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Liquid Audio, Inc.
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(Name of Registrant as Specified In Its Charter)
musicmaker.com, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Press Release
Source: musicmaker.com, Inc.
MUSICMAKER.COM, INC. GIVES NOTICE OF OPPOSITION SLATE OF DIRECTOR
NOMINEES AND OTHER PROPOSALS FOR NEXT ANNUAL MEETING OF LIQUID
AUDIO, INC. STOCKHOLDERS
New York, New York -- December 21, 2001 -- musicmaker.com, Inc. (HITS) announced
that it had sent formal notice to Liquid Audio, Inc. (Nasdaq: LQID) of its
intention to nominate directors and submit certain other proposals for
consideration at the next annual meeting of Liquid Audio stockholders.
musicmaker said it intends to nominate Seymour Holtzman and James Mitarotonda as
Class III directors to replace the two directors currently stated to serve in
that class, whose term is scheduled to expire in 2002. musicmaker also intends
to propose amendments to certain provisions of the Company's Bylaws, and in some
cases its Certificate of Incorporation. Those amendments would: remove the
classification of the Company's Board, and provide that all directors will be
elected annually; permit stockholders to remove directors with or without cause
and fill any vacancies on the Board; expand the number of directors and elect
additional Board members by stockholder vote; remove the Company's current
prohibition against stockholder action by written consent; remove the
requirement of a 66 2/3% stockholder vote to amend certain specified provisions
of the Certificate of Incorporation and Bylaws; and clearly state that a special
meeting of the stockholders may be called by a stockholder. Subject to the
adoption and effectiveness of the proposals to expand the Board (which
musicmaker understands may require a two-thirds stockholder vote), musicmaker
will be nominating Joseph R. Wright, Jr., Jesse H. Choper, William J. Fox and
Thomas E. Constance to fill any additional vacancies on Liquid Audio's Board
that may result at the meeting.
musicmaker is also proposing that Liquid Audio rescind its "shareholder rights
plan" or "poison pill."
In a joint statement, Seymour Holtzman, Chairman of musicmaker, and James
Mitarotonda, President and Chief Executive Officer of musicmaker, said:
"We had previously requested, on October 18, 2001, that Liquid Audio
schedule a special stockholders' meeting very promptly to fill the
long-existing vacancies on the Board and take certain other action.
Liquid Audio's management refused our request, and announced in
November that management had privately filled the long-vacant Board
seats with its own designees.
Our information still shows that Liquid Audio is burning cash at an
alarming rate of $8 million to $10 million per quarter, or $0.35 to
$0.44 per share. We continue to urge the Board of Directors to
consider its fiduciary duty to act responsibly and in the best
interest of all stockholders. We believe the voice of all
stockholders must be heard at this crucial time for the Company."
CERTAIN INFORMATION CONCERNING PARTICIPANTS
The following is a list of the names and stockholdings, if any, of persons
who may be deemed to be "participants" in any solicitation that musicmaker may
make in the future with respect to the shares of Liquid Audio. musicmaker, a
Delaware corporation, beneficially owns 627,100 shares of the Company's
outstanding Common Stock. Jewelcor Management, Inc., a Nevada corporation,
beneficially owns 475,500 shares of the Company's outstanding Common Stock.
Barington Companies Equity Partners, L.P. a Delaware limited partnership,
beneficially owns 339,200 of the Company's outstanding Common Stock. Barington
Companies Investors, LLC is the general partner of Barington Companies Equity
Partners, L.P. James Mitarotonda is the managing member of Barington Companies
Investors, LLC. Domrose Sons Partnership, a New York partnership, beneficially
owns 8,000 shares of the Company's outstanding Common Stock. Each of James
Mitarotonda, Mario Mitarotonda and Mike Mitarotonda is a partner in Domrose Sons
Partnership. Certain others who for certain purposes have joined in the filing
of a Schedule 13D with the foregoing disclaim participation in any such
prospective solicitation. Messrs. Holtzman, Mitarotonda, Wright, Choper, Fox and
Constance, as prospective nominees for director, may also be deemed to be
participants but do not individually own any Common Stock of the Company.
If musicmaker engages in any solicitation with respect to the shares of
Liquid Audio it will prepare and disseminate a proxy statement with respect to
this solicitation. Shareholders should read this proxy statement if and when it
becomes available because it will contain important information. Shareholders
will be able to obtain copies of the proxy statement, related materials and
other documents filed with the Securities and Exchange Commission's web site at
http//:www.sec.gov without charge when these documents become available.
Shareholders will also be able to obtain copies of that proxy statement and
related materials without charge, when available, from musicmaker.com, Inc. by
oral or written request to: musicmaker.com, Inc. Attention: James Mitarotonda,
President and Chief Executive Officer, c/o Barington Capital Group, L.P., 888
Seventh Avenue, 17th floor, New York, New York 10019.
For more information please contact Seymour Holtzman (570) 822-6277 Ext.
23 or James Mitarotonda (212) 974-5701.