sec document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 6)(1)
LIQUID AUDIO, INC.
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(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE
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(Title of Class of Securities)
53631T 10 2
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(CUSIP Number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 16, 2002
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule 13d-7
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 8 Pages)
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1 The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
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CUSIP No. 53631T 10 2 13D Page 2 of 8 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
STEEL PARTNERS II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,866,366
OWNED BY
EACH
REPORTING
PERSON WITH
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8 SHARED VOTING POWER
-0-
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9 SOLE DISPOSITIVE POWER
1,866,366
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10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,866,366
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.2%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 53631T 10 2 13D Page 3 of 8 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
WARREN G. LICHTENSTEIN
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,866,366
OWNED BY
EACH
REPORTING
PERSON WITH
--------------------- ----------------------------------------------
8 SHARED VOTING POWER
-0-
--------------------- ----------------------------------------------
9 SOLE DISPOSITIVE POWER
1,866,366
--------------------- ----------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,866,366
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.2%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 53631T 10 2 13D Page 4 of 8 Pages
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The following constitutes Amendment No. 6 ("Amendment No. 6") to the
Schedule 13D filed by the undersigned. This Amendment No. 6 amends the Schedule
13D as specifically set forth.
Item 4 is hereby amended to add the following:
On April 16, 2002, Steel Partners II delivered a letter to the Board
of Directors of the Issuer urging the Board to take the following actions: (i)
appoint Seymour Holtzman and James Mitarotonda (representatives of the
musicmaker.com, Inc. group) to the Board of Directors rather than engaging in an
expensive, protracted proxy contest with the musicmaker.com group at the next
annual meeting of shareholders, and (ii) declare a $3.00 per share cash
distribution to all shareholders. Steel Partners II believes that inviting
Messrs. Holtzman and Mitarotonda to the Board and declaring a $3.00 per share
cash distribution are steps the Board should immediately take in order to
maximize shareholder value. Steel Partners II also expresses its continued
concern with the Issuer's high cash burn rate and, in Steel Partners II's
opinion, the Issuer's flawed business plan. A copy of the letter is filed as an
exhibit to this Amendment No. 6 and incorporated herein by reference.
Item 7 is hereby amended to add the following exhibit:
7. Letter from Steel Partners II, L.P. to the Board of Directors
of Liquid Audio, Inc., dated April 16, 2002.
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CUSIP No. 53631T 10 2 13D Page 5 of 8 Pages
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SIGNATURES
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After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: April 17, 2002 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By: /s/ Warren G. Lichtenstein
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Warren G. Lichtenstein
Chief Executive Officer
/s/ Warren G. Lichtenstein
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WARREN G. LICHTENSTEIN
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CUSIP No. 53631T 10 2 13D Page 6 of 8 Pages
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EXHIBIT INDEX
Exhibit Page
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1. Joint Filing Agreement, dated July 26, 2001 (previously
filed).
2. Letter from Steel Partners II, L.P. to the Board of
Directors of Liquid Audio, Inc., dated September 10, 2001
(previously filed).
3. Letter from Steel Partners II, L.P. to certain officers
and directors of Liquid Audio, Inc., dated October 3,
2001 (previously filed).
4. Letter from Steel Partners II, L.P. to the Board of
Directors of Liquid Audio, Inc., dated October 22, 2001
(previously filed).
5. Letter from Steel Partners II, L.P. to the Board of
Directors of Liquid Audio, Inc., dated October 25, 2001
(previously filed).
6. Letter from Steel Partners II, L.P. to the Board of
Directors of Liquid Audio, Inc., dated November 26, 2001
(previously filed).
7. Letter from Steel Partners II, L.P. to the Board of 7 to 8
Directors of Liquid Audio, Inc., dated April 16, 2002.
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CUSIP No. 53631T 10 2 13D Page 7 of 8 Pages
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STEEL PARTNERS
150 SOUTH RODEO DRIVE
SUITE 100
BEVERLY HILLS, CALIFORNIA 90212
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TEL (310) 246-3741
FAX (310) 777-3041
April 16, 2002
The Board of Directors
Liquid Audio, Inc.
800 Chesapeake Drive
Redwood City, California 94063
Ladies and Gentlemen:
Steel Partners II, L.P., the largest shareholder of Liquid Audio, Inc. (the
"Company"), remains alarmed by the continuing cash burn of the Company and the
Board of Directors' apparent indifference to the many important issues raised by
the musicmaker.com group and other shareholders of the Company. We fear that the
Board intends to allow management to continue to pursue its flawed business plan
and potentially waste hundreds of thousands of dollars on a protracted proxy
fight with the musicmaker.com group at the next annual meeting of shareholders.
Because we are convinced that shareholders will overwhelmingly elect
musicmaker.com's slate of directors, we propose that the Board ask Seymour
Holtzman and James Mitarotonda to join the Board now and not waste more money on
a pointless proxy fight. Additionally, we believe it would be embarrassing to
the Company and its shareholders if Gerald Kearby, Chairman, Chief Executive and
Co-Founder and Robert Flynn, Senior Vice President and Co-Founder lose the
election by such a wide margin.
An alternative for enhancing shareholder value would be to declare a $3.00 per
share cash distribution to all shareholders, a suggestion we have made many
times. As per the guidance issued by management on their most recent conference
call, the Company had a cash balance of approximately $85 million as of March
31, 2002, or $3.75 per share. If the Board declared this $3.00 per share cash
distribution, the Company would have approximately $17 million to pursue its
business strategy. We firmly believe that if the Company cannot operate on this
budget, then the Board must acknowledge the business plan is severely flawed and
should immediately explore other options such as selling the Company to the
highest bidder.
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CUSIP No. 53631T 10 2 13D Page 8 of 8 Pages
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Recently, we reiterated our suggestion to the Company and its advisors and were
told that a cash distribution would not solve the Company's "problem" which is
the large ownership by unhappy shareholders; in simple terms, a cash
distribution will not get rid of the dissatisfied owners. The Board should
understand that by making this distribution, many of the current issues raised
by shareholders are likely to go away. Instead of wasting valuable cash on a
business plan destined for failure and an unwinnable proxy fight at the
shareholders' expense, we suggest that you should immediately focus on
maximizing shareholder value.
Finally, we remain perplexed as to why directors or officers have not acquired a
greater stake in the Company when its shares trade near an all-time low and at a
62% discount to its cash balance as of April 15, 2002. Why should we have any
confidence in the Board when it has such nominal ownership in the Company? We
suspect the answer is that it lacks confidence in its own business plan.
We believe by inviting musicmaker.com's slate of directors to join the Board and
making a $3.00 cash distribution, all shareholders will benefit. If neither of
these alternatives is palatable to you, we ask that you hold the annual
shareholders meeting immediately and allow the shareholders to promptly decide
the appropriate fate of the Company. We ask that you act responsibly by not
frivolously wasting shareholders' money on a proxy contest that is very likely a
fait accompli.
If you would like to further discuss any of the above ideas, please call me at
(310) 246-3741.
Very truly yours,
/s/ Josh Schechter
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Josh Schechter
Steel Partners