Transcription

Top 5 Things You Need to Know to Keep YourElectronic Documents Legal and SecureJuly 16, 2013

PresentersMiles KellySr. Director, IndustryMarketingDocuSignSteve BisbeeCEOeOriginalDOCUSIGN CONFIDENTIALMargo TankPartnerBuckleySandler LLP2

Top 5 Things You Need to Know1. Know the law2. Require the highest level of security in your documentecosystem3. Understand electronic chattel paper4. Understand eTransaction management5. Implementation best practicesDOCUSIGN CONFIDENTIAL3

About DocuSignNext Major Step in ProductivityVisionNextStepEmpower organizations to“keep business digital.”2010sMobileComputingFully Digital2000sSocialFinancial ServicesNetworkingwith DocuSign eSignature Transaction Management 90sCloudComputingExponential GrowthLeveraging Key ent / ServerComputingTransactionsGrowingDigitally anytime, any place, any device.2009DOCUSIGN CONFIDENTIAL20102011201220134

DocuSign Network Taking OffMore than 37M users growing to 60MMore than 63,000 users a dayMore than 65,000 customersUp to 5M pages a day189 countries

1. Know the Law: UETA and ESIGN OverviewDOCUSIGN CONFIDENTIAL6

2. Require a Broad Set of SecurityCertifications Global Security Gold Standard: ISO 27001 Defines An (ISMS) Information SecurityManagement System Requires Business Continuity Streamlined processfor EU privacy lawcompliance Security Framework Testing of Controls Measures Effectiveness Reliability of Service Data Privacy Collection of Data Use of Data Protection of Data Data Requirements General Computing Controls Focus Comprehensive ScopeDOCUSIGN CONFIDENTIAL

DocuSign SecurityDocuSign Security Assurance ProgramCustomer ticityNon-RepudiationDOCUSIGN CONFIDENTIAL

Security Assurance Program BenefitsConfidentialityCustomer documents and data are private, and access isworkflow controlledIntegrityDocuments, both in progress and completed, are tamperproofAvailabilityCritical service is accessible to customers 365x24x7AuthenticityThird parties (such as courts) can rely on validity ofsigners as well as documentsNon-RepudiationDocuments are technically, legally, and procedurally irrefutableDOCUSIGN CONFIDENTIAL9

Stephen F. BisbeePresident and CEO of eOriginalMargo TankPartner, BuckleySandler LLP

eOriginalOur VisionEnabling the post-execution management ofsecure, legally compliant and enforceableelectronic eSignatures and transactions consistingof high value assets or source records throughouttheir lifecycle.Over 1T oftransferable assetsunder managementwithin eOriginaleVaults.Certified Print TOLECOver 23 millionfinancialtransactionsmanaged withinthe eOriginaleVaults.Transfer OwnershipDestruction

3. Understanding Electronic Chattel Paper: Brief History In 2000, Congress enacted the Electronic Signatures in Global andNational Commerce Act (E-Sign Act). Its purpose was to facilitate the use of electronic records and signaturesand ensure the validity of electronic contracting. In addition to the federal E-Sign Act, all but 3 states have enacted theUniform Electronic Transactions Act (UETA) -- and the other 3 states haveenacted similar laws over which the eSign Act is potentially preemptive. The E-Sign Act did not do anything to change the basic rules of contractlaw, preserves underlying consumer protection laws and the consumer'sright to receive certain information in writing. Its purpose, as set forth in Section 101(a) of the E-Sign Act, was to make itclear that a signature, contract, or other record could not be consideredinvalid or unenforceable just because it was done in an electronic format. Under Section 101(d) and (e), however, an electronic contract could beinvalid or unenforceable if the electronic record was not capable of beingretained and accurately reproduced for later reference.

3. Understanding Electronic Chattel Paper: Contracts, Leases or other financial assets are oftensecuritized or pledged as collateral to lenders that providefinancing to different industries. If the contract is "chattel paper," then the lender mayperfect by either filing or by taking possession of thecontract (with possession taking priority). If the contract is created in an electronic format, then itmay be "electronic" chattel paper. If the contract is electronic chattel paper, then the lendermay perfect by taking "control" of the contract. Key to remember -- “control" is to electronic chattel paperwhat "possession" is to chattel paper (in terms of priority).

3. Understanding Electronic Chattel Paper: Legal Requirements So what does it mean to take "control" of electronic chattel paper? Under Article 9-105 of the UCC, a secured party has “control” of electronic chattelpaper if the record or records comprising the chattel paper are created, storedand assigned in such a manner that each of following six criteria are met:1. A single authoritative copy of the record exists that is unique, identifiable, and, exceptas provided below (in 4, 5 and 6), has not been altered;2. The authoritative copy identifies the secured party as the assignee of the record orrecords;3. The authoritative copy is communicated to and maintained by the secured party or itscustodian

3. Understanding Electronic Chattel Paper: Legal Requirements4. Copies or revisions that add or change the identified assignee of the authoritativecopy can only be made with the participation of the secured party;5. Each copy of the authoritative copy (or any copy of a copy) is readily identifiable as acopy that is not the authoritative copy; and6. Any revision of the authoritative copy is readily identifiable as an authorized orunauthorized revision.Note: The 2010 amendments to Article 9 -105, effective July 1, 2013, add ageneral rule of control satisfied “if a system employed for evidencing thetransfer of interests in the chattel paper reliably establishes the securedparty as the person to which the chattel paper was assigned.”The satisfaction of the six criteria above become a safe harbor for meetingthis general rule.

3. Understanding Electronic Chattel Paper: Legal Requirements That is what Article 9-105 tells us; what Article 9-105 does not tell us is how to goabout complying with each of these criteria No guidance that says “If you do A, B or C, then you satisfy a certainrequirement” Largely left to the marketplace to determine best practices Little case law, even additional revisions to Article 9-105 offer little help The "control" standard set forth in UCC 9-105 brings a level of order and certaintyto the process In the near-term, expect that funders will treat electronic leases/contracts aselectronic chattel paper (regardless of whether they actually are) to ensureaccepted compliance

3. Understanding Electronic Chattel Paper: Legal Requirements An added incentive for complying with the requirements of Article 9-105 – becauseit wants to create an additional comfort level for any subsequent buyer of thoseelectronic leases Why? Because any buyer of contracts (whether paper or electronic) wants tomake sure that they are getting possession/control of the contracts and are buyingenforceable contracts If a seller can adequately demonstrate that it has the necessary controlprocedures in place, it will give the prospective buyer a much greater comfort levelin contracts being purchased Acceptance of eContracts CustomersFunding SourcesCounsel/UnderwritersRating Agencies

4. eTransaction Management What is the role of Standard and Poor’s, Fitch’s and Moody’s in thesecondary market for eContracts? What types of electronic transactions have been rated? What differences, if any, are involved in rating a paperless transactionvs. paper? UCC 9-105 Control Opinions and System DescriptionsElectronic Collateral Control AgreementsCommunicating with transaction participantsCounsel, underwriters, servicers, trustees, issuers, custodians How counsel educates investors and underwriters about eContracting Start with the right tools and mindset for paperless transactions

4. eTransaction Management Facilitate Post Closing Environment Including: Transaction ManagementIntegrity checksAudited control of access (who, when?)Evidentiary package, Certified Print Content media format, Paper Out and Paper In Establish Control Transfer of Control (Ownership), securitization andcollateralization, release Restricting important actions- e.g., deleting or transferringeContracts. Provide Insight/Transparency/DocumentRetention Policies Deliver Audit/Compliance

4. eTransaction Management: Pledging as ultFunding SourcesCollateral ControlAgreementeDepositCustodians

4. eTransaction Management: SecuritizationCustomersOriginatorsFunding VWarehouseBank Lender3rd Party CustodianSelected poolFunding SourceeOriginal VaulteDepositSelected poolInternalOr3rd Party ee

5. Best Practices & Implementation Tips Overcoming Tradition in an Industry Based on Tradition Obtaining Internal Buy-inObtaining External Buy-in from Vendors, End Users andSyndication Sources Focus on Business Efficiencies Formulating the Appropriate Security Levels Agreements to Contract Electronically Important Role of Global Agreements Acting Globally, but Thinking Locally Getting the Various Business Units Up and Running Special Concerns of Different Collateral Financiers

Summary End to end digital transactions are becoming a standard formodern financial service institutions The world is evolving to electronic chattel paper Utilize industry resources as you modernize!DOCUSIGN CONFIDENTIAL23

Q&A

Thank You Upcoming Webinars Forrester eSignature Technology Insights – What to Look for in a Provider Tuesday, August 6th, 2013 at 10:00 AM PT Online Admissions Best Practices for Higher Education Wednesday, July 31st, 2013 at 10:00 AM PT For more information: Call: 1-877-720-2040 or [email protected] Website: www.docusign.com Website: www.eoriginal.com Thank you very much!25

Top 5 Things You Need to Know 1. Know the law 2. Require the highest level of security in your document ecosystem 3. Understand electronic chattel paper