Liquid Audio, Inc., a leading provider of technology, services and infrastructure for Internet media
delivery, and privately-held Alliance Entertainment Corp., one of the largest home entertainment product distribution, fulfillment and infrastructure companies in the U.S., have signed a definitive merger agreement. Under the terms of the agreement, the stockholders of Alliance would receive approximately 46.2 million newly issued shares of Liquid Audio common stock, and Liquid Audio would assume all outstanding stock options and warrants to purchase shares of Alliance Entertainment. The current stockholders of Alliance will own approximately 67% of the new company's outstanding shares and 33% will be held by Liquid Audio stockholders. The proposed stock-for-stock transaction would be accounted for as a purchase and is intended to qualify as tax-free to the stockholders of Liquid Audio and Alliance Entertainment.
