Opinion ID: 2275517
Heading Depth: 1
Heading Rank: 5

Heading: MM's Various Actions

Text: On November 13, 2001, MM announced its intention to nominate its own candidates for the two seats on Liquid Audio's board of directors that were up for election at the next annual meeting. On December 18, 2001, MM delivered a formal notice to Liquid Audio stating that it intended to nominate Seymour Holtzman and James Mitarotonda as directors to fill the two seats on the Board then held by the individuals designated as Class III directors whose terms expired at the next annual meeting. The December 18, 2001 notice also requested that the Board adopt resolutions declaring certain amendments to the certificate of incorporation and bylaws advisable and that such amendments be submitted to the stockholders. On December 20, 2001, MM sent notice to Liquid Audio informing the Board of its intention to bring before the annual meeting a proposal that would amend the bylaws and increase the size of the Board by four members. The December 20, 2001 notice also informed the Board of MM's intention to nominate four individuals as directors to fill those four newly created directorships. MM subsequently demanded that the Board commit to fixing an annual meeting date by February 22, 2002. On February 22, 2002, MM renewed its October 2001 offer to acquire Liquid Audio. That offer, however, was at the reduced price of $2.50 per share. The Liquid Audio board rejected that offer as inadequate. On May 17, 2002, MM forwarded a written demand to Liquid Audio under Section 220, [4] which requested a list of stockholders of Liquid Audio and related materials. Liquid Audio did not respond to the demand letter. On May 30, 2002, MM filed an action under Section 220 seeking, among other things, an order of the Court of Chancery directing that Liquid Audio forward to MM the information identified in the demand letter. A hearing before the Court of Chancery with respect to the Section 220 complaint was scheduled to be held on June 14, 2002. On June 10, 2002, MM filed proxy materials with the Securities and Exchange Commission (SEC) and commenced soliciting proxies for a shareholder meeting Liquid Audio planned to have on July 1, 2002. In addition to proposing two nominees for the Board, MM's proxy statement included a takeover proposal to increase the size of the Board by an additional four directors and to fill those positions with its nominees. As outlined in its initial proxy materials, MM's takeover proposal sought to expand the Board from five members to nine. If MM's two directors were elected and its four proposed directors were also placed on the Board, MM would control a majority of the Board.