Exhibit 10.1

July 8, 2011

Delivered Via email

Personal and Confidential

To:     Jeffrey A. Koch

Re:     Separation Agreement and Release

Dear Jeff:

As we have discussed, your employment with MakeMusic, Inc. (“MakeMusic”) ended
effective at the close of business, June 13, 2011 as a result of the appointment
of the CEO. The purpose of this Separation Agreement and Release letter
(“Agreement”) is to set forth the specific separation pay and benefits that
MakeMusic has agreed to provide to you, provided you agree to the terms and
conditions of this Agreement.

By your signature below, you agree to the following terms and conditions:

1. End of Employment.

a. Your employment with MakeMusic ended effective at the close of business on
June 13, 2011.

b. Upon your receipt of your final paycheck which includes payment for services
through June 13, 2011, you will have received all wages owed to you by virtue of
your employment with MakeMusic or separation thereof.

c. Upon your receipt of payment from MakeMusic in the amount of $7,559.88, less
applicable deductions and withholding, which represents payment for 68.62 hours
of accrued but unused Paid Time Off (PTO) at your regular rate, you will have
received all PTO benefits owed to you by virtue of your employment with
MakeMusic or separation thereof.

d. The COBRA period for continuation of your insurance coverage under
MakeMusic’s group plans will begin on July 1, 2011. Information regarding your
right to elect COBRA coverage will be sent to you via separate letter.

e. Except as specifically modified within this Agreement, your rights with
regard to your stock options and restricted stock awards with MakeMusic are
governed by your separate equity award agreements with MakeMusic.

f. You will continue to serve on MakeMusic’s Board of Directors until
MakeMusic’s 2011 Annual Meeting of Shareholders, and you have been nominated to
serve for another one-year term upon election by MakeMusic’s shareholders at the
2011 Annual Meeting. As consideration for your continued service as a director
during the 2011 fiscal year, you will be entitled to pro-rated cash and equity
compensation pursuant to MakeMusic’s current Board Compensation Plan, consisting
of $20,000 cash, payable quarterly, and a four-year non-qualified option to
purchase 3,000 shares of MakeMusic common stock at an exercise price of $5.00
per share, which will become exercisable as to 500 shares at the end of each
month from July 31, 2011 through December 31, 2011. Your director compensation
for future fiscal years, if any, will be determined in accordance with the
then-applicable Board Compensation Plan.

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You are not eligible for any other payments or benefits by virtue of your
employment with MakeMusic or separation thereof except for those expressly
described in this Agreement or otherwise provided by the terms of any benefit
plan. You will not receive the payments described in Section 2 if you (i) do not
sign and return this Agreement by the due date indicated, (ii) rescind this
Agreement after signing it, or (iii) violate any of the terms and conditions set
forth in this Agreement.

2. Separation Pay and Benefits. Specifically in consideration of your signing
this Agreement and subject to the limitations, obligations, and other provisions
contained in this Agreement, MakeMusic agrees as follows:

a. To pay you separation pay in the gross amount of Ninety Three Thousand Eight
Hundred Sixty Four and 98/100 Dollars ($93,864.98) (representing pay from
June 14, 2011 through November 9, 2011 at your ending base salary), less
applicable deductions and withholding. Such separation pay will be paid to you
in substantially equal installments on MakeMusic’s normal payroll schedule
beginning on the first regularly scheduled payday following expiration of the
rescission periods noted below;

b. To pay you the pro-rated value of any incentive cash compensation earned by
you in fiscal year 2011. MakeMusic will calculate such fiscal year 2011 bonus in
accordance with the terms of the applicable Executive Incentive Compensation
Plan and pro-rate to your June 13, 2011 separation date. Your 2011 cash bonus,
if earned, will be paid to you on or before March 15, 2012;

c. To issue to you the pro-rated portion of the earned restricted stock award
for fiscal year 2011. MakeMusic will calculate such earned restricted stock
award in accordance with the terms of the applicable Executive Incentive
Compensation Plan and pro-rate to your June 13, 2011 separation date. Your 2011
restricted stock award, if earned, will be issued to you on or before March 15,
2012 and will not be subject to risks of forfeiture;

d. The portion of your previously-issued restricted stock award under the 2010
bonus plan that would otherwise be subject to risk of forfeiture as of the date
hereof (714 shares) is to be released from restriction as soon as reasonably
practicable following the acceptance date of this Agreement.

The shares issued pursuant to the restricted stock awards referenced in Sections
2(c) and 2(d) of this Agreement shall be released into your Wells Fargo account
as unrestricted shares of MakeMusic common stock.

3. Your Release of Claims. Specifically in consideration of the separation pay
and benefits described in Section 2, to which you would not otherwise be
entitled, by signing this Agreement you, for yourself and anyone who has or
obtains legal rights or claims through you, agree to the following:

a. You hereby do release, agree not to sue, and forever discharge MakeMusic (as
defined below) of and from any and all manner of claims, demands, actions,
causes of action, administrative claims, liability, damages, claims for punitive
or liquidated damages, claims for attorney’s fees, costs and disbursements,
individual or class action claims, or demands of any kind whatsoever, you have
or might have against them or any of them, whether known or unknown, in law or
equity, contract or tort, arising out of or in connection with your employment
with MakeMusic, or the termination of that employment, or otherwise, and however
originating or existing, from the beginning of time through the date of your
signing this Agreement.

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b. This release includes, without limiting the generality of the foregoing, any
claims you may have for wages, bonuses, commissions, penalties, deferred
compensation, vacation pay, separation benefits, defamation, invasion of
privacy, negligence, emotional distress, breach of contract, estoppel, improper
discharge (based on contract, common law, or statute, including any federal,
state or local statute or ordinance prohibiting discrimination or retaliation in
employment), violation of the United States Constitution, the Minnesota
Constitution, the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.,
the Minnesota Human Rights Act, Minn. Stat. § 363A.01 et seq., Title VII of the
Civil Rights Act, 42 U.S.C. § 2000e et seq., the Americans with Disabilities
Act, 42 U.S.C. § 12101 et seq., the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001 et seq., the Family and Medical Leave Act, 29 U.S.C. §
2601 et seq., the National Labor Relations Act, 29 U.S.C. § 151 et seq., the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq., the
Sarbanes-Oxley Act, 15 U.S.C. § 7201 et seq., the Fair Labor Standards Act, any
claim arising under Minn. Stat. Chapters 177 and 181, Minn. Stat. § 176.82, and
any claim for retaliation, harassment or discrimination based on sex, race,
color, creed, religion, age, national origin, marital status, sexual
orientation, disability, status with regard to public assistance, veteran or
military status, genetic information, or any other protected class under
federal, state or local law. You hereby waive any and all relief not provided
for in this Agreement. You understand and agree that, by signing this Agreement,
you waive and release any past, present, or future claim to employment with
MakeMusic.

c. If you file, or have filed on your behalf, a charge, complaint, or action,
you agree that the payments and benefits described above in Section 2 is in
complete satisfaction of any and all claims in connection with such charge,
complaint, or action and you waive, and agree not to take, any award of money or
other damages from such charge, complaint, or action.

d. You are not, by signing this Agreement, releasing or waiving (1) any vested
interest you may have in any 401(k) or profit sharing plan by virtue of your
employment with MakeMusic, (2) any rights or claims that may arise after the
Agreement is signed, (3) the post-employment payments and benefits specifically
promised to you under Section 2 of this Agreement, (4) the right to institute
legal action for the purpose of enforcing the provisions of this Agreement,
(5) any rights you have under workers compensation laws, (6) any rights you have
under state unemployment compensation benefits laws, (7) the right to file a
charge of discrimination with a governmental agency such as the Equal Employment
Opportunity Commission, although, as noted above, you agree that you will not be
able to recover any award of money or damages if you file such a charge or have
a charge filed on your behalf, (8) the right to testify, assist, or participate
in an investigation, hearing, or proceeding conducted by the EEOC, (9) any
rights you have under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), (10) any existing rights pertaining to stock options and restricted
stock awards, or (11) the right to coverage and indemnification under
MakeMusic’s directors’ and officers’ insurance coverage as set forth in
MakeMusic’s D&O insurance policy.

e. MakeMusic, as used in this Section 3, shall mean MakeMusic, Inc. and its
parent, subsidiaries, divisions, affiliated entities, insurers, if any, and its
and their present and former officers, directors, shareholders, trustees,
employees, agents, attorneys, representatives and consultants, and the
successors and assigns of each, whether in their individual or official
capacities, and the current and former trustees or administrators of any pension
or other benefit plan applicable to the employees or former employees of
MakeMusic, in their official and individual capacities.

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4. Notice of Right to Consult Attorney and Twenty-One (21) Calendar Day
Consideration Period. By signing this Agreement, you acknowledge and agree that
MakeMusic has informed you by this Agreement that (1) you have the right to
consult with an attorney of your choice prior to signing this Agreement, and
(2) you are entitled to twenty-one (21) calendar days from your receipt of this
Agreement on June 21, 2011 to consider whether the terms are acceptable to you.
You have the right, if you choose, to sign this Agreement prior to the
expiration of the twenty-one (21) day period.

5. Notification of Rights under the Minnesota Human Rights Act (Minn. Stat.
Chapter 363A) and the Federal Age Discrimination in Employment Act (29 U.S.C. §
621 et seq.). You are hereby notified of your right to rescind the release of
claims contained in Section 3 with regard to claims arising under the Minnesota
Human Rights Act, Minnesota Statutes Chapter 363A, within fifteen (15) calendar
days of your signing this Agreement, and with regard to your rights arising
under the federal Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.,
within seven (7) calendar days of your signing this Agreement. The two
rescission periods shall run concurrently. In order to be effective, the
rescission must (a) be in writing; (b) delivered to Deb Peterson, MakeMusic,
Inc., 7615 Golden Triangle Drive, Suite M, Eden Prairie, MN 55344-3848 by hand
or mail within the required period; and (c) if delivered by mail, the rescission
must be postmarked within the required period, properly addressed to Deb
Peterson, as set forth above, and sent by certified mail, return receipt
requested. You understand that if you rescind any part of this Agreement in
accordance with this Section 5, you will not receive the separation pay and
benefits described in Section 2 and you will be obligated to return any such
payments if already received.

6. Return of Property. By signing this Agreement, you acknowledge and agree that
all documents and materials relating to the business of, or the services
provided by, MakeMusic are the sole property of MakeMusic. By signing this
Agreement you further agree and represent that you have returned to MakeMusic
all of its property, including but not limited to, all keys, access cards,
credit cards, customer records and other documents and materials, whether on
computer disc, hard drive or other form, and all copies thereof, within your
possession or control, which in any manner relate to the business of, or the
duties and services you performed on behalf of MakeMusic. MakeMusic acknowledges
it is transferring ownership of your personal computer. If there is any
remaining current value, MakeMusic will loan these items to you until such time
as there is no remaining taxable value, at which time MakeMusic will give the
items to you.

7. On-Going Obligations. You are hereby reminded of your on-going obligations to
MakeMusic under Articles III, IV and V of your Employment Agreement with
MakeMusic. You acknowledge and agree that if you violate Article III, IV, and/or
V of your Employment Agreement, MakeMusic shall be entitled to all available
legal and equitable remedies, including but not limited to suspending and
recovering any and all payments and benefits made or to be made under Section 2
of this Agreement.

8. Cooperation. In consideration of the separation pay and benefits described in
Section 2 of this Agreement, you agree to respond to MakeMusic in a timely and
helpful manner should it have questions for you regarding your work for
MakeMusic, including, without limitation, status of projects, technology-related
questions, passwords, and location of data and documents.

9. Non-Disparagement and Confidentiality. You promise and agree not to disparage
MakeMusic, its shareholders, officers, directors, employees, customers, products
or services. You further promise and agree not to disclose or discuss, directly
or indirectly, in any manner whatsoever, any

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information regarding either (1) the contents and terms of this Agreement, or
(2) the substance and/or nature of any dispute between MakeMusic and any
employee or former employee, including yourself. You agree that the only people
with whom you may discuss this confidential information are your legal and
financial advisors and your spouse and children, if applicable, provided they
agree to keep the information confidential, or as otherwise required by law.

10. Remedies. If you breach any term of this Agreement, MakeMusic shall be
entitled to its available legal and equitable remedies, including but not
limited to suspending and recovering any and all payments and benefits made or
to be made under Section 2 of this Agreement and payment by you of its
attorneys’ fees and costs. If MakeMusic seeks and/or obtains relief from an
alleged breach of this Agreement, all of the provisions of this Agreement shall
remain in full force and effect.

11. Non-Admission. It is expressly understood that this Agreement does not
constitute, nor shall it be construed as, an admission by MakeMusic or you of
any liability or unlawful conduct whatsoever. MakeMusic and you specifically
deny any liability or unlawful conduct.

12. Successors and Assigns. This Agreement is personal to you and may not be
assigned by you without the written agreement of MakeMusic. The rights and
obligations of this Agreement shall inure to the successors and assigns of
MakeMusic. Notwithstanding the foregoing, in the event of your death, any
remaining monies owing to you under this Agreement (PTO, separation pay, bonus
pay) shall be paid to your estate and your rights with regard to stock options
and restricted stock awards shall be transferred to your estate.

13. Enforceability. If a court finds any term of this Agreement to be invalid,
unenforceable, or void, the parties agree that the court shall modify such term
to make it enforceable to the maximum extent possible. If the term cannot be
modified, the parties agree that the term shall be severed and all other terms
of this Agreement shall remain in effect.

14. Law Governing. This Agreement shall be governed and construed in accordance
with the laws of the State of Minnesota.

15. Full Agreement. This Agreement contains the full agreement between you and
MakeMusic and may not be modified, altered, or changed in any way except by
written agreement signed by both parties. The parties agree that this Agreement
supersedes and terminates any and all other written and oral agreements and
understandings between the parties except for the following agreements which
shall remain in full force and effect: your separate stock option and restricted
stock award agreements with MakeMusic (except to the extent that this Agreement
provides for acceleration of the lapse of risks of forfeiture on your
previously-issued restricted stock award) and Articles I and III – IX of your
Employment Agreement with MakeMusic.

16. Acknowledgment of Reading and Understanding. By signing this Agreement, you
acknowledge that you have read this Agreement, including the release of claims
contained in Section 3, and understand that the release of claims is a full and
final release of all claims you may have against MakeMusic and the other
entities and individuals covered by the release. By signing, you also
acknowledge and agree that you have entered into this Agreement knowingly and
voluntarily.

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If not already accepted by you, the offer contained in this Agreement will
expire at 5:00 p.m. on the 22nd calendar day following your receipt of this
Agreement. After you have reviewed this Agreement and obtained whatever advice
and counsel you consider appropriate regarding it, please evidence your
agreement to the provisions set forth in this Agreement by dating and signing
the Agreement. Please then return an original signed Agreement to Deb Peterson
no later than 5:00 p.m. on the 22nd calendar day following your receipt of this
Agreement. Please keep a copy for your records.

Sincerely,

 

MAKEMUSIC, INC.   /s/ Karen L. VanDerBosch               Karen L. VanDerBosch  
Chief Operating Officer & Chief Financial Officer

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ACKNOWLEDGMENT AND SIGNATURE

By signing below, I, Jeffrey A. Koch, acknowledge and agree to the following:

 

  •  

I have had adequate time to consider whether to sign this Separation Agreement
and Release.

 

  •  

I have read this Separation Agreement and Release carefully.

 

  •  

I understand and agree to all of the terms of the Separation Agreement and
Release.

 

  •  

I am knowingly and voluntarily releasing my claims against MakeMusic.

 

  •  

I have not, in signing this Agreement, relied upon any statements or
explanations made by MakeMusic except as for those specifically set forth in
this Separation Agreement and Release.

 

  •  

I intend this Separation Agreement and Release to be legally binding.

 

  •  

I am signing this Separation Agreement and Release on or after my last day of
employment with MakeMusic.

 

Accepted this 8th day of July, 2011.   /s/ Jeffrey A. Koch               Jeffrey
A. Koch