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LIQUID AUDIO, INC.
(Name of Registrant as Specified in Its Charter)
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MUSICMAKER.COM, INC.,
JEWELCOR MANAGEMENT, INC., BARINGTON COMPANIES EQUITY PARTNERS, L.P., RAMIUS
SECURITIES, LLC, DOMROSE SONS PARTNERSHIP,
JAMES A. MITAROTONDA and SEYMOUR HOLTZMAN
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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On July 16, 2002, MM Companies, Inc. (formerly known as musicmaker.com,
Inc.) sent the following letter to the management and board of directors of
Liquid Audio, Inc. Copies maybe delivered to shareholders from time to time
thereafter.
MM Companies, Inc.
c/o Barington Capital Group, L.P.
888 Seventh Avenue
17th Floor
New York, New York 10019
VIA FAX AND FEDERAL EXPRESS
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July 16, 2002
Gerald W. Kearby, President & Chief
Executive Officer
Robert G. Flynn, Secretary
Members of the Board of Directors
Liquid Audio, Inc.
800 Chesapeake Drive
Redwood City, California 94063
Gentlemen:
Liquid Audio, Inc.'s new proposal of a merger with Alliance Entertainment
combined with a self-tender offer to acquire 10 million shares of the Company's
stock at $3.00 per share does not cure our fundamental objections. As I am sure
you know, the record business is in a shambles with the likelihood that it will
get worse before it gets better. In view of these circumstances, we are
categorically opposed to this transaction.
If the Company's management is serious about enhancing shareholder value,
we believe the Company should distribute $3.00 per share to ALL of Liquid
Audio's shareholders. Thereafter, a determination can be made with the remaining
cash in the corporation to either make a further distribution, or to retain a
moderate amount of cash and fold it into a viable business. Furthermore, this is
a matter that the shareholders should ultimately decide.
We vigorously protest the Board of Directors' decision to amend the
Company's preferred stock rights agreement - the poison pill - to reduce the
triggering threshold from beneficial ownership of 15% of Liquid Audio's
outstanding shares to beneficial ownership of 10%. The Board's conduct is
unconscionable and, in our opinion, may constitute a breach of their fiduciary
duties.
Your immediate response to this letter would be appreciated.
/s/ Seymour Holtzman /s/ James Mitarotonda
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Seymour Holtzman James Mitarotonda
Chairman President & CEO