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
September 30, 2002
Subject Company: Alliance Entertainment Corp.
Registration Statement Number 33-96925
[LIQUID AUDIO LOGO]
FOR IMMEDIATE RELEASE
Liquid Audio Sells Intellectual Property Assets to Microsoft in Preparation For
Completion of Merger With Alliance Entertainment
REDWOOD CITY, Calif., Sept. 30 - Liquid Audio, Inc. (Nasdaq: LQID - News), a
leading provider of software, infrastructure and services for the secure digital
delivery of media over the Internet, today announced that it has entered into an
agreement with Microsoft Corp. (Nasdaq: MSFT - News) that will enable Microsoft
to acquire the domestic and foreign rights to Liquid Audio's patents for cash
consideration of $7 million.
Since its inception, Liquid Audio has been awarded several key patents related
to its technology and product architecture. These include patents in the areas
of digital rights management (DRM) together with technology for secure content
transfer to portable devices as well as the ability to honor territorial
restrictions for digital music content. In addition to the cash consideration,
Liquid Audio will receive a royalty-free license to continue using the patented
technology in its digital distribution system.
"Selling the rights to our patent portfolio to a leading technology partner such
as Microsoft helps us shift our strategy in preparation for the merger with
Alliance Entertainment," said Gerry Kearby, president and CEO of Liquid Audio,
Inc. "This direction is consistent with our move away from product development
and toward an exclusive focus on the digital distribution of media to the retail
community, which is entirely complementary to Alliance's physical media
distribution business for home entertainment products."
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).
NOTE: Liquid Audio, Liquid Player, Liquid Music Network and the Liquid Audio
logo are trademarks of Liquid Audio, Inc.
###
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 Corp.
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.