Stroboscopic Coin Flip: RIT
Ken Adams has a knack for discovering gems in Edgar filings. For some reason, he was wondering whether there was much precedent for using a coin flip (Ed: There may be problems with that link, try this Google cache) to resolve issues and found a whole host of examples.
Ken found the timeless, unbiased arbiter in a host of situations, including
- To determine who goes first when striking names from a list of arbitrators. [This use accounted for the vast majority of coin-toss references.]
- To select an accounting firm.
- To determine who has seniority among two or more employees of otherwise equal seniority.
He has a fascinating list of other examples, but what caught our eye was the reference to the parties who felt it necessary to define the process. In four paragraphs. Including who provides the coin (which must be issued by the US Mint), who “calls it,” and so on.
The details of the process and, more importantly, we’re naming names (and the lawyers invovled are bigshots now, so make sure you click through!) – after the jump.
Although Ken didn’t provide the information, we had to see the contract for ourselves. It comes from a Partnership Agreement filed by SFX Entertainment, Inc. with its S-1 in 1998. SFX is a special-events producer and promoter now owned by LiveNation, which, as it happens is the subject of Senate hearings today on the anticompetitive effects of its proposed merger with Ticketmaser.
The lawyers we can identify and hold responsible for this joke (whether it’s intentionally funny or not remains to be seen) are:
- Michael F. Rogers (Rice BS ’80, Texas JD ’83), a partner in Gardere – a Texas firm of nearly 300 lawyers that is the successor to his firm of the time, Sewell & Riggs, who represented Pace; and
- Adam Phillips (Emory BS ’85, Northwestern JD ’88), who is now a partner at Kirkland & Ellis, but was previously general counsel of Blockbuster;
- David Johnson (Yale undergrad, Penn JD, NYU LLM), who has been CEO of Warner Music Group since January 2006, having joined as general counsel from Sony Music Entertainment.
Their brilliant drafting is in Section 12.3 of the Partnership Agreement (huge file, so be patient).
The allocation of the Qualified Markets between the Partners shall be made in accordance with the following:
(1) At the closing of the Unwind Procedure, the Partners will determine which of the Partners will select the first Qualified Market by the toss of a U.S. minted coin. The toss of such coin shall be governed by the following provisions:
(i) A representative of Pace at the closing of the Unwind Procedure shall be responsible for selecting the coin to be tossed and then subsequently tossing the coin.
(ii) A representative of Sony/Block shall have the opportunity to inspect the coin selected by the representative of Pace and the parties shall agree as to which side of the coin will be designated the “head” of the coin and which side will be designated as the “tail” of the coin. After these initial agreements have been reached, the representative of Pace will toss the coin in the air. While the coin is in the air, the representative of Sony/Block will call either “heads” or “tails” in a loud, audible voice. The representative of Pace who tosses the coin into the air will allow it to fall to the floor.
(iii) If the side of the coin called by the representative of Sony/Block is facing up, then Sony/Block shall be deemed the “winner of the flip.” Otherwise, Pace shall be deemed to be the “winner of the flip.”(2) At the closing of the Unwind Procedure, the “winner of the flip” shall then proceed to select one of the Qualified Markets as a Market which will be allocated to it. The other Partner shall then proceed to select a Qualified Market which will be allocated to it for purposes of this Section 12.3(b). The Partners shall continue to alternate selecting the Qualified Markets in this manner until all Qualified Markets have been allocated between the Partners.
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"The representative of Pace who tosses the coin into the air will allow it to fall to the floor." What if it bounces off a table, etc.? Does interference void the toss?
We reached out to Rogers and Phillips for feedback but no response as of yet. We'll add that to the list of questions if they do get back.
"The representative of Pace who tosses the coin into the air will allow it to fall to the floor." What if it bounces off a table, etc.? Does interference void the toss?
We reached out to Rogers and Phillips for feedback but no response as of yet. We'll add that to the list of questions if they do get back.