CG Oncology Inc

This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table" below. In 2023, our “named executive officers,” which consist of our principal executive officer during 2023 and our two next most highly compensated executive officers during 2023, and their positions were as follows:

•

Arthur Kuan, Chairman and Chief Executive Officer;

•

Ambaw Bellete, President and Chief Operating Officer; and

•

Vijay Kasturi, M.D., Chief Medical Officer.

Mr. Bellete joined the company as President and Chief Operating Officer in July 2023 and Dr. Kasturi joined as Chief Medical Officer in August 2023. Corleen Roche, our Chief Financial Officer and Secretary, commenced employment in January 2024 and is therefore not included as a named executive for 2023. However, we describe the employment arrangements with Ms. Roche in connection with her commencement of employment below.

Summary Compensation Table

The following table presents summary information regarding compensation earned with respect to the fiscal year ended December 31, 2023 by our named executive officers.

2023 Summary Compensation Table

(1)

The amounts reported in the “Option Awards” column represent the aggregate grant date fair value of the stock options awarded to our named executive officers during the applicable fiscal year, calculated in accordance with Financial Accounting Standards Board (FASB), Accounting Standards Codification (ASC) Topic 718. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in our financial statements in this Annual Report. The amounts reported in this column reflect the accounting cost for the stock options and do not reflect the actual economic value that will be realized by the individual upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such awards. See the subsection “—Narrative to Summary Compensation Table—Equity-Based Incentive Awards” in this Annual Report.

(2)

Amount reflects a performance bonus earned by Mr. Kuan in 2022, which was paid in early 2023.

(3)

Amounts reflect $9,919 and $2,217 in 401(k) matching contributions for Mr. Bellete and Dr. Kasturi, respectively, $760, $317 and $253 in company-paid premiums for long-term disability insurance for Mr. Kuan, Mr. Bellete and Dr. Kasturi, respectively, $666, $278 and $222 in company-paid premiums for life insurance for Mr. Kuan, Mr. Bellete and Dr. Kasturi, respectively, and $1,548 related to a company-paid holiday-related gift for each of Mr. Kuan, Mr. Bellete and Dr. Kasturi. Amount for Mr. Bellete also reflects $357,908 for his services as a consultant to the company during 2023 prior to his commencement of employment.

(4)

Amounts reflect performance bonuses earned by each executive in 2023, which were paid in March 2024.

(5)

Amounts reflect one-time sign-on bonuses paid to Mr. Bellete and Dr. Kasturi in connection with their commencement of employment with the company in July 2023 and August 2023, respectively.

(6)

The annual base salaries for Mr. Bellete and Dr. Kasturi were each prorated for the portion of the year employed in 2023.

Narrative to Summary Compensation Table

Annual Base Salary

The compensation of our named executive officers is generally determined and approved by our board of directors. The 2023 base salaries of each of our named executive officers are described under the subsection titled “—Employment Arrangements with our Named Executive Officers” below.

Annual Bonus

In addition to base salaries, our named executive officers are eligible to receive annual performance-based cash bonuses, which are designed to provide appropriate incentives to our executives to achieve annual corporate goals and to reward our executives for individual achievement towards these goals. The annual performance-based bonus each named executive officer is eligible to receive is based on the extent to which we achieve the corporate goals that our board of directors establishes each year. At the end of the year, our board of directors reviews our performance against each corporate goal and determines the extent to which we achieved each of our corporate goals.

For 2023, Mr. Kuan, Mr. Bellete, and Dr. Kasturi were each eligible to earn a target annual bonus equal to 40% of their respective annual base salaries. The annual bonus for Dr. Kasturi will be prorated for the portion of the year employed in 2023.

The corporate goals the board of directors established for 2023 related to regulatory, clinical and development goals, as well as operational objectives. Bonuses are determined and paid in the first quarter of the following year. For 2023, the bonuses for our named executive officers paid in the first quarter of 2024 are reflected in the Summary Compensation Table above.

In connection with our initial public offering, the target annual bonuses for Mr. Kuan and Mr. Bellete increased to 55% and 45% of annual base salary, retroactive to January 1, 2024.

Equity-Based Incentive Awards

Our equity-based incentive awards are designed to align our interests and those of our stockholders with those of our employees, including our executive officers. The board of directors or an authorized committee thereof is responsible for approving equity grants.

Prior to our initial public offering, we granted stock options pursuant to our 2015 Equity Incentive Plan (2015 Plan) and our 2022 Incentive Award Plan (2022 Plan). Following our initial public offering, we grant equity awards under the terms of our 2024 Incentive Award Plan (2024 Plan). All options are granted with an exercise price per share that is no less than the fair market value of our common stock on the date of grant of such award. Our stock option grants generally vest over a four-year period and may be subject to acceleration of vesting and exercisability under certain termination and change in control events. In addition, from time to time our board of directors has also granted performance-based stock options, the vesting of which is tied to key clinical, operational or regulatory milestones.

In June 2023, Mr. Bellete was granted an option to purchase 432,311 shares of our common stock pursuant to our 2022 Plan. The option has an exercise price of $3.72 per share, the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation, and vests over a period of four years, with 25% of the shares underlying the option vesting on the first-year anniversary of the vesting commencement date (July 9, 2023), and the remaining shares vesting in equal monthly installments over the subsequent three-year period thereafter, subject to Mr. Bellete’s continuous service with us as of each such vesting date. In addition, Mr. Bellete was also granted an option to purchase 121,833 shares of our common stock pursuant to our 2022 Plan. The option has an exercise price of $3.72 per share and, subject to Mr. Bellete’s continuous service with us as of each such vesting date, vests as follows: (1) 29,365 shares vested upon the successful completion of our initial public offering of the company’s common stock on a public exchange by December 31, 2026, (2) 29,365 shares vest upon the enrollment of the first patient in the IR trial by December 31, 2026, (3) 16,869 shares vest upon the company achieving commercial organization readiness by December 31, 2026, as determined by our board of directors, (4) 29,365 shares vest upon the approval by the FDA of a BLA with respect to cretostimogene, provided such BLA approval occurs on or before December 31, 2026, and (5) 16,869 shares vest upon the company’s achievement of the first successful commercial sale by December 31, 2026.

In August 2023, Dr. Kasturi was granted an option to purchase 443,628 shares of our common stock pursuant to our 2022 Plan. The option has an exercise price of $5.06 per share, the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation, and vests over a period of four years, with 25% of the shares underlying the option vesting on the first-year anniversary of the vesting commencement date (August 14, 2023), and the remaining shares vesting in equal monthly installments over the subsequent three-year period thereafter, subject to Dr. Kasturi’s continuous service with us as of each such vesting date. In addition, Dr. Kasturi was also granted an option to purchase 49,292 shares of our common stock pursuant to our 2022 Plan. The option has an exercise price of $5.06 per share and, subject to Dr. Kasturi’s continuous service with us as of each such vesting date, vests as follows: (1) 24,646 shares vest upon the filing with the FDA of the company’s BLA with respect to cretostimogene, provided that such BLA filing occurs on or before December 31, 2025, and (2) 24,646 shares vest upon the approval by the FDA of a BLA with respect to cretostimogene, provided that such BLA approval occurs on or before December 31, 2026.

In October 2023, Mr. Kuan was granted an option to purchase 524,383 shares of our common stock pursuant to our 2022 Plan. The option has an exercise price of $6.67 per share, which was the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation, and vests in equal monthly installments over a period of four years following the grant date, subject to Mr. Kuan’s continuous service with us as of each such vesting date.

In December 2023, our compensation committee approved the grant of stock options pursuant to the 2022 Plan to our named executive officers as follows: Mr. Kuan, 83,901 options; Mr. Bellete, 52,438 options; and Dr. Kasturi, 36,706 options. Such stock options have an exercise price of $12.59 per share, which was the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation, and vest in equal monthly installments over a period of four years following the grant date, and in each case subject to such executive’s continuous service with us through the applicable vesting date.

In January 2024, in connection with the commencement of employment of Corleen Roche, our Chief Financial Officer, our board of directors approved a grant of stock options to Ms. Roche to purchase 492,920 shares of our common stock pursuant to our 2024 Plan, which grant became effective on January 24, 2024. The option has an exercise price per share of $19.00, which was the initial price to the public of a share of common stock in our initial public offering. The option vests over a four-year period, with 25% of the shares vesting on the date that is 12 months after the vesting commencement date (January 16, 2024), and the remaining shares vesting in 36 equal monthly installments thereafter, subject to Ms. Roche’s continuous service with us as of each such vesting date.

Outstanding Equity Awards at 2023 Fiscal Year End

The following table presents information regarding the outstanding stock options held by each of our named executive officers as of December 31, 2023.

(1)

These awards are subject to potential acceleration of vesting in connection with a qualifying termination of employment following a change in control, as described under the subsection titled “—Employment Arrangements with our Named Executive Officers” below.

(2)

The options vest in equal monthly installments over a period of four years following the vesting commencement date (October 19, 2022 for Mr. Kuan’s options granted on October 19, 2022 and September 20, 2023 for Mr. Kuan’s options granted on October 9, 2023), subject to Mr. Kuan’s continuous service with us through each such vesting date.

(3)

The options vest in equal monthly installments over a period of four following the vesting commencement date (December 13, 2023), subject to the executive’s continuous service with us through each such vesting date.

(4)

The options vest over a period of four years, with 25% of the shares subject to the options vesting on the first anniversary of the vesting commencement date (July 9, 2023 for Mr. Bellete and August 14, 2023 for Dr. Kasturi), and the remaining shares vesting in equal monthly installments thereafter over the subsequent three-year period, subject, respectively, to Mr. Bellete and Dr. Kasturi’s continuous services with us through each such vesting date.

(5)

The option vests as follows: (i) 29,365 shares vested upon successful completion of our initial public offering of the company’s common stock on a public exchange by December 31, 2026, (ii) 29,365 shares vest upon the enrolment of the first patient in the IR trial by December 31, 2026, (iii) 16,868 shares vest upon the company achieving commercial organization readiness by December 31, 2026, as determined by our board of directors, (iv) 29,365 shares vest upon the approval by the FDA of a BLA with respect to cretostimogene, provided such BLA approval occurs on or before December 31, 2026, and (v) 16,868 shares vest upon the company’s achievement of the first successful commercial sale by December 31, 2026.

(6)

The option vests as follows: (i) 24,646 shares vest upon the filing with the FDA of a BLA with respect to cretostimogene, provided that such BLA filing occurs on or before December 31, 2025, and (ii) 24,646 shares vest upon the approval by the FDA of the company’s BLA with respect to cretostimogene, provided that such BLA approval occurs on or before December 31, 2026.

Employment Arrangements with Our Executive Officers

We have entered into employment agreements with certain of our executive officers, including our named executive officers, which govern the terms of their employment with us. Pursuant to their employment agreements, Mr. Kuan, Mr. Bellete, Dr. Kasturi, and Ms. Roche are each entitled to an annual base salary of $450,000, $430,000, $415,000, and $450,000, respectively. The base salaries for Mr. Kuan, Mr. Bellete and Dr. Kasturi were increased to $625,000, $495,000 and $465,000, respectively, effective January 1, 2024. In addition, in accordance with their employment agreements, Mr. Kuan, Mr. Bellete, Ms. Roche and Dr. Kasturi are eligible to earn an annual bonus at a target amount of40% of their base salaries actually paid for the year to which such annual bonus relates, subject to the achievement of performance objectives as determined by our board of directors. The target annual bonuses for Mr. Kuan and Mr. Bellete were increased to 55% and 45% of their annual base salaries, effective January 1, 2024.

Pursuant to their employment agreements, Mr. Bellete, Dr. Kasturi and Ms. Roche also received a sign on bonus in the amount of $125,000, $50,000 and $30,000, respectively, subject to repayment if the executive is terminated for cause or resigns without good reason prior to completing 12 months of service, for Mr. Bellete, and 24 months of service for Dr. Kasturi and Ms. Roche. Additionally, Mr. Bellete is also eligible to receive a relocation reimbursement of up to $90,000 should the company require Mr. Bellete to relocate to the Orange County, California area.

Regardless of the manner in which our executive officers’ employment terminates, they are entitled to receive certain accrued amounts previously earned during their employment, including unpaid salary, reimbursement of expenses owed, and accrued but unpaid paid time off and any continuation of benefits required by applicable law. In addition, our executive officers are entitled to certain severance benefits under their employment agreements, subject to their execution of a release of claims and compliance with post-termination obligations.

Arthur Kuan and Ambaw Bellete

Messrs. Kuan and Bellete’s employment agreements provide for severance benefits for certain terminations that arise during and outside of a change in control period (as defined below). Upon a termination without cause outside of the period commencing upon a change in control and continuing until 18 months after such change in control (such period, the change in control period), Messrs. Kuan and Bellete are entitled to (1) an amount in cash equal to their annual base salary, payable in a lump sum, (2) payment or reimbursement of the COBRA premiums for Messrs. Kuan and Bellete and their respective eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements, for a maximum period of up to 12 months from the date of their termination of employment, and (3) an amount in cash equal to their target annual bonus, prorated for the portion of the year that elapsed prior to the date of their termination of employment, payable in a lump sum. Additionally, upon a termination without cause occurring outside of the change in control period, Mr. Bellete is entitled to outplacement services for 12 months, up to a maximum cost of $20,000.

In addition, except with respect to Mr. Bellete’s option award of 432,311 shares granted on June 14, 2023 (the Bellete Initial Option), upon a termination without cause outside of the change in control period, Messrs. Kuan and Bellete are entitled to accelerated vesting of the unvested portion of company equity awards that would have vested during the 12 months following the date of their termination of employment had they continued in employment during such period; provided, however, that any performance-based equity awards shall remain subject to attainment of the relevant performance goals. With respect to the Bellete Initial Option, Mr. Bellete is entitled to the following: (1) if the termination without cause occurs prior to the first anniversary of Mr. Bellete’s start date, accelerated vesting of the portion of the Bellete Initial Option that would have vested during the 12 months following the date of such termination had he continued in employment during such period, (2) if such termination occurs after the first anniversary of Mr. Bellete’s start date but prior to the second anniversary of his start date, accelerated vesting of the portion of the Bellete Initial Option that would have vested during the 18 months following the date of such termination had he continued in employment during such period, and (3) if such termination occurs after the second anniversary of Mr. Bellete’s start date, accelerated vesting of any unvested portion of the Bellete Initial Option.

Upon a termination without cause or a resignation for good reason within the change in control period, Mr. Kuan is entitled to (1) an amount in cash equal to 1.5 times his annual base salary, payable in a lump sum, (2) payment or reimbursement of the COBRA premiums for Mr. Kuan and his eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements, for a maximum period of up to 18 months from the date of Mr. Kuan’s termination of employment, (3) an amount in cash equal to 1.5 times his target annual bonus, payable in a lump sum, and (4) full accelerated vesting of all unvested company equity awards; provided, however, that any performance-based equity awards shall remain subject to attainment of the relevant performance goals.

Upon a termination without cause or a resignation for good reason within the change in control period, Mr. Bellete is entitled to (1) an amount in cash equal to his annual base salary, payable in a lump sum, (2) payment or reimbursement of the COBRA premiums for Mr. Bellete and his eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements, for a maximum period of up to 12 months from the date of Mr. Bellete’s termination of employment, (3) an amount in cash equal to his target annual bonus, payable in a lump sum, (4) full accelerated vesting of all unvested company equity awards (provided, however, that any performance-based equity awards shall remain subject to attainment of the relevant performance goals), and (5) outplacement services for 18 months, up to a maximum cost of $20,000.

Vijay Kasturi, M.D. and Corleen Roche

Dr. Kasturi and Ms. Roche’s employment agreements provide for severance benefits for certain terminations that arise during and outside of a change in control period. Upon a termination without cause outside of the change in control period, Dr. Kasturi and Ms. Roche are entitled to (1) an amount in cash equal to 0.75 times their annual base salary, payable in a lump sum, (2) payment or reimbursement of the COBRA premiums for Dr. Kasturi and Ms. Roche and their respective eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements, for a maximum period of up to 9 months from the date of their termination of employment, (3) an amount in cash equal to their target annual bonus, prorated for the portion of the year that elapsed prior to the date of their termination of employment, payable in a lump sum, and (4) accelerated vesting of the unvested portion of company equity awards that would have vested during the 9 months following the date of Dr. Kasturi or Ms. Roche’s termination of employment they he continued in employment with the company during such period; provided, however, that any performance-based equity awards shall remain subject to attainment of the relevant performance goals.

Upon a termination without cause or a resignation for good reason within the change in control period, Dr. Kasturi and Ms. Roche would be entitled to (1) an amount in cash equal to their annual base salary, payable in a lump sum, (2) payment or reimbursement of the COBRA premiums for Dr. Kasturi and Ms. Roche and their respective eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements, for a maximum period of up to 12 months from the date of their termination of employment, (3) an amount in cash equal to their target annual bonus, payable in a lump sum, and (4) full accelerated vesting of all unvested company equity awards; provided, however, that any performance-based equity awards shall remain subject to attainment of the relevant performance goals.

Health and Welfare Benefits; Perquisites

All of our current named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, disability, and life insurance plans, in each case on the same basis as all of our other employees. We generally do not provide perquisites or personal benefits to our named executive officers, except in limited circumstances. Our board of directors may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests.

401(k) Plan

Our named executive officers are eligible to participate in a defined contribution retirement plan that provides eligible employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees may defer eligible compensation on a pre-tax or after-tax (Roth) basis, up to the statutorily prescribed annual limits on contributions under the Code. Contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan (except for Roth contributions) and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan. Under the 401(k) plan, we provide matching contributions equal to 100% of the first 4% of eligible compensation deferred by our employees, not to exceed 1% of an employee’s eligible compensation. Our board of directors may elect to adopt qualified or nonqualified retirement plans in the future, if it determines that doing so is in our best interests.

Clawback Policy

We have adopted a compensation recovery policy that is compliant with the Nasdaq Listing Rules, as required by the Dodd-Frank Act.

Non-Employee Director Compensation

We provide a $36,000 cash retainer, paid in quarterly installments, to certain non-employee directors for their service on our board of directors. We also have a policy of reimbursing all of our non-employee directors for their reasonable out-of-pocket expenses in connection with attending board of directors and committee meetings.

We also from time to time provide equity compensation to certain non-employee directors for their service on our board of directors. On June 14, 2023, Drs. Mulé and Post were granted options to purchase 7,865 shares and 15,731 shares, respectively, of our common stock. The options have an exercise price of $3.72 per share, the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation. The options vest over a period of three years in equal monthly installments beginning on the first monthly anniversary of the vesting commencement date (June 14, 2023), subject to Dr. Mulé and Dr. Post’s continuous service with us as of each such vesting date.

Additionally, on November 20, 2023, Susan Graf was appointed as a member of our board of directors and was granted an option to purchase 104,876 shares of our common stock, which has an exercise price of $7.82 per share, the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation. The option vests over a period of three years in equal monthly installments beginning on the first monthly anniversary of the vesting commencement date (November 14, 2023), subject to Ms. Graf’s continuous service with us as of each such vesting date.

On December 13, 2023, Dr. Mulé was granted an option to purchase 15,731 shares of our common stock, which has an exercise price of $12.59 per share, the fair market value on the date of grant as determined by our board of directors based on an independent third-party valuation. The option vests over a period of three years in equal monthly installments following the vesting commencement date (December 13, 2023), subject to Dr. Mulé’s continuous service with us as of each such vesting date.

The following table sets forth information regarding compensation earned with respect to the fiscal year ended December 31, 2023 by each individual who served as a non-employee director during such fiscal year.

(1)

As of December 31, 2023, Ms. Graf and Drs. Mulé and Post each held options to purchase 104,876 shares, 86,052 shares, and 150,808 shares, respectively, of our common stock.

(2)

Ms. Graf was appointed as a director in November 2023. Ms. Graf’s annual cash retainer paid in 2023 was prorated to reflect the portion of the year Ms. Graf served as a director in 2023.

(3)

Dr. Nakanishi ceased serving as a director in October 2023.

(4)

Ms. Pu ceased serving as a director in October 2023.

(5)

The amounts reported in the “Option Awards” column represent the aggregate grant date fair value of the stock options awarded to our non-employee directors during the applicable fiscal year, calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in our financial statements included elsewhere in this Annual Report. The amounts reported in this column reflect the accounting cost for the stock options and do not reflect the actual economic value that will be realized by the individual upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such awards.

Director Compensation Program

In connection with our initial public offering, our board of directors adopted and our stockholders approved our non-employee director compensation program. The non-employee director compensation program provides for annual retainer fees and equity awards for our non-employee directors. Each non-employee director receives an annual retainer of $40,000, with the non-employee director serving as chair of the board of directors or lead independent director receiving an additional annual retainer of $30,000. The non-employee directors serving as the chairs of the audit, compensation and nominating and corporate governance committees receive additional annual retainers of $15,000, $12,000 and $10,000, respectively. Non-employee directors serving as members of the audit, compensation and nominating and corporate governance committees receive additional annual retainers of $7,500, $6,000 and $5,000, respectively. Non-employee directors commencing service following our initial public offering will receive initial grants of options to purchase 44,500 shares of our common stock, vesting monthly over three years, upon election or appointment to the board of directors. Each year on the date of each annual meeting, each non-employee director will receive an annual grant of options to purchase 22,250 shares of our common stock, vesting in substantially equal monthly installments over the 12 months following the date of grant (or, in the event the next annual meeting of our stockholders occurs prior to the first anniversary of the date of grant, any remaining unvested portion of the annual award will vest on the date of such annual meeting of our stockholders). Awards to our non-employee directors will also vest in the event of a change in control or upon a non-employee director’s death or disability.

Compensation under our non-employee director compensation program will be subject to the annual limits on non-employee director compensation set forth in the 2024 Plan (which limits will not apply to any non-employee director that serves in any additional capacity with the company for which he or she receives compensation or any compensation paid to any non-employee director prior to 2025). As provided in the 2024 Plan, our board of directors or its authorized committee may make exceptions to this limit for individual non-employee directors as the board of directors or its authorized committee may determine in its discretion.

Limitations of Liability and Indemnification Matters

Our amended and restated certificate of incorporation and our amended and restated bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by the Delaware General Corporation Law, which prohibits our amended and restated certificate of incorporation from limiting the liability of our directors for the following:

•

any breach of the director’s duty of loyalty to us or our stockholders;

•

acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

•

unlawful payment of dividends or unlawful stock repurchases or redemptions; or

•

any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and our amended and restated bylaws also provide that if Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. This limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our amended and restated certificate of incorporation and our amended and restated bylaws also provide that we shall have the power to indemnify our employees and agents to the fullest extent permitted by law. Our amended and restated bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our amended and restated bylaws would permit indemnification. We have obtained directors’ and officers’ liability insurance.

We have entered into separate indemnification agreements with our directors and executive officers, in addition to indemnification provided for in our amended and restated certificate of incorporation and amended and restated bylaws. These agreements, among other things, provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by this person in any action or proceeding arising out of this person’s services as a director or executive officer or at our request. We believe that these provisions in our amended and restated certificate of incorporation and amended and restated bylaws and indemnification agreements are necessary to attract and retain qualified persons as directors and executive officers.

The above description of the indemnification provisions of our amended and restated certificate of incorporation, our amended and restated bylaws and our indemnification agreements is not complete and is qualified in its entirety by reference to these documents, each of which is filed as an exhibit to this Annual Report.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.