Document:

EXCLUSIVE LICENSE AGREEMENT

 Exhibit 10.20 
 [********] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. 
 EXCLUSIVE LICENSE AGREEMENT 
 THIS AGREEMENT (the “Agreement”) by and between YALE UNIVERSITY, a corporation organized and existing under and by virtue of a charter granted by the general assembly of the Colony and State of Connecticut
and located in New Haven, Connecticut (“YALE”), and Targacept, Inc., a corporation organized and existing under the laws of the State of Delaware with principal offices located in Winston-Salem, North Carolina (“LICENSEE”), is
effective as of the date of final signature below (“EFFECTIVE DATE”). 
 ARTICLE 1 BACKGROUND 
 1.1. In the course of research conducted under YALE auspices, Drs. Tony George, Kristi Sacco, and Jennifer Vessicchio, in the Department of Psychiatry at
YALE (the “INVENTORS”), have produced an invention entitled “Mecamylamine and Other Nicotinic Antagonists for Augmentation of SSRI, MAOIs, TCA and Other Antidepressants (OCR 1625)” (the “INVENTION”). 
 1.2. The INVENTORS have assigned to YALE all of all INVENTORS’ right, title and interest in and to the INVENTION and any resulting patents.

 1.3. YALE wishes to have the INVENTION and any resulting patents commercialized to benefit the public good. 
 1.4. LICENSEE has agreed with YALE to induce YALE to enter into this Agreement that it shall, solely to the extent expressly provided in Article 7, act
diligently to develop and commercialize the LICENSED PRODUCTS for public use. 
 1.5. YALE is willing to grant a license to LICENSEE, subject
to the terms and conditions of this Agreement. 
 1.6. In consideration of these statements and mutual promises, YALE and LICENSEE agree to
the terms of this Agreement. 
 ARTICLE 2 DEFINITIONS 
 The following terms used in this Agreement shall be defined as set forth below: 
 2.1. “AFFILIATE”
shall mean, with respect to any entity (including, without limitation, either party hereto), any entity or person that directly or indirectly controls, is controlled by or is under common control with such entity. For purposes of this definition,
“control” means possession of the power to direct the management of an entity, whether through ownership of more than fifty percent (50%) of voting securities, by contract or otherwise. 
 2.2. “CONFIDENTIAL INFORMATION” shall mean all information disclosed by one party to the other during the negotiation of, or under, this
Agreement in any manner, whether orally, 

 
visually or in tangible form, that directly relates to LICENSED PATENTS, LICENSED PRODUCTS or LICENSED METHODS or the Agreement itself, unless such
information is subject to an exception described in Article 8.2; provided, however, that CONFIDENTIAL INFORMATION that is disclosed in tangible form shall be marked “Confidential” at the time of disclosure and CONFIDENTIAL INFORMATION that
is disclosed orally or visually shall be identified as confidential at the time of disclosure and subsequently reduced to writing (including, for this purpose, email), marked confidential and delivered to the other party within thirty (30) days
after such disclosure. Subject to Article 8.2, CONFIDENTIAL INFORMATION shall include, without limitation, materials, know-how and data, technical or non-technical, trade secrets, inventions, methods and processes, whether or not patentable.

 2.3. “EARNED ROYALTY” is defined in Article 6.1. 
 2.4. “EFFECTIVE DATE” is defined in the introductory paragraph of this Agreement. 
 2.5.
“FIELD” shall mean all therapeutic uses in humans. 
 2.6. “FIRST SALE” shall mean, with respect to a LICENSED PRODUCT or
LICENSED METHOD, the first sale, that results in NET SALES, to a third party of such LICENSED PRODUCT or LICENSED METHOD after all regulatory approvals necessary for the commercialization of such LICENSED PRODUCT or LICENSED METHOD in the country in
which such sale is made have been obtained. For purposes of clarity, for each LICENSED PRODUCT developed by LICENSEE, there can only be one FIRST SALE under this Agreement. 
 2.7. “INSOLVENT” shall mean that LICENSEE is insolvent as defined by the United States Bankruptcy Code, as amended from time to time

 2.8. “INVENTION” and “INVENTOR” are defined in Article 1.1. 
 2.9. “LICENSE” refers to the license granted under Article 3.1. 
 2.10. “LICENSED INFORMATION” shall mean all preclinical and clinical data controlled by Yale as of the EFFECTIVE DATE and directly relating to the INVENTION. 
 2.11. “LICENSED METHODS” shall mean any method, procedure, service or process the practice of which, in the absence of a license from YALE,
would infringe a VALID CLAIM of a LICENSED PATENT. 
 2.12. “LICENSED PATENTS” shall mean: (i) the patent applications listed
in Appendix A, together with all continuations, divisionals and continuations-in-part that include any claim that is directed to subject matter described in the patent applications listed on Appendix A (collectively, the
“Applications”); (ii) all patents issuing from or claiming priority to any of the Applications during the TERM, together with all reissues, re-examinations or extensions thereof or substitutes therefor (the “Patents”) and
(iii) the relevant international counterparts of each of the Applications and Patents. Appendix A is incorporated into this Agreement herein by reference. 
 2.13. “LICENSED PRODUCT” shall mean any product (including any apparatus or kit), or component part thereof, the manufacture, use or sale of which, in the absence of a license from YALE, would infringe a
VALID CLAIM of a LICENSED PATENT. 
  

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 2.14. “LICENSED TERRITORY” shall mean the entire world. 
 2.15. “NDA” shall mean a new drug application filed with the United States Food and Drug Administration to obtain marketing approval for a
LICENSED PRODUCT in the United States. 
 2.16. “NET SALES” shall mean: 
 (a) gross invoice price from the sale or other transfer or disposition of the LICENSED PRODUCTS or LICENSED METHODS, or from services performed using
LICENSED PRODUCTS or LICENSED METHODS, by LICENSEE, SUBLICENSEES or its AFFILIATES to third parties, except as set forth in Article 2.16(b), less the following deductions, provided they actually pertain to the disposition of the LICENSED PRODUCTS or
LICENSED METHODS: 
 (i) all discounts (including chargebacks), credits and allowances on account of returns; 
 (ii) all amounts repaid or credited by reason of rejection, returns or recalls of goods, rebates or bona fide price reductions determined
by LICENSEE or a SUBLICENSEE or an AFFILIATE in good faith; 
 (iii) all rebates and similar payments made with respect to
sales paid for by any governmental or regulatory authority such as, by way of illustration and without limitation, Federal or state Medicaid, Medicare or similar state program in the United States or equivalent governmental program in any other
country; 
 (iv) all invoiced amounts that are not collected by LICENSEE or a SUBLICENSEE or an AFFILIATE, including bad debts
(provided that deductions for bad debt in any calendar quarter shall not exceed [********]of aggregate gross sales for such quarter pursuant to clause (a) (i.e., before application of sub clauses (i-v))); 
 (v) all duties, taxes and other governmental levies, fees or charges levied on the sale, transportation or delivery of LICENSED PRODUCTS
or practice of the LICENSED METHODS (to the extent included separately on the applicable invoice), but not including income taxes; and 
 (vi) [********]of the amount arrived at after application of the provisions of items (i) through (v) above as an allowance for transportation costs, distribution expenses, special packaging and related
insurance charges; provided that, if such costs, expenses and charges are itemized separately on the applicable invoice, such deduction shall instead be equal to the aggregate amount therefor shown on such invoice. 
 No deductions shall be made for any other costs or expenses, including but not limited to commissions to independents, agents or those on LICENSEE’s,
SUBLICENSEE’s or an AFFILIATE’s payroll or for the cost of collection. 
 NET SALES shall be calculated using the selling party’s
(LICENSEE’s or a SUBLICENSEE’s or an AFFILIATE’s) internal audited systems used to report such sales, as adjusted for any of items (i) to (vi) (inclusive) above not taken into account in such systems. Deductions pursuant to
clause (iv) above shall be taken in the quarter in which such sales are no longer recorded as a receivable. 
  

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 For purposes of clarity, sales of a LICENSED PRODUCT or LICENSED METHOD in any country in the LICENSED TERRITORY in which
the sale of such LICENSED PRODUCT or LICENSED METHOD would not infringe a VALID CLAIM of a LICENSED PATENT shall not be taken into account in determining NET SALES. 
 (b) “NET SALES” shall not include the gross invoice price for LICENSED PRODUCTS or LICENSED METHODS sold to, or services performed using LICENSED PRODUCTS or LICENSED METHODS for, any SUBLICENSEE or
AFFILIATE unless such SUBLICENSEE or AFFILIATE is the end user of any LICENSED PRODUCT or LICENSED METHOD, in which case such consideration shall be included in NET SALES at the average selling price charged to a third party during the same quarter.
Also, none of (i) the use of any LICENSED PRODUCT in a clinical trial, preclinical study or other research or development activity, (ii) the disposal or transfer of a LICENSED PRODUCT for purposes of a sampling program or for charitable,
manufacturing, testing or qualification, regulatory or governmental purposes, or (iii) the sale, disposal or transfer of a LICENSED PRODUCT on a treatment investigational new drug application, named patient or compassionate use or other similar
basis, shall give rise to any NET SALES. 
 2.17. “QUALIFIED SUBLICENSEE” shall mean any entity that is, or is an Affiliate of,
either (i) one of the [********] largest biotechnology or pharmaceutical companies in the world, as measured by annual sales, or (ii) any other entity that has assets of at least $[********]. 
 2.18. “REASONABLE COMMERCIAL EFFORTS” shall mean documented efforts that are consistent with those typically utilized by companies of similar
size and with similar resources and expertise in the development of products and services with market potential similar to LICENSED PRODUCTS and LICENSED METHODS, taking into account all relevant scientific, clinical, regulatory, financial,
competitive and commercial factors. 
 2.19. “ROYALTY TERM” is defined in Article 3.4. 
 2.20. “SUBLICENSE INCOME” shall mean all amounts (excluding Excluded Amounts, as described below) received by LICENSEE from a SUBLICENSEE,
but only if the sublicense to LICENSED PATENTS or LICENSED METHODS is not combined, whether or not in the same agreement, with (i) a license to issued patents or pending patent applications owned or licensed by LICENSEE or its
AFFILIATES (other than LICENSED PATENTS) that claim or cover compounds or their use in the FIELD or (ii) an agreement by LICENSEE or its AFFILIATES to collaborate with such SUBLICENSEE to discover, research, develop or commercialize
compounds or products for use in the FIELD. 
 “Excluded Amounts” means all payments made to LICENSEE or its AFFILIATES: (i) as royalties on
the sale of products; (ii) upon the achievement of, or based on, clinical, regulatory, commercialization or sales milestones; (iii) under a credit facility; (iv) in consideration of (A) any issuance of equity or debt securities
by LICENSEE or its AFFILIATES, (B) any supply of compounds or related materials by or on behalf of LICENSEE or its AFFILIATES, or (C) any research, development or other activities that LICENSEE or its AFFILIATES may perform on behalf of a
SUBLICENSEE, provided that such payments do not exceed the fair market value of such securities, supply or activities, as applicable; (v) that LICENSEE or its AFFILIATES may be required to repay (e.g., a loan); (vi) as reimbursement
of actual patent prosecution and maintenance costs and expenses; or (vii) in connection with awards or judgments in patent or other intellectual property right enforcement. 
  

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 2.21. “SUBLICENSEE” shall mean any third party sublicensed by LICENSEE to make, have made, use,
sell, have sold, import or export any LICENSED PRODUCT or to practice any LICENSED METHOD; provided that a contract research organization or contract manufacturer contracted by LICENSEE or a SUBLICENSEE or an AFFILIATE to perform services on a
fee-for-service basis related to the manufacturing and/or research or development of LICENSED PRODUCTS only, and not sales of LICENSED PRODUCTS, shall not be a SUBLICENSEE. 
 2.22. “TARGACEPT PATENT” shall mean all issued and unexpired patents or pending patent applications owned or licensed by LICENSEE or any of its
AFFILIATES during the TERM that contain a VALID CLAIM that would be infringed by the manufacture, use, sale or other exploitation of a LICENSED PRODUCT by a third party in the absence of a license from LICENSEE (or such AFFILIATE); provided that
(i) LICENSED PATENTS are not TARGACEPT PATENTS, (ii) no pending patent application that solely covers a method of manufacture or delivery shall be a TARGACEPT PATENT and (iii) no issued patent that solely covers a method of
manufacture or delivery shall be a TARGACEPT PATENT unless, with respect to a particular LICENSED PRODUCT, no third party could reasonably be expected to manufacture and market such LICENSED PRODUCT to treat the indication for which LICENSEE or any
of its AFFILIATES or SUBLICENSEES is commercializing such LICENSED PRODUCT without infringing such patent in the absence of a license from LICENSEE or any of its AFFILIATES. 
 2.23. “TERM” is defined in Article 3.4. 
 2.24. “VALID CLAIM” shall mean a claim of a pending or issued and unexpired LICENSED PATENT so long as such LICENSED PATENT (i) if a pending patent application, is being prosecuted in good faith and shall not have been
irrevocably abandoned or finally disallowed without the possibility of appeal or re-filing or (ii) if an issued and unexpired patent, shall not have been finally canceled, withdrawn, abandoned or rejected by any administrative agency or other
authority of competent jurisdiction, shall not have been permanently revoked, declared to be invalid, unpatentable or unenforceable in an unappealable (or unappealed within the time allowed for appeal) decision of a court or other authority or
competent jurisdiction through no challenge by LICENSEE. 
 ARTICLE 3 LICENSE GRANT AND TERM 
 3.1. Subject to the terms and conditions of this Agreement, YALE hereby grants to LICENSEE an exclusive license, with the right to sublicense, under the
LICENSED PATENTS and a non-exclusive license, with the right to sublicense, under the LICENSED INFORMATION, in each case to make, have made, use, sell, have sold, import, export and otherwise exploit LICENSED PRODUCTS, and to practice any LICENSED
METHOD, within the FIELD in the LICENSED TERRITORY (the “LICENSE”). YALE (i) represents to LICENSEE that The Donaghue Foundation (“TDF”) provided funding (but not any inventive contribution) to YALE in support of the
research activities giving rise to the INVENTION and (ii) covenants to LICENSEE that TDF has irrevocably waived and disclaimed all of TDF’s right, title and interest in and to the INVENTION and the LICENSED PATENTS in a valid, binding and
enforceable written agreement between TDF and YALE so as to enable LICENSEE to enjoy the exclusivity intended by the LICENSE with no obligation, financial or otherwise, of LICENSEE to TDF. 
  

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 3.2. To the extent that any invention included within the LICENSED PATENTS has been funded in whole or in
part by the United States government, the United States government retains certain rights in such invention as set forth in 35 U.S.C. §200-212 and all regulations promulgated thereunder, as amended, and any successor statutes and regulations
(the “Federal Patent Policy”). As a condition of the LICENSE granted hereby, LICENSEE acknowledges and shall comply with all aspects of the Federal Patent Policy applicable to the LICENSED PATENTS, including, solely if and to the extent
applicable, the obligation that LICENSED PRODUCTS used or sold in the United States be manufactured substantially in the United States. Nothing contained in this Agreement obligates or shall obligate YALE to take any action that would conflict in
any respect with its past, current or future obligations to the United States Government under the Federal Patent Policy with respect to the LICENSED PATENTS. 
 3.3. The LICENSE is expressly made subject to YALE’s reservation of the right, on behalf of itself and all other non-profit academic research institutions, to make, use and practice the LICENSED PATENTS and
LICENSED METHODS for research, clinical, teaching or other non-commercial purposes, and not for purposes, whether itself or through any licensee or other third party, of commercial development, use, manufacture or distribution. Nothing in this
Agreement shall be construed to grant by implication, estoppel or otherwise any licenses under patents of YALE other than the LICENSED PATENTS. 
 3.4. Unless terminated earlier as provided in Article 13, the royalty term of this Agreement (the “ROYALTY TERM”) shall commence on the EFFECTIVE DATE and shall automatically expire, for purposes of any country, on the date on
which the last of the LICENSED PATENTS in such country that include at least one VALID CLAIM expires. The term of this Agreement (the “TERM”) shall expire upon expiration of the last-to-expire ROYALTY TERM or, if earlier, upon the
effective date of termination in accordance with Article 13. 
 3.5. Except as expressly provided in this Agreement, under no circumstances
will LICENSEE, as a result of this Agreement, obtain any interest in or any other right to any technology, know-how, patents, patent applications, materials or other intellectual or proprietary property of YALE. 
 ARTICLE 4 SUBLICENSES 
 4.1.
LICENSEE may sublicense the rights granted to it under this Agreement without the consent of YALE. 
 4.2. Any sublicense granted by LICENSEE
shall include provisions designed to protect CONFIDENTIAL INFORMATION and substantially the same provisions on Patent Notices and Use of YALE’s Name as are agreed to in this Agreement and such other provisions as are needed to enable LICENSEE
to comply with this Agreement. LICENSEE will provide YALE with a copy of each sublicense agreement (and all amendments thereof) promptly after execution. LICENSEE shall remain responsible for the performance of all SUBLICENSEES under any such
sublicense as if such performance were carried out by LICENSEE itself, including, without limitation, the payment of any royalties or other payments provided for hereunder, regardless of whether the terms of any sublicense provide for such amounts
to be paid by the SUBLICENSEE directly to YALE. 
 4.3. LICENSEE shall pay royalties to YALE on NET SALES of SUBLICENSEES based on the same
royalty rate as apply to NET SALES by LICENSEE and its AFFILIATES, regardless of the royalty rates payable by SUBLICENSEES to LICENSEE under a sublicense agreement. In addition, LICENSEE shall pay to YALE [********] ([********]) of any SUBLICENSE
INCOME. 
  

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 4.4. LICENSEE agrees that it has sole responsibility to promptly notify YALE of termination of any
sublicense. 
 ARTICLE 5 LICENSE INITIATION FEE; MILESTONE; ROYALTIES 
 5.1. LICENSEE shall pay to YALE, (i) a non-refundable license initiation fee of [********] ($[********]) and (ii) the amount of [********]
($[********]) to reimburse YALE for all expenses incurred as of the EFFECTIVE DATE in the filing, prosecution, and maintenance of the LICENSED PATENTS. 
 5.2. LICENSEE shall make the following non-refundable milestone payments to YALE within thirty (30) days after the applicable milestone event(s) set forth below: 
 (a) [********] ($[********]) (i) upon the issuance of the first U.S. patent included in the
LICENSED PATENTS that would be infringed, in the absence of a license from YALE, by the commercial sale by LICENSEE of mecamylamine hydrochloride together with citalopram hydrobromide or (ii) if the first to issue U.S. patent included in the
LICENSED PATENTS would not be infringed, in the absence of a license from YALE, by the commercial sale by LICENSEE of mecamylamine hydrochloride together with citalopram hydrobromide, upon the sixtieth (60th) day after the date on which LICENSEE pays the issuance fee (following receipt of the notice of allowance) for such U.S. patent. 
 (b) [********] ($[********]) when LICENSEE or any of its SUBLICENSEES or AFFILIATES files an NDA for each LICENSED PRODUCT developed by LICENSEE.

 (c) [********] ($[********]) upon the FIRST SALE of each LICENSED PRODUCT developed by LICENSEE. 
 For purposes of clarity, the racemate and enantiomers of any compound shall be considered to be the same compound such that, to the extent that any of the racemate or
either of the enantiomers is contained in or comprises a LICENSED PRODUCT, such racemate and enantiomers shall be considered together to be the same LICENSED PRODUCT and therefore subject to a single milestone stream hereunder. 
 For purposes of further clarity, with respect to each of the foregoing milestone payments, such milestone payment shall not be due or payable by LICENSEE if this
Agreement is terminated pursuant to Article 13 and such termination becomes effective prior to the date on which the event (or, in the case of Article 5.2(a)(ii), the date) giving rise to such milestone payment occurs. 
 5.3. Neither the license initiation fee set forth in Article 5.1 nor the milestone payments set forth in Article 5.2 shall be credited against EARNED
ROYALTIES payable under Article 6. 
 ARTICLE 6 EARNED ROYALTIES; MINIMUM ROYALTY PAYMENTS 
 6.1. During the TERM, as partial consideration for the LICENSE, LICENSEE shall pay to YALE an earned royalty on cumulative NET SALES of LICENSED PRODUCTS
or LICENSED METHODS by LICENSEE or its SUBLICENSEES or AFFILIATES in each calendar (January 1 through December 31) year (“EARNED ROYALTIES”) according to the following schedule: 
  

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	 Annual NET SALES
	  	 Prior to Expiration of the Last
 TARGACEPT PATENT
	  	 After Expiration of the last
 TARGACEPT PATENT

	 $[********]
	  	[********]%	  	[********]%
			
	 >$[********]
	  	[********]%	  	[********]%
			
	 >$[********]
	  	[********]%	  	[********]%
			
	 > $[********]
	  	[********]%	  	[********]%

 By way of example, if cumulative NET SALES of LICENSED PRODUCTS in a particular calendar year are $[********]and
there is at least one unexpired TARGACEPT PATENT, EARNED ROYALTIES payable hereunder would be determined as follows: 
 [********] 

For purposes of clarity, LICENSEE’s obligation to pay EARNED ROYALTIES shall be imposed only once with respect to the same unit of a LICENSED PRODUCT or LICENSED
METHOD regardless of how many LICENSED PATENTS or VALID CLAIMS pertain thereto. 
 6.2. Notwithstanding Article 6.1, if (i) the practice
of any portion of the LICENSE (including, without limitation, the sale of LICENSED PRODUCTS or LICENSED METHODS), or the manufacture, use, sale or other exploitation of a LICENSED PRODUCT or LICENSED METHOD, by LICENSEE or any of its AFFILIATES or
SUBLICENSEES in a particular country would or would reasonably be expected to infringe upon an issued patent of a third party in the absence of a license (whether or not any other LICENSED PRODUCT or LICENSED METHOD could be manufactured, used, sold
or otherwise exploited without a license to such third party patent) and (ii) LICENSEE or any of its AFFILIATES or SUBLICENSEES obtains a license to such third party patent, the amount of EARNED ROYALTIES payable by LICENSEE shall be reduced by
an amount equal to the lesser of (A) [********] ([********]) of the amounts paid to secure such third party license or (B) the amount that results in aggregate EARNED ROYALTIES of at least [********]of NET SALES for such calendar quarter.

 6.3. LICENSEE shall pay all EARNED ROYALTIES accruing to YALE within ninety (90) days from the end of each calendar quarter (i.e.,
March 31, June 30, September 30 and December 31), beginning in the first calendar quarter in which NET SALES occur. 
 6.4. During the TERM, LICENSEE agrees to pay YALE annual Minimum Royalty Payments (“MRP”), commencing after the first anniversary of the date of the FIRST SALE of the first LICENSED PRODUCT or LICENSED METHOD. The MRP shall be in
the following amounts: 
  

			
	 1st anniversary of FIRST SALE
	  	$[********]
		
	 2nd anniversary of FIRST SALE
	  	$[********]
		
	 3rd anniversary of FIRST SALE
 and every anniversary of FIRST SALE thereafter
	  	$[********]

  

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 Each MRP shall be payable by LICENSEE on the anniversary of the EFFECTIVE DATE that first occurs after the applicable
anniversary of FIRST SALE. 
 6.5. LICENSEE shall continue to pay the MRP until the end of the TERM. YALE shall fully credit each MRP made
against any EARNED ROYALTIES payable by LICENSEE in the same year and thereafter until exhausted. 
 6.6. All EARNED ROYALTIES and other
payments due under this Agreement shall be paid to YALE in United States Dollars. In the event that conversion from foreign currency is required in calculating a payment under this Agreement, the exchange rate used shall be the Interbank rate quoted
by Citibank at the end of the last business day of the quarter in which the royalty was earned. If overdue, the royalties and any other payments due under this Agreement shall bear interest until payment at a per annum rate two percent
(2%) above the prime rate in effect at Citibank on the due date and YALE shall be entitled to recover reasonable attorneys’ fees and costs related to the enforcement of this Agreement to collect such payment. The payment of such interest
shall not foreclose YALE from exercising any other right it may have as a consequence of the failure of LICENSEE to make any payment when due. 
 ARTICLE 7 DUE DILIGENCE 
 7.1. LICENSEE shall use all REASONABLE COMMERCIAL EFFORTS to develop at least one LICENSED
PRODUCT or LICENSED METHOD for commercialization in the United States. Failure to do so shall, if determined to be a material breach and subject to the applicable cure period, be subject to termination under Article 13. 
 7.2. Within sixty (60) days after each anniversary of the EFFECTIVE DATE, LICENSEE shall provide a written report to YALE summarizing
LICENSEE’s progress in its development or commercialization of at least one LICENSED PRODUCT or LICENSED METHOD; provided that such reporting obligation shall expire upon the FIRST SALE of at least one LICENSED PRODUCT. 
 7.3. LICENSEE shall immediately notify YALE if at any time LICENSEE finally abandons both its research, development or marketing of LICENSED PRODUCTS and
LICENSED METHODS and its intent to research, develop and market such products or methods. 
 7.4. Without prejudice to YALE’s rights
under Article 13, LICENSEE agrees that YALE shall be entitled to terminate this Agreement if LICENSEE provides YALE with the notice set forth in Article 7.3. 
 ARTICLE 8 CONFIDENTIALITY AND PUBLICITY 
 8.1. Subject to the parties’ rights and
obligations pursuant to this Agreement, YALE and LICENSEE agree that during the TERM and for five (5) years thereafter, each of them: 
 (a) will keep confidential and will cause their AFFILIATES and, in the case of LICENSEE, its SUBLICENSEES, to keep confidential, CONFIDENTIAL INFORMATION disclosed to it by the other party, by taking whatever action the party receiving the
CONFIDENTIAL INFORMATION would take to preserve the confidentiality of its own CONFIDENTIAL INFORMATION, which in no event shall be less than reasonable care; and 
  

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 (b) will only disclose that part of the other party’s CONFIDENTIAL INFORMATION to its officers,
employees or agents that is necessary for those officers, employees or agents to carry out its responsibilities under this Agreement; and 
 (c) will not use the other party’s CONFIDENTIAL INFORMATION other than as expressly set forth in this Agreement (including, in the case of LICENSEE, in the development or commercialization of LICENSED PRODUCTS OR LICENSED METHODS) or
disclose the other party’s CONFIDENTIAL INFORMATION to any third parties under any circumstance without advance written permission from the other party; provided that LICENSEE shall be permitted to disclose YALE’s CONFIDENTIAL INFORMATION
(including, solely for this purpose, the terms of this Agreement) (i) to its legal and financial advisors, (ii) to its auditor, (iii) in connection with any actual or potential debt or equity financing, (iv) to any actual or
potential SUBLICENSEE or (v) in connection with any acquisition or business combination; provided that, in case of clauses (iv) or (v), any such disclosure is made subject to an obligation of confidentiality at least substantially similar
to those contained herein; and 
 (d) will, within sixty (60) days of receipt of written request from a party following termination of
this Agreement, return all the CONFIDENTIAL INFORMATION disclosed to it by the other party pursuant to this Agreement, except for one copy which may be retained by the recipient for monitoring compliance with this Article 8. 
 8.2. The obligations of non-use and confidentiality described above shall not pertain to that part of the CONFIDENTIAL INFORMATION that: 
 (a) was known to the recipient prior to the disclosure by the disclosing party; or 
 (b) is at the time of disclosure or has become thereafter publicly known through no fault or omission attributable to the recipient; or 
 (c) is rightfully given to the recipient from sources independent of the disclosing party; or 
 (d) is established by written evidence to have been independently developed by the receiving party without use of or reference to the CONFIDENTIAL
INFORMATION of the other party; or 
 (e) is required to be disclosed by law, rule or regulation (including, in the case of LICENSEE or
AFFILIATES, stock exchange or listing organization requirements) in the opinion of recipient’s attorney, but only after the disclosing party is given prompt written notice and an opportunity to seek a protective order (in each case to the
extent practicable under the circumstances). 
  

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 8.3. Except as required by law, rule or regulation (including, in the case of LICENSEE or its AFFILIATES,
stock exchange or listing organization requirements) or permitted by Article 8.1(c), neither party may disclose the financial terms of this Agreement without the prior written consent of the other party. 
 ARTICLE 9 REPORTS, RECORDS AND INSPECTIONS 
 9.1. LICENSEE shall, within ninety (90) days after the calendar year in which NET SALES first occur, and within ninety (90) days after each calendar quarter (i.e.,
March 31, June 30, September 30 and December 31) thereafter, provide YALE with a written report detailing the NET SALES and uses, if any, made by LICENSEE, its SUBLICENSEES and AFFILIATES of LICENSED PRODUCTS and
LICENSED METHODS during the preceding calendar quarter and calculating the payments due pursuant to Article 6. NET SALES of LICENSED PRODUCTS or LICENSED METHODS shall be deemed to have occurred on the date of invoice for such LICENSED PRODUCTS or
LICENSED METHODS. Each such report shall be signed by an officer of LICENSEE (or the officer’s designee), and must include: 
 (a) the
number of LICENSED PRODUCTS sold or otherwise transferred or disposed of, and the amount of LICENSED METHODS sold, by LICENSEE, SUBLICENSEES and AFFILIATES; 
 (b) a calculation of NET SALES for the applicable reporting period, including the gross invoice prices charged for the LICENSED PRODUCTS and LICENSED METHODS and detailing any permitted deductions made pursuant to
Article 2.16; 
 (c) a calculation of total royalties or other payment due, including any exchange rates used for conversion; and 

(d) names and addresses of all SUBLICENSEES and the type and amount of SUBLICENSE INCOME, if any, received from each SUBLICENSEE. 
 9.2. LICENSEE and its SUBLICENSEES shall keep and maintain complete and accurate records and books containing an accurate accounting of all data in
sufficient detail to enable verification of EARNED ROYALTIES and other payments under this Agreement. LICENSEE shall preserve such books and records for three (3) years after the calendar year to which they pertain. Such books and records shall
be open to inspection by YALE or an independent certified public accountant selected by YALE, at YALE’s expense, during normal business hours upon thirty (30) days prior written notice, for the purpose of verifying the accuracy of the
reports and computations rendered by LICENSEE. In the event LICENSEE underpaid the amounts due to YALE with respect to the audited period by more than five percent (5%), LICENSEE shall pay the reasonable cost of such examination, together with the
deficiency not previously paid, within thirty (30) days of receiving notice thereof from YALE. 
 9.3. On or before the ninetieth (90th) day following the close of
LICENSEE’s fiscal year, LICENSEE shall provide YALE with LICENSEE’s certified financial statements for the preceding fiscal year including, at a minimum, a balance sheet and an income statement. This Article 9.3 shall not apply if and for
so long as LICENSEE has a class of securities registered under Section 12 of the Securities Exchange Act of 1934. 
  

 11 

 ARTICLE 10 PATENT PROTECTION 
 10.1. From and after the EFFECTIVE DATE, LICENSEE shall be responsible for all actually incurred, reasonable costs of filing, prosecution and maintenance
of all United States patent applications contained in the LICENSED PATENTS. Any and all such United States patent applications, and resulting issued patents, shall remain the property of YALE. 
 10.2. From and after the EFFECTIVE DATE, LICENSEE shall be responsible for all actually incurred, reasonable costs of filing, prosecution and maintenance
of all foreign patent applications, and patents contained in the LICENSED PATENTS in countries outside the United States in the LICENSED TERRITORY selected by LICENSEE with the consent of YALE, not to be unreasonably withheld, conditioned or
delayed. All such applications or patents shall remain the property of YALE. 
 10.3. If LICENSEE fails to pay the expenses of filing,
prosecuting or maintaining a LICENSED PATENT in the United States, then LICENSEE’s rights under this Agreement shall terminate automatically with respect to such LICENSED PATENT in the United States. 
 10.4. The costs mentioned in Articles 10.1 and 10.2 shall include, but are not limited to, taxes, annuities, working fees, maintenance fees and renewal
and extension charges. Payment of such costs shall be made, at YALE’s option, either directly to patent counsel or by reimbursement to YALE. In either case, LICENSEE shall make payment directly to the appropriate party within thirty
(30) days after receiving its invoice. 
 10.5.    (a) Subject to this Article 10.5, all pending patent applications
and issued patents included in the LICENSED PATENTS shall be prepared, prosecuted, filed and maintained by outside patent counsel chosen by YALE subject to the approval of LICENSEE, not to be unreasonably withheld. YALE shall instruct patent counsel
to (i) keep both YALE and LICENSEE regularly informed of the progress of the prosecution, issuance and maintenance of all such patent applications and patents, (ii) make itself available with reasonable notice, at reasonable times and with
reasonable frequency for consultation with LICENSEE and its outside patent counsel, (iii) give both YALE and LICENSEE reasonable opportunity to review and comment on the type and scope of useful claims and the nature of supporting disclosures,
(iv) give due consideration in good faith to comments received from LICENSEE or its outside patent counsel and (v) give LICENSEE at least thirty (30) days prior written notice of all meetings and material communications with any
patent authorities concerning the LICENSED PATENTS and to permit LICENSEE to participate in such meetings or communications. YALE will not finally abandon any patent application included in the LICENSED PATENTS without LICENSEE’s prior written
consent. LICENSEE shall have the sole right, in good faith, to determine whether to seek or obtain any patent term extension(s), restoration(s) or the like that may be available in the future with respect to the LICENSED PATENTS in any part of the
LICENSED TERRITORY. Neither party shall have any liability to the other party for damages, whether direct, indirect or incidental, consequential or otherwise, arising from its good faith decisions, actions and omissions in connection with patent
prosecution hereunder if such party shall have complied with its obligations under this Article 10.5(a). 
 (b) Notwithstanding Article
10.5(a), upon thirty (30) days written notice to YALE, LICENSEE (or its AFFILIATES or SUBLICENSEES) shall have the right to assume the sole responsibility for the preparation, prosecution, filing and maintenance, by outside patent counsel
chosen thereby and reasonably acceptable to YALE, of all pending patent applications and issued 

  

 12 

 
patents included in the LICENSED PATENTS; provided that such rights shall be expressly subject to the obligations of LICENSEE (or, as applicable, its
AFFILIATES or SUBLICENSEES) to instruct patent counsel to (i) [********], (ii) keep YALE regularly informed of the progress, issuance and maintenance of all such patent applications and patents, (iii) give YALE reasonable opportunity
to comment on the type and scope of useful claims and the nature of supporting disclosures, (iv) give due consideration in good faith to comments received from YALE or its outside patent counsel, (v) not make any changes that would
materially limit either the scope or number of claims without YALE’s prior written consent and (vi) not to finally abandon any patent application included in the LICENSED PATENTS without YALE’s prior written consent. 
 10.6. LICENSEE shall mark, and shall contract with its SUBLICENSEES to mark, all LICENSED PRODUCTS with the numbers of all patents included in LICENSED
PATENTS that cover the LICENSED PRODUCTS. Without limiting the foregoing, all LICENSED PRODUCTS shall be marked in such a manner as to conform with the patent marking notices required by the law of any country where such LICENSED PRODUCTS are made,
sold, used or shipped, including, but not limited to, the applicable patent laws of that country. 
 ARTICLE 11 INFRINGEMENT AND
LITIGATION 
 11.1. Each party shall promptly notify the other in writing in the event that it obtains knowledge of infringing activity
by third parties, or is sued or threatened with an infringement suit, in any country in the LICENSED TERRITORY as a result of activities that concern the LICENSED PATENTS and shall supply the other party with documentation of the infringing
activities that it possesses, if any. 
 11.2. During the TERM: 
 (a) LICENSEE shall have the first right, but shall not be obligated, to defend the LICENSED PATENTS against infringement or interference in the FIELD and in the LICENSED TERRITORY by third parties. This right includes
bringing any legal action for infringement and defending any counterclaim of invalidity or action of a third party for declaratory judgment for non-infringement or non-interference. If, in the reasonable opinion of LICENSEE’s and YALE’s
respective counsels, YALE is required to be a named party to any such suit for standing purposes, LICENSEE may join YALE as a party; provided, however, that (i) YALE shall not be the first named party in any such action, (ii) the pleadings
and any public statements about the action shall state that the action is being pursued by LICENSEE and that LICENSEE has joined YALE as a party; and (iii) LICENSEE shall keep YALE reasonably apprised of all material developments in any such
action. LICENSEE may settle such suits, whether by agreement, consent, judgment, voluntary dismissal or otherwise, solely in its own name and solely at its own expense and through counsel of its own selection; provided, however, that any such
settlement that imposes any restrictions or obligations on YALE shall be entered into only with YALE’s prior written consent. LICENSEE shall bear the expense of such legal actions. Except for providing reasonable assistance, at the request and
reasonable expense of LICENSEE, YALE shall have no obligation regarding the legal actions described in Article 11.2 unless required to participate by law. However, YALE shall have the right to participate in any such action through its own counsel
and at its own expense. Any recovery shall first be applied to LICENSEE’s out of pocket expenses and second to YALE’s out of pocket expenses, in each case including legal fees. If there is any excess recovery following payment of such
expenses: (A) any amount recovered specifically for lost profits or sales shall be treated as NET SALES in the calendar quarter in which such recovery is paid and shall be subject to EARNED 

  

 13 

 
ROYALTIES payable to YALE in respect of such NET SALES; (B) any amount recovered specifically as punitive or treble damages shall be treated as
SUBLICENSE INCOME; and (C) if both clause (A) and clause (B) apply, the amount of such excess recovery shall apply to clause (A) and clause (B) in the same proportion as (1) the amount recovered specifically for lost
profits or sales bears to (2) the amount recovered specifically as punitive or treble damages. 
 (b) In the event LICENSEE fails to
initiate and pursue commercially reasonable steps within one hundred twenty (120) days of (i) notification of infringement from YALE to eliminate the infringement or interference or (ii) the date LICENSEE otherwise first becomes aware
of an infringement, whichever is earlier, YALE shall have the right to initiate such legal action at its own expense. If, in the reasonable opinion of YALE’s and LICENSEE’s respective counsel, LICENSEE is required to be a named party in
any such suit for standing purposes, YALE may join LICENSEE as a party, subject to the same conditions to the joining of YALE set forth in Article 11.2(a). In such case, LICENSEE shall provide reasonable assistance to YALE if requested to do so.
YALE may settle, whether by agreement, consent, judgment, voluntary dismissal or otherwise, such actions solely through its own counsel; provided, however, that any such settlement that imposes any restrictions or obligations on LICENSEE shall be
entered into only with LICENSEE’s prior written consent. Any recovery shall be retained by YALE. 
 11.3. In the event LICENSEE is
permanently enjoined from exercising its LICENSE under this Agreement pursuant to an infringement action brought by a third party, or if both LICENSEE and YALE elect not to undertake the defense or settlement of a suit alleging infringement for a
period of six (6) months from notice of such suit, then either party shall have the right to remove the country where the suit was filed from the LICENSED TERRITORY upon thirty (30) days written notice to the other party in accordance with
the terms of Article 15. 
 ARTICLE 12 USE OF YALE’S NAME 
 LICENSEE shall not use the name “Yale” or “Yale University,” or any variation or adaptation thereof, or any trademark, tradename or
other designation owned by YALE, or the names of any of its trustees, officers, faculty, students, employees or agents, for any purpose without the prior written consent of YALE in each instance, except that LICENSEE may state that it has licensed
from YALE one or more of the patents and applications comprising the LICENSED PATENTS. YALE shall not use the name “Targacept” or any variation or adaptation thereof, or any trademark, tradename or other designation owned by LICENSEE, or
the names of any of its directors, officers, employees or agents, for any purpose without the prior written consent of LICENSEE in each instance, except that YALE may state that LICENSEE has licensed from it one or more of the patents and
applications comprising the LICENSED PATENTS. 
 ARTICLE 13 TERMINATION 
 13.1. YALE shall have the right to terminate this Agreement upon written notice to LICENSEE in the event LICENSEE: 
 (a) fails to make any payment whatsoever due and payable pursuant to this Agreement unless LICENSEE shall make all such payments (and all interest due on
such payments under Article 6.4) within the thirty (30) day period after receipt of written notice from YALE; or 
  

 14 

 (b) subject to Article 16.3, commits a material breach of any other provision of this Agreement which is
not cured (if capable of being cured) within the one hundred twenty (120) day period after receipt of written notice thereof from YALE (or upon receipt of such notice if such breach is not capable of being cured); 
 (c) fails to obtain or maintain adequate insurance as described in Article 14 and does not cure such breach within the ten (10) day period after
receipt of written notice thereof from YALE; 
 (d) as provided in Article 7.4. 
 13.2. This Agreement shall terminate automatically without any notice to LICENSEE in the event LICENSEE shall cease to carry on its business or becomes
INSOLVENT, or a petition in bankruptcy is filed against LICENSEE and is consented to, acquiesced in or remains undismissed for sixty (60) days, or LICENSEE makes a general assignment for the benefit of creditors, or a receiver is appointed for
LICENSEE. 
 13.3. LICENSEE shall have the right to terminate this Agreement upon thirty (30) days prior written notice to YALE.

 13.4. Upon termination of this Agreement for any reason (but, for purposes of clarity, not expiration of the TERM), all rights and
licenses granted to LICENSEE under the terms of this Agreement are terminated and YALE has the option, in its discretion, to terminate any sublicense granted by LICENSEE. Upon such termination (but not expiration of the TERM), LICENSEE shall cease
to manufacture or sell LICENSED PRODUCTS and cease to practice LICENSED METHODS; provided that, as applied to the terms “LICENSED PRODUCTS” and “LICENSED METHODS” as used in this Article 13.4 and notwithstanding Article 2.24,
“VALID CLAIM” shall, mean (i) a valid and enforceable claim of an issued and unexpired LICENSED PATENT or (ii) a claim of a pending application included in LICENSED PATENTS that is being prosecuted in good faith and that has not
been irrevocably abandoned or finally disallowed without the possibility of appeal or re-filing where such claim, if such patent application were to issue as a patent, would be valid and enforceable. Within sixty (60) days after the effective
date of termination LICENSEE shall deliver to YALE: 
 (a) the last report required under Article 7 or 9; and 
 (b) all payments incurred up to the effective date of termination. 
 13.5. Termination of this Agreement shall not affect any rights or obligations accrued prior to the effective date of such termination and specifically LICENSEE’s obligation to pay all such accrued royalties and
other payments specified by Article 5 and 6. The following provisions shall survive any termination: Articles 2 and 8, Article 9.2, Article 10.5 (last sentence only), Article 12, this Article 13.5, Article 14, Article 15, Article 16.1, Article 16.3
and Article 17. The parties agree that claims giving rise to indemnification may arise after the TERM or termination of the LICENSE granted herein. 
 13.6. The rights provided in this Article 13 shall be in addition and without prejudice to any other rights which the parties may have with respect to any default or breach of the provisions of this Agreement. 
  

 15 

 13.7. Waiver by either party of one or more defaults or breaches shall not deprive such party of the
right to terminate because of any subsequent default or breach. 
 ARTICLE 14 INDEMNIFICATION; INSURANCE; WARRANTIES AND
DISCLAIMERS 
 14.1. LICENSEE shall defend, indemnify and hold harmless YALE, its trustees, directors, officers, employees, and agents
and their respective successors, heirs and assigns (“Indemnified Parties”) against any and all liabilities, claims, demands, damages, judgments and expenses of any nature, including without limitation legal expenses and reasonable
attorneys’ fees, under any theory of liability (including, without limitation, tort, warranty, or strict liability), arising out of the death, personal injury or illness of any person, or damage to any property, resulting from the production,
manufacture, sale, use, lease or other disposition or consumption, promotion or advertisement of the LICENSED PRODUCTS or LICENSED METHODS by LICENSEE, its AFFILIATES, SUBLICENSEES; provided that LICENSEE shall have no obligation hereunder to
Indemnified Parties with respect to liabilities, claims or demands (“Claims”), damages, judgments, losses and expenses to the extent that they arise out of the gross negligence or willful misconduct of any Indemnified Party. 
 14.2. YALE shall give LICENSEE prompt (and, in any event, within thirty (30) days after YALE’s receipt of written notice of a Claim) written
notice of any Claim asserted for which any Indemnified Party seeks to enforce Article 14.1, specifying in an amount of detail reasonable under the circumstances the nature of the Claim; provided that the failure to provide such notice on a timely
basis shall not relieve LICENSEE of any obligation that it may have under Article 14.1, except to the extent that the defense of such Claim is materially prejudiced by such failure. LICENSEE shall have the opportunity to defend, negotiate and settle
such claims using counsel of its choice; provided, however, that (i) any Indemnified Party shall be entitled to participate in the defense of such matter and to employ, at its expense, counsel to assist therein and (ii) LICENSEE shall not
be responsible or bound by any settlement of any Claim without its prior written consent. YALE shall ensure that all Indemnified Parties seeking to enforce Article 14.1 provide LICENSEE with such information and assistance as LICENSEE may reasonably
request, at the reasonable expense of LICENSEE. 
 14.3. LICENSEE shall purchase and maintain in effect during the TERM, and shall require
its SUBLICENSEES (other than QUALIFIED SUBLICENSEES which may elect to self-insure and other than SUBLICENSEES with rights limited to in vitro and animal research) to purchase and maintain in effect during the TERM, a policy of general
liability insurance. Such insurance shall: 
 (a) list “YALE, its trustees, directors, officers, employees and agents” as additional
insureds under the policy and provide for thirty (30) days written notice prior to any cancellation or material change to the policy(ies); and 
 (b) be endorsed such that it provides contractual liability coverage for LICENSEE’s indemnification under Article 14.1. 
 In addition,
LICENSEE shall purchase and maintain in effect during the TERM a policy covering product liability in amounts no less than $[********]Dollars per incident and $[********]Dollars annual aggregate; provided that, by virtue of such minimum amount of
coverage required, such insurance not be construed to create a limit of LICENSEE’s liability with respect to its indemnification under Article 14.1. 
  

 16 

 14.4. By signing this Agreement, LICENSEE certifies that the requirements of Article 14.3 will be
met on or before the earlier of (a) the date of FIRST SALE of any LICENSED PRODUCT or LICENSED METHOD or (b) the first date, after the EFFECTIVE DATE, any LICENSED PRODUCT or LICENSED METHOD is tested or used by LICENSEE, a SUBLICENSEE or
an AFFILIATE on humans, and will continue to be met thereafter. Upon YALE’s request during the TERM, LICENSEE shall furnish a Certificate of Insurance and a copy of the current insurance policy(ies) to YALE. 
 14.5. YALE represents and warrants to LICENSEE that (i) to YALE’s knowledge, the INVENTORS are the only persons who contributed to either the
conception or first reduction to practice of the INVENTION, (ii) each INVENTOR was an employee of YALE at the time the INVENTION was first disclosed to YALE’s Office of Cooperative Research, (iii) YALE has secured a valid and binding
written assignment to the INVENTION (including, without limitation, the LICENSED PATENTS) from each INVENTOR, (iv) YALE has made due inquiry of each INVENTOR and has no reason to believe that any such INVENTOR has granted, purported to grant or
agreed to grant any right or license to the INVENTION or any of the LICENSED PATENTS to any third party, (v) to YALE’s knowledge, YALE owns all right, title and interest in and to the LICENSED PATENTS, (vi)YALE has the lawful right to
grant the LICENSE, (vii)YALE has not granted rights or licenses in derogation of this Agreement other than those rights granted or reserved to the U.S. Government, (viii) to YALE’s knowledge, the LICENSED PATENTS are not invalid or
unenforceable and (ix) in respect of the pending U.S. patent application included in the LICENSED PATENTS, YALE has presented all relevant prior art of which YALE and, to YALE’s knowledge, the INVENTORS have knowledge to the relevant
Patent Examiner at the United States Patent and Trademark Office. YALE agrees that, during the TERM, YALE shall not enter into any other agreements that conflict with the rights or obligations provided hereunder, including any rights and obligations
that survive termination of this Agreement. 
 14.6. (a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 14.5, YALE MAKES NO, AND EXPRESSLY
DISCLAIMS ALL, REPRESENTATIONS OR WARRANTIES THAT ANY CLAIMS OF THE LICENSED PATENTS, ISSUED OR PENDING, ARE VALID, OR THAT THE MANUFACTURE, USE, SALE OR OTHER DISPOSAL OF THE LICENSED PRODUCTS, OR PRACTICE OF THE LICENSED METHODS DOES NOT OR WILL
NOT INFRINGE UPON ANY PATENT OR OTHER RIGHTS NOT VESTED IN YALE. 
 (b) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 14.5, YALE MAKES
NO, AND EXPRESSLY DISCLAIMS ALL, REPRESENTATIONS AND WARRANTIES WHATSOEVER WITH RESPECT TO THE LICENSED PATENTS, LICENSED PRODUCTS AND LICENSED METHODS, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. LICENSEE SHALL MAKE NO STATEMENTS, REPRESENTATION OR WARRANTIES WHATSOEVER TO ANY THIRD PARTIES WHICH ARE INCONSISTENT WITH SUCH DISCLAIMER BY YALE. IN NO EVENT SHALL YALE, OR ITS TRUSTEES, DIRECTORS, OFFICERS,
EMPLOYEES AND AFFILIATES, BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER YALE SHALL BE ADVISED, SHALL HAVE OTHER REASON TO
KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING. 
  

 17 

 ARTICLE 15 NOTICES 
 15.1. Any payment, notice or other communication required by this Agreement (a) shall be in writing, (b) may be delivered personally or sent by
reputable overnight courier with written verification of receipt or by registered or certified first class United States Mail, postage prepaid, return receipt requested, (c) shall be sent to the following addresses or to such other address as
such party shall designate by written notice to the other party, and (d) shall be effective upon receipt: 
  

			
	 FOR YALE:
	  	 FOR LICENSEE:

	Managing Director	  	TARGACEPT, INC.
	YALE UNIVERSITY	  	200 East First Street, Suite 300
	Office of Cooperative Research	  	Winston-Salem, NC 27101
	433 Temple Street	  	Attn: VP, Business and Commercial Development
	New Haven, CT 06511	  	Attn: General Counsel

 ARTICLE 16 LAWS, FORUM AND REGULATIONS, DISPUTE RESOLUTION 
 16.1. Any matter arising out of or related to this Agreement shall be governed by and in accordance with the substantive laws of the State of
Connecticut, without regard to its conflicts of law principles, except where the federal laws of the United States are applicable and have precedence. Any dispute arising out of or related to this Agreement shall be brought in a court of competent
jurisdiction in the State of Connecticut. 
 16.2. LICENSEE shall comply, and shall cause its AFFILIATES to comply and contract with its
SUBLICENSEES to comply, in all material respects with all foreign and United States federal, state, and local laws, regulations, rules and orders applicable to the testing, production, transportation, packaging, labeling, export, sale and use of the
LICENSED PRODUCTS and practice of the LICENSED METHODS. In particular, LICENSEE shall be responsible for assuring compliance with all United States export laws and regulations applicable to this LICENSE and LICENSEE’s activities under this
Agreement 
 16.3. Neither party shall institute a proceeding in any court or administrative agency to resolve a dispute arising out of or
relating to this Agreement before that party has sought to resolve such dispute through direct negotiation with the other party. Notwithstanding the foregoing, either party may seek, without waiving any right or remedy under this Agreement, from any
court having jurisdiction injunctive or provisional relief to protect the rights or property of that party pending resolution of the dispute. 
 ARTICLE 17 MISCELLANEOUS 
 17.1. This Agreement shall be binding upon and inure to the benefit of the parties and
their respective legal representatives, successors and permitted assigns. 
 17.2. This Agreement constitutes the entire agreement of the
parties relating to the LICENSED PATENTS, LICENSED PRODUCTS and LICENSED METHODS, and all prior representations, agreements and understandings, written or oral (including, without limitation, the various draft term sheet proposals exchanged between
the parties), are merged into it and superseded by this Agreement. 
  

 18 

 17.3. The provisions of this Agreement shall be deemed separable. If any part of this Agreement is
rendered void, invalid, or unenforceable, such determination shall not affect the validity or enforceability of the remainder of this Agreement unless the part or parts which are void, invalid or unenforceable shall substantially impair the value of
the entire Agreement as to either party. 
 17.4. Paragraph headings are inserted for convenience of reference only and do not form a part of
this Agreement. 
 17.5. No person not a party to this Agreement, including any employee of either party to this Agreement, shall have or
acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any third party. 
 17.6. This Agreement may not be amended or modified except by written agreement executed by each of the parties. This Agreement is personal to LICENSEE and shall not be assigned by LICENSEE without the prior written
consent of YALE, except no such consent shall be required in connection with any assignment by LICENSEE to an AFFILIATE or to a successor of all or substantially all of the business of LICENSEE to which this Agreement relates. Any attempted
assignment in contravention of this Article 17.6 shall be null and void and shall constitute a material breach of this Agreement. 
 17.7.
Neither LICENSEE nor any SUBLICENSEE or assignee will create, assume or permit to exist any lien, pledge, security interest or other encumbrance on this Agreement or any sublicense. 
 17.8. The failure of either party to enforce at any time, or for any period of time, any provision of this Agreement shall not be construed as a waiver
of either such provision or of the right of such party thereafter to enforce each and every provision of this Agreement. 
 17.9. This
Agreement may be executed in any number of counterparts and either party may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but
one and the same instrument. 
  

 19 

 IN WITNESS to their Agreement, the parties have caused this Agreement to be executed in duplicate originals by their duly
authorized representatives. 
  

									
	YALE UNIVERSITY	 		 	TARGACEPT, INC.
					
	By:	 	 /s/ Jonathan Soderstrom
	 		 	By:	 	 /s/ Jeffrey C. Brennan

				
	E. Jonathan Soderstrom, Ph.D.	 		 	Name:	 	Jeffrey C. Brennan
	Managing Director, Office of Cooperative Research	 		 	Title:	 	Vice President, Business and Commercial Development
			
	Date: 18 Jan 2007	 		 	Date: January 22, 2007

  

 20 

 Appendix A 
 LICENSED PATENTS 
 U.S. Patent Application 10/585,562 “Mecamylamine and Other Nicotinic Antagonists for
Augmentation of SSRI, MAOIs, TCA and Other Antidepressants”. 
 U.S. provisional applications 60/534,532 and 60/627,250 
 PCT/US2005/000083 (Publication No. WO05067909A1) 
  

 21MODIFIED AIA DOCUMENT B141

 Exhibit 10.1 
 AIA® Document B141TM – 1997 Part 1 
 Standard Form of Agreement Between Owner and Architect 
 with
Standard Form of Architect’s Services 
 This document has important legal consequences. Consultation with an attorney is encouraged with respect to
its completion or modification. 
 TABLE OF ARTICLES 
  

			
	1.1	  	INITIAL INFORMATION
		
	1.2	  	RESPONSIBILITIES OF THE PARTIES
		
	1.3	  	TERMS AND CONDITIONS
		
	1.4	  	SCOPE OF SERVICES AND OTHER SPECIAL TERMS AND CONDITIONS
		
	1.5	  	COMPENSATION

 AGREEMENT made as of the 22nd day of January in the year Two Thousand Seven 
 (In words, indicate day, month and year) 
 BETWEEN the
Architect’s client identified as the Owner*: 
 (Name, address and other information) 
 Targacept, Inc. 
 200 East First Street, Suite 300 
 Winston-Salem, NC 27101-4165 
  

	*	Targacept, Inc. leases the property which is the subject of this Agreement. 

 and the Architect: 
 (Name, address and other information) 
 O’Brien Atkins Associates, PA 
 P.O. Box 12037 
 Research Triangle Park, NC 27709 
 For the following Project: 
 (Include detailed description of Project) 
 Fit-Up of First Floor 
 200 East First Street 
 Winston-Salem, NC 27101-4165 
 Project Description: Targacept Animal Care Facility (+/- 5,400 GSF) (ACF), Associated Office Space (+/- 4,700 GSF) and Chemical Storage Room (+/- 360 GSF) as described
in program documents prepared by Specialty Operations Solutions, Inc. for the Basis of Design (BOD) dated 7/13/06 and the Draft 3a Floor Plan dated 9/20/06 (see Exhibit A). 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	1
	User Notes: January 16, 2007	  	(2572649982	)	 	

 The Owner and Architect agree as follows: 
 ARTICLE 1.1 INITIAL INFORMATION 
 § 1.1.1 This Agreement is based on the following
information and assumptions. 
 (Note the disposition for the following items by inserting the requested information or a statement such as “not
applicable,” “unknown at time of execution” or “to be determined later by mutual agreement.”) 
 § 1.1.2
PROJECT PARAMETERS 
 § 1.1.2.1 The objective or use is: 
 (Identify or describe, if appropriate, proposed use or goals.) 
 § 1.1.2.2 The physical parameters
are: 
 (Identify or describe, if appropriate, size, location, dimensions, or other pertinent information, such as geotechnical reports about the site.)

 § 1.1.2.3 The Owner’s Program is: 
 (Identify documentation or state the manner in which the program will be developed.) 
 See program documents prepared by Specialty Operations
Solutions, Inc. for the Basis of Design (BOD) dated 7/13/06 and the Draft 3a Floor Plan dated 9/20/06 (Exhibit A) 
 § 1.1.2.4 The legal
parameters are: 
 (Identify pertinent legal information, including, if appropriate, land surveys and legal descriptions and restrictions of the site.)

 § 1.1.2.5 The financial parameters are as follows. 
  

	 	.1	Amount of the Owner’s overall budget for the Project, including the Architect’s compensation, is: TBD. 

  

	 	.2	Amount of the Owner’s budget for the Cost of the Work, excluding the Architect’s compensation, is: TBD 

 § 1.1.2.6 The time parameters are: 
 (Identify, if
appropriate, milestone dates, durations or fast track scheduling.) 
 TBD 
 § 1.1.2.7 The proposed procurement or delivery method for the Project is: 
 (Identify method such as
competitive bid, negotiated contract, or construction management.) 
 Negotiated construction contract where the basis of payment is cost plus a fee with
GMP. 
 § 1.1.2.8 Other parameters are: 
 (Identify special characteristics or needs of the Project such as energy, environmental or historic preservation requirements.) 
 § 1.1.3 PROJECT TEAM 
 § 1.1.3.1 The Owner’s Designated Representative is: 
 (List name, address and other information.) 
 Ms. Mauri K.
Hodges 
 Targacept, Inc. 
 200 East First Street, Suite 300

 Winston-Salem, NC 27101-4165 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	2
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.1.3.2 The persons or entities, in addition to the Owner’s Designated Representative, who are
required to review the Architect’s submittals to the Owner are: 
 (List name, address and other information.) 
 Special Operations Solutions, Inc. 
 § 1.1.3.3 The
Owner’s other consultants and contractors are: 
 (List discipline and, if known, identify them by name and address.) 
 ACF Planning Consultant: 
 Specialty Operations Solutions, Inc. 

§ 1.1.3.4 The Architect’s Designated Representative is: 
 (List name, address and other information.) 
 Eric J. Erickson 
 O’Brien Atkins Associates, PA 
 P.O. Box 12037 
 Research Triangle Park, NC 27709 
 § 1.1.3.5 The consultants retained at the Architect’s expense are:

 (List discipline and, if known, identify them by name and address.) 
  

			
	Mechanical Engineer (HVAC and Plumbing):
		
	Name:	  	Sterling Engineering Co., Inc.
	Address:	  	79 Main Street
		  	Sturbridge, MA 01566

  

			
	Electrical Engineer:
		
	Name:	  	Sterling Engineering Co., Inc.
	Address:	  	79 Main Street
		  	Sturbridge, MA 01566

  

			
	Fire Protection Engineering:
		
	Name:	  	Sterling Engineering Co., Inc.
	Address:	  	79 Main Street
		  	Sturbridge, MA 01566

  

			
	Structural Engineer (if required):
		
	Name:	  	GKC Associates
	Address:	  	510 Executive Park Drive
		  	Durham, NC 27713

 § 1.1.4 Other important Architect requested initial information is: 
 § 1.1.5 When the services under this Agreement include contract administration services, the General Conditions of the Contract for Construction shall
be the 1997 edition of AIA Document A201 as modified by the Owner. 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	3
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.1.6 The information contained in this Article 1.1 may be reasonably relied upon by the Owner and
Architect in determining the Architect’s compensation. Both parties, however, recognize that such information may change and, in that event, the Owner and the Architect shall negotiate appropriate adjustments in schedule, compensation and
Change in Services in accordance with Section 1.3.3. The Architect represents, and the Owner reasonably relies on such representation, that the Architect has carefully reviewed the scope of Initial Information in Article 1.1 and, as of the date
of this Agreement, has no actual knowledge of any additional Initial Information needed to perform the services described in this Agreement. 
 ARTICLE 1.2 RESPONSIBILITIES OF THE PARTIES 
 § 1.2.1 The Owner and the Architect shall cooperate with one another to
fulfill their respective obligations under this Agreement. Both parties shall endeavor to maintain good working relationships among all members of the Project team. 
 § 1.2.2 OWNER 
 § 1.2.2.1 Unless otherwise provided under this Agreement, the Owner shall
provide full information in a timely manner regarding requirements for and limitations on the Project. The Owner shall furnish to the Architect, within 15 days after receipt of a written request, information necessary and relevant for the Architect
to evaluate, give notice of or enforce lien rights. 
 § 1.2.2.2 The Owner shall periodically update the budget for the Project, including
that portion allocated for the Cost of the Work. The Owner shall not significantly increase or decrease the overall budget, the portion of the budget allocated for the Cost of the Work, or contingencies included in the overall budget or a portion of
the budget, without the agreement of the Architect to a corresponding change in the Project scope and quality. 
 § 1.2.2.3 The Owner’s
Designated Representative identified in Section 1.1.3 shall be authorized to act on the Owner’s behalf with respect to the Project. The Owner or the Owner’s Designated Representative shall render decisions in a timely manner
pertaining to documents submitted by the Architect in order to avoid unreasonable delay in the orderly and sequential progress of the Architect’s services. 
 § 1.2.2.4 The Owner shall furnish the services of consultants other than those designated in Section 1.1.3 or authorize the Architect to furnish them as a Change in Services when such services are requested by the
Architect and are reasonably required by the scope of the Project. 
 § 1.2.2.5 Unless otherwise provided in this Agreement, the Owner shall
furnish tests, inspections and reports required by law or the Contract Documents, such as structural, mechanical, and chemical tests, tests for air and water pollution, and tests for hazardous materials. 
 § 1.2.2.6 The Owner shall furnish all legal, insurance and accounting services, including auditing services, that may be reasonably necessary at any
time for the Project to meet the Owner’s needs and interests. 
 § 1.2.2.7 The Owner shall provide prompt written notice to the
Architect if the Owner becomes aware of any fault or defect in the Project, including any errors, omissions or inconsistencies in the Architect’s Instruments of Service; provided, however, that a failure of the Owner to give such notice shall
not affect the duties and responsibilities of the Architect under this Agreement. 
 § 1.2.3 ARCHITECT 
 § 1.2.3.1 The services performed by the Architect, Architect’s employees and Architect’s consultants shall be as enumerated in
Article 1.4. 
 § 1.2.3.2 The Architect’s services shall be performed as expeditiously as is consistent with professional skill
and care and the orderly progress of the Project. The Architect shall submit for the Owner’s approval a schedule for the performance of the Architect’s services which initially shall be consistent with the time periods established in
Section 1.1.2.6 and which shall be adjusted, if necessary, as the Project proceeds. This schedule shall include allowances for periods of time required for the Owner’s review, for the performance of the Owner’s consultants, and for
approval of submissions by authorities having jurisdiction over the Project. Time limits established by this schedule approved by the Owner shall not, except for reasonable cause, be exceeded by the Architect or Owner. 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	4
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.2.3.3 The Architect’s Designated Representative identified in Section 1.1.3 shall be
authorized to act on the Architect’s behalf with respect to the Project. 
 § 1.2.3.4 The Architect shall maintain the confidentiality
of information specifically designated as confidential by the Owner, unless withholding such information would violate the law, create the risk of significant harm to the public or prevent the Architect from establishing a claim or defense in an
adjudicatory proceeding. The Architect shall require of the Architect’s consultants similar agreements to maintain the confidentiality of information specifically designated as confidential by the Owner. 
 § 1.2.3.5 Except with the Owner’s knowledge and consent, the Architect shall not engage in any activity, or accept any employment, interest or
contribution that would reasonably appear to compromise the Architect’s professional judgment with respect to this Project. 
 § 1.2.3.6 The Architect shall review laws, codes, and regulations applicable to the Architect’s services and shall perform its responsibilities under this Agreement in compliance with the applicable laws, codes and
regulations. The Architect shall design the Project in accordance with the requirements imposed by governmental authorities having jurisdiction over the Project. 
 § 1.2.3.7 The Architect shall be entitled to rely on the accuracy and completeness of services and information furnished by the Owner. The Architect shall provide prompt written notice to the Owner if the Architect becomes
aware of any errors, omissions or inconsistencies in such services or information. 
 § 1.2.3.8 The Architect hereby represents to the Owner
that the Architect has visited the Project site and has thoroughly familiarized itself with the local conditions under which the services required hereunder are to be performed; and that the Architect possesses the requisite licenses, authority,
experience, personnel and working capital to complete the services required hereunder. 
 ARTICLE 1.3 TERMS AND CONDITIONS

 § 1.3.1 COST OF THE WORK 
 § 1.3.1.1 The Cost of the Work shall be the total cost or, to the extent the Project is not completed, the estimated cost to the Owner of all elements of the Project designed or specified by the Architect. 
 § 1.3.1.2 The Cost of the Work shall include the cost at current market rates of labor and materials furnished by the Owner and equipment designed,
specified, selected or specially provided for by the Architect, including the costs of management or supervision of construction or installation provided by a separate construction manager or contractor, plus a reasonable allowance for their
overhead and profit. In addition, a reasonable allowance for contingencies shall be included for market conditions at the time of bidding and for changes in the Work. 
 § 1.3.1.3 The Cost of the Work does not include the compensation of the Architect and the Architect’s consultants, the costs of the land, rights-of-way and financing or other costs that are the
responsibility of the Owner. 
 § 1.3.2 INSTRUMENTS OF SERVICE 
 § 1.3.2.1 Drawings, specifications and other documents, including those in electronic form, prepared by the Architect and the Architect’s consultants are Instruments of Service for use solely
with respect to this Project. The Architect and the Architect’s consultants shall be deemed the authors and owners of their respective Instruments of Service and shall retain all common law, statutory and other reserved rights, including
copyrights. 
 § 1.3.2.2 The Architect shall provide the Owner with a complete copy of the original drawings and specifications, as well as
the record drawings referenced in subparagraph 2.8.3.20. In addition, the Architect shall provide the Owner with a complete set of computer disks of the original drawings and record drawings referenced in subparagraph 2.8.3.20 for all such drawings
that are produced by computer/CAD. These drawings and specifications and record drawings shall be the property of the Owner, who may use and reproduce them for reference without the Architect’s permission for completion of or additions to the
Project. Any use of the Architect’s Instruments of Service on other projects without prior written permission by the Architect shall be at the Owner’s sole risk and without liability to the Architect or the Architect’s consultants.

  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	5
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.3.2.3 
 § 1.3.2.4 Prior to the Architect providing to the Owner any Instruments of Service in electronic form or the Owner providing to the Architect any electronic data for incorporation into the Instruments of Service, the Owner
and the Architect shall by separate written agreement set forth the specific conditions governing the format of such Instruments of Service or electronic data, including any special limitations or licenses not otherwise provided in this Agreement.

 § 1.3.3 CHANGE IN SERVICES 
 § 1.3.3.1 Change in Services of the Architect, including services required of the Architect’s consultants, may be accomplished after execution of this Agreement, without invalidating the Agreement, if mutually agreed
in writing, if required by circumstances beyond the Architect’s control, or if the Architect’s services are affected as described in Section 1.3.3.2. In the absence of mutual agreement in writing, the Architect shall notify the Owner
in writing prior to changing such services. If the Owner deems that all or a part of such Change in Services is not required, the Owner shall give prompt written notice to the Architect, and the Architect shall have no obligation to change those
services. Except for a change due to the fault of the Architect, Change in Services of the Architect shall entitle the Architect to an adjustment in compensation pursuant to Section 1.5.2, and the Architect to any Reimbursable Expenses
described in Section 1.3.9.2 and Section 1.5.5. 
 § 1.3.3.2 If any of the following circumstances require the Architect to make
material and substantial revisions to Instruments of Service or participation in subparagraph 1.3.3.2.6 activities below, the Architect or the Owner, as appropriate, shall be entitled to an appropriate adjustment in the Architect’s schedule and
compensation: 
  

	 	.1	change in the instructions or approvals given by the Owner that necessitate revisions in Instruments of Service; 

  

	 	.2	enactment or revision of codes, laws or regulations or official interpretations which necessitate changes to previously prepared Instruments of Service;

  

	 	.3	changes due to decisions of the Owner, required by this Agreement, not rendered in a timely manner; 

  

	 	.4	significant change in the Project including, but not limited to, size, quality, complexity, the Owner’s schedule or budget, or procurement method;

  

	 	.5	failure of performance on the part of the Owner or the Owner’s consultants or contractors; 

  

	 	.6	preparation for and attendance at a public hearing, a dispute resolution proceeding or a legal proceeding except where the Architect is party thereto or is alleged to have
committed a wrongful act or omission which is a subject of such hearing or proceeding; 

  

	 	.7	change in the information contained in Article 1.1. 

 § 1.3.4 MEDIATION 
 § 1.3.4.1 Any claim, dispute or other matter in question between the Architect and the Owner
arising out of or relating to this Agreement, the Project, the Work or the Contract Documents shall, upon demand by either party, be submitted to mediation under the auspices of and in accordance with the mediation rules of the American Arbitration
Association, unless the parties mutually agree otherwise, before proceeding to any other form of dispute resolution, including litigation. The Owner, Architect and Contractor may participate in the mediation process, and any fees in connection
therewith shall be borne equally by the parties. If a request for mediation is filed regarding a dispute between the Owner and the Contractor, which includes a claim involving the Architect, then upon written request by the Owner or Contractor, the
Architect shall become a party to the mediation. 
 § 1.3.4.2 Unless otherwise agreed in writing, the Architect shall carry on with the
performance of its services and duties under this Agreement during the pendency of any proceeding to resolve any claim, dispute or other matter in question, and the Owner shall continue to make payments to the Architect in accordance with this
Agreement, except that the Owner shall be under no obligation to make payments to the Architect on such claim, dispute or other matter in question during the pendency of any proceeding to resolve such claim, dispute or other matter in question.

 § 1.3.4.3 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	6
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.3.5 ARBITRATION 
 § 1.3.5.1 Any claim arising out of or relating to this Agreement, the Project, the Work or the Contract Documents that is not resolved through mediation shall be litigated unless, by mutual agreement, the parties agree to
submit the dispute to binding arbitration under the auspices and rules of the American Arbitration Association or another organization mutually acceptable to the Owner and the Architect. The parties agree that all dispute resolution proceedings
shall be in the county in which the Project is located. The Owner, Architect and Contractor may participate in the arbitration, and any fees in connection therewith shall be borne equally by the parties. Any award rendered shall be final and
judgment may be entered upon it in accordance with applicable law by any court having jurisdiction. If any claim submitted to arbitration between the Owner and the Contractor involves the Architect, the Architect may be joined in the proceeding. If
the Architect is found to have no liability, the Owner shall indemnify the Architect for all loss, cost, damage and expense (including reasonable attorneys’ fees) incurred by the Architect as a result of being joined in the proceeding by the
Owner; and the Owner shall make reasonable efforts to include a similar obligation on the Contractor in the contract with the Contractor. 
 § 1.3.5.2 
 § 1.3.5.3 
 § 1.3.5.4 
 § 1.3.5.5 
 § 1.3.6 CLAIMS FOR CONSEQUENTIAL DAMAGES 
 § 1.3.7 MISCELLANEOUS PROVISIONS 
 § 1.3.7.1 This Agreement shall be governed by the law of the place of the Project. 
 § 1.3.7.2 Terms in this Agreement shall have the same meaning as those in the 1997 edition of AIA Document A201, General Conditions of the Contract for Construction, as modified by the Owner.

 § 1.3.7.3 Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued
and the applicable statutes of limitations shall commence to run not later than either the date of Substantial Completion for acts or failures to act occurring prior to Substantial Completion or the date of issuance of the final Certificate for
Payment for acts or failures to act occurring after Substantial Completion. In no event shall such statutes of limitations commence to run any later than the date when the Architect’s services are substantially completed. 
 § 1.3.7.4 To the extent damages are covered by property insurance during construction, the Owner and the Architect waive all rights against each other
and against the contractors, consultants, agents and employees of the other for damages, except such rights as they may have to the proceeds of such insurance as set forth in the 1997 edition of AIA Document A201, General Conditions of the Contract
for Construction, as modified by the Owner. The Owner or the Architect, as appropriate, shall require of the contractors, consultants, and agents of any of them similar waivers in favor of the other parties enumerated herein. 
 § 1.3.7.5 Nothing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a third party against either
the Owner or Architect. 
 § 1.3.7.6 Unless otherwise provided in this Agreement, the Architect and Architect’s consultants shall have
no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials or toxic substances in any form at the Project site. However, the Architect shall report to the Owner the presence and
location of any hazardous material which it notices. 
 § 1.3.7.7 Subject to the Owner’s prior review and written approval thereof, the
Architect shall have the right to include photographic or artistic representations of the design of the Project among the Architect’s promotional and professional materials. The Architect shall be given reasonable access to the completed
Project to make such representations. However, the Architect’s materials shall not include the Owner’s confidential or proprietary information if the Owner has previously advised the Architect in writing of the specific information
considered by the Owner to be confidential or proprietary. The Owner may, in its sole discretion, provide professional credit for the Architect in the Owner’s promotional materials for the Project. 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	7
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.3.7.8 If the Owner requests the Architect to execute certificates, the proposed language of such
certificates shall be submitted to the Architect for review at least 14 days prior to the requested dates of execution. The Architect shall not be required to execute certificates that would require knowledge, services or responsibilities beyond the
scope of this Agreement, but the Owner may require and the Architect shall execute, as part of its scope of Services described under Article 1.4 or elsewhere herein any certificates or certifications customarily, commonly or reasonably required on
projects of this type. 
 § 1.3.7.9 The Owner and Architect, respectively, bind themselves, their partners, successors, assigns and legal
representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of such other party with respect to all covenants of this Agreement. The Architect shall not assign this Agreement without the
prior written consent of the Owner, the Owner may assign this Agreement to an institutional lender providing financing for the Project. In such event, the lender shall assume the Owner’s rights and obligations under this Agreement. The
Architect shall execute all consents reasonably required to facilitate such assignment. 
 § 1.3.8 TERMINATION OR SUSPENSION

 § 1.3.8.1 If the Owner fails to make payments to the Architect in accordance with this Agreement, the Architect having performed the
Architect’s obligation hereunder, such failure shall be considered substantial nonperformance and cause for termination or, at the Architect’s option, cause for suspension of performance of services under this Agreement. If the Architect
elects to suspend services, prior to suspension of services, the Architect shall give seven days’ written notice to the Owner. In the event of a proper suspension of services, the Architect shall have no liability to the Owner for delay or
damage caused the Owner because of such suspension of services. Before resuming services, the Architect shall be paid all sums due prior to suspension and any direct expenses reasonably incurred in the interruption and resumption of the
Architect’s services. The Architect’s fees for the remaining services and the time schedules shall be equitably adjusted. 
 § 1.3.8.2 If, through no fault of the Architect, the Project is suspended by the Owner for more than 30 consecutive days, the Architect shall be compensated for services performed prior to notice of such suspension. When
the Project is resumed, the Architect shall be compensated for direct expenses reasonably incurred in the interruption and resumption of the Architect’s services. The Architect’s fees for the remaining services and the time schedules shall
be equitably adjusted. 
 § 1.3.8.3 If, through no fault of the Architect, the Project is suspended or the Architect’s services are
suspended for more than 180 consecutive days, the Architect may terminate this Agreement by giving not less than fourteen days’ written notice. 
 § 1.3.8.4 This Agreement may be terminated by either party upon not less than seven days’ written notice should the other party fail substantially to perform in accordance with the terms of this Agreement through no
fault of the party initiating the termination. 
 § 1.3.8.5 This Agreement may be terminated by the Owner upon not less than seven
days’ written notice to the Architect for the Owner’s convenience and without cause. 
 § 1.3.8.6 In the event of termination not
the fault of the Architect, the Architect shall be compensated for services performed prior to termination, together with Reimbursable Expenses then due. 
 § 1.3.8.7 In the event of any termination under this Article, the Architect consents to the Owner’s selection of another architect of the Owner’s choice to assist the Owner in completing the Project. The Architect
agrees to cooperate and provide any information requested by the Owner in connection with the completion of the Project and consents to and authorizes the making of any reasonable changes to the design of the Project as the Owner and such other
architect may desire. Any services provided by the Architect that are requested by the Owner after date of termination shall be fairly compensated by the Owner pursuant to mutual agreement on the amount of compensation prior to the performance of
such services. The Owner shall indemnify O’Brien Atkins for any damages or injuries that are proximately caused by such design modifications made by the follow on architect, unless O’Brien Atkins agreed to the design modifications.

  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	8
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.3.9 PAYMENTS TO THE ARCHITECT 
 § 1.3.9.1 Payments on account of services rendered and for Reimbursable Expenses incurred shall be made monthly upon presentation of the Architect’s
properly submitted statement of services promptly after such services are performed. No deductions shall be made from the Architect’s compensation on account of penalty, liquidated damages or other sums withheld from payments to contractors, or
on account of the cost of changes in the Work other than those for which the Architect is responsible. 
 § 1.3.9.2 Reimbursable Expenses
are in addition to compensation for the Architect’s services and include reasonable actual expenses incurred by the Architect and Architect’s employees and consultants directly related to the Project, as identified in the following
Clauses: 
  

	 	.1	transportation in connection with the Project, authorized out-of-town travel and subsistence, and electronic communications; 

  

	 	.2	fees paid for securing approval of authorities having jurisdiction over the Project; 

  

	 	.3	reproductions, plots, standard form documents, postage, handling and delivery of Instruments of Service; 

  

	 	.4	expense of overtime work requiring higher than regular rates if authorized in writing in advance by the Owner; 

  

	 	.5	renderings, models and mock-ups requested and authorized in writing in advance by the Owner; 

  

	 	.6	expense of professional liability insurance dedicated exclusively to this Project or the expense of additional insurance coverage or limits requested by the Owner in excess
of that normally carried by the Architect and the Architect’s consultants; 

  

	 	.7	reimbursable expenses as designated in Section 1.5.5; 

  

	 	.8	any other expense directly related to the Project and reasonably incurred after first receiving the written approval of the Owner. 

 § 1.3.9.3 Records of Reimbursable Expenses, of expenses pertaining to a Change in Services, and of services performed on the basis of hourly rates or a
multiple of Direct Personnel Expense shall be available to the Owner or the Owner’s authorized representative at mutually convenient times. These records shall be preserved by the Architect for a period of four years after final payment.

 § 1.3.9.4 Direct Personnel Expense is defined as the direct salaries of the Architect’s personnel engaged on the Project and the
portion of the cost of their mandatory and customary contributions and benefits related thereto, such as employment taxes and other statutory employee benefits, insurance, sick leave, holidays, vacations, employee retirement plans and similar
contributions. 
 ARTICLE 1.4 SCOPE OF SERVICES AND OTHER SPECIAL TERMS AND CONDITIONS 

§ 1.4.1 Enumeration of Parts of the Agreement. This Agreement represents the entire and integrated agreement between the Owner and the Architect and
supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be amended only by written instrument signed by both Owner and Architect. This Agreement comprises the documents listed below. 

§ 1.4.1.1 Standard Form of Agreement Between Owner and Architect, AIA Document B141-1997, as modified. 
 § 1.4.1.2 Standard Form of Architect’s Services: Design and Contract Administration, AIA Document B141-1997, as modified. 
 (List other documents, if any, delineating Architect’s scope of services.) 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	9
	User Notes: January 16, 2007	  	(2572649982	)	 	

 § 1.4.1.3 Other documents as follows: 
 (List other documents, if any, forming part of the Agreement.) 
  

			
	Exhibit A	  	Program documents by Specialty Operations Solutions, Inc. (SOS) for the Basis of Design (BOD) dated 7/13/06 and the Draft 3a Floor Plan dated September 20, 2006
		
	Exhibit B	  	Fee Proposal from O’Brien Atkins, dated October 30, 2006
		
	Exhibit C	  	Proposal from subconsultant Sterling Engineering to O’Brien Atkins, dated October 24, 2006

 NOTE: In the event of conflicts or discrepancies between the documents forming this contract,
interpretations will be based on the following precedent priorities: (1) this modified B141 Owner/Architect Agreement; (2) Exhibit B; and then (3) Exhibit C. 
 § 1.4.2 Special Terms and Conditions. Special terms and conditions that modify this Agreement are as follows: 
 § 1.4.2.1 The Architect shall maintain throughout the period of the Project, and for a period of three years thereafter, standard errors and omissions insurance in an amount normally carried by the Architect and which is
customary for similarly situated architects in the industry. The Architect shall maintain insurance coverage for commercial general liability, automobile liability and workers’ compensation in form and amounts normally carried by the Architect
which are customary for similarly situated architects in the industry. The Architect shall ensure that any and all consultants engaged or employed by the Architect carry similar insurance with reasonable prudent limits and coverages in light of the
services to be rendered by such consultants. The Architect shall submit to the Owner proof of insurance in amounts satisfactory to the Owner and upon the Owner’s request, shall promptly furnish copies of all insurance policies to the Owner. The
insurance policies shall incorporate a provision for giving written notice to the Owner at least 30 days prior to any cancellation, non-renewal or material modification of the policies. Without limiting any other provision in this Agreement, failure
of the Architect to comply with this paragraph 1.4.2.1 shall be cause for termination. 
 § 1.4.2.2 To the fullest extent permitted by law,
the Architect agrees to indemnify, hold harmless, protect and defend the Owner and the Owner’s agents, representatives and affiliated entities against any and all claims, loss, liability, damage, costs and expenses including reasonable
attorneys’ fees, occurring as a result of or due to the negligence of the Architect, its agents, consultants, employees or representatives. 
 § 1.4.2.3 The Architect shall be responsible for all services provided under this Agreement regardless of whether provided directly by the Architect or by any consultants directly employed by the Architect. The Architect
will perform all duties and services and make all decisions called for hereunder promptly and without unreasonable delay and will give the Project such priority as is necessary to cause the Architect’s services hereunder to be timely and
properly performed. 
 § 1.4.2.4 With respect to the Americans with Disabilities Act (“ADA”), the Owner acknowledges that the ADA
is not a detailed building code and that its requirements are general in nature and open to differing interpretations. Consistent with the professional standard of care, the Architect will interpret applicable ADA requirements with respect to its
design of the building. However, the Architect does not warrant or represent that services provided under this Agreement will result in full project compliance with the ADA or all interpretations of ADA requirements by regulatory bodies or court
decisions. In addition, if the Owner requires that the construction of the project deviate from the Architect’s reasonable judgment and understanding of the provisions of the ADA, the Owner shall hold the Architect harmless from any claim based
upon such deviation. For clarity, this does not relieve the Architect of its duty to adhere to applicable state and local building codes. 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	10
	User Notes: January 16, 2007	  	(2572649982	)	 	

 ARTICLE 1.5 COMPENSATION 
 § 1.5.1 For the Architect’s services as described under Article 1.4 or elsewhere herein, compensation (“Basic Compensation”) shall be computed as follows: 
  

				
	 Review of SOS Documents/MEP Existing Cond
	  	$	26,080
	 Architectural Design Confirmation/MEP Schematic Design
	  	 	25,564
	 Design Development
	  	 	27,813
	 Construction Documents
	  	 	67,648
	 Procurement & Permitting
	  	 	9,492
	 Construction
	  	 	46,330
	 Total
	  	$	202,927

 The Architect shall submit to the Owner invoices on a monthly basis, the amount of each such invoice to
be calculated based on the percentage of each Basic Compensation phase as set forth above. 
 § 1.5.2 If the services of the Architect
are changed as described in Section 1.3.3.1, the Architect’s compensation shall be adjusted. Such adjustment shall be calculated as described below or, if no method of adjustment is indicated in this Section 1.5.2, in an equitable
manner. 
 (Insert basis of compensation, including rates and multiples of Direct Personnel Expense for Principals and employees, and identify Principals
and classify employees, if required. Identify specific services to which particular methods of compensation apply.) 
 See O’Brien Atkins
Associates, P.A. Hourly Rates for 2006, attached and incorporated herein as Exhibit B. 
 § 1.5.3 For a Change in Services of the
Architect’s consultants, compensation shall be computed as a multiple of One and one-tenth ( 1.10 ) times the amounts billed to the Architect for such services. 
 § 1.5.4 For Reimbursable Expenses as described in Section 1.3.9.2, and any other items included in Section 1.5.5 as Reimbursable Expenses, the compensation shall be computed as a multiple of
One and one-tenth ( 1.10 ) times the expenses incurred by the Architect, and the Architect’s employees and consultants. 
 § 1.5.5
Other Reimbursable Expenses, if any, are as follows: 
 § 1.5.6 The rates and multiples for Changes in Services of the Architect and the
Architect’s consultants as set forth in this Agreement shall be adjusted in accordance with their normal salary review practices. 
 § 1.5.7 Payments for services shall be made monthly, and where applicable, shall be in proportion to services performed on the basis set forth in this Agreement. 
 § 1.5.8 Payments are due and payable Thirty ( 30 ) days from the date of the Architect’s invoice. Amounts properly due and unpaid Sixty ( 60 ) days
after the invoice date shall bear interest at the rate entered below, or in the absence thereof at the legal rate prevailing from time to time at the principal place of business of the Architect. 
 (Insert rate of interest agreed upon.) 
 Prime rate plus one percent
per annum as published in the Wall Street Journal. 
 (Usury laws and requirements under the Federal Truth in Lending Act, similar state and local consumer
credit laws and other regulations at the Owner’s and Architect’s principal places of business, the location of the Project and elsewhere may affect the validity of this provision. Specific legal advice should be obtained with respect to
deletions or modifications, and also regarding requirements such as written disclosures or waivers.) 
 § 1.5.9 If the services covered
by this Agreement have not been completed within Eight ( 8 ) months of the date hereof, through no fault of the Architect, extension of the Architect’s services beyond that time shall be equitably adjusted for any Change in Services required as
a result of such time being exceeded or extended. 
  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	11
	User Notes: January 16, 2007	  	(2572649982	)	 	

 This Agreement entered into as of the day and year first written above. 
  

					
	OWNER – Targacept, Inc.	 		 	ARCHITECT – O’Brien Atkins Associates, P.A.
			
	/s/ Alan A. Musso	 		 	/s/ DBL
	(Signature)	 		 	(Signature)
	Alan A. Musso, Vice President & CFO	 		 	Dudley B. Lacy, AIA, President and COO
	(Printed name and title)	 		 	(Printed name and title)

  

						
	AIA Document B141TM – 1997 Part 1. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:07:31
on 01/16/2007 under Order No. unlicensed which expires on 3/6/2007, and is not for resale.	      	 	12
	User Notes: January 16, 2007	  	(2572649982	)	 	

 AIA® Document B141TM – 1997 Part 2 
 Standard Form of Architect’s Services: 
 Design and
Contract Administration 
 This document has important legal consequences. Consultation with an attorney is encouraged with respect to its completion or
modification. 
 TABLE OF ARTICLES 
  

			
	2.1	  	PROJECT ADMINISTRATION SERVICES
		
	2.2	  	SUPPORTING SERVICES
		
	2.3	  	EVALUATION AND PLANNING SERVICES
		
	2.4	  	DESIGN SERVICES
		
	2.5	  	CONSTRUCTION PROCUREMENT SERVICES
		
	2.6	  	CONTRACT ADMINISTRATION SERVICES
		
	2.7	  	FACILITY OPERATION SERVICES
		
	2.8	  	SCHEDULE OF SERVICES
		
	2.9	  	MODIFICATIONS

 ARTICLE 2.1 PROJECT ADMINISTRATION SERVICES 
 § 2.1.1 The Architect shall manage the Architect’s services and administer the Project. The Architect shall consult with the Owner, research
applicable design criteria, attend Project meetings, communicate with members of the Project team and issue progress reports. The Architect shall coordinate the services provided by the Architect and the Architect’s consultants with those
services provided by the Owner and the Owner’s consultants. 
 § 2.1.2 The Architect shall prepare, and periodically update for the
Owner’s approval within seven (7) days of the execution of this Agreement, a Project schedule that shall identify milestone dates for decisions required of the Owner, design services furnished by the Architect, completion of documentation
provided by the Architect, commencement of construction and Substantial Completion of the Work. 
 § 2.1.3 The Architect shall consider, and
discuss with the Owner, the value of alternative materials, building systems and equipment, together with other considerations based on program, budget and aesthetics in developing the design for the Project. 
 § 2.1.4 Upon request of the Owner, the Architect shall make a presentation to explain the design of the Project to representatives of the Owner.

 § 2.1.5 The Architect shall submit design documents to the Owner at intervals appropriate to the design process for purposes of
evaluation and approval by the Owner. Subject to the provisions contained in the next sentence herein, the Architect shall be entitled to rely on approvals received from the Owner in the further development of the design. The Owner’s approval
of the Architect’s design documents contemplated herein shall not be for the purpose of determining the accuracy, adequacy or completeness of such documents and shall not alter the Architect’s responsibilities with respect to such
documents. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	1
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.1.6 The Architect shall assist the Owner in connection with the Owner’s responsibility for
filing documents required for the approval of governmental authorities having jurisdiction over the Project. 
 § 2.1.7
EVALUATION OF BUDGET AND COST OF THE WORK 
 § 2.1.7.1 When the Project requirements have been
sufficiently identified, the Architect shall prepare a preliminary estimate of the Cost of the Work. This estimate may be based on current area, volume or similar conceptual estimating techniques. As the design process progresses through the end of
the preparation of the Construction Documents, the Architect shall update and refine the preliminary estimate of the Cost of the Work. The Architect shall advise the Owner of any adjustments to previous estimates of the Cost of the Work indicated by
changes in Project requirements or general market conditions. If at any time the Architect’s estimate of the Cost of the Work exceeds the Owner’s budget, the Architect shall make appropriate recommendations to the Owner to adjust the
Project’s size, quality or budget, and the Owner shall cooperate with the Architect in making such adjustments. 
 § 2.1.7.2
Evaluations of the Owner’s budget for the Project, the preliminary estimate of the Cost of the Work and updated estimates of the Cost of the Work prepared by the Architect represent the Architect’s judgment as a design professional
familiar with the construction industry. It is recognized, however, that neither the Architect nor the Owner has control over the cost of labor, materials or equipment, over the Contractor’s methods of determining bid prices, or over
competitive bidding, market or negotiating conditions. Accordingly, the Architect cannot and does not warrant or represent that bids or negotiated prices will not vary from the Owner’s budget for the Project or from any estimate of the Cost of
the Work or evaluation prepared or agreed to by the Architect. 
 § 2.1.7.3 In preparing estimates of the Cost of the Work, the Architect
shall be permitted to include reasonable contingencies for design, bidding and price escalation; to determine what materials, equipment, component systems and types of construction acceptable to the Owner are to be included in the Contract
Documents; to make reasonable adjustments in the scope of the Project acceptable to the Owner and to include in the Contract Documents alternate bids acceptable to the Owner as may be necessary to adjust the estimated Cost of the Work to meet the
Owner’s budget for the Cost of the Work. If an increase in the Contract Sum occurring after execution of the Contract between the Owner and the Contractor and not attributable to negligence of the Architect causes the budget for the Cost of the
Work to be exceeded, that budget shall be increased accordingly. 
 § 2.1.7.4 If bidding or negotiation has not commenced within 90 days
after the Architect submits the Construction Documents to the Owner, the budget for the Cost of the Work shall be reviewed and, if necessary, adjusted to reflect changes, if any, in the general level of prices in the construction industry, between
the date of submission of the Contract Documents to the Owner and the date on which proposals are sought. 
 § 2.1.7.5 If the budget for the
Cost of the Work is exceeded by the lowest bona fide bid or negotiated proposal, the Owner shall: 
  

	 	.1	give written approval of an increase in the budget for the Cost of the Work; 

  

	 	.2	authorize rebidding or renegotiating of the Project within a reasonable time; 

  

	 	.3	terminate in accordance with Section 1.3.8.5; or 

  

	 	.4	cooperate in revising the Project scope and quality as required to reduce the Cost of the Work. 

 § 2.1.7.6 If the Owner chooses to proceed under Section 2.1.7.5.4, the Architect, without additional compensation, shall modify the documents for which the Architect is responsible under this
Agreement as necessary to comply with the budget for the Cost of the Work. The modification of such documents shall be the limit of the Architect’s responsibility under this Section 2.1.7. The Architect shall be entitled to compensation in
accordance with this Agreement for all services performed whether or not construction is commenced. 
 ARTICLE 2.2 SUPPORTING SERVICES

 § 2.2.1 Unless provided by the Architect as specifically designated in Section 2.8.3, or reasonably inferable under paragraph 1.4
or elsewhere herein, the services in this Article 2.2 shall be provided by the Owner or the Owner’s consultants and contractors. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	2
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.2.1.1 The Owner shall furnish a program setting forth the Owner’s objectives, schedule,
constraints and criteria, including space requirements and relationships, special equipment, systems and site requirements, unless such initial information has been included in Article 1.1 of this Agreement. 
 § 2.2.1.2 The Owner shall furnish surveys to describe physical characteristics, legal limitations and utility locations for the site of the Project, and
a written legal description of the site. The surveys and legal information shall include, as applicable, grades and lines of streets, alleys, pavements and adjoining property and structures; adjacent drainage; rights-of-way, restrictions, easements,
encroachments, zoning, deed restrictions, boundaries and contours of the site; locations, dimensions and necessary data with respect to existing buildings, other improvements and trees; and information concerning available utility services and
lines, both public and private, above and below grade, including inverts and depths. All the information on the survey shall be referenced to a Project benchmark, unless such initial information has been included in Article 1.1 of this Agreement.

 § 2.2.1.3 The Owner shall furnish services of geotechnical engineers which may include but are not limited to test borings, test pits,
determinations of soil bearing values, percolation tests, evaluations of hazardous materials, ground corrosion tests and resistivity tests, including necessary operations for anticipating subsoil conditions, with reports and appropriate
recommendations. 
 ARTICLE 2.3 EVALUATION AND PLANNING SERVICES 
 § 2.3.1 The Architect shall provide a preliminary evaluation of the information furnished by the Owner under this Agreement, including the Owner’s
program and schedule requirements and budget for the Cost of the Work, each in terms of the other. The Architect shall review such information to ascertain that it is consistent with the requirements of the Project and shall notify the Owner in
writing of any other information, tests, analyses, studies, reports or consultant services that may be reasonably needed for the Project. 
 § 2.3.2 The Architect shall provide a preliminary evaluation of the Owner’s site for the Project based on the information provided by the Owner and upon the Architect’s observations of site conditions, and the
Owner’s program, schedule and budget for the Cost of the Work. 
 § 2.3.3 The Architect shall review the Owner’s proposed method
of contracting for construction services and shall notify the Owner in writing of anticipated impacts that such method may have on the Owner’s program, financial and time requirements, and the scope of the Project. 
 ARTICLE 2.3.4 ENGINEER PREDESIGN SERVICES 
 The
Architect shall cause its engineering consultant, Sterling Engineering, to perform the following services for Targacept, Inc., located at 200 East First Street, Winston-Salem, NC 27101: 
  

	 	1.	Review and confirmation of Specialty Operations Solutions, Inc. (SOS) Documents. To the extent unpaid, Architect to pay $8,000.00, including reimbursables to its consultant,
Sterling Engineering, to perform the following pre-design services. 

  

	 	a.	Review of SOS documents to become familiar with the information and to meet with SOS to clarify questions concerning this information. 

  

	 	b.	Design confirmation code review of the SOS concept floor plan. Convert SOS plans to O’Brien/Atkins’ CAD Standards, revise floor plans to confirm to code and make revisions
accordingly. 

 ARTICLE 2.4 DESIGN SERVICES 
 § 2.4.1 The Architect’s design services shall include normal structural, mechanical and electrical engineering services. 
 § 2.4.1.1 The Architect shall be responsible for the coordination of all drawings and design documents used on the Project which have been prepared by the Architect or the Architect’s
consultants. The Architect, subject to the professional standard of care, shall be responsible for the completeness and accuracy of all drawings and specifications submitted by or through the Architect and for their compliance with all applicable
codes, ordinances, regulations, laws and statutes. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	3
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.4.1.2 The Owner shall have the right to disapprove any portion of the Architect’s work on the
Project (including, but not limited to, the Preliminary Planning and Conceptual Design Services, the Schematic Design Services, the Design Development Services, the Construction Documents Services, the Bidding or Negotiation Services or the Contract
Administration Services) on any reasonable basis including, but not limited to, the Owner’s opinion that the Cost of the Work is likely to render the Project infeasible. In the event that any non-construction phase of the Architect’s work
is not approved by the Owner, the Architect shall proceed, when requested by the Owner, to revise its work in good faith to attempt to satisfy the Owner’s objections. These revisions will be made without adjustments to the compensation provided
for hereunder, unless revisions are made to design work or documents previously approved by the Owner, in which case such revisions shall be paid for as Changes in Services pursuant to paragraph 1.3.3. Should there be substantial changes to the
original program after the approval of schematic drawings, which changes substantially increase the scope of design services to be furnished hereunder, the Architect shall notify the Owner in writing of a Change in Services and receive approval from
the Owner before proceeding with the revisions necessitated by such changes. 
 § 2.4.1.3 See Exhibit B, Fee Proposal from
O’Brien Atkins dated October 10, 2006, and Exhibit C, the subconsultant proposal from Sterling Engineering to O’Brien Atkins dated October 4, 2006. 
 § 2.4.2 SCHEMATIC DESIGN DOCUMENTS 
 § 2.4.2.1 The Architect shall provide
Schematic Design Documents for the Owner’s approval based on the mutually agreed-upon program, schedule, and budget for the Cost of the Work. The documents shall establish the conceptual design of the Project illustrating the scale and
relationship of the Project components. The Schematic Design Documents shall include a conceptual site plan, if appropriate, and preliminary building plans, sections and elevations. At the Architect’s option, the Schematic Design Documents may
include study models, perspective sketches, electronic modeling or combinations of these media. Preliminary selections of major building systems and construction materials shall be noted on the drawings or described in writing. 
 § 2.4.3 DESIGN DEVELOPMENT DOCUMENTS 
 § 2.4.3.1 The Architect shall provide Design Development Documents for the Owner’s approval based on the approved Schematic Design Documents and updated budget for the Cost of the Work. The Design Development Documents
shall illustrate and describe the refinement of the design of the Project, establishing the scope, relationships, forms, size and appearance of the Project by means of plans, sections and elevations, typical construction details, and equipment
layouts. The Design Development Documents shall include specifications that identify major materials and systems and establish in general their quality levels. 
 § 2.4.4 CONSTRUCTION DOCUMENTS 
 § 2.4.4.1 The Architect shall provide Construction Documents for the
Owner’s approval based on the approved Design Development Documents and updated budget for the Cost of the Work. The Construction Documents shall set forth in detail the requirements for construction of the Project. The Construction Documents
shall include Drawings and Specifications that establish in detail the quality levels of materials and systems required for the Project. 
 § 2.4.4.2 During the development of the Construction Documents and as requested by the Owner, the Architect shall assist the Owner in the development and preparation of: (1) bidding and procurement information which
describes the time, place and conditions of bidding; bidding or proposal forms; and the form of agreement between the Owner and the Contractor; and (2) the Conditions of the Contract for Construction (General, Supplementary and other
Conditions). The Architect also shall compile the Project Manual that includes the Conditions of the Contract for Construction and Specifications and may include bidding requirements and sample forms. 
 ARTICLE 2.5 CONSTRUCTION PROCUREMENT SERVICES 
 § 2.5.1 The Architect shall assist the Owner in obtaining negotiated proposals and shall assist the Owner in awarding and preparing contracts for construction. 
 § 2.5.2 The Architect shall assist the Owner in establishing a list of prospective bidders or contractors. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	4
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.5.3 The Architect shall assist the Owner in bid validation or proposal evaluation and determination
of the successful bid or proposal, if any. If requested by the Owner, the Architect shall notify all prospective bidders or contractors of the bid or proposal results. 
 § 2.5.4 COMPETITIVE BIDDING 
 § 2.5.4.1 Bidding Documents shall consist of bidding
requirements, proposed contract forms, General Conditions and Supplementary Conditions, Specifications and Drawings. 
 § 2.5.4.2 If
requested by the Owner, the Architect shall arrange for procuring the reproduction of Bidding Documents for distribution to prospective bidders. The Owner shall pay directly for the cost of reproduction or shall reimburse the Architect for such
expenses. 
 § 2.5.4.3 If requested by the Owner, the Architect shall distribute the Bidding Documents to prospective bidders and request
their return upon completion of the bidding process. The Architect shall maintain a log of distribution and retrieval, and the amounts of deposits, if any, received from and returned to prospective bidders. 
 § 2.5.4.4 The Architect shall consider requests for substitutions, if permitted by the Bidding Documents, and shall prepare and distribute addenda
identifying approved substitutions to all prospective bidders. 
 § 2.5.4.5 The Architect shall participate in or, at the Owner’s
direction, shall organize and conduct a pre-bid conference for prospective bidders. 
 § 2.5.4.6 The Architect shall prepare responses to
questions from prospective bidders and provide clarifications and interpretations of the Bidding Documents to all prospective bidders in the form of addenda. 
 § 2.5.4.7 The Architect shall participate in or, at the Owner’s direction, shall organize and conduct the opening of the bids. The Architect shall subsequently document and distribute the bidding results, as directed
by the Owner. 
 § 2.5.5 NEGOTIATED PROPOSALS 
 § 2.5.5.1 Proposal Documents shall consist of proposal requirements, proposed contract forms, General Conditions and Supplementary Conditions, Specifications and Drawings. 
 § 2.5.5.2 If requested by the Owner, the Architect shall arrange for procuring the reproduction of Proposal Documents for distribution to prospective
contractors. The Owner shall pay directly for the cost of reproduction or shall reimburse the Architect for such expenses. 
 § 2.5.5.3 If
requested by the Owner, the Architect shall organize and participate in selection interviews with prospective contractors. 
 § 2.5.5.4 As
an additional service pursuant to Section 1.3.3, the Architect shall consider requests for substitutions, if permitted by the Proposal Documents, with the concurrence of the Owner, and shall prepare and distribute addenda identifying approved
substitutions to all prospective contractors. 
 § 2.5.5.5 If requested by the Owner, the Architect shall assist the Owner during
negotiations with prospective contractors. The Architect shall subsequently prepare a summary report of the negotiation results, as directed by the Owner. 
 ARTICLE 2.6 CONTRACT ADMINISTRATION SERVICES 
 § 2.6.1 GENERAL ADMINISTRATION 
 § 2.6.1.1 The Architect shall provide administration of the Contract between the Owner and the Contractor(s) as set forth below and in the 1997 edition
of AIA Document A201, General Conditions of the Contract for Construction, as modified by the Owner. Modifications made by the Owner to the General Conditions, when adopted as part of the Contract Documents, shall be enforceable under this Agreement
only to the extent that they are consistent with this Agreement or approved in writing by the Architect. 
 § 2.6.1.2 The Architect’s
responsibility to provide Contract Administration Services under this Agreement commences with the award of the Contract for Construction and, subject to subparagraphs 2.6.6.1 and 1.5.9, terminates at the later of 60 days after the final completion
date set forth in the Contract Documents and any extensions of time granted pursuant thereto, or the date when all Work is complete as described in the Contract Documents. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	5
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.6.1.3 The Architect shall be a representative of and shall advise and consult with the Owner during
the provision of the Contract Administration Services. The Architect shall have authority to act on behalf of the Owner only to the extent provided in this Agreement unless otherwise modified by written amendment. 
 § 2.6.1.4 Duties, responsibilities and limitations of authority of the Architect under this Article 2.6 shall not be restricted, modified or extended
without written agreement of the Owner and Architect with consent of the Contractor, which consent will not be unreasonably withheld. 
 § 2.6.1.5 The Architect shall review properly prepared, timely requests by the Contractor for additional information about the Contract Documents. A properly prepared request for additional information about the Contract
Documents shall be in a form prepared or approved by the Architect and shall include a detailed written statement that indicates the specific Drawings or Specifications in need of clarification and the nature of the clarification requested.

 § 2.6.1.6 If deemed appropriate by the Architect, the Architect shall on the Owner’s behalf prepare, reproduce and distribute
supplemental Drawings and Specifications in response to requests for information by the Contractor. 
 § 2.6.1.7 The Architect shall
interpret and decide matters concerning performance of the Owner and Contractor(s) under, and requirements of, the Contract Documents on written request of either the Owner or Contractor(s). The Architect’s response to such requests shall be
made in writing within any time limits agreed upon or otherwise with reasonable promptness. 
 § 2.6.1.8 Interpretations and decisions of
the Architect shall be consistent with the intent of and reasonably inferable from the Contract Documents and shall be in writing or in the form of drawings. When making such interpretations and initial decisions, the Architect shall endeavor to
secure faithful performance by both Owner and Contractor, shall not show partiality to either, and shall not be liable for the results of interpretations or decisions so rendered in good faith. 
 § 2.6.1.9 The Architect shall render initial decisions on claims, disputes or other matters in question between the Owner and Contractor as provided in
the Contract Documents. 
 § 2.6.2 EVALUATIONS OF THE WORK 
 § 2.6.2.1 The Architect, as a representative of the Owner, shall visit the site at intervals appropriate to the stage of the Contractor’s operations, or as otherwise agreed by the Owner and the
Architect in Article 2.8, (1) to become generally familiar with and to keep the Owner informed about the progress and quality of the portion of the Work completed, (2) to use reasonable care to guard the Owner against defects and
deficiencies in the Work, and (3) to determine in general if the Work is being performed in a manner indicating that the Work, when fully completed, will be in accordance with the Contract Documents. However, the Architect shall not be required
to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work. The Architect shall neither have control over or charge of, nor be responsible for, the construction means, methods, techniques, sequences or
procedures, or for safety precautions and programs in connection with the Work, since these are solely the Contractor’s rights and responsibilities under the Contract Documents. 
 § 2.6.2.1.1 Although the Architect shall not be required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work, the Architect shall, review the quality and
quantity of the Work on at least a bi-weekly basis as part of the Architect’s Scope of Services under this Agreement, and shall issue written reports of such reviews, which reports shall inform the Owner of any material deviations from the
Contract Documents observed during such reviews. The parties acknowledge that the basic services limit for site visits is nine (9) by the Architect and five (5) by the Architect’s subconsultant, Sterling Engineering. The Architect
shall conduct additional reviews if requested by the Owner; any such additional reviews shall constitute a Change in Services pursuant to paragraph 1.3.3. 
 § 2.6.2.1.2 The Architect, as part of its scope of services under this Agreement, will attend and actively participate in bi-weekly progress meetings during construction of the Project which will be conducted by the
Contractor. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	6
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.6.2.1.3 The Architect, as part of its scope of services under this Agreement, shall carefully review
the Contractor’s meeting minutes and prior to the next progress meeting issue amendments and corrections as necessary for an accurate record protecting the interests of the Owner. If the Architect determines that the Contractor has fallen
substantially behind schedule, the Architect shall request from the Contractor a recovery plan to bring the Work back on schedule. 
 § 2.6.2.2 The Architect shall report to the Owner and Contractor in writing known deviations from the Contract Documents and from the most recent construction schedule submitted by the Contractor. However, the Architect
shall not be responsible for the Contractor’s failure to perform the Work in accordance with the requirements of the Contract Documents. The Architect shall be responsible for the Architect’s negligent acts or omissions, but shall not have
control over or charge of and shall not be responsible for acts or omissions of the Contractor, Subcontractors, or their agents or employees, or of any other persons or entities performing portions of the Work. 
 § 2.6.2.3 The Architect shall at all times have access to the Work wherever it is in preparation or progress. 
 § 2.6.2.4 Except as otherwise provided in this Agreement or when direct communications have been specially authorized, the Owner shall endeavor to
communicate with the Contractor through the Architect about matters arising out of or relating to the Contract Documents. Communications by and with the Architect’s consultants shall be through the Architect. 
 § 2.6.2.5 The Architect, in carrying out its responsibilities of observation and evaluation pursuant to this Agreement, shall have authority to reject
Work that does not conform to the Contract Documents. With the approval of the Owner, whenever the Architect considers it necessary or advisable, the Architect will have authority to require inspection or testing of the Work in accordance with the
provisions of the Contract Documents, whether or not such Work is fabricated, installed or completed. However, neither this authority of the Architect nor a decision made in good faith either to exercise or not to exercise such authority shall give
rise to a duty or responsibility of the Architect or the Owner to the Contractor, Subcontractors, material and equipment suppliers, their agents or employees or other persons or entities performing portions of the Work. 
 § 2.6.3 CERTIFICATION OF PAYMENTS TO CONTRACTOR 
 § 2.6.3.1 The Architect shall review and certify the amounts due the Contractor and shall issue Certificates for Payment in such amounts, based on the Architect’s observations and evaluations of the Contractor
Applications for Payment. The Architect’s certification for payment shall constitute a representation to the Owner, based on the Architect’s evaluation of the Work as provided in Section 2.6.2 and on the data comprising the
Contractor’s Application for Payment, that the Work has progressed to the point indicated and that, to the best of the Architect’s knowledge, information and belief, the quality of the Work is in accordance with the Contract Documents. The
foregoing representations are subject (1) to an evaluation of the Work for conformance with the Contract Documents upon Substantial Completion, (2) to results of subsequent tests and inspections, (3) to correction of minor deviations
from the Contract Documents prior to completion, and (4) to specific qualifications expressed by the Architect. 
 § 2.6.3.2 The
issuance of a Certificate for Payment shall not be a representation that the Architect has (1) made exhaustive or continuous on-site inspections to check the quality or quantity of the Work, (2) reviewed construction means, methods,
techniques, sequences or procedures, (3) reviewed copies of requisitions received from Subcontractors and material suppliers and other data requested by the Owner to substantiate the Contractor’s right to payment, or (4) ascertained
how or for what purpose the Contractor has used money previously paid on account of the Contract Sum. 
 § 2.6.3.3 The Architect shall
maintain a record of the Contractor’s Applications for Payment. 
 § 2.6.4 SUBMITTALS 
 § 2.6.4.1 The Architect shall review and approve or take other appropriate action upon the Contractor’s submittals such as Shop Drawings, Product
Data and Samples, but only for the limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents. The Architect’s action shall be taken with such reasonable promptness as to cause
no delay in the Work or in the activities of the Owner, Contractor or separate contractors, while allowing sufficient time in the Architect’s professional judgment to permit adequate review. Review of such submittals is not conducted for the
purpose of determining the accuracy and completeness of other details such as dimensions and quantities, or for substantiating instructions for installation or performance of equipment or systems, all of which remain the responsibility of the
Contractor as required by the Contract Documents. The Architect’s review shall not constitute approval of safety precautions or, unless otherwise specifically stated by the Architect, of any construction means, methods, techniques, sequences or
procedures. The Architect’s approval of a specific item shall not indicate approval of an assembly of which the item is a component. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	7
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.6.4.2 The Architect shall maintain a record of submittals and copies of submittals supplied by the
Contractor in accordance with the requirements of the Contract Documents. 
 § 2.6.4.3 If professional design services or certifications by
a design professional related to systems, materials or equipment are specifically required of the Contractor(s) by the Contract Documents, the Architect shall specify appropriate performance and design criteria that such services must satisfy. Shop
Drawings and other submittals related to the Work designed or certified by the design professional retained by the Contractor shall bear such professional’s written approval when submitted to the Architect. The Architect shall be entitled to
reasonably rely upon the adequacy, accuracy and completeness of the services, certifications or approvals performed by such design professionals. 
 § 2.6.5 CHANGES IN THE WORK 
 § 2.6.5.1 The Architect shall prepare Change Orders and Construction
Change Directives, with supporting documentation and data, for the Owner’s approval and execution in accordance with the Contract Documents. The Architect may, with the prior approval of the Owner, authorize minor changes in the Work not
involving an adjustment in Contract Sum or an extension of the Contract Time which are consistent with the intent of the Contract Documents. If necessary, the Architect shall prepare, reproduce and distribute Drawings and Specifications to describe
Work to be added, deleted or modified, as provided in Section 2.8.2. 
 § 2.6.5.1.1 All changes in the Work potentially involving an
adjustment in the Contract Sum or an extension of the Contract Time must be approved in writing in advance by the Owner. 
 § 2.6.5.2 The
Architect shall review and respond to reasonable requests by the Owner or Contractor for changes in the Work, including adjustments to the Contract Sum or Contract Time. If the Architect determines that requested changes in the Work are not
materially different from the requirements of the Contract Documents, the Architect may issue an order for a minor change in the Work or recommend to the Owner that the requested change be denied. If a request for a change in the Work requires
extensive investigation or preparation of additional drawings or specifications by the Architect, such Work shall be compensated as a Change in Service. 
 § 2.6.5.3 If the Architect determines that implementation of the requested changes would result in a material change to the Contract that may cause an adjustment in the Contract Time or Contract Sum, the Architect shall
make a recommendation to the Owner, who may authorize further investigation of such change. Upon such authorization, and based upon information furnished by the Contractor, if any, the Architect shall estimate the additional cost and time that might
result from such change, including any additional costs attributable to a Change in Services of the Architect, providing such change is solely a result of some action or inaction on the part of a party other than the Architect. With the Owner’s
approval, the Architect shall incorporate those estimates into a Change Order or other appropriate documentation for the Owner’s execution or negotiation with the Contractor. 
 § 2.6.5.4 The Architect shall maintain records relative to changes in the Work. 
 § 2.6.6
PROJECT COMPLETION 
 § 2.6.6.1 The Architect shall conduct inspections to determine the date or dates of Substantial Completion and
the date of final completion, shall receive from the Contractor and forward to the Owner, for the Owner’s review and records, written warranties and related documents required by the Contract Documents and assembled by the Contractor, and shall
issue a final Certificate for Payment based upon the Architect’s final inspection indicating the Work complies with the requirements of the Contract Documents. 
 § 2.6.6.1.1 If the Architect exceeds the number of inspections under basic services in this Agreement as a result of the fault of the Contractor, and if the Architect intends to charge the Owner for
same as a Change in Services, then the Architect must recommend to the Owner that such amount be deducted from amounts due the Contractor on the subsequent or final Application for Payment. 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	8
	User Notes: January 16, 2007	  	(1403318709	)	 	

 § 2.6.6.2 The Architect’s inspection shall, at the option of the Owner, be conducted with the
Owner’s Designated Representative to check conformance of the Work with the requirements of the Contract Documents and to verify the accuracy and completeness of the list submitted by the Contractor of Work to be completed or corrected. The
presence of the Owner’s Designated Representative at such inspection shall not affect the duties and responsibilities of the Architect under this Agreement. 
 § 2.6.6.3 When the Work is found to be substantially complete by the Architect, and the Owner is in agreement with same, the Architect shall inform the Owner about the balance of the Contract Sum remaining to be paid the
Contractor(s), including any amounts needed to pay for final completion or correction of the Work. 
 § 2.6.6.4 The Architect shall receive
from the Contractor and forward to the Owner: (1) consent of surety or sureties, if any, to reduction in or partial release of retainage or the making of final payment and (2) affidavits, receipts, releases and waivers of liens or bonds
indemnifying the Owner against liens and (3) warranties, guarantees and other Project closeout items required by the Contract Documents. 
 ARTICLE 2.7 FACILITY OPERATION SERVICES 
 § 2.7.1 The Architect shall request of the Owner, and if the
Owner decides to act on such request, the Architect shall meet with the Owner or the Owner’s Designated Representative promptly after Substantial Completion to review the need for facility operation services. 
 § 2.7.2 During the tenth month after Substantial Completion, the Architect shall arrange and conduct a meeting with the Owner and the Owner’s
Designated Representative, perform a thorough inspection of the Project and provide to the Owner a written report of deficiencies potentially constituting warranty issues of which the Contractor should be notified by the Owner. 
 ARTICLE 2.8 SCHEDULE OF SERVICES 
 § 2.8.1 Design and Contract Administration Services beyond the following limits shall be provided by the Architect as a Change in Services in accordance with Section 1.3.3: 
  

	 	.1	up to two ( 2 ) reviews of each Shop Drawing, Product Data item, sample and similar submittal of the Contractor. 

  

	 	.2	one ( 1 ) bi-weekly visit to the site by the Architect over the duration of the Project during construction. 

  

	 	.3	up to one ( 1 ) inspection for any portion of the Work to determine whether such portion of the Work is substantially complete in accordance with the requirements of the
Contract Documents. 

  

	 	.4	up to one ( 1 ) inspection for any portion of the Work to determine final completion. 

 NOTE: Under basic services, site visits are limited to nine (9) by the Architect and five (5) by the Architect’s subconsultant, Sterling Engineering. Site visits exceeding these limits to which
the Architect or its subconsultants bear no responsibility shall be subject to additional compensation as a Change in Services. 
 § 2.8.2
The following Design and Contract Administration Services shall be provided by the Architect as a Change in Services in accordance with Section 1.3.3: 
  

	 	.1	review of a Contractor’s submittal out of sequence from the submittal schedule agreed to by the Architect; 

  

	 	.2	responses to the Contractor’s requests for information where such information is available to the Contractor from a careful study and comparison of the Contract
Documents, field conditions, other Owner-provided information, Contractor-prepared coordination drawings, or prior Project correspondence or documentation; 

  

	 	.3	Change Orders and Construction Change Directives requiring evaluation of proposals, including the preparation or revision of Instruments of Service when such Change Orders
and Construction Change Directives are issued solely as a result of some action or inaction on the part of a party other than the Architect; 

  

	 	.4	providing consultation concerning replacement of Work resulting from fire or other cause, not the fault of the Architect, during construction; 

  

	 	.5	evaluation of an extensive number of claims submitted by the Contractor or others in connection with the Work with such claims arising solely from some action or inaction on
the part of a party other than the Architect; 

  

	 	.6	evaluation of substitutions proposed by the Owner’s consultants or contractors and making subsequent revisions to Instruments of Service resulting therefrom;

  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	9
	User Notes: January 16, 2007	  	(1403318709	)	 	

	 	.7	preparation of design and documentation for alternate bid or proposal requests proposed by the Owner; or 

  

	 	.8	providing services after the later of 60 days after the final completion date set forth in the Contract Documents and any extensions of time granted pursuant thereto, or the
date when all Work is complete as described in the Contract Documents, but only to the extent that the Architect performs additional services that would otherwise not have had to have been performed if the Project was not delayed.

 § 2.8.3 The Architect shall furnish or provide the following services only if specifically designated or otherwise
specified herein: 
  

							
	 Services
	  	 Responsibility
(Architect, Owner or
Not
Provided)
	  	 Location of Service Description

	.1	  	Programming	  	Owner (SOS)	  	
	.2	  	Land Survey Services	  	N/A	  	
	.3	  	Geotechnical Services	  	N/A	  	
	.4	  	Space Schematics/Flow Diagrams	  	Owner (SOS)	  	
	.5	  	Existing Facilities Surveys	  	N/A	  	
	.6	  	Economic Feasibility Studies	  	N/A	  	
	.7	  	Site Analysis and Selection	  	N/A	  	
	.8	  	Environmental Studies and Reports	  	N/A	  	
	.9	  	Owner-Supplied Data Coordination	  	Owner/Architect	  	
	.10	  	Schedule Development and Monitoring	  	N/A	  	
	.11	  	Civil Design	  	N/A	  	
	.12	  	Landscape Design	  	N/A	  	
	.13	  	Interior Design	  	Architect	  	Selection of finishes
	.14	  	Special Bidding or Negotiation	  	N/A	  	
	.15	  	Value Analysis	  		  	
	.16	  	Detailed Cost Estimating	  	N/A	  	
	.17	  	On-Site Project Representation	  	N/A	  	
	.18	  	Construction Management	  	N/A	  	
	.19	  	Start-up Assistance	  	N/A	  	
	.20	  	Record Drawings	  	Architect	  	para. 2.8.3.20.A
	.21	  	Post-Contract Evaluation	  	N/A	  	
	.22	  	Tenant-Related Services	  		  	
	.23	  	Signage	  	Owner	  	If required
	.24	  	Mechanical, Electrical and Plumbing Engineering	  	Architect	  	1.1.3.5
	.25	  	Fire Protection Engineering	  	Architect	  	1.1.3.5
	.26	  	Structural (if required)	  	Architect	  	1.1.3.5

 § 2.8.3.20.A No later than 120 days after final payment to the Contractor, and as part of
Basic Services, the Architect shall provide the Owner with a complete set of reproducible record drawings, in hard copy and electronic form delivered to the Owner on CD. These files will show significant changes in the Work made during construction
based on marked-up prints, drawings and other data furnished by the Contractor(s) to the Architect. 
 § 2.8.4 Notwithstanding anything in
this Agreement to the contrary, to the extent that architectural services are made necessary by any fault or omission of the Architect, such architectural services shall not be compensated as a Change in Service. 
 Description of Services. 
 (Insert descriptions of the services
designated.) 
  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	10
	User Notes: January 16, 2007	  	(1403318709	)	 	

 ARTICLE 2.9 MODIFICATIONS 
 § 2.9.1 Modifications to this Standard Form of Architect’s Services: Design and Contract Administration, if any, are as follows: 
 By its execution, this Standard Form of Architect’s Services: Design and Contract Administration and modifications hereto are incorporated into the Standard Form of Agreement Between the Owner and Architect, AIA
Document B141-1997, as modified, that was entered into by the parties as of the date: 
  

					
	OWNER – Targacept, Inc.	 		 	ARCHITECT – O’Brien Atkins Associates, P.A.
			
	/s/ Alan A. Musso	 		 	/s/ DBL
	(Signature)	 		 	(Signature)
	Alan A. Musso, VP & CFO	 		 	Dudley B. Lacy, AIA, President and COO
	(Printed name and title)	 		 	(Printed name and title)

  

						
	AIA Document B141TM – 1997 Part 2. Copyright © 1917, 1926, 1948, 1951, 1953, 1958, 1961, 1963, 1966, 1967, 1970, 1974, 1977, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International Treaties.
Unauthorized reproduction or distribution of this AIA® Document, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by AIA software at 15:08:28
on 01/16/2007 under Order No.unlicensed which expires on 3/6/2007, and is not for resale.	      	 	11
	User Notes: January 16, 2007	  	(1403318709	)	 	

 Exhibit A 
 Program Documents by Specialty Operations Solutions, 
 Inc. (SOS) for the Basis of Design (BOD)
dated 7/13/06 
 and the Draft 3a Floor Plan dated 9/20/06 
 Targacept Tech One Expansion – Basis Of Design Document 
 REVISION # 0

 July 13, 2006 
 GENERAL NOTES 
  

	 	•	 	 This facility will undergo a thorough commissioning of all installed systems. Because of the nature of the work being conducted (housing of non-regulated research
animals) a detailed punchlist will be prepared following a thorough inspection. The facility cannot be used by the Tenant until all punchlist items are phased out. 

  

	 	•	 	 The scope items listed below apply only to animal housing and laboratory areas, and do not apply to office areas within the Tenant suite.

  

	 	•	 	 All valves, dampers and other items requiring routine service should be located above accessible ceilings outside of the animal housing rooms, testing rooms and
procedure rooms. No adjustable or serviceable devices of any kind should be mounted above the housing rooms, testing rooms and procedure rooms. 

 HVAC 
  

	 	•	 	 Constant volume throughout. 

  

	 	•	 	 Fully ducted. No plenum returns. 

  

	 	•	 	 Adjustable volume damper on each supply run and each exhaust run, accessible through access areas located in accessible ceilings. 

  

	 	•	 	 Stainless steel (304) grills and registers in two qualified animal housing rooms. Galvanized or aluminum ductwork permitted above the ceiling structure, with
the exception of the cagewasher exhaust duct which must be stainless steel (304) to the mechanical penthouse. The cagewasher exhaust duct shall be appropriately formed and routed so that condensate will drain back to the cagewasher without
leaking. 

  

	 	•	 	 10 air changes per hour in two qualified housing rooms, cagewasher room, food & bedding storage room, behavior rooms and lab areas, supplied by the
existing base building HVAC systems. The use of this space does not require a separate air handler, but will require additional constant volume boxes. 

  

	 	•	 	 Rodents shall be housed exclusively in powered, exhausted, individually isolated caging systems. The caging systems themselves shall be directly connected by
flexible ductwork to the dedicated exhaust duct and fan serving the cagewasher, which is located in the mechanical penthouse. This fan and vertical riser duct will exhaust all caging systems and the cagewasher. This exhaust stream shall not be
directed across a “heat wheel” heat recovery apparatus. Each caging system isolator typically exhausts 300CFM (adjustable) through a below-ceiling collar and blast gate damper. The cagewasher exhausts approximately 400 CFM.

  

	 	•	 	 Ceiling mounted grilles with the exception of the exhaust collars in the primary housing room, and the steam collection hood in the cagewasher room.

  

	 	•	 	 Control using system selected by the mechanical engineer to coordinate with the existing building system. Redundant control of spaces to be by stand-alone devices
which will control emergency shutdown of the main supply and exhaust ducts, and emergency activation of the back-up heat/cool units located in the housing room. 

  

	 	•	 	 Each of the qualified housing rooms and behavior testing rooms shall be a separate reheat zone, 

 fitted with its own thermostat. 

	 	•	 	 Reheat shall be effected by the use of electric coils, with devices mounted above accessible ceilings. 

  

	 	•	 	 No flexible ductwork. 

  

	 	•	 	 Balancing deviations shall be no greater than 5%. In no event shall the air change figure be allowed to drop below 10 ACH. 

  

	 	•	 	 The two qualified housing rooms and testing rooms 2 & 3 shall have a Mitsubishi Mr Slim DX heat pump (or approved equal) – appropriately sized - installed
in the mounting location selected by SOS. This unit will be completely independent of the main control system and will be fitted with its own mechanical heat/cool thermostat. Mount condensing units at the direction of the architect.

  

	 	•	 	 The central HVAC and control systems must be capable of maintaining the following environmental condition. 

  

	 	1.	70 degrees F, -+ 4 degrees (8 degree F spread allowed) 

  

	 	2.	Relative humidity no lower than 30% and no higher than 70%. Set at 50%, +- 10% 

  

	 	3.	Humidification shall be central to the space, supplied by one humidifier located in the main supply trunk serving the entire Targacept suite. 

  

	 	4.	A redundant, mechanical control by Honeywell (T87F or approved equal) shall be used to prevent dangerous, wildly out of parameter temperatures in each of the two qualified housing
rooms. In the event the ambient temperature of either room rises above 80 degrees F (adjustable to 90 F upper ) or below 62 degrees F (adjustable to 55 degrees F lower), supply and exhaust control dampers shall positively close and the system
will go into alarm. Supply dry contacts (NO or NC) for an alarm by others. 

  

	 	•	 	 In a power failure condition (or in the previously described out-of-parameter temperature condition) the control system shall be programmed so that the main control
dampers for the housing room on the supply and exhaust ducts shall close and shall remain closed until the main power supply is restored. 

  

	 	•	 	 Each housing room shall be fitted with one Magnahelic gauge, mounted over the entrance door on the central ACF corridor side. This gauge is to determine the
relative pressure of the housing room in comparison with the central ACF corridor. 

 ELECTRICAL 
  

	 	•	 	 All emergency systems shall be on stand-by power, served by a new stand-by load center, mounted in the new suite. Emergency systems consist of outlets powering the
six ventilated caging systems; penthouse exhaust fan ventilating the caging systems; four emergency heat pump units (one in each qualified housing room); and two additional 120V 20A circuits. 

  

	 	•	 	 Lighting levels in the two qualified housing rooms and each behavior testing room shall be wired so that two separate light levels may be chosen by the user. The
low light level shall be 25 FC measured at the floor and shall be controlled by a mechanical 24/7 timer, mounted in the corridor immediately outside the room being controlled. Use exterior-rated or marine application timers by Intermatic, Paragon,
Hubbell or approved equal. Seal the timer housing to the wall with a smooth bead of GE silicone caulk. 

  

	 	•	 	 Provide Sylvania “full spectrum” lamps for housing room. Cool white for all other areas. The light fixture housings shall be sealed against the ceiling
surface with a smooth bead of clear GE silicone caulk. 

  

	 	•	 	 All wall-mounted devices shall be exterior rated GFCI-type (or on GFCI breakers, at the discretion of the Electrical Engineer) with weatherproof covers. All
wall-mounted switches shall be fitted with Hubbell clear plastic weatherproof covers. 

  

	 	•	 	 The electrical contractor shall install indicated conduits and boxes for telephone and data ports. 

  

	 	•	 	 Fire alarm devices shall be outdoor or marine rated. No claxon or horn shall be mounted in the two qualified housing rooms, with the approval of the Fire Marshal.

  

	 	•	 	 Fire alarm pull stations shall be fitted with a clear plastic protective cover, Stopper II brand by Safety Technologies. 

	 	•	 	 All devices – switches for lights, and receptacles – fed by the stand-by power system shall be factory red in color. This applies to the device and the
cover plate. If a factory red device or plate is not available (the weathertight covers or the ceiling mounted boxes for instance – the contractor shall paint the cover plate or box with red Rustoleum heavy duty enamel. The Hubbell clear
flexible covers over light switches shall not be painted. 

  

	 	•	 	 The electrical contractor shall affix an engraved plastic indicator or professionally prepared label at each individual outlet and switch in the facility indicating
feed panel and circuit number. 

 CONSTRUCTION 
  

	 	•	 	 Completely prepare the floor surface so that it is a smooth, defect free cement plane. 

  

	 	•	 	 Flooring shall be rolled on epoxy rated for severe & wet service. 

  

	 	•	 	 Materials shall be at the direction of SOS. 

  

	 	•	 	 Access panels shall be installed as needed to allow full and complete access. 

  

	 	•	 	 All wall and ceiling surfaces shall be coated with two coats (4.5 mils wet per coat) of Sherwin-Williams Poly-Lon 1900 polyester polyurethane epoxy, after
appropriate surface preparation to make the surface perfectly smooth and free of gaps and defects. 

  

	 	•	 	 Hollow metal door frames in the two qualified housing rooms shall be “hospital rated” with welded joints 

  

	 	•	 	 All gaps at the joints of door frames and walls shall be filled with a smooth bead of GE clear silicone sealant 

  

	 	•	 	 Housing room doors shall have no view panels, or small view panels with light-tight inspection doors (Targacept option). Storage room doors shall have full upper
view panel (Lexan or laminated safety glass). 

  

	 	•	 	 Fire corridor doors shall be existing or to match the building standard. No view panel 

  

	 	•	 	 The contractor shall affix engraved plastic labels (1/4” white letters on black background) on each access door installed in the ceiling of the central ACF
corridor. The label shall list every electrical device, plumbing valve, damper and other device serviced through that access panel. 

  

	 	•	 	 All doors in the qualified housing rooms and behavior testing rooms shall be fitted with heavy duty LCN hydraulic closers, which are specifically designed to close
slowly against an air pressure differential of .20” 

 SPECIALTIES 
  

	 	•	 	 All wall surfaces as indicated on the drawing shall be fitted with Acrovyn ECR-32 crash rails, manufactured by Construction Specialties.

  

	 	•	 	 All swinging doors as indicated on the drawing shall be fitted with Acrovyn Latch Protectors, manufactured by Construction Specialties.

  

	 	•	 	 All outside corner wall joints as indicated on the drawing shall be fitted with Acrovyn corner guards, manufactured by Construction Specialties.

  

	 	•	 	 All hollow metal door frames as indicated on the drawing shall be fitted with Acrovyn DFP-B door frame protection sleeves, manufactured by Construction Specialties.

  

	 	•	 	 Doors leading into or out of the ACF, on the two qualified housing rooms, on each testing room and on the food & bedding storage room shall be fitted with
active door-bottom sealing mechanisms which will lower to the floor when the door is closed. A positive flexible seal at the floor is required. The frames of both doors shall be fitted with a positive sealing rubber gasket assembly. The performance
specification here is to make as air-tight, and vermin-tight, a seal at both doors as is possible. 

  

	 	•	 	 Use extra heavy duty – Severe Service – hinge. 

  

	 	•	 	 Use stainless steel hardware and latches. 

 [Diagram of Floor Design] 

 Exhibit B 
 Fee Proposal from O’Brien Atkins dated October 30, 2006 
  

							
	 O’Brien/Atkins Associates, PA
	  	 Post Office Box 12037
	  	 Durham
	  	 919/941-9000

	 Architecture/Engineering
	  	 Research Triangle Park, NC
	  	 Raleigh
	  	 919/755-1032

	 Landscape Architecture/Planning
	  	 27709
	  	 Chapel Hill
	  	 919/968-4571

	 Interior Design
	  		  		  	

 OBrienAtkins 
 October 30, 2006 
 Ms. Mauri K. Hodges 
 200 E. 1st St. 
 Suite 300 
 Winston-Salem, NC
27101-4165 
  

	Re:	Targacept ACF Fee Proposal 

 Dear Mauri: 
 Please find enclosed O’Brien/Atkins’ revised fee proposal for providing architectural services for the partial fit-up of the first floor of One Technology
Place. We are pleased to present this proposal for providing professional architecture for the design and construction documents of approximately 5400 GSF of animal care facility, 360 Sq. Ft of Chemical Storage Room and 4700 GSF of associated office
space. 
 Scope of the Project 
 O’Brien/Atkins will
provide architectural documents for the fit up of the spaces described above and as described in the program documents prepared by Specialty Operations Solutions for the Basis of Design (BOD) dated 7-13-06 and the Draft 3a Floor Plan dated 9-20-06.

 Delivery of Services 
 Targacept will hold three
contracts: One with Shelco the General Contractor, one with O’Brien/Atkins Associates for Architecture, MEP and Fire protection, and one with Specialty Operations Solutions. The contract of Sterling Engineering Company, Inc. for MEP and Fire
protection has been assigned to O’Brien/Atkins. O’Brien Atkins will administer Sterling’s contract and coordinate their services. Any required structural work (framing new roof/floor openings or support of roof mounted equipment) will
be provided by GKC as a sub-consultant to O’Brien/Atkins. At this time it is not known if any structural modifications will be required. If such services are required we would provide a firm quote at the time the scope is determined.

 Architecture and Engineering Team 
 O’Brien/Atkins
will provide architectural design services and lead the design phase effort with the following team: 
  

	 	•	 	 Architecture: O’Brien/Atkins Associates, PA 

  

	 	•	 	 Interior Design: O’Brien/Atkins Associates, PA 

  

	 	•	 	 Structural Engineering: GKC if required 

  

	 	•	 	 MEP Engineering: Sterling Engineering Company, Inc. (assigned to O’Brien/Atkins) 

  

	 	•	 	 Fire Protection Engineering: Sterling Engineering Company, Inc. (assigned to O’Brien/Atkins) 

  

	 	•	 	 ACF Planning: by Owner’s consultant, Specialty Operations Solutions (SOS) 

  

	 	•	 	 Code Compliance: O’Brien/Atkins Associates (Architecture), PA and Sterling Engineering Company Inc. (MEP and Fire Protection)

  

	 	•	 	 Civil Engineering: Not Required 

  

	 	•	 	 Landscape Architecture: Not Required 

  

	 	•	 	 Graphics & Signage: Not included in basic services. 

  

	 	•	 	 FF&E: Not included in basic services. 

 Page 2 of 2 
 Tragacept ACF

 Fit-up Scope of Services & Revised Fee Proposal 
 October 30, 2006 
 Scope of Architecture Services 
 The scope of architectural services includes the customary design, documentation and construction phase services for the above scope of work. 
 Coordinated with the delivery of services, the project has been separated into the following phases of services: 
  

	 	•	 	 Review of SOS documents to become familiar with the information and to meet with SOS to clarify questions concerning this information 

 

	 	•	 	 Design confirmation code review of the SOS concept floor plan. Convert SOS plans to O’Brien/Atkins’ CAD Standards, revise floor plans to confirm to code
and make revisions accordingly. 

  

	 	•	 	 Design Development as per AIA Document B-141 

  

	 	•	 	 Construction Documents as per AIA Document B-141 

  

	 	•	 	 Bid/Negotiations as per AIA Document B-141 

  

	 	•	 	 Construction Administration as per AIA Document B-141 

 Scope of Engineering Services 
 The scope of the engineering services and associated fee is defined in Sterling Engineering Company’s,
Inc. Fee Proposal dated October 24, 2006 (copy attached). 
 Project Schedule 
 The schedule for the project is: 
  

					
	 	  	Estimated Schedule
	 	  	Start	  	Finish
	 Review of SOS Documents
	  	10/2/2006	  	10/6/2006
	 Schematic Design
	  	10/6/2006	  	10/13/2006
	 Design Development
	  	10/13/2006	  	10/20/2006
	 Construction Documents
	  	10/20/2006	  	11/21/2006
	 Procurement & Permitting
	  	11/22/2006	  	12/12/2006
	 Construction
	  	12/12/2006	  	4/15/2007
	 Commissioning
	  	4/15/2007	  	5/1/2007

 Note: The completion of Design Development Phase shall constitute Plan Lock. Any changes after that will
constitute a change of scope and schedule, which in turn will require a negotiation of an adjustment to the fee and schedule. Design Development Phase approval is required prior to beginning the Construction Documents Phase. 
 Project Budget 
 The estimated construction budget for the project is
approximately $2,000,000. 

 Page 3 of 3 
 Tragacept ACF

 Fit-up Scope of Services & Revised Fee Proposal 
 October 30, 2006 
 Services Not Included/clarifications 
  

	 	•	 	 Tabulation of existing and future Equipment and Cut sheets – by Owner’s consultant, Specialty Operations Solutions 

  

	 	•	 	 Meetings limited to every two weeks during design 

  

	 	•	 	 Meetings every two weeks during construction (9 Meetings) 

  

	 	•	 	 Cost estimating services not included 

  

	 	•	 	 Scheduling services 

  

	 	•	 	 Laboratory casework programming and drawings by casework vendor 

  

	 	•	 	 Signage and Graphics not included 

  

	 	•	 	 O/A will rely on SOS for selection of Hardware, floor and wall finishes; Ceiling finishes within the perimeter of the ACF. SOS to furnish O’Brien/Atkins the
appropriate cut sheets and product information for the specification process. 

  

	 	•	 	 Because of the short schedule any change in the BOD, equipment or floor plan may constitute an adjustment to the fee and schedule. Any changes after the plan lock
will constitute will constitute a change of scope and schedule (see note above on the project schedule). 

  

	 	•	 	 O/A and Sterling has no scope during the Commissioning Phase 

 Receivables 
 O’Brien/Atkins needs the following documents: 
  

	 	•	 	 Signed Contract 

  

	 	•	 	 Authorization to proceed 

 Fee and Reimbursable
Expenses 
 O’Brien/Atkins proposes to provide the services described above for Two Hundred Two Thousand Nine Hundred Twenty Seven Dollars ($202,927)
plus the reasonable cost of its reimbursable expenses, submitted in a format acceptable to Targacept for travel, reproduction and express delivery times a 1.1 multiplier. For a breakout of the fee by tasks and associated hours please refer to the
attached spreadsheets. 
 We appreciate this opportunity to work with Targacept again and are excited to work with you on this project. 
  

	
	 Sincerely,
 O’BRIEN/ATKINS ASSOCIATES,
PA

	
	/s/ Eric J. Erickson,
	 Eric J. Erickson, AIA
 Principal, Director of
Science & Technology

 Attachments 
  

	cc:	Graydon Pleasants 

 John L. Atkins, III, FAIA 

Dudley B. Lacy, AIA 

 Idealllance Biotechnology Research Facility 
 Part 1. Idealliance Biotechnology Research Facility 
 Recap of
estimated fee & expenses by discipline by phase 
  

																																						
	  	 	 	 	Architecture & Project
Mgmt.	 	Mechanical
Engineering	 	Electrical
Engineering	 	 	 	 	 	Total Fee
	 Activity
	 	 Duration
 (Working
Days)
	 	Est. hrs.	 	Est. Fee	 	Est. hrs.	 	Est. Fee	 	Est. hrs.	 	Est. Fee	 	Total Hrs	 	Total $	 	Structural
GKC	 	Sterling
Engineering
Company,
INC	 	O/A
Coord/
Mgt	 	 	 	O/A
	 Review of SOS Documents and MEP Existing Conditions
	 	3	 	10	 	$	1,610	 	0	 	$	0	 	0	 	$	0	 	10	 	$	1,610	 			 	$	22,245	 	$	2,225	 	$	26,080	 	$	1,610
	 Architectural Design Confirmation/Schematic MEP
	 	5	 	52	 	$	4,780	 	0	 	$	0	 	0	 	$	0	 	52	 	$	4,780	 	$	0	 	$	18,895	 	$	1,890	 	$	25,685	 	$	4,780
	 Design Development
	 	5	 	68	 	$	7,380	 	0	 	$	0	 	0	 	$	0	 	68	 	$	7,380	 	$	0	 	$	18,576	 	$	1,856	 	$	27,813	 	$	7,380
	 Construction Documents Production
	 	15	 	248	 	$	28,480	 	0	 	$	0	 	0	 	$	0	 	248	 	$	28,480	 	$	0	 	$	31,025	 	$	3,103	 	$	92,608	 	$	28,480
	 Bld/Negotiation
	 	20	 	36	 	$	4,680	 	0	 	$	0	 	0	 	$	0	 	36	 	$	4,680	 	$	0	 	$	4,375	 	$	438	 	$	9,493	 	$	4,680
	 Construction Phase
	 	110	 	200	 	$	24,440	 	0	 	$	0	 	0	 	$	0	 	200	 	$	24,440	 	$	0	 	$	19,900	 	$	1,990	 	$	46,330	 	$	24,440
	 Interiors
	 	1	 	72	 	$	5,040	 		 			 		 			 	72	 	$	5,040	 			 			 	$	0	 	$	5,040	 	$	0
	 Estimated Total Hours
	 		 	686	 			 	0	 			 	0	 			 	686	 			 			 			 			 			 		
	 Estimated Total Fee
	 		 		 	$	76,410	 		 	$	0	 		 	$	0	 		 	$	76,410	 	$	0	 	$	116,015	 	$	11,502	 	$	202,927	 	$	71,370
		 		 		 			 		 			 		 			 		 			 			 			 	$	126,517	 			 		

  

							
	 Consultants:
	  			  		
	 Sterling Engineering Co
	  	$	115,015	  		
	 Structural Fee: GKC
	  	$	0	  		
		  	 	 	  		
		  	$	115,015	  		
	 Management/Coord. of consultants
	  	$	11,502	  		
		  	 	 	  		
	 Total for Basic Service Consultants
	  	$	126,517	  		
			
	 Basic Services
	  			  		
	 Building
	  			  	$	76,410
	 Consultants
	  			  	$	126,517
		  			  	 	 
	 Sub Total Basic Services
	  			  	$	202,927
	 Additional Services
	  			  		
	 Marketing Support Materials
	  	$	0	  		
	 EDI- Telecom/Security
	  	$	0	  		
	 Management/Coord. of consultants
	  	$	0	  		
	 Total for Additional Service Consultants
	  			  	$	0
		  			  	 	 
	 Total Fee (Excluding Reimbursable Expenses)
	  			  	$	202,927
		  			  	 	 

  

										
	 	  	Estimated
Construction
Cost	  	A/E Fee	  	Total Est
Const Cat +
A/E Fee
	 Biotechnology Facility Cora & Shell Construction Budget
	  	$	2,000,000	  	$	202,927	  	$	2,202,927

 Estimated Reimbursable Expenses 
 O’Brien/Atkins 
  

				
	 Mileage
	  	$	1,346
	 Express Mail
	  	$	625
	 Reproduction
	  	$	3,570
	 Meals
	  	$	294
	 Sub-Total Expenses
	  	$	5,835
	 Time Multiplier of 1.1
	  	$	6,418

 Consultants 
  

				
	 Sterling Engineering
	  	$	4,480
		  	$	0
		  	$	0
		  	$	0
	 Sub-Total Expenses
	  	$	4,480
	 Time Multiplier of 1.1
	  	$	4,928

 Estimated Tot. Reimbursables = $10,898 
 Remarks: 
  

	1.	Assumes 10,460 S.F. Build-out. 

  

	2.	Construction Review limited to 18 weeks and 9 architectural site visits 

  

	3.	Estimated Architectural 15 sheets 

  

	4.	Estimated at 40 express mail packages at $25/package = $1000. 

  

					
	O’Brien Atkins Associates, PA Confidential	  	10/30/2006	  	Detailed Summary Targacept ACF Fee R3

 Idealllance Biotechnology Research Facility 
 Part 1. Detailed Breakout of Fee & Expenses 
 Review of SOS
Documents 
  

					
	3/1/05-3/15/05	  	3 working days	  	24 working hours

  

																																						
	  	 	 	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape
Architecture	 	 	 	 
	Activity	 	Remarks	 	Principal	 	Project
Manager	 	Project
Architect	 	Intern
Architects	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafters	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	Total
Hours	 	Total $
		 		 	2	 	8	 		 			 		 		 		 			 		 		 			 		 			 		 		
	 Estimated Hours
	 		 	2	 	8	 	—  	 	 	—  	 		 	—  	 	—  	 	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	 	—  	 	10	 		
	 Full-time Equivalents
	 		 	0.08	 	0.33	 	0.00	 	 	0.00	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	0.00	 	 	0.00	 		 			 		 		
	 Fee by Discipline
	 		 		 		 		 	$	1,610	 		 		 		 	$	 —  	 		 		 	$	 —  	 		 	$	 —  	 		 	$	1,610
		 		 		 		 	10	 	$	161	 		 		 	0	 	 	#DIV/01	 		 	0	 	 	#DlV/01	 	0	 	 	#DIV/01	 		 		

 Design Confirmation 
  

					
	3/16/05 -3/30/05	  	5 working days	  	40 working hours

  

																																						
	  	 	 	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape
Architecture	 	 	 	 
	Activity	 	Remarks	 	Principal	 	Project
Manager	 	Project
Architect	 	Intern
Architects	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafters	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	Total
Hours	 	Total $
	 Schematic Design
	 	1	 	4	 	8	 		 	 	40	 		 		 		 			 		 		 			 		 			 		 		
	 Estimated Hours
	 		 	4	 	8	 	—  	 	 	40	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	 	—  	 	62	 		
	 Full-time Equivalents
	 		 	0.10	 	0.20	 	0.00	 	 	1.00	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	0.00	 	 	0.00	 		 			 		 		
	 Fee by Discipline
	 		 		 		 		 	$	4,780	 		 		 		 	$	—  	 		 		 	$	—  	 		 	$	—  	 		 	$	4,780
		 		 		 		 	52	 	$	92	 		 		 	0	 	 	#DIV/01	 		 	0	 	 	#DIV/01	 	0	 	 	#DIV/01	 		 		

 Design Development 
  

					
	3/31/05-4/14/05	  	5 working days	  	40 working hours

  

																																						
	  	 	 	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape
Architecture	 	 	 	 
	Activity	 	Remarks	 	Principal	 	Project
Manager	 	Project
Architect	 	Intern
Architects	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafters	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	Total
Hours	 	Total $
	 Design Development
	 	1	 	8	 	20	 		 	 	40	 		 		 		 			 		 		 			 		 			 		 		
	 Estimated Hours
	 		 	8	 	20	 		 	 	40	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	 	—  	 	68	 		
	 Full-time Equivalents
	 		 	0.20	 	0.50	 	0.00	 	 	1.00	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	 	0.00	 		 		
	 Fee by Discipline
	 		 		 		 		 	$	7,380	 		 		 		 	$	 —  	 		 		 	$	 —  	 		 	$	 —  	 		 	$	7,380
		 		 		 		 	68	 	$	109	 		 		 	0	 	 	#DIV/01	 		 	0	 	 	#DIV/01	 	0	 	 	#DIV/01	 		 		

 Construction Documents Production 
  

					
	4/15/05-5/19/5	  	15 working days	  	120 working hours

  

																																						
	  	 	 	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape
Architecture	 	 	 	 
	Activity	 	Remarks	 	Principal	 	Project
Manager	 	Project
Architect	 	Intern
Architects	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafters	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	Total
Hours	 	Total $
	 Construction Documents Production
	 	1	 	8	 	40	 		 	 	120	 		 		 		 			 		 		 			 		 			 		 		
	 Specifications
	 		 		 	80	 		 			 		 		 		 			 		 		 			 		 			 		 		
	 Estimated Hours
	 		 	8	 	120	 	—  	 	 	120	 	0.00	 	0.00	 	0.00	 	 	0.00	 	—  	 	—  	 	 	—  	 	—  	 	 	—  	 	248	 		
	 Full-time Equivalents
	 		 	0.07	 	1.00	 	0.00	 	 	1.00	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	 	0.00	 		 		
	 Fee by Discipline
	 		 		 		 		 	$	28,480	 		 		 		 	$	 —  	 		 		 	$	 —  	 		 	$	 —  	 		 	$	28.480
		 		 		 		 	248	 	$	115	 		 		 	0	 	 	#DIV/01	 		 	0	 	 	#DIV/01	 	0	 	 	#DIV/01	 		 		

  

					
	O’Brien Atkins Associates, PA Confidential	  	10/30/2006	  	Targacept ACF Fee R3

 Idealllance Biotechnology Research Facility 
 Bid/Negotiation 
  

					
	5/20/05-6/20/05	  	160 working hours	  	20 working days

  

																																						
	 Activity
	 	Remarks	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape Architecture	 	Total Hours	 	Total $
	 	 	Principal	 	Project
Manager	 	Project
Architect	 	Intern
Architects	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafters	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	 
	 Bid/Negotiation
	 	1	 	4	 	20	 		 	 	12	 		 		 		 			 		 		 			 		 			 		 		
	 Hours
	 		 	4	 	20	 	—  	 	 	12	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	 	—  	 	36	 		
	 Full-time Equivalents
	 		 	0.03	 	0.13	 	0.00	 	 	0.08	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	 	0.00	 		 		
	 Fee by Discipline
	 		 		 		 		 	$	4,680	 		 		 		 	$	—  	 		 		 	$	—  	 		 	$	—  	 		 	$	4,680
		 		 		 		 	36	 	$	130	 		 		 	0	 	 	#DIV/01	 		 	0	 	 	#DIV/01	 	0	 	 	#DIV/01	 		 		

 Construction Phase 
  

					
	6/20/06-12/11/06	  	110 working days	  	880 working hours

  

																																							
	 Activity
	 	Remarks	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape Architecture	 	Total Hours	 	Total $
	 	 	Principal	 	Project
Manager	 	Project
Architect	 	Intern
Architects	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafters	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	 
	 Construction Phase
	 	1	 	8	 	40	 		 	 	60	 		 		 		 			 		 		 			 			 			 		 		
	 Construction Meetings
	 		 		 	72	 		 			 		 		 		 			 		 		 			 			 			 		 		
	 Record Drawings
	 		 		 		 		 	 	20	 		 		 		 			 		 		 			 			 			 		 		
	 Estimated Hours
	 		 	8	 	112	 	—  	 	 	80	 	—  	 	—  	 	—  	 	 	—  	 	—  	 	—  	 	 	—  	 	 	—  	 	 	—  	 	200	 		
	 Full-time Equivalents
	 		 	0.01	 		 	0.00	 	 	0.09	 	0.00	 	0.00	 	0.00	 	 	0.00	 	0.00	 	0.00	 	 	0.00	 	$	120.00	 	$	68.00	 		 		
	 Fee by Discipline
	 		 		 		 		 	$	24,440	 		 		 		 	$	—  	 		 		 	$	—  	 			 	$	—  	 		 	$	24,440
		 		 		 		 	200	 	$	122	 		 		 	0	 	 	#DIV/01	 		 	0	 	 	#DIV/01	 	 	0	 	 	#DIV/01	 		 		

 Interior Design 
  

					
		  	1 working days	  	8 working hours

  

																																																
	 Activity
	 	Remarks	 	Architectural	 	Mechanical Engineering	 	Electrical Engineering	 	Landscape Architecture	 	Total Hours	 	Total $
	 	 	Principal	 	Project
Manager	 	Sr Interior
Designer	 	Interior
Designer	 	Mechanical
Engineer	 	HVAC
Designer	 	Plumbing
Designer	 	Mechanical
Drafters	 	Electrical
Engineer	 	Electrical
Designer	 	Electrical
Drafter	 	 Senior
Landscape
 Architect
	 	Landscape
Architect	 	 
	 Interior Design
	 	1	 	 	0	 			 			 	 	72	 			 			 			 			 			 			 			 			 			 			 		
	 Coordination with FF&E Designer
	 		 			 			 			 			 			 			 			 			 			 			 			 			 			 			 		
	 Estimated Hours
	 		 	 	—  	 			 	 	—  	 	 	72	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	72	 		
	 Full-time Equivalents
	 		 	 	0.00	 			 	 	0.00	 	 	9.00	 			 			 			 			 			 			 			 			 			 			 		
	 Fee by Person
	 		 	$	—  	 	$	—  	 	$	—  	 	$	5,040	 	$	—  	 	$	—  	 	$	—  	 	$	—  	 	$	—  	 	$	—  	 	$	—  	 	$	—  	 	$	—  	 			 		
	 Fee by Discipline
	 		 			 			 			 	$	5,040	 			 			 			 	$	—  	 			 			 	$	—  	 			 	$	—  	 			 	$	5,040
		 		 			 			 	 	72	 	 	$ —  	 			 			 	 	0	 			 			 	 	0	 	 	#DIV/01	 	 	0	 	 	#DIV/01	 			 		
		 	CDs	 	 	26	 	 	176	 	 	—  	 	 	284	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	$	486	 		
		 	CA	 	 	8	 	 	112	 	 	—  	 	 	80	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	$	200	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
		 		 	 	34	 	 	288	 	 	—  	 	 	364	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	$	686	 		

  

					
	O’Brien Atkins Associates, PA Confidential	  	10/30/2006	  	Targacept ACF Fee R3

 Estimated Expenses 
 12/1/04 -12/31/06 
  

				
	 Travel/Mileage
	  	$	1,346
	 Express Mail
	  	$	625
	 Reproduction
	  	$	3,570
	 Meals
	  	$	294
	 Total Estimated Expenses
	  	$	5,835

 Remarks: 
  

	1.	Assumes 10,480 S.F. Build-out. 

  

	2.	Construction Review limited to 18 weeks and 9 architectural sits visits 

  

	3.	Estimated Architectural 15 sheets 

  

	4.	Estimated at 40 express mail packages at $25/package = $1000. 

  

														
	 Estimated Reproduction
	  	# Sheets	  	Cost Sheet	  	Cost/Set	  	Est. # of sets	  	Est. Cost
	 SD Deliverable Estimated at
	  	2	  	$	2.00	  	$	4.00	  	15	  	$	60.00
	 DD Deliverable Estimated at
	  	16	  	$	2.00	  	$	32.00	  	15	  	$	480.00
	 CD Deliverable Estimated at
	  	15	  	$	2.00	  	$	30.00	  	20	  	$	600.00
	 Bid Sets Estimated at
	  	15	  	$	2.00	  	$	30.00	  	30	  	$	900.00
	 DD Specifications
	  	20	  	$	0.10	  	$	2,00	  	15	  	$	30.00
	 CD Specifications
	  	250	  	$	0.10	  	$	25.00	  	30	  	$	750.00
	 Bid Specifications
	  	250	  	$	0.10	  	$	25.00	  	30	  	$	750.00
		  		  			  			  		  	 	 
	 Total Reproduction
	  		  			  			  		  	$	3,570.00

  

														
	 	  	 	  	Rate	  	total per trip	  	# of trips	  	Total
	 Travel
	  	178 miles/trip @	  	$	0.36	  	$	64.08	  	21	  	$	1,345.88
	 Meals
	  		  	$	7.00	  	$	7.00	  	42	  	$	294.00

  

					
	O’Brien Atkins Associates, PA Confidential	  	10/30/2006	  	Targacept ACF Fee R3

 Exhibit C 
 Proposal from Subconsultant Sterling Engineering 
 to O’Brien Atkins dated October 4, 2006

  

			
	

	  	
		
	 79 Main Street
	  	October 24, 2006
		
	 Sturbridge, MA 01566
	  	
		
	 www.sterling-eng.com
	  	 Mr. Eric Erickson, AIA
 O’Brien/Atkins
Associates, PA
 P.O. Box 12037
 Research Triangle Park, NC
27709

	 T Ÿ 508.347.9101
	  	
		
	 F Ÿ 508.347.7659
	  	
		  	Re: Targacept Tech One 1st Floor MEP Proposal - Rev
2
		
	 E Ÿ info@sterling-eng.com
	  	

 Dear Rick, 
 This
letter of agreement outlines the details of the professional engineering services we will provide on a fixed fee basis. Please carefully review all items including the attached General Terms and Conditions, sign, date, and return this letter by fax
or mail at your earliest convenience, and retain a copy for your records. 
 SCOPE OF WORK 
 We propose to perform the following services for O’Brien/Atkins Associates located at 5001 South Miami Blvd., Durham, NC 27703. 
 PHASE I- PREPURCHASE 
  

	 	 1.
	 We will generate a formal prepurchase equipment schedule for the purchase of the long lead items required for the fit-up
of the Targacept Tech One 1st Floor ACF. 

  

	 	2.	We will produce a specification for the equipment to support the prepurchase schedule information. 

  

	 	3.	We will supply [3] sets each of 95% and 100% completion of the prepurchase specification and schedules. 

  

	 	4.	Following the issuance of the 95% prepurchase set, (separate from the design drawing sets), we plan on [1] on-site review of the 95% prepurchase review set in conjunction with the
50% design drawing review meeting. We are planning on a number of phone calls with comments, but may require an additional trip(s) if comments and/or directives conflict in such a manner that the equipment will hamper the outcome of the intended
design. The additional trip(s) are not covered by this proposal. 

 PHASE II- ACF/OFFICE
DESIGN 
  

	 	 1.
	 We will survey the 1st floor and produce existing conditions drawings of the mechanical and electrical systems including HVAC, exhaust, electrical, drains, plumbing, fire protection, mechanical piping and gas (OFA/CA,
natural gas and process vacuum). We will not include lab liquid or gases (Formalin, NoX, etc.) or other trades not expressly listed above. Other trade design can be incorporated for an additional cost, but is deemed outside of the scope of this
proposal. 

  

					
	Sterling Engineering Co., Inc.	  	Proposal for MEP Design Services	  	06090
	OBrien/Atkins- Targacept Tech One 1st
Floor	  	Page 1	  	October 24, 2006

	 	2.	Mechanical design will follow the Sterling HVAC Assessment dated 9/28/06 and the Assessment Addendum #1 dated 10/4/06. Deviations from that will be recorded by Sterling and approved
by OBA and Targacept prior to design incorporation. Included in the design will be the following design criteria outside of the Assessment’s general scope: 

  

	 	a)	NC 55 for lab environments for the ACF and NC 45 for the office areas 

  

	 	b)	Coordination with North Carolina State Building, Fire Prevention, Mechanical, Plumbing and Energy Codes 

  

	 	c)	Normal power for outlets and lighting 

  

	 	d)	Emergency feeds for the necessary equipment 

  

	 	e)	Control power for devices and panels 

  

	 	f)	Specification of control instruments and panels 

  

	 	 3.
	 We will develop [3] sets each of 50%, 100% review and 100% complete drawings for the 1st floor and associated penthouse and ground floor equipment including transitions between floors. We will issue relevant
specifications for mechanical and electrical trades. Other trade specifications will be handled by O’Brien/Atkins separately. Included with the sets will be the mechanical basis of design, and mechanical sequence of operations.

  

	 	4.	We will develop a permit set and include calculations for the plumbing, and HVAC loads if required. 

  

	 	5.	We understand there is an existing building air system riser diagram. We intend on issuing a riser diagram with the 100% complete set and would like it to be as complete as
possible. Therefore, we hope to receive an AutoCAD drawing of the print prior to the 50% review issue set. We do not intend on assessing the ductwork on the other floors, but again, would like it to be as complete and accurate as possible for the
client. 

  

	 	6.	We are planning on [3], on-site meetings prior to the 100% complete issue: kick-off, 50% review and 100% review. The 100% complete set will be issued via overnight
courier  –  afternoon delivery the day prior to the due date. Teleconferences can be planned, as required. 

  

	 	7.	We are planning on a monthly review meeting and construction observation trip until the projected, construction completion in February 2007 (3 trips total).

  

	 	8.	We will furnish [1] interim punch list at 95-100% complete construction by O’Brien/Atkins’ direction or by the end of February 2007, whichever is later. In addition, we
will issue [1] final mechanical/electrical punch list following or in conjunction with the commissioning process. This will allow the controls to be completed and tested. Also, we will verify the interim, punchlist items are rectified. [2] trips are
planned during this process. 

  

	 	9.	O’Brien/Atkins will furnish owner approved, AutoCAD room layout for our X-reference, as well as the program document, before the start of the MEP design process and a minimum
of 10 business days prior to the 50% drawing issue date as determined by OBA/Sterling agreement. 

  

	 	 10.
	 We assume we will not require escorts for the 1st floor, penthouse or ground floor areas during our survey. We also have not planned for safety training or protocol training. 

  

	 	 11.
	 If possible, we desire the as-built set and the balance report information for the current 1st floor build-out. This will aid in the redesign of that floor. 

  

	 	 12.
	 Add Chemical Storage HVAC, Exhaust, Electrical, and Fire Protection as required for 1st floor and associated requirements up to roof. 

  

	 	A.	Coordinate with architect to route ductwork, install electrical lights and power, fire protection and exhaust to maintain Class I, Div I code compliance and maintain design schedule
per the original proposal. 

  

					
	Sterling Engineering Co., Inc.	  	Proposal for MEP Design Services	  	06090
	OBrien/Atkins- Targacept Tech One 1st
Floor	  	Page 2	  	October 24, 2006

 SCHEDULE 
 Below is a list of our current, projected dates for the design process: 
 Existing Conditions: October 6, 2006 
 Schematic Design: October 13, 2006 
 Design Development/ 50% Issued: October
20, 2006 
 Construction Documents/ 100% Design Issued: November 21, 2006 
 Permitting Complete/Construction Start: December 12, 2006 
 Construction Complete: April 15, 2007 
 Commissioning services are not included in this proposal. 
 The design
schedule from October 11 to November 21 comprises a 7 business week schedule. This is the minimum duration based on the man-loading calculation that is achievable at the given price. If the schedule is compressed, the price should be
reevaluated. 
 COST 
 The total cost of
services, as outlined above, is a fixed fee of $ 119,495.00 including expenses. 
 Project Phase Breakout: 
  

									
	  	  	LABOR	  	EXPENSES	  	 NOTES on EXPENSE BRKDWN*

	 Phase 1- Existing Conditions:
	  	$	22,245.00	  	$	 1,625.00	  	3 ppl/2nights/drive 1600 miles total
	 Phase 2- Schematic Design:
	  	$	18,895.00	  	$	0.00	  	
	 Phase 3- Design Development/ 50%:
	  	$	18,575.00	  	$	1,575.00	  	2pp1/1 night/flv & car rental
	 Phase 4- Conceptual Design to 100%:
	  	$	31,025.00	  	$	0.00	  	
	 Phase 5- Procurement, Permitting/Bidding:
	  	$	4,375.00	  	$	0.00	  	
	 Phase 6- Construction Observation/Administration:
	  	$	19,900.00	  	$	1,280.00	  	1 prsn/ 3 trips/1 night/fly or drive
	 TOTAL
	  			  	$	119,495.00	  	

  

	*	All values are approximate, per person and may vary: hotel-1 night ~ $120/night, fly ~ $550 pp/flight, drive ~$640 rnd trip, car rental ~ $110/day, meals ~ $35/day

 Our billing rates for additional T&M work are as follows: 
  

				
	 Principle Engineer/ P.E.:
	  	$	125.00
	 Project Manager
	  	$	115.00
	 Sr Engineer
	  	$	110.00
	 Sr. Designer:
	  	$	105.00
	 Engineer/Designer:
	  	$	95.00
	 Jr. Designer
	  	$	85.00
	 Drafter:
	  	$	65.00
	 Administrative Support:
	  	$	55.00

 The price does not include remobilization for design or construction holds or delays. The billing rates are
subject to change in 1 year from the issuance of this proposal. 
  

					
	Sterling Engineering Co., Inc.	  	Proposal for MEP Design Services	  	06090
	OBrien/Atkins- Targacept Tech One 1st
Floor	  	Page 3	  	October 24, 2006

 EXECUTION 
 Please sign your name; print your name, title, and the date in the space provided. Having affixed their hands and seals below, Sterling Engineering, Co. Inc. and the Client indicate acceptance of the terms of this proposal and the attached
General Terms and Conditions. Please return the signed original to us. We look forward to serving you on this project 
  

					
		 	CLIENT’S NAME
			
		 	Signature:	 	  
		 	Name and Title:	 	  
		 	Date:	 	  

  

					
		 	STERLING ENGINEERING CO., INC.
			
		 	Signature:	 	JVM (via email)
		 	Name and Title: Jennifer V. Morrison, President
		 	Date: October 24, 2006

  

					
	Sterling Engineering Co., Inc.	  	Proposal for MEP Design Services	  	06090
	OBrien/Atkins- Targacept Tech One 1st
Floor	  	Page 4	  	October 24, 2006

 Sterling Engineering  
 Job Budget 
  

			
	 Client OBrien/Atkins
	  	Proj. Mgr. Todd Somerset
	 Address Durham, NC
	  	Job # 06090
	 Attention Eric Erickson, AIA
	  	Job Title Targacept ACF

  

																														
	 Phase
	  	 Description
	  	Principal
Eng.	  	Proj. Mgr.	  	Sr Eng	  	 Sr.
 Designer
	  	Engineer/
Designer	  	Jr Designer	  	Drafter	  	Admin.
Support	  	 
	ES	  	Survey and Existing Site Conditions	  	 	41	  	 	40	  	 	43	  	 	40	  	 	6	  	 	16	  	 	24	  	 	2	  		
	SC	  	Schematic Design	  	 	72	  	 	5	  	 	44	  			  	 	24	  	 	4	  	 	24	  	 	6	  		
	DG	  	Design to 50%	  	 	36	  	 	10	  	 	29	  	 	50	  	 	20	  	 	25	  	 	8	  	 	1	  		
		  	 Design to 100%
	  	 	69	  	 	32	  	 	28	  	 	76	  	 	59	  	 	14	  	 	8	  	 	7	  		
	SW	  	Bidding and RFI’s	  	 	18	  	 	7	  	 	11	  			  			  	 	1	  			  	 	0.5	  		
	CO	  	 Construction Observation/Admin
	  	 	71	  			  	 	42	  	 	58	  			  			  			  	 	4	  		
		  	 Total Hours
	  	 	307	  	 	94	  	 	197	  	 	224	  	 	109	  	 	60	  	 	64	  	 	20.5	  		
		  	Labor Cost	  	$	38,375.00	  	$	10,810.00	  	$	21,670.00	  	$	23,520.00	  	$	10,355.00	  	$	5,100.00	  	$	4,160.00	  	$	1,025.00	  	$	0.00

 Comments 
  
  
  

				
	Total Labor Cost	  	$	115,015.00
	Expenses	  	$	4,480.00
	Lab Charges	  		
	Miscellaneous	  		
	Total Contract	  	$	119,495.00

					
		  		  	 Sterling Engineering Co., Inc
 79 Main Street
..
 Sturbridge, MA 01566
 P: 508-347-9101
 F: 508-347-7659

 GENERAL TERMS AND CONDITIONS 
 CONTRACT — The Contract consists of the proposal signed by the Client and Sterling Engineering Co., Inc., and these General Terms and Conditions. The unsigned
proposal is valid for 90 days from the date on the front cover page of the proposal. The signed proposal is valid for 60 days form the date on the front cover page of the proposal unless a specific start of services date is identified within the
proposal. 
 This Contract supersedes all written or oral agreements between Sterling Engineering Co., Inc. and the Client except those written documents
specifically stated in the proposal as being a necessary document to the contractual arrangement of which the General Terms and Conditions is a part. No amendment of the signed proposal or General Terms and Conditions shall be of any force and
effect unless mutually agreed to by Sterling Engineering Co., Inc. and the Client, and evidenced in writing by fully stating the nature and details of said amendment and signed by duly authorized representatives of Sterling Engineering Co., Inc. and
the Client. 
 In the event that any clause or portion of a clause of this signed proposal or the General Terms and Conditions is finally determined by a
court of competent jurisdiction, from which an appeal either cannot be taken or is not taken, to be in violation of any applicable federal, state, or local law, all other clauses or portions of a clause shall nevertheless remain in full force and
effect to the maximum extent not clearly prohibited by applicable federal, state, or local law. 
 Wherever “Sterling Engineering Co., Inc.” is
named in the General Terms and Conditions it shall also mean and include Sterling Engineering Co., Inc.’s officers, directors, owners, employees and subconsultants. 
 ABSENCE OF WARRANTY/STANDARD OF CARE — All services of Sterling Engineering Co., Inc. will be rendered in a reasonable and prudent manner in accordance with the generally accepted engineering practice at
the time said services are rendered. All estimates, recommendations, opinions and decisions of Sterling Engineering Co., Inc. will be on the basis of the information available to Sterling Engineering Co., Inc. and Sterling Engineering Co.,
Inc.’s experience, technical qualifications, and professional judgement. There are no warranties of merchantability or fitness for a particular purpose or any other warranties or guarantees whatsoever, express or implied, with respect to any
service rendered or materials provided under this Contract or any related agreement. 
 ADDITIONAL SERVICES — Additional services above the basic
scope of work performed by Sterling Engineering Co., Inc. shall be compensated in accordance with our provided fee schedule plus reimbursable expenses. Additional services include, but are not limited to, site visits during construction in excess of
those scheduled; any change causing mechanical or electrical redesign beyond the 80% complete phase; services required to comply with changes in criteria defined in the Basis of Design document and/or the Schematic Narrative received after Owner
review and approval of Basis of Design document and Schematic Narrative documents; services required to verify the accuracy of drawings or other information furnished by the Client or owner; services required to prepare a set of record drawings
showing changes in the work made during construction; project changes (including, but not limited to, size, system type, complexity, or schedule) required by the owner or Client following the date of completion of the schematic design phase; project
revisions required due to codes, laws, or regulations enacted after completion of the schematic design phase; services or preparation of documents, review of Contractor’s proposals, or review of Contractor’s substitutions related to change
orders; services related to defects or deficiencies in Contractor’s work; services related to damage from any source to the site, equipment, or materials associated with the project; preparation of alternate bids; performance of engineering
feasibility studies, engineering economic studies, or surveys. 
 REIMBURSABLE EXPENSES — Reimbursable expenses include costs for travel fares
(airfare, taxi, train, etc.), automobile rental or mileage at 44.5¢ per mile, tolls, parking, lodging, meals, photocopies and reproductions, plotting and scanning, postage, applicable codes and standards, reference material, subconsultants,
rental equipment, laboratory services, and additional insurance coverage or 
  

					
	Sterling Engineering Co., Inc.	  	General Terms and Conditions	  	Rev. July 26, 2006
		  	Page 1	  	

 limits in excess of that normally carried (when requested by the Client in writing); expenses from required responses to
subpoenas or court orders related to work under this Contract or any related agreement. All reimbursable expenses from work by subconsultants and from laboratory services may be marked up 15% for administrative cost; all other reimbursable expenses
will be billed at cost. 
 INFORMATION FURNISHED BY CLIENT — The Client will assist Sterling Engineering Co., Inc. by placing at Sterling
Engineering Co., Inc.’s disposal all available information pertinent to the project including previous reports and any other data relative to design or construction of the project or Sterling Engineering Co., Inc.’s provision of services.
Sterling Engineering Co., Inc. shall have no liability for any claims attributable to Sterling Engineering Co., Inc.’s reliance upon or use of data, design criteria, drawings, specifications or other information furnished by the Client and the
Client agrees to indemnify and hold harmless Sterling Engineering Co., Inc. from any and all liability, claims, demands, judgments, damages, losses, costs and expenses, including consequential or indirect damages, whatsoever, including reasonable
attorney’s fees, therefrom. Sterling Engineering Co., Inc. shall disclose to the Client prior to use thereof, defects or omissions in the data, design criteria, drawings, specifications or other information furnished by the Client to Sterling
Engineering Co., Inc. that Sterling Engineering Co., Inc. discovers in its review and inspection thereof. 
 SCHEDULE — The Client agrees to
submit any project requirements to Sterling Engineering Co., Inc. before the end of the schematic design phase unless Sterling Engineering Co., Inc. is not required to comply with the project schedule. The Client agrees to submit any project changes
or changes in the scope of work no later than the date indicated for Client review comments of our 60% or greater complete submission phase unless Sterling Engineering Co., Inc. is not required to comply with the project schedule. Time limits
established by the project schedule shall not, except for reasonable cause, be adjusted by Sterling Engineering Co., Inc. or the Client. 
 CONSTRUCTION
OBSERVATION — Construction observation, when performed, is to verify general conformance with the construction documents. The Contractor is solely responsible for means, methods, accuracy, adequacy, schedule, and supervision of
construction. The Contractor is solely responsible for delivery and installation of materials and equipment. The Contractor is solely responsible for all measurements, dimensions, and fit of materials and equipment. The Contractor is solely
responsible for supervision of personnel, materials, equipment, and machinery. The Contractor is solely responsible for safety regarding all work. The Client agrees to indemnify and hold harmless Sterling Engineering Co., Inc. from all liability,
claims, demands, judgments, damages, losses, costs and expenses, including consequential or indirect damages, whatsoever, including reasonable attorney’s fees, arising out of or resulting from the Contractor’s means, methods, and safety
practices, and for the acts or omissions of any person (except Sterling Engineering Co., Inc.’s own employees or agent) at the project site or otherwise performing any of the work of the project. 
 DOCUMENTS — Documents prepared by Sterling Engineering Co., Inc. including but not limited to drawings, specifications, reports, calculations, data, notes,
sketches, photographs, renderings, and electronic media are instruments of service and remain the copyrighted property of Sterling Engineering Co., Inc. The Client agrees not to use any instruments of service for any purpose other than for the
project for which the instruments of service were prepared, without express written permission from and verification or adaptation by Sterling Engineering Co., Inc. Any such unauthorized use by the Client will be at the Client’s sole risk and
without liability or legal exposure to Sterling Engineering Co., Inc., and the Client shall indemnify and hold harmless Sterling Engineering Co., Inc. from any and all liability, claims, demands, judgments, damages, losses, costs and expenses,
whatsoever, including consequential or indirect damages, whatsoever, including reasonable attorney’s fees, arising out of or resulting therefrom. Sterling Engineering Co., Inc. reserves the right to remove its professional stamp and title block
from documents turned over to the Client. The hard copies or printed original documents provided by Sterling Engineering Co., Inc. shall remain the controlling version of the instruments of service. If it is necessary to disseminate any documents to
an unrelated third party, both the third party and the Client agree: 1) the third party is bound by all of the conditions and limitations of this Contract and related documents; 2) the third party is bound by all limitations of liability or
indemnity provisions hereof; and 3) the limitation of liability set forth in section “Liability” 
  

					
	Sterling Engineering Co., Inc.	  	General Terms and Conditions	  	Rev. July 26, 2006
		  	Page 2	  	

 below is an aggregate limit and the client does not have the right or duty to apportion the limitation amount between
itself and the third party. Sterling Engineering Co., Inc. shall have the right to use any documents in promotional materials or professional articles unless the Client expressly prohibits such use in writing. 
 CODE COMPLIANCE — Sterling Engineering Co., Inc. shall exercise usual and standard professional care and judgement to design in compliance with applicable
laws, regulations, codes, and standards in effect as of the date of the services rendered. 
 ABANDONMENT OR SUSPENSION OF WORK — Abandonment or
suspension of work by the Client with or without written notice does not reduce the Client’s liability to promptly pay Sterling Engineering Co., Inc. for all services rendered to date of written notification of abandonment or suspension. The
Client agrees to promptly pay commitments to consultants of Sterling Engineering Co., Inc. made in association with work of this Contract, or any related agreement, to date of written notification of abandonment or suspension of work. Sterling
Engineering Co., Inc. may, upon seven days written notice to the Client, suspend any and all work associated with this Contract, or any related agreement, when the Client does not pay the full balance of any invoice when due. Sterling Engineering
Co., Inc. reserves the right to abandon any and all work associated with this Contract, or any related agreement, when the Client does not pay the full balance of any invoice within 120 days of the date of invoice. The Client agrees to indemnify,
defend and hold harmless Sterling Engineering Co., Inc. from all liability, claims, demands, judgments, damages, losses, costs and expenses, whatsoever, including reasonable attorney’s fees, arising out of or resulting from such suspension or
abandonment. 
 ACCESS AND RIGHT OF ENTRY — When access or right of entry to property is required by work, the Client agrees to obtain legal
right-of-entry on the property. 
 LIABILITY — The Client agrees that Sterling Engineering Co., Inc.’s total liability for any and all
claims, demands, judgments, damages, losses, costs and expenses, whatsoever, including reasonable attorney’s fees, arising out of or in any way related to the project or this Contract or any related agreement, from any insurable cause including
its negligent acts, errors or omissions, breach of contract, or strict liability, shall not exceed the total amount recoverable from Sterling Engineering Co., Inc.’s general liability insurance and professional liability insurance at the time
of determination of liability. The Client hereby releases Sterling Engineering Co., Inc. from any liability above such amount and such amount shall be the sole and exclusive remedy available to the Client. The Client agrees to indemnify and
hold harmless Sterling Engineering Co., Inc. from any and all consequential or indirect damages arising out of or in any way related to the project or this contract. Appropriate insurance certificates will be furnished upon request. 
 INDEMNIFICATION — Sterling Engineering Co., Inc. shall, subject to the limitation of liability contained in “Liability” above, indemnify and hold
harmless the Client for claims, demands, judgments, damages, losses, costs and expenses, whatsoever, including reasonable attorney’s fees, caused by Sterling Engineering Co., Inc.’s negligent acts, errors or omissions in rendering the
services under this Contract or any related agreement to the extent and in proportion to Sterling Engineering Co., Inc.’s comparative degree of fault. The Client shall indemnify and hold harmless Sterling Engineering Co., Inc. for any and all
claims, demands, judgments, damages, losses, costs and expenses, whatsoever, including reasonable attorney’s fees, caused by the Client’s professional negligence to the extent and in proportion to the Client’s comparative degree of
fault. 
 HAZARDS — The Client agrees that Sterling Engineering Co., Inc. and their consultants have no responsibility for the discovery,
presence, handling, removal, disposal, or treatment of, or exposure of persons to, hazardous or toxic substances related to the project or at the project site. Client agrees that Sterling Engineering Co., Inc. and their subconsultants have no
responsibility for discovery or remediation of, or exposure of persons to, hazardous or dangerous circumstances. The Client agrees to indemnify, defend and hold harmless Sterling Engineering Co., Inc. from all liability, claims, demands, judgments,
damages, losses, costs and expenses, whatsoever, including reasonable attorney’s fees, arising out of or resulting from such hazardous or toxic conditions. 
  

					
	Sterling Engineering Co., Inc	  	General Terms and Conditions	  	Rev. July 26, 2006
		  	Page 3	  	

 FORCE MAJEURE — The Client agrees that Sterling Engineering Co., Inc. may not be held responsible for delay
or failure of performance of any commitment or agreement beyond our control including, without limiting the generality thereof, act of god, governmental regulations, priorities, embargoes, blockade, sabotage, fire, strike, lockouts and other
industrial disturbances, explosions, hurricanes, windstorm, flood, accident, epidemic, interruption of transportation facilities, appropriation of plant or produce by any government or public authority, inability to obtain necessary materials,
supplies, or permits due to existing or future rules, regulations, orders, laws or proclamations of governmental authorities either civil or military, and any other cause whether of the kind herein enumerated or otherwise, that are not reasonably
within our control. Any Force Majeure shall be remedied with all reasonable dispatch. 
 PAYMENT TERMS — The Client agrees to pay Sterling
Engineering Co., Inc. within thirty days from the date of the invoice. An interest charge of 1-1/2% per month of the invoice will be added for late payments. All payments received shall be applied to the oldest invoices first. The Client agrees
to reimburse Sterling Engineering Co., Inc. for all attorney’s fees and collection costs related to collection of late payments. When the fee is based on a percentage of construction cost and any portion of the project is abandoned, not
constructed, or constructed for less than current market rates, services performed by Sterling Engineering Co., Inc. shall be compensated based on the Contractor bid price, if prepared, otherwise on the latest cost estimate by Sterling Engineering
Co., Inc. 
 PROPRIETARY DATA — The technical and pricing information contained in the accompanying proposal or related agreement is to be
considered confidential and proprietary and is not to be disclosed or otherwise made available to third parties without the express written consent of Sterling Engineering Co., Inc. 
 SUCCESSORS AND ASSIGNMENTS — Sterling Engineering Co., Inc. and the Client, and each of their respective partners, successors, executors, administrators, and legal representatives, are hereby bound to the
other party to this Contract and any related agreement and to the partners, successors, executors, administrators, and legal representatives (and said assigns) of such other party with respect to all covenants, agreements and obligations of this
Contract or any related agreement. Neither Sterling Engineering Co., Inc. nor the Client shall assign, sublet or transfer any rights under or interest in this Contract or any related agreement (including but without limitation, moneys that may
become due or moneys that are due) without the express written consent of the other, except to the extent that any assignment, subletting or transfer is mandated by law. Unless specifically stated to the contrary in any written consent to an
assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Contract or any related agreement. Nothing contained in this paragraph shall prevent Sterling Engineering Co., Inc. from employing such
independent associates and subconsultants as Sterling Engineering Co., Inc. may deem appropriate to assist in the rendering of services hereunder. 
 PRECEDENCE — These General Terms and Conditions shall take precedence over any inconsistency or contradictory provisions contained in any proposal, contract, purchase order, requisition, notice to proceed, or any other document
related to this Contract, excepting direct amendments to these provisions that are stated as such in writing. It is understood and agreed that the services performed under the accompanying proposal or any related agreement are not subject to any
provision of the Uniform Commercial Code. Any terms and conditions set forth in the Client’s purchase order, requisition, or other notice or authorization to proceed are inapplicable to the services under the proposal or any related agreement,
except when specifically provided for in full on the face of such purchase order, requisition, or notice or authorization, and specifically accepted in writing by Sterling Engineering Co., Inc. Sterling Engineering Co., Inc.’s acknowledgement
of receipt of any purchase order, requisition, notice or authorization, or Sterling Engineering Co., Inc.’s rendering of services subsequent to receipt thereof, does not constitute acceptance of any terms or conditions other than those set
forth herein. 
 GOVERNING LAW — The validity and interpretation of this Contract and any related agreement shall be governed by the laws of the
Commonwealth of Massachusetts. 
  

					
	Sterling Engineering Co., Inc	  	General Terms and Conditions	  	Rev. July 26, 2006
		  	Page 4

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