Targacept (TRGT)

RECITALS :

WHEREAS the Company and Employee propose to amend the Agreement to conform the term thereof to the term of other employment agreements between the Company and members of its executive management team.

NOW, THEREFORE, in furtherance of the purposes described herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Employee hereby agree as follows:

1. Section 2 of the Agreement is hereby amended by deleting the first sentence thereof in its entirety and replacing it with the following:

“This Agreement shall commence as of the date first written above (the “Effective Date”) and continue until terminated as provided in Section 6 or Section 7 (such period, the “Term”).”;

2. Notices to Employee under the Agreement shall be sent to Jeffrey P. Brennan, 4641 Cherryhill Lane, Winston-Salem, North Carolina 27106;

3. As amended by this Amendment, the Agreement shall continue in full force and effect; and

4. This Amendment shall be construed and enforced according to the laws of the State of North Carolina, without regard to the principles of conflicts of laws.

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IN WITNESS WHEREOF, this Amendment has been executed in behalf of the Company and Employee on the day and year first above written.

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RECITALS :

RECITALS

WHEREAS, Targacept possesses proprietary technology and know-how related to the research, discovery, identification, synthesis and development of small molecule drug candidates targeting NNRs;

WHEREAS, GSK possesses expertise in the pharmaceutical research, development, manufacturing and commercialization of human pharmaceuticals, and GSK is interested in developing such small molecule drug candidates as drug products;

WHEREAS, GSK desires to engage in a collaborative effort with Targacept pursuant to which Targacept shall, subject to the terms and conditions set forth herein, carry out six (6) research and development Programs with respect to specified combinations of NNR Subtypes;

WHEREAS, GSK shall have exclusive options, exercisable at GSK’s sole discretion, to further develop and commercialize on an exclusive basis for any and all uses in the Field and in the Territory certain Licensed Products resulting from each of such Programs, all subject to the terms and conditions set forth herein;

WHEREAS, upon exercise of each of its options to such compounds by GSK, Targacept desires to grant and will grant to GSK, and GSK desires to obtain and will obtain, an exclusive license in the Territory and in the Field, subject to the terms and conditions set forth herein; and

EXECUTION VERSION

WHEREAS, contemporaneously with the execution of this Agreement, the Parties have executed a Stock Purchase Agreement pursuant to which GSK shall purchase shares of the common stock of Targacept (the “Stock Purchase Agreement”).

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows: