The novel coronavirus (COVID-19) is affecting all aspects of our clients' businesses, not to mention their personal lives. We are fielding numerous legal and practical questions in many different substantive areas and will continue to monitor developments and best practices as we help our clients navigate through these issues.

Advising Boards of Directors

• How should our Board exercise its fiduciary duties, including its duty of oversight, in the current environment?
• What topics should the Board discuss with management more frequently?
  • Company's operational response to COVID-19, including with respect to employees, supply chain, customer, and community
  • Effect of the current environment on the company's corporate strategy and risk
  • Internal and external communications including with employees, governmental entities, and stockholders
  • Effect of the current environment on the company's operating plan and ability to achieve guidance previously delivered to investors
  • Succession planning and incentive compensation matters
  • Access to capital, including the ability to draw on existing credit facilities
  • Ability to continue planned stock repurchases and dividends and the advisability of commencing them now
• How do we balance the Board's oversight duty with management's need to run the day-to-day business of the company?

SEC Reporting

• How can we provide updates to customers, suppliers, securities analysts, and investors about the effects of COVID-19 on our business in a Regulation FD compliant manner (and in a way that avoids an inadvertent re-affirmation or rejection of prior guidance)?
• Do we need to update the risk factors in our last periodic report before our next periodic report is due?
• Our retail locations/manufacturing facilities/fulfilment centers have been required to close—what disclosure obligations do we have?
• What Forms 8-K might we be required to file in the current environment?
• We're not sure how COVID-19 is going to affect our company—what does that mean for our SEC filings? Should we update our risk factors? What needs to be disclosed in MD&A? In our liquidity disclosure?
• What should we do if we need to file our Form 10-K or Form 10-Q late?
• How should we be thinking about our internal control over financial reporting and disclosure controls and procedures in light of the current environment?
• Do we still need to collect wet signature pages for SEC filings or can we use DocuSign?
• As we approach the end of our quarter, we're not sure we're going to meet our previously provided guidance—what issues should we think through as it relates to pre-announcing our quarter?
• Should we continue to give guidance for the next quarter and rest of year?
• We have an executive officer who has tested positive for COVID-19—what, if anything, should we disclose about this publicly? To employees?

Annual Meetings¹

• What if we're not able to allow people to attend our annual meeting—how do we allow stockholders to participate?
• Should we hold a virtual annual meeting this year?
• What are specific steps companies should take if they plan to transition from an in-person meeting to a virtual meeting, both prior to and after filing definitive proxy materials?
• What are the voting policies of ISS/Glass Lewis and other major investors in the company relating to virtual annual meetings?
• Must a shareholder proponent physically be present at the meeting in order to make the proposal in light of the current environment?
• How do we think through other logistical considerations?

Shareholder Activism

• With our stock price depressed, we're worried about activists—how should we prepare for shareholder activism in the current environment?
• Are there any specific industries that activists might target in the near term?
• How will the current environment affect our situation with the shareholder activists who are currently involved with our company?

Liquidity and Capital Raising Considerations

• The equity markets and debt markets—both equity linked and straight debt—appear for the most part to be closed. What alternatives are available for raising capital in the near term?
• We do not currently have a line of credit or a debt facility: should we attempt to put one in place to ensure access to funds in light of the uncertainty as to when the equity and debt capital markets will reopen? What types of terms are available in the current environment?
• We have an existing line of credit/debt facility: should we draw it down entirely to add cash to our balance sheet proactively or to avoid a freeze in the credit market that could lead to banks being unwilling to lend?

Stock Buybacks

• With our stock trading lower, can our company put a Rule 10b-18 program in place?
• Can we enter into a Rule 10b-5 plan in connection with a Rule 10b-18 program?
• Are there unique fiduciary duty considerations a board should consider in the current environment with respect to blackouts?
• To what extent are we required to comply with insider trading policy blackouts with respect to our repurchase activity?
• Should we consider an accelerated share repurchase program?
• How do we balance the advantages of repurchasing our shares with reduced liquidity at a time when capital raising activities may be limited?
• What public disclosure obligations do we have in connection with stock buybacks?

Officer and Director Stock Trades

• Should we adopt a special insider trading plan blackout? If so, when?
• Can individuals terminate or amend their Rule 10b-5 plans?
• Can individuals terminate their Rule 10b5-1 plans when we are otherwise in a trading blackout?
• Can officers or directors purchase stock in the market? What if they have sold stock in the previous six months?
• Can individuals enter into Rule 10b5-1 plans to purchase stock?

Financing Emerging Companies

• Are any venture capital deals getting done in the current environment? Are investors requiring unique terms to get deals closed?
• What considerations should be given in down round financings?

Sheltering In Place Orders²

• Is my business impacted by a shelter in place order? If so, must we shut down? What minimum business operations can we keep running?
• Under these shelter in place orders, are all pharmaceutical and biotechnology companies exempted as "Healthcare Operations"? Can we say that our medical device company falls within the exception?
• What expenses must the company reimburse while our employees work remotely?
• We've got employees who cannot work from home. Can I require them to use vacation or sick leave?
• We need certain employees to be at the printer next week. Can we require them to be there notwithstanding the order?

Employment Law Matters³

• What must I do to protect my workers from COVID-19?
• A worker has tested positive for COVID-19. What should we do?
• What questions may we ask employees about their current medical state/health? Are there privacy considerations we need to consider when asking these questions?
• Can we ask employees, independent contractors, and other visitors to submit to thermal screening?
• When should employers be concerned about compliance with HIPAA?
• How do we implement and monitor an employee telecommute policy?
• Do we have to allow all employees to telecommute?
• We have limited or canceled business-related travel. Can we also require employees to limit or cancel personal travel plans? Can we require them to tell us about personal travel?
• Some employees who can work from home have been affected by school closures and don't have access to childcare. Must we allow them to take time off or provide them with a flexible work schedule to accommodate childcare needs?
• We need to lay off employees in order to control costs. How much notice do we have to provide? What about severance?
• Can I delay an employee's start date, or withdraw a job offer, because of COVID-19 concerns (e.g., recession or travel limitations)?

Employee Compensation Matters

• What do we need to consider if we are going to decrease salaries for executives or across the board, either unilaterally or in exchange for something?
• We have equity awards that vest based on total shareholder return; can we and should we modify the terms of those awards to take into account this black swan event?
• Our annual operating plan and annual bonus plans were established before COVID-19 and we know that the goals are no longer realistic. Can we and should we modify our annual bonus plan to adjust for this? What are the considerations for doing that and when would be good timing?
• Our approved ranges for equity grants were established when our stock price was much higher? What are the considerations for changing the ranges now?
• Our employee stock options are now all underwater and our granted restricted stock units are less valuable than before the stock market drop—what can we do to incentivize our employees?
• Our new lower stock price may cause us to run out of shares in our employee stock purchase plan? What can we do about that?

Merger and Acquisition Issues

• Could recent developments and effects on a company constitute a "material adverse effect" (MAE) that would allow a counterparty to terminate or refuse to close a deal—and, for deals that have not yet signed, should COVID-19 be explicitly excluded from the definition of an MAE?
• Will the disruptive effects of COVID-19 delay transactions—on the front end, from a longer due diligence process, and after signing, to obtain regulatory clearance or satisfy closing conditions?
• If a pending transaction becomes delayed, what are both parties' obligations under the merger agreement for consummating the transaction and what is the need to comply with interim operating and ordinary course covenants?
• Financing considerations—will financing will be available? What kind of "flex" provisions will be imposed, ensuring closing conditions align with the closing conditions on the acquisition agreement?
• Will changing market conditions have an impact on fairness opinions from financial advisors and financial analyses used by boards and management? If so, how should we address this impact?
• In private company transactions, how should risk be allocated through indemnity provisions, or how should valuation gaps be addressed through earnouts?

Contractual Issues

• Is the force majeure clause in my contract triggered by COVID-19?
• If there is no force majeure clause in my contract, how could COVID-19 implicate our rights and obligations under the contract?

Courts and Regulatory Agencies

• Our company is in litigation—are the courts open? Are we still required to make filings on current deadlines? What effect will the current environment have on court hearings and trials?
• Is the SEC open for business? How will the current environment affect the review of our IPO prospectus (or the review of our Form 10-K comment letter)? Are we still required to file current reports, quarterly reports, annual reports, etc., on current deadlines?
• Is the California Secretary of State and Delaware Secretary of State open and accepting filings?

[1] For more information on this topic, please see our recent client alert.

[2] For more information on this topic, please see our recent client alert.

[3] For more information on this topic, please see our recent client alert and our recent webcast.