Amendment No. 20 to Schedule 13D

-----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, KW5i2yE7uSknR3aHFRWeZRH5FEX3sB7hWuFmYc4tvD50HRmtlF44F+xwcFInygak wR21e4zWtDPSAZMMiofeVg== 0001193125-06-006714.txt : 20060117 0001193125-06-006714.hdr.sgml : 20060116 20060117073222 ACCESSION NUMBER: 0001193125-06-006714 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20060117 DATE AS OF CHANGE: 20060117 GROUP MEMBERS: EMANUEL R. PEARLMAN GROUP MEMBERS: LIBERATION INVESTMENTS, L.P. GROUP MEMBERS: LIBERATION INVESTMENTS, LTD. FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LIBERATION INVESTMENT GROUP LLC CENTRAL INDEX KEY: 0001259272 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 11766 WILSHIRE BLVD., STREET 2: SUITE 870 CITY: LOS ANGELES STATE: CA ZIP: 90025 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BALLY TOTAL FITNESS HOLDING CORP CENTRAL INDEX KEY: 0000770944 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEMBERSHIP SPORTS & RECREATION CLUBS [7997] IRS NUMBER: 363228107 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-47769 FILM NUMBER: 06531309 BUSINESS ADDRESS: STREET 1: 8700 WEST BRYN MAWR AVENUE STREET 2: SECOND FLOOR CITY: CHICAGO STATE: IL ZIP: 60631 BUSINESS PHONE: 773-380-3000 MAIL ADDRESS: STREET 1: 8700 WEST BRYN MAWR AVENUE STREET 2: SECOND FLOOR CITY: CHICAGO STATE: IL ZIP: 60631 FORMER COMPANY: FORMER CONFORMED NAME: BALLYS HEALTH & TENNIS CORP DATE OF NAME CHANGE: 19940526 SC 13D/A 1 dsc13da.htm AMENDMENT NO. 20 TO SCHEDULE 13D Amendment No. 20 to Schedule 13D

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

Information to be Included in Statements Filed Pursuant to Rule

13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a)

Under the Securities Exchange Act of 1934

(Amendment No. 20)*

BALLY TOTAL FITNESS HOLDING CORPORATION

(Name of Issuer)

COMMON STOCK, PAR VALUE $.01 PER SHARE

(Title of Class of Securities)

058 73K 10 8

(CUSIP Number)

KENNETH J. BARONSKY

MILBANK, TWEED, HADLEY & McCLOY LLP

601 S. FIGUEROA STREET, 30^TH FLOOR

LOS ANGELES, CA 90017

TELEPHONE: 213-892-4333

(Name, address and telephone number of person authorized to receive notices and communications)

January 13, 2006

(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 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.

*	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).

CUSIP No. 058 73K 10 8


(1)	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Liberation Investments, L.P.
(2)	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x
(3)	SEC USE ONLY
(4)	SOURCE OF FUNDS WC
(5)	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)	¨
(6)	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

NUMBER OF

BENEFICIALLY

OWNED BY

PERSON

WITH

(7) SOLE VOTING POWER

(8) SHARED VOTING POWER

2,848,213

(9) SOLE DISPOSITIVE POWER

(10) SHARED DISPOSITIVE POWER

2,848,213


(11)	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,848,213
(12)	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	¨
(13)	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.44%
(14)	TYPE OF REPORTING PERSON PN

Page 2

CUSIP No. 058 73K 10 8


(1)	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Liberation Investments, Ltd.
(2)	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x
(3)	SEC USE ONLY
(4)	SOURCE OF FUNDS WC
(5)	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)	¨
(6)	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands

NUMBER OF

BENEFICIALLY

OWNED BY

PERSON

WITH

(7) SOLE VOTING POWER

(8) SHARED VOTING POWER

1,536,237

(9) SOLE DISPOSITIVE POWER

(10) SHARED DISPOSITIVE POWER

1,536,237


(11)	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,536,237
(12)	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	¨
(13)	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.01%
(14)	TYPE OF REPORTING PERSON CO

Page 3

CUSIP No. 058 73K 10 8


(1)	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Liberation Investment Group LLC
(2)	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x
(3)	SEC USE ONLY
(4)	SOURCE OF FUNDS N/A
(5)	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)	¨
(6)	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

NUMBER OF

BENEFICIALLY

OWNED BY

PERSON

WITH

(7) SOLE VOTING POWER

(8) SHARED VOTING POWER

4,384,450

(9) SOLE DISPOSITIVE POWER

(10) SHARED DISPOSITIVE POWER

4,384,450


(11)	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,384,450
(12)	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	¨
(13)	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.45%
(14)	TYPE OF REPORTING PERSON OO, IA

Page 4

CUSIP No. 058 73K 10 8


(1)	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Emanuel R. Pearlman
(2)	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ¨ (b) x
(3)	SEC USE ONLY
(4)	SOURCE OF FUNDS N/A
(5)	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)	¨
(6)	CITIZENSHIP OR PLACE OF ORGANIZATION United States

NUMBER OF

BENEFICIALLY

OWNED BY

PERSON

WITH

(7) SOLE VOTING POWER

35,000

(8) SHARED VOTING POWER

4,419,450

(9) SOLE DISPOSITIVE POWER

35,000

(10) SHARED DISPOSITIVE POWER

4,419,450


(11)	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,419,450
(12)	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES	¨
(13)	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.54%
(14)	TYPE OF REPORTING PERSON IN, HC

Page 5

INTRODUCTORY STATEMENT

This Amendment No. 20 (this “Amendment”) relates to the Schedule 13D filed on behalf of (i) Liberation Investments, L.P., a Delaware limited partnership (“LILP”); (ii) Liberation Investments Ltd. (“LILTD”), a private offshore investment corporation; (iii) Liberation Investment Group, LLC (“LIGLLC”), a Delaware limited liability company and general partner of LILP and discretionary investment advisor to LILTD; and (iv) Emanuel R. Pearlman, as General Manager and majority member of LIGLLC, with the Securities and Exchange Commission on June 8, 2004, as amended by Amendment No. 1 filed on July 13, 2004, Amendment No. 2 filed on August 27, 2004, Amendment No. 3 filed on September 1, 2004, Amendment No. 4 filed on September 10, 2004, Amendment No. 5 filed on December 13, 2004, Amendment No. 6 filed on April 26, 2005, Amendment No. 7 filed on May 6, 2005, Amendment No. 8 filed on July 19, 2005, Amendment No. 9 filed on July 22, 2005, Amendment No. 10 filed on September 19, 2005, Amendment No. 11 filed on October 11, 2005, Amendment No. 12 filed on October 31, 2005, Amendment No. 13 filed on November 14, 2005, Amendment No. 14 filed on November 22, 2005, Amendment No. 15 filed on December 7, 2005, Amendment No. 16 filed on December 14, 2005, Amendment No. 17 filed on December 23, 2005, Amendment No. 18 filed on December 27, 2005 and Amendment No. 19 filed on January 12, 2005 (the “Schedule 13D”), relating to shares of common stock (the “Common Stock”), $.01 par value per share, of Bally Total Fitness Holding Corporation (the “Company”).

Items 4 and 7 of the Schedule 13D are hereby amended and supplemented as follows:

ITEM 4. PURPOSE OF TRANSACTION

On or about January 13, 2006, LILP, LILTD, LIGLLC, Emanuel R. Pearlman, and Gregg E. Frankel mailed a letter, dated January 13, 2006, accompanied by their gold proxy card (a copy of which materials is attached hereto as Exhibit 99.31, the “Shareholder Communication”) to certain shareholders of the Company.

As a result of the mailing of the Shareholder Communication, LILP, LILTD, LIGLLC, Emanuel R. Pearlman, and Gregg E. Frankel may engage in discussions with the Company’s shareholders, management or Board concerning the matters described in the Shareholder Communication or other matters.

ITEM 7. MATERIAL TO BE FILED AS EXHIBITS

The following exhibit is filed with this Amendment:

Exhibit 99.31. Shareholder Communication, dated January 13, 2006.

Page 6

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: January 17, 2006


LIBERATION INVESTMENTS, L.P.
By:		Liberation Investment Group LLC, general partner

By:		/s/ Emanuel R. Pearlman
		Emanuel R. Pearlman
		General Manager

LIBERATION INVESTMENTS, LTD.

By:		/s/ Emanuel R. Pearlman
		Emanuel R. Pearlman
		Director

LIBERATION INVESTMENT GROUP, LLC

By:		/s/ Emanuel R. Pearlman
		Emanuel R. Pearlman
		General Manager

EMANUEL R. PEARLMAN

/s/ Emanuel R. Pearlman

Page 7

EX-99.31 2 dex9931.htm SHAREHOLDER COMMUNICATION Shareholder Communication

Exhibit 99.31

TOBACK SOLD * BE BOLD * OUT WITH THE OLD * VOTE GOLD

January 13, 2006

Dear Fellow Shareholder:

As owners of approximately 11.5% of the common stock of Bally Total Fitness Holding Corporation, we at Liberation Investments have, over the past 18 months, watched in dismay as the Company’s Chief Executive Officer, President and Chairman, Paul Toback, has, in our view, acted to enrich and entrench himself as CEO of Bally. Unfortunately, Bally’s Board has failed to curb what we see as Toback’s excesses and failings. AS A RESULT, WE HAVE CONCLUDED THAT IMMEDIATE SHAREHOLDER ACTION IS REQUIRED TO ALIGN THE INTERESTS OF MANAGEMENT WITH THOSE OF SHAREHOLDERS AND TO PROTECT AND IMPROVE SHAREHOLDER VALUE. To protect your investment in Bally, we urge you to sign, date and return the enclosed GOLD proxy card today.

THE PATH FORWARD

By joining our call for reform, together we can send a strong message to the Board to: (1) Appoint a CEO who is highly competent and has the shareholders’ best interests in mind; (2) Implement corporate governance best-practices that align the interests of management with those of shareholders; (3) Restore the confidence of the capital markets in Bally; and (4) Soundly reject Bally’s proposal for a highly dilutive equity compensation plan.

WHAT IS PAUL TOBACK AFRAID OF?

Following a steady stream of self-serving public statements by Bally and Toback about Toback’s success at the helm of Bally, why is he so afraid to let shareholders have a say in Bally’s future direction? Ask yourself why Toback has mounted, in our view, such a reckless and expensive campaign against his shareholders—with an attack strategy consisting almost entirely of frivolous lawsuits seeking to deny you the right to vote on our proposals, endless press releases touting his dubious “accomplishments,” and misleading personal smears. FOR SOMEONE WHO PURPORTS TO BE DOING SUCH A GOOD JOB FOR SHAREHOLDERS, TOBACK SEEMS AWFULLY CONCERNED THAT 75% OF BALLY’S SHAREHOLDERS WANT TO VOTE HIM OUT OF OFFICE. WHAT DOES THAT TELL YOU?

TOBACK’S “RECORD” SPEAKS FOR ITSELF

Ultimately, the performance of every CEO is evaluated on the basis of his or her record. Toback should not be exempt. We believe that Toback’s record speaks for itself, but we invite you to consider the facts for yourself:

“PUMP-AND-DUMP SCHEME”: In what one shareholder has described as a “pump-and-dump scheme,” Toback sold most of his stake in Bally one day after an earnings conference call during which he boasted about his substantial holdings in Bally’s stock, emphasized that Bally “has a really positive ability to grow…” and announced that the company was for sale. Toback sold his stock for over $2.9 million. He also negotiated with Bally to receive a special payment of $838,777 to cover his tax expenses in connection with the stock sale. Why should shareholders have confidence in Toback’s leadership when his actions show that he doesn’t have confidence in his own ability to maximize the value of Bally’s stock?

BUNGLED CONSENT SOLICITATION: Due to Toback’s inability to turn out restated financials when promised and his, as we see it, mismanagement of a consent solicitation process, the Company was forced to issue over 1.9 million shares of Bally stock and pay approximately $12.4 million in cash to bondholders and bank lenders (plus investment banking and legal fees). Can we trust this man to effectively represent our company to the capital markets?

TOBACK SOLD * BE BOLD * OUT WITH THE OLD * VOTE GOLD

DOMINATION OF BOARD: In recent years, Toback has permitted people who we believe to include his friends and associates to fill Board vacancies without putting them up for a shareholder vote. In fact, 4 of 7 current Bally directors were appointed to their positions and have never been voted into office by shareholders. Predictably, the result has been a Board that has repeatedly rubber-stamped Toback’s worst decisions. Some recent examples of this chummy Board’s failure of proper oversight include:

•

The Board approved two rich grants of restricted stock and options to management during 2005, each before the release of financial statements. These grants, which chiefly benefited Toback, were comprised of approximately $5.5 million in restricted stock and options to purchase an additional approximately 794,000 shares.

•

Immediately following an enormous management sell-off of equity compensation in December of 2005, of which Toback was the principal beneficiary, the Board approved a generous new equity compensation plan for the issuance of up to another 1.75 million shares of Bally stock, which could be highly dilutive to shareholders.

TOBACK’S STRATEGY: MORE POLITICS AS USUAL

Once you strip away the legalese and the theatrical expressions of outrage, Toback’s central strategy in this proxy contest appears to us to be quite simple: Use whatever means necessary, including the suppression of shareholder rights, to prevent shareholders from voting on Liberation’s proposals to remove him from office. It is remarkable that Toback, a man who spent many years in politics, seems to harbor such hostility for the most basic principles of shareholder democracy. But how else can the actions described below be understood?

WALL-TO-WALL LITIGATION: Toback has launched one lawsuit after another against Liberation in the hopes of preventing you from voting on our proposals, only to be rebuffed time after time.

“POISON PILL” AS A WEAPON: The day after he learned that he faced a proxy contest, Toback adopted a “poison pill” plan - an anti-takeover defense - and brazenly wielded it as a club to beat down shareholders intent on engaging in a legitimate expression of shareholder democracy. Although we believe that a “poison pill” has never before been used as an offensive weapon against shareholders in a proxy contest, even this tactic is not beneath Toback.

CLASSIFIED BOARD: Toback has repeatedly refused to allow shareholders to vote to declassify the Board, even though the existence of a classified Board severely limits your ability to replace underperforming directors.

PROXY CARD MAY DISENFRANCHISE: Toback’s proxy card may disenfranchise shareholders by not providing for an up-or-down vote on Liberation’s proposals. Bally’s proxy card only enables shareholders to vote to give Bally discretion to vote against Liberation’s proposals or vote not to give Bally such discretion (which has the same effect as a “No” vote on Liberation’s proposals). This “heads I win, tails you lose” tactic has all of the hallmarks of a manipulative scheme to deceive shareholders.

At great cost to shareholders, Toback has advanced his agenda with the full range of resources available to him as the chief of a public company, including a well-oiled public relations machine with years of experience, as we see it, spinning bad news for him and a veritable army of lawyers arrayed across the country. BUT EVEN WITH HIS YEARS OF POLITICAL BACKGROUND AND HIS FORMIDABLE RESOURCES, TOBACK CANNOT CAMPAIGN HIS WAY OUT OF HIS RECORD. LET’S SHOW TOBACK THAT WE WON’T ACCEPT POLITICS AS USUAL ANYMORE.

The future of your investment is at stake. Act today to protect your investment. We urge you to sign, date and return the enclosed GOLD proxy card today. Do not sign the white proxy card from Bally or the green proxy card from Pardus. If you have already done so, you may revoke your proxy by delivering a later-dated GOLD proxy card in the enclosed postage-prepaid envelope. If you have any questions about voting, or for more information, please call our proxy solicitors, Innisfree M&A Incorporated, as follows: Shareholders—Call Toll-Free at 888-750-5834; Banks and Brokers—Call Collect at 212-750-5833.

LIBERATION INVESTMENTS, L.P. LIBERATION INVESTMENTS LTD. LIBERATION INVESTMENT

GROUP, LLC EMANUEL R. PEARLMAN GREGG E. FRANKEL

THIS PROXY IS SOLICITED BY LIBERATION INVESTMENTS, L.P.

AND LIBERATION INVESTMENTS LTD. (TOGETHER WITH CERTAIN OF THEIR

AFFILIATES, “LIBERATION”) IN OPPOSITION TO THE BOARD OF DIRECTORS

OF BALLY TOTAL FITNESS HOLDING CORPORATION

The undersigned hereby appoints Emanuel R. Pearlman, Gregg E. Frankel and Nicole A. Jacoby, and each of them, the proxy or proxies of the undersigned, with full power of substitution, and hereby authorizes them to vote, as provided below, all shares of Common Stock, par value $.01 per share, of Bally Total Fitness Holding Corporation (“Bally”) which the undersigned would be entitled to vote if personally present at the Annual Meeting of the Stockholders of Bally to be held on January 26, 2006, and at any and all adjournments or postponements thereof (the “Annual Meeting”). The undersigned hereby revokes any previous proxies with respect to any and all matters to be voted upon at the Annual Meeting.

THIS PROXY WILL BE VOTED AS INSTRUCTED, BUT IF NO INSTRUCTION IS GIVEN, IT WILL BE VOTED AS FOLLOWS: IN THE DISCRETION OF THE PROXIES WITH RESPECT TO THE NOMINEES IN ITEM 1; FOR THE PROPOSALS IN ITEMS 2, 3, 4 AND 5; ABSTAIN WITH RESPECT TO THE PROPOSAL IN ITEM 6; AGAINST THE PROPOSAL IN ITEM 7; ABSTAIN WITH RESPECT TO THE PROPOSAL IN ITEM 8; AND IN THE DISCRETION OF THE PROXIES, UPON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.

LIBERATION RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS IN ITEMS 2, 3, 4 AND 5, AGAINST THE PROPOSAL IN ITEM 7 AND FOR ITEM 9. WE MAKE NO RECOMMENDATION WITH RESPECT TO THE NOMINEES IN ITEM 1, THE PROPOSAL IN ITEM 6 OR THE PROPOSAL IN ITEM 8. TO VOTE IN ACCORDANCE WITH LIBERATION’S RECOMMENDATIONS AND GRANT THE PROXIES DISCRETION WITH RESPECT TO THE NOMINEES IN ITEM 1, JUST SIGN, DATE AND RETURN THIS PROXY; NO BOXES NEED TO BE CHECKED.


1.		Election of Directors.

		Instruction: To vote FOR the election of any of the nominees named below, please mark FOR in the corresponding box. To withhold authority to vote for the election of any of the nominees named below, please mark WITHHOLD in the corresponding box.


FOR	WITHHOLD	Nominees	Nominated By
¨	¨	Charles J. Burdick	Bally and Pardus

¨	¨	Barry R. Elson	Bally and Pardus

¨	¨	Don R. Kornstein	Pardus


		FOR	AGAINST	ABSTAIN
2.	Liberation’s Proposal to Give Stockholders the Authority to Remove the Chief Executive Officer and President of Bally	¨	¨	¨

3.	Liberation’s Proposal to Increase Stockholder Authority in Determining the Tenure of Bally’s Officers	¨	¨	¨

4.	Liberation’s Proposal to Protect Stockholder Authority to Remove Bally’s Officers	¨	¨	¨

5.	Liberation’s Proposal to Remove Paul A. Toback as Chief Executive Officer and President of Bally’s Board of Directors	¨	¨	¨

6.	Pardus’ Proposal to Repeal Any Amendments to the Bylaws Made by Bally’s Board of Directors from May 26, 2005 Through the Annual Meeting	¨	¨	¨

7.	Bally’s Proposal to Approve the 2006 Omnibus Equity Compensation Plan	¨	¨	¨

8.	Bally’s Proposal to Ratify the Appointment of KPMG LLP as Independent Auditor for the Company for the Fiscal Year Ending December 31, 2005	¨	¨	¨

9.	In the Discretion of the Proxies With Respect to Any Other Matters as May Properly Come Before the Annual Meeting	¨	¨	¨

The undersigned hereby acknowledges receipt of the Proxy Statement of Liberation dated December 30, 2005.


Dated:

Signature:



Signatures, if held jointly:





Title or Authority:



Joint owners should each sign personally. If signing as attorney, executor, administrator, trustee, broker, bank nominee, guardian, or in any other similar capacity, please include your full title. If a corporation, please sign in corporate name by authorized officer. If a partnership, please sign in partnership name by authorized person. This proxy votes all shares held in all capacities.

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