Filed by Liquid Audio, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 13e-4(c) and Rule 14a-12
under the Securities Act of 1934
August 21, 2002
Subject Company: Alliance Entertainment Corp.
Commission File No. 001-13054
INVESTOR CONTACT: MEDIA CONTACT:
Michael Bolcerek Kimberly Strop
650-549-2000 650-549-2194
mbolcerek@liquidaudio.com kstrop@liquidaudio.com
[LIQUID AUDIO LOGO]
FOR IMMEDIATE RELEASE
LIQUID AUDIO FILES LAWSUIT AGAINST MM COMPANIES AND STEEL PARTNERS
SUIT ALLEGES VIOLATIONS BY MM COMPANIES OF THE 1940 ACT AND BY STEEL
PARTNERS OF SEC PROXY RULES REDWOOD CITY, Calif. (Aug. 21, 2002)--Liquid Audio,
Inc. (Nasdaq: LQID) today announced that it has filed a lawsuit against MM
Companies, Inc. and Steel Partners II, L.P. in U.S. District Court for the
Southern District of New York. Liquid Audio is asking the court to prohibit MM
Companies and Steel Partners from violating the federal securities laws in
connection with their campaigns to take control of Liquid Audio, as well as
seeking compensatory and punitive damages as a result of their alleged
violations.
Liquid Audio's complaint alleges that MM Companies has failed to register
as an investment company under the Investment Company Act of 1940, and that its
purchase of Liquid Audio shares and subsequent proxy contest to take control of
Liquid Audio's board of directors is therefore in violation of that Act. The
complaint also charges that Steel Partners is conducting an illegal proxy
contest by failing to make the proper filings with the Securities and Exchange
Commission (SEC) and that, in the course of its contest, Steel Partners has
distributed false and misleading statements to Liquid Audio stockholders. Liquid
Audio is seeking to enjoin MM Companies from continuing its campaign to take
control of Liquid Audio and from communicating with Liquid Audio stockholders.
In addition, Liquid Audio is seeking to require Steel Partners to comply with
the SEC's proxy rules, to retract its recent press release concerning Liquid
Audio's proposed merger with Alliance Entertainment and to disseminate
corrective disclosure.
According to Gerry Kearby, Liquid Audio's president and CEO, "Liquid
Audio's board of directors remains committed to our combination with Alliance
Entertainment. We simply cannot
allow MM Companies and Steel Partners to continue to spread misinformation about
the transaction. We believe that they should be required to play by the rules."
Liquid Audio, Inc. is a leading provider of software, infrastructure and
services for the secure digital delivery of media over the Internet. The Liquid
Audio solution gives content owners, Web sites and companies the ability to
publish, syndicate and securely sell digital media online with copy protection
and copyright management. Using the Liquid(TM) Player software, available for
free download at www.liquidaudio.com, consumers can preview and purchase
downloadable music from hundreds of affiliate Web sites in the Liquid Music
Network(TM).
# # #
Liquid, Liquid Audio, Liquid Player, Liquid Music Network and the Liquid Audio
logo are trademarks of Liquid Audio, Inc.
FOR MORE INFORMATION, PRESS ONLY:
Kim Strop, Liquid Audio, Inc., (650) 549-2194, email: kstrop@liquidaudio.com
Forward-looking Statements
--------------------------
All statements made in this release, other than statements of historical fact,
are forward-looking statements. The words "anticipate," "believe," "estimate,"
"expect," "intend," "will," "guidance" and similar expressions typically are
used to identify forward-looking statements. Forward-looking statements are
based on the then-current expectations, beliefs, assumptions, estimates and
forecasts about the businesses of Liquid Audio and Alliance Entertainment and
the industries and markets in which the companies operate. Those statements are
not guarantees of future performance and involve risks, uncertainties and
assumptions that will be difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or implied by those
forward-looking statements. Factors that may affect Liquid Audio's and Alliance
Entertainment's businesses, financial condition and operating results include
the effects of changes in the economy, consumer spending, the stock market and
the industries in which they operate generally, changes affecting the Internet
and e-commerce, the ability of the companies to maintain relationships with
strategic partners and suppliers, the ability of the companies to timely and
successfully develop, maintain and protect their technology and product and
service offerings and execute operationally and the ability of the companies to
attract and retain qualified personnel. These factors may also include, but are
not limited to, general market conditions, our ability to develop new products
to meet market demand, our ability to successfully combine two geographically
dispersed businesses, our ability to realize synergies of the merger; our
ability to maintain cost controls; the mix of products and services our
customers require and the effects of natural disasters, international conflicts
and other events beyond our control. More information about potential factors
that could affect Liquid Audio can be found in its most recent Form 10-K, Form
10-Q and other reports and statements filed by Liquid Audio with the Securities
and Exchange Commission ("SEC"). Each of Liquid Audio and Alliance Entertainment
expressly disclaims any intent or obligation to update those forward-looking
statements, except as otherwise specifically stated by it.
Additional Information and Where to Find It
-------------------------------------------
Liquid Audio has filed a Registration Statement on SEC Form S-4 in connection
with the merger and plans to file a Tender Offer Statement on Schedule TO in
connection with the offer. Investors and stockholders of Liquid Audio and
Alliance Entertainment are urged to read the Registration Statement and the
Tender Offer Statement carefully when it is available. The Registration
Statement contains important information about the companies, the merger and
related matters. Investors and stockholders will be able to obtain free copies
of these documents through the web site maintained by the SEC at
http://www.sec.gov. Free copies of the Registration Statement and these other
documents may also be obtained from Liquid Audio by directing a request through
the Liquid Audio Web site at http://www.liquidaudio.com or by mail to Liquid
Audio, Inc., Attention: Investor Relations.
In addition to the Registration Statement and the Tender Offer Statement, Liquid
Audio 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 Liquid Audio at the SEC's public reference rooms at
450 Fifth Street, N.W., Washington, D.C. 20549 or at any of the SEC's other
public reference rooms in New York and Chicago. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Liquid
Audio's filings with the SEC are also available to the public from commercial
document-retrieval services and at the Web site maintained by the SEC at
http://www.sec.gov.
Interests of Certain Persons in the Merger
------------------------------------------
The directors and executive officers of Liquid Audio and Alliance Entertainment
have interests in the merger, some of which may differ from, or may be in
addition to, those of the stockholders of Liquid Audio and Alliance
Entertainment generally. A description of the interests that the directors and
executive officers of the companies have in the merger is available in the
Registration Statement.
Solicitation of Proxies
-----------------------
Liquid Audio and Alliance Entertainment, their respective directors, executive
officers and certain other members of their management and employees may be
soliciting proxies from stockholders of Liquid Audio and Alliance Entertainment
in favor of the merger. Information concerning the participants is set forth in
the Registration Statement filed with the SEC.