MAC Digital Documentation Protocol
Project Chairs: Anshu Pasricha (formerly of Koley Jessen, P.C., L.L.O.) and Thomas B. Romer (Greenberg Traurig LLP)
Key Contributors: W. Ian Palm and Stefan Nasswetter (Gowling), Kathy Woeber Gardner and Karen Masterson Dienst (Montgomery Pacific), Tali Sealman (White & Case) and Brittany Sakowitz (Kirkland & Ellis LLP)
Subcommittee Chair and Contributor: Daniel Rosenberg (Charles Russell Speechlys LLP)
Peer Review: Glenn West (Weil, Gotshal & Manges)
Committee Chair: Wilson Chu (McDermott Will & Emery LLP)
As in-person closings, much less in-person signings, go the way of livery of siesen, the Technology Subcommittee of the ABA Mergers and Acquisitions Committee (“MAC”) has prepared a protocol which represents the best practices used by M&A lawyers in arranging for the proper execution and delivery of documents digitally. The “MAC Digital Documentation Protocol” is not an exclusive means to digitally execute and deliver documents, but rather a set of governing principles counsel can rely on to ensure documents are effectively reviewed, executed and delivered digitally.
The digitization of the M&A agreement process has significantly increased the speed with which documents can be changed and greatly enhanced the ability of parties to fine tune agreements up to the last minute—or even second—before signing. Although there have been few cases to date in which the enforceability of an agreement has been challenged due to the failure of the execution and delivery process that was not held in person, we believe adherence to the guiding principles of the MAC Digital Documentation Protocol will help parties to avoid potential disputes on issues such as “what was the final version of an applicable agreement” or “that a party never agreed to the terms of the purported final agreement.”
MAC Digital Documentation Protocol Guiding Principles
The MAC Digital Documentation Protocol is comprised of four guiding principles:
- complete documents should to be made available to signatories for review before or at least as they are signed;
- review of complete documents by the signatories should be confirmed;
- execution of documents by electronic means in accordance with applicable law is supported; and
- delivery of reviewed, confirmed and executed documents should be clearly established.
By executing and delivering a document in concert with these guiding principles, we believe sufficient evidence of due execution and delivery of that document has occurred amongst the signatories.
How to use the MAC Digital Documentation Protocol
In our view, simply including a reference to the MAC Digital Documentation Protocol in a transaction document is sufficient to document the parties’ intent to execute and deliver documents in accordance with its guiding principles.
Failure to adhere to the MAC Digital Documentation Protocol, whether or not it has been referenced, should not in-and-of-itself mean a document is not effectively executed and delivered. However, adherence to the MAC Digital Documentation Protocol, whether or not referenced, is intended to be a sufficient means through which documents can be executed and delivered by electronic means and thereby enforceable amongst the parties to such documents.
Including the MAC Digital Documentation Protocol (whether by reference or by including language that reflects its guiding principles) is intended to create a presumption that the parties have complied with the MAC Digital Documentation Protocol absent clear evidence to the contrary.
Sample language to be included in documents consistent with the MAC Digital Documentation Protocol is provided below. Including this language in an agreement is not required to evidence the parties’ intent to execute and delivery documents in accord with the MAC Digital Documentation Protocol. However, incorporating the MAC Digital Documentation Protocol by reference is considered to be sufficient evidence of the parties’ intent.
The MAC Digital Documentation Protocol guidelines are designed to apply to the execution and delivery of any agreement or document that is signed by one or more parties. With the exception of the sample signature page language which is designed to be applicable to any document, the sample language is designed to be incorporated into a purchase or merger agreement and applicable to the documents required to close a transaction.
Incorporation of the MAC Digital Documentation Protocol by Reference
Specific reference to the MAC Digital Documentation Protocol is the clearest way to document the parties’ intent to sign an agreement or close a transaction in accordance with the MAC Digital Documentation Protocol.
Sample Signature Page Language:
The undersigned hereby execute and deliver this Agreement in accordance with the MAC Digital Documentation Protocol as of the day above first written.
Sample Closing Language:
The Closing. On the terms and subject to the conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on the Closing Date by the electronic exchange of documents in accordance with the MAC Digital Documentation Protocol (the “Protocol”). No Party shall be required to appear at any specific physical location to effect the Closing. The Closing shall be deemed effective at 12:01 a.m. Eastern Time on the Closing Date (the “Effective Time”).