SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Liquid Audio, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Explanatory Note
Liquid Audio, Inc., a Delaware corporation, is filing the materials
contained in this Schedule 14A with the Securities and Exchange Commission on
September 10, 2002 with respect to its 2002 annual meeting of stockholders.
# # #
[Liquid Audio Letterhead]
Dear Fellow Shareholder:
MM Companies (formerly musicmaker) is running a full slate against our
director nominees and has proposed that the stockholders take several
extraordinary actions at our annual meeting on September 26, 2002 to give
control of Liquid Audio to musicmaker's nominees. Don't give musicmaker control
of the Company for nothing - its promise of a cash payout is highly qualified as
to amount.
The Board of Directors of Liquid Audio seeks your support to reelect
Raymond Doig and Gerald Kearby as directors and to prevent musicmaker from
taking control of your Company. Musicmaker has also announced its opposition to
the Alliance Entertainment transaction. If musicmaker takes control, you could
lose any benefits of the proposed Alliance transaction.
COMMITMENT TO THE ALLIANCE CASH AND STOCK TRANSACTION
The Board of Directors is committed to the transaction with Alliance
Entertainment. In the transaction:
- The Company will tender for 10,000,000 shares of its stock for $3.00 per
share in cash. This is a 25% premium to the closing price on September 9,
2002.
- The Company's two senior executives have agreed not to tender unless the
offer is under-subscribed. This means the Company will purchase about 47%
of its remaining shares.
- The remaining Liquid Audio shares that are not repurchased will represent
26% of the combined entity after the merger with Alliance.
DON'T GIVE MUSICMAKER CONTROL OF THE COMPANY. MUSICMAKER WANTS TO TAKE AWAY YOUR
OPPORTUNITY TO PARTICIPATE IN THE $3.00 PER SHARE CASH TENDER OFFER.
The merger agreement with Alliance is a binding agreement. You should refer
to the enclosed proxy statement for a more detailed summary of the proposed
transaction.
YOUR BOARD STRONGLY RECOMMENDS THAT YOU REJECT THE MUSICMAKER TAKEOVER AND VOTE
"FOR" THE LIQUID NOMINEES AND THE BOARD ON THE ENCLOSED GREEN PROXY CARD.
DON'T GIVE MUSICMAKER CONTROL OF YOUR COMPANY
WHAT YOU MIGHT EXPECT IF MUSICMAKER WINS
You may get less than you hope for by a musicmaker takeover. Look at what
happened when Seymour Holtzman and James Mitarotonda, musicmaker's current
nominees, took control of musicmaker in January 2001:
- In January 2001, musicmaker announced a plan of complete liquidation and
an intention to submit the plan to stockholders for approval. Since the
takeover, no liquidation plan has been submitted for stockholder
approval.
- Musicmaker paid $9.9 million in cash dividends in March 2001, but has not
paid any other dividends since.
- After that dividend, musicmaker had over $11.3 million in stockholders'
equity - and most recently reported $4.6 million in stockholder's
equity.* This decline comes despite not paying any additional dividends,
not engaging in any business operations and not making any significant
acquisitions.
- For more than 18 months musicmaker has claimed to be searching for
potential acquisition transactions. Since the takeover, no significant
acquisitions have been made.
- In July 2002, musicmaker squeezed-out its small stockholders.
MUSICMAKER HAS KEPT SUBSTANTIAL VALUE TIED UP IN THE COMPANY SINCE THE TAKEOVER.
DO NOT RETURN ANY WHITE PROXY CARD SENT TO YOU BY THE MUSICMAKER GROUP.
YOUR BOARD STRONGLY RECOMMENDS THAT YOU SUPPORT THE LIQUID NOMINEES BY VOTING
"FOR"
THE LIQUID NOMINEES ON THE ENCLOSED GREEN PROXY CARD.
Your vote is important, regardless of how many shares you own. Please sign
and date the accompanying GREEN PROXY CARD and mail it in the enclosed
self-addressed envelope as promptly as possible, whether or not you expect to
attend the annual meeting.
THE BOARD OF DIRECTORS
Redwood City, California
September 10, 2002
If you have any questions or need assistance in voting your shares, please
contact our proxy solicitors, Georgeson, at the number set forth below:
[GEORGESON LOGO]
17 STATE STREET, 10(TH )FLOOR
NEW YORK, NY 10004
BANKS AND BROKERS: (212) 440-9800
STOCKHOLDER'S CALL TOLL FREE: (866) 367-5519
ADDITIONAL INFORMATION AND WHERE TO FIND IT
Liquid Audio plans to file a Registration Statement on SEC Form S-4 in
connection with the merger and a Tender Offer Statement on Schedule TO in
connection with the offer. Investors and stockholders are urged to read the
Registration Statement, the Tender Offer Statement and Proxy
Statement/Prospectus carefully when they are available. The Registration
Statement and the Proxy Statement/ Prospectus will contain important information
about 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 Proxy Statement/ Prospectus 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.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND SOLICITATION OF PROXIES
The directors and executive officers of Liquid Audio have interests in the
merger, some of which may differ from, or may be in addition to, those of the
stockholders of Liquid Audio generally. A description of the interests that the
Liquid Audio directors and executive officers have in the merger will be
available in the Proxy Statement/Prospectus. Liquid Audio and its directors,
executive officers and certain other members of its management and employees may
be soliciting proxies from stockholders of Liquid Audio in favor of the merger.
Information concerning the participants will be set forth in the Proxy
Statement/Prospectus.
* Based on information in its Form 10-Q for the quarterly periods ending
March 31, 2001 and June 30, 2002.