates to its Finale products, which has resulted in
the development of a regular customer base. Coda also produces an
Academic/Theological Edition of the Finale product that is sold exclusively to
schools, schoolteachers, college students and churches at a suggested retail
price of $275. This edition has also been a key source of revenue and registered
user base growth for Coda, and it represents a market that is continually being
replenished with new student users.

In addition to English, product manuals are currently available in German,
French, Italian, Dutch and Japanese. Coda believes the international market is a
key growth opportunity as computer penetration increases worldwide.
International revenues, primarily from the sale of Finale products, represented
18.2% and 15.2% of 1999 and 1998 revenues, respectively.

FINALE ALLEGRO

Coda introduced the Finale Allegro(R) product, a value version of the
powerful Finale music notation software product, in 1993. The Finale Allegro
music notation software product retails for $199 and contains a subset of the
notation tools contained in the Finale product. Coda released Allegro 98 in
1998, the first update since the product was first developed. With extensive
MIDI capabilities, Allegro is targeted to an audience that may not read music
but needs to create "lead sheets" for other musicians, and is therefore known
as, "The MIDI User's choice for music notation." The Allegro 2000 upgrade was
introduced in February 2000, and is capable of exchanging files with both Finale
2000 and PrintMusic! 2000.

FINALE PRINTMUSIC!

Coda introduced Finale PrintMusic!(TM) for Windows, a powerful entry-level
music notation software product, in April 1999. The PrintMusic! music notation
software product retails for $69.95 and contains a subset of the notation tools
contained in the Finale and Finale Allegro products. The PrintMusic! product
allows Coda to offer an entry-level

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<PAGE> 48

product to the retail customer, thereby expanding the base of registered users
and increasing the potential for sales of notation software upgrades. Upgraded
to Finale PrintMusic! 2000 in November 1999, as a platform hybrid for Macintosh
and Windows, this product is targeted to a broader audience in the education and
general consumer marketplace.

INTONATION TRAINER

Coda introduced Intonation Trainer in February 2000 at a retail price of
$149.95. Intonation Trainer is an easy, yet powerful program that actually
teaches woodwind and brass students how to play in tune by listening for and
eliminating intonation beats within intervals and chords.

MARKETING, SALES AND DISTRIBUTION

In late 1998, Coda hired a VP of Marketing and Sales and realigned its
sales and marketing staff to present a more cohesive approach to the marketing
of all of its products.

SmartMusic Studio products are currently being sold through domestic and
international distributors. Distributors service the music instrument retailers,
college bookstore and educational software markets. Coda is also selling
SmartMusic Studio products directly on the Web and through its customer service
department. Finale products are sold through distributors, music instrument
retailers, mail order software retailers, and computer dealers. Finale upgrades
were sold on the Web for the first time in 1999.

Coda believes it can significantly build on its Finale, Finale Allegro and
Finale Print Music! software business by continuously expanding the installed
base of users and regularly providing them with upgrades, broadening retail
distribution, producing additional international versions of the products and
establishing the products as a means for electronic transmission of music. Coda
introduced Finale upgrades on both the Windows platform and Macintosh platform
in each of the last five years. Coda also introduced the first upgrade for
Finale Allegro in 1998, and introduced Finale Print Music! in 1999.

A key marketing strategy of Coda is to introduce both the SmartMusic Studio
and Finale products to students as they learn, making them more likely to
continue to make music and use the product during their lives. To improve its
position in the education market, Coda introduced a low-priced Finale Academic
Edition for students and teachers, added an on-campus direct seller network,
developed product lab packs consisting of five copies of the Finale product sold
at a reduced price per copy and in 1999 introduced site licenses, which allow
schools and universities to cost-effectively bring Finale music notation
software products into their curriculum.

Coda currently sells its products in over 30 countries around the world.
The products are distributed by leading music software distributors in each of
the international markets who are responsible for sales, marketing and technical
support.

PRODUCT DEVELOPMENT

During 1999 and 1998, Coda incurred $1,341,166 and $1,657,213 in product
development expenses. Coda intends to continue to expand its current product
offerings by developing products for new applications and markets.

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<PAGE> 49

SMARTMUSIC STUDIO

In 1999, SmartMusic Studio was given a new look and feel to its user
interface. This new look was developed not only to increase the usefulness and
attractiveness of the product, but also to make SmartMusic Studio ready to be
deployed on the Internet.

SMARTMUSIC ACCOMPANIMENTS

Accompaniment development in 1999 focused on 1) the development of
band-method music for young students published by Warner Bros., and 2) the
addition of more difficult music often used by college-level students. These
advanced titles included popular opera arias for soprano, mezzo-soprano, tenor
and baritone voices.

In the first part of 2000, development focused on accompaniments for basic
skill development exercises. These include scales, arpeggios and other technical
exercises, all of which are much more fun to practice when played with
accompaniment.

In general, Coda plans to continue adding to the existing accompaniment
catalogue, creating additional accompaniments and generally broadening the
accompaniment library to include other musical genres. SmartMusic Accompaniment
development has limited risk and short development cycles that typically range
from one month to four months. Coda has established an expertise in
accompaniment development by creating procedures to synthesize classical music
and mark-music sequences. Additionally, Coda has automated some of the process,
and developed a technical specification that is used to standardize both quality
and process. Unlike a game manufacturer, which must continually invent new
games, Coda need only look to the most popular titles in the large and growing
supply of musical compositions to develop additional SmartMusic accompaniments.

FINALE

To maintain its leadership position in the music notation marketplace, over
the past five years Coda has focused significant efforts on developing upgrades
of the Finale product for both the Macintosh and Windows platforms. Coda expects
to make annual releases of such upgrades. After an announcement of an upgrade
release, but prior to the actual release, new purchasers of a Finale product are
offered this upgrade at no charge for a limited period of time. Existing Finale
users are required to purchase the upgrade product at prices ranging from $79.95
to $149.95.

In addition, Coda will continue to explore adapting its Finale products to
allow online viewing, customizing and transmission of musical scores. Electronic
music transmission would be used by music publishers or distributors to
electronically transmit scores in Finale file format to customers who would be
able to view the music, customize it, then purchase and print the score. Coda
believes that the use of the Finale file format as the standard for electronic
music distribution may increase demand for the Finale products. Although a
product that may be used for such a purpose is not yet in commercial production,
Coda currently has a beta version of such product that is being demonstrating to
key publishers in order to obtain market feedback. Coda believes the cost of
developing a commercially viable product is within its product development
budget.

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<PAGE> 50

FINALE ALLEGRO AND PRINTMUSIC!

In 1998, Coda released the first upgrade of the Finale Allegro product. In
1999, Coda released PrintMusic!, an entry-level notation product. Both Allegro
and PrintMusic! are based on Finale.

INTONATION TRAINER

In early 2000, Coda released Intonation Trainer, a product designed to help
school band directors teach their students to play better in tune. Coda intends
to continue developing music education products with its proprietary music
technologies.

COMPETITION

Coda knows of no other musical accompaniment product similar to its
SmartMusic products other than In Concert(TM) by Cakewalk, which is an
interactive product for MIDI keyboards. Coda believes that SmartMusic products
also compete with conventional music accompaniment products by Music Minus One
by MMO Music Group, Inc. and MTS 120 by Roland Corporation. These products offer
students the ability to play along with prerecorded songs. They differ from the
SmartMusic Studio product in that they do not automatically adjust in real-time
to the musician's changes in tempo. Coda believes its SmartMusic system is
unique because this product listens to wind instruments and voice. In addition,
Coda sells accompaniments, while competitors sell only the applications.
However, there can be no assurance that competitors will not enter the market.

The notation market in which our Finale family of products competes is
highly competitive due to the presence of established competitors such as
Cakewalk and G-Vox. In addition, new products are continually being announced
and introduced by companies such as NoteHeads Musical Expert Systems and
Sibelius Software LTD.

Principal competitive factors in marketing Coda's SmartMusic and Finale
products include product features, quality, brand recognition, ease of use,
merchandising, access to distribution channels, retail shelf space and price.
However, Coda believes it competes effectively in these areas. To the extent
that competitors achieve significant advantages in performance, price or other
selling advantages, Coda could be adversely affected. There can be no assurance
that Coda will have the resources to respond to market or technological changes,
or to compete successfully in the future. Some of the companies with which Coda
may compete have significantly greater financial and other resources than Coda.
In addition, increasing competition in the music software market could cause
prices to fall, which could adversely affect Coda's business, operating results
and financial condition.

PATENTS

Coda has licensed, on a worldwide basis for the life of the patent, from
Carnegie Mellon University ("CMU") the use of the U.S. patent which covers the
automated accompaniment that listens to and follows tempo changes from a live
performance. Coda has further developed this technology and patented additional
features. Coda has obtained five patents, in addition to the CMU patent, that
protect improvements to the user control of the software, certain aspects of the
repertoire file which enhance the following capabilities of the software,
enhancements to the following algorithm, accompaniment controls and repertoire
data files and miscellaneous interface features of the product. As a

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<PAGE> 51

result of the additional patented features developed by Coda, and the ability of
Coda to develop an extensive library of repertoire over the next several years,
Coda does not believe that it will be materially adversely affected by the
expiration of the CMU patent in 2005.

Coda's Finale product is covered by three separate patents which protect
the data structure, the ability to enter music into the product by tapping tempo
with a pedal device or computer keyboard, and the method of automatically
assigning guitar fingerboards to a notated chord. These patents are licensed
from Wenger Corporation on a royalty-free, exclusive, worldwide basis for the
life of the patents.

TRADEMARKS

Coda owns the registered trademarks in the United States for Allegro(R),
Coda(R), Finale(R), Finale Allegro(R), The Art of Music Notation(R), Vivace(R),
V(R), Intelligent Accompaniment(R), SmartMusic(R), Hyperscribe(R), Intelligent
Accompanist(R) and Personal Accompanist(R). In addition, the names Coda and
Finale have been protected in some foreign countries. Coda has applied for
trademark registration in the U.S. for Practice Studio(TM), SmartMusic
Studio(TM), SmartMusic Accompaniments(TM), Quickscribe(TM), MakeMusic(TM),
Makemusic.com(TM), IntonationTrainer(TM) and Finale PrintMusic!(TM).

MANUFACTURING

Printing of user manuals and packaging and manufacture of related materials
are performed to Coda's specifications by outside subcontractors. Currently BBI
Computer Systems, Inc. ("BBI") provides key-disk protection for accompaniment
products. While BBI is not the only seller of copy disk protection, Coda has a
significant investment in incorporating their protection mechanism into the
accompaniment product inventory. No other products are vendor specific. Coda
currently uses Advanced Duplication Services, Inc. to perform standard copying
and assembling services, including copying the accompaniment floppy disks and
other product software CD-ROM disks, and assembling the product manuals, disks
and other product literature into packages.

EMPLOYEES

As of December 31, 1999, Coda employed 49 full-time employees. Of these, 12
served in the product and repertoire development area, 11 in product testing and
end user support, and 26 in administrative and sales-related activities. Coda
believes that its relations with its employees are good. None of Coda's
employees are covered by a collective bargaining agreement. In addition, Coda
relies on independent contractors to develop its repertoire. Coda has had no
difficulty contracting with these individuals and believes that its
relationships are good. Should Coda have difficulty securing the services of
such persons in the future, it could adversely affect operations.

PROPERTIES

Coda leases approximately 12,150 square feet of office and warehouse space
at 6210 Bury Drive, Eden Prairie, Minnesota 55346, for current annual net rent
of approximately $110,000. This lease expires on March 31, 2002.

LEGAL PROCEEDINGS

Coda is not a party to any material litigation and is not aware of any
threatened litigation that would have a material adverse effect on its financial
condition or results of operations.

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<PAGE> 52

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR CODA

GENERAL

Coda develops and markets proprietary music technology products that
enhance music learning and composition, increase productivity and make
practicing and performing music fun. These products include Finale, a music
notation product used by professional and amateur composers alike; Finale
Allegro, a less fully featured, value-priced version of Finale; Print Music!, an
entry-level notation product; SmartMusic Studio (previously called Vivace), an
Intelligent Accompaniment product used by musicians and vocalists to make
practice more fun and productive; and an extensive catalogue of SmartMusic
Accompaniments.

Coda acquired the Finale product on December 31, 1992 and enhanced and
marketed this product while developing Vivace accompaniment products. In June
1994, the first test markets of the Vivace product were launched with a modular
system product at a suggested retail price of $2,295. Technology advancements
enabled Coda over several stages to reduce, then eliminate expensive hardware
components. Early in 1998, the software-based product was renamed SmartMusic
Studio. Late in 1999, SmartMusic Studio was further upgraded to SmartMusic
Studio 6.0, with an updated look, and suggested retail prices of $79.95 and
$119.95, depending on features included.

Coda has historically released annual upgrades of the Finale notation
product. Finale 2000, Finale Allegro 98 and Print Music! were released in 1999.

RESULTS OF OPERATIONS

For the period ended March 31, 2000 compared to the period ended March 31, 1999.

Net Sales. Net sales of $1,803,732 for the quarter ended March 31, 2000
were $587,375 or 48% higher than for the quarter ended March 31, 1999. Of this
increase, approximately $401,000 is due to a increase in Finale(R) product
revenues. The remainder of the increase was spread among PrintMusic!(TM),
Allegro(R), SmartMusic(R) Studio and the newly introduced Intonation Trainer(TM)
sales. The Finale sales increase is due to consumer acceptance of the latest
release and what it offers to the user. When comparing total product sales of
Finale 2000 to Finale 98, sales are up 66%. The number of SmartMusic
Applications sold during the first quarter of 2000 increased 46% to 971 units,
while the number of SmartMusic Accompaniments increased 20% to 9,682 units.

Gross profit. The gross profit of $1,573,195 for the quarter ended March
31, 2000 was $517,665, or 49% higher than for the quarter ended March 31, 1999.
This increase resulted from the increased sales described above and the
improvement in gross profit margin to 87.2% in 2000 from 86.8% in 1999. The
gross profit margin improvement is attributable to mix changes and sales
increases for the higher margin Finale products.

Sales and marketing expenses. For the quarter ended March 31, 2000, sales
and marketing expenses of $598,275 were 38% higher than the quarter ended March
31, 1999. The increase is related to trade show and travel costs resulting from
the Company's attendance at more trade shows; material design costs related to
the release of Intonation trainer; higher direct mail costs related to
additional product mailings; and increased personnel costs in customer service
and post-sale technical support related to higher sales levels.

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<PAGE> 53

Product development expenses. Product development expenses of $358,501 for
the quarter ended March 31, 2000 were $5,022 or 1.4% higher than the quarter
ended March 31, 1999.

General and Administrative Expenses. General and administrative expenses of
$575,660 for the quarter ended March 31, 2000 were $13,144 or 2.3% higher than
the quarter ended March 31, 1999. Certain general and administrative increased
as a result of higher personnel costs relating to benefits and training. In
addition, professional fees, public company fees, software expenses and computer
services also reflected increases. The aforementioned increases were offset by
decreases related to expenses incurred in the exploration of E-Commerce
opportunities.

Interest Income, net. The Company had net interest income of $20,277 for
the quarter ended March 31, 2000 compared to $19,753 for the quarter ended March
31, 1999. The Company's financing is discussed further under the caption
"Liquidity and Capital Resources."

Net Income (loss). The net income of $60,035 or $.01 per basic and diluted
share income for the quarter ended March 31, 2000 is favorable to the net loss
of $275,290 or $.04 per basic and diluted share loss for the quarter ended March
31, 1999. This improvement is attributable to the changes in revenues and costs
described above.

For the year ended December 31, 1999 compared to the year ended December 31,
1998.

Net Sales. Net sales for 1999 were $6,356,136 or 1% lower than revenues for
1998. This total decrease reflects a 10% increase in Finale, Finale Allegro and
Print Music! sales, offset by a 45% decrease in SmartMusic Accompaniments and
SmartMusic Studio product and miscellaneous accessories sales. Finale 2000 sales
since product release are 20% higher than Finale 98 for the same time period.
The decrease in SmartMusic Applications and accompaniments is attributable to
smaller promotion efforts while waiting for the release of SmartMusic Studio
6.0, and difficulties in transitioning to new channels to market that include
both distributors and a direct-to-general-consumer market. Comparative
SmartMusic Studio unit sales information for the year is represented in the
table below:

<TABLE>
<CAPTION>
12/31/99 12/31/98
-------- --------
<S> <C> <C>
Applications................................................ 2,352 4,613
Accompaniments (Repertoires)................................ 19,123 24,752
</TABLE>

Gross Profit. The 6% increase in gross profit dollars between years
reflects improved gross margins and product mix changes due to Finale sale
increases and SmartMusic sale decreases. The 1999 gross profit percentage of 88%
compares favorably to the 1998 gross profit percentage of 82%.

Sales and Marketing Expenses. Sales and marketing expenses of $2,040,615
increased $342,900 or 20% compared to 1998. The principal components of this
increase include approximately $113,076 related to increased material design and
duplication costs for the development of new box designs and promotional
materials for existing and new products; $39,322 related to increased travel and
attendance at trade shows; and $179,613 related to higher personnel costs
partially due to the addition of a Vice President of Marketing and Sales late in
1998.

Product Development Expenses. Coda expensed product development costs of
$1,341,166 in 1999, a decrease of $316,047 or 19% over 1998 expenses. The
decrease is

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<PAGE> 54

related to reductions in personnel costs as a result of lower repertoire
development efforts for SmartMusic Accompaniments.

General and Administrative Expenses. General and administrative expenses of
$2,729,191 in 1999 were $794,015 or 41% greater than the amount incurred in
1998. The increase relates to $989,491 from the investment in Internet
activities, primarily consulting, offset by reductions in other general and
administrative areas including personnel, legal, director fees and travel.

Product Repositioning. In 1998, Coda developed SmartMusic Studio, a new and
renamed version of the Vivace Practice Studio(TM) product. In connection with
this introduction, Coda no longer needed to utilize some component parts.
Expenses totaling $856,000 for product returns and inventory write-offs were
incurred in 1998 relating to this product repositioning.

Interest Income, Net. Coda had net interest income of $71,645 in 1999
compared to $88,670 in 1998. The $17,025, or 19%, decrease related primarily to
lower cash balances and funds available for investment.

Net Loss. The net loss of $455,612 for 1999 is favorable compared to the
loss of $804,455 incurred in 1998, This decrease in the loss is attributable to
the changes in revenues and costs described above. Coda would have produced net
income of $533,879 without the $989,491 Internet investment costs.

INCOME TAXES

Because of net operating losses Coda has not incurred income tax expense.
For income tax reporting purposes, net operating loss carryforwards as of
December 31, 1999 were approximately $10 million, which are currently available
to offset Coda's future taxable income as of December 31, 1999. These
carryforwards begin to expire in 2005. A valuation allowance equal to the full
amount of the related deferred tax assets has been established due to the
uncertainty of its realization. The valuation allowance will be removed when
Coda believes profits are such that the deferred tax assets will be realized. If
the transaction is consummated, Coda will experience an "ownership change" for
purposes of Section 382 of the Internal Revenue Code of 1986, thereby limiting
the annual use of its net operating loss carryforwards to approximately
$1,380,000 per year.

LIQUIDITY AND CAPITAL RESOURCES

The Company has a $500,000 line of credit with a bank available to finance
its working capital requirements. Effective March 1, 2000, $250,000 of the line
was converted into a $250,000 installment note payable over three years. A
$100,000 certificate of deposit is at the borrowers facility. The borrowings
under the line of credit are limited to 75% of eligible accounts receivable plus
25% of eligible inventories, as defined, bear interest at 1% over the bank's
reference rate and are collateralized by all of the accounts receivable,
inventory and general intangibles of the Company. As of March 31, 2000 there
were no borrowings under the line of credit other than the installment note.

Net cash used in operating activities totaled $359,054 for the quarter
ended March 31, 2000 and $161,148 for the quarter ended March 31, 1999. Net cash
provided by operating activities totaled $498,567 in 1999 and net cash provided
by operating activities totaled $296,705 in 1998. In addition, the Company made
capital expenditures for furniture,

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<PAGE> 55

equipment and fixtures of $171,936 during the quarter ended March 31, 2000,
$16,012 for the quarter ended March 31, 1999, $342,526 in 1999 and $136,988 in
1998. Repertoire development costs were $24,870 in the quarter ended March 31,
2000 and $46,645 during the quarter ended March 31, 1999. The increase in such
expenditures in 1999 was due to the payment of $200,000 in 1999 in connection
with a new financial and operation software system to be installed in 2000, the
total cost of which is estimated at $450,000.

Coda anticipates that additional capital expenditures for 2000 will be
approximately $375,000. Management believes existing cash and proceeds from line
of credit borrowings, together with funds generated from the sale of products,
will be sufficient to fund its capital expenditure, product development and
working capital requirements through 2000.

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SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT OF CODA

The following table provides information as of August 1, 2000, concerning
the beneficial ownership of each person known to Coda to be the beneficial owner
of more than 5% of Coda's outstanding common stock, by each of the President and
Chief Financial Officer of Coda, by each director of Coda, and by all directors
and executive officers of Coda as a group. Unless otherwise indicated, the
shareholders listed in the table have sole voting and investment powers with
respect to the shares indicated.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
------------------- ------------------ ----------
<S> <C> <C>
Benson K. Whitney................................... 1,250,681(2) 19.7%
821 Marquette Avenue
Minneapolis, MN 55402
J.M. Hixon Partners, LLC............................ 1,158,847(3) 18.2%
821 Marquette Avenue
Minneapolis, MN 55402
Gordon F. Stofer
7601 France Avenue S. 10.7%
Minneapolis, MN 55435............................. 681,352(4)
Cherry Tree Ventures IV............................. 667,221(5) 10.5%
7601 France Avenue S.
Minneapolis, MN 55435
John W. Paulson..................................... 480,500(6) 7.6%
6210 Bury Drive
Eden Prairie, MN 55346
Mark E. Dunn........................................ 72,583(7) *
6210 Bury Drive
Eden Prairie, MN 55346
Barbara S. Remley................................... 37,500(8) *
6210 Bury Drive
Eden Prairie, MN 55346
Timothy M. Heaney................................... 28,270(9) *
614 McKinley Place N.E.
Minneapolis, MN 55413
Glenna A. Dibrell................................... 16,500(7) *
6210 Bury Drive
Eden Prairie, MN 55346
Larry A. Pape....................................... 9,600(10) *
2306 Glenhaven Drive
Highlands Ranch, CO 80126
Timothy Bajarin..................................... 8,472(7) *
901 Campisi Way
Campbell, CA 95008
All current directors and officers as a group (8 41.5%
persons).......................................... 2,639,185(11)
</TABLE>

-------------------------

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<PAGE> 57

(1) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person to acquire them as of August 1, 2000, or within sixty days of
such date are treated as outstanding only when determining the percent
owned by such individual and when determining the percent owned by a group.

(2) Includes (i) 1,000 shares issuable pursuant to a currently exercisable
warrant, (ii) 769,231 shares held by J.M. Hixon Partners, LLC ("Hixon
Partners"), (iii) 384,616 shares issuable pursuant to currently exercisable
warrants held by Hixon Partners, (iv) 5,000 shares issuable pursuant to a
currently exercisable option held by Hixon Partners, (v) 65,834 shares held
by Gideon Hixon Ventures ("Hixon Ventures") and (vi) 7,500 shares issuable
pursuant to a currently exercisable warrant held by Hixon Ventures. Mr.
Whitney, as the managing member of Hixon Partners, has sole voting and
dispositive power over the shares held by Hixon Partners, and has shared
voting and dispositive powers over the shares held by Hixon Ventures.

(3) Includes (i) 384,616 shares issuable pursuant to currently exercisable
warrants and (ii) 5,000 shares issuable pursuant to a currently exercisable
option.

(4) Includes (i) 603,759 shares held by Cherry Tree Ventures IV, of which Mr.
Stofer is a general partner, and (ii) 63,462 shares issuable pursuant to
currently exercisable warrants held by Cherry Tree Ventures IV. Mr. Stofer
disclaims beneficial ownership in the securities held by Cherry Tree
Ventures IV.

(5) Includes 63,462 shares issuable pursuant to currently exercisable warrants.

(6) Includes 180,000 shares which may be purchased upon exercise of options
which are exercisable as of August 1, 2000 or within 60 days of such date.

(7) Such shares are not outstanding but may be purchased upon exercise of
options which are exercisable as of August 1, 2000 or within 60 days of
such date.

(8) Includes 27,500 shares which may be purchased upon exercise of options
which are exercisable as of August 1, 2000 or within 60 days of such date.

(9) Includes 1,500 shares held by a trust for the benefit of Mr. Heaney's
children and 14,045 shares which may be purchased upon exercise of options
and warrants which are exercisable as of August 1, 2000 or within 60 days
of such date. Mr. Heaney disclaims beneficial ownership of the shares held
by his children's trust.

(10) Includes 300 shares held by Mr. Pape's wife and 9,000 shares which may be
purchased upon exercise of options which are exercisable as of August 1,
2000 or within 60 days of such date.

(11) Includes 692,123 shares which may be purchased upon exercise of options and
warrants which are exercisable as of August 1, 2000 or within 60 days of
such date.

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<PAGE> 58

BUSINESS OF NET4MUSIC S.A.

GENERAL

Founded in 1995 under the name "Interactive Musique Compagnie" by French
conductor Claude Poletti, Net4Music's core business is currently focused on the
marketing of quality digital sheet music. In this regard, our strategy has
allowed Net4Music to rapidly become one of the largest Internet-oriented
companies in the sheet music industry. Building upon this core competency,
Net4Music's ultimate corporate mission is to become the leading provider of a
wide array of Internet solutions enabling music publishers to adapt to the
changes in the music industry.

Today, the structure of the music industry consists of multiple segments,
including production studios, publishers, distributors and labels. Each of these
industry segments generally provide different services within the music
industry. As a result, each of these segments has already been or will likely be
affected in different manners by the Internet and e-commerce.

The role of production studios is to record and produce songs. Their role
is not expected to be significantly altered by the Internet, other than using
the Internet to identify music they select for production more rapidly.

The role of labels is to manufacture and market CDs. They represent the
largest share of revenue in the music industry. However, these revenues are
decreasing because of the proliferation of CD burners and the dissemination of
unprotected audio files on the Internet. In addition, music distribution over
the Internet is likely to be audio-streaming, which does not require the
marketing efforts traditionally deployed by the labels.

The role of distributors is to ensure that sheet music and recording
products (e.g., CDs) are made available in a variety of retail outlets and
venues throughout the world. Also, they ensure that product is positioned
correctly within these retail environments and priced appropriately.

The role of publishers is to promote the artists they represent and collect
revenues related to i) the sale of sheet music, ii) the collection of
performance rights royalties, which they can obtain from collecting
organizations such as BMI in the USA and SACEM in France, iii) the collection of
mechanical rights royalties, which they receive from labels when the labels
distribute a CD and iv) the collection of synchronization rights royalties which
are paid mostly by advertising and multi-media agencies as well as film
companies.

Net4Music has identified the sheet music industry as an inefficient market
where significant benefits will result from the use of the Internet to reshape
the traditional industry chain. The ultimate objective of Net4Music is to use
the sheet music market as a platform to develop online publishing services.

MARKET OVERVIEW

Sheet Music. The global market for sheet music is expected to be
approximately $1 billion in 2000, according to National Association of Music
Merchants. The combination of the United States, Germany, France, the United
Kingdom and Japan accounts for more than 70% of the global sheet music market.
The market has not seen growth for many years due to several reasons such as
sourcing difficulties outside the larger

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cities, the lack of availability of single piece sheet music as opposed to
songbooks and the increase in illegal copying.

Net4Music's current business focus is aimed at the online distribution of
sheet music. The sheet music product is particularly suited to such distribution
channel because of the global nature of the product (no translation is required
for scores), and significant cost-savings will result from the elimination of
printing, inventory and physical distribution and the decrease in the
dissemination of illegal copies due to online secured distribution systems. In
addition, on-line distribution will dramatically increase the availability of
sheet music, making it easy for consumers to locate and instantly purchase the
music they desire.

Net4Music estimates online sales of sheet music in 2000 at $20 million. By
2003 these sales are expected to reach $165 million, thereafter growing by 102%
per annum. Due to the Internet, single sheet music, as opposed to songbooks, is
expected to become the driving force of the sheet music market.

MIDI files. MIDI files are encoded files that store scores played by each
instrument on separate tracks. MIDI files are used with synthesizers to play,
modify or arrange existing music. They are today the most universal standard
used by professionals as well as by educational and entertainment entities. They
can be edited and do not compete with audio files such as MP3, which are "read
only" files. Most of the sales of MIDI files are achieved through retailers
using floppy disks. Due to the nature of this digital format, a rapid growth in
sales due to the on-line distribution is expected.

The market for MIDI files is expected to represent $280 million in 2000,
according to Music Trades magazine, and to grow by 12% per year through 2003
reaching $400 million for that year. Net4Music estimates online sales of MIDI
files in 2000 at $28 million. By 2003, these sales are expected to reach $80
million, thereafter growing by 58% per annum.

TRADITIONAL DISTRIBUTION OF SHEET MUSIC AND MIDI FILES IS INEFFICIENT

In the context of the physical distribution of any proprietary products,
each participant must independently manage the costs of manufacturing,
warehousing and shipping physical inventory. The physical distribution process
imposes significant time delays, geographic constraints on the delivery of
products, and retail shelf space limitations. With respect to sheet music, the
physical distribution chain starts with copying sheet music onto physical media
and inserting it to physical packaging which is then physically distributed
through a multi-party chain that eventually delivers the goods to a retail store
or a corporate reseller. In addition, these traditional methods, when applied to
the sheet music industry, pose the following specific inefficiencies:

Inventory management and limitation. Publishers have contractual
obligations with composers to ensure the availability of each piece of sheet
music for which they own the rights. The industry of sheet music retailers is
fragmented, however, and the majority of retailers are local with limited
storage capacity. Inventory management is a substantial burden for them given
the size and the fragmentation of catalogues for both sheet music and MIDI
files. As a result, the current method of distribution is inadequate, and
inventory selection is not complete.

Number of sheet music and MIDI files not available to customers given the
fragmentation of the sheet music distribution. The majority of sheet music or
MIDI files is not available in-store from retailers. As a result, when ordering
sheet music or MIDI files

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from traditional retailers, customers are generally not offered the opportunity
to look at or listen to a sample before buying the product, and often experience
delays in receiving their products.

No access to single sheet music. The marketing and sale of sheet music has
been mainly focused on selling compilations and songbooks while, on the other
hand, most customers have expressed the desire to buy on a more selective,
custom-made basis.

Delayed availability of MIDI files. The demand for MIDI files is
essentially driven by the success of recent songs and is therefore highly time
sensitive. However, the traditional distribution process takes several weeks
between the creation of a MIDI file and the availability of its package form
in-store once packaged.

Number of errors to be found in traditional sheet music. Given the high
cost of correcting errors identified once batches of sheet music have been
printed and distributed, publishers currently do not benefit from cost effective
equipment or services that would enable them to monitor corrections efficiently.

Margins do not permit significant discounts. The costs associated with the
traditional printing and distribution of sheet music consumes 85% of the total
revenues of the sheet music industry. Publishers receive only 15% of such
revenues, which they then have to share with the composers. As a result, groups
of consumers, such as choirs, music schools or orchestras, requiring many copies
of a piece of sheet music obtain limited volume discount from retail stores.

THE NET4MUSIC SOLUTION

Net4Music offers digital files to be printed by customers. The Net4Music
solution therefore replaces the entire traditional printing and distribution
chain without changing the paper end products for the users. This new approach
provides advantages to consumers, publishers and independent composers.

Value to Consumers. At present, musicians buy from traditional retailers.
However, as previously detailed, this traditional method of distribution has
many inefficiencies and drawbacks. Through the Net4Music website, musicians will
have real time, convenient access to a large digitized catalogue covering all
music genres from musicians worldwide, along with the possibility of audio and
preview sampling prior to ordering. This will provide musicians and other
consumers with instant access to digital sheet music that traditionally has been
available only in limited, print-version formats. Purchases by individual
musicians are currently estimated to comprise approximately 30% of the total
revenues generated from online sales of sheet music over the next three years.

Net4Music expects music schools and associations to represent some 40% of
the market for sheet music within the next three years. This category of
customers has been traditionally confined by the limited availability of
specialized educational material and of current pop sheet music. Orchestras must
buy sets of sheet music which often do not match the instrumentation of the
ensemble, leading to either excess, or shortage, of sheet music. Finally, few
discounts are offered to consumers buying a large quantities of the same sheet
music. Net4Music addresses the needs of groups of musicians and provides them
with customized combinations of instrumentations, ability to download in real
time a large number of titles. The Net4Music website also promotes a large
variety of educational materials. Finally, groups of musicians will have access
to special discounts for educational entities and to scaleable volume discounts.

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Value to Retailers

Retailers will continue to represent a significant channel to end-users.
Net4Music provides them with the solution to make the transition from an
inefficient paper-based inventory management system to providing a high quality
service to their customers by immediately downloading sheet music on their
behalf. Digital deliveries will represent an opportunity for the retailers to
eliminate space-consuming inventories of printed sheet music and to attract more
consumers for other music products displayed by them. Net4Music believe that
sales of sheet music through retailers will represent about 30% of the total
market by 2003.

Value to Large Music Publishers

The Net4Music solutions should enable publishers of sheet music to increase
their revenues in absolute values and as a percentage of total revenue generated
from the sheet music industry. As purchasers of sheet music increasingly
leverage the benefits of our website, publishers of music who digitize their
music selection catalogues on our website will gain access to an ever increasing
market via a common distribution channel. Not only should the increased traffic
increase the pure number of sales for publishers, they will experience reduced
costs of marketing their catalogues of titles.

Value to Independent Composers and Publishers

Net4Music offers independent composers and publishers (which generally own
small catalogues) a distribution model and online self-publication tools that
allow them to secure, distribute and promote their music or catalogue at low
set-up costs compared to traditional channels. They achieve superior economics
through revenue sharing on sales of their sheet music. Under Net4Music's sharing
arrangement, approximately 40% of net revenues generated by the sales of sheet
music will be effectively received by the composers or publishers. In addition,
the Net4Music self-publishing solution enables composers to secure and
distribute worldwide their pieces of work in as little as 24 hours after
registration. Net4Music recently launched the Self Publication functionality,
which enables independent artists or publishers to distributes their own sheet
music on the Net4Music website.

STRATEGY

Net4Music is pioneering a revolutionary approach to the publication,
promotion, and distribution of sheet music by licensing the digital distribution
of the world's largest catalogue of titles and offering associated services.
Net4Music currently receives revenues by selling via our website sheet music
from the Net4Music.com database both to consumers and to businesses, by
providing online services to musicians and from various operating alliances with
other Internet websites.

In order to strengthen its position in the music market and to become an
indispensable resource providing unique services, Net4Music has entered into
agreements with major publishers and distribution sites. Net4Music distributes
digitized sheet music from more than 340 publishers through long-term license
agreements. Net4Music has recently entered into two significant agreements with
international publishers:

- EMI Music Publishing, which owns the world's largest music catalogue.
Through various agreements entered into between the two companies,
Net4Music has gained

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full access to EMI's entire catalogue in order to distribute and sell
online to consumers digitized sheet music engraved by Net4Music for EMI.
These long-term agreements are non-exclusive. This is a major
accomplishment for Net4Music as this is the first time that an
international publisher has granted access to its catalogue to a unique
distribution website which can deliver to the world market song lyrics
electronically in five languages. The arrangements are structured so that
out of every 1,000 titles added to the site, 600 are to be culled from
best-selling songs, with 400 other titles to be selected, 200 each, by
EMI and Net4Music. Net4Music will make at least 100,000 EMI titles
available on its website, the titles of which account for about 90% of
EMI's annual revenue. Net4Music believes this precedent will encourage
additional publishers to enter into similar agreements with Net4Music,
helping it rapidly solidify a leadership position. This agreement gives
Net4Music access to a catalogue of more than one million titles for
online sales.

- Schott, which is based in Germany, is one of the world's largest
publishers of classical music. Under this exclusive agreement, Net4Music
will engrave and distribute digitized sheet music from Schott's best
catalogue, strengthening Net4Music's leadership in the arena of online
distribution of classical sheet music.

Net4Music is now in a position to offer titles from all music genres, and
its objective is to support the distribution of sheet music through license
agreements with local and specialized publishers such as Symphony Land and Uncle
Jazz in Europe and Lorenz Corporation and Cafe soul Brazil in the Americas.

Net4Music has also entered into agreements with independent composers and
publishers, such as Alain Souchon, a famous French popular composer, thus
offering the artist the opportunity to promote the totality of his musical
creations. As a result of this agreement, his fans now have direct access from
his website, created in November 1999, to his sheet music stored and distributed
by Net4Music.

PRODUCTS AND SERVICES

Net4Music has quickly become one of the largest Internet-oriented companies
in the sheet music industry. Since its inception, it has developed the following
products and services:

- NET4MUSIC.COM. An extensive and fully operational website launched on
December 1, 1999 offering customer interaction in five languages (French,
English, Spanish, German and Italian) and 22 currencies, editorial
content and a musicians directory.

- PARTITOR.COM. An independent and complementary website focused on mail
order distribution, which has been fully operational since its inception
in 1998 and has been integrated with Net4Music after the transaction of
Net4Music's European competitor, Informusique, in October 1999.

- DIGITAL COPYRIGHT PROTECTION SYSTEM. A proprietary technology developed
to create a Digital Right Management ("DRM") system capable of enhancing
copyright protection. With respect to the DRM, Net4Music has two pending
applications for patent for "System and process for the digital musical
files publishing" as well as two other applications with the Institut
National de la Propriete Intellectuelle and the U.S. Patent and Trademark
Office, respectively, for "Process for the remote publishing of musical
scores".

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- LARGE DATABASE OF DIGITIZED SHEET MUSIC. Net4Music's database is one of
the world's largest with respect to digitized sheet music, including
music from all genres. The music skills of the Net4Music team ensure the
quality of both the sheet music and the selection of titles.

- THE GUTENBERG SERVICE. A standardized process based on detailed
proprietary specifications for automated input to Net4Music's large
database of digital sheet music including the Net4Music engraving
facility with a staff of 70 in Madagascar.

- LINKS TO NET4MUSIC.COM. Other major websites in the music industry, such
as MP3.com, FNAC.com and Music123.com, provide links to Net4Music's
website. Efficient referencing systems have been implemented through
major search engines and Internet portals to enable customers to find the
Net4Music website easily and rapidly when searching for sheet music.

- MEMBERSHIP. Each customer benefits from a membership which enables him
or her to monitor in a web-enabled manner his or her personal data, his
or her public information entered in the directory, his or her wallet,
and his or her purchase and self-publication history.

- TECHNOLOGY INFRASTRUCTURE. The Net4Music website uses middle-range
industry standard Sun machines under the Solaris operating system. For
middleware, its systems use the Oracle Application Server to communicate
and ensure infrastructure scalability. Net4Music can relatively easily
add new machines as traffic increases, or as it adds new functionalities.
The systems in place use less than 10% of existing capacity with over
10,000 visits a day and 50 concurrent users. Net4Music data are stored
exclusively in Oracle 8i databases, which is one of the latest versions
of Oracle formal (PDF). Net4Music's DRM system has been written in the
well known C++ language. All these technological choices place Net4Music
at an advantage in a highly time-sensitive market since Net4Music will
not have to redesign its architecture or switch to more powerful
platforms to handle a large growth in traffic and download.

- SECURE WEBSITE. Net4Music's website is hosted by UUNet, one of the
global market leaders of web-hosting and connectivity, which puts
Net4Music directly on the largest Internet Backbone and provides total
bandwidth scalability. Net4Music system administrators use an external
real time supervision system that sends SMS messages in the event of any
failure of Net4Music's front office systems. All disks use fault tolerant
RAID 5 technology and daily back-ups are operated with tape and CD-ROM
kept in multiple locations.

- THE PRODUCT STORE. Through the product store, musicians can search
products by key words, instruments, music genres, composers or artists
and publishers. A sample of each product can be previewed before
purchase. For such purposes, Net4Music has built an infrastructure which
should enable it to service a substantial growth of its site activities
adequately and to ensure the best available copyright protection for the
musicians and publishers. The site replies very rapidly to questions and
searches.

- EDITORIAL CONTENT. Net4Music's website offers users interactive
editorial, written by musicians and validated by a team of in-house
journalists located in France and in the United States as well as several
correspondents around the world. It targets the largest community of
musicians (amateurs and professionals) and is currently

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available in five languages. In conjunction with its writing team, the
editorial service offers users the opportunity to express themselves
about their musical experience, their knowledge, etc. A large portion of
the editorial services is devoted to education and offers several online
courses made by highly experienced musicians. Among the services
available in the editorial service are interviews and clinics held by
musicians, monthly special features, comments on sheet music and MIDI
files; comments and tips provided by users and information on music
events.

- THE DIRECTORY. Net4Music has implemented a directory for musicians on
its website. In its directory, users can identify and promote themselves
(teachers, independent publishers, music schools, DJs, stores, etc.)
through a web page and can be located through a search engine. They can
link this page to their own site or to their sheet music on Net4Music's
website. They can also earn discounts related to the group to which they
belong: retailer, teacher, etc.

- THE ELECTRONIC WALLET. In addition to the Kleline technology, the site
features proprietary secured micro-payment using most usual credit cards
and an "electronic wallet". This wallet can be loaded using credit cards,
bank checks or money orders and cash payments. Purchasing can be done in
such a way that volume discounts are automatically granted for the
purchase of multiple copies of the same score (e.g., for student groups).
Payments must be made prior to downloading and printing.

In March 2000, visitors to Net4Music's website viewed over 1,000,000 web
pages and downloaded over 1,000 units of sheet music. Net4Music estimates that
more than 6,000 consumers per day on average visit its website.

The Net4Music website currently contains over 40,000 titles from all music
genres, which represents the largest collection of digital sheet music available
on the Internet. Net4Music will continue to expand rapidly its catalogue by
seeking to add to its database more than 10,000 new titles per month on average.
Net4Music has developed from inception the required technology infrastructure to
support such a rapid growth both in terms of production and file warehousing.
Net4Music considers such a rich and diversified offering as a key factor to
success.

Net4Music ultimately wants to create a community where any artist can
publish, promote and distribute in real time to an audience of millions.
Net4Music aims at offering standards to the sheet music industry in terms of the
engraving process, online sheet music catalogues and search engines, and
dedicated DRM protection technologies to ensure copyright protection.

Net4Music is planning to complete a worldwide organization to be able to
meet and maximize market demand. It has already established offices in Europe,
the United States and Japan and its website offers services and products in five
languages with payments in 22 currencies. In addition, Net4Music also intends to
continue to launch new innovative products and services to meet the electronic
commerce, publishing, communications, education and information needs of its
customers.

AGREEMENTS WITH INTERNET DISTRIBUTION SITES

In order to effectively brand its product and ensure a steady increase of
traffic to its website, Net4Music has negotiated various agreements with major
players and content providers on the Internet. To date, Net4Music has entered
into an agreement with

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www.fnac.com, the largest French online retailer for musical and cultural
products, and has a link with fnac.com entitling any customer buying CDs from
www.fnac.com to buy the related sheet music from Net4Music.com.

Net4Music has also negotiated similar agreements with U.S. online retailers
like Music 123 (musical instruments) and TWEC (largest music/video retailer in
the U.S.), School Music, Pearson Music, ProMusicFind, and MusicWares. By
establishing a presence in this area, Net4Music will accelerate its global
market penetration.

PARTNERSHIPS WITH MUSIC ASSOCIATIONS

Through such partnerships, Net4Music intends to increase its brand
awareness with the communities of musicians. Among others, Net4Music has entered
into alliances with the International Music Council of UNESCO, whose mission is
to help the promotion of musicians and composers around the world, the European
Music Competition for Youth (EMCY), the German association responsible for the
organization of music competitions on the behalf of over 4 million associations
and organizations, and Promusicis, the foundation of father Pierre MERLET, the
mission of which is to promote young talents who will in return organize musical
events within prisons, hospitals and schools.

COMPETITION

Net4Music currently competes with a few other specialized online sheet
music publication companies. With respect to the market for online sheet music
distribution, competition comes from a limited number of music websites and
traditional distributors, which currently partner with retailers or publishers.
Today, approximately 100 websites offer sheet music in hard copy sold by mail
order. Most of them have less than 20,000 titles in their catalogues as opposed
to www.partitor.com, the Net4Music mail order website that featured more than
150,000 titles as of May 2000. Only a few of these websites have been endorsed
by the music industry and recognized by publishers as having the capacity to
ensure secured digital downloads. Further, most of their catalogues are often in
the public domain.

With respect to the market for the preparation, enhancement and secure
distribution of digital sheet music, companies that are currently in similar or
potentially competing business are United States companies including:

- SUNHAWK. Quoted on The Nasdaq Stock Market, Sunhawk has positioned
itself as a provider of a digital rights management system that allows
Internet users to download copyrighted material such as film, music,
photographic images, and software for which the owners charge a fee. This
technology relies on the "Solero" viewer provided by Sunhawk, and the
associated proprietary format.

- SHEET MUSIC DIRECT. The website is affiliated with sheet music
distributors Hal Leonard Publishing Corporation and Music Sales
Corporation. Sheet Music Direct has developed an Internet-based,
purchase-on-demand delivery system for digital sheet music.

The market for sheet music publication is dominated by three major
companies (Hal Leonard, Music Sales, Warner Publications, a Warner Publishing
affiliate). In addition, mid-sized publishers often have in-house publication
services. These companies sell to

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wholesalers which in turn supply retailers. Some of them have initiated online
sheet music distribution. However, the proposed solutions are based mostly on
mail-order.

Net4Music believes that it has established a variety of competitive
advantages which will discourage others from competing effectively in the
business of online sales and distribution of digital sheet music over the
Internet. These advantages include: technologies for encrypting and managing the
rights to digital content under a standard format developed by Net4Music; a
digital production process designed to create what could become the largest
digital sheet music catalogue available; a method of digital distribution which
has been adopted by major international publishers (Net4Music has developed a
plug-in that enables a fast and secure download); a fully operational,
multi-lingual and multi-currency website; and a community of musicians through
its website's directory and editorial content features.

EMPLOYEES

As of December 31, 1999, Net4Music employed 179 employees, including 6 in
management positions, 15 in sales and marketing, 13 in product development, 39
in engraving activities through a subsidiary located in Madagascar and 6 in
general administration.

LEGAL PROCEEDINGS

Net4Music is not a party to any material litigation and is not aware of any
threatened litigation that would have a material adverse effect on its financial
condition or results of operations.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF NET4MUSIC S.A.

OVERVIEW

Net4Music is an online music company that connects musicians worldwide and
provides them with various products and services. Through an extensive website
(www.net4music.com), Net4Music offers musicians interaction in five languages,
secured download of sheet music and MIDI files available through purchase in 22
currencies, editorial content, musicians directory and self-publication
opportunities.

Net4Music was organized as a French company in December 1994 under the name
Interactive Musique Compagnie and started its activities by selling digital
sheet music through proprietary kiosks. Operations were conducted in Europe
through two wholly-owned subsidiaries (Euro Music System and Music Writer
Europe).

In early 1999, Net4Music decided to refocus its strategy toward the
Internet and secured a first round of financing from European venture
capitalists and banks. The two French subsidiaries (Euro Music System and Music
Writer Europe) were integrated and a subsidiary (Net4Music Inc.) was
incorporated in the United States to form a new structure renamed Net4Music S.A.
During 1999, operations consisted principally of developing the business model,
developing and patenting the technology, establishing international operations
for the production of digital sheet music, negotiating licensing agreements with
major publishers and developing the net4music.com website.

In October 1999, Net4Music conducted a second round of financing to sustain
its operating costs and promote its activity. In 1999, Net4Music also acquired
the assets of its main European competitor Informusique, providing Net4Music
with: the operation of the website partitor.com (selling digital and hard sheet
music); a production facility based in Madagascar (Notmad); and several
licensing agreements.

In December 1999, Net4Music launched a first version of its website with
the largest database of sheet music available online (30,000 titles). Since
then, Net4Music has enhanced the stability and the performance of its website,
signed contracts with major publishers such as EMI, developed new features
(worldwide directory for musicians, self-publication among others) and improved
its production capacities.

Net4Music is today a global company with two offices in France, a
subsidiary in the United States, a subsidiary in Madagascar (Notmad) and a sales
representative in Tokyo.

RESULTS OF OPERATIONS

For the year ended December 31, 1999 compared to the year ended December 31,
1998

Revenues. Revenues decreased 74.0% in 1999 to $299 thousand from $1.15
million in 1998. Interactive kiosk revenue (which includes the sales of prepaid
cards and kiosk rentals) decreased by 75.0% in 1999 to $176 thousand from $706
thousand in 1998. Engraving services, consisting of the digitalization of sheet
music for publishers and artists, decreased by 66.1% to $97 thousand in 1999
from $286 thousand in 1998. Other revenue decreased by 83.6% to $26 thousand in
1999 from $159 thousand in 1998. The revenue decrease was mainly attributable to
lower revenue from interactive kiosk revenue due to the decision of the
management to discontinue the kiosk activity and to focus on an

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Internet strategy. Revenues from the new Internet strategy had not yet commenced
in 1999.

Gross Profit (Loss). Net4Music's gross profit decreased by $955 thousand
to a loss of $279 thousand in 1999 from gross profit of $676 in 1998. The main
reason for the change was due to significantly lower revenue in 1999 versus 1998
and an increase in cost of sales by 21.7% to $578 thousand in 1999 from $475
thousand in 1998.

Website Development. Website development expenses amounted to $386
thousand in 1999 and no expenditures in 1998. This reflects the change of
direction for Net4Music in 1999 when it decided to start focusing on the
Internet. Website development expense consists primarily of expenses required to
design and develop the Net4Music website and underlying technology
infrastructure. These expenses mainly include payments to third party service
vendors and personnel costs.

Content Development. Content development expenses increased 10.3% to $310
thousand in 1999 from $281 thousand in 1998. The majority of the increase
resulted from increases in payroll and payments to a third party for the
engraving of digital sheet music.

Selling and Marketing Expenses. Selling and marketing expenses increased
by approximately $1.1 million to approximately $1.2 million in 1999 from $40
thousand in 1998. The increase in selling and marketing expenses was primarily
due to higher costs of marketing, advertising and promotion expenses to promote
the Net4Music website and increased payroll and related expenses associated with
the employment of additional staff engaged in advertising, sales, business
development, marketing and customer service activities.

General and Administrative Expenses. General and administrative expenses
increased 421.1% to approximately $2.4 million in 1999 from $454 thousand in
1998. The increase consists primarily of payroll and related expenses for
executive and administrative personnel, professional services expenses relating
to financing activities, increased facilities expenses due to expansion related
to implementation of Net4Music's Internet strategy and other general corporate
expenses.

Restructuring Charges. The Net4Music recognized a net expense of
approximately $1.2 million for restructuring charges following the strategic
decision taken by its management to discontinue the kiosk activity in 1999.
Restructuring charges consisted primarily of the write-off of capitalized leased
interactive kiosks (approximately $816 thousand) and related development costs
along with accrued interest on lease contracts (approximately $93 thousand).

Interest Income and Expense. Net interest expense increased by $25
thousand to $108 thousand in 1999 from $83 thousand in 1998. Interest income
consists of earnings on cash and cash equivalents. Interest expense consists of
interest associated with short-term borrowing.

Foreign Exchange Loss. Net4Music has international operations and in 1999
it recognized a foreign exchange loss of approximately one thousand U.S.
dollars.

Income Tax. Because of net operating losses, Net4Music was only required
to pay the minimum tax payment required by French law of seven thousand U.S.
dollars in 1999 and two thousand U.S. dollars in 1998.

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Liquidity and Capital Resources. From its inception in December 1994
through March 1999, Net4Music financed its operations and growth entirely from
internally generated cash flow, bank loans, a debenture loan and capital
contributions from its founders. Since March 1999 when it started its Internet
operations, Net4Music raised $9.2 million through private sales of securities,
including the sale of $3.3 million of common shares in March 1999 and the sale
of $5.9 million of Series A preferred shares in December 1999.

Net cash used in operating activities totaled $3.8 million for the year
ended December 31, 1999 compared to net cash provided by operating activities of
$106 thousand for 1998. Net cash used in operating activities for the year 1999
consisted of losses, increases in other current assets and prepaid expenses,
partially offset by increases of depreciation and amortization of property and
equipment that amounted to $1.3 million that was associated with Net4Music's
decision to exit its kiosk business.

Net cash used in investing activities was $1.2 million for the year ended
December 31, 1999 and $140 thousand for the year ended December 31, 1998. Net
cash used in investing activities for the year ended December 31, 1999 consisted
primarily of purchases of computer equipment and systems.

Net cash provided by financing activities was $9.0 million for the year
ended December 31, 1999 compared to net cash used in financing activities of
$118 thousand for the year ended December 31, 1998, primarily consisting of cash
proceeds from the issuance of securities for an aggregate amount of $9.2 million
as described above, partially offset by a net decrease in financial debt of
approximately $200 thousand, compared to net cash used in financing activities
of $118 thousand for the year ended December 31, 1998.

As of December 31, 1999, Net4Music had in cash or cash equivalents $4.1
million. Net4Music currently anticipates that its available cash resources,
including a capital increase of 5,706,150 Series B preferred shares at FF 20 per
share, equal to approximately $17 million and which was completed on May 15,
2000, will be sufficient to meet its anticipated cash needs for working capital
and capital expenditures for the next 12 months.

MANAGEMENT OF NET4MUSIC INC. FOLLOWING THE TRANSACTION

The names and ages of the persons who will be the executive officers and
directors of consolidated company after the transaction and the positions and
offices they will hold are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Claude Poletti...................... 50 Chairman of the Board
Francois Duliege.................... 43 Chief Executive Officer and Director
President of Coda Division and
John W. Paulson..................... 52 Director
Chief Financial Officer, Treasurer
Barbara S. Remley................... 48 and Secretary
William Avery....................... 51 Director
Timothy Bajarin..................... 50 Director
Benoist Grossmann................... 40 Director
Patrick Revenu...................... 53 Director
Martin Velasco...................... 46 Director
Benson K. Whitney................... 43 Director
</TABLE>

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<PAGE> 70

CLAUDE POLETTI created IMC in 1995 in order to perform digital engraving
and distribution of sheet music as well as to develop digital products and
services for musicians. IMC became Net4Music in May 1999, when the Company was
redirected towards an Internet strategy. Mr. Poletti holds several first prizes
from Conservatoire National Superieur de Musique. He also won first prize of
French broadcast, 1964. For 20 years, he headed several National Music
Academies, and for four years he was President of the National Association of
Music Academies. Mr. Poletti was a member of a team created by the French
Minister of Industry, responsible for development of the music industry. He is
the current conductor of a chamber orchestra, as well as an active organist. Mr.
Poletti is also Director of the Chamber Music Festival of Tyrol (Austria).

FRANCOIS DULIEGE joined Net4Music in March 1999. Prior to joining
Net4Music, held several international positions with information technology
companies. After 12 years at Computervision, where his last assignment was
Worldwide Vice President for the PC Business Unit, he became Vice President and
General Manager of Europe, Middle East and Africa for UB Networks. He then
joined Nat Systems as President of Worldwide Operations. Mr. Duliege graduated
from Institut National de Sciences Appliquees and holds an MBA from Centre
d'Etude Supevieur de Management.

JOHN W. PAULSON has been Chief Executive Officer and Chairman of the Board
of Directors of Coda since December 1990. From 1982 to 1990, Mr. Paulson was
Chairman of Springboard Software, Inc., a publicly held company he founded to
develop and market educational and consumer software products. Springboard was
subsequently purchased by Spinnaker Software Corp. Prior to founding
Springboard, Mr. Paulson was a public school music teacher for nine years during
which time he taught band, keyboard and electronic music classes. He has a
Master of Arts in Music Education from the Eastman School of Music, is a
published composer, and has performed as a professional musician for over ten
years. Mr. Paulson has served on the Board of Directors of the National
Association of Music Merchants ("NAMM") and the St. Paul Chamber Orchestra.

BARBARA S. REMLEY has been Chief Financial Officer of Coda since May 1998.
In 1997 and 1998 Ms. Remley consulted for various entities. From 1992 to 1997,
Ms. Remley held various titles including President, Chief Operating Officer and
Chief Financial Officer of Garment Graphics, Inc., a designer, marketer and
distributor of licensed sports apparel, which filed a Chapter 11 bankruptcy
proceeding in 1997 and was subsequently converted to a Chapter 7 liquidation
proceeding. She also has ten years of public accounting experience with Ernst &
Young (formerly Ernst & Ernst).

WILLIAM AVERY became a director of Net4Music in October 1999. He is the
managing partner of FG II, a private equity venture capital fund with offices in
Greenwich, Connecticut, San Francisco, California and Oxford, England. Prior to
joining FG II, he was employed at CUC International until its merger in 1997
with HFS Inc (now known as Cendent). While at CUC, Mr. Avery held the positions
of Executive Vice President of sales and marketing for CUC's largest division
and President of CUC's international division based in England. Mr. Avery has a
degree in English and Spanish from Franklin and Marshall College. He is Chairman
of Missionfish.com and a board member of Recollections, a photography publishing
company based in New York.

TIMOTHY BAJARIN has been a director of Coda since April 2000. He is a
well-known computer industry consultant and President of Creative Strategies
Inc. Mr. Bajarin has been with Creative Strategies since 1981 and has been a
consultant to most of the leading hardware and software vendors in the industry
including IBM, Apple, Xerox, Compaq,

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Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others. His
articles and/or analyses have appeared in most of the leading business and
trading publications and he has appeared on national television programs as a
business analyst commenting on the computer industry and is a frequent guest on
PBS' The Computer Chronicles. Mr. Bajarin has been a columnist for many U.S. and
international computer industry publications such as PC Week, Computer Reseller
News, Asia Computer Weekly and Personal Computer World.

BENOIST GROSSMANN has been a director of Net4Music since March 1999. He is
currently a partner in Viventures, the private equity capital fund of the French
group Vivendi. Mr. Grossmann began his career at EDF, the National French
Electricity Company, where he conducted research on new laser sources. He then
spent six years at NASA as project manager of a space-borne laser system. After
his return to France, Mr. Grossmann worked three years for Thomson-CSF in the
Optronics Division. In 1993, he joined the Financiere de Brienne (risk capital
group in Paris) where he managed several early-stage information technology
investments in France and in the United States. Mr. Grossmann received his Ph.D.
in Physics from the University of Paris VI and his MBA from the Institut d'Etude
Politique in Paris.

PATRICK REVENU became a director of Net4Music in March 1999. He is
currently the managing partner in PLS Venture Capital Partners, a private equity
capital fund based in Paris and Lyon, and affiliated with Avenir Finance
Partners. The first ten years of his career were devoted to research,
development and management relating to new technologies and processing. Mr.
Revenu then spent four years, from 1977 to 1981, in the Pechiney group focusing
on research and production, and three years as director of robotic processing in
ASEA. Thereafter, from 1984 to 1987, he was technical director at ISOROY. Over
the next five years, Mr. Revenu served as director in several French and other
European firms. He founded InnovaFrance in 1997. He is a civil engineer and is a
graduate of the Center of Improvement in Business.

MARTIN VELASCO has been a director of Net4Music since July 2000. He is an
international entrepreneur with extensive experience in the electronic
communications industry combining the experience of large international
companies with high-tech start-ups. He has been a board member of Telefonica SA,
the leading telecommunications services company in the Spanish and Portuguese
regions of the world; several start-ups in Europe, the United States and the
Asia-Pacific region, including Atlantech Technologies, Audiosoft, EoExchange,
Lysis, MobileChannel.Network, Comm.com, Brain Diagnostic Network and
HealthCenter.com; and several venture and investment funds, including Genevest
Consulting S.A. and Sequoia Investments Ltd., and trans-atlantic business
organizations. Mr. Velasco was also the founder and chairman of the charity
foundation Infantia, financed by venture capital, and the co-leader of the
McKinsey worldwide telecommunication group. Mr. Velasco was previously the
co-leader of the McKinsey worldwide telecommunication group. He holds an
engineering degree in electronics and a postgraduate degree in computer science
from the Ecole Polytechnique Federale de Lausanne in Lausanne and an MBA from
Institut Europeen d'Administration des Affaires.

BENSON K. WHITNEY has been a director of Coda since May 1997. Mr. Whitney
is the managing general partner of the Gideon Hixon Fund, a private venture
capital partnership. He also serves as Vice President and Chief Executive
Officer of Whitney Management Co., a family management company. In these
positions he has been involved in numerous early-stage investments and serves on
several boards of directors. He formerly practiced

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law with Popham, Haik, Schnobrich & Kaufman, specializing in regulated
industries such as medical services companies and cable television.

SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
OF NET4MUSIC INC. FOLLOWING THE TRANSACTION (PRO FORMA)

The following table provides information concerning the anticipated
beneficial ownership, immediately following completion of Coda's proposed
transaction with Net4Music, of outstanding common stock of the consolidated
company by (i) each person anticipated to be the beneficial owner of more than
5% of the outstanding common stock of the consolidated company, (ii) by each
anticipated director and executive officer of the consolidated company, and
(iii) by all anticipated directors and executive officers as a group. The
information assumes that: (i) the conversion ratio is .78 and that Coda will
issue approximately 16,565,075 shares of its common stock to consummate the
transaction, and (ii) no directors or executive officers purchase or sell any
Coda common stock from March 31, 2000 through the date when the transaction is
completed. Unless otherwise indicated, the shareholders listed in the table have
sole voting and investment powers with respect to the shares indicated.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
------------------- ------------------ ----------
<S> <C> <C>
Claude Poletti(2)................................. 1,040,832 5.8%
13, rue Etienne Delorme
65160 Tassin la Demi Lune
France
Francois Duliege(3)............................... 686,712 3.7%
29 bis avenue du Chateau
94170 Le Perreux
France
John W. Paulson(4)................................ 480,500 2.7%
6210 Bury Drive
Eden Prairie, MN 55346
Barbara S. Remley................................. 37,500 *
6210 Bury Drive
Eden Prairie, MN 55346
William Avery(6).................................. 390,000 2.2%
20 Dayton Avenue
Greenwich, CT 06830
Timothy Bajarin(7)................................ 8,472 *
901 Campisi Way
Campbell, CA 95008
Benoist Grossmann(8).............................. 2,833,873 15.9%
1, place Carpeaux
92915 La Defense
France
</TABLE>

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<PAGE> 73

<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS(1)
------------------- ------------------ ----------
<S> <C> <C>
Patrick Revenu(9)................................. 1,836,157 10.3%
24, chemin Neuf
69570 Dardilly
France
Martin Velasco(10)................................ 533,391 3.0%
Place du marche 1
1260 Nyon
Switzerland
Benson K. Whitney(11)............................. 1,250,681 6.9%
821 Marquette Avenue
Minneapolis, MN 55402
J.M. Hixon Partners(12)........................... 1,158,847 6.4%
821 Marquette Avenue
Minneapolis, MN 55402
Viventures FCPR................................... 2,865,766 15.9%
1, place Carpeaux
92915 La Defense
France
All directors and officers as a group
(10 persons)(13)................................ 9,098,118 45.1%
</TABLE>

-------------------------
* Less than 1%.

(2) Such shares are not outstanding but may be purchased upon exercise of his
rights under the Put and Call Agreement, which rights are exercisable as of
the closing of the transaction.

(3) Such shares are not outstanding but may be purchased upon exercise of his
rights under the Put and Call Agreement, which are exercisable as of the
closing of the transaction.

(4) Includes 180,000 shares which may be purchased upon exercise of options
which are exercisable as of August 1, 2000 or within 60 days of such date.

(5) Includes 27,500 shares which may be purchased upon exercise of options
which are exercisable as of August 1, 2000 or within 60 days of such date.

(6) Represents shares held by FG II, of which Mr. Avery is the managing
partner.

(7) Such shares are not outstanding but may be purchased upon exercise of
options which are exercisable as of August 1, 2000 or within 60 days of
such date.

(8) Includes 78 shares held by Viventures and 2,833,795 shares held by
Viventures FCPR. Mr. Grossmann is a partner in these venture funds. Mr.
Grossmann disclaims beneficial ownership of such shares.

(9) Includes (i) 78 shares held by PLS Ventures, (ii) 942,084 shares held by
InnovaFrance FCPI, (iii) 479,647 shares held by InnovaFrance 99 FCPI and
(iv) 414,348 shares held by Avenir Finance Partners. Mr. Revenu is the
managing
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partner of PLS Ventures and is affiliated with InnovaFrance and Avenir
Finance Partners. Mr. Revenu disclaims beneficial ownership in the shares
held by PLS Ventures, InnovaFrance and Avenir Finance Partners.

(10) Includes (i) 31,200 shares which may be purchased upon exercise of options
that are exercisable as of August 1, 2000 or within 60 days of such date,
(ii) 167,397 shares held by Genevest Consulting S.A., of which Mr. Velasco
is a director and (iii) 334,794 shares held by Sequoia Investments Ltd.,
of which he is an affiliate. Mr. Velasco disclaims beneficial ownership in
the shares held by Genevest Consulting S.A. and Sequoia Investments Ltd.

(11) Includes (i) 1,000 shares issuable pursuant to a currently exercisable
warrant, (ii) 769,231 shares held by J.M. Hixon Partners, LLC ("Hixon
Partners"), (iii) 384,616 shares issuable pursuant to currently exercisable
warrants held by Hixon Partners, (iv) 5,000 shares issuable pursuant to a
currently exercisable option held by Hixon Partners, (v) 65,834 shares held
by Gideon Hixon Ventures ("Hixon Ventures") and (vi) 7,500 shares issuable
pursuant to a currently exercisable warrant held by Hixon Ventures. Mr.
Whitney, as the managing member of Hixon Partners, has sole voting and
dispositive power over the shares held by Hixon Partners, and has shared
voting and dispositive powers over the shares held by Hixon Ventures.

(12) Includes (i) 384,616 shares issuable pursuant to currently exercisable
warrants and (ii) 5,000 shares issuable pursuant to a currently exercisable
option.

(13) Includes 2,372,832 shares which may be purchased upon exercise of options,
warrants or rights under the Put and Call Agreement that are exercisable as
of August 1, 2000, within 60 days of such date or of the closing of the
transaction.

DESCRIPTION OF CODA CAPITAL STOCK

GENERAL

Subject to the vote of the Coda shareholders on Proposal #1 above, Coda's
Articles of Incorporation will authorize the issuance of 50,000,000 shares of
common stock, without par value, and 15,000,000 undesignated shares, without par
value.

COMMON STOCK

General. As of [record date], shares of common stock were issued and
outstanding. No share of common stock is entitled to preference over any other
share and each such share is equal to other shares of common stock in all
respects. In any distribution of assets, whether voluntary or involuntary,
holders of common stock are entitled to receive pro rata the assets remaining
after creditors and holders, if any, of stock with a liquidation preference have
been paid in full.

Voting. Common shareholders are entitled to one vote for each share held of
record on each matter submitted to a vote of the common shareholders.

Dividends, Distributions and Redemptions. Subject to the preferential
dividend rights of any subsequent classes or series of stock with such rights
and preferences superior to the common stock as Coda's board of directors may
designate, the common stock shareholders are entitled to receive dividends as
and when declared by Coda's board of directors. However, dividends on Coda's
common stock are not contemplated in the foreseeable future. Under the Minnesota
Business Corporation Act (the "MBCA"), Coda may declare
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and pay dividends on the common stock only if it will be able to pay its debts
in the ordinary course of business after making the distribution. In addition,
Coda's bank line of credit prohibits the payment of dividends without prior
approval of the lender.

If Coda were liquidated, its common shareholders would be entitled to
receive, pro rata, all assets available for distribution to them after
satisfaction of Coda's liabilities and any payment applicable to any preferred
stock then outstanding.

No Cumulative Voting. Coda's Articles of Incorporation provide that
shareholders will not have cumulative voting rights in the electing of
directors. Under cumulative voting, a shareholder could cast that number of
votes in favor of one candidate or among several candidates equal to such
shareholder's shares multiplied by the number of directors to be elected.
Cumulative voting makes it possible for less than a majority of the shareholders
to elect one or more members of the board of directors. Without cumulative
voting, a majority of the voting power of the shareholders entitled to vote can
elect the entire board of directors.

No Preemptive Rights. Coda's Articles of Incorporation provide that
shareholders will not have any preemptive rights to subscribe for or purchase
additional shares of capital stock. This means that Coda's shareholders will not
be entitled to acquire a certain fraction of the unissued securities or rights
to purchase Coda securities before Coda may offer them to other persons.
Preemptive rights enable a shareholder to maintain the shareholder's
proportional voting power and proportional rights to receive dividends and other
distributions by Coda.

LIMITATION OF DIRECTOR LIABILITY; INDEMNIFICATION

The MBCA permits Minnesota corporations, in their Articles of
Incorporation, to limit or eliminate the personal liability of directors to
corporations and their shareholders for monetary damages for breach of
directors' fiduciary duty of care. The duty of care requires that, when acting
on behalf of a corporation, directors must exercise an informed business
judgment based on all material information reasonably available to them. Absent
the limitations authorized by the MBCA, directors are accountable to
corporations and their shareholders for monetary damages for conduct
constituting gross negligence in the exercise of their duty of care. Although
the MBCA provision does not change directors' duty of care, it enables
corporations to limit available relief to equitable remedies such as injunction
or rescission. Coda's Articles of Incorporation state that its directors will
not be personally liable for monetary damages for breach of their fiduciary duty
as a director, except for liability for (i) any breach of the director's duty of
loyalty to the company or its shareholders, (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) corporate distributions which are in contravention of restrictions in the
MBCA, Coda's Articles of Incorporation or Bylaws, or any agreement to which Coda
is a party, or (iv) any transaction from which the director derives an improper
personal benefit. Coda's Articles of Incorporation also provide that if the MBCA
is later amended, then the liability of Coda's directors will be eliminated or
limited to the fullest extent permitted by the MBCA, as so amended. The
inclusion of this provision in Coda's Articles of Incorporation may have the
effect of reducing the likelihood of derivative litigation against directors and
may discourage or deter shareholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefited Coda and its shareholders.

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Minnesota Statutes Section 302A.521 provides that Coda's officers and
directors have the right to indemnification from Coda for liability arising out
of certain actions. Coda has included in its Bylaws a provision to indemnify
directors and officers for expenses and liabilities to the fullest extent
permitted by Minnesota law.

COMPARISON OF RIGHTS OF CODA AND NET4MUSIC

Upon completing the transaction, Net4Music shareholders will become
shareholders of Coda. Because Net4Music was organized under the laws of the
Republic of France and Coda was incorporated under the laws of the State of
Minnesota, the rights of Coda's shareholders under its Articles of Incorporation
and Bylaws differ in certain respects from the rights of Net4Music's
shareholders under its statuts, being the equivalent of articles of
incorporation and bylaws. Certain significant differences between the rights of
Coda shareholders and Net4Music shareholders are summarized below. This summary
does not, however, purport to be a complete description of all of the
differences between the rights of shareholders of Net4Music and the rights of
shareholders of Coda.

CLASSIFICATION, REMOVAL, AND NOMINATION OF DIRECTORS

Classification. Coda's Articles of Incorporation and Bylaws do not
classify its board of directors, and directors are elected each year for a
one-year term.

Net4Music statuts (articles of incorporation and bylaws) do not classify
its board of directors, and directors are elected for a six-year term, it being
understood that directors may be renewed by the majority of the shareholders at
each ordinary shareholders' meeting.

Amendment of Provisions. Coda's Bylaws provide that Coda's board of
directors has the power to make, alter, amend or rescind provisions of Coda's
Bylaws, except for provisions fixing a quorum for meetings of shareholders and
provisions regarding removal of directors or filling vacancies on the board.

Provisions of the statuts (bylaws) of Net4Music may be amended or rescinded
by a vote of 2/3 of the shareholders attending or represented at extraordinary
shareholders' meetings.

Liability of Directors. Coda's Articles of Incorporation exempt directors
from personal liability to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director to the full extent permitted
by Minnesota law. There is no similar provision under French law.

PREFERRED STOCK

Coda has 15,000,000 authorized but unissued shares of undesignated stock.
Under governing Coda's Articles of Incorporation, no action by its shareholders
is necessary, and only action of the board of directors is required, to
authorize the issuance of any of the undesignated stock. The board of directors
is empowered to establish and to designate each class or series of the
undesignated shares and to set the terms of such shares (including terms with
respect to redemption, sinking fund, dividend, liquidation, preemptive,
conversion and voting rights and preferences). Accordingly, the board of
directors, without shareholder approval, may issue such undesignated shares in
one or more series of

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preferred stock having rights, preferences, privileges or restrictions,
including voting rights, that may be greater than the rights of holders of
common stock, provided, however, that the issuance of preferred stock is
approved by a majority of Coda's independent directors who do not have an
interest in the transaction and who have access, at Coda's expense, to Coda's or
independent legal counsel.

It is not possible to state the actual effect of the issuance of any shares
of preferred stock upon the rights of holders of the common stock until the
board of directors determines the specific rights of the holders of such
preferred stock. However, the effects might include, among other things,
restricting dividends on the common stock, diluting the voting power of the
common stock, impairing the liquidation rights of the common stock and delaying
or preventing a change in control of Coda without further action by the
shareholders. Coda has no present plans to issue any shares of preferred stock.

Net4Music's preferred stock will be converted into common stock immediately
prior to closing the transaction.

SPECIAL MEETINGS OF SHAREHOLDERS

Under Coda's Bylaws, a special meeting of shareholders may be called by
certain officers, two or more directors, or shareholders holding at least 10% of
the voting power of all shares entitled to vote. Under Minnesota law, a special
meeting for the purpose of considering an action to effect, directly or
indirectly, a business combination must be called by shareholders holding at
least 25% of the voting power of all shares entitled to vote.

An extraordinary shareholders meeting must be called for the amendment of
the statuts (bylaws) of Net4Music. Quorum is one-third of the shares for the
first notice and one-fourth for the second notice if needed because a quorum is
not reached after the first notice. A majority of 2/3 of the shareholders
(present or represented) is needed. By law, certain decisions require unanimous
vote of the shareholders (decision increasing shareholders' liability, change of
nationality of the corporation).

VOTING RIGHTS; SHAREHOLDER APPROVALS

Under Coda's Articles of Incorporation, holders of common stock are
entitled to one vote per share on all matters submitted to a vote of the
shareholders. Coda's Bylaws provide that, except as specifically required
otherwise under Coda's Articles or Minnesota law, all matters submitted to the
shareholders are decided by a majority vote of the shares entitled to vote and
represented at a meeting at which there is a quorum. Coda's Articles of
Incorporation require approval by a majority of the shares entitled to vote to
authorize a merger, exchange, sale of substantially all its assets, or a
dissolution of Coda.

Under the Net4Music statuts (bylaws) holders of common stock are entitled
to one vote per share on all matters submitted to a vote of the shareholders.
Except as specifically required otherwise under Net4Music statuts (bylaws) or
French law, all matters submitted to the shareholders are decided by a majority
vote of the shares entitled to vote and represented at a meeting at which there
is a quorum. Quorum is one-third of the shares for the first notice and
one-fourth for the second notice if needed because a quorum is not reached after
the first notice.

72
<PAGE> 78

CUMULATIVE VOTING

Neither Coda's nor Net4Music's governing documents provides for cumulative
voting for holders of common stock.

PREEMPTIVE RIGHTS

Under Coda's and Net4Music's governing documents, holders of common stock
are expressly denied preemptive rights. Minnesota law provides that a
corporation's shareholders have preemptive rights only if such rights are
expressly granted in the corporation's articles of incorporation.

AMENDMENT OF THE ARTICLES OF INCORPORATION

Under Minnesota law, an amendment to the articles of incorporation requires
the affirmative vote of the holders of a majority of the shares present and
entitled to vote unless a larger affirmative vote is required by the
corporation's articles. Coda's Articles of Incorporation do not contain any
provisions that require a larger affirmative vote in order to amend its Articles
of Incorporation.

BUSINESS COMBINATIONS AND CONTROL SHARE ACQUISITIONS

Coda is governed by Sections 302A.671 and 302A.673 of the MBCA. In general,
Section 302A.671 provides that the shares of a corporation acquired in a
"control share transaction" have no voting rights unless voting rights are
approved in a prescribed manner. A "control share transaction" is a transaction,
directly or indirectly, of beneficial ownership of shares that would, when added
to all other shares beneficially owned by the acquiring person, entitle the
acquiring person to have voting power of 20% or more in the election of
directors. In general, Section 302A.673 prohibits a public Minnesota corporation
from engaging in a "business combination" with an "interested shareholder" for a
period of four years after the date of the transaction in which the person
became an interested shareholder, unless the business combination is approved in
a prescribed manner. "Business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
shareholder. An "interested shareholder" is a person who is the beneficial
owner, directly or indirectly, of 10% or more of the corporation's voting stock
or who is an affiliate or associate of the corporation and at any time within
four years prior to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the corporation's voting stock. Such provisions of
Minnesota law that do not apply to the transaction with Net4Music, could have
the effect of delaying, deferring, or preventing a future change in control of
Coda.

LEGAL MATTERS

The validity of the Coda common stock to be issued in connection with the
transaction will be passed upon for Coda by Fredrikson & Byron, P.A.,
Minneapolis, Minnesota.

Certain legal matters for Net4Music will be passed upon by Sokolow, Dunaud,
Mercadier & Carreras, Paris, France.

73
<PAGE> 79

EXPERTS

The audited financial statements of Coda as of December 31, 1998 and 1999,
included in this Proxy Statement/Prospectus, have been audited by McGladrey &
Pullen, LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of their
report as experts in accounting and auditing. The audited financial statements
of Net4Music as of December 31, 1998 and 1999, included in this Proxy
Statement/Prospectus, have been audited by Ernst & Young Audit, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of their report as experts in
accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

Coda files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements,
or other information filed by Coda at the SEC's public reference rooms at 450
5th Street, N.W., Washington, D.C. 20549, or at 7 World Trade Center, Suite
1300, New York, New York 10048, or at Citicorp Center, 500 W. Madison Street,
Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for
more information on the public reference rooms. The SEC also maintains an
Internet site at "http://www.sec.gov" that contain reports, proxy and
information statements, and other information regarding issuers, like Coda, that
file electronically with the SEC.

You can also inspect reports, proxy statements and other information about
Coda at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, D.C. 20006.

Coda has filed with the SEC a Registration Statement on Form S-4 to
register the Coda common stock to be issued in the transaction. This Proxy
Statement/Prospectus is a part of that Registration Statement and constitutes a
prospectus of Coda in addition to being a proxy statement of Coda for the
Special Meeting. As allowed by SEC rules, this Proxy Statement/Prospectus does
not contain all the information you can find in the Registration Statement and
the exhibits to the Registration Statement.

The SEC allows Coda to "incorporate by reference" information into this
Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered part of this
Proxy Statement/Prospectus, except for any information superseded by information
in (or incorporated by reference in) this Proxy Statement/Prospectus.

This Proxy Statement/Prospectus incorporates by reference the documents
listed below that Coda has previously filed with the SEC. These documents
contain important information about Coda and its finances.

1. Annual Report on Form 10-KSB for the fiscal year ended December 31,
1999;

2. Proxy Statement for the 2000 Annual Meeting of Shareholders;

3. Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000;
and

5. Current Report on Form 8-K dated June 21, 2000.

74
<PAGE> 80

Coda is also incorporating by reference all additional documents that it
may file with the SEC between the date of this Proxy Statement/Prospectus and
the date of the Special Meeting.

If you are a Coda shareholder, Coda may have sent you some of the documents
incorporated by reference, but you can obtain any of them from Coda or the SEC.
Documents incorporated by reference are available from Coda without charge,
except for any exhibits to those documents unless we have specifically
incorporated by reference a particular exhibit in this Proxy
Statement/Prospectus. Shareholders may obtain documents incorporated by
reference in this Proxy Statement/Prospectus by requesting them in writing or by
telephone from the appropriate party at the following address:

Coda Music Technology, Inc.
6210 Bury Drive
Eden Prairie, Minnesota 55346
Attention: Barbara S. Remley
(952) 937-9611
[email protected]

If you would like to request documents from Coda, please do so by [date one
week prior to meeting date], 2000 to receive them before the Special Meeting.

Neither Coda nor Net4Music has authorized anyone to provide you with
information that is different from, or in addition to, what is contained or
referred to in this Proxy Statement/Prospectus. Coda has supplied all
information contained or incorporated by reference in this Proxy
Statement/Prospectus relating to Coda and Net4Music has supplied all information
contained herein relating to Net4Music.

75
<PAGE> 81

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
Pro forma condensed combined statements of operations
(unaudited) for the year ended December 31, 1999 and the
three months ended March 31, 2000......................... F-3
Pro forma condensed consolidated balance sheet (unaudited)
as of March 31, 2000...................................... F-4
Notes to unaudited pro forma condensed combined financial
statements................................................ F-5
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NET4MUSIC S.A. CONSOLIDATED FINANCIAL STATEMENTS
Auditors' report............................................ F-6
Consolidated balance sheets as of December 31, 1998 and
1999...................................................... F-7
Consolidated statements of shareholders' equity for the
years ended December 31, 1998 and 1999.................... F-10
Consolidated statements of cash flows for the years ended
December 31, 1998 and 1999................................ F-11
Notes to consolidated financial statements.................. F-12
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CODA MUSIC TECHNOLOGY, INC. CONSOLIDATED FINANCIAL
STATEMENTS
Auditor's Report............................................ F-29
Consolidated balance sheets as of December 31, 1998 and 1999
and March 31, 2000 (unaudited)............................ F-30
Consolidated statements of operations for the years ended
December 31, 1998 and 1999 and the three months ended
March 31, 2000 (unaudited)................................ F-31
Consolidated statements of shareholders' equity for the
years ended December 31, 1998 and 1999 and the three
months ended March 31, 2000 (unaudited)................... F-32
Consolidated statements of cash flows for the years ended
December 31, 1998 and 1999 and the three months ended
March 31, 2000 (unaudited)................................ F-33
Notes to consolidated financial statements.................. F-34
</TABLE>

F-1
<PAGE> 82

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma combined financial statements give effect to the
transaction between Net4Music and Coda, as described under "Proposal No. 3: THE
TRANSACTION". For accounting purposes the transaction will be accounted for as a
reverse acquisition. The unaudited pro forma combined financial statements have
been prepared on the basis of assumptions described in the notes to the
unaudited pro forma combined financial statements and include assumptions
relating to the allocation of the consideration paid for Net4Music to the
consolidated assets and liabilities of Coda, based on preliminary estimates of
their respective fair values. The actual allocation of such consideration may
differ from that reflected in the pro forma combined financial statements after
an appropriate review of the fair values of the consolidated assets and
liabilities of Coda has been completed. Amounts allocated will be based upon the
estimated fair values at the time of the transaction which could vary
significantly from the amounts reflected in the unaudited pro forma combined
financial statements. The unaudited pro forma combined financial statements do
not reflect any cost of other merger related expenses anticipated by Coda's
management. The transaction will be accounted for using the purchase method of
accounting. The unaudited pro forma combined financial statements should be read
in conjunction with the respective financial statements of Coda and Net4Music
and the related notes incorporated by reference in the Proxy
Statement/Prospectus. See "WHERE YOU CAN FIND MORE INFORMATION".

Please note that Coda and Net4Music may be unable to complete the proposed
transaction. The transaction is subject to various conditions, any of which may
fail to be satisfied.

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)

The unaudited pro forma condensed combined financial statement of
operations for the year ended December 31, 1999 has been prepared by combining
the 1999 consolidated statement of operations of Coda with the 1999 consolidated
statement of operations of Net4Music adjusted to give effect to the transaction
as if it had occurred on January 1, 1999. The unaudited pro forma condensed
combined financial statement of operations for the first quarter ended March 31,
2000, has been prepared by combining the unaudited first quarter consolidated
statement of operations of Coda with the unaudited first quarter consolidated
statement of operations of Net4Music adjusted to give effect to the transaction
as if it had occurred on January 1, 2000. The unaudited pro forma condensed
combined financial statements do not necessarily reflect the actual results of
operations of Coda which would have resulted had the transaction occurred as of
the date presented. The pro forma information is not necessarily indicative of
future results of operations for the combined companies.

F-2
<PAGE> 83

PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------------------------------------------
CODA MUSIC NET4
TECHNOLOGY, INC. MUSIC S.A. PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------------- ---------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................ $ 6,356 $ 299 -- $ 6,655
Cost of sales........................ 772 578 -- 1,350
--------- --------- --------- ----------
Gross profit (loss)................ 5,584 (279) -- 5,305
--------- --------- --------- ----------
Sales and marketing.................. 2,041 1,173 -- 3,214
Product development.................. 1,341 -- -- 1,341
Website development.................. -- 386 -- 386
Content development.................. -- 310 -- 310
General and administrative........... 2,729 2,366 3,074(B) 8,169
Restructuring charges................ -- 1,201 -- 1,201
--------- --------- --------- ----------
Operating expenses................. 6,111 5,436 3,074 14,621
Operating loss....................... (527) (5,715) (3,074) (9,316)
Other income (expense)............... 71 (109) -- (38)
Minority interest.................... -- -- 1,045(D) 1,045
--------- --------- --------- ----------
Loss before income taxes............. (456) (5,824) (2,029) (8,309)
Income tax expense................... -- 7 -- 7
--------- --------- --------- ----------
Net (loss)........................... $ (456) $ (5,831) $ (2,029) $ (8,316)
========= ========= ========= ==========
Weighted average common shares
outstanding
Basic.............................. 6,202,036 5,084,867 6,279,491(C) 17,566,394
Diluted............................ 6,202,036 5,084,867 6,279,491(C) 17,566,394
Net loss per share
Basic.............................. $ (0.07) $ (1.15) -- $ (0.47)
Diluted............................ $ (0.07) $ (1.15) -- $ (0.47)
</TABLE>

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements

F-3
<PAGE> 84

PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)

The pro forma combined balance sheet as of March 31, 2000, has been
prepared by combining the consolidated balance sheet of Coda as of March 31,
2000 with the unaudited consolidated balance sheet of Net4Music as of March 31,
2000, adjusted to give effect to the transaction as if it had occurred on March
31, 2000. The pro forma statements do not necessarily reflect the actual
financial position of Coda that would have resulted had the transaction occurred
as of the date presented. The pro forma information is not necessarily
indicative of the future financial position for the combined companies.

<TABLE>
<CAPTION>
MARCH 31, 2000
-------------------------------------------------------------
CODA MUSIC NET 4
TECHNOLOGY, INC. MUSIC SA PROFORMA PROFORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------------- -------------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents.............. $ 1,155 $ 1,378 $ -- $ 2,533
Short term investments..... 717 -- -- 717
Accounts receivable........ 498 56 -- 554
Inventories................ 247 -- -- 247
Prepaid expenses........... -- 23 -- 23
Other current assets....... 90 1,062 -- 1,152
-------- ------- ------- -------
Total current assets.......... 2,707 2,519 -- 5,226
Property and equipment, net... 250 582 -- 832
-------- ------- ------- -------
Other assets:
Software deposit........... 332 -- -- 332
Repertoire development
costs.................... 439 -- -- 439
Prepaid royalties.......... 205 -- -- 205
Other assets............... 101 38 -- 139
Intangible assets.......... -- 414 46,117(A) 46,531
-------- ------- ------- -------
1,077 452 46,117 47,646
-------- ------- ------- -------
$ 4,034 $ 3,553 $46,117 $53,704
======== ======= ======= =======
Liabilities and Stockholders'
Equity Current liabilities:
Current portion of long-term
debt....................... $ 75 $ 115 $ -- $ 190
Current portion of capital
lease obligations........ -- 559 -- 559
Accounts payable........... 314 863 -- 1,177
Reserve for product
returns.................. 180 -- -- 180
Accrued expenses........... 405 686 -- 1,091
Deferred revenue........... 79 -- -- 79
-------- ------- ------- -------
Total current liabilities..... 1,053 2,223 -- 3,276
-------- ------- ------- -------
Long-term debt, less current
portion....................... 175 407 -- 582
Long-term portion of capital
lease obligations............. -- 572 -- 572
-------- ------- ------- -------
175 979 -- 1,154
-------- ------- ------- -------
Minority interest............... -- -- 63(D) 63
</TABLE>

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements

F-4
<PAGE> 85

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(A) The transaction will be accounted for as a reverse acquisition with
Net4Music being the acquirer. Per share data are based upon the weighted
average number of shares of Coda, including those to be issued to Net4Music
shareholders upon combination. No determination has yet been made regarding
the reevaluation of the assets acquired and accordingly, the cost in excess
of fair value of the net assets acquired for the pro forma presentation has
been recorded as goodwill. The actual purchase price and allocation thereof
may vary significantly from the amounts reflected in the unaudited pro forma
condensed combined financial statements.

(B) To amortize over fifteen years the cost in excess of fair value of net
assets acquired.

(C) To increase common shares outstanding for the estimated 12,297,963 shares to
be issued in the transaction based on an assumed Coda common stock of $3.75
per share.

(D) To record minority interest relating to the approximate 18 percent of
Net4Music, S.A. shareholders who will not be parties to the transaction.

F-5
<PAGE> 86

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Net4Music S.A.

We have audited the accompanying consolidated balance sheets of Net4Music
S.A. and subsidiaries, as of December 31, 1998 and 1999 and the related
consolidated statements of operations, statements of comprehensive income,
shareholders' equity and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of Net4Music S.A. and
subsidiaries as of December 31, 1998 and 1999 and the consolidated results of
their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
ERNST & YOUNG AUDIT

Represented by
Philippe Rahms
Strasbourg
August 1, 2000

F-6
<PAGE> 87

NET4MUSIC S.A.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF DECEMBER 31
-------------------
1998 1999
------ ------
(IN THOUSANDS OF
U.S. DOLLARS,
EXCEPT
PER SHARE DATA)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 22 $4,106
Accounts receivable (net of allowance of $20,133 and
$279,380 as of December 31, 1998 and 1999,
respectively)............................................. 219 52
Other current assets........................................ 139 499
Prepaid expenses............................................ 35 165
------ ------
Total current assets and prepaid expenses................. 415 4,822
------ ------
Intangible assets:.......................................... 359 551
less accumulated amortization............................. (182) (118)
------ ------
Intangible assets -- net.................................. 177 433
------ ------
Property and equipment at cost.............................. 1,586 1,983
less accumulated depreciation............................. (273) (1,416)
------ ------
Property and equipment - net.............................. 1,313 567
------ ------
Other non current assets.................................... 7 18
------ ------
Total non current assets - net.............................. 1,497 1,018
------ ------
Total assets.............................................. $1,912 $5,840
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current portion of long-term debt........................... $ 36 $ 132
Current portion of capital lease obligations................ 378 339
Advances received from shareholders......................... 97 1
Accounts payable............................................ 197 836
Accrued liabilities and other current liabilities........... 159 539
Deferred revenues........................................... 14 --
------ ------
Total current liabilities and deferred revenues........... 881 1,847
------ ------
Long-term portion of long-term debt....................... 590 426
Long-term portion of capital lease obligations.............. 917 568
------ ------
Total long-term debt...................................... 1,507 994
------ ------
Shareholders' equity (deficit):
Common stock:.............................................
Ordinary shares 1,500,000 shares issued and outstanding
as of December 31, 1998 at FRF 1 ($0.15) par value and
6,039,800 shares issued and outstanding as of December
31, 1999 at
FRF 1 ($0.15) par value................................. 295 1,077
Class A shares, FRF 1 ($0.15) par value as of December
31, 1999; 3,500,000 shares issued and outstanding as of
December 31, 1999....................................... -- 540
Class B shares, 800,000 shares issued and outstanding as of
December 31, 1998 at FRF 1 ($0.15) par value; converted
into ordinary shares in 1999.............................. 162 --
Additional paid-in capital................................ 44 8,191
Deferred compensation..................................... -- (49)
Accumulated deficit....................................... (994) (6,825)
Other comprehensive income................................ 17 65
------ ------
Total shareholders' equity (deficit).................... (476) 2,999
------ ------
Total liabilities and shareholders' equity (deficit)...... $1,912 $5,840
====== ======
</TABLE>

The accompanying notes form an integral part of the consolidated financial
statements.

F-7
<PAGE> 88

NET4MUSIC S.A.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1999
------------ ------------
(IN THOUSANDS OF U.S. DOLLARS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Revenues
Interactive kiosks revenues......................... $ 706 $ 176
Engraving services.................................. 286 97
Other............................................... 159 26
---------- ----------
Total revenues...................................... 1,151 299
Cost of sales......................................... (475) (578)
---------- ----------
Gross profit (loss)................................... 676 (279)
---------- ----------
Website development expenses.......................... -- (386)
Content development expenses.......................... (281) (310)
Selling and marketing expenses........................ (40) (1,173)
General and administrative expenses................... (454) (2,366)
Restructuring charges................................. -- (1,201)
---------- ----------
Total operating expenses............................ (775) (5,436)
---------- ----------
Loss from operations................................ (99) (5,715)
Interest expense...................................... (86) (154)
Interest income....................................... 3 46
Foreign exchange gain (loss).......................... -- (1)
---------- ----------
Loss before income tax.............................. (182) (5,824)
Income tax............................................ (2) (7)
---------- ----------
Net loss.............................................. $ (184) $ (5,831)
========== ==========
Loss per share........................................ $ (0.08) $ (1.15)
Number of shares used for the calculation of the
loss per share...................................... 2,300,000 5,084,867
</TABLE>

The accompanying notes form an integral part of the consolidated financial
statements.

F-8
<PAGE> 89

NET4MUSIC S.A.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1998 1999
----- -------
(IN THOUSANDS OF
U.S. DOLLARS,
EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net loss.................................................... $(184) $(5,831)
Other comprehensive income Foreign currency translation
adjustment................................................ 17 48
----- -------
Comprehensive loss.......................................... $(167) $(5,783)
===== =======
</TABLE>

The accompanying notes form an integral part of the consolidated financial
statements.

F-9
<PAGE> 90

NET4MUSIC S.A.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
NUMBER OF SHARES ADDITIONAL
----------------------------------------------------- PAID-IN
ORDINARY CLASS B CLASS A TOTAL AMOUNT CAPITAL
--------- -------- --------- --------- ------ ----------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
At January 1, 1998.................... 1,500,000 800,000 2,300,000 $ 457 $ 44
Net loss..............................
Translation adjustment................
--------- -------- --------- --------- ------ ------
At December 31, 1998.................. 1,500,000 800,000 2,300,000 457 44
Issuance of ordinary shares at par
value............................... 3,739,800 3,739,800 620 2,698
Conversion from Class B shares to
ordinary shares..................... 800,000 (800,000)
Issuance of Class A shares............ 3,500,000 3,500,000 540 5,394
Deferred compensation................. 55
Amortization of deferred
compensation........................
Comprehensive income:
Net loss............................ -- -- -- -- --
Translation adjustment.............. -- -- -- -- --
--------- -------- --------- --------- ------ ------
At December 31, 1999.................. 6,039,800 -- 3,500,000 9,539,800 $1,617 $8,191
========= ======== ========= ========= ====== ======

OTHER SHAREHOLDERS'
ACCUMULATED DEFERRED COMPREHENSIVE EQUITY
DEFICIT COMPENSATION INCOME (DEFICIT)
----------- ------------ ------------- -------------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
At January 1, 1998.................... $ (810) $ -- $ -- $ (309)
Net loss.............................. (184) (184)
Translation adjustment................ 17 17
------- ---- ----- -------
At December 31, 1998.................. (994) 17 (476)
Issuance of ordinary shares at par
value............................... 3,318
Conversion from Class B shares to
ordinary shares.....................
Issuance of Class A shares............ -- -- 5,934
Deferred compensation................. (55) --
Amortization of deferred
compensation........................ 6 6
Comprehensive income:
Net loss............................ (5,831) -- (5,831)
Translation adjustment.............. -- 48 48
------- ---- ----- -------
At December 31, 1999.................. $(6,825) $(49) $ 65 $ 2,999
======= ==== ===== =======
</TABLE>

The accompanying notes form an integral part of the consolidated financial
statements.

F-10
<PAGE> 91

NET4MUSIC S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1998 1999
------ --------
(IN THOUSANDS OF)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(184) $(5,831)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization of intangible assets........ 7 201
Depreciation and amortization of property and equipment... 226 1,256
Other..................................................... -- (51)
Increase (decrease) in cash from:
Accounts receivable.................................... (20) 146
Other current assets................................... (44) (403)
Prepaid expenses....................................... 22 (143)
Accounts payable....................................... 63 459
Accrued liabilities.................................... 34 578
Deferred revenues...................................... 2 (2)
----- -------
Net cash provided by (used in) operating
activities........................................ 106 (3,790)
----- -------
Cash flows from investing activities:
Purchases of property and equipment and intangibles....... (137) (1,177)
Other.................................................. (3) 2
----- -------
Net cash provided by (used in) investing activities.... (140) (1,175)
----- -------
Cash flows from financing activities:
Cash proceeds from issuance of shares..................... -- 9,252
Increase in financial debt................................ 141 213
Reimbursement of financial debt........................... (259) (416)
----- -------
Net cash provided by (used in) financing activities.... (118) 9,049
----- -------
Effect of exchange rate changes on cash..................... 4 --
Net increase (decrease) in cash and equivalents............. (148) 4,084
----- -------
Cash and equivalents, beginning of period................... 170 22
----- -------
Cash and equivalents, end of period......................... $ 22 $ 4,106
===== =======
</TABLE>

The accompanying notes form an integral part of the consolidated financial
statements.

F-11
<PAGE> 92

NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1. NATURE OF BUSINESS

Net 4 Music, S.A. (the "Company") was incorporated in France as a Societe
Anonyme or corporation in 1995, under the name ' Interactive Musique Compagnie '
(IMC, S.A.), to develop and distribute digital sheet music through interactive
kiosks displayed in specialized music stores. As of July 28, 1999 but effective
January 1, 1999, the Company changed its name from IMC S.A. to Net 4 Music S.A.,
and merged with its two 100% owned subsidiaries, Euro Music System S.A. ("EMS")
and Music Writer Europe S.A. ("MWE").

With prepaid cards, users could acquire digital sheet music stored on
interactive kiosks and print when required. In 1999, the Company acquired the
business of its main competitor in France, Informusique. The major part of this
acquisition was its website, www.partitor.com. The Company's activity then
evolved towards Internet through the development of the website,
www.net4music.com, partly with Partitor technologies and the development of its
content through the negotiation of musical works distribution agreements with
publishers. The Company decided to stop its distribution activity through
interactive kiosks (see note 1.6) in order to concentrate on the website
development officially launched in December 1999. The website provides editorial
and pedagogical information on music and users can purchase downloadable sheet
music and MIDI files. Sheet music can be printed as the number of copies is
defined in the order. A transfer of files on other computers is prevented by
technology developed by the Company. Payments are made with credit cards.

The company's registered office is located in Marly (Moselle), its
operating activities in Paris and Lyon. The Company has a wholly owned
subsidiary in the United States of America, Net 4 Music Inc, which was
incorporated in July 1999 and whose activity is mainly dedicated to promotion
and marketing. Notmad is another wholly-owned subsidiary located in Madagascar
and is dedicated primarily to the engraving activity. The Company has also a
dormant subsidiary, IMA Dakar.

1.2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

Basis of presentation

The accompanying consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America.

The preparation of financial statements requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying footnotes. Actual results could differ from those
estimates. Significant estimates include revenue forecasts on the sale of
existing products and the recoverable amounts of capitalized website costs.
Management periodically reviews these estimates and it is possible that
management's evaluation of the capitalized costs recoverability may change
because of actual results or other factors.

F-12
<PAGE> 93
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of December 31, 1998, the consolidated accounts comprise the accounts of
IMC S.A., MWE S.A. and EMS S.A. As of December 31, 1999, the consolidated
accounts comprise the accounts of Net 4 Music S.A. and its 100% owned
subsidiaries, Net 4 Music Inc in the United States of America and Notmad in
Madagascar. Intercompany accounts and transactions have been eliminated.

In October 1999, the Company acquired Informusique, a French company
focused on mail order distribution, for $244,000. The acquisition was accounted
for under the purchase method of accounting. Accordingly, the purchase price has
been allocated to the acquired assets and liabilities based on fair values as of
the acquisition date. The historical operations of Informusique were
insignificant prior to the acquisition.

1.3 FOREIGN CURRENCY TRANSLATION

The reporting currency of the Company is the United States dollar.

All assets and liabilities in the balance sheet of entities whose
functional currency, which generally is the local currency, is other than the
United States dollar are translated as follows: (1) asset and liability accounts
at year-end rates, (2) income statement accounts at weighted average exchange
rates for the year, and (3) shareholders' equity accounts at historical exchange
rates. Gains or losses resulting from the above translation process are recorded
in shareholders' equity.

In individual accounts, gains and losses arising from foreign currency
transactions are reflected in the statement of income. Assets and liabilities
denominated in foreign currencies at year end are translated at the rate of
exchange in effect at the balance sheet date. The Company has not undertaken
hedging transactions to cover its currency translation exposure.

1.4 REVENUE RECOGNITION

The Company historically has derived most of its revenues from the rental
of interactive kiosks, the sale of prepaid cards and engraving services.
Engraving services are generally contained within distribution agreements and
music works are, in some cases, digitized by the Company and corresponding costs
charged to the publisher.

Rentals of interactive kiosks are spread over the renting duration.
Revenues generated by the sale of prepaid cards are recognized when cards are
delivered to the distributor.

Engraving services revenues are recognized at the delivery of digital sheet
music to the publisher. Product sales and shipping revenues are recognized when
the product is delivered.

F-13
<PAGE> 94
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1.5 COST OF SALES AND OPERATING EXPENSES

COST OF SALES

Cost of sales mainly includes royalties paid to publishers, depreciation
costs of interactive kiosks and other costs directly linked to the running of
the interactive kiosks such as maintenance and personnel costs and the costs of
prepaid cards.

WEBSITE DEVELOPMENT EXPENSES

Website development expenses are mainly non-capitalized development costs
and the amortization costs of capitalized expenses (see note 1.9) as well as
costs dedicated to site maintenance and minor improvements.

CONTENT DEVELOPMENT EXPENSES

Content development expenses are mainly the costs of entering and engraving
music work under digital format. These costs are expensed as incurred. Some
distribution agreements stipulate that the publisher pays for a portion of these
costs according to a contractual rate; these amounts are recorded as engraving
services revenues.

SELLING AND MARKETING EXPENSES

The primary allocation of selling and marketing expenses covers the
salaries of the employees who are dedicated to these particular activities. Also
included are the costs of participating in exhibitions, public relation or
marketing events and of printings.

1.6 RESTRUCTURING CHARGES

As a result of the management's decision to stop its distribution activity
through interactive kiosks in December 1999, restructuring charges were recorded
which consisted primarily of the write-off of capitalized leased interactive
kiosks (approximately $816,000) and related developments costs along with
accrued interest on lease contracts (approximately $92,500).

1.7 NET LOSS PER SHARE

Net result per share is calculated by dividing the consolidated net loss by
the weighted average number of shares of the Company.

As net losses have been reported in all periods presented, the dilutive
effects of warrants were excluded from the calculation of net loss per share as
it would reduce net loss per share.

All share and per share amounts have been restated to reflect the 100 to 1
stock split approved by the shareholders in July 1999.

F-14
<PAGE> 95
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1.8 SEGMENT REPORTING

The Company has determined that its reportable segments are those that are
based on the Company's internal financial reporting.

Management considers that the Company's activity, at present, represents
one segment, the distribution of sheet music and similar digital products.
Identified assets, capital expenditure and depreciation of assets located
outside of France are not material. The Company's operations were located mainly
in France in 1998 and 1999. The American affiliate presented a loss of
$1,042,486 in 1999.

1.9 INTANGIBLE ASSETS

Intangible assets consist primarily of capitalized development costs of
distribution means and patent filing costs.

Capitalized development costs of distribution

The capitalized development costs of distribution means include costs of
developing interactive kiosks and the website and particularly costs of
developing software giving users access to information on the kiosk or the
website.

Costs of preliminary studies of the functional analysis and kiosks or
website post-implementation costs are expensed when incurred and posted in
"Website development expenses" in the statements of operations. Application
development stage costs are capitalized and amortized on a straight-line basis
over the useful life of the website which is estimated at three years. The
estimated useful life is based on planned or expected significant modifications
of the site in response to the rapid rate of change in the Internet industry and
technology in general.

Filing and acquisition costs of patents

Costs of filing patents, which are primarily legal fees, are capitalized
when the Company demonstrates a strong intention to use or market the technique
or innovation and chances of commercial success are reasonable. Related costs
for the website technology are amortized on a straight-line basis over the
useful life of the website, estimated at three years.

In 1995, the Company acquired a patent for a technique of electronic music
desk. As the Company had no plan to market this technique, corresponding patent
costs were fully amortized before 1998.

F-15
<PAGE> 96
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1.10 PROPERTY AND EQUIPMENT

Property and equipment are stated at their acquisition costs. They are
depreciated using the straight-line method over the estimated useful life of the
asset as follows:

<TABLE>
<CAPTION>
PERIOD
------
<S> <C>
Purchased software.................................... 1 year
Computer equipment.................................... 4 years
Furniture............................................. 3-10 years
Vehicles.............................................. 5 years
Leasehold improvements................................ 10 years
</TABLE>

Property and equipment held under capital lease are capitalized and
depreciated over the useful life of the asset in case of a contractual option to
buy or over the residual life of the lease contract.

1.11 IMPAIRMENT OF ASSETS

Long-lived assets are written down when, as a result of events and changes
in circumstances within the year, their recoverable value based on undiscounted
future cash flow appear to be permanently less than their carrying value.

1.12 CASH AND CASH EQUIVALENTS

Overdrafts are posted against cash in the balance sheets. As of December
31, 1998 and 1999, overdrafts amounted to $19,830 and $37,170, respectively.

Cash equivalents have an original maturity of three months or less and
present no material rate risk. They are accounted for at their historical value.

At December 31, 1999, cash equivalents approximated $3,944,000 consisting
of marketable securities. The Company had no cash equivalents at the end of
1998. Realized losses and gains on 1998 and 1999 transactions were immaterial.
Unrealized gains on marketable securities owned by the Company have been
considered as accrued interests and accounted for in the statement of operations
for a total of $18,085 as of December 31, 1999.

1.13 FAIR VALUE OF FINANCIAL INSTRUMENTS

At December 31, 1998 and 1999, the carrying values of current financial
instruments such as cash, cash equivalents, accounts receivable, accounts
payable, other current assets, accrued liabilities and other current liabilities
as well as the current portion of long-term debt and capital lease obligations
approximated their market values, based on the short-term maturities of these
instruments.

At December 31, 1998 and 1999, the market value of long term debt
approximates its carrying value. Market value is determined using discounted
future cash flows at a market interest rate or other appropriate valuation
method.

F-16
<PAGE> 97
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1.14 CREDIT RISK AND CONCENTRATION OF RISKS

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents
as well as accounts receivable.

The Company has cash investment policies that limit investments to short
term instruments with a low risk. The Company's cash is held in euros and U.S.
dollars and is concentrated primarily in major French and American banks.

The Company historically has sold its products through the interactive
kiosks to customers located mainly in France. The Company has performed credit
evaluations of its customers and accounted for allowances for potential credit
losses subsequent to the decision of discontinuing the kiosk activity. The new
Internet activity has not generated any revenue during the periods presented.

The Company has entered into license agreements for the operation of music
publishing catalogues including the duplication and distribution of music work
on digital support, with a limited number of publishers. These contracts may
include a period of exclusivity and are generally renewable after the initial
contractual period.

Future results of the Company depend upon several risks and uncertainties
which include:

- its ability to increase the number of new customers on the website
developed in 1999,

- the introduction of content, web pages, new or improved products and
services,

- competition on prices,

- the level of Internet use and the ability of customers to accept Internet
for the Company's products and services,

- its maintenance and improvement of the technical systems upon which its
operations rely,

- its ability to attract and retain qualified management and employees,

- technical difficulties, website breaks or inefficiencies independent from
the Company,

- sales and marketing decisions,

- decisions of regulatory authorities, and

- general economic conditions, especially those affecting Internet
networks, e-commerce and the leisure industry.

Management considers that the Company has sufficient financial resources to
face its future commitments and obligations. The Company has finalized a private
placement extending the prospects beyond December 31, 2000.

F-17
<PAGE> 98
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. INTANGIBLE ASSETS

The change in both the gross value and the accumulated amortization of
intangible assets can be analyzed as follows:

<TABLE>
<CAPTION>
EFFECT OF
EXCHANGE
DECEMBER 31, RATE DECEMBER 31,
1998 ADDITIONS REDUCTIONS CHANGES 1999
------------ --------- ---------- --------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interactive kiosks
development costs...... $204 187 (17) $ --
Capitalized website
development costs...... 448 (26) 422
Patents and similar...... 93 51 (15) 129
Other intangible
assets................. 62 56 (6) --
---- --- --- --- ----
Total gross value... 359 499 243 (64) 551
---- --- --- --- ----
Amortization of:
Interactive kiosks
development costs...... -- 187 187
Capitalized website
development costs...... -- 13 (1) 12
Patents and similar...... 120 2 (16) 106
Other intangible
assets................. 62 56 (6)
---- --- --- --- ----
Total amortization....... $ 82 202 243 (23) $118
---- --- --- --- ----
Net...................... $177 $433
==== ====
</TABLE>

In 1999, the Company acquired the business of its main French competitor,
Informusique, for $244,000 including several assets of which the most
significant is an Internet site. The acquisition price has been allocated to its
different components. $234,480 has been allocated to capitalized site
development costs and is being amortized over three years from the acquisition
date.

F-18
<PAGE> 99
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

The change in both the gross value and the accumulated depreciation of
property and equipment can be summarized as follows:

<TABLE>
<CAPTION>
EFFECT OF
DECEMBER 31, EXCHANGE DECEMBER 31,
1998 ADDITIONS REDUCTIONS RATE CHANGES 1999
------------ --------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Computer equipment and
software................. $ 7 181 (11) $ 177
Interactive kiosks......... 1,493 (208) 1,285
Vehicles................... 36 22 22 (5) 31
Office furniture and
other.................... 50 70 (10) 110
Fixed assets under
construction............. -- 403 (23) 380
------ ----- -- ---- ------
Total gross value........ $1,586 676 22 (257) $1,983
------ ----- -- ---- ------
Depreciation of computer
equipment and software... 7 74 (5) 76
Depreciation of interactive
kiosks................... 226 1,157 (98) 1,285
Depreciation of vehicles... 22 11 2 (4) 27
Depreciation of furniture
and other................ 18 14 (4) 28
------ ----- -- ---- ------
Total depreciation......... $ 273 1,256 2 (111) $1,416
------ ----- -- ---- ------
NET VALUE............. $1,313 $ 567
====== ======
</TABLE>

The Company has financed much of its equipment, especially the interactive
kiosks, through capital lease contracts. The Company entered into no additional
lease agreements during 1999.

Capitalized lease costs have been accounted for in property and equipment
for $1,493,000 as of December 31, 1998 and $1,286,000 as of December 31, 1999
(difference is solely the effect of exchange rate changes). Accumulated
depreciation at December 31, 1998 and 1999 was $173,850 and $1,286,000,
respectively.

Following strategic decisions taken by the Company in 1999 on its future
development and the future of the kiosk activity, the Company decided to fully
depreciate the interactive kiosk assets and accrue for future interests on
corresponding lease contracts.

Average residual lifetime of lease contracts is 2.5 years. In case of an
anticipated termination, the Company owes all rent through the contracts'
termination dates as well as a penalty equivalent to one-quarter of the rent.

F-19
<PAGE> 100
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. OTHER CURRENT ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Spare parts inventory................................. $ 27 $ --
VAT receivable........................................ 99 445
Lease back receivable................................. -- --
Other................................................. 13 54
---- ----
Total other current assets....................... $139 $499
==== ====
</TABLE>

5. SHAREHOLDERS' EQUITY

5.1. GENERAL

As at December 31, 1999, the authorized, issued and outstanding share
capital of the Company consisted of 6,039,800 ordinary shares and 3,500,000
Class A shares at a nominal value of FRF 1. The ordinary shares and Class A
shares have the same voting rights.

Class A shares benefit over ordinary shares from preferential rights on the
Company's net assets in the case of liquidation and a right to designate a
member of the Board of Directors.

In December 1999, the shareholders authorized the issuance for cash of
3,500,000 Class A shares, resulting in a share capital increase of $539,450.

In July 1999, the Company agreed to effect a 100-for-1 stock split,
reducing the nominal value of ordinary shares from FRF 100 to FRF 1.

In March 1999, Class B shares issued in April 1995 and July 1996 were
converted into ordinary shares. Currently, no Class B shares are outstanding.

Upon the incorporation of IMC S.A in 1995, the founders of the Company
invested $160,550. Subsequent share capital increases were authorized by the
shareholders of the Company in April 1995 (contribution in kind for an amount of
$134,000 and in cash for an amount of $103,000), July 1996 (cash contribution of
$59,000) and March 1999 (cash contribution of $620,470).

5.2. STOCK OPTIONS AND WARRANTS

In December 1999, the shareholders authorized the Board of Directors to
grant 490,000 "Bons de Souscription de Parts de Createur d'Entreprise" or
"BSPCE" warrants to certain employees. Each warrant allows the holder to
purchase one ordinary share at an exercise price of FRF 11 per share. These
warrants vest over three years (163,333 warrants are exercisable one year after
grant date, then 1/24(th) of the remaining warrants per month) and expire five
years after grant date. If the Company effects a listing of its ordinary shares
on a stock market or in the event of a change in control of the Company, the
warrants become immediately exercisable.

F-20
<PAGE> 101
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Also in December 1999, the shareholders authorized the Board of Directors
to grant 390,530 Bons de Souscription d'Actions or "BSA" warrants to external
consultants. Each warrant allows the holder to purchase one ordinary share at an
exercise price of FRF 11 per share. These warrants vest gradually over three
years and expire five years after grant date. If the Company effects a listing
of its ordinary shares on a stock market or in the event of a change in control
of the Company, the warrants become immediately exercisable.

In September 1999, the shareholders authorized the Board of Directors to
grant 170,489 "BSPCE" warrants to certain employees. Each warrant allows the
holder to purchase one ordinary share at an exercise price of FRF 5.35 per
share. These warrants vest over three years (56,830 warrants are exercisable one
year after grant date, then 1/24th of the remaining warrants per month) and
expire five years after grant date. If the Company effects a listing of its
ordinary shares on a stock market or in the event of a change in control of the
Company, the warrants become immediately exercisable.

In August 1999, the shareholders authorized the Board of Directors to grant
415,190 BSA warrants, of which 339,701 were granted to employees and 75,489 were
granted to external consultants. Each warrant allows the holder to purchase one
ordinary share at an exercise price of FRF 5.35 per share. These warrants vest
gradually over three years and expire five years after grant date. If the
Company effects a listing of its ordinary shares on a stock market or in the
event of a change in control of the Company, the warrants become immediately
exercisable.

In July 1999, the shareholders authorized the Board of Directors to grant
1,325,778 "BSPCE" warrants to certain employees and directors. Each warrant
allows the holder to purchase one ordinary share at an exercise price of FRF
5.35 per share. These warrants vest over three years (Of 1,124,800 warrants,
156,222 are exercisable one month after grant date, then the remaining vest
1/35th per month; of 200,978 warrants, one third are exercisable one year after
grant date, the remaining vest 1/24th per month) and expire five years after
grant date. If the Company effects a listing of its ordinary shares on a stock
market or in the event of a change in control of the Company, the warrants
become immediately exercisable.

A total of 2,791,987 warrants were issued in 1999 and remain outstanding as
of December 31, 1999. The Company did not issue warrants in years prior to 1999.

The following is additional information related to warrants outstanding as
of December 31, 1999:

<TABLE>
<CAPTION>
OUTSTANDING
------------------------------------------
WEIGHTED AVERAGE
EXERCISE NUMBER REMAINING NUMBER
PRICE OUTSTANDING CONTRACTUAL LIFE EXERCISABLE
--------- ----------- ---------------- -----------
<S> <C> <C> <C>
FRF 5.35 1,911,457 4.6 321,437
FRF 11 880,530 4.9 24,459
</TABLE>

Warrants granted to external consultants have been valued in accordance
with FASB Statement No. 123, "Accounting and Disclosure of Stock-Based
Compensation"
F-21
<PAGE> 102
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(FAS 123). The fair value of these warrants has been estimated as of the grant
date with the minimum-value method and the following assumptions: expected
dividend yield of 0%, risk-free interest rate of 4.45% and expected lives of 5
years. Total deferred compensation calculated in 1999 was $55,000, of which
$49,000 was unrecognized as of December 31, 1999 and will be recognized over the
remaining service terms.

The Company accounts for employee and director stock-based grants in
accordance with APB Opinion No. 25, "Accounting For Stock Issued to Employees"
and related Interpretations (APB 25). Under APB 25, no compensation expense is
recognized for grants to employees and directors if the exercise price of the
grant is at or above the fair market value of the underlying stock on the date
of grant. All grants have been at or above the fair market value of the
underlying stock, as determined by management, on the respective dates of grant;
therefore, no compensation expense has been recognized to date for stock-based
grants to employees or directors.

As required by FAS 123, pro forma information regarding net loss and loss
per share has been determined as if the Company had accounted for employee and
director stock options under the fair value method provided for under FAS 123.
The fair value for the grants to directors and employees of the Company was
estimated at the date of grant using the minimum value method with the following
assumptions: expected dividend yield of 0%, risk-free interest rate of 4.45% and
expected lives of 5 years.

The weighted average fair value of warrants granted during the year was
$0.35. For purposes of the pro forma disclosures, the estimated fair value of
warrants granted have been amortized to expense over the vesting period. The
Company's pro forma information for FAS 123 follows (in thousands, except for
loss per common share information):

<TABLE>
<CAPTION>
1999
-------
<S> <C>
Pro forma net loss.................................... $(5,900)
Pro forma net loss per share.......................... (1.16)
</TABLE>

6. LONG TERM DEBT

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Conditional advance from ANVAR........................ $367 $ 374
Convertible bonds..................................... 160 138
Bank loans............................................ 99 46
---- -----
Total long-term debt................................ 626 558
Less current portion................................ (36) (132)
---- -----
Long term portion of long term debt................... $590 $ 426
==== =====
</TABLE>

Conditional advance from ANVAR

In 1997 and 1998, the "Agence Nationale pour la Valorisation de la
Recherche" (ANVAR), a French state-owned institution dedicated to the financing
of research and

F-22
<PAGE> 103
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

development activities of French companies, granted the Company non-interest
bearing advances for its interactive kiosk development activities. Reimbursement
of these advances depends upon the technical and commercial success of the
program. The Company has already reimbursed a portion of these advances. The
Company initially benefited from these advances with another French company,
EURITIS. A part of the cash received has been paid to EURITIS. As the Company
has become the only debtor of ANVAR for the reimbursement of the advances, a
receivable of $68,300 from EURITIS has been recorded, corresponding to the cash
received by EURITIS. An allowance has been recorded with respect to the
identified risk of unrecoverability.

Convertible bonds

In September 1996, the Company issued 9,000 convertible bonds benefiting to
EUREFI for a total of $175,600 in order to reinforce its equity and finance its
growth.

These bonds are convertible by the holder, 7 bonds giving a right on 4
shares, from January 1st, 2000 to the term of the debt at December 31, 2003. The
debt bears interest at 6% a year payable each half-year at June 30 and December
31. Accrued interest has been included in other current liabilities at December
31, 1998 and 1999. Debt can be reimbursed in three annual payments of 3,000
bonds from December 31, 2001. In case the bonds are not converted or are only
partly converted, the Company will have to pay a non-conversion penalty of 4%
pro rata temporis at term. EUREFI has agreed not to convert its bonds.

Bank loans

The Company has contracted 3 bank loans bearing interest at fixed rates and
reimbursable monthly until 2001. The average interest rate was 5.8% at December
31, 1998 and 1999.

Future minimum reimbursement at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
2000............................................... $43
2001............................................... 3
---
Total......................................... $46
===
</TABLE>

F-23
<PAGE> 104
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. COMMITMENTS

7.1. CAPITAL LEASE OBLIGATIONS

Future minimum lease payments under capital lease obligations due for the
years ending December 31 are as follows (in thousands):

<TABLE>
<S> <C>
2000..................................................... $ 395
2001..................................................... 364
2002..................................................... 146
-----
Total minimum lease payments............................. 905
less amount representing interest........................ (88)
-----
Present value of net minimum lease payments.............. 817
less current portion..................................... (340)
-----
Long term portion........................................ $ 477
=====
</TABLE>

7.2. OPERATING LEASES

The Company leases offices in Paris and Lyon under operating leases through
2008. Leases last generally three years and are renewable two additional
three-year periods.

In Marly, the Company entered into a short-term lease terminating on
October 31, 2000.

Future minimum lease payments under these leases for the year ending
December 31, are as follows (in thousands):

<TABLE>
<S> <C>
2000...................................................... $ 68
2001...................................................... 61
2002...................................................... 61
----
Total minimum lease payments.............................. $190
====
</TABLE>

Rent expense for the years ending December 31, 1998 and 1999 was $17,200
and $39,750, respectively.

7.3. OTHER COMMITMENTS

The Company has entered into license agreements for the distribution of
music publishing catalogues which require payments based on the sale of its
products. As of December 31, 1999, no agreement required annual minimum
payments.

Payments to licensors are included in cost of sales in the consolidated
statement of operations and were $93,450 and $24,500 for the years ended
December 31, 1998 and 1999, respectively.

F-24
<PAGE> 105
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES

Accrued liabilities and other current liabilities consist of:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
<S> <C> <C>
Accrued taxes......................................... $ 78 $ 32
Accruals towards personnel and social institutions.... 77 472
Other current liabilities............................. 4 35
---- ----
Total accrued liabilities and other current
liabilities......................................... $159 $539
==== ====
</TABLE>

9. HEADCOUNT

Average headcount of the Company was 15 and 89 employees as of December 31,
1998 and 1999, respectively. In 1998 and 1999, employee costs amounted to
$301,500 and $1,108,400, respectively, and payments to management and the five
most highly paid employees amounted to $260,000 and $327,700, respectively.

As required by French law, the Company contributes to mandatory pension
plans covering all French employees. Payments are based upon salaries and made
to state-owned institutions. In France, legislation also requires that lump sum
retirement benefits be paid to employees still in service with the Company at
their retirement date, based upon their years of service and compensation at
retirement. The obligation related to these retirement benefits was immaterial
at December 31, 1998 and 1999.

The other group companies have no specific pension plans.

10. INCOME TAXES

Loss before income taxes includes the following components:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
France................................................ $(182) $(4,781)
United States......................................... -- (1,042)
Other................................................. -- --
----- -------
Total................................................. $(182) $(5,823)
===== =======
</TABLE>

F-25
<PAGE> 106
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of income taxes computed at the French statutory rate
(41.7% in 1998, 40% in 1999) to the effective income tax rate resulting from the
statement of operations is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Income tax expense (benefit) at French statutory
rate................................................ $(76) $(2,335)
Minimum tax payment................................... 2 7
Unused tax loss carry-forwards........................ 42 2,003
Temporary differences................................. 34 280
Other................................................. -- 52
---- -------
Effective income tax expense (benefit)................ $ 2 $ 7
==== =======
</TABLE>

The Company has no deferred tax liabilities. Significant components of
deferred tax assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Tax losses carried forward............................ $ 81 $ 2,009
Other................................................. 140 356
----- -------
Deferred tax assets................................... 221 2,365
Valuation allowance................................... (221) (2,365)
----- -------
Net deferred tax assets............................... $ -- $ --
===== =======
</TABLE>

Due to its historical losses, the Company believes there is no sufficient
evidence of the recoverability of net deferred tax assets. Accordingly, the
Company has provided valuation allowances covering 100% of its net deferred tax
assets.

At December 31, the Company had operating loss carry forwards in France for
a total of $4,300,000 of which $112,000 are reportable indefinitely. The
remaining losses of $4,188,000 will expire, if not used, as follows:

<TABLE>
<CAPTION>
DECEMBER 31
------------
<S> <C>
2000........................................................ $ 47
2001........................................................ 63
2002........................................................ 17
2003........................................................ 26
2004........................................................ 4,035
------
$4,188
======
</TABLE>

The Company has federal and state net operating loss carry forwards of
$1,042,500 which expire in 2019. These loss carry forwards can only be used by
the entity which has generated the corresponding tax losses.

F-26
<PAGE> 107
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. LITIGATION

In the ordinary course of business, the Company can be party to legal
actions, proceedings or claims. Corresponding costs are accrued when it is more
likely than not that loss will be incurred and the amount can be precisely or
reasonably estimated. The Company is not a party to any material claim or
proceeding.

12. RELATED PARTY TRANSACTIONS

As of December 31, 1998, the Company had received advances from several
shareholders for a total of $104,000. These advances bore interest at an annual
rate of 6% and were substantially satisfied reimbursed during 1999.

13. IMPACT OF THE YEAR 2000 CHANGE (UNAUDITED)

The Company has not experienced any major disruption of its critical
information technology systems and estimates that these systems have correctly
addressed Year 2000 issues. Expenses linked to Year 2000 issues were immaterial
in 1999. The Company is not aware of any Year 2000 issues affecting its products
and services, its internal systems or products and services from third parties.
The Company will monitor during 2000 its critical information systems and those
of its suppliers and partners so as to remediate quickly any potential problems
linked Year 2000 issues.

14. INTRODUCTION OF THE EURO (UNAUDITED)

On January 1, 1999, 11 of the 15 member countries of the European Union
established a fixed conversion rate between their sovereign currencies and
adopted the Euro as their common legal currency. As a result, the Euro now
trades on currency exchanges and is available for non-cash transactions. The
Company is modifying its business operations and systems to accommodate the Euro
conversion. As of December 31, 1999, the cost of these modifications has not
significantly affected its operating results.

15. SUBSEQUENT EVENTS (UNAUDITED)

Distribution agreements

On February 28, 2000, the Company executed a license agreement for the
distribution of music works with Schott Musik International GmbH ("Schott").
Schott granted the Company the right to display and distribute music works for 5
years with the possibility of extending the license period. The Company has an
exclusivity period of two years.

On April 4, 2000, the Company has executed three contracts with EMI
Overseas Holding Ltd. ("EMI"): one consulting contract, one license agreement
for the distribution of music works and one engraving agreement.

F-27
<PAGE> 108
NET4MUSIC S.A.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Share capital increase

In April 2000, the shareholders of the Company authorized the issuance of
905,290 "actions a bons de souscription d'actions" -- ABSA -- which give right
to 905,290 Class A shares and 905,290 warrants.

805,290 ABSA'S have been issued to EMI Overseas Holding Ltd at a price of
FRF 11 in exchange of rights granted by the contracts described in the preceding
section. Two warrants allow the holder to purchase one Class A share at a price
of FRF 25 until December 31, 2000 and FRF 50 until December 31, 2001. These
warrants are exercisable from grant date until December 31, 2001.

100,000 ABSA'S have been issued to Schott Music International GmbH at a
price of FRF 11 in exchange of the rights granted by the contract described in
the preceding section. Two warrants give the right to one Class A share at an
exercise price of FRF 25. These warrants are exercisable from the grant date
until December 31, 2000.

An additional share capital increase was authorized at the Company's
shareholders' meeting of May 15, 2000 resulting in the issuance of 5,357,100
Class B shares at a nominal value of FRF1 representing net proceeds of
$14,798,300. Class B shares benefit over Class A and ordinary shares from
preferential rights on the Company's net assets in case of liquidation.

An additional share capital increase was authorized at the Company's
shareholders' meeting of July 13, 2000 resulting in net proceeds of $49,300.

Stock options

In April 2000, shareholders authorized the issuance of 120,000 "BSPCE"
warrants at a price of FRF 0 per warrant. Each BSCPE grants the holder to
purchase one ordinary share at an exercise price of FRF 11 per share. These
BSCPEs vest over three years (1/3rd are exercisable one year after grant date,
then 1/24th of the remaining BSCPEs vest per month) and expire five years after
grant date.

The shareholders approved the issuance of 154,755 "BSA" warrants at a price
of FRF 0 per BSA. Each BSA allows the holder to purchase one ordinary share at
an exercise price of FRF 11 per share. These BSAs vest over three years (1/36th
per month) and expire five years after grant date.

The BSA shareholders' meeting of May 15, 2000 authorized the issuance of
6,250,019 BSAs at a price of FF 1 for 500 BSAs and 600,000 BSPCE warrants at a
price of FRF 0 per BSPCE. The BSA warrants expire five years after grant date
and allow the holder to purchase one Class B share per BSA at par and according
to specific conditions related to equity transactions based on the number of
exercisable BSAs.

The BSPCE warrants expire five years after grant date and allow the holder
to purchase ordinary shares at an exercise price of FRF 20 per share and
according to specific conditions on the number of exercisable BSPCEs. They are
exercisable only in the case the Company's ordinary shares are listed on a Stock
market.

The shareholders' meeting of July 13, 2000 approved the issuance of 40,000
BSAs.

F-28
<PAGE> 109

INDEPENDENT AUDITOR'S REPORT

To the Stockholders
Coda Music Technology, Inc.

We have audited the accompanying consolidated balance sheets of Coda Music
Technology, Inc. and subsidiary as of December 31, 1998 and 1999, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Coda Music
Technology, Inc. and subsidiary as of December 31, 1998 and 1999, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.

Minneapolis, Minnesota,
February 11, 2000

F-29
<PAGE> 110

CODA MUSIC TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1998 1999 2000
------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............. $ 563,685 $ 1,345,599 $ 1,154,519
Short-term investments................. 1,411,420 608,600 717,267
Accounts receivable, less allowance of
$25,000............................. 432,604 484,515 498,166
Inventories............................ 274,163 200,242 246,722
Other current assets................... 93,825 119,480 89,677
------------ ------------ ------------
Total current assets.............. 2,775,597 2,758,436 2,706,351
EQUIPMENT, FURNITURE AND FIXTURES, at
cost, less accumulated depreciation of
$1,018,108, $841,348, and $881,421 in
1998, 1999, and 2000, respectively..... 273,425 249,660 249,843
SOFTWARE DEPOSIT......................... -- 200,000 332,494
REPERTOIRE DEVELOPMENT COSTS, net of
accumulated amortization of $548,553,
$869,548, and $942,464 in 1998, 1999,
and 2000, respectively................. 643,248 486,891 438,845
PREPAID ROYALTIES........................ 185,144 192,490 204,890
OTHER ASSETS............................. 87,881 99,527 101,004
------------ ------------ ------------
$ 3,965,395 $ 3,987,004 $ 4,033,427
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities on long-term debt... $ -- $ -- $ 75,075
Accounts payable....................... 228,677 619,944 313,889
Reserve for Product Returns............ 156,787 210,858 179,988
Accrued expenses:
Compensation........................ 405,804 373,761 206,148
Royalties........................... 47,026 56,474 75,669
Post contract support............... 103,000 80,000 80,000
Other............................... 8,494 38,209 42,848
Deferred revenue....................... 61,017 89,548 79,214
------------ ------------ ------------
Total current liabilities......... 1,010,805 1,468,794 1,052,831
------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
LONG-TERM DEBT, less current maturities
(Note 3)............................... -- -- 174,925
SHAREHOLDERS' EQUITY (Notes 3 and 4):
common stock, without par value,
15,000,000 shares authorized;
6,194,732, 6,216,319, and 6,364,402
issued and outstanding in 1998,
1999, and 2000, respectively........ 13,707,259 13,726,491 13,953,917
Accumulated deficit.................... (10,752,669) (11,208,281) (11,148,246)
------------ ------------ ------------
Total shareholders' equity........ 2,954,590 2,518,210 2,805,671
------------ ------------ ------------
$ 3,965,395 $ 3,987,004 $ 4,033,427
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-30
<PAGE> 111

CODA MUSIC TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------ ------------------------
1998 1999 1999 2000
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET SALES........................ $6,413,045 $6,356,136 $1,216,357 $1,803,732
COST OF SALES.................... 1,160,066 772,421 160,828 230,538
---------- ---------- ---------- ----------
GROSS PROFIT..................... 5,252,979 5,583,715 1,055,529 1,573,194
OPERATING EXPENSES:
Sales and marketing............ 1,697,715 2,040,615 433,547 598,275
Product development............ 1,657,213 1,341,166 353,479 358,501
General and administrative..... 1,935,176 2,729,191 563,546 576,660
Product repositioning (Note
2).......................... 856,000 -- -- --
---------- ---------- ---------- ----------
Total operating
expenses............... 6,146,104 6,110,972 1,350,572 1,533,436
---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS.... (893,125) (527,257) (295,093) 39,758
INTEREST INCOME, NET............. 88,670 71,645 19,753 20,277
---------- ---------- ---------- ----------
Net income (loss)......... $ (804,455) $ (455,612) $ (275,290) $ 60,035
========== ========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (NOTE 2)........... 6,198,965 6,202,036 6,194,965 6,288,101
========== ========== ========== ==========
BASIC AND DILUTED NET INCOME
(LOSS) PER COMMON SHARE (NOTE
2)............................. $ (.13) $ (.07) $ (.04) $ .01
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-31
<PAGE> 112

CODA MUSIC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------------ ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
--------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1997..... 6,199,732 $13,712,572 $ (9,968,214) $3,744,358
Purchase of common stock
(Note 4).................. (5,000) (5,313) -- (5,313)
Licensing expense from the
issuance of warrants...... -- -- 20,000 20,000
Net loss..................... -- -- (804,455) (804,455)
--------- ----------- ------------ ----------
BALANCE, December 31, 1998..... 6,194,732 13,707,259 (10,752,669) 2,954,590
Exercise of warrants......... 21,587 19,232 19,232
Net loss..................... (455,612) (455,612)
--------- ----------- ------------ ----------
BALANCE, December 31, 1999..... 6,216,319 13,726,491 (11,208,281) 2,518,210
Exercise of stock options and
warrants (unaudited)...... 148,083 227,426 -- 227,426
Net income (unaudited)....... -- 60,035 60,035
--------- ----------- ------------ ----------
BALANCE, March 31, 2000
(unaudited).................. 6,364,402 $13,953,917 $(11,148,246) $2,805,671
========= =========== ============ ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-32
<PAGE> 113

CODA MUSIC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
-------------------------- ------------------------
1998 1999 1999 2000
----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................... $ (804,455) $ (455,612) $ (275,290) $ 60,035
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization....... 574,016 507,181 136,695 114,677
Licensing expense from issuance of
warrants.......................... 20,000 -- -- --
Change in current assets and
liabilities:
Accounts receivable............... 202,236 (51,911) 126,679 (13,651)
Inventories....................... 342,533 73,921 (16,376) (46,480)
Prepaid royalties................. (4,039) (7,346) (725) (12,400)
Other current assets.............. (625) (25,655) 10,942 29,803
Accounts payable.................. (65,721) 391,267 (55,128) (306,055)
Reserve for product returns....... (93) 54,071 46,203 (30,870)
Accrued expenses.................. 174,439 (15,880) (141,216) (143,779)
Deferred revenue.................. (141,586) 28,531 7,068 (10,334)
----------- ----------- ---------- ----------
Net cash provided by (used in)
operating activities........ 296,705 498,567 (161,148) (359,054)
INVESTING ACTIVITIES:
Purchases of equipment, furniture and
fixtures............................ (136,988) (342,526) (16,012) (171,936)
Capitalized repertoire development
cost................................ (373,748) (164,638) (46,645) (24,870)
Purchase of short-term investments..... (5,837,453) (1,135,180) -- --
Sale of short-term investments......... 5,405,033 1,938,000 -- --
Patent expenditures.................... (18,008) (31,541) (8,114) (3,979)
----------- ----------- ---------- ----------
Net cash provided by (used in)
investing activities........ (961,161) 264,115 (70,771) (200,785)
FINANCING ACTIVITIES:
Proceeds from stock options
exercised........................... -- -- -- 227,426
Proceeds from term note................ -- -- -- 250,000
Purchase of common stock............... (5,313) -- -- --
Proceeds from exercise of warrants..... -- 19,232 -- --
----------- ----------- ---------- ----------
Net cash provided by (used in)
financing activities........ (5,313) 19,232 -- 477,426
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ (669,769) 781,914 (231,919) (82,413)
CASH AND CASH EQUIVALENTS, BEGINNING..... 1,233,454 563,685 1,975,105 1,954,199
----------- ----------- ---------- ----------
CASH AND CASH EQUIVALENTS, ENDING........ $ 563,685 $ 1,345,599 $1,743,186 $1,871,786
=========== =========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-33
<PAGE> 114

CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

1. ORGANIZATION AND NATURE OF BUSINESS

Coda Music Technology, Inc. (the Company) develops and markets proprietary
music technology products that enhance music learning and composition, increase
productivity and make practicing and performing music fun. The Company's
innovative products provide easy-to-use, efficient alternatives to traditional
practice, education and composition techniques. The company operates in one
business segment.

Management believes that cash and cash equivalents, short-term investments,
its line of credit and funds generated from the sale of products will be
sufficient to meet operating requirements in 2000.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

UNAUDITED INTERIM FINANCIAL INFORMATION

The accompanying consolidated financial statements and related notes as of
March 31, 2000, and for the quarters ended March 31, 1999 and 2000, are
unaudited, but include all adjustments, consisting only of normal recurring
adjustments, that the Company considers necessary for a fair presentation of its
consolidated financial position, operating results, and cash flows for the
interim date and periods presented. Results for the quarter ended March 31,
2000, are not necessarily indicative of results for the entire fiscal year or
future periods.

PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of Coda Music
Technology, Inc. and its wholly owned subsidiary. All significant intercompany
accounts and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents consist of money market instruments with original
maturities of 90 days or less. Short-term investments consist of U.S. Treasury
securities with original maturities of 12 months or less which are not cash
equivalents. Cash equivalents and short-term investments are recorded at cost,
which approximates fair value. All short-term investments are considered to be
available for sale. Unrealized gains or losses were immaterial at December 31,
1998 and 1999, and March 31, 2000. The Company maintains its cash in bank
deposit accounts, which, at times, may exceed federally insured limits. The
Company has insured balances in excess of federally insured limits. The Company
has not experienced any losses in such accounts.

F-34
<PAGE> 115
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash and cash equivalents,
short-term investments, trade accounts receivable, accounts payable and a line
of credit for which current carrying amounts approximate fair market value.

INVENTORIES

Inventories are stated at the lower of first-in, first-out cost or market
and consist of finished products and components.

EQUIPMENT, FURNITURE AND FIXTURES

Equipment, furniture and fixtures are stated at cost and are depreciated
using the straight-line method over their estimated useful lives of three to
five years. Repairs and maintenance are charged to expense as incurred. In 2000
the Company is implementing a new financial and operation software system at an
estimated cost of $450,000, of which $200,000 was paid as of December 31, 1999.

REPERTOIRE DEVELOPMENT COSTS

The Company capitalizes the costs incurred in the development of repertoire
software in accordance with Statement of Financial Accounting Standards (SFAS)
No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed." The Company has capitalized $1,191,801, $1,356,439, and
$1,381,309 as of December 31, 1998 and 1999, and March 31, 2000, respectively,
of costs incurred in the development of repertoire. These costs are amortized
using the straight-line method over the economic lives of the assets, not to
exceed five years, beginning when the repertoire products are released. The
Company periodically evaluates whether events and circumstances have occurred
that indicate the remaining balance of repertoire development costs may not be
recoverable.

Other product development costs associated with development of software
applications are charged to expense since the costs incurred between the point
in time the technological feasibility of these products is established and the
time when such products are available for general release to customers has not
historically been significant.

PATENTS AND TRADEMARKS

The Company capitalizes the costs associated with obtaining patents,
trademarks and Internet domain names. These costs are being amortized over the
estimated useful lives of the assets, which range from three to 20 years.

F-35
<PAGE> 116
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION

Revenues and related cost of sales are recorded at the time of shipment. In
the event that software upgrade rights are granted to customers at no charge,
associated revenues are deferred until shipment of the upgrade. Costs are
accrued for estimated returns relating to stock balancing arrangements with
resellers. Costs related to insignificant obligations, which include
postcontract telephone support, are accrued.

PRODUCT REPOSITIONING

In 1998 the Company developed SmartMusic Studio, a new and renamed version
of the Vivace Practice Studio(TM) product. In connection with this introduction,
the Company no longer needed to utilize some of the component parts. The Company
recorded the cost of returns, exchanges and inventory obsolescence resulting
from this product repositioning and classified the net charge of $856,000 as an
operating expense in 1998.

INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating loss or
tax credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
amounts of assets and liabilities recorded for income tax and financial
reporting purposes. Deferred tax assets are reduced by a valuation allowance
when management determines that it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.

NET LOSS PER COMMON SHARE

Basic and diluted net loss per common share was computed by dividing the
net loss by the weighted average number of shares of common stock. In accordance
with the requirements of Financial Accounting Standard No. 128, common stock
equivalents have been excluded from the calculation, as their inclusion would be
antidilutive.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-36
<PAGE> 117
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS

Certain amounts in the 1998 consolidated balance sheet and consolidated
statement of operations have been reclassified to conform with the 1999
presentation.

3. DEBT

LINE OF CREDIT

The Company has a $500,000 line-of-credit agreement that expires on
February 14, 2001. There were no borrowings outstanding as of December 31, 1998
and 1999, or March 31, 2000. Borrowings under the agreement are limited to 75%
of eligible accounts receivable plus 25% of eligible inventories, as defined,
bear interest at the bank's reference rate (8.50% and 9.0% as of December 31,
1999, and March 31, 2000, respectively) plus 1% and are collateralized by all of
the accounts receivable, inventories and general intangibles of the Company. The
loan agreement supporting the line of credit requires the Company to maintain
certain levels of tangible net worth. While this agreement is in effect, the
Company may not incur additional indebtedness, liquidate or merge the Company,
pay dividends or acquire any other entity without the prior approval of the
lender. Further, a 25% or more change in ownership of the Company constitutes an
event of default under the agreement.

4. SHAREHOLDERS' EQUITY

AUTHORIZED SHARES

The Company's Restated Articles of Incorporation authorized the issuance of
30,000,000 shares of no par value capital stock. Of such authorized shares,
15,000,000 have been designated as common shares and 15,000,000 are undesignated
as of December 31, 1999, and March 31, 2000.

STOCK OPTIONS

The Company has a stock option plan pursuant to which options for up to
1,325,000 shares of its common stock may be issued to key employees, directors
and officers of the Company. The options vest over periods of up to six years
and are granted at prices which must be at least equal to the fair market value
of the common stock at the date of grant.

The Company has also granted nonqualified stock options to directors and
consultants of the Company. The options vest over periods of up to four years
and have been granted at prices which were equal to the fair market value of the
common stock at the date of grant. In 1998, the Company repriced certain stock
options previously granted to the fair market value at the date of repricing.

F-37
<PAGE> 118
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

4. SHAREHOLDERS' EQUITY (CONTINUED)
The following summarizes stock issued under the Company's stock option
plans.

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OUTSTANDING EXERCISE PRICE
----------- ----------------
<S> <C> <C>
Balance at December 31, 1997........................ 749,620 $1.56
Granted........................................... 89,000 1.22
Canceled.......................................... (209,120) 1.68
-------- -----
Balance at December 31, 1998........................ 629,500 1.42
Granted........................................... 287,500 2.05
Canceled.......................................... (122,001) 1.71
-------- -----
Balance at December 31, 1999........................ 794,999 $1.59
-------- -----
Granted (unaudited)............................... 40,000 2.50
Canceled (unaudited).............................. (7,916) 1.11
Exercised (unaudited)............................. (148,083) 1.54
-------- -----
Balance March 31, 2000 (unaudited).................. 679,000 1.68
======== =====
Exercisable at March 31, 2000 (unaudited)........... 443,911 1.70
======== =====
Exercisable at December 31, 1999.................... 554,178 $1.62
======== =====
Exercisable at December 31, 1998.................... 401,197 $1.53
======== =====
</TABLE>

The Company accounts for stock options under Accounting Principles Board
Opinion No. 25, under which no compensation cost has been recognized. Had
compensation cost for these options been determined consistent with SFAS No.
123, "Accounting for Stock-Based Compensation," the net loss and loss per share
would have been increased to the following pro forma amounts:

<TABLE>
<CAPTION>
DECEMBER 31
---------------------- MARCH 31,
1998 1999 2000
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Net income (loss)
As reported................................ $(804,455) $(455,612) $60,035
Pro forma.................................. (825,146) (653,433) 40,789
Basic and diluted net income (loss) per share
As reported................................ (.13) (.07) .01
Pro forma.................................. (.13) (.11) .01
</TABLE>

All options outstanding at December 31, 1999 were granted with exercise
prices greater than or equal to the fair market value of the common stock at the
date of grant. For purposes of calculating the above required disclosure, the
fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1998, 1999, and 2000,

F-38
<PAGE> 119
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

4. SHAREHOLDERS' EQUITY (CONTINUED)
respectively: risk-free interest rates of 4.94%, 5.13%, and 6.21%, no expected
dividend yield, expected lives of seven years and expected volatility of 57%,
64%, and 66%.

The weighted average fair value of options granted during 1998, 1999, and
2000 was $.76 , $1.42 and $1.63, respectively. Options issued, which remain
outstanding at March 31, 2000, have an exercise price between $1.00 and $4.50,
and a weighted average remaining contractual life of 4.37 years.

WARRANTS

In 1999, 34,616 warrants were exercised resulting in a $19,232 addition to
common stock. During the period ended March 31, 2000, 9,616 warrants were
exercised resulting in a $19,232 addition to common stock. In connection with
certain financing and other transactions, the Company has issued warrants to
purchase shares of common stock at prices between $1.25 and $7.20 per share,
exercisable over periods of five to seven years from the date of grant. Warrants
outstanding at March 31, 2000, total 1,142,125, have a weighted average exercise
price of $2.70 and expire as follows: 2000-992,125, 2001-50,000, 2002-70,000 and
2005-30,000.

5. INCOME TAXES

There has been no tax expense recorded due to losses incurred in both 1998
and 1999. At December 31, 1999 the Company has approximately $10,000,000 in
operating loss carryforwards and $488,000 in research and development credits
which may be used to offset otherwise future taxable income. Loss carryforwards
and credits as of December 31, 1999, have the following expiration dates:

<TABLE>
<CAPTION>
NET RESEARCH AND
OPERATING DEVELOPMENT
LOSS CREDITS
--------- ------------
<S> <C> <C>
2005................................................... $ 2,000 $ 0
2006................................................... 38,000 0
2007................................................... 243,000 16,000
2008................................................... 825,000 90,000
2009................................................... 1,586,000 113,000
2010................................................... 2,128,000 71,000
2011................................................... 2,192,000 63,000
2012................................................... 1,736,000 47,000
2018................................................... 770,000 63,000
2019................................................... 480,000 25,000
</TABLE>

F-39
<PAGE> 120
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

5. INCOME TAXES (CONTINUED)
The tax effects of principle temporary differences at an assumed effective
annual rate of 40 percent are shown in the following table:

<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Loss carryforwards.................................... $ 3,711,000 $ 4,000,000
Research and Development Credits...................... 463,000 488,000
Allowance for doubtful accounts....................... 10,000 10,000
Inventory............................................. 154,000 91,000
Depreciation.......................................... 158,000 0
Compensation expense.................................. 59,000 79,000
Other accruals........................................ 112,000 179,000
----------- -----------
Gross deferred tax assets............................. 4,667,000 4,847,000
Valuation allowance for deferred tax assets........... (4,667,000) (4,748,000)
----------- -----------
Net deferred tax assets............................... 0 99,000
Deferred tax liability:
Depreciation........................................ 0 99,000
----------- -----------
Net deferred taxes.................................... $ 0 $ 0
=========== ===========
</TABLE>

Realization of deferred tax assets is dependent upon the generation of
sufficient future taxable income. Management has determined that sufficient
uncertainty exists regarding the realizability of the net deferred tax assets
and, accordingly, has reserved the net deferred tax assets of the Company.

The income tax provision differs from the amount of income tax determined
by applying the U.S. federal income tax rate to pretax income for the years
ended December 31, 1998 and 1999, due to the valuation allowance recorded
against deferred tax assets.

6. MAJOR CUSTOMERS AND FOREIGN SALES

During 1999 and for the three months ended March 31, 2000, the Company had
sales of approximately $732,000 and $265,000, respectively, to a major customer.
Accounts receivable from this customer were approximately $81,000 and $109,000
at December 31, 1999 and March 31, 2000, respectively. There were no major
customers in 1998. The Company had foreign export sales amounting to 15.2% and
18.2% of total net sales for the years ended December 31, 1998 and 1999
respectively and 19.7% and 18.8% of total net

F-40
<PAGE> 121
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

MAJOR CUSTOMERS AND FOREIGN SALES (CONTINUED)
sales for the three months ended March 31, 1999 and 2000, respectively. The
sales were made principally to the following locations:

<TABLE>
<CAPTION>
FOR
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
-------------- --------------
1998 1999 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Japan............................................... 2.9% 4.7% 4.7% 7.6%
Germany............................................. 2.9 2.5 3.8 0.7
United Kingdom...................................... 1.4 1.4 1.7 1.6
Canada.............................................. 1.3 2.0 1.2 2.0
Elsewhere........................................... 6.7 7.6 8.3 6.9
---- ---- ---- ----
15.2% 18.2% 19.7% 18.8%
==== ==== ==== ====
</TABLE>

7. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases office and warehouse space and certain equipment under
operating leases through 2003. The approximate future minimum lease payments as
of December 31, 1999 under these leases are $127,000 in 2000, $13,000 in 2001,
$13,000 in 2002 and $10,000 in 2003. Rent expense for the years ended December
31, 1998 and 1999 was $141,569 and $140,827, respectively.

LICENSING AND EXCLUSIVITY AGREEMENTS

The Company has entered into license/exclusivity agreements, which require
payments based on sales of its products or, in some cases, annual minimum
payments. Minimum royalties related to a significant licensor are as follows:

<TABLE>
<S> <C>
2000........................................................ $53,300
2001........................................................ 40,800
2002........................................................ 36,300
2003........................................................ 36,300
2004 and thereafter......................................... 72,600
</TABLE>

Royalty expense, including amounts related to the agreement referred to
above, totaled approximately $225,000 and $152,000 in the years ended December
31, 1998 and 1999, respectively, and are reflected as a component of cost of
sales in the accompanying statements of operations.

F-41
<PAGE> 122
CODA MUSIC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION APPLICABLE TO THE THREE-MONTH PERIODS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED.)

7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
401(k) Savings Plan

The Company has established a 401(k) savings plan for the benefit of
qualified employees. Under the plan, qualified employees may elect to defer up
to 20% of their compensation, subject to a maximum limit determined by the
Internal Revenue Service. The Company, at the discretion of the Board of
Directors, may elect to make additional contributions. The Company made no
contributions to the plan in 1998 or 1999 or during the three months ended March
31, 2000.

8. MANAGEMENT FEE

The Company paid management fees totaling $30,300 and $41,075 during the
years ended December 31, 1998 and 1999, respectively, to affiliates of directors
for management services provided to the Company. $22,500 was owed to these
affiliates at December 31, 1999.

9. SUBSEQUENT EVENTS (UNAUDITED)

In February 2000, 75,000 shares of common stock were issued pursuant to the
exercise of stock options.

In March 2000, the Company converted $250,000 of the line of credit into a
10% installment note payable in monthly installments of $8,085, including
interest, over three years. Per terms of the agreement, a $100,000 certificate
of deposit is at the borrowers' facility. The loan is secured by substantially
all assets of the Company.

In March 2000, the Company extended the lease on its office space through
March 2002. Additional future minimum lease payments under this lease at March
31, 2000, are $7,000 in 2000, $84,000 in 2001, and $21,000 in 2002.

F-42
<PAGE> 123

Appendix A

STOCK PURCHASE AGREEMENT

CODA MUSIC TECHNOLOGY, INC.

NET4MUSIC S.A.

SHAREHOLDERS OF NET4MUSIC S.A.
<PAGE> 124

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (the "Agreement") is made and entered into
this 11th day of August, 2000 by and among CODA MUSIC TECHNOLOGY, INC. ("CODA"),
a Minnesota corporation, NET4MUSIC S.A. ("NET4MUSIC") an organization organized
under the laws of the Republic of France, and all of the legal or equitable
owners of NET4MUSIC Stock or NET4MUSIC Purchase Rights (as defined below) whose
names are listed on Schedules 2.1 and 2.2 hereto (individually a "Shareholder";
collectively the "Shareholders").

WITNESSETH:

WHEREAS, CODA wishes to buy and the Shareholders wish to sell to CODA, on
the terms and for the consideration hereinafter provided, approximately 82% of
the issued and outstanding capital stock of NET4MUSIC (the "NET4MUSIC Stock").

In consideration of the respective representations, warranties, covenants
and agreements contained herein, and for other valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:

ARTICLE I

DEFINITIONS

1.1) Specific Definitions. As used in this Agreement, the following terms
shall have the meanings set forth herein or as referenced below:

"Affiliate" of any entity means any other entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the first entity. Control shall mean
owning more than fifty percent (50%) of the total voting power of the
entity.

"Agreement" means this Agreement and all Exhibits and Schedules
hereto.

"Best knowledge" of NET4MUSIC or CODA means those matters actually
known to the officers or directors of person as well as those matters that
a reasonable person in the position of such officer or director should have
known.

"CODA" means CODA MUSIC TECHNOLOGY, INC. and, unless otherwise
indicated, each of its subsidiaries identified in Schedule 5.4 to this
Agreement.

"CODA Board" means the Board of Directors of CODA.

"Code" means the Internal Revenue Code of 1986, as amended.

"Closing" and "Closing Date" have the meanings defined in Section 9.1.

"Conversion Ratio" means that number of shares of CODA common stock
for each share of NET4MUSIC Stock to be calculated as follows: (2.0303 X
fully diluted outstanding shares of CODA common stock) / fully diluted
outstanding NET4MUSIC Stock.

A-2
<PAGE> 125

"Employee Plans" means any health care plan or arrangement; life
insurance or other death benefit plan; deferred compensation or other
pension or retirement plan; stock option, bonus or other incentive plan;
severance or early retirement plan; or other fringe or employee benefit
plan or arrangement; or any employment or consulting contract or executive
compensation agreement; whether the same are written or otherwise, formal
or informal, voluntary or required by law or by policies or practices of
NET4MUSIC or CODA, as the case may be, including, without limitation, any
"pension plan" as defined in Section 3(2) of ERISA which is not a
Multiemployer Plan, and any "welfare plan" as defined in Section 3(1) of
ERISA (whether or not any of the foregoing is funded), (i) to which
NET4MUSIC or CODA, as the case may be, is a party or by which NET4MUSIC or
CODA, as the case may be, is bound; (ii) which NET4MUSIC or CODA, as the
case may be, has at any time established or maintained for the benefit of
or relating to present or former employees, leased employees, consultants,
agents, and/or their dependents, or directors of NET4MUSIC or CODA, as the
case may be; or (iii) with respect to which NET4MUSIC or CODA, as the case
may be, has made any payments or contributions since July 1, 1990.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all regulations promulgated thereunder.

"Intellectual Property" means letters patent and patent applications;
trademarks, service marks and registrations thereof and applications
therefor; copyrights and copyright registrations and applications; and/or
discoveries, ideas, technology, domain names, know-how, trade secrets,
processes, formulas, drawings and designs, computer programs or software;
and all amendments, modifications, and improvements to any of the
foregoing.

"Inventories" means finished goods, raw materials and ingredients,
work-in-process, wares and merchandise.

"IRS" means the United States Internal Revenue Service.

"Liens" means liens, mortgages, charges, security interests, claims,
voting trusts, pledges, encumbrances, options, assessments, restrictions,
or third party or spousal interests of any nature.

"Multiemployer Plan" means as defined in Section 3(37) of ERISA.

"NET4MUSIC" means NET4MUSIC S.A. and, unless otherwise indicated, each
of its subsidiaries identified in Schedule 3.4 to this Agreement.

"NET4MUSIC Assumed Options" means all options to acquire shares of
NET4MUSIC Stock that are outstanding as of the Closing other than NET4MUSIC
BSPCE Options and those NET4MUSIC BSA Options shown on Schedule 6.13.

"NET4MUSIC Assumed Purchase Right" means all options, warrants and
other rights to acquire shares of NET4MUSIC Stock that are outstanding at
the Closing, whether or not exercisable and whether or not vested, other
than NET4MUSIC BSPCE Options and those NET4MUSIC BSA Options shown on
Schedule 6.13.

A-3
<PAGE> 126

"NET4MUSIC Board" means the NET4MUSIC Board of Directors.

"NET4MUSIC BSPCE Options" means those options to acquire shares of
NET4MUSIC Stock that are outstanding as of the Closing and that are
identified as BSPCE options on Schedule 3.3 to this Agreement.

"NET4MUSIC BSA Options" means those options to acquire shares of
NET4MUSIC Stock that are outstanding as of the Closing and that are
identified as BSA options on Schedule 3.3 to this Agreement.

"NET4MUSIC Options" means all options to acquire shares of NET4MUSIC
Stock that are outstanding as of the Closing, as identified on Schedule 3.3
to this Agreement.

"NET4MUSIC Preferred Stock" means all of the "A" and "B" preferred
stock of NET4MUSIC outstanding immediately prior to the Closing.

"NET4MUSIC Purchase Right" means all options, warrants and other
rights to acquire shares of NET4MUSIC Stock that are outstanding at the
Closing, whether or not exercisable and whether or not vested.

"NET4MUSIC Stock" means all common stock of NET4MUSIC outstanding as
of the Closing.

"Put and Call Agreement" means that certain agreement of even date
herewith between CODA and the other parties thereto, a form of which is
attached as Schedule 6.13.

"Registration Statement" means the registration statement filed on
Form S-4 with the SEC by CODA to register the issuance of the CODA common
stock to the Shareholders and the Proxy Statement/Prospectus filed with and
incorporated as part of such registration statement, which Proxy Statement
relates to the meeting of the shareholders of CODA for the purpose of
obtaining the Required CODA Shareholder Vote.

"Required CODA Shareholder Vote" means approval by the holders of a
majority of the shares of the CODA common stock outstanding as of the
record date of the CODA shareholder meeting called to authorize (i) the
issuance of the CODA common stock to the Shareholders, (ii) the amendment
of the Articles of Incorporation of CODA to effect an increase in the
authorized common stock of CODA to 50,000,000 shares and the name change of
CODA to NET4MUSIC INC. effective upon the Closing and (iii) the increase in
the number of shares reserved for issuance under CODA's 1992 Stock Option
Plan.

"SEC" means the Securities and Exchange Commission.

"SEC Documents" means CODA's Annual Report on Form 10-KSB for the year
ended December 31, 1999 and each filing made by CODA with the SEC since the
filing of such Form 10-KSB.

"Schedule 3.7A Financial Statements" mean as defined in Section 3.7.

"Securities Act" means the Securities Act of 1933, as amended, and all
regulations promulgated thereunder.

A-4
<PAGE> 127

"Shareholders' Representative" means the person designated in Section
12.14 as the Shareholders' attorney-in-fact for purposes of this Agreement.

"Taxes" means all taxes, penalties, interest, fines, duties,
withholdings, assessments, and charges assessed or imposed by any federal,
state, local or foreign governmental authority.

1.2) Definitional Provisions.

(a) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.

(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice-versa.

(c) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to or
referenced in this Agreement, and references to an "Article" or a "Section"
are, unless otherwise specified, to one of the Articles or Sections of this
Agreement.

(d) The term "person" includes any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or
any department or agency thereof.

(e) References to dollar amounts are references to U.S. dollars unless
otherwise indicated.

ARTICLE II
PURCHASE AND SALE OF STOCK

2.1) Sale of NET4MUSIC Stock. Each Shareholder shall convey, transfer,
assign and deliver to CODA at the Closing, free and clear of all Liens, all
NET4MUSIC Stock owned by such Shareholder as set forth on Schedule 2.1. The
Shareholders shall transfer title and ownership of the NET4MUSIC Stock to CODA
and CODA shall accept title and ownership of the NET4MUSIC Stock at the Closing.
The NET4MUSIC Stock shall constitute approximately eighty-two percent (82%) of
the issued and outstanding capital stock of NET4MUSIC as of the Closing.
Transfer forms for approximately eighty-two percent (82%) of the NET4MUSIC Stock
shall be duly signed in a form acceptable to CODA and its counsel.

2.2) Assumption of Purchase Rights; Conversion of Preferred Stock.

(a) Each NET4MUSIC Assumed Purchase Right shall, without any action on
the part of NET4MUSIC or the holder thereof, be assumed by CODA. Each
NET4MUSIC Assumed Option shall be assumed in such manner that CODA (i) is a
corporation "assuming a stock option in a transaction to which Section
424(a) applies" within the meaning of Section 424 of the Code and the
regulations thereunder or (ii) to the extent that Section 424 of the Code
does not apply to any such NET4MUSIC Assumed Option, would be such a
corporation were Section 324 of the Code applicable to such NET4MUSIC
Assumed Option. From and after the Closing, all references to NET4MUSIC in
the instruments governing the NET4MUSIC Assumed Purchase Rights shall be
deemed to refer to CODA. The NET4MUSIC Assumed Purchase Rights shall

A-5
<PAGE> 128

be exercisable upon the same terms and conditions as under the instruments
governing such NET4MUSIC Assumed Purchase Rights (including provisions
regarding vesting and the acceleration thereof) except that (i) such
NET4MUSIC Assumed Purchase Rights shall entitle the holder to purchase from
CODA the number of shares of CODA common stock (rounded to the nearest
whole number of such shares) that equals the product of the Conversion
Ratio multiplied by the number of shares of NET4MUSIC Stock subject to such
NET4MUSIC Assumed Purchase Right immediately prior to the Closing, (ii) the
exercise price per share of CODA common stock shall be an amount (rounded
up to the nearest full cent) equal to the exercise price per share of
NET4MUSIC Stock in effect immediately prior to the Closing divided by the
Conversion Ratio, and (iii) the NET4MUSIC Assumed Purchase Rights shall
vest to the extent required pursuant to the current terms of the
instruments governing such NET4MUSIC Assumed Purchase Rights. Except to the
extent required pursuant to the current terms of such NET4MUSIC Purchase
Rights, NET4MUSIC shall not take any action to accelerate the vesting of
any NET4MUSIC Purchase Rights. Prior to the Closing, the CODA Board shall,
for purposes of Rule 16b-3(d)(1) promulgated under Section 16 of the
Securities Exchange Act of 1934, and the rules and regulations thereunder
(the "1934 Act"), specifically approve (i) the assumption by CODA of the
NET4MUSIC Assumed Options and (ii) the issuance of CODA common stock in the
transaction contemplated by this Agreement to directors, officers and
shareholders of NET4MUSIC who will become subject to Section 16 of the 1934
Act immediately following the Closing.

(b) As promptly as practicable after the Closing, CODA shall issue to
each holder of a NET4MUSIC Assumed Purchase Right a written instrument
informing such holder of the assumption by CODA of such NET4MUSIC Assumed
Purchase Right. CODA shall comply with the terms of the NET4MUSIC Option
Plan that govern the terms of NET4MUSIC Assumed Purchase Rights. All
outstanding NET4MUSIC Purchase Rights are set forth on Schedule 3.3.

(c) The NET4MUSIC BSPCE Options and those NET4MUSIC BSA options shown
on Schedule 6.13 shall be exercisable for NET4MUSIC Stock upon the same
terms and conditions as under the instruments governing such NET4MUSIC
BSPCE and BSA Options (including provisions regarding vesting and the
acceleration thereof), except that NET4MUSIC Stock issued upon exercise of
a NET4MUSIC BSPCE Option and those NET4MUSIC BSA options shown on Schedule
6.13 shall be immediately exchanged for shares of CODA common stock
pursuant to the terms of Put and Call Agreement as if such shares of
NET4MUSIC Stock had been outstanding as of the Closing.

(d) Each holder of outstanding shares of NET4MUSIC Preferred Stock
hereby irrevocably elects to convert each such share of NET4MUSIC Preferred
Stock legally or beneficially owned by such holder into one share of
NET4MUSIC Stock effective immediately prior to the Closing. The parties
hereto agree that such NET4MUSIC Preferred Stock shall be deemed to
represent at the Closing the NET4MUSIC Stock into which NET4MUSIC Preferred
Stock is converted.

2.3) Purchase Price. Subject to the terms and conditions of this Agreement
and in reliance upon the representations, warranties and covenants of NET4MUSIC
and the Shareholders herein contained, and in full consideration of such sale,
conveyance, transfer and assignment of the NET4MUSIC Stock to CODA, CODA agrees
to deliver at Closing to each Shareholder a number of shares of CODA common
stock (rounded down to the

A-6
<PAGE> 129

nearest whole number) equal to the Conversion Ratio multiplied by the number of
shares of NET4MUSIC Stock held by such Shareholder. The aggregate number of
shares of CODA common stock each Shareholder shall receive is listed on Schedule
2.3, which Schedule 2.3 shall be finalized immediately prior to the closing.

2.4) No Fractional Shares. No fractional shares of CODA common stock and no
certificates or scrip therefor, or other evidence of ownership thereof, shall be
issued in connection with the purchase of NET4MUSIC Stock. No dividend or other
distribution of CODA shall relate to any fractional share. Fractional share
interests shall not entitle the owner thereof to vote or to any rights of a
shareholder of CODA. All fractional shares of CODA common stock to which a
holder of NET4MUSIC Stock immediately prior to the Closing would otherwise be
entitled, at the Closing, shall be aggregated if and to the extent multiple
NET4MUSIC Stock certificates of such holder are submitted together at the
Closing. NET4MUSIC Stock which cannot be converted into a whole share of CODA
common stock will be purchased by CODA for cash based upon the Conversion Ratio
and the closing price on The Nasdaq Stock Market of CODA common stock on the day
of the Closing. Payment for any such fractional share shall be made within five
(5) calendar days following the Closing; provided, however, that no payment
shall be made for fractional shares if the payment is for less than $1.00.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF NET4MUSIC

NET4MUSIC represents and warrants to, and covenants and agrees with, CODA
as of the date hereof as follows and acknowledges that the same shall be true
and correct as of the Closing Date (as if made at the Closing), shall be deemed
to have been relied upon by CODA.

3.1) Listing of Certain Assets and Data. Attached hereto as Schedules 3.1A
through 3.1L are lists, which are true and complete in all material respects as
of the date hereof, of the matters set forth in the following subsections (a)
through (1).

(a) Real Property. Schedule 3.1A sets forth a description of all real
property owned, leased or subject to option, of record or beneficially, by
NET4MUSIC or otherwise used by NET4MUSIC in the conduct of its business,
stating the ownership status and a brief description of all buildings and
structures located or planned for construction thereon. Prior to the date
of this Agreement, NET4MUSIC has delivered to CODA true and complete copies
of the purchase agreements, leases, or options relating to such real
property.

(b) Equipment. Schedule 3.1B sets forth a list of all material items
of equipment and other similar property and assets owned, leased or
otherwise used by NET4MUSIC, specifically identifying and describing those
items with an original cost to, or total lease payments by, NET4MUSIC in
excess of $10,000, setting forth with respect to all such listed property a
summary description of all Liens relating thereto (other than liens for
taxes due but not yet payable), identifying the parties thereto, the rental
or other payment terms, expiration date and cancellation and renewal terms
thereof. Prior to the date of this Agreement, NET4MUSIC has delivered to
CODA true and complete copies of all currently effective leases,
conditional sales agreements or other similar documents concerning the
items listed in Schedule 3.1B.

A-7
<PAGE> 130

(c) Patents, Trademarks, Formulas, Etc. Schedule 3.1C sets forth a
list of all of NET4MUSIC's patents, trade names, trademarks, service marks,
copyrights, domain names, and applications or registrations for any of the
foregoing, and any licenses granted by or to NET4MUSIC pursuant to which
any of the foregoing is used. Prior to the date of this Agreement,
NET4MUSIC has delivered to CODA true and complete copies of (i) all
issuances, registrations, applications and certificates regarding such
intellectual property, a form of contract with employees or others relating
in whole or in part to disclosure, assignment or patenting of inventions or
discoveries, confidential or proprietary information, copyrights, product
formulas or other know-how and a list of such contracts, and (iii) all
material or master patent, trademark, trade name, copyright, trade secret
or other intellectual property licenses granted at any time by or to
NET4MUSIC and a list of all such licenses.

(d) Certain Leases, Agreements, Etc. Schedule 3.1D sets forth a list
(including, in the case of oral arrangements, a written description of all
material terms thereof) of each lease, contract, agreement or other
commitment, written or otherwise, to which NET4MUSIC is a party (other than
leases, contracts, agreements or commitments furnished pursuant to other
paragraphs of this Section 3.1) involving:

(i) The purchase of any services, raw materials, supplies or
equipment, other than purchase orders for the purchase of products or
services required in the ordinary course of business involving payment
of less than $10,000 per annum or an aggregate of less than $20,000; or

(ii) The sale of assets, products or services, which is in any way
not yet performed and involving a value estimated at more than $10,000,
or any contract for provision of service warranties, sales credits,
product returns, or discounts, warehouse allowances, advertising
allowances or promotional services.

Prior to the date of this Agreement, NET4MUSIC has delivered to CODA
true and complete copies of all written agreements identified in Schedule
3.1D.

(e) Permits, Licenses, Etc. Schedule 3.1E sets forth a list of all
material permits, licenses, approvals or similar permissions held by
NET4MUSIC. Prior to the date of this Agreement, NET4MUSIC has delivered to
CODA true and complete copies of all material permits, licenses, approvals
or other documents identified in Schedule 3.1E.

(f) Banks and Depositories. Schedule 3.1F sets forth a list of each
bank, broker or other depository with which NET4MUSIC has an account or
safe deposit box, the names and numbers of such accounts or boxes and the
names of all persons authorized to draw or execute transactions on such
accounts.

(g) Loans and Credit Agreements, Etc. Schedule 3.1G sets forth a list
of all outstanding mortgages, promissory notes, evidences of indebtedness,
deeds of trust, indentures, loan or credit agreements or similar
instruments for money borrowed, excluding normal trade credit, to which
NET4MUSIC is a party (as lender or borrower), written or otherwise, and all
amendments or modifications, if any, thereof. Prior to the date of this
Agreement, NET4MUSIC has delivered to CODA true and complete copies of all
documents identified in Schedule 3.1G.

(h) Insurance Policies and Claims. Schedule 3.1H sets forth a list,
including the term, coverages, premium rates, limits and deductibles
thereof, of all policies of insurance maintained by NET4MUSIC with respect
to NET4MUSIC and covering their

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respective officers, directors, employees, agents, properties, buildings,
machinery, equipment, furniture, fixtures or operations and a description
of each claim made by NET4MUSIC under any such policy of insurance within
the past three years, describing such claim and the amount thereof. Prior
to the date of this Agreement, NET4MUSIC has delivered to CODA true and
complete copies of all policies of insurance identified in Schedule 3.1H,
and true and complete copies of all documentation regarding claims made
thereunder.

(i) Certain Employees. Schedule 3.1I sets forth (i) the name and
current annual salary rate of each director, officer or employee of
NET4MUSIC whose total remuneration for NET4MUSIC's last fiscal year was, or
for the current year has been set at, in excess of $50,000, together with a
summary of the bonuses, additional compensation and other benefits, if any,
paid or payable to such persons as of the date hereof or in the future;
(ii) the name of each employee and each individual to whom employment has
been offered and who has accepted such offer, including scheduled starting
date, and (iii) the names of all former employees whose employment has
terminated either voluntarily or involuntarily during the preceding
twelve-month period.

(j) Employee Plans. Schedule 3.1J sets forth a list of all Employee
Plans and any related insurance contracts and trust and custodial
agreements. Prior to the date of this Agreement, NET4MUSIC has delivered to
CODA true and complete copies of all documents listed in Schedule 3.1J.

(k) Powers of Attorney. Schedule 3.1K sets forth the names of all
persons, if any, holding powers of attorney from NET4MUSIC and a
description of the scope of each such power of attorney.

(l) Taxes. Schedule 3.1L sets forth a list of (i) all tax, assessment
or information reports and returns filed by or on behalf of NET4MUSIC or
its predecessors with any jurisdiction during the last three years, and
(ii) a list of all tax or assessment elections of NET4MUSIC in effect.
Prior to the date of this Agreement, NET4MUSIC has delivered to CODA true
and complete copies of all documents listed in Schedule 3.1L and all
correspondence to or from taxing authorities since NET4MUSIC's
incorporation and has made available to CODA for review and copying all
working papers of NET4MUSIC's independent auditor related to work done for
NET4MUSIC.

3.2) Organization; Directors and Officers. NET4MUSIC and each of its
subsidiaries identified in Schedule 3.4 is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. NET4MUSIC has all necessary power and authority, corporate and
otherwise, to own its properties and assets and conduct the business presently
being conducted by it. NET4MUSIC is qualified or licensed to transact business
as a foreign or alien corporation in each jurisdiction in which the character of
NET4MUSIC's properties or the nature of its activities makes any such
qualification necessary and where the failure to be so qualified would have a
material adverse effect upon NET4MUSIC or NET4MUSIC's business. Schedule 3.2
sets forth a list of the directors and officers (with all titles and positions
indicated) of NET4MUSIC. NET4MUSIC has heretofore delivered to CODA complete and
correct copies of its organizational documents and all amendments thereto and
any other governing documents or instruments. NET4MUSIC has previously delivered
to CODA a complete and correct copy of the Shareholder Agreement to which the
Shareholders are a party.

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3.3) Capital Stock. The authorized and outstanding capital stock of
NET4MUSIC and each of its subsidiaries is as set forth in Schedule 3.3. Schedule
3.3 sets forth the capitalization of NET4MUSIC and each of its subsidiaries.
Except as specifically described in Schedule 3.3, there are no plans, contracts
or commitments providing for the issuance or granting of NET4MUSIC capital stock
or NET4MUSIC Purchase Rights. There is no indebtedness of NET4MUSIC convertible
into NET4MUSIC capital stock. All issued and outstanding shares of capital stock
of NET4MUSIC have been duly authorized and validly issued, and are fully paid
and nonassessable. All issuances of NET4MUSIC Stock were made in compliance with
all applicable foreign laws and regulations. There are no preemptive rights in
respect of any capital stock of NET4MUSIC.

3.4) Subsidiaries. Except as specifically set forth on Schedule 3.4,
NET4MUSIC has no interest, direct or indirect, in any other business,
corporation, joint venture, partnership or proprietorship and the business
carried on by NET4MUSIC has not been conducted through any other direct or
indirect subsidiary or Affiliate of NET4MUSIC.

3.5) Binding Obligation. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized and approved by all requisite corporate action on the part of
NET4MUSIC and by all requisite corporate, partnership, or other action on the
part of each Shareholder that is not a natural person. NET4MUSIC and each
Shareholder has all requisite power and authority to do and perform all acts and
things required to be done by it under this Agreement and the agreements
contemplated hereby. This Agreement constitutes and, when executed and
delivered, the agreements contemplated hereby will constitute, the valid and
binding obligations of NET4MUSIC and each of the Shareholders, enforceable in
accordance with its and their respective terms except as may be limited by laws
affecting creditors rights generally or by judicial limitations on the right to
specific performance or other equitable remedies.

3.6) Consents Required. Except as specifically set forth in Schedule 3.6,
the execution and delivery of this Agreement, the transfer of the NET4MUSIC
Stock, the assumption of any NET4MUSIC Purchase Rights, and the consummation of
the transactions contemplated hereby in compliance with the terms and provisions
hereof, by NET4MUSIC and each of the Shareholders will not:

(a) Conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under the governing instruments of
NET4MUSIC or of any Shareholder that is not a natural person, or any
material instrument, agreement, mortgage, lease, judgment, order, award,
decree or other instrument or restriction to which NET4MUSIC, or any of the
Shareholders is a party or by which NET4MUSIC or any of the Shareholders or
any of its or their assets is bound or affected;

(b) Require any affirmative approval, consent, authorization or other
order or action of any court, governmental authority, regulatory body,
creditor or any other person; or

(c) Give any party with rights under any such material instrument,
agreement, mortgage, lease, judgment, order, award, decree or other
instrument or restriction the right to terminate, modify or otherwise
change the rights or obligations of NET4MUSIC or the Shareholders
thereunder.

3.7) Financial Statements. NET4MUSIC has previously furnished CODA as
Schedule 3.7A a true and complete copy of NET4MUSIC's audited financial
statements as

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of and for the years ended December 31, 1998 and 1999 and unaudited financial
statements for the three-month period ended March 31, 2000 together with notes
thereto (the "Schedule 3.7A Financial Statements"). All such financial
statements fairly and accurately present in all material respects the financial
position of NET4MUSIC as of their respective dates and the results of operations
for the applicable periods ended on such date. The statements of earnings
included within the Schedule 3.7A Financial Statements do not contain any items
of special or nonrecurring income or any other income not earned in the ordinary
course of business except as expressly specified therein. The Schedule 3.7A
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles, consistent with the prior year-end
except as stated in the notes included therein and except for (i) normal
recurring year-end adjustments which are consistent with United States generally
accepted accounting principles and the prior year-end, and (ii) the requirement
of an auditor's report thereon. The books of account of NET4MUSIC accurately
reflect in all material respects NET4MUSIC's items of income and expense and all
assets and liabilities and accruals which properly should have been reflected
therein in accordance with United States generally accepted accounting
principles consistently applied throughout the periods covered thereby except as
disclosed in the Schedule 3.7A Financial Statements.

3.8) Taxes. NET4MUSIC has timely filed all tax or assessment reports and
tax returns (including any applicable information returns) that may be required
by any law or regulation of any jurisdiction to be filed, and all such reports
and returns are true, correct and complete in all material respects and listed
in Schedule 3.1L. NET4MUSIC has duly paid, deposited or accrued on its books of
account, all Taxes pursuant to such reports and returns, or assessed against
NET4MUSIC, or which NET4MUSIC is obligated to withhold from amounts owing to any
employee. NET4MUSIC has no liability for any Taxes in excess of the amounts
stated in the Schedule 3.7A Financial Statements with respect to all time
periods or portions thereof ending on or before the date of such financial
statements. Neither the assessment of any additional Taxes that by law should
have been reported or paid or in accordance with United States generally
accepted accounting principles should have been accrued, nor any investigation
or audit, is pending, or, to the best of NET4MUSIC's knowledge, threatened or
expected. No taxing or assessment authority has indicated to NET4MUSIC any
intent to conduct an audit or other investigation or asserted any unresolved
deficiencies with respect to Tax liabilities of NET4MUSIC for any period and
NET4MUSIC has no reasonable grounds to know of any facts or circumstances which
would give rise thereto. NET4MUSIC has not waived any statute of limitations in
respect of foreign, federal, state or local Taxes or agreed to any extension of
time with respect to an assessment of deficiency with respect to such Taxes.

3.9) Absence of Undisclosed Liabilities. There are no debts, liabilities,
claims against or obligations of NET4MUSIC, or legal basis therefor, whether
accrued, absolute, contingent, known, unknown or otherwise, and whether due or
to become due, including, but not limited to, liabilities on account of taxes,
other governmental charges, duties, penalties, interest or fines, except:

(a) Liabilities, to the extent set forth or reserved against in the
Schedule 3.7A Financial Statements;

(b) Liabilities incurred in the ordinary course of business (and in
compliance with this Agreement) since the date of the Schedule 3.7A
Financial Statements; or

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3.10) Absence of Certain Changes and Events. Except as specifically set
forth in Schedule 3.10, since the date of the most recent financial statements
included in Schedule 3.7A:

(a) There has not been any material adverse change in the general
affairs, management, net worth or condition (financial or otherwise) of the
businesses or assets of NET4MUSIC, whether or not covered by insurance, or
in the relationships with or prospects or abilities of the suppliers of
NET4MUSIC; NET4MUSIC has conducted its business only in the ordinary
course.

(b) NET4MUSIC has not (i) sold or otherwise disposed of any of its
real property or real property leases, or entered into any renewals or
extensions of such existing leases or entered into any new leases; (ii)
made any increase in the compensation or benefits payable or to become
payable by NET4MUSIC to any officers, employees or consultants whose total
remuneration for the last fiscal year was, or for the current fiscal year
is expected to be after any such increase, more than $50,000, or paid or
accrued any bonus, percentage of compensation, severance benefit or other
like benefit to, or for the credit of, any officer, employee or consultant,
except in accordance with such plans and arrangements as were in effect
prior to the date of the most recent financial statements included in
Schedule 3.7A and are specifically set forth in Schedule 3.1I; (iii)
entered into, amended, terminated or received notice of termination of any
contract, license, franchise, commitment or other arrangement other than in
the ordinary course of business; (iv) altered or revised its accounting
principles, procedures, methods or practices except as required by law; (v)
removed or permitted to be removed from any building, facility or real
property of NET4MUSIC any item of machinery, equipment, fixture, vehicle,
or other personal property or parts thereof, except in the ordinary course
of business; (vi) changed its credit policy as to sales of inventories,
discounts, product returns, warranties or collection of receivables; (vii)
transferred or otherwise disposed of any assets except inventory in the
ordinary course of business; (viii) incurred, discharged or satisfied any
material liability (absolute or contingent), mortgage, lien, security
interest or encumbrance other than in the ordinary course of business; (ix)
declared or paid any dividend or other distribution in cash or securities
or redeemed, repurchased or otherwise acquired any capital stock of
NET4MUSIC; (x) issued or committed to issue any securities of, or other
ownership interests in, NET4MUSIC, except pursuant to exercise of NET4MUSIC
Purchase Rights; (xi) made any purchase commitment in excess of the normal,
ordinary and usual requirements of its business, or made any change in its
selling, pricing, advertising or personnel practices inconsistent with its
prior practice; (xii) written off or down the value of any inventory or
other assets as unusable, obsolete or below standard quality in excess of
stated reserves on the Schedule 3.7A Financial Statements; (xiii) written
off or down as uncollectible any notes or accounts receivable or portion
thereof except in amounts which in the aggregate are not in excess of
preexisting reserves therefor, or taken, set aside or increased any
reserves or charges on its books against earnings or assets or reversed any
reserves; (xiv) failed to replenish its inventory in a normal and customary
manner consistent with its prior practice and prudent business practices
prevailing in NET4MUSIC's industry; (xv) entered into any settlement
regarding the breach or infringement of any United States or foreign
license, patent, trademark, tradename, invention or similar rights; (xvi)
entered into any compromise or settlement of or suffered any judgment in
any litigation, proceeding, or governmental investigation relating to it or
its assets, properties, rights or business; (xvii) suffered any damage,
destruction or loss whether

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or not covered by insurance which might materially adversely affect the
property, business or operations of NET4MUSIC as a whole; (xviii) had any
material adverse change in its relations with its employees, agents,
customers or suppliers; (xix) made any loans to any Shareholders,
directors, officers, employees or consultants of NET4MUSIC; (xx) repaid any
loans or other advances from Shareholders or Affiliates of NET4MUSIC, or
repaid any indebtedness of NET4MUSIC for which any Shareholder was a
guarantor or was otherwise directly or indirectly liable; (xxi) changed or
modified the terms or amounts of its insurance coverages; (xxii) entered
into any advertising contract or commitment; (xxiii) received any
communication from any customer which accounted for more than 2% of its
revenues during the last full fiscal year to the effect that such customer
does not intend to continue to purchase merchandise from it; (xxiv) made
any capital expenditures or commitment therefor in excess of $10,000; or
(xxv) entered into any written or oral agreement, other than this
Agreement, to do any of the things enumerated in (i) through (xxiv) of this
Section 3.10.

3.11) Assets. The fixtures, equipment, facilities and operating assets of
NET4MUSIC are suitable for the uses for which intended, free from defects and in
good operating condition (ordinary wear and tear excepted) in all material
respects. All such assets are being and have been properly and regularly
serviced and maintained by NET4MUSIC in a manner that would not void or limit
the coverage of any warranty thereon. All improvements and modifications of such
facilities by NET4MUSIC, NET4MUSIC's uses of such facilities and all such
facilities and their uses conform to all applicable zoning and building laws.
NET4MUSIC has good, marketable and insurable title to, or, in the case of
leases, valid and subsisting leasehold interests in, all assets used in or
necessary to the operations (as presently conducted) of NET4MUSIC, free and
clear of any Liens except Liens for current taxes or assessments not yet due and
payable.

3.12) Trademarks, Patents and Trade Secrets.

(a) NET4MUSIC owns all right, title and interest in, is licensed under
or has the right to use, all patent applications, patents, trademark
applications, trademarks, service marks, trade names, trade dress, Internet
domain names, uniform resource locators ("URL"), copyright applications,
copyrights, trade secrets, know-how, technology, NET4MUSIC Software (as
defined below), technical documentation and other intellectual property and
proprietary rights used in or necessary to the conduct of its business as
presently conducted, including but not limited to, to the extent required
to carry out such business activities, the rights to make, use, exclude
others from using, reproduce, modify, adapt, create derivative works based
on, modify, translate, distribute (directly or indirectly), transmit,
display and perform publicly, license, sublicense, rent, lease, assign and
sell such intellectual property and proprietary rights (the "NET4MUSIC
Intellectual Property"). All of the NET4MUSIC Intellectual Property is
owned or held by NET4MUSIC except as set forth in Schedule 3.12A. Except as
set forth on Schedule 3.12A, no other person (including any employee or
former employee) is, to the best knowledge of NET4MUSIC, infringing,
misappropriating or violating any of the NET4MUSIC Intellectual Property.
Except as set forth on Schedule 3.12A, there are no royalties, fees,
honoraria or other payments payable by NET4MUSIC to any person or entity by
reason of the ownership, development, modification, use, license,
sublicense, sale, distribution or other exploitation of the NET4MUSIC
Intellectual Property, other than salaries and sales commissions paid to
employees and sales agents in the ordinary course of

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NET4MUSIC's business consistent with past practice. NET4MUSIC has not done
anything to compromise the secrecy, confidentiality, ownership, rights in
or to any of the NET4MUSIC Intellectual Property. NET4MUSIC is taking
reasonable security measures to protect the secrecy and confidentiality of
all NET4MUSICIntellectual Property.

(b) Set forth on Schedule 3.12B is a true and complete list of all
copyright applications, copyright registrations, mask works, trademark
applications, trademark registrations, trade names, service mark
registrations and service mark applications, material unregistered marks
which are or have been used by NET4MUSIC, Internet domain names and
Internet domain name applications, and all patents and patent applications
made or taken pursuant to United States federal, state, local and foreign
law or regulations for the NET4MUSIC Intellectual Property. NET4MUSIC is
not aware of any loss, cancellation, termination or expiration of any such
application or registration except as is set forth on Schedule 3.12B.

(c) To the best knowledge of NET4MUSIC, the business of NET4MUSIC as
conducted as of the date hereof and any intellectual property developed by
NET4MUSIC for third parties, does not, and will not cause NET4MUSIC to,
infringe, misappropriate or violate any of the patents, trademarks, service
marks, trade names, trade dress, mask works, copyrights, trade secrets,
Internet domain names, proprietary rights or other intellectual property of
any other person ("Third Party Intellectual Property"). NET4MUSIC has not
received any written or oral claim or notice of ownership, infringement,
misappropriation or potential infringement or misappropriation of or
involving any Third Party Intellectual Property, nor are there, to the best
knowledge of NET4MUSIC, any valid grounds for any bona fide claim of
ownership, infringement, misappropriation or potential infringement or
misappropriation of or involving any Third Party Intellectual Property. To
the best knowledge of NET4MUSIC, NET4MUSIC has the unrestricted, worldwide
right to reproduce, manufacture, sell, license, sublicense, exploit and
otherwise distribute all of its products and provide its services (such
products and services being set forth in Schedule 3.12C) and the right to
use all of its registered user lists, and NET4MUSIC is not using any
confidential information or trade secrets of any past or present employees.

(d) Schedule 3.12D contains a correct and complete list of all of the
computer software programs, applications or tools that are owned or used by
or have been developed by NET4MUSIC, including existing development or
modification of such programs, application and tools, excluding third-party
software applications licensed by NET4MUSIC pursuant to customary
commercial arrangements which are not material to NET4MUSIC's business or
financial condition ("NET4MUSIC Software"), and a list of all source code
escrow agreements pursuant to which NET4MUSIC is a party or any NET4MUSIC
Intellectual Property is bound or subject. NET4MUSIC owns full and
unencumbered right and good, valid and marketable title to or has the valid
right to use NET4MUSIC Software free and clear of all mortgages, pledges,
liens, security interests, conditional sales agreements, encumbrances,
charges or third-party rights of any kind except as described in Schedule
3.12D. The source code relating to NET4MUSIC Software (i) has at all times
been maintained in strict confidence, (ii) has been disclosed by NET4MUSIC
only to employees who have had a "need to know" the contents thereof in
connection with the performance of their duties to NET4MUSIC and who have
executed appropriate nondisclosure agreements and

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(iii) has not been disclosed to any third party except pursuant to
agreements described in Schedule 3.1D. Except with respect to demonstration
or trial copies, no portion of any NET4MUSIC Software contains any "back
door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or
other software routines, or hardware components intentionally designed to
(i) permit unauthorized access; (ii) disable, corrupt or erase software,
hardware, or data or to perform any other such actions, or (iii) otherwise
interfere with or disrupt the operation or performance of, such NET4MUSIC
Software in a manner contrary to the associated documentation.

(e) To the extent required for its particular use, NET4MUSIC Software
(i) has been designed, written and tested to ensure year 2000
compatibility, which shall be defined as date data century recognition, and
calculations that accommodate same century and multi-century formulas and
date values; (ii) operates and will operate substantially in accordance
with its specifications prior to, during and after the calendar year 2000
or any leap years; and (iii) as a result of processing data containing
dates in the Year 2000 and any subsequent years, shall not end abnormally
or provide invalid or incorrect results of date data, specifically
including date data which represents or references different centuries or
more than one century, except to the extent that any such error is
attributable to another software application with which NET4MUSIC Software
inter-operates.

(f) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the NET4MUSIC Intellectual Property on behalf of NET4MUSIC
and all officers and technical employees of NET4MUSIC have executed a
proprietary information and inventions agreement regarding the
confidentiality of NET4MUSIC confidential information and either (i) have
been a party to a "work-for-hire" arrangement or agreements with NET4MUSIC
that has accorded NET4MUSIC full, effective and exclusive ownership of all
tangible and intangible property thereby arising or (ii) have executed
appropriate instruments of assignment in favor of NET4MUSIC as assignee
that have conveyed to NET4MUSIC effective and exclusive ownership of all
tangible and intangible property thereby arising. NET4MUSIC, after
reasonable investigation, is not aware that any of NET4MUSIC's employees,
officers, contractors or consultants is in violation thereof or of any item
that would result in a material adverse change to the business of
NET4MUSIC.

3.13) Accounts Receivable. All accounts and notes receivable shown on the
most recent financial statements included in Schedule 3.7A and all accounts and
notes receivable created up to the Closing Date will be collected within 180
days after the Closing in the ordinary course of business (net of the allowance
set forth or reflected in such financial statements for doubtful accounts). On
the Closing Date such accounts and notes receivable, except to the extent
already paid, will be valid and collectible obligations owing to NET4MUSIC, not
subject to any defenses or set-offs. All notes and accounts receivable due to
NET4MUSIC from any director, officer or Shareholder shall be paid in full at or
prior to the Closing.

3.14) Inventories. All inventories of NET4MUSIC consist of items of
merchantable quality and quantity usable or salable in the ordinary course of
NET4MUSIC's business, and are salable at prevailing market prices not less than
the book value amounts thereof. The quantities of all inventories, materials and
supplies (net of the allowance set forth or reflected in such financial
statements for obsolete or excess inventory) are not obsolete, damaged, slow
moving, defective or excessive, and are reasonable and balanced in the

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circumstances of NET4MUSIC's business. Schedule 3.1A sets forth a complete list
of the addresses of all warehouses or other facilities owned or leased by
NET4MUSIC and in which inventories are located.

3.15) Licenses; Compliance with Laws, Regulations, Etc. NET4MUSIC possesses
all necessary permits, licenses and other approvals and authorizations which are
necessary for the conduct of its business as presently conducted, and all of
such licenses, permits and other approvals and authorizations are in good
standing, full force and effect. All such licenses, permits, approvals or
authorizations will continue to be in full force and effect immediately after
the transactions contemplated herein and not be affected by the transactions
contemplated herein. NET4MUSIC and its actions, properties, products, practices
and procedures, and any agreements to which NET4MUSIC is a party or is bound,
have complied, and are in compliance, with all applicable laws statutes,
ordinances, orders, decrees, rules, regulations, interpretations and
requirements promulgated by governmental or other authorities. No statute, rule,
regulation, order or interpretation has been enacted, entered or deemed
applicable by any domestic or foreign government or governmental or
administrative agency or court which would make consummation by NET4MUSIC and
the Shareholders of the transactions contemplated by this Agreement illegal.

3.16) Litigation. Except as specifically set forth in Schedule 3.16, there
is no action, lawsuit, claim, proceeding, or investigation of any kind pending
or, to the best of NET4MUSIC's knowledge, threatened against, by or affecting
NET4MUSIC which if decided adversely against NET4MUSIC would have a material
adverse effect upon the business and operations of NET4MUSIC. NET4MUSIC is not
in default with respect to any order, writ, injunction, or decree of any court
or of any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting or relating to its business or assets. No suit, action or other
proceeding is pending or, to the best of NET4MUSIC's knowledge, threatened by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and no
investigation that might eventuate in any such suit, action or other proceeding
is pending or overtly threatened to the best of NET4MUSIC's knowledge.

3.17) Warranties, Leases, Contracts. All products manufactured or sold, and
all services provided, by NET4MUSIC have complied, and are in compliance, in all
material respects with all contractual requirements, warranties or covenants,
express or implied, applicable thereto, and with all applicable governmental,
trade association or regulatory specifications therefor or applicable thereto.
The terms of NET4MUSIC's product and service warranties and product return,
discount, demo sales and credit policies are specifically set forth in Schedule
3.17. NET4MUSIC has performed all material obligations required to be performed
by it and is not in default under any lease, contract, mortgage, promissory
note, evidence of indebtedness or other agreement or commitment to which
NET4MUSIC is a party or by which NET4MUSIC is bound, and the same are in full
force and effect on the date hereof and are valid and enforceable by NET4MUSIC
in accordance with their respective terms except as may be limited by laws
affecting creditors' rights generally or by judicial limitations on the right to
specific performance or other equitable remedies; there has not been any event
of default (or any event or condition which with notice or the lapse of time,
both or otherwise, would constitute an event of default) on the part of
NET4MUSIC or any party to any thereof; and performance of any such lease,
contract, mortgage, promissory note, evidence of indebtedness or other agreement
will not have a material adverse effect on the business or operations of
NET4MUSIC.

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3.18) Insurance Policies. All policies of insurance listed in Schedule 3.1H
are in full force and effect, have been issued for the benefit of NET4MUSIC by
properly licensed reputable insurance carriers, and are adequate and customary
for the assets, business and operations of NET4MUSIC. NET4MUSIC has promptly and
properly notified its insurance carriers of any and all claims known to it with
respect to its operations or products for which it is insured. NET4MUSIC has
maintained general liability insurance on an uninterrupted basis in such amounts
and with such deductibles as are customary for the industry in which NET4MUSIC
operates.

3.19) Labor Agreements. NET4MUSIC is not a party to any collective
bargaining agreement with any labor organization or to any other agreement or
understanding containing any severance pay liabilities or obligations, except as
specifically set forth on Schedule 3.19. NET4MUSIC has not committed any unfair
labor practice. There is not currently pending or threatened a demand for
recognition from any labor union with respect to, and NET4MUSIC has no knowledge
of any attempt that has been made or is being made to organize, any of the
persons employed by NET4MUSIC. There has never been and there is not now any
strike, slow-down, work stoppage or lockout, or any threat thereof, by or with
respect to any of the employees of NET4MUSIC or to the best knowledge of
NET4MUSIC, any supplier of NET4MUSIC.

3.20) Employees.

(a) Except as specifically set forth in Schedule 3.1J, NET4MUSIC has
no Employee Plans.

(b) Except as specifically set forth in Schedule 3.20B or in the
Schedule 3.7A Financial Statements, NET4MUSIC has no obligations and the
transactions contemplated hereby shall give rise to no obligations to its
directors, officers, employees, consultants, or agents other than
obligations arising in the ordinary course of business since the date of
the most recent financial statements included in Schedule 3.7A on account
of wages, salaries and commissions for prior services performed or business
produced.

(c) Except as specifically set forth in Schedule 3.16, there have been
no lawsuits or claims brought by any employee or consultant or former
employee or consultant of NET4MUSIC against NET4MUSIC.

(d) Except as specifically set forth in Schedule 3.20D:

(i) Proper and accurate amounts have been withheld by NET4MUSIC
from the compensation of all of its employees for all periods in full
and complete compliance with the tax withholding provisions of any
applicable laws;

(ii) Proper and accurate returns have been filed by NET4MUSIC for
all periods for which returns were due with respect to employee income
tax and social security withholding and unemployment taxes, and the
amounts shown on such returns to be due and payable have been paid in
full or adequate provisions for payment of such amounts have been
included in the Schedule 3.7A Financial Statements;

(iii) Hours worked by, and payments made to, employees of NET4MUSIC
have not been in violation of any applicable laws dealing with such
matters;

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(iv) All payments due from NET4MUSIC on account of employee health,
welfare and workers compensation insurance have been accrued as a
liability in the Schedule 3.7A Financial Statements; and

(v) There are no severance or early retirement payments which are
or were due from NET4MUSIC under the terms of any agreement, oral or
written.

3.21) No Finders. No act of NET4MUSIC or the Shareholders has given or will
give rise to any valid claim against any of the parties hereto for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated herein except for payments due to FleetBoston
Robertson Stephens Inc. pursuant to a letter agreement dated July 18, 2000, a
copy of which letter agreement has been provided to CODA.

3.22) Contracts with Related Parties. Except as specifically set forth in
Schedules 3.1I, 3.20 or 3.22, to the best of NET4MUSIC's knowledge, there are no
agreements or contracts between NET4MUSIC and any of its officers, directors,
Shareholders or any entity in which any officer, director or Shareholder owns a
more than five percent (5%) equity interest.

3.23) Absence of Certain Business Practices. Neither NET4MUSIC nor any
officer, employee or agent of NET4MUSIC, nor any other person acting on its
behalf, has directly or indirectly, since the date of NET4MUSIC's incorporation
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of NET4MUSIC (or assist NET4MUSIC in connection with any
actual or proposed transaction) which (i) might subject NET4MUSIC to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had an adverse effect on the assets,
business or operations of NET4MUSIC as reflected in the Schedule 3.7A Financial
Statement, or (iii) if not continued in the future, might adversely affect
NET4MUSIC's assets, business, operations or prospects or which might subject
NET4MUSIC to suit or penalty in any private or governmental litigation or
proceeding.

3.24) Corporate Records. The minute books of NET4MUSIC are complete and
correctly reflect in all material respects, all corporate actions taken by it at
all meetings or through written action and correctly record all resolutions of
NET4MUSIC.

3.25) Completeness of Schedules. Without limitation of the representations
and warranties contained in this Article III, the Schedules to this Agreement
completely and correctly present the information required by this Agreement to
be set forth therein in all material respects.

3.26) Disclosure. Without limitation of the representations and warranties
contained in this Article III, no representation or warranty by NET4MUSIC or the
Shareholders in this Agreement, and no information disclosed in the Schedules
supplied by NET4MUSIC or the Shareholders or contained in the letter referred to
in Section 12.16, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS

Each Shareholder, severally and not jointly, represents and warrants to,
and covenants and agrees with, CODA as of the date hereof, and acknowledges that
the same shall be true and correct as of the Closing Date (as if made at the
Closing) and shall be deemed to have been relied upon by CODA.

4.1) Title to NET4MUSIC Stock; Authority of the Shareholders. Each
Shareholder has valid and unencumbered title to all of the NET4MUSIC Stock and
all outstanding NET4MUSIC Purchase Rights listed as being held by such
Shareholder on Schedule 2.3, free and clear of any Liens. Each Shareholder has
full legal and equitable right, power, and authority (without the consent or
approval of any other person) to enter into this Agreement and to perform all of
his or her obligations under this Agreement. Upon completion of the Closing,
each Shareholder shall have delivered and CODA shall have acquired full legal
and beneficial title to the NET4MUSIC Stock and Purchase Rights listed as being
held by such Shareholder on Schedule 2.3. The NET4MUSIC Stock and the
outstanding NET4MUSIC Purchase Rights constitute all of the Shareholders' right,
title and interest in NET4MUSIC. Each holder will, upon request, execute and
deliver any additional documents deemed by CODA to be necessary or desirable to
complete the sale, assignment and transfer of the NET4MUSIC Stock or Purchase
Rights of such holder. Each holder understands and acknowledges that CODA,
NET4MUSIC and their respective counsel will be acting in material reliance upon
the truth and accuracy of all representations of the holder set forth in this
Agreement or in any document, certificate or schedule delivered pursuant to this
Agreement.

4.2) Binding Obligation. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized and approved by all requisite corporate, partnership, or other action
on the part of each Shareholder that is not a natural person. Each Shareholder
has all requisite power and authority to do and perform all acts and things
required to be done by it under this Agreement and the agreements contemplated
hereby. This Agreement constitutes and, when executed and delivered, the
agreements contemplated hereby will constitute, the valid and binding
obligations of each of the Shareholders, enforceable in accordance with its and
their respective terms except as may be limited by laws affecting creditors
rights generally or by judicial limitations on the right to specific performance
or other equitable remedies.

4.3) Consents Required. Except as specifically set forth in Schedule 4.3,
the execution and delivery of this Agreement, the transfer of the Stock, the
assumption of any NET4MUSIC Purchase Rights, and the consummation of the
transactions contemplated hereby in compliance with the terms and provisions
hereof, by each of the Shareholders will not:

(a) Conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under the governing instruments of
any Shareholder that is not a natural person, or any material instrument,
agreement, mortgage, lease, judgment, order, award, decree or other
instrument or restriction to which any of the Shareholders is a party or by
which any of the Shareholders or any of their assets is bound or affected;

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(b) Require any affirmative approval, consent, authorization or other
order or action of any court, governmental authority, regulatory body,
creditor or any other person; or

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF CODA

Except as set forth in the SEC Documents or in a specific schedule to this
Agreement, CODA represents and warrants to, and covenants and agrees with,
NET4MUSIC and the Shareholders as of the date hereof as follows and acknowledges
that the same shall be true and correct as of the Closing Date (as if made at
the Closing), shall be deemed to have been relied upon by NET4MUSIC and the
Shareholders.

5.1) Listing of Certain Assets and Data. Attached hereto as Schedules 5.1A
through 5.1L are lists, which are true and complete in all material respects as
of the date hereof, of the matters set forth in the following subsections (a)
through (1).

(a) Real Property. Schedule 5.1A sets forth a description of all real
property owned, leased or subject to option, of record or beneficially, by
CODA or otherwise used by CODA in the conduct of its business, stating the
ownership status and a brief description of all buildings and structures
located or planned for construction thereon. Prior to the date of this
Agreement, CODA has delivered to NET4MUSIC true and complete copies of the
purchase agreements, leases or options relating to such real property.

(b) Equipment. Schedule 5.1B sets forth a list of all material items
of equipment and other similar property and assets owned, leased or
otherwise used by CODA, specifically identifying and describing those items
with an original cost to, or total lease payments by, CODA in excess of
$10,000, setting forth with respect to all such listed property a summary
description of all Liens relating thereto (other than liens for taxes due
but not yet payable), identifying the parties thereto, the rental or other
payment terms, expiration date and cancellation and renewal terms thereof.
Prior to the date of this Agreement, CODA has delivered to NET4MUSIC true
and complete copies of all currently effective leases, conditional sales
agreements or other similar documents concerning the items listed in
Schedule 5.1B.

(c) Patents, Trademarks, Formulas, Etc. Schedule 5.1C sets forth a
list of all of CODA's patents, trade names, trademarks, service marks,
copyrights, domain names and applications or registrations for any of the
foregoing, and any licenses granted by or to CODA pursuant to which any of
the foregoing is used. Prior to the date of this Agreement, CODA has
delivered to NET4MUSIC true and complete copies of (i) all issuances,
registrations, applications and certificates regarding such intellectual
property, a form of contract with employees or others relating in whole or
in part to disclosure, assignment or patenting of inventions or
discoveries, confidential or proprietary information, copyrights, product
formulas or other know-how and a list of such contracts, and (iii) all
material or master patent, trademark, trade name,

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copyright, trade secret or other intellectual property licenses granted at
any time by or to CODA and a list of all such licenses.

(d) Certain Leases, Agreements, Etc. Schedule 5.1D sets forth a list
(including, in the case of oral arrangements, a written description of all
material terms thereof) of each lease, contract, agreement or other
commitment, written or otherwise, to which CODA is a party (other than
leases, contracts, agreements or commitments furnished pursuant to other
paragraphs of this Section 5.1) involving:

Prior to the date of this Agreement, CODA has delivered to NET4MUSIC
true and complete copies of all written agreements identified in Schedule
5.1D.

(e) Permits, Licenses, Etc. Schedule 5.1E sets forth a list of all
material permits, licenses, approvals or similar permissions held by CODA.
Prior to the date of this Agreement, CODA has delivered to NET4MUSIC true
and complete copies of all material permits, licenses, approvals or other
documents identified in Schedule 5.1E.

(f) Banks and Depositories. Schedule 5.1F sets forth a list of each
bank, broker or other depository with which CODA has an account or safe
deposit box, the names and numbers of such accounts or boxes and the names
of all persons authorized to draw or execute transactions on such accounts.

(g) Loans and Credit Agreements, Etc. Schedule 5.1G sets forth a list
of all outstanding mortgages, promissory notes, evidences of indebtedness,
deeds of trust, indentures, loan or credit agreements or similar
instruments for money borrowed, excluding normal trade credit, to which
CODA is a party (as lender or borrower), written or otherwise, and all
amendments or modifications, if any, thereof. Prior to the date of this
Agreement, CODA has delivered to NET4MUSIC true and complete copies of all
documents identified in Schedule 5.1G.

(h) Insurance Policies and Claims. Schedule 5.1H sets forth a list,
including the term, coverages, premium rates, limits and deductibles
thereof, of all policies of insurance maintained by CODA with respect to
CODA and covering their respective officers, directors, employees, agents,
properties, buildings, machinery, equipment, furniture, fixtures or
operations and a description of each claim made by CODA under any such
policy of insurance within the past three years, describing such claim and
the amount thereof. Prior to the date of this Agreement, CODA has delivered
to NET4MUSIC true and complete copies of all policies of insurance
identified in Schedule 5.1H, and true and complete copies of all
documentation regarding claims made thereunder.

(i) Certain Employees. Schedule 5.1I sets forth (i) the name and
current annual salary rate of each director, officer or employee of CODA
whose total remuneration for CODA's last fiscal year was, or for the
current year has been set at, in excess of

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$50,000, together with a summary of the bonuses, additional compensation
and other benefits, if any, paid or payable to such persons as of the date
hereof or in the future; (ii) the name of each employee and each individual
to whom employment has been offered and who has accepted such offer,
including scheduled starting date, and (iii) the names of all former
employees whose employment has terminated either voluntarily or
involuntarily during the preceding twelve-month period.

(j) Employee Plans. Schedule 5.1J sets forth a list of all Employee
Plans and any related insurance contracts and trust and custodial
agreements. Prior to the date of this Agreement, CODA has delivered to
NET4MUSIC true and complete copies of all documents listed in Schedule
5.1J.

(k) Powers of Attorney. Schedule 5.1K sets forth the names of all
persons, if any, holding powers of attorney from CODA and a description of
the scope of each such power of attorney.

(l) Taxes. Schedule 5.1L sets forth a list of (i) all tax, assessment
or information reports and returns filed by or on behalf of CODA or its
predecessors with any jurisdiction during the last three years, and (ii) a
list of all tax or assessment elections of CODA in effect. Prior to the
date of this Agreement, CODA has delivered to NET4MUSIC true and complete
copies of all documents listed in Schedule 5.1L and all correspondence to
or from taxing authorities since CODA's incorporation and has made
available to NET4MUSIC for review and copying all working papers of CODA's
independent auditor related to work done for CODA.

5.2) Organization. CODA and each of its subsidiaries identified in Schedule
5.4 is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization. CODA has all necessary power
and authority, corporate and otherwise, to own its properties and assets and
conduct the business presently being conducted by it. CODA is qualified or
licensed to transact business as a foreign corporation in each jurisdiction in
which the character of CODA's properties or the nature of its activities makes
any such qualification necessary and where the failure to be so qualified would
have a material adverse effect upon CODA or CODA's business. The directors and
officers (with all titles and positions indicated) of CODA are as indicated in
the SEC Documents. Correct copies of CODA's organizational documents and all
amendments thereto and any other governing documents or instruments have been
filed with, and are publicly available from, the SEC.

5.3) Capital Stock. The authorized and outstanding capital stock of CODA
and each of its subsidiaries as identified in Schedule 5.4 is as set forth in
Schedule 5.3. There are outstanding options to purchase 739,233 shares of CODA
common stock under CODA's 1992 Stock Option Plan, which plan has reserved for
issuance 975,000 shares of common stock as of the date of this Agreement and as
of the Closing will have 2,675,000 shares reserved for issuance, subject to the
approval by the CODA shareholders of an increase in the reserved shares. There
are outstanding warrants to purchase 994,047 shares of CODA common stock. Except
for the foregoing options and warrants, there are no plans, contracts or
commitments providing for the issuance or granting of CODA capital stock. There
is no indebtedness of CODA convertible into CODA capital stock. All issued and
outstanding shares of capital stock of CODA have been duly authorized and
validly issued, and are fully paid and nonassessable. All issuances of CODA
common stock were made in compliance with all applicable securities laws and
regulations. There are no preemptive rights in respect of any capital stock of
CODA.

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5.4) Subsidiaries. Except as specifically set forth on Schedule 5.4, (i)
CODA has no interest, direct or indirect, in any other business, corporation,
joint venture, partnership or proprietorship and (ii) the business carried on by
CODA has not been conducted through any other direct or indirect subsidiary or
Affiliate of CODA.

5.5) Binding Obligation. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized and approved by all requisite corporate action on the part of CODA.
CODA has all requisite power and authority to do and perform all acts and things
required to be done by it under this Agreement and the agreements contemplated
hereby. This Agreement constitutes and, when executed and delivered, the
agreements contemplated hereby will constitute, the valid and binding
obligations of CODA, enforceable in accordance with its and their respective
terms except as may be limited by laws affecting creditors rights generally or
by judicial limitations on the right to specific performance or other equitable
remedies.

5.6) Consents Required. Except for the Required CODA Shareholder Vote, the
declaration of effectiveness by the SEC of the Registration Statement and as
specifically set forth in Schedule 5.6, the execution and delivery of this
Agreement, the acquisition of the NET4MUSIC Stock, the assumption of any
NET4MUSIC Purchase Rights, and the consummation of the transactions contemplated
hereby in compliance with the terms and provisions hereof, by CODA will not:

(a) Conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under the governing instruments of
CODA, or any material instrument, agreement, mortgage, lease, judgment,
order, award, decree or other instrument or restriction to which CODA is a
party or by which CODA or any of its assets is bound or affected;

(b) Require any affirmative approval, consent, authorization or other
order or action of any court, governmental authority, regulatory body,
creditor or any other person; or

5.7) SEC Reports; Financial Statements. CODA has filed all forms, reports,
registration statements and documents required to be filed by it with the SEC
since July 5, 1995. As of their respective dates, the SEC Documents complied as
to form and content in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, as the case may be. The audited
financial statements and unaudited interim financial statements included or
incorporated by reference in the SEC Documents (i) fairly and accurately present
in all material respects the financial position of CODA as of their respective
dates and the results of operations for the applicable periods ended on such
date, (ii) do not contain any items of special or nonrecurring income or any
other income not earned in the ordinary course of business except as expressly
specified therein, (iii) have been prepared in accordance with United States
generally accepted accounting principles, consistent with the prior year-end
except as stated in the notes included therein and except for normal recurring
year-end adjustments which are consistent with United States generally accepted
accounting principles and the prior year-end, and except for the requirement of
an auditor's report thereon or as permitted by Form 10-QSB of the SEC.

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The books of account of CODA accurately reflect in all material respects CODA's
items of income and expense and all assets and liabilities and accruals which
properly should have been reflected therein in accordance with United States
generally accepted accounting principles consistently applied throughout the
periods covered thereby except as disclosed in the SEC Documents.

5.8) Taxes. CODA has timely filed all tax or assessment reports and tax
returns (including any applicable information returns) that may be required by
any law or regulation of any jurisdiction to be filed, and all such reports and
returns are true, correct and complete in all material respects and listed in
Schedule 5.1L. CODA has duly paid, deposited or accrued on its books of account,
all Taxes pursuant to such reports and returns, or assessed against CODA, or
which CODA is obligated to withhold from amounts owing to any employee. CODA has
no liability for any Taxes in excess of the amounts stated in the financial
statements of CODA filed with the SEC with respect to all time periods or
portions thereof ending on or before the date of such financial statements.
Neither the assessment of any additional Taxes that by law should have been
reported or paid or in accordance with United States generally accepted
accounting principles should have been accrued, nor any investigation or audit,
is pending, or, to the best of CODA's knowledge, threatened or expected. No
taxing or assessment authority has indicated to CODA any intent to conduct an
audit or other investigation or asserted any unresolved deficiencies with
respect to Tax liabilities of CODA for any period and CODA has no reasonable
grounds to know of any facts or circumstances which would give rise thereto.
CODA has not waived any statute of limitations in respect of foreign, federal,
state or local Taxes or agreed to any extension of time with respect to an
assessment of deficiency with respect to such Taxes.

5.9) Absence of Undisclosed Liabilities. There are no debts, liabilities,
claims against or obligations of CODA, or legal basis therefor, whether accrued,
absolute, contingent, known, unknown or otherwise, and whether due or to become
due, including, but not limited to, liabilities on account of taxes, other
governmental charges, duties, penalties, interest or fines, except:

(a) Liabilities, to the extent set forth or reserved against in the
financial statements of CODA filed with the SEC; or

(b) Liabilities incurred in the ordinary course of business (and in
compliance with this Agreement) since the date of the most recent financial
statements of CODA filed with the SEC.

5.10) Absence of Certain Changes and Events. Except as specifically set
forth in Schedule 5.10, since the date of the most recent financial statements
of CODA filed with the SEC:

(a) There has not been any material adverse change in the general
affairs, management, net worth or condition (financial or otherwise) of the
businesses or assets of CODA, whether or not covered by insurance, or in
the relationships with or prospects or abilities of the suppliers of CODA;
CODA has conducted its business only in the ordinary course.

(b) CODA has not (i) sold or otherwise disposed of any of its real
property or real property leases, or entered into any renewals or
extensions of such existing leases or entered into any new leases; (ii)
made any increase in the compensation or benefits payable or to become
payable by CODA to any officers, employees or consultants

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whose total remuneration for the last fiscal year was, or for the current
fiscal year is expected to be after any such increase, more than $50,000,
or paid or accrued any bonus, percentage of compensation, severance benefit
or other like benefit to, or for the credit of, any officer, employee or
consultant, except in accordance with such plans and arrangements as were
in effect prior to the date of the most recent financial statements of CODA
filed with the SEC and are specifically set forth in Schedule 5.1I; (iii)
entered into, amended, terminated or received notice of termination of any
contract, license, franchise, commitment or other arrangement other than in
the ordinary course of business; (iv) altered or revised its accounting
principles, procedures, methods or practices except as required by law; (v)
removed or permitted to be removed from any building, facility or real
property of CODA any item of machinery, equipment, fixture, vehicle, or
other personal property or parts thereof, except in the ordinary course of
business; (vi) changed its credit policy as to sales of inventories,
discounts, product returns, warranties or collection of receivables; (vii)
transferred or otherwise disposed of any assets except inventory in the
ordinary course of business; (viii) incurred, discharged or satisfied any
material liability (absolute or contingent), mortgage, lien, security
interest or encumbrance other than in the ordinary course of business; (ix)
declared or paid any dividend or other distribution in cash or securities
or redeemed, repurchased or otherwise acquired any capital stock of CODA;
(x) issued or committed to issue any securities of, or other ownership
interests in, CODA, except pursuant to exercise of outstanding CODA options
or warrants; (xi) made any purchase commitment in excess of the normal,
ordinary and usual requirements of its business, or made any change in its
selling, pricing, advertising or personnel practices inconsistent with its
prior practice; (xii) written off or down the value of any inventory or
other assets as unusable, obsolete or below standard quality in excess of
stated reserves in the financial statements of CODA filed with the SEC;
(xiii) written off or down as uncollectible any notes or accounts
receivable or portion thereof except in amounts which in the aggregate are
not in excess of preexisting reserves therefor, or taken, set aside or
increased any reserves or charges on its books against earnings or assets
or reversed any reserves; (xiv) failed to replenish its inventory in a
normal and customary manner consistent with its prior practice and prudent
business practices prevailing in CODA's industry; (xv) entered into any
settlement regarding the breach or infringement of any United States or
foreign license, patent, trademark, tradename, invention or similar rights;
(xvi) entered into any compromise or settlement of or suffered any judgment
in any litigation, proceeding, or governmental investigation relating to it
or its assets, properties, rights or business; (xvii) suffered any damage,
destruction or loss whether or not covered by insurance which might
materially adversely affect the property, business or operations of CODA as
a whole; (xviii) had any material adverse change in its relations with its
employees, agents, customers or suppliers; (xix) made any loans to any
shareholders, directors, officers, employees or consultants of CODA; (xx)
repaid any loans or other advances from shareholders or Affiliates of CODA,
or repaid any indebtedness of CODA for which any shareholder was a
guarantor or was otherwise directly or indirectly liable; (xxi) changed or
modified the terms or amounts of its insurance coverages; (xxii) entered
into any advertising contract or commitment; (xxiii) received any
communication from any customer which accounted for more than 2% of its
revenues during the last full fiscal year to the effect that such customer
does not intend to continue to purchase merchandise from it; (xxiv) made
any capital expenditures or commitment therefor in excess of $10,000; or
(xxv) entered into any

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written or oral agreement, other than this Agreement, to do any of the
things enumerated in (i) through (xxiv) of this Section 5.10.

5.11) Assets. The fixtures, equipment, facilities and operating assets of
CODA are suitable for the uses for which intended, free from defects and in good
operating condition (ordinary wear and tear excepted) in all material respects.
All such assets are being and have been properly and regularly serviced and
maintained by CODA in a manner that would not void or limit the coverage of any
warranty thereon. All improvements and modifications of such facilities by CODA,
CODA's uses of such facilities and all such facilities and their uses conform to
all applicable zoning and building laws. CODA has good, marketable and insurable
title to, or, in the case of leases, valid and subsisting leasehold interests
in, all assets used in or necessary to the operations (as presently conducted)
of CODA, free and clear of any Liens except Liens for current taxes or
assessments not yet due and payable.

5.12) Trademarks, Patents and Trade Secrets.

(a) CODA owns all right, title and interest in, is licensed under or
has the right to use, all patent applications, patents, trademark
applications, trademarks, service marks, trade names, trade dress, Internet
domain names, uniform resource locators ("URL"), copyright applications,
copyrights, trade secrets, know-how, technology, CODA Software (as defined
below), technical documentation and other intellectual property and
proprietary rights used in or necessary to the conduct of its business as
presently conducted and as proposed to be conducted, including but not
limited to, to the extent required to carry out such business activities,
the rights to make, use, exclude others from using, reproduce, modify,
adapt, create derivative works based on, modify, translate, distribute
(directly or indirectly), transmit, display and perform publicly, license,
sublicense, rent, lease, assign and sell such intellectual property and
proprietary rights (the "CODA Intellectual Property"). All of the CODA
Intellectual Property is owned or held by CODA except as set forth in
Schedule 5.12A. Except as set forth on Schedule 5.12A, no other person
(including any employee or former employee) is, to the best knowledge of
CODA, infringing, misappropriating or violating any of the CODA
Intellectual Property. Except as set forth on Schedule 5.12A, there are no
royalties, fees, honoraria or other payments payable by CODA to any person
or entity by reason of the ownership, development, modification, use,
license, sublicense, sale, distribution or other exploitation of the CODA
Intellectual Property, other than salaries and sales commissions paid to
employees and sales agents in the ordinary course of CODA's business
consistent with past practice. CODA has not done anything to compromise the
secrecy, confidentiality, ownership, rights in or to any of the CODA
Intellectual Property. CODA is taking reasonable security measures to
protect the secrecy and confidentiality of all CODA Intellectual Property.

(b) Set forth on Schedule 5.12B is a true and complete list of all
copyright applications, copyright registrations, mask works, trademark
applications, trademark registrations, trade names, service mark
registrations and service mark applications, material unregistered marks
which are or have been used by CODA, Internet domain names and Internet
domain name applications, and all patents and patent applications made or
taken pursuant to United States federal, state, local and foreign law or
regulations for the CODA Intellectual Property. CODA is not aware of any
loss, cancellation, termination or expiration of any such application or
registration except as is set forth on Schedule 5.12B.

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(c) To the best knowledge of CODA, the business of CODA as conducted
as of the date hereof and any intellectual property developed by CODA for
third parties, does not, and will not cause CODA to, infringe,
misappropriate or violate any of the patents, trademarks, service marks,
trade names, trade dress, mask works, copyrights, trade secrets, Internet
domain names, proprietary rights or other intellectual property of any
other person ("Third Party Intellectual Property"). CODA has not received
any written or oral claim or notice of ownership, infringement,
misappropriation or potential infringement or misappropriation of or
involving any Third Party Intellectual Property, nor are there, to the best
knowledge of CODA, any valid grounds for any bona fide claim of ownership,
infringement, misappropriation or potential infringement or
misappropriation of or involving any Third Party Intellectual Property. To
the best knowledge of CODA, CODA has the unrestricted, worldwide right to
reproduce, manufacture, sell, license, sublicense, exploit and otherwise
distribute all of its products and provide its services (such products and
services being set forth in Schedule 5.12C) and the right to use all of its
registered user lists, and CODA is not using any confidential information
or trade secrets of any past or present employees.

(d) Schedule 5.12D contains a correct and complete list of all of the
computer software programs, applications or tools that are owned or used by
or have been developed by CODA, including existing development or
modification of such programs, application and tools, excluding third-party
software applications licensed by CODA pursuant to customary commercial
arrangements which are not material to CODA's business or financial
condition ("CODA Software"), and a list of all source code escrow
agreements pursuant to which CODA is a party or any CODA Intellectual
Property is bound or subject. CODA owns full and unencumbered right and
good, valid and marketable title to or has the valid right to use CODA
Software free and clear of all mortgages, pledges, liens, security
interests, conditional sales agreements, encumbrances, charges or
third-party rights of any kind except as described in Schedule 5.12D. The
source code relating to CODA Software (i) has at all times been maintained
in strict confidence, (ii) has been disclosed by CODA only to employees who
have had a "need to know" the contents thereof in connection with the
performance of their duties to CODA and who have executed appropriate
nondisclosure agreements and (iii) has not been disclosed to any third
party. Except with respect to demonstration or trial copies, no portion of
any CODA Software contains any "back door," "time bomb," "Trojan horse,"
"worm," "drop dead device," "virus" or other software routines or hardware
components intentionally designed to (i) permit unauthorized access; (ii)
disable, corrupt or erase software, hardware, or data or to perform any
other such actions, or (iii) otherwise interfere with or disrupt the
operation or performance of, such CODA Software in a manner contrary to the
associated documentation.

(e) To the extent required for its particular use, CODA Software (i)
has been designed, written and tested to ensure year 2000 compatibility,
which shall include, but is not limited to, date data century recognition,
and calculations that accommodate same century and multi-century formulas
and date values; (ii) operates and will operate substantially in accordance
with its specifications prior to, during and after the calendar year 2000
or any leap years; and (iii) as a result of processing data containing
dates in the Year 2000 and any subsequent years, shall not end abnormally
or provide invalid or incorrect results of date data, specifically
including date data which represents or references different centuries or
more than one century, except to

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the extent that any such error is attributable primarily to another
software application with which CODA Software inter-operates.

(f) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the CODA Intellectual Property on behalf of CODA and all
officers and technical employees of CODA have executed a confidential
information and inventions agreement regarding the confidentiality of CODA
proprietary information and either (i) have been a party to a
"work-for-hire" arrangement or agreements with CODA in accordance with
applicable United States federal law that has accorded CODA full, effective
and exclusive ownership of all tangible and intangible property thereby
arising or (ii) have executed appropriate instruments of assignment in
favor of CODA as assignee that have conveyed to CODA effective and
exclusive ownership of all tangible and intangible property thereby
arising. CODA, after reasonable investigation, is not aware that any of
CODA's employees, officers, contractors or consultants is in violation
thereof or of any item that would result in a material adverse change to
the business of CODA.

5.13) Accounts Receivable. All accounts and notes receivable shown on the
most recent financial statements of CODA filed with the SEC and all accounts and
notes receivable created up to the Closing Date will be collected within 180
days after the Closing in the ordinary course of business (net of the allowance
set forth or reflected in such financial statements for doubtful accounts). On
the Closing Date such accounts and notes receivable, except to the extent
already paid, will be valid and collectible obligations owing to CODA, not
subject to any defenses or set-offs. All notes and accounts receivable due to
CODA from any director, officer or shareholder shall be paid in full at or prior
to the Closing.

5.14) Inventories. All inventories of CODA consist of items of merchantable
quality and quantity usable or salable in the ordinary course of CODA's
business, and are salable at prevailing market prices not less than the book
value amounts thereof. The quantities of all inventories, materials and supplies
(net of the allowance set forth or reflected in the financial statements of CODA
filed with the SEC for obsolete or excess inventory) are not obsolete, damaged,
slow moving, defective or excessive, and are reasonable and balanced in the
circumstances of CODA's business. Schedule 5.1A sets forth a complete list of
the addresses of all warehouses or other facilities owned or leased by CODA and
in which inventories are located.

5.15) Licenses; Compliance with Laws, Regulations, Etc. CODA possesses all
necessary permits, licenses and other approvals and authorizations which are
necessary for the conduct of its business as presently conducted, and all of
such licenses, permits and other approvals and authorizations are in good
standing, full force and effect. All such licenses, permits, approvals or
authorizations will continue to be in full force and effect immediately after
the transactions contemplated herein and not be affected by the transactions
contemplated herein. CODA and its actions, properties, products, practices and
procedures, and any agreements to which CODA is a party or is bound, have
complied, and are in compliance, with all applicable laws (including common
law), statutes, ordinances, orders, decrees, rules, regulations, interpretations
and requirements promulgated by governmental or other authorities. No statute,
rule, regulation, order or interpretation has been enacted, entered or deemed
applicable by any domestic or foreign government or governmental or
administrative agency or court which would make consummation by CODA of the
transactions contemplated by this Agreement illegal.

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5.16) Litigation. Except as specifically set forth in Schedule 5.16, there
is no action, lawsuit, claim, proceeding, or investigation of any kind pending
or, to the best of CODA's knowledge, threatened against, by or affecting CODA
which if decided adversely against CODA would have a material adverse effect
upon the business and operations of CODA. CODA is not in default with respect to
any order, writ, injunction, or decree of any court or of any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting or relating to its business or
assets. No suit, action or other proceeding is pending or, to the best of CODA's
knowledge, threatened by or before any court or governmental agency in which it
is sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby, and no investigation that might eventuate in any such suit,
action or other proceeding is pending or overtly threatened to the best of
CODA's knowledge.

5.17) Warranties, Leases, Contracts. All products manufactured or sold, and
all services provided, by CODA have complied, and are in compliance, in all
material respects with all contractual requirements, warranties or covenants,
express or implied, applicable thereto, and with all applicable governmental,
trade association or regulatory specifications therefor or applicable thereto.
The terms of CODA's product and service warranties and product return, discount,
demo sales and credit policies are specifically set forth in Schedule 5.17. CODA
has performed all material obligations required to be performed by it and is not
in default under any lease, contract, mortgage, promissory note, evidence of
indebtedness or other agreement or commitment to which CODA is a party or by
which CODA is bound, and the same are in full force and effect on the date
hereof and are valid and enforceable by CODA in accordance with their respective
terms except as may be limited by laws affecting creditors' rights generally or
by judicial limitations on the right to specific performance or other equitable
remedies; there has not been any event of default (or any event or condition
which with notice or the lapse of time, both or otherwise, would constitute an
event of default) on the part of CODA or any party to any thereof; and
performance of any such lease, contract, mortgage, promissory note, evidence of
indebtedness or other agreement will not have a material adverse effect on the
business or operations of CODA.

5.18) Insurance Policies. All policies of insurance listed in Schedule 5.1H
are in full force and effect, have been issued for the benefit of CODA by
properly licensed reputable insurance carriers, and are adequate and customary
for the assets, business and operations of CODA. CODA has promptly and properly
notified its insurance carriers of any and all claims known to it with respect
to its operations or products for which it is insured. CODA has maintained
general liability insurance on an uninterrupted basis in such amounts and with
such deductibles as are customary for the industry in which CODA operates.

5.19) Labor Agreements. CODA is not a party to any collective bargaining
agreement with any labor organization or to any other agreement or understanding
containing any severance pay liabilities or obligations. CODA has not committed
any unfair labor practice. There is not currently pending or threatened a demand
for recognition from any labor union with respect to, and CODA has no knowledge
of any attempt that has been made or is being made to organize, any of the
persons employed by CODA. There has never been and there is not now any strike,
slow-down, work stoppage or lockout, or any threat thereof, by or with respect
to any of the employees of CODA or to the best knowledge of CODA any supplier of
CODA.

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5.20) Employees.

(a) Except as specifically set forth in Schedule 5.1J, CODA has no
Employee Plans.

(b) CODA is not and has never been (i) a party or contributor to, or
incurred withdrawal liability with respect to any Multiemployer Plan, or
(ii) a party or contributor to any plan maintained by more than one
employer as described in Section 413(c) of the Code.

(c) Except as specifically set forth in the financial statements of
CODA filed with the SEC, CODA has no obligations and the transactions
contemplated hereby shall give rise to no obligations to its directors,
officers, employees, consultants, or agents other than obligations arising
in the ordinary course of business since the date of the most recent
financial statements of CODA filed with the SEC on account of wages,
salaries and commissions for prior services performed or business produced.

(d) There have been no lawsuits or claims brought by any employee or
consultant or former employee or consultant of CODA against CODA.

(e) Proper and accurate amounts have been withheld by CODA from the
compensation of all of its employees for all periods in full and complete
compliance with the tax withholding provisions of any applicable laws.

(f) Proper and accurate returns have been filed by CODA for all
periods for which returns were due with respect to employee income tax and
social security withholding and unemployment taxes, and the amounts shown
on such returns to be due and payable have been paid in full or adequate
provisions for payment of such amounts have been included in the financial
statements of CODA filed with the SEC.

(g) Hours worked by, and payments made to, employees of CODA have not
been in violation of any applicable laws dealing with such matters.

(h) All payments due from CODA on account of employee health, welfare
and workers compensation insurance have been accrued as a liability in the
financial statements of CODA filed with the SEC.

(i) There are no severance or early retirement payments which are or
were due from CODA under the terms of any agreement, oral or written.

5.21) No Finders. No act of CODA has given or will give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or other like payment in connection with the transactions contemplated herein.

5.22) Contracts with Related Parties. Except as specifically set forth in
Schedules 5.1I or 5.22, to the best of CODA's knowledge, there are no agreements
or contracts between CODA and any of its officers, directors, shareholders or
any entity in which any officer, director or shareholder owns a more than five
percent (5%) equity interest.

5.23) Absence of Certain Business Practices. Neither CODA nor any officer,
employee or agent of NET4MUSIC, nor any other person acting on its behalf, has
directly or indirectly, since the date of NET4MUSIC's incorporation given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of CODA (or assist CODA in connection

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with any actual or proposed transaction) which (i) might subject CODA to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had an adverse effect on
the assets, business or operations of CODA as reflected in the financial
statements of CODA filed with the SEC, or (iii) if not continued in the future,
might adversely affect CODA's assets, business, operations or prospects or which
might subject CODA to suit or penalty in any private or governmental litigation
or proceeding.

5.24) Corporate Records. The minute books of CODA are complete and
correctly reflect in all material respects, all corporate actions taken by it at
all meetings or through written action and correctly record all resolutions of
CODA.

5.25) Completeness of Schedules. Without limitation of the representations
and warranties contained in this Article V, the Schedules to this Agreement
completely and correctly present the information required by this Agreement to
be set forth therein in all material respects.

5.26) Disclosure. Without limitation of the representations and warranties
contained in this Article V, no representation or warranty by CODA in this
Agreement, and no information disclosed in the Schedules supplied by CODA,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.

ARTICLE VI

COVENANTS

6.1) Approvals and Consents. NET4MUSIC and the Shareholders will, at
NET4MUSIC's sole cost and expense, obtain all approvals and consents of all
third parties necessary on the part of NET4MUSIC or the Shareholders to
consummate the transaction contemplated herein. CODA agrees to cooperate with
NET4MUSIC and the Shareholders in connection with obtaining such approvals and
consents. CODA will, at its sole cost and expense, obtain all approvals and
consents of all third parties necessary on the part of CODA to consummate the
transactions contemplated herein. NET4MUSIC and the Shareholders agree to
cooperate with CODA in connection with obtaining such approvals and consents.
Attached as Schedule 6.1 are copies of the agreements obtained by CODA from
Messrs. Gordon Stofer, Benson K. Whitney and John Paulson regarding their
agreement to vote the shares of CODA common stock that they beneficially hold in
favor of the transactions contemplated by this Agreement.

6.2) Preserve Accuracy of Representations and Warranties. NET4MUSIC and the
Shareholders shall refrain from taking any action, except with the prior written
consent of CODA, that would render any representation, warranty or agreement of
NET4MUSIC and the Shareholders in this Agreement inaccurate or breached as of
the Closing in any material respect. NET4MUSIC covenants and agrees that the
representations and warranties made by it set forth in Article III hereof, and
each Shareholder covenants and agrees that the representations and warranties
made by such Shareholder set forth in Article IV hereof, shall be true and
correct at the Closing, as if such representations and warranties, and any
Schedules referred to therein and attached hereto, were made as of the Closing
Date, except as required by this Agreement or consented to in writing by CODA.
CODA covenants and agrees that the representations and warranties set forth in
Article V hereof

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shall be true and correct at the Closing, as if such representations and
warranties, and any Schedules referred to therein and attached hereto, were made
as of the Closing Date, except as required by this Agreement or consented to in
writing by NET4MUSIC and the Shareholders. At all times prior to the Closing,
NET4MUSIC and the Shareholders will promptly inform CODA in writing, with
respect to any matters hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
the Schedules pursuant to Articles III, IV or V, as applicable.

6.3) Maintain NET4MUSIC and CODA. NET4MUSIC and the Shareholders shall
maintain NET4MUSIC's business operations intact in accordance with past
practices and sound business judgment, continue to meet the contractual
obligations incurred by NET4MUSIC in the ordinary course of business (and in
compliance with this Agreement), pay obligations as they mature in the ordinary
course of business, use their best efforts to keep available the services of the
present employees, preserve the good relations of the suppliers, customers and
others with whom NET4MUSIC has business relations, and not materially adversely
change the character of NET4MUSIC's business. NET4MUSIC shall promptly notify
CODA in writing of any change in NET4MUSIC's business, or prospects therefor,
whether or not in the ordinary course of business. CODA shall maintain its
business operations intact in accordance with past practices and sound business
judgment, continue to meet the contractual obligations incurred by it in the
ordinary course of business (and in compliance with this Agreement), pay
obligations as they mature in the ordinary course of business, use its best
efforts to keep available the services of the present employees, preserve the
good relations of the suppliers, customers and others with whom it has business
relations, and not materially adversely change the character of its business.
CODA shall promptly notify NET4MUSIC in writing of any change in CODA's
business, or prospects therefor, whether or not in the ordinary course of
business.

6.4) No Solicitation of Other Offers. Neither NET4MUSIC nor any of the
Shareholders shall solicit, entertain, discuss or consider any offer, inquiry or
proposal with respect to the sale, merger or other acquisition or licensing of
the business or assets (or any material portion or items thereof) of NET4MUSIC
or of any outstanding stock of NET4MUSIC by any third party other than CODA.
CODA shall not solicit, entertain, discuss or consider any offer, inquiry or
proposal with respect to the sale, merger or other acquisition or licensing of
the business or assets (or any material portion or items thereof) of CODA or of
any outstanding stock of CODA by any third party other than NET4MUSIC.

6.5) Access to Information and Records Before Closing. Prior to the
Closing, NET4MUSIC shall give CODA, its employees, attorneys, accountants and
other representatives, full access from the date hereof to all of its
properties, books, contracts, commitments, customers, records, employees,
agents, attorneys and accountants, and furnish to CODA during such period all
such information as CODA may reasonably request. Prior to the Closing, CODA
shall give NET4MUSIC, its employees, attorneys, accountants and other
representatives, full access from the date hereof to all of its properties,
books, contracts, commitments, customers, records, employees, agents, attorneys
and accountants, and furnish to NET4MUSIC during such period all such
information as NET4MUSIC may reasonably request. Except as provided herein,
CODA, NET4MUSIC and the Shareholders shall maintain the confidentiality of all
Confidential Information, the public disclosure of which might adversely affect
NET4MUSIC or CODA.

6.6) Employee Agreements. Prior to the Closing, the parties shall cause
John Paulson and Francois DULIEGE to enter into Employment Agreements in the
form attached hereto as Exhibit A.

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6.7) Approval of Coda Shareholders; Registration Statement.

(a) CODA shall promptly take all action necessary in accordance with
the Minnesota Business Corporations Act and its Articles of Incorporation
and Bylaws to cause a special meeting of the its shareholders to be duly
called and held as soon as reasonably practicable following the date of
this Agreement for the purpose of obtaining the Required CODA Shareholder
Vote. CODA shall prepare and file with the SEC, as soon as reasonably
practicable, the Registration Statement (and related Proxy
Statement/Prospectus) and shall use its best efforts to cause the
Registration Statement to become effective as promptly as possible.
NET4MUSIC and Shareholders shall furnish to CODA all information and shall
take such other action and otherwise cooperate, as CODA may reasonably
request in connection with any such action.

(b) If at any time prior to obtaining the Required CODA Shareholder
Vote, any event or circumstance occurs that may give rise to the filing of
an amendment of, or supplement to, the Registration Statement, CODA,
NET4MUSIC or Shareholders, as the case may be, shall, upon learning of such
event, promptly notify the others and consult and cooperate with the others
in connection with the determination of whether or not such an amendment or
supplement is required and, if so, with the preparation and filing with the
SEC of a mutually acceptable amendment or supplement. CODA shall promptly
mail such amendment or supplement as soon as practicable. No amendment or
supplement to the Registration Statement will be made without the approval
of the NET4MUSIC and CODA (such approval not to be unreasonably withheld or
delayed).

6.8) Further Actions. Subject to the terms and conditions herein provided
and without being required to waive any conditions herein (whether absolute,
discretionary, or otherwise), each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper, or advisable to consummate and
make effective the transactions contemplated by this Agreement. In case at any
time after the Closing, any further action is necessary or desirable to carry
out the purposes of this Agreement, the parties to this Agreement, or their
proper officers and directors, shall take all such necessary action.

6.9) Regulatory Approvals. Although the parties do not anticipate any
legislative, administrative or judicial objection to the consummation of any of
the transactions contemplated by this Agreement, each of the parties to this
Agreement agrees to use commercially reasonable efforts vigorously to contest
and resist any action, including legislative, administrative or judicial action,
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) (an
"Order") that is in effect and that restricts, prevents or prohibits the
consummation of any of the other transactions contemplated by this Agreement,
including, without limitation, by vigorously pursuing available avenues of
administrative and judicial appeal.

6.10) Certain Notifications. Each party to this Agreement shall notify the
other parties in writing of the occurrence of any event that will or could
reasonably be expected to result in the failure by such party or its Affiliates
to satisfy any of the conditions specified in this Agreement.

6.11) Nasdaq National Market Listing; Market Makers. NET4MUSIC and CODA
shall use their best efforts to obtain the necessary authorizations for the
quotation of CODA common stock on the Nasdaq National Market immediately
following the Closing.

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NET4MUSIC and CODA shall use their best efforts to locate additional market
makers for CODA common stock following the Closing.

6.12) Voting Agreements. The Shareholders agree to execute, effective upon
the Closing, Voting Agreements, in the form attached hereto as Exhibit B,
regarding the election of a sufficient number of directors designated by John
Paulson, Benson Whitney and Timothy Bajarin (or their successors) such that
these designees would constitute at least one-third of the Board of Directors of
CODA following the Closing.

6.13) Shareholder Put Agreements. Prior to Closing, NET4MUSIC and the
Shareholders shall cause those shareholders of NET4MUSIC who are not parties to
this Agreement, each of whom is listed on Schedule 6.13 to this Agreement, to
execute and deliver to CODA a counterpart of the Put and Call Agreement.

6.14) Lockup Agreement. Each Shareholder agrees, for the benefit of Coda,
that the undersigned will not, for a period of 270 days from the date hereof in
the case of those Shareholders who are employees of Net4Music and 180 days from
the date hereof in the case of non-employee Shareholders ("Lockup Period") (i)
sell, transfer or otherwise dispose of, or agree to sell, transfer or otherwise
dispose of, any of the Coda Common Stock, or any option, right or warrant to
purchase Coda Common Stock, that the Shareholder will beneficially own during
the Lockup Period or (ii) sell or grant, or agree to sell or grant, options,
rights or warrants with respect to any of the Coda Common Stock, or any option,
right or warrant to purchase Coda Common Stock, that the Shareholder will
beneficially own during the Lockup Period. The foregoing lockup does not
prohibit, during the Lockup Period, gifts to donees or transfers by will or the
laws of descent to heirs or beneficiaries provided that such donees, heirs or
beneficiaries shall be bound by the obligations set forth in this Section 6.14.

ARTICLE VII
CONDITIONS TO CODA'S OBLIGATIONS

The obligations of CODA under this Agreement shall, at its option, be
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions:

7.1) Truth of Representations and Warranties. The representations and
warranties of NET4MUSIC and the Shareholders herein shall be true in all
material respects on the Closing Date with the same effect as though made at
such time. NET4MUSIC and the Shareholders shall have performed all material
obligations and complied with all material covenants and conditions prior to or
as of the Closing Date. NET4MUSIC shall have delivered to CODA a certificate in
form and substance satisfactory to CODA, in its reasonable judgment, dated as of
the Closing Date and executed by the Shareholders' Representative and the
President of NET4MUSIC to all such effects.

7.2) Opinion of Counsel for Net4Music. Counsel for NET4MUSIC with respect
to the transactions contemplated by this Agreement shall have delivered to CODA
a written opinion, dated the Closing Date, in substantially the form of the
attached Exhibit C.

7.3) Required Consents. NET4MUSIC and the Shareholders shall have obtained
the written consent or approval of each person whose consent or approval CODA
reasonably believes is required in connection with this Agreement. The Required
CODA Shareholder Vote shall have been obtained.

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7.4) Litigation Affecting Closing. No suit, action or other proceeding
shall be pending or threatened by any third party or by or before any court or
governmental agency in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated by this Agreement, and no investigation that might
result in any such suit, action or other proceeding shall be pending or
threatened.

7.5) Legislation. No statute, rule, regulation, order, or interpretation
shall have been enacted, entered or deemed applicable by any domestic or foreign
government or governmental or administrative agency or court which would make
the transactions contemplated by this Agreement illegal.

7.6) Review of Business. CODA shall have completed, to its satisfaction, an
investigation of NET4MUSIC, its assets, accounts, practices, and operations and
received the full cooperation of NET4MUSIC and the Shareholders in connection
therewith.

7.7) Employment Agreements. Francois DULIEGE and John Paulson shall have
entered into the agreements described in Section 6.6.

7.8) Shareholder Agreement. The existing shareholder agreement to which the
Shareholders are a party shall be terminated effective upon the Closing.

7.9) Fairness Opinion. CODA shall have received a fairness opinion from an
investment banker acceptable to it, in its reasonable judgment, regarding the
transaction contemplated by this Agreement.

7.10) Voting Agreement. CODA shall have received the Voting Agreements
described in Section 6.12.

7.11) Put and Call Agreement. CODA and certain shareholders of Net4Music
shall have entered into the Put Agreement described in Section 6.13.

ARTICLE VIII
CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS

The obligations of the Shareholders under this Agreement shall, at their
option, be subject to the satisfaction, on or prior to the Closing Date, of all
of the following conditions:

8.1) Truth of Representations and Warranties. The representations and
warranties of CODA herein shall be true in all material respects on the Closing
Date with the same effect as though made at such time. CODA shall have performed
all material obligations and complied with all material covenants and conditions
prior to or as of the Closing Date. CODA shall have delivered to Net4Music and
the Shareholders a certificate in form and substance satisfactory to Net4Music
and the Shareholders in their reasonable judgment dated as of the Closing Date
and executed by the Chief Executive Officer of CODA to all such effects.

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8.2) Opinion of Counsel for CODA. The Shareholders shall have received from
Fredrikson & Byron, P.A., counsel for CODA, a written opinion dated the Closing
Date, in substantially the form of the attached Exhibit D.

8.3) Required Consents. CODA shall have obtained the written consent or
approval of each person whose consent or approval Net4Music or the Shareholders
reasonably believe is required in connection with this Agreement. The Required
CODA Shareholder Vote shall have been obtained.

8.4) Litigation Affecting Closing. No suit, action or other proceeding
shall be pending or threatened by any third party or by or before any court or
governmental agency in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated by this Agreement, and no investigation that might
result in any such suit, action or other proceeding shall be pending or
threatened.

8.5) Legislation. No statute, rule, regulation or order or interpretation
shall have been enacted, entered or deemed applicable by any domestic or foreign
government or governmental or administrative agency or court which would make
the transactions contemplated by this Agreement illegal.

8.6) Review of Business. NET4MUSIC and the Shareholders shall have
completed, to their satisfaction, an investigation of CODA, its assets,
accounts, practices, and operations and received the full cooperation of CODA in
connection therewith.

8.7) Employment Agreements. Francois DULIEGE and John Paulson shall have
entered into the agreements described in Section 6.6.

8.8) Put Agreements. CODA and certain shareholders of NET4MUSIC shall have
entered into the Put Agreement described in Section 6.13.

ARTICLE IX
CLOSING

9.1) Closing Date. The consummation of the purchase and sale of the
NET4MUSIC Stock and the assumption of all outstanding NET4MUSIC Purchase Rights
provided for herein (the "Closing") shall take place at 10:00 a.m. (Central
Time) on such date as the Required CODA Shareholder Vote has been obtained or on
such other date and/or at such other time as the parties hereto may agree upon
(the "Closing Date"). The Closing shall take place at the offices of Fredrikson
& Byron, P.A. or at such other place as the parties hereto may agree.

9.2) Closing Deliveries of the Shareholders. In addition to, and without
limiting any other provisions of this Agreement, each Shareholder shall, at the
Closing, deliver to CODA the items referred to in subsection (a) below, and all
of the Shareholders shall collectively deliver the items referred to in
subsections (b) through (c) below, in form satisfactory to CODA and its counsel,
in their reasonable judgment:

(a) Transfer forms for all NET4MUSIC Stock legally or beneficially
owned by such Shareholder, duly endorsed; and a check made payable to
NET4MUSIC in the amount of all principal and accrued interest thereon owed
to NET4MUSIC by such Shareholder pursuant to any promissory note or other
obligation for the payment of

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money, if any. Necessary documentary transfer tax stamps, if any, shall be
affixed to the transfer forms at the expense of the Shareholders or funds
sufficient for the purchase thereof shall be delivered to CODA at the
Closing.

(b) Certified copies of NET4MUSIC's governing documents as listed in
Exhibit E hereto, certified by Claude POLETTI and a Certificate of Claude
POLETTI as of a date not more than five business days prior to the Closing
Date, to the effect that NET4MUSIC is in good standing, has no known unpaid
tax liability, and is entitled to transact business under the laws of the
Republic of France.

(c) All of the documents, certificates, instruments and opinions
required to be delivered to CODA under Article VII of this Agreement.

9.3) Closing Deliveries of CODA. In addition to, and without limiting any
other provisions of this Agreement, CODA shall, at the Closing, deliver to the
Shareholders or the Shareholders' Representative, in form satisfactory to the
Shareholders and the Shareholders' Representative in their reasonable judgment,
the following:

(a) certificates representing the CODA common stock to which each
Shareholder is entitled under this Agreement and as set forth in Schedule
2.3 hereto;

(b) the documents and opinion required to be delivered to the
Shareholders under Article VIII of this Agreement; and

(c) certified copies of CODA's Articles of Incorporation and Bylaws
and a certificate to the effect that CODA has no known unpaid tax
liability, certified by CODA's Chief Executive Officer and Chief Financial
Officer, and a Certificate of Good Standing of CODA, issued by the
Secretary of State of the State of Minnesota, and equivalent instruments
for each state in which CODA is qualified to do business, in each case as
of a date not more than five business days prior to the Closing.

9.4) Proceedings. All proceedings taken and all documents executed and
delivered by the parties hereto at the Closing shall be deemed to have been
taken and executed simultaneously and no proceedings shall be deemed taken nor
any documents executed or delivered until all have been taken, executed and
delivered.

ARTICLE X
INDEMNIFICATION

10.1) Indemnification of CODA.

(a) NET4MUSIC shall indemnify, defend and hold harmless CODA and each
of its Affiliates, officers, directors agents, counsel and stockholders
(CODA and such other indemnitees referred to in this Article X as "CODA")
from and against and in respect of any and all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, interest and
penalties, costs and expenses (including, without limitation, reasonable
legal fees and disbursements incurred in connection therewith and in
seeking indemnification therefor, and any amounts or expenses required to
be paid or incurred in connection with any action, suit, proceeding, claim,
appeal, demand, assessment or judgment) ("Indemnifiable Losses"), resulting
from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of any breach of any representation,
warranty, covenant or agreement of

A-37
<PAGE> 160

NET4MUSIC or the Shareholders contained in this Agreement or any agreement,
certificate or document executed and delivered by NET4MUSIC or the
Shareholders pursuant hereto or in connection with any of the transactions
contemplated by this Agreement. The amount of the Indemnifiable Losses
payable hereunder shall not exceed CODA's actual, cash out-of-pocket
payments for which indemnity is sought.

10.2) Indemnification of NET4MUSIC. CODA shall indemnify, defend and hold
harmless NET4MUSIC and each of its Affiliates, officers, directors, agents,
counsel and stockholders (NET4MUSIC and such other indemnitees referred to in
this Article X as NET4MUSIC) from and against and in respect of any and all
Indemnifiable Losses resulting from, arising out of, or imposed upon or incurred
by any person to be indemnified hereunder by reason of any breach of any
representation, warranty, covenant or agreement of CODA contained in this
Agreement or any agreement, certificate or document executed and delivered by
CODA pursuant hereto or in connection with the transactions contemplated by this
Agreement. The amount of the Indemnifiable Losses payable hereunder shall not
exceed NET4MUSIC's actual, cash out-of-pocket payments for which indemnity is
sought.

10.3) Third Party Claims. If a claim by a third party is made against an
indemnified party and if the indemnified party intends to seek indemnity with
respect thereto under this Article X, such indemnified party shall promptly
notify the indemnifying party of such claim; provided, however, that failure to
give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying
party's ability to defend such claim against a third party. The indemnified
party shall not settle such claim without the consent of the indemnifying party,
which consent shall not be unreasonably withheld or delayed. If the indemnifying
party acknowledges in writing its indemnity obligations for Indemnifiable Losses
resulting therefrom, the indemnifying party may participate at its own cost and
expense in the settlement or defense of any claim for which indemnification is
sought; provided that, such settlement or defense shall be controlled by the
indemnified party.

10.4) Cooperation as to Indemnified Liability. Each party hereto shall
cooperate fully with the other parties with respect to access to books, records,
or other documentation within such party's control, if deemed reasonably
necessary or appropriate by any party in the defense of any claim which may give
rise to indemnification hereunder.

ARTICLE XI

TERMINATION

11.1) Termination. The obligation of the parties hereto to consummate the
trans-actions contemplated hereby may be terminated and abandoned at any time at
or before the Closing only as follows:

(a) by mutual written consent duly authorized by the NET4MUSIC Board,
the CODA Board and the Shareholders;

(b) by any party to this Agreement if the acquisition of the
NET4MUSICStock as contemplated by this Agreement shall not have been
consummated on or before December 31, 2000; provided, however, that the
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have been the
proximate cause of, or resulted in, the failure to consummate

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<PAGE> 161

the acquisition of the NET4MUSIC Stock as contemplated by this Agreement by
such date;

(c) by any party to this Agreement if a court of competent
jurisdiction or an administrative, governmental, or regulatory authority
has issued a final, nonappealable order, decree, or ruling, or taken any
other action, having the effect of permanently restraining, enjoining, or
otherwise prohibiting the acquisition of theNET4MUSIC Stock as contemplated
by this Agreement;

(d) by CODA if (i) CODA is not in material breach of its obligations
under this Agreement and (ii) there has been a material breach by NET4MUSIC
or the Shareholders of any of their representations, warranties, or
obligations under this Agreement; provided, however, that, if such breach
is curable by NET4MUSICor the Shareholders, as the case may be, through the
exercise of reasonable best efforts and such cure is reasonably likely to
be completed prior to the Required CODA Shareholder Vote, then for so long
as NET4MUSIC or the Shareholders, as the case may be, continue to exercise
reasonable best efforts, prior to the Required Coda Shareholder Vote, CODA
may not terminate this Agreement under this Section 11.1(d); or

(e) by NET4MUSIC if (i) NET4MUSIC and the Shareholders are not in
material breach of their obligations under this Agreement and (ii) there
has been a material breach by CODA of any of their representations,
warranties, or obligations under this Agreement; provided, however, that,
if such breach is curable by CODA through the exercise of reasonable best
efforts and such cure is reasonably likely to be completed prior to the
Required CODA Shareholder Vote, then for so long as CODA continues to
exercise reasonable best efforts, prior to the Required Coda Shareholder
Vote, NET4MUSIC and the Shareholders may not terminate this Agreement under
this Section 11.1(e).

11.2) Effect. Except in the event of termination pursuant to Section
11.1(c), termination of this Agreement by a party shall not relieve the other
parties hereto of any liability for breach of representation, warranty, covenant
or agreement by such other parties including liability for monetary damages
and/or specific performance. In the event of any termination of this Agreement,
that certain Confidentiality Agreement dated 5 May, 2000 between NET4MUSIC and
CODA shall govern any confidential information about the other party obtained
pursuant to this Agreement. If CODA terminates this Agreement under Section
11.1(d) or if NET4MUSIC and the Shareholders terminate this Agreement under
Section 11.1(e), the non-terminating party shall be responsible for reimbursing
the terminating party for its reasonable expenses incurred in connection with
the transactions contemplated by this Agreement and shall pay the terminating
party a fee of $750,000, which expenses and fee shall be paid to NET4MUSIC in
the event CODA is the non-terminating party.

ARTICLE XII

OTHER PROVISIONS

12.1) Further Assurances. At such time and from time to time on and after
the Closing Date upon request by CODA, the Shareholders will execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further

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<PAGE> 162

acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances that may be required for the better conveying, transferring,
assigning, delivering, assuring and confirming to CODA, or to its respective
successors and assigns all of the NET4MUSIC Stock or to otherwise carry out the
purposes of this Agreement.

12.2) Complete Agreement. The Schedules and Exhibits to this Agreement
shall be construed as an integral part of this Agreement to the same extent as
if they had been set forth verbatim herein. This Agreement and the Schedules and
Exhibits hereto, together with the Confidentiality Agreement dated 5 May, 2000,
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements whether written or oral
relating hereto.

12.3) Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements contained in Articles III,
IV and V of this Agreement shall not survive the Closing. Expiration of a
representation, warranty, covenant or agreement pursuant to this Section shall
not limit or otherwise affect the right of a party to indemnification under
Article X if notice was sent to the party from whom indemnification is sought of
the basis for such claim to indemnification prior to such expiration. No
independent investigation of NET4MUSIC by CODA, or by CODA of NET4MUSIC, their
respective counsel, agents or employees shall in any way limit or restrict the
scope of the representations and warranties made by NET4MUSIC, the Shareholders
or CODA in this Agreement. No claim for indemnification under Article X pursuant
to this Section 12.3: (i) may be made if the party who otherwise would have the
right to claim such indemnification proceeds to Closing and (ii) shall in no
event exceed the actual, cash out-of-pocket expenses of this transaction
incurred by the party seeking indemnification.

12.4) Waiver, Discharge, Amendment, Etc. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement, including the
election of such party to proceed with the Closing despite a failure of any
condition to such party's closing obligations to occur, shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
This Agreement may be amended by NET4MUSIC and CODA, by mutual action approved
by their respective Boards of Directors or their respective officers authorized
by such Board of Directors, and by the Shareholders acting through the
Shareholders' Representative, at any time prior to the Closing Date. Any
amendment to this Agreement shall be in writing and signed by NET4MUSIC, the
Shareholders' Representative, and CODA.

12.5) Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified, (ii) when sent by
telefax, facsimile or electronic mail if sent during normal business hours of
the recipient, if not then on the next business day, (iii) five days after
deposit in the United States mail, in the case of CODA , or in the French poste
in the case of NET4MUSIC and the Shareholders or (iv) two days after deposit
with a internationally recognized overnight courier. All such notices and other
communications shall be sent to the addresses listed below or at such other
address as such party may designate with ten days' advance written notice to the
other parties.

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if to CODA:

CODA MUSIC TECHNOLOGY, INC.
6210 Bury Drive
Eden Prairie, Minnesota 55346
Attention: John Paulson, President
Telecopy Number: (952) 906-3617
with a copy to:

Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Melodie R. Rose
Telecopy Number: (612) 347-7077

and if to the Shareholders to:

Telecopy Number:

Francois DULIEGE
NET4MUSIC S.A.
24, rue du President Wilson
93200 CEVALLOIS-PERRET
FRANCE
Telecopy Number: 33 1 40 87 71 83
with a copy to:
Sokolow, Dunard, Mercadier & Carreras
55 avenne Kleber
75116 Paris
FRANCE
Attention: Jean-Francois CARRERAS
Telecopy Number: 33 1 53 65 70 50

and if to NET4MUSIC prior to the Closing to:

NET4MUSIC S.A.
24, rue du President Wilson
93200 LEVALLOIS-PERRET
FRANCE

Attention: Francois DULIEGE, President
Telecopy Number: 33 1 40 87 71 83

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with a copy to:

Sokolow, Dunaud, Mercadier & Carreras
55 avenue Kleber
75116 Paris
FRANCE

Attention: Jean-Francois CARRERAS
Telecopy Number: 33 1 53 65 70 50

12.6) Public Announcement. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this Agreement
or the transactions contemplated hereby, such party shall so advise the other
parties hereto, and the parties shall thereafter use their best efforts to cause
a mutually agreeable release or announcement to be issued. Except in connection
with the Registration Statement, neither NET4MUSIC nor CODA will publicly or
privately disclose or divulge, other than to their respective counsel and
accountants, any provisions of this Agreement or the transactions contemplated
hereby without the other's written consent. No Shareholder will publicly or
privately disclose or divulge any provisions of this Agreement or the
transactions contemplated hereby without the written consent of NET4MUSIC and
CODA. The foregoing shall not apply to any disclosure required by applicable
law.

12.7) Expenses. Except as provided in Section 11.2, each party to this
Agreement shall pay its own expenses incident to this Agreement and the
preparation for, and consummation of, the transactions provided for herein.

12.8) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, including all matters of
construction, validity, performance and enforcement, without giving effect to
principles of conflict of laws.

12.9) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto.

12.10) Titles and Headings; Construction. The Table of Contents, titles and
headings to the Articles and Sections herein are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof against
the party causing this Agreement to be drafted.

12.11) Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

12.12) Taxes. The Shareholders will pay all sales, transfer and documentary
taxes, if any, payable in connection with the sale and transfer of the NET4MUSIC
Stock to CODA hereunder.

12.13) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

12.14) Attorney-in-Fact for Shareholders. Each Shareholder appoints
Francois DULIEGE as such Shareholder's true and lawful attorney-in-fact and
agent, with full

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power of substitution and resubstitution, for such Shareholder and in such
Shareholder's name, place and stead to act on behalf of such Shareholder to
resolve matters arising in connection with the transactions contemplated by this
Agreement. In furtherance of the foregoing, each Shareholder grants to Francois
DULIEGE full authority to amend this Agreement, waive any provision of this
Agreement, settle or compromise any claim, authorize any payment, and take any
action in connection with this Agreement. In the event of the death, resignation
or incapacity of Francois DULIEGE, each Shareholder appoints Claude POLETTI to
succeed Francois DULIEGE as the Shareholders' Representative hereunder with the
full authority granted by this Section. Any further successors shall be selected
by the written consent of holders of a majority in interest of the NET4MUSIC
Stock. The Shareholders' Representative shall not be liable for any action taken
or determination made in good faith in connection with the exercise of his
authority pursuant to this Section.

12.15) Arbitration. Any disputes regarding this Agreement, or the breach of
it, shall be resolved by mutual agreement of the parties. In the event that the
parties are unable to resolve disputes within 30 days after discussions, this
dispute will be settled by binding arbitration (unless the parties otherwise
agree). The arbitrator shall be a retired judge (unless otherwise agreed by the
parties) mutually agreed upon by the parties. The arbitration proceeding shall
occur New York, New York and shall be administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules (to the extent
such rules are not inconsistent with the provisions of this Section). Judgment
may be entered upon the final award of the arbitrator in any court having
jurisdiction and notwithstanding anything to the contrary, such arbitration
award shall be final and conclusive for all legal purposes consistent with the
provisions of the Minnesota Arbitration Act. The party which does not
substantially prevail shall pay the fees and expenses of the arbitrator and the
American Arbitration Association. The arbitrator may, in his or her discretion,
award attorneys' fees incurred by the party which substantially prevails in
connection with the arbitration proceeding. This Section shall survive
termination of this Agreement under any circumstances. As indicated in Section
12.8, the governing law shall be that of the State of New York.

12.16) Disclosure. Each Shareholder acknowledges that such Shareholder has
received and read a letter from the President of NET4MUSIC describing the
transactions set forth in this Agreement and has had an opportunity to review
such transactions with such Shareholder's tax, legal, or other advisors if so
desired.

(signatures follow)

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<PAGE> 166

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in the manner appropriate for each, and to be dated as of the date
first above written.

<TABLE>
<S> <C>
CODA MUSIC TECHNOLOGY, INC.
By /s/ JOHN W. PAULSON
-------------------------------------------
Its Chief Executive Officer
-------------------------------------------
SHAREHOLDERS:
PLS VENTURES PARTNERS
By
-------------------------------------------
Its
-------------------------------------------
ERATO
By
-------------------------------------------
Its
-------------------------------------------
VIVENTURES FCPR
By
-------------------------------------------
Its
-------------------------------------------
AVENIR FINANCE PARTNERS
By
-------------------------------------------
Its
-------------------------------------------
FCPR ROBERTSAU INVESTISSEMENT
By
-------------------------------------------
Its
-------------------------------------------
NESTOR 99
By
-------------------------------------------
Its
-------------------------------------------
FCPI SOGE INNOVATION
By
-------------------------------------------
Its
-------------------------------------------
VIVENTURES
By
-------------------------------------------
Its
-------------------------------------------
NET4MUSIC S.A.
By /s/ FRANCOIS DULIEGE
-------------------------------------------
Its Chief Executive Officer
-------------------------------------------
Sade
By
-------------------------------------------
Its
-------------------------------------------
NESTOR
By
-------------------------------------------
Its
-------------------------------------------
FCPI SGAM INNOVATION 1
By
-------------------------------------------
Its
-------------------------------------------
FGII
By
-------------------------------------------
Its
-------------------------------------------
SCHOTT MUSIK INTERNATIONAL
By
-------------------------------------------
Its
-------------------------------------------
NET DISCOVERY FCPR
By
-------------------------------------------
Its
-------------------------------------------
TURENNE FCPI JET INNOVATION 1
By
-------------------------------------------
Its
-------------------------------------------
MC ITE
By
-------------------------------------------
Its
-------------------------------------------
</TABLE>

A-44
<PAGE> 167
<TABLE>
<S> <C>
NET FUND EUROPE CVA
By
-------------------------------------------
Its
-------------------------------------------
EDB VENTURE PTE LTD
By
-------------------------------------------
Its
-------------------------------------------
TURENNE HOLDING
By
-------------------------------------------
Its
-------------------------------------------
CROISSANCE DISCOVERY FCPR
By
-------------------------------------------
Its
-------------------------------------------
BANCBOSTON INVESTMENTS INC.
By
-------------------------------------------
Its
-------------------------------------------
FCPI SOGE INNOVATION 2
By
-------------------------------------------
Its
-------------------------------------------
MITSUBISHI CORPORATION (UK) PLC
By
-------------------------------------------
Its
-------------------------------------------
GENEVEST CONSULTING S.A.
By
-------------------------------------------
Its
-------------------------------------------
STARTEC HOLDING
By
-------------------------------------------
Its
-------------------------------------------
SEQUOIA INVESTMENTS LTD
By
-------------------------------------------
Its
-------------------------------------------
EMI OVERSEAS HOLDINGS LTD
By
-------------------------------------------
Its
-------------------------------------------
---------------------------------------------
ERIC LILEY
---------------------------------------------
LAVIDA DOWDELL
---------------------------------------------
PETER MUSTALISH
---------------------------------------------
CRAIG BRUNENGRABER
---------------------------------------------
SERGE DORNY
---------------------------------------------
THOMAS DOLBY
---------------------------------------------
CAROLIN BIENSTOCK
---------------------------------------------
MARK MUNFORD
---------------------------------------------
MIKE FORSTER
---------------------------------------------
KEVIN GREENSTEIN
---------------------------------------------
TOD WARNER
---------------------------------------------
JOHN JACKSON
---------------------------------------------
TANYA JONHSON
</TABLE>

A-45
<PAGE> 168
<TABLE>
<S> <C>
---------------------------------------------
JORDI ROCH I BOCH
---------------------------------------------
PETER HANSER STRECKER
---------------------------------------------
DAVID SHULHOF
---------------------------------------------
MARTIN VELASCO
</TABLE>

A-46
<PAGE> 169
Special Committee of the Board of Directors
Coda Music Technology, Inc.
Page 1

Appendix B

August 11, 2000

Special Committee of the Board of Directors
Coda Music Technology, Inc.
6210 Bury Drive
Eden Prairie, MN 55346-1718

Dear Directors:

You have requested our opinion, as of the date hereof, as to the fairness,
from a financial point of view, to Coda Music Technology, Inc. ("Coda" or the
"Company") of the consideration to be paid in connection with Coda's proposed
acquisition (the "Acquisition") of Net4Music S.A., a privately-held corporation
organized under the laws of the Republic of France ("Net4Music"). The terms of
the Acquisition are contained in a Stock Purchase Agreement to be dated on or
about August 11, 2000 (the "Stock Purchase Agreement") between Coda, Net4Music,
and certain shareholders of Net4Music. Pursuant to the Stock Purchase Agreement,
Coda will issue approximately 11.4 million shares of the Company's common stock
and assume options and warrants to purchase approximately 900,000 shares of the
Company's common stock to purchase approximately 82% of the issued and
outstanding equity securities of Net4Music. In addition, the remaining equity
interests of Net4Music will be callable by the Company at the end of five years
from the closing date for the Acquisition, if not put to the Company and
converted into common stock of Coda before such date by the holders of such
equity interests of Net4Music. The equity interests subject to the calls and
puts will be converted into Coda's common stock on the same terms as the shares
purchased under the Stock Purchase Agreement. As a result of the Acquisition,
the shareholders of Coda will own approximately 33% of the fully diluted common
shares and the equity holders of Net4Music will own (or have the right to own)
approximately 67% of the fully diluted common shares of the Company after the
Acquisition and Coda will own (or have the right to own) 100% of the stock of
Net4Music. The transaction is subject to a vote by stockholders of Coda, as well
as a number of other closing conditions.

Miller, Johnson & Kuehn, Incorporated ("MJK"), as part of its investment
banking business, is continually engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements, and valuations for estate, corporate, and other
purposes. MJK will receive a fixed fee for providing this opinion and will be
indemnified against certain liabilities that may arise from activities related
to this engagement.

In connection with this opinion, we have, among other things, reviewed (i)
a draft of the Stock Purchase Agreement, certain other agreements and drafts of
the Form S-4 Proxy/Prospectus prepared for the Acquisition; (ii) certain
historical financial information for Coda and Net4Music; (iii) certain projected
financial information for Coda and Net4Music prepared for financial planning
purposes in connection with the Acquisition and furnished by the management of
Coda and Net4Music; and (iv) certain pro forma

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<PAGE> 170
Special Committee of the Board of Directors
Coda Music Technology, Inc.
Page 2

combined information for the two companies. We have made inquiries of the
management of Coda and Net4Music regarding the past and current business
operations, financial condition, and future prospects for the two companies. In
addition, we visited Coda's facility, and have held discussions with the senior
management of both companies to understand their reasons for completing the
Acquisition.

We have compared financial information on Coda and Net4Music to similar
information for certain companies deemed comparable to Coda and Net4Music and
have reviewed stock market information on such companies that have publicly
traded securities. Also, we have reviewed, to the extent publicly available, the
financial terms of certain acquisition transactions involving companies
operating businesses deemed similar to that of Net4Music and analyzed the
general economic outlook for companies in the Internet music distribution
industry.

In conducting our review and in rendering our opinion, we have assumed and
relied upon the accuracy, completeness, and fairness of the financial and other
information provided to us or publicly available and we have not assumed any
responsibility for independent verification of such information. It is
understood that we were retained by the Special Committee of the Board of
Directors of the Company, and that the Special Committee of the Board of
Directors has not looked to us for independent verification with respect to the
financial and other information provided to us or publicly available. We have
further relied upon the assurances of the management of the Company that it is
not aware of any facts that would make the information supplied to us, or
publicly available, inaccurate or misleading. With respect to the financial
projections for Coda and Net4Music and pro forma projected information for the
combined company, management of Coda and Net4Music have represented that such
projections and pro forma combined projected information have been reasonably
prepared on a basis reflecting management's best currently available estimates
and judgment as to the future financial performance of Coda and Net4Music and
the projected combined performance of the combined company.

We did not make an independent appraisal of the assets or liabilities of
Coda or Net4Music, and we do not express an opinion regarding the liquidation
value or solvency of either company separately, or the combined company
following the Acquisition. Furthermore, we do not express any opinion as to the
prices at which shares of Coda's common stock may trade following the date of
this opinion, at the closing date for the Acquisition, or at any later time in
the future. Our opinion as expressed herein is limited to the fairness to Coda,
from a financial point of view, of the consideration to be paid by the Company
in connection with the Acquisition, and does not address the Company's
underlying business decision to proceed with the Acquisition. Our opinion is
based solely on information available to us on or before the date hereof and
reflects general market, economic, financial, monetary, and other conditions as
of the date hereof.

This opinion is addressed to the Special Committee of the Board of
Directors of the Company and is not a recommendation as to how any stockholder
of Coda should vote at the meeting of stockholders to be held in connection with
the Acquisition. This opinion may not be reproduced, quoted, published, or
otherwise used or referred to in any manner, nor shall any public reference to
MJK be made, without our prior written consent. In accordance with the rules and
regulations of the Securities and Exchange Commission,

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<PAGE> 171
Special Committee of the Board of Directors
Coda Music Technology, Inc.
Page 3

MJK has consented to the reproduction and discussion of this opinion in the
proxy statement to be mailed to the Company's shareholders.

Based upon the foregoing, and other matters that we considered relevant, it
is our opinion that, as of the date hereof, the consideration to be paid by Coda
Music Technology, Inc. in connection with the Acquisition is fair to the Company
from a financial point of view.

Very truly yours,

MILLER, JOHNSON & KUEHN, INCORPORATED

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<PAGE> 172

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 302A.521, subd. 2, of the Minnesota Statutes requires Coda Music
Technology, Inc. (the "Company") to indemnify a person made or threatened to be
made a party to a proceeding by reason of the former or present official
capacity of the person with respect to the Company, against judgments,
penalties, fines, including, without limitation, excise taxes assessed against
the person with respect to an employee benefit plan, settlements and reasonable
expenses, including attorneys' fees and disbursements, incurred by the person in
connection with the proceeding with respect to the same acts or omissions if
such person (1) has not been indemnified by another organization or employee
benefit plan for the same judgments, penalties or fines; (2) acted in good
faith; (3) received no improper personal benefit and statutory procedure has
been followed in the case of any conflict of interest by director; (4) in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful; and (5) in the case of acts or omissions occurring in the person's
official capacity as a director, officer, board committee member or employee,
reasonably believed that the conduct was in the best interests of the Company,
or, in the case of acts or omissions occurring in the person's official capacity
as a director, officer or employee of the Company involving service as a
director, officer, partner, trustee, employee or agent of another organization
or employee benefit plan, reasonably believed that the conduct was not opposed
to the best interests of the Company. In addition, Section 302A.521, subd. 3,
requires payment by the Company, upon written request, of reasonable expenses in
advance of final disposition of the proceeding in certain circumstances. A
decision as to required indemnification is made by a disinterested majority of
the board of directors present at a meeting at which a disinterested quorum is
present, or by a designated committee of the board, by special legal counsel, by
the shareholders or by a court.

The Company's Bylaws provide for indemnification to the full extent
permitted by the laws of the state of Minnesota, pursuant to Minnesota Statutes
Section 302A.521, as now enacted or hereafter amended, against and with respect
to threatened, pending or completed actions, suits or proceedings arising from,
or alleged to arise from, a party's actions or omissions as a director, officer,
employee or agent of the Company or any subsidiary of the Company or of any
other corporation, partnership, joint venture, trust or other enterprise in
which such person has served in such capacity at the request of the Company if
such acts or omissions occurred or were or are alleged to have occurred, while
said person was a director or officer of the Company. Generally, under Minnesota
law, indemnification will only be available where an officer or director can
establish that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company.

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<PAGE> 173

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
2.1 Stock Purchase Agreement, dated August 11, 2000, by and
among Coda Music Technology, Inc., Net4Music S.A. and
certain shareholders of Net4Music S.A. (The Stock Purchase
Agreement is furnished as Appendix A to the Proxy
Statement/Prospectus forming a part of this Registration
Statement.) Upon the request of the Commission, Coda agrees
to furnish supplementally to the Commission a copy of any
disclosure schedules to the Stock Purchase Agreement.
2.2* Form of Put and Call Agreement to be entered into by Coda
Music Technology, Inc. and certain shareholders and option
and warrant holders of Net4Music S.A.
2.3* Form of Voting Agreement to be entered into by Coda Music
Technology, Inc., certain shareholders of Coda, and the
shareholders of Net4Music S.A.
5 Opinion and Consent of Fredrikson & Byron, P.A. regarding
validity of shares.
23.1 Consent of Fredrikson & Byron, P.A. (included in Exhibit 5).
23.3 Consent of McGladrey & Pullen LLP, independent accountants
for Coda Music Technology, Inc.
23.4 Consent of Ernst & Young Audit, independent accountants for
Net4Music S.A.
24 Power of Attorney.
99.1 Form of Proxy to be used by Coda Music Technology, Inc.
shareholders.
</TABLE>

------------------

* To be filed by amendment.

ITEM 22. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) (i) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.

(ii) The registrant undertakes that every prospectus [a] that is filed
pursuant to paragraph (b)(i) immediately preceding, or [b] that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of

II-2
<PAGE> 174

determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

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<PAGE> 175

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on August 11, 2000.
CODA MUSIC TECHNOLOGY, INC.
By /s/ JOHN W. PAULSON
--------------------------------
John W. Paulson,
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on August 11, 2000 by the following
persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S> <C>
President and Director
------------------------------ (principal executive
John W. Paulson officer)

Chief Financial Officer,
------------------------------ Treasurer and Secretary
Barbara S. Remley (principal financial and
accounting officer)

Director
------------------------------
Benson K. Whitney
Director
------------------------------
Gordon F. Stofer

Director
------------------------------
Larry A. Pape

Director
------------------------------
Timothy M. Heaney

Director
------------------------------
Timothy Bajarin
</TABLE>

*By
/s/ JOHN W. PAULSON
--------------------------------
John W. Paulson
Attorney-in-Fact

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<PAGE> 176

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------

EXHIBIT INDEX
TO
FORM S-4 REGISTRATION STATEMENT

------------------

CODA MUSIC TECHNOLOGY, INC.

2.2* Form of Put and Call Agreement to be entered into by Coda
Music Technology, Inc. and certain shareholders and option
and warrant holders of Net4Music S.A.

2.3* Form of Voting Agreement to be entered into by Coda Music
Technology, Inc., certain shareholders of Coda, and the
shareholders of Net4Music S.A.

5 Opinion and Consent of Fredrikson & Byron, P.A. regarding
validity of shares.

23.1 Consent of Fredrikson & Byron, P.A. (included in Exhibit 5).

23.3 Consent of McGladrey & Pullen LLP, independent accountants
for Coda Music Technology, Inc.

23.4 Consent of Ernst & Young Audit, independent accountants for
Net4Music S.A.

24 Power of Attorney.

99.1 Form of Proxy to be used by Coda Music Technology, Inc.
shareholders.
</TABLE>

---------------

* To be filed by amendment.

II-5