Item 1. Legal Proceedings
ITEM 1. LEGAL PROCEEDINGS
Litigation
On
October 27, 2011, the Company and National
Amusements Inc. filed a lawsuit against AMC Entertainment Inc. (“AMC”) (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 the MovieTickets.com Joint Venture 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 to the MovieTickets.com Joint Venture and its joint
venturers, Hollywood Media and National Amusements, Inc.
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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