Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS
On October 27, 2011,
the Company, together with National Amusements Inc. and the MovieTickets.com Joint Venture, filed a lawsuit against AMC Entertainment
Inc. (“AMC”) and MovieTickets.com Inc. (as nominal defendant) (Case No. 50 2011 CA 016684) in the Circuit Court of
the 15th Judicial Circuit in and for Palm Beach County, Florida relating to MovieTickets.com. On February 8, 2012, MovieTickets.com,
Inc. joined the lawsuit against AMC and an amended complaint was filed. MovieTickets.com is an online movie ticketing service in
which Hollywood Media, National Amusements, Inc. and AMC each own a 26.2% equity interest.
The amended complaint alleges that AMC
has breached and continues to breach the MovieTickets.com Joint Venture Agreement, which obligates AMC to exclusively provide its
ticket inventory to MovieTickets.com, and has breached its contractual and common law duties of good faith, fair dealing, and loyalty
with respect to MovieTickets.com and its joint venturers, Hollywood Media and National Amusements, Inc., as a result of various
actions by AMC. The amended complaint contends that when AMC’s demands for greater control and a larger share of MovieTickets.com
were not met, AMC breached and continues to breach the MovieTickets.com Joint Venture Agreement, which obligates AMC to exclusively
provide its ticket inventory to MovieTickets.com. The amended complaint further specifies breaches by AMC of its contractual and
common law duties of good faith, fair dealing, and loyalty and violations of Florida’s Deceptive and Unfair Trade Practices
Act. Among other things, the plaintiffs allege in the amended complaint that AMC used its inside position with MovieTickets.com
and access to MovieTickets.com’s proprietary information in order to advance AMC’s own goals in contravention of its’
duty of loyalty to the joint venture and to the detriment of MovieTickets.com.
Hollywood Media and the other plaintiffs have asked for a jury trial and are seeking unspecified consequential damages and have
reserved the right to seek punitive damages. Hollywood Media and the other plaintiffs also are seeking a declaratory
judgment that AMC is obligated to make available on MovieTickets.com’s website AMC’s ticket inventory for sale
on an exclusive basis and to honor its’ contractual and common law fiduciary duties of good faith and loyalty. Discovery
is proceeding.
Hollywood Media is
from time to time party to various legal proceedings, including matters arising in the ordinary course of business. Currently,
the Company is unaware of any actual or threatened litigation against it.
ITEM 1A. RISK FACTORS
Not required.
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