-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DYV4BhZdOiXFHdXyZiyGaPdRrhZ4OLi2DfaBqVnY0Bb54B7O68N/t8YcDN1aSosJ 1ZOC6u4OLTsaEOLb4Mlkrg== 0001056590-04-000018.txt : 20040503 0001056590-04-000018.hdr.sgml : 20040503 20040503113300 ACCESSION NUMBER: 0001056590-04-000018 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20040503 GROUP MEMBERS: EVELYN HOLTZMAN GROUP MEMBERS: JEWELCOR INC. GROUP MEMBERS: JEWELCOR MANAGEMENT, INC. GROUP MEMBERS: S. H. HOLDINGS, INC. GROUP MEMBERS: SEYMOUR HOLTZMAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LIQUID AUDIO INC CENTRAL INDEX KEY: 0001016613 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 770421089 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-57595 FILM NUMBER: 04772108 BUSINESS ADDRESS: STREET 1: 800 CHESAPEAKE DRIVE CITY: REDWOOD CITY STATE: CA ZIP: 94063 BUSINESS PHONE: 6505492000 MAIL ADDRESS: STREET 1: LIQUID AUDIO INC STREET 2: 800 CHESAPEAKE DRIVE CITY: REDWOOD CITY STATE: CA ZIP: 94063 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JEWELCOR MANAGEMENT INC CENTRAL INDEX KEY: 0001056590 IRS NUMBER: 232331228 STATE OF INCORPORATION: NV FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 100 N WILKES BARRE BLVD CITY: WILKES BARRE STATE: PA ZIP: 18702 BUSINESS PHONE: 5708226277 MAIL ADDRESS: STREET 1: 100 N WILKES BARRE BLVD CITY: WILKES BARRE STATE: PA ZIP: 18702 SC 13D/A 1 lqid13d18.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A (AMENDMENT NO. 18)* Under the Securities Exchange Act of 1934 LQ Corporation, Inc. (Name of Issuer) Common Stock (Title of Class of Securities) 53631T102000 (CUSIP Number) Seymour Holtzman c/o Jewelcor Companies 100 N. Wilkes-Barre Blvd. Wilkes-Barre, Pennsylvania 18702 (570) 822-6277 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 3, 2004 (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 which is subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b) or (4), check the following box. * 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 ("Act") 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). SCHEDULE 13D CUSIP No. 53631T102000 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Seymour Holtzman 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b)x 3 SEC USE ONLY 4 SOURCE OF FUNDS* NA 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. 7 SOLE VOTING POWER 475,500 NUMBER OF 8 SHARED VOTING POWER SHARES - 0 - BENEFICIALLY OWNED BY 9 SOLE DISPOSITIVE POWER EACH 475,500 REPORTING PERSON WITH 10 SHARED DISPOSITIVE POWER -0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SEE ITEM 5 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.05% 14 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 53631T102000 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Evelyn Holtzman 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b)x 3 SEC USE ONLY 4 SOURCE OF FUNDS* NA 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. 7 SOLE VOTING POWER - 0 - NUMBER OF 8 SHARED VOTING POWER SHARES - 0 - BENEFICIALLY OWNED BY 9 SOLE DISPOSITIVE POWER EACH - 0 - REPORTING PERSON WITH 10 SHARED DISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - SEE ITEM 5 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% 14 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 53631T102000 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Jewelcor Management, Inc. Federal Identification No. 23-2331228 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b)x 3 SEC USE ONLY 4 SOURCE OF FUNDS* NA 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. Nevada 7 SOLE VOTING POWER 475,500 NUMBER OF 8 SHARED VOTING POWER SHARES - 0 - BENEFICIALLY OWNED BY 9 SOLE DISPOSITIVE POWER EACH 475,500 REPORTING PERSON WITH 10 SHARED DISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.05% 14 TYPE OF REPORTING PERSON* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 53631T102000 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON S.H. Holdings, Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b)x 3 SEC USE ONLY 4 SOURCE OF FUNDS* NA 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. Delaware 7 SOLE VOTING POWER - 0 - NUMBER OF 8 SHARED VOTING POWER SHARES - 0 - BENEFICIALLY OWNED BY 9 SOLE DISPOSITIVE POWER EACH - 0 - REPORTING PERSON WITH 10 SHARED DISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - SEE ITEM 5 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% 14 TYPE OF REPORTING PERSON* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 53631T102000 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Jewelcor Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b)x 3 SEC USE ONLY 4 SOURCE OF FUNDS* NA 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. Pennsylvania 7 SOLE VOTING POWER - 0 - NUMBER OF 8 SHARED VOTING POWER SHARES - 0 - BENEFICIALLY OWNED BY 9 SOLE DISPOSITIVE POWER EACH - 0 - REPORTING PERSON WITH 10 SHARED DISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - SEE ITEM 5 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% 14 TYPE OF REPORTING PERSON* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! Introduction. This Amendment No. 18 amends and supplements the Schedule 13D, dated September 28, 2001, as amended to date (the "Schedule 13D"), filed with the Securities and Exchange Commission by MM Companies, Inc., formerly known as musicmaker.com, Inc. ("MM Companies"), Jewelcor Management, Inc., Barington Companies Equity Partners, L.P., Ramius Securities, LLC and Domrose Sons Partnership with respect to the common stock, $.001 par value (the "Common Stock"), of LQ Corporation, Inc., formerly known as Liquid Audio, Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 800 Chesapeake Drive, Redwood City, California 94063. Item 2(a) - (c) of Schedule 13D, "Identity and Background" is deleted in its entirety and replaced with the following: (a-c) This statement is being filed by Jewelcor Management, Inc. ("JMI"), a Nevada corporation, which is primarily involved in investment and management services. JMI's principal and executive offices are located at 100 N. Wilkes Barre Blvd., Wilkes-Barre, PA 18702. JMI is a wholly owned subsidiary of Jewelcor Inc., which is a wholly owned subsidiary of S.H. Holdings, Inc. (each, a "Company" and collectively, the "Companies"). Seymour Holtzman and Evelyn Holtzman, his wife, own, as tenants by the entirety, a controlling interest of S.H. Holdings, Inc. Seymour Holtzman is Chairman and President of JMI and has sole investment discretion and voting authority with respect to such common stock of the issuer. This statement is being filed by Seymour Holtzman whose principal office is located at 100 N. Wilkes Barre Blvd., Wilkes-Barre, PA 18702. Mr. Holtzman has sole investment discretion and voting authority with respect to JMI. This statement is being filed by Evelyn Holtzman whose principal office is located at 100 N. Wilkes Barre Blvd., Wilkes-Barre, PA 18702. Item 4. Purpose of Transaction. Mr. Holtzman, as a representative of the Reporting Persons, sent a memorandum on April 19, 2004 to the Board of Directors of the Issuer. The memorandum included a copy of a March 2, 2004 memorandum (including the documents referenced in the March 2, 2004 memorandum). Mr. Holtzman sent a third memorandum on May 3, 2004 to the Board of Directors of the Issuer. The reporting persons have filed the documents as exhibits, listed in Item 7 hereof. One document attached to exhibit 4 is a copy of the insider transactions page found on the Yahoo finance web site and cannot be filed. Item 5(a) of the Schedule 13D, "Interest in Securities of the Issuer," is deleted in its entirety and replaced with the following: As of May 3, 2004, JMI beneficially owns an aggregate of 475,500 shares of Common Stock. Based upon the Company's Form 10-K filed on March 30, 2004, which indicates that there are 23,176,858 shares of Common Stock outstanding, JMI beneficially owns approximately 2.05% of said outstanding shares. As of May 3, 2004, the Reporting Persons beneficially own an aggregate of 475,500 shares of Common Stock which, based on 23,176,858 shares of Common Stock outstanding, represents approximately 2.05% of said outstanding shares. The Reporting Persons previously reported on schedule 13-D their ownership of Common Stock together with Common Stock owned by MM Companies, Inc., Barington Companies Equity Partners, L.P., Ramius Securities, LLC, Domrose Sons Partnership, RCG Ambrose Master Fund Ltd. and Ramius Master Fund, Ltd. (collectively known as the "Barington Group"). The Barington Group filed an amended Schedule 13-D on January 14, 2004, excluding the Reporting Persons as part of the Barington Group. Although, the Reporting Persons do not believe they are still part of the Barington Group, the Reporting Persons are filing this 13-D in the event they are determined to still be a part of the Group. (d) N/A (e) N/A The responses of the Reporting Persons to Items (7) through (11) of the cover pages to this Schedule 13D relating to the beneficial ownership of shares of Common Stock of the Issuer are incorporated herein by reference. Information with respect to each of the Reporting Persons is given solely by such Reporting Person and no Reporting Person shall have responsibility for the accuracy or completeness of information supplied by another Reporting Person. The Reporting Persons are filing this Schedule 13D because such Reporting Persons may be deemed to be members of a group for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Each Reporting Person disclaims beneficial ownership of any Common Stock beneficially owned by any other Reporting Person, except that Mr. Holtzman acknowledges beneficial ownership of the Common Stock owned by JMI. Item 7. Material to be filed as Exhibits. Exhibit 1 Executive Officers and Director of Reporting Persons Exhibit 2 Joint Filing Agreement. Exhibit 3 Memorandum dated April 19, 2004 sent by Seymour Holtzman to the Board of the Issuer Exhibit 4 Memorandum dated March 2, 2004 sent by Seymour Holtzman to the Board of the Issuer Exhibit 5 Recent Stock purchases as an attachment to Exhibit 4 Exhibit 6 Memorandum dated May 3, 2004 sent by Seymour Holtzman to the Board of the Issuer. SIGNATURES After reasonable inquiry and to the best of their knowledge, the undersigned certify that the information set forth in this Statement is true, complete and correct. Dated: May 3, 2004 /s/ Seymour Holtzman Seymour Holtzman /s/ Evelyn Holtzman Evelyn Holtzman JEWELCOR MANAGEMENT, INC. By: /s/ Seymour Holtzman Name: Seymour Holtzman Title: President JEWELCOR INC. By: /s/ Seymour Holtzman Name: Seymour Holtzman Title: President S.H. HOLDINGS, INC. By: /s/ Seymour Holtzman Name: Seymour Holtzman Title: President EX-1 2 directors.txt Exhibit 1 Directors and Officers of Jewelcor Management, Inc. Name and Position Principal Occupation Principal Business Address Seymour Holtzman, Chairman and Chief 100 N. Wilkes Barre Blvd. Chairman Executive Officer, Wilkes Barre, Jewelcor Management, Pennsylvania 18702 Inc. Richard Huffsmith, Vice 100 N.Wilkes Barre Blvd. Vice President President Wilkes Barre, General Counsel General Counsel Pennsylvania 18702 Maria Sciandra, Corporate Secretary 100 N. Wilkes Barre Blvd. Corporate Secretary Wilkes Barre, Pennsylvania and Director 18702 Joseph Litchman, Vice President/ 100 N. Wilkes Barre Blvd. Vice President/ Treasurer Wilkes Barre, Pennsylvania Treasurer and 18702 Director EX-2 3 jointagreement.txt EXHIBIT 2 Agreement of Joint Filing Pursuant to 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned persons hereby agree to file with the Securities and Exchange Commission the Statement on Schedule 13D (the "Statement") to which this Agreement is attached as an exhibit, and agree that such Statement, as so filed, is filed on behalf of each of them. IN WITNESS WHEREOF, the undersigned have executed this Agreement. Dated: April 19, 2004 JEWELCOR MANAGEMENT, INC. By /s/ Seymour Holtzman ------------------------------------- Name: Seymour Holtzman Title: Chairman and Chief Executive Officer JEWELCOR INC. By /s/ Seymour Holtzman ------------------------------------- Name: Seymour Holtzman Title: Chairman and Chief Executive Officer SH Holdings, Inc. By /s/ Seymour Holtzman ------------------------------------- Name: Seymour Holtzman Title: Chairman and Chief Executive Officer By /s/ Seymour Holtzman ------------------------------------- Name: Seymour Holtzman By /s/ Evelyn Holtzman ------------------------------------- Name: Evelyn Holtzman EX-3 4 duty.txt Exhibit 3 MEMORANDUM To: Board of Directors of LQ Corporation, Inc. From: Seymour Holtzman, Chairman Subject: Insider Trading Date: April 19, 2004 On March 2, 2004, I sent a Memorandum to the Board of Directors of LQ Corporation, Inc. (the "Company") requesting that the Board immediately hold a special telephonic meeting and take action to retain special counsel to investigate certain purchases of the Company's stock by James Mitarotonda/Barington Capital Group LP. I also directed your attention to recent questionable purchases by Mr. Mitarotonda and his associates of MM Companies, Inc. ("MMC") stock. I am seriously concerned by this trading activity because Mr. Mitarotonda is the President and co-CEO of the Company. I am attaching a copy of the March 2, 2004 Memorandum for your reference. As I stated in the Memorandum, I am not accusing anyone of insider trading. However, as directors of a public company, we must avoid the appearance of improprieties in trading the Company's securities and initiate the appropriate investigations when confronted by such issues. It has been approximately seven weeks since I sent the Memorandum and the majority of the Board of Directors has not taken the appropriate action to investigate the purchases of the Company's stock and MMC's stock as requested in my Memorandum. The selection of an independent reputable outside law firm to investigate this matter should be made by the members of the Board that do not have a direct or possible indirect conflict of interest in this matter. Since the majority of the Board failed to investigate this matter in a timely manner, I intend to initiate immediate legal action to address this issue. In an analogous situation where an accusation was made against an officer of a public company, we were advised to disclose the circumstances in a 10-K. In view of this, I strongly urge the Company to file an amended 10-K to include this material information. Cc: Peter Smith, Esq. Jack Jackson, Esq. Proskauer Rose LLP George Reihner, Esq. Elliott Reihner & Siedzikowski, P.C. EX-4 5 holtzmanmemo.txt Exhibit 4 MEMORANDUM To: The Board of Directors of LQ Corporation Inc. From: Seymour Holtzman Subject: Insider Trading Date: March 2, 2004 __________________________ On or about February 25, 2004, we each received a distribution from Jim Mitarotonda of the "Insider Trading Policy for LQ Corp. Inc." which actually appears to be a document authored by Kramer Levin Naftalis & Frankel LLP ("Kramer Levin") and is hereinafter referred to as the "Insider Trading Policy." The Insider Trading Policy purports to be management's recommendation to the Board of Directors of LQ Corporation Inc. (the "Company") of policies and restrictions designed to ensure compliance with applicable law and corporate governance concerns with respect to effecting trading based on material, non-public information. Although I am still reviewing the proposed Insider Trading Policy with my own counsel and am not now in a position to vote to approve or disapprove its adoption, I certainly agree with the sentiments expressed in the Insider Trading Policy that the subject matter (and compliance with insider trading laws generally) is of paramount concerns to both the Company and each us. As noted in the Insider Trading Policy, "Insider trading creates potential liability for the Company itself, not just its officers and directors," including fines of up to $1 million (or three times the profit gained or loss avoided by the insider, whichever is greater). I also concur with the view expressed in the Insider Trading Policy that the Company must take all actions necessary to "avoid the appearance of impropriety in trading the Company's securities, and therefore. . . reduce the likelihood of securities class action litigation against the Company and its insiders." The timing of our receipt of the proposed Insider Trading Policy has forced me to convey to you certain concerns which are serious and need our collective focus and attention. As you are aware, on or about February 24, 2004, the Company announced the terms of the settlement of its ongoing litigation with SightSound, Inc. ("SightSound"). Prior to this settlement, the Company had significant exposure with respect to this litigation and had in fact agreed to effectively reserve $7.0 million in respect thereof (i.e., $2.0 million to be applied to legal fees and expenses and $5.0 million for actual liability). Fortunately, our actual total outlay to resolve this matter was approximately $2.0 million (or less than 30% of the previously reported contingent liability) and the favorable terms of this settlement has been reflected in the significant recent increase in the Company's per share stock price. The fact that our stock price has increased by 39% (from $0.31 on February 23, 2004, the day prior to the announcement, to $0.43 on March 2, 2004) (and by approximately 48% from $0.29 on December 31, 2003 when 285,000 shares were traded by insiders to $0.43 on March 2, 2004 as described below) since the announcement of the settlement reflects the fact that the general public was unaware that such a favorable outcome was likely. However, since at least November 2003, I and at least one other director of the Company, Jim Mitarotonda, have known that the Company's actual liability in respect of the SoundSight litigation would be significantly less than the $7.0 million contingency amount referenced above. Both Jim and I were updated on a regular basis by the Company's outside counsel on this matter. In fact, as Jim has the preexisting relationship with this counsel, his contacts and discussions were more involved than those to which I was a party, and I would be given a summary of such counsel's discussion with Jim. As you are all also aware, at our last meeting, a proposal was made by certain members of our Board regarding a possible business combination (the "Merger Proposal") with musicmaker.com, Inc. ("MMCo"). Obviously, this proposal was the product of considerable prior deliberations and agreements among these directors and, since such directors collectively constitute a majority of the board of directors of both the Company and MMCo, they were clearly of the belief that they could cause such a business combination to occur. I also call to your attention that our February 19, 2004 Board meeting at which the Merger Proposal was first revealed to the minority directors was a postponement of a Board meeting that was to originally have occurred on January 27, 2004. I believe this fact is significant because of the substantial likelihood that the Merger Proposal was discussed and agreed to by the same three directors at a much earlier date which may indicate some degree of complicity. The Insider Trading Policy notes that it is not possible to define all categories of material information, but does note that the following are "per se" examples of material information: "? Positive or negative development in outstanding litigation" "? News of a pending or proposed merger or other acquisition" Thus, according to the Insider Trading Policy (and common sense), events such as the settlement of the SightSound litigation and the Merger Proposal involve material information. Moreover, the "run up" in our stock price following the announcement of the SightSound litigation underscores how material this type of information is to the Company's stock price. I have attached hereto some publicly available information concerning trading in the Company's common stock and ask that you consider such trading information in light of the availability to certain directors and their associates of certain material non-public information. The list includes some names as to which not everyone may be familiar. To my knowledge, the "Ramius" entities both execute trades for Barington Capital and invest on a "side-by-side" basis for their own house account under two entities (one of which is RCG Ambrose). Because Ramius execute orders for Barington, there are daily discussions that Ramius has with Jim Mitarotonda. In fact, Barington and Ramius are joint Schedule 13D filers. Lloyd Miller is a known associate of Jim Mitarotonda and serves on at least one public company board with Jim. As noted in the Insider Trading Policy, "tipping" others as to material, non-public information is also illegal. Now, I want to be very clear here about what I am saying and what I am not saying. I am not accusing anyone of insider trading. It is not appropriate for any of us to speculate on what motivated the trading activity which I referenced above. However, as noted in the Insider Trading Policy, the Company and its directors must "avoid the appearance of impropriety in trading in the Company's securities." Moreover, given the significant exposure to the Company if insider trading has occurred, we have a fiduciary duty to ascertain the actual facts and take appropriate action (if any) based upon a full and fair investigation thereof. I am therefore recommending that the Board immediately hold a special telephonic meeting and take action to retain special outside counsel to investigate the matters noted above and report back to the Board as soon as practicable with findings of fact and, if warranted, recommendations of appropriate remedial actions. I believe that we should select outside counsel other than Kramer Levin. It is not my intention to impugn the integrity of that firm in any way. However, the reality is that certain members of that firm have prior existing relationships with members of this Board (including me). Moreover, it may very well be that Kramer Levin has knowledge of relevant facts pertinent to the investigation (for example, certain members of Kramer Levin may have been consulted concerning the Merger Proposal and the timing of any such consultation may be critical to the investigation). Prior to the resolution of the investigation which I believe we must immediately initiate, I would also recommend that we postpone any consideration of the Merger Proposal. I do not make this recommendation easily. Although I have very strong views as to the wisdom of this Merger Proposal, I do not believe it can fairly be evaluated with this "cloud" over us. More importantly, given the concerns about possible insider trading, certain directors may have a personal stake in the Merger Proposal or the timing thereof. For example, it may be in the personal best interests of certain directors to propose structuring the Merger Proposal in a way designed to minimize potential Section 16(b) "shortswing" disgorgement liability as opposed to whatever structure is otherwise optimal to the Company. At the very least, I would think it prudent and consistent with current corporate governance "best practices" that Jim Mitarotonda recuse himself from voting with respect to these matters. I want to be very clear as to my "personal agenda" here. I want to ensure that we exercise our fiduciary duty to the stockholders of the Company with the greatest degree of care. As each of you know, I have a very visible role as a shareholder activist. It would be personally devastating for me to serve as a director of a public company where certain improprieties may have occurred and simply do nothing. I have spent considerable political and economic capital denouncing directors of this type and I do not want to become one now myself. I think now is the time for all of us to call on our sense of professionalism and endeavor to do our level best for the benefit of the Company. It is unclear to me how the Insider Trading Policy could reflect management's recommendation to the Board of Directors when it was never discussed with me in my capacity as co-CEO of the Company. 2 EX-5 6 recentpurchases.txt Exhibit 5 Recent Purchases of MM Companies SEC Document Barington Capital Group LP 1/6/2004 2,000 1.30 Form 4 and 13D 1/27/2004 5,000 1.27 Form 4 and 13D 1/28/2004 2,000 1.31 Form 4 and 13D 1/29/2004 1,000 1.35 Form 4 and 13D 1/30/2004 15,000 1.5341 Form 4 and 13D 2/3/2004 8,310 1.40 Form 4 and 13D 2/4/2004 36,105 1.40 Form 4 and 13D 2/9/2004 1,000 1.61 Form 4 2/10/2004 500 1.59 Form 4 2/12/2004 3,500 1.61 Form 4 Total Barington Capital Group LP 74,415 RCG Ambrose 1/27/2004 1,500 1.27 13D 1/28/2004 600 1.31 13D 1/29/2004 300 1.35 13D 1/30/2004 4,500 1.5341 13D Total RCG Ambrose 6,900 Ramius Master Fund Ltd 1/27/2004 2,500 1.27 13D 1/28/2004 1,000 1.31 13D 1/29/2004 500 1.35 13D 1/30/2004 7,500 1.5341 13D Total Ramius Master Fund Ltd 11,500 Ramius Securities LLC 1/27/2004 1,000 1.27 13D 1/28/2004 400 1.31 13D 1/29/2004 200 1.35 13D 1/30/2004 3,000 1.5341 13D Total Ramius Securities LLC 4,600 Jewelcor Management Inc 1/27/2004 (A) 2,500 (A) 1.30 Form 4 and 13D 1/30/2004 (A) 20,000 (A) 1.534 Form 4 and 13D Total Jewelcor Management Inc 22,500 Recent Purchases of Liquid Audio Barington Companies Equity Partners LP 12/31/2003 142,500 0.29 13D RCG Ambrose Master Fund Ltd 12/31/2003 42,750 0.29 13D Ramius Securities, LLC 12/31/2003 28,500 0.29 13D Ramius Master Fund, Ltd. 12/31/2003 71,250 0.29 13D Total 12/31/2003 285,000 0.29 13D Lloyd Miller 12/31/2003 (B) 30,000 (B) 13G/A and 13G 12/1/2003 (C) 456,600 (C) 13G/A and 13G (A) To ensure completeness, please note that I also included purchases by Jewelcor Management. Obviously, I was not one of the directors privy to the Merger Proposal. (B) per 13 G/A filed on 2/18/04 compared to 12/8/04 13G Shared Voting Power shares increased by 30,000 compared to original 13G. The date of event which required filing was 12/31/03. (C) per 13G filed on 12/8/03 Shared Voting Power Shares increased by 456,600 shares compared to 9/29/03 filing. The date of event which required filing was 12/1/03. EX-6 7 holtzmanmemo2.txt Exhibit 6 To: The Board of Directors of LQ Corporation, Inc. From: Seymour Holtzman Date: May 3, 2004 Subject: Required Notices and Filings As you are aware, I notified the Board on or about March 2, 2004 with respect to my concerns regarding certain trading activity in our Company's shares by Jim Mitarotonda, Barington Capital Group, LP and others. As I tried to impress upon you then, in the current environment where public companies and their directors are "under a microscope," necessity dictates that a board of directors act promptly in these matters and, at all costs, protect the interests of our public shareholders. The failure to so act exposes us all to personal liability. I recognize that following my second communication of April 19, 2003 on this subject that the Board finally initiated an investigation. For the time being, I will reserve comment on the conduct of such investigation. Nevertheless, and as I previously advised the Board, we should be doing more to better protect the interests of our shareholders and, frankly, ourselves. Specifically, as I have stated previously, in serving on other public company boards where improper conduct of a senior officer may be at issue, it appears that the necessary course of action is to inform the public of the particular allegations and then keep them informed as the process unfolds. We have made no public disclosure of this matter for over two (2) weeks and I am very uncomfortable with this state of affairs. I believe we are at risk and that we should have immediately amended our Form 10-K to include information as to the current situation. Public companies are today going out of their way to make disclosures about much less serious matters because the current climate dictates full and timely disclosure. Because we are also well aware of the significance of this matter and the possible exposure to us as directors for not disclosing such information to the public, I believe we must immediately notify our D&O carrier of this potential claim and mitigate any chance that coverage may be denied. In addition, we should also advise our auditors of this situation so that they can evaluate what action, if any, is required by them. Based on the foregoing, and your failure to promptly amend the Company's Form-10K as previously requested, for my own protection and for the protection of the Company's public shareholders, I will make the requisite disclosures in my Schedule 13 D. In addition, I will be notifying our D&O carrier as well as our auditors. I believe your failure to act left me no choice except to make the requisite disclosures on my own. -----END PRIVACY-ENHANCED MESSAGE-----