Exhibit 10.8

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of March 13, 2008 by and
between TARGACEPT, INC., a Delaware corporation (“Employer”), and Peter A. Zorn,
an individual resident of Massachusetts (“Employee”);

RECITALS:

WHEREAS, Employer considers the availability of Employee’s services to be
important to the management and conduct of Employer’s business and desires to
secure the continued availability of Employee’s services; and

WHEREAS, Employee is willing to make his services available to Employer on the
terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:

1. Employment. For the Term (as defined in Section 2), Employee shall be
employed as Vice President, Legal Affairs and General Counsel. Employee hereby
accepts and agrees to such employment, subject to the general supervision of the
Board of Directors of Employer (the “Board”), the Chief Executive Officer and
President. Employee shall perform such duties and shall have such powers,
authority and responsibilities as are customary for one holding the position of
Vice President, Legal Affairs and General Counsel of a business similar to
Employer and shall additionally render such other services and duties as may be
reasonably assigned to him from time to time by the Board, the Chief Executive
Officer or the President.

2. Term of Employment. 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”). Any termination of this
Agreement shall not affect the parties’ continuing obligations under Section 5,
which shall survive any such termination.

3. Compensation.

(a) For all services rendered by Employee to Employer under this Agreement,
Employer shall pay to Employee, during the Term, a base annual salary of not
less than $246,010, payable in arrears in accordance with the customary payroll
practices of Employer. During the Term, Employee’s annual base salary shall be
reviewed and subject to increase in accordance with Employer’s standard policies
and procedures. Without limiting the generality of the foregoing, Employee’s
base annual salary shall be increased annually to the extent necessary to stay
in line with the median base salary of employees of a similar level in
comparable companies as described in the then current Radford Biotechnology
Compensation Report.

(b) Employee shall be eligible to earn an annual bonus during the Term of up to
30% of Employee’s annual base salary, or such higher amount as determined by the
Board of Directors (or a compensation committee thereof). The eligibility for
the target

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bonus shall be based upon the achievement of performance objectives established
by the Board of Directors (or a compensation committee thereof) in consultation
with Employer’s chief executive officer and shall be payable within thirty
(30) days of the end of each fiscal year.

(c) All amounts payable hereunder shall be subject to such deductions and
withholdings as shall be required by law, if any.

(d) Employee shall also be entitled to holidays, sick leave and other time off
and to participate in those life, health or other insurance plans and other
employee pension and welfare benefit programs, plans, practices and benefits
generally made available from time to time to similarly situated executives of
Employer; provided that nothing herein shall obligate Employer to continue any
of such benefits for Employee if discontinued for all other similarly situated
executives of Employer. Without limiting the foregoing, Employee shall be
entitled to paid vacation during each fiscal year of the Term of twenty
(20) days.

4. Reimbursement of Expenses. Employer shall pay or reimburse Employee for all
reasonable travel and other expenses incurred by Employee in performing his
obligations under this Agreement and also, to the extent consistent with
Employer’s policy, for any dues and costs of appropriate professional
organization and continuing professional education, in each case subject to such
reasonable documentation and substantiation as Employer shall require.

5. Covenants of Employee.

(a) Covenant Not to Compete. Employee covenants that during the “Noncompetition
Period” (as defined in Section 5(g)) and within the “Noncompetition Area” (as
defined in Section 5(h)), he shall not, directly or indirectly, as principal,
agent, officer, director, shareholder, member, employee, consultant or trustee,
or through the agency of any person, firm, corporation, partnership, limited
liability company, association or other entity (collectively, “Entity”), engage
in the “Business” (as defined in Section 5(i)). Without limiting the generality
of the foregoing, Employee agrees that during the Noncompetition Period and
within the Noncompetition Area, he shall not be (i) the owner of the outstanding
capital stock or other equity interests of any Entity (other than Employer or
its affiliates) that, directly or indirectly, engages in the Business; or
(ii) an officer, director, partner, manager, member, consultant or employee of
any Entity that, directly or indirectly, engages in the Business; provided, that
this Section 5(a) shall not prevent Employee from (A) being an employee of any
area or division of any Entity to the extent that such area or division does
not, directly or indirectly, engage in the Business or (B) beneficially owning
less than 1% of the stock of a corporation traded on a national securities
exchange (including, without limitation, The Nasdaq Stock Market).

(b) Nondisclosure Covenant. The parties acknowledge that Employer and its
affiliates are enterprises whose success is attributable largely to the
ownership, use and development of certain valuable confidential and proprietary
information (the “Proprietary Information”), and that Employee’s employment with
Employer will involve access to and work with such information. Employee
acknowledges that his relationship with Employer is a confidential relationship,
and agrees that (i) he shall keep and maintain the Proprietary Information in
strictest confidence, and (ii) he shall not, either directly or indirectly, use
any

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Proprietary Information for his own benefit, or divulge, disclose or communicate
any Proprietary Information in any manner whatsoever to any person or Entity
other than to employees or agents of Employer having a need to know such
Proprietary Information to perform their responsibilities on behalf of Employer,
and to other persons or Entities in the normal course of Employer’s business.
This nondisclosure obligation shall apply to all Proprietary Information,
whether or not Employee participated in the development thereof. Upon
termination of his employment with Employer for any reason, Employee will return
to Employer all Proprietary Information in any medium and all other documents,
data, materials or property of Employer (including any copies thereof) in his
possession. For purposes of this Agreement, the term “Proprietary Information”
shall include any and all proprietary information related to the business of
Employer and its affiliates and stockholders, or to any of their products,
services, sales or operations, which is not generally known to the public,
specifically including (but without limitation): trade secrets, processes,
formulae, compounds and properties thereof, data, files, research results,
computer programs and related source codes and object codes, improvements,
inventions, techniques, marketing plans, strategies, forecasts, copyrightable
material, suppliers, methods and manner of operations; information relating to
the identity, needs and location of all past, present and prospective customers;
and information with respect to the internal affairs of Employer and its
affiliates. Such Proprietary Information may or may not contain legends or other
written notice that it is of a confidential or proprietary nature. The parties
stipulate that, as between them, the above-described matters are important and
confidential and gravely affect the successful conduct of the business of
Employer and its affiliates and that any breach of the terms of this
Section 5(b) shall be a material breach of this Agreement.

(c) Nonsolicitation Covenant. Employee covenants that during the Noncompetition
Period he shall not, directly or indirectly, on behalf of himself or any Entity,
call upon any of the customers or clients of Employer (or potential customers or
clients whose business Employee solicited on behalf of Employer or about whose
needs Employee gained information during his employment with Employer) for the
purpose of soliciting or providing any product or service similar to that
provided by Employer, nor will he, in any way, directly or indirectly, on behalf
of himself or any Entity solicit, divert or take away, or attempt to solicit,
divert, or take away any of the customers, clients, business or patrons of
Employer (or potential customers or clients whose business Employee solicited on
behalf of Employer or about whose needs Employee gained information during his
employment with Employer). The foregoing restrictions of this Section 5(c) shall
apply only to those customers, clients, or patrons whom Employee solicited,
called upon, or contacted on Employer’s behalf during the two (2) year period
immediately preceding the termination of Employee’s employment under this
Agreement. Employee further covenants that during the Noncompetition Period he
shall not, directly or indirectly, on behalf of himself or any Entity, solicit,
induce or encourage any person to leave the employ of Employer.

(d) Inventions. All inventions, designs, formulae, processes, discoveries,
drawings, improvements and developments made by Employee, either solely or in
collaboration with others, during his employment with Employer, whether or not
during working hours, and relating to any methods, apparatus, products,
compounds, services or deliverables which are made, furnished, sold, leased,
used or developed by Employer or its affiliates or which pertain to the Business
(the “Developments”) shall become and remain the sole property of Employer.
Employee shall disclose promptly in writing to Employer all such Developments.

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Employee acknowledges and agrees that all Developments shall be deemed “works
made for hire” within the meaning of the United States Copyright Act, as
amended. If, for any reason, such Developments are not deemed works made for
hire, Employee hereby assigns to Employer all of his right, title and interest
(including, but not limited to, copyright and all rights of inventorship) in and
to such Developments. At the request and expense of Employer, whether during or
after employment with Employer, Employee shall make, execute and deliver all
application papers, assignments or instruments, and perform or cause to be
performed such other lawful acts as Employer may deem necessary or desirable in
making or prosecuting applications, domestic or foreign, for patents (including
reissues, continuations and extensions thereof) and copyrights related to such
Developments or in vesting in Employer full legal title to such Developments.
Employee shall assist and cooperate with Employer or its representatives in any
controversy or legal proceeding relating to such Developments, or to any
patents, copyrights or trade secrets with respect thereto. If for any reason
Employee refuses or is unable to assist Employer in obtaining or enforcing its
rights with respect to such Developments, he hereby irrevocably designates and
appoints Employer and its duly authorized agents as his agents and
attorneys-in-fact to execute and file any documents and to do all other lawful
acts necessary to protect Employer’s rights in the Developments. Employee
expressly acknowledges that the special foregoing power of attorney is coupled
with an interest and is therefore irrevocable and shall survive (i) his death or
incompetency, (ii) the termination of his employment with Employer and (iii) the
termination of this Agreement.

(e) Independent Covenants. Each of the covenants on the part of Employee
contained in Sections 5(a), (b), (c) and (d) of this Agreement shall be
construed as an agreement independent of each other such covenant. The existence
of any claim or cause of action of Employee against Employer, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Employer of any such covenant.

(f) Reasonableness; Injunction. Employee acknowledges that his covenants
contained in Section 5 of this Agreement are reasonably necessary for the
protection of Employer and its affiliates and their businesses, and that such
covenants are reasonably limited with respect to the activities prohibited, the
duration thereof, the geographic area thereof, the scope thereof and the effect
thereof on Employee and the general public. Employee further acknowledges that
violation of the covenants would immeasurably and irreparably damage Employer
and its affiliates, and by reason thereof Employee agrees that for violation or
threatened violation of any of the provisions of this Agreement, Employer shall,
in addition to any other rights and remedies available to it, at law or
otherwise, be entitled to an injunction to be issued by any court of competent
jurisdiction enjoining and restraining Employee from committing any violation or
threatened violation of this Agreement. Employee consents to the issuance of
such injunction. Furthermore, Employer shall, in addition to any other rights or
remedies available to it, at law or otherwise, be entitled to reimbursement of
court costs, attorneys’ fees and other expenses incurred as a result of a breach
of this Agreement. Employee agrees to reimburse Employer for such expenses
promptly following a final determination that he has breached this Agreement.

(g) Noncompetition Period. “Noncompetition Period” shall mean the period
commencing on the Effective Date and continuing until nine (9) months following
termination of this Agreement.

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(h) Noncompetition Area. The “Noncompetition Area” shall consist of the entire
world.

(i) Business. For the purposes of this Agreement, the “Business” shall mean the
business of developing, manufacturing, marketing or selling therapeutic products
that use synthetic nicotinic cholinergic compounds.

6. Disability. Upon the “disability” of Employee, this Agreement may be
terminated by action of the Board upon 30 days prior written notice (the
“Disability Notice”), such termination to become effective only if such
disability continues. If, prior to the effective time of the Disability Notice,
Employee shall recover from such disability and return to the full-time active
discharge of his duties, then the Disability Notice shall be of no further force
and effect and Employee’s employment shall continue as if the same had been
uninterrupted. If Employee shall not so recover from his disability and return
to his duties, then his services shall terminate at the effective time of the
Disability Notice with the same force and effect as if that date had been the
end of the Term originally provided for hereunder. Such termination shall not
prejudice any benefits payable to Employee that are fully vested as of the date
of such termination. Prior to the effective time of the Disability Notice,
Employee shall continue to earn all compensation to which Employee would have
been entitled as if he had not been disabled, such compensation to be paid at
the time, in the amounts, and in the manner provided in Section 3(a). A
“disability” of Employee shall be deemed to exist at all times that Employee is
considered by the insurer which has issued any policy of disability insurance
owned by Employer or for which premiums are paid by Employer (the “Employer
Policy”) to be totally disabled under the terms of such policy. In the event
there is no Employer Policy, “disability” shall mean the inability, by reason of
physical or mental incapacity, impairment or infirmity, of Employee to perform,
upon request, his regular duties required herein for six (6) consecutive months,
and the determination of the existence or nonexistence of disability shall be
made by a medical doctor who is licensed to practice medicine in the State of
North Carolina mutually acceptable to the Board and to Employee (or, if Employee
is incapacitated, his spouse).

7. Termination.

(a) If Employee shall die during the Term, this Agreement and the employment
relationship hereunder will automatically terminate on the date of death, which
date shall be the last day of the Term; provided that such termination shall not
prejudice any benefits payable to Employee or Employee’s beneficiaries that are
fully vested as of the date of death.

(b) Employer may terminate Employee’s employment under this Agreement at any
time with or without Just Cause. Any termination without Just Cause shall be
effective only on thirty (30) days prior written notice to Employee. Any
termination with Just Cause shall be effective immediately or at such other time
set by the Board. “Just Cause” shall mean: (i) Employee’s willful and material
breach of this Agreement and his continued failure to cure such breach to the
reasonable satisfaction of the Board within thirty (30) days following written
notice of such breach to Employee from the Board; (ii) Employee’s conviction of,
or entry of a plea of guilty or nolo contendere to a felony or a misdemeanor
involving moral turpitude, (iii) Employee’s willful commission of an act of
fraud, breach of trust, or dishonesty including, without limitation,
embezzlement, that results in material damage or harm to the

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business, financial condition or assets of Employer; (iv) Employee’s intentional
damage or destruction of substantial property of Employer; (v) Employee’s
violation of Employer’s policies prohibiting employment discrimination or
workplace harassment; or (vi) Employee’s commission of any act (or omission)
contrary to the ethical or professional standards generally expected of Employer
or of Employee’s profession. Just Cause shall be determined by the Board in its
reasonable discretion and the particulars of any determination shall be provided
to Employee in writing. At any time within ninety (90) days of receipt by
Employee in writing of such determination, Employee may object to such
determination in writing and submit the determination to arbitration in
accordance with Section 9(j). If such determination is overturned in
arbitration, Employee will be treated as having been terminated without Just
Cause and shall be entitled to the benefits of Section 7(d).

(c) Employee may voluntarily terminate his employment with Employer on thirty
(30) days prior written notice to Employer.

(d) Upon any termination pursuant to this Section 7, Employee shall be entitled
to receive a lump sum equal to any base salary, target bonus and other
compensation earned and due but not yet paid through the effective date of
termination. In addition, if this Agreement and Employee’s employment hereunder
is terminated by (i) Employer (or its successor) other than for Just Cause or
(ii) Employee within one (1) year following the first occurrence of Good Reason,
Employee shall be entitled to the following:

(A) severance, payable monthly, equal to Employee’s then current base salary for
nine (9) months following such termination or, if shorter, until such time as
Employee secures other employment (the “Severance Period”); provided that, in
the event the aggregate amount payable in the Severance Period based on the
foregoing would exceed the greater of:

(1) two times the lesser of:

(x) the sum of Employee’s annualized compensation based upon his annual base
salary for his taxable year preceding his taxable year in which his employment
hereunder terminates (adjusted for any increase during that year that was
expected to continue indefinitely if Employee’s employment had not terminated);
or

(y) the maximum amount that may be taken into account under a qualified plan
pursuant to Section 401(a)(17) of the Internal Revenue Code of 1986, as amended
(the “Code”), for the year in which Employee’s employment hereunder is
terminated; or

(2) the maximum amount that would be exempt under Section 409A of the Code;

then, Employer (or its successor) shall pay the amount of such excess to
Employee in a lump sum on the date that is two and one-half months following the
end of Employer’s (or its successor’s) taxable year during which the termination
of Employee’s employment occurs;

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(B) six (6) months acceleration of unvested stock options to purchase capital
stock or restricted stock of the Employer held by Employee;

(C) the health care (including medical and dental) and life insurance benefits
coverage provided to Employee at his date of termination shall be continued at
the same level and in the same manner as if his employment had not terminated
(subject to the customary changes in such coverages if Employee reaches age 65
or similar events), for the Severance Period, followed by COBRA election rights.
Any additional coverages Employee had at termination, including dependent
coverage, will also be continued for such period on the same terms. Any costs
Employee was paying for such coverages at the time of termination shall continue
to be paid by Employee. If the terms of any benefit plan referred to in this
section do not permit continued participation by Employee, then Employer will
arrange for other coverage providing substantially similar benefits at the same
contribution level of Employee, and

(D) outplacement counseling services selected by Employer, up to a maximum of
$10,000 and provided that (1) such expense is incurred by Employee on or before
the second anniversary of December 31 of the year during which the termination
of Employee’s employment occurs and (2) such amount is paid by Employer on or
before the third anniversary of December 31 of the year during which the
termination of Employee’s employment occurs.

(e) If Employer (or its successor) terminates Employee’s employment for Just
Cause, Employee shall forfeit any unexercised vested stock options at the date
of termination. If Employee terminates his employment or if Employer (or its
successor) terminates Employee’s employment without Just Cause, Employee shall
have, with respect to each vested stock option, until the earlier of (i) three
(3) months or ninety (90) days (whichever is applicable to the plan pursuant to
which the stock option was granted) from the date of termination or (ii) the
last day of the applicable option period or option term, to exercise such vested
stock option.

(f) For purposes hereof, “Good Reason” shall mean the occurrence of any of the
following events without Employee’s express written consent:

(A) the breach by Employer (or any successor entity) of any material provision
of this Agreement;

(B) any purported termination of the employment of Employee by Employer (or any
successor entity) which is not effected in accordance with this Agreement; or

(C) any failure of the Employer (or any successor entity) to pay Employee any
amounts of base salary or bonus compensation that have become due and payable to
Employee within thirty (30) days after Employee has given Employer (or any
successor entity) notice of demand therefor;

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provided that “Good Reason” pursuant to any of clauses (A), (B) or (C) above
shall be conditional on (i) Employee having provided written notice to Employer
(or its successor) of the initial existence of any or all of the foregoing
events within ninety (90) days of the initial existence of such event and
(ii) such event continuing to exist thirty (30) days after the date of such
written notice from Employee.

(g) Except as otherwise provided in this Section 7, upon termination of this
Agreement for any reason, Employee shall not be entitled to any form of
severance benefits, including benefits otherwise payable under any of Employer’s
regular severance plans or policies, or any other payment whatsoever. Employee
agrees that (i) the payment of any severance or other benefits pursuant to this
Section 7 shall be contingent on the delivery by Employee to Employer of a
release and waiver of legal claims related to the employment relationship
between Employee and Employer in a form reasonably acceptable to Employer and
(ii) the payments and benefits provided hereunder, subject to the terms and
conditions hereof, shall be in full satisfaction of any rights which he might
otherwise have or claim by operation of law, by implied contract or otherwise,
except for rights which he may have under any employee benefit plan of Employer.

(h) To the extent applicable, Employer and Employee intend that this Agreement
comply with Section 409A of the Code. The parties hereby agree that this
Agreement shall at all times be construed in a manner to comply with
Section 409A and that should any provision be found not in compliance with
Section 409A, the parties are hereby contractually obligated to execute any and
all amendments to this Agreement deemed necessary and required by legal
counsel to achieve compliance with Section 409A. In the event amendments are
required to be made to this Agreement to comply with Section 409A, Employer
shall use its best efforts to provide Employee with substantially the same
payments he would have been entitled to pursuant to this Agreement had
Section 409A not applied, but in a manner that is compliant with Section 409A.
The manner in which the immediately preceding sentence shall be implemented
shall be the subject of good faith negotiations of the parties. The parties also
agree that in no event shall any payment required to be made pursuant to this
Agreement that is considered deferred compensation within the meaning of
Section 409A be accelerated in violation of Code Section 409A.

8. Best Efforts of Employee. Employee agrees that he will at all times
faithfully, industriously and to the best of his ability, experience and talents
perform all the duties that may be required of him pursuant to the express and
implicit terms hereof, to the reasonable satisfaction of Employer, commensurate
with his position, and to comply with all rules, regulations and policies
established or issued by Employer. Such duties shall be rendered at such place
as Employer designates and Employee acknowledges that he may be required to
travel as shall reasonably be required to promote the business of Employer. To
the extent reasonably required by the duties assigned to him, Employee shall
devote substantially all his professional time, attention, knowledge and skills
to the business and interest of Employer and Employer shall be entitled to all
the benefits, profits and other issue arising from or incident to all work,
service and advice of Employee. Employee pledges that during the Term, Employee
shall not, directly or indirectly, engage in any business which could detract
from Employee’s ability to apply his best efforts to the performance of his
duties hereunder. Employee further agrees to obtain prior written consent before
engaging in any other occupation, and he agrees to refrain from taking advantage
of any corporate opportunities of the Employer. During the Term, Employee shall
not be interested,

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directly or indirectly, in any manner as partner, manager, officer, director,
shareholder, member, adviser, consultant, employee or in any other capacity in
any other business; provided, that nothing herein contained shall be deemed to
prevent or limit the right of Employee to beneficially own less than 1% of the
stock of a corporation traded on a national securities exchange (including,
without limitation, The Nasdaq Stock Market) as long as such passive investment
does not interfere with or conflict with the performance of services to be
rendered hereunder.

9. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina without regard to conflicts of law
principles thereof.

(b) This Agreement constitutes the entire Agreement between Employee and
Employer with respect to the subject matter hereof, and supersedes in their
entirety any and all prior oral or written agreements, understandings or
arrangements between Employee and Employer or any of its affiliates relating to
the terms of Employee’s employment by Employer, and all such agreements,
understandings and arrangements are hereby terminated and are of no force and
effect. To the extent necessary, the terms of Section 7(d)(B) shall be deemed
incorporated into any option or similar agreement evidencing an award made to
Employee prior to or after the date hereof. Employee hereby expressly disclaims
any rights under any such agreements, understandings and arrangements. This
Agreement may not be amended or terminated except by an agreement in writing
signed by both parties.

(c) This Agreement may be executed in two counterparts, each of which shall be
deemed and original and all of which, taken together, shall constitute one and
the same instrument.

(d) Any notice or other communication required or permitted under this Agreement
shall be effective only if it is in writing and delivered in person or by
nationally recognized overnight courier service or deposited in the mails,
postage prepaid, return receipt requested, addressed as follows:

To Employer:

Targacept, Inc.

200 East First Street, Suite 300

Winston-Salem, North Carolina 27101

Attn: President

To Employee:

Peter A. Zorn

19 Liberty Road

Bedford, Massachusetts 01730

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Notices given in person or by overnight courier service shall be deemed given
when delivered in person or the day after delivery to the courier addressed to
the address required by this Section 9(d), and notices given by mail shall be
deemed given three days after deposit in the mails. Either party hereto may
designate by written notice to the other party in accordance herewith any other
address to which notices addressed to him shall be sent.

(e) The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. It is understood and agreed that
no failure or delay by Employer or Employee in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

(f) This Agreement may not be assigned by Employee without the written consent
of Employer. This Agreement shall be binding on any successors or assigns of
either party hereto.

(g) For purposes of this Agreement, employment of Employee by any affiliate of
Employer shall be deemed to be employment by Employer hereunder, and a transfer
of employment of Employee from one such affiliate to another shall not be deemed
to be a termination of employment of Employee by Employer or a cessation of the
Term, it being the intention of the parties hereto that employment of Employee
by any affiliate of Employer shall be treated as employment by Employer and that
the provisions of this Agreement shall continue to be fully applicable following
any such transfer.

(h) The respective rights and obligations of the parties hereunder shall survive
any termination of the Term or Employee’s employment with Employer to the extent
necessary to preserve such rights and obligations for their stated durations.

(i) In the event that it shall become necessary for either party to retain the
services of an attorney to enforce any terms under this Agreement, the
prevailing party, in addition to all other rights and remedies hereunder or as
provided by law, shall be entitled to reasonable attorneys’ fees and costs of
suit. Employer shall reimburse Employee for the reasonable fees and expenses of
counsel to Employee for the original negotiation of this Agreement.

(j) Except as otherwise provided in this Section 9(j), any controversy or claim
arising out of or relating to this Agreement shall be settled by arbitration in
accordance with Commercial Arbitration Rules of the American Arbitration
Association then in effect, and judgment upon the award rendered by the
arbitration panel, which shall consist of three members, may be entered in any
court having jurisdiction. Any arbitration shall be held in Winston-Salem, North
Carolina, unless otherwise agreed in writing by the parties. One arbitrator
shall be selected by Employee, one arbitrator shall be selected by Employer, and
the third arbitrator shall be selected by the two arbitrators selected by
Employee and Employer. Notwithstanding the foregoing, any claim or dispute with
respect

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to or arising out of any of the covenants in Section 5 or the last sentence of
Section 8, or any statutory or common law claim of patent infringement,
misappropriation of trade secrets, unfair competition, unfair or deceptive trade
practices, interference with contract, or interference with actual or
prospective economic or business relations, shall be excluded from this
Section 9(j).

[THE NEXT PAGE IS THE SIGNATURE PAGE]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.

 

TARGACEPT, INC. By:  

/s/ J. Donald deBethizy

  J. Donald deBethizy, Ph.D.   President and CEO EMPLOYEE:  

/s/ Peter A. Zorn

  Peter A. Zorn