Document:

STOCK SPECIMEN

 Exhibit 4.1 
  

 
  

									
	 	 	AMERICAN BANK NOTE COMPANY	 	 	  	 PRODUCTION COORDINATOR: TODD DEROSSETT
 931-490-1720
	  	 
	 	 	711 ARMSTRONG LANE	 	 	  	PROOF OF JANUARY 18, 2005	  	 
	 	 	COLUMBIA, TENNESSEE 38401	 	 	  	TARGACEPT, INC.	  	 
	 	 	(931) 388-3003	 	 	  	TSB 18440 FC	  	 
	 	 	SALES:    J. NAPOLITANO      212-269-0339X14	 	 	  	Operator:                         Ron	  	 
	 	 	/ ETHER 13 / LIVE JOBS
/T /TARGACEPT 18440  FC	 	 	  	New	  	 

  
 PLEASE INITIAL THE
APPROPRIATE SELECTION FOR THIS PROOF:  
             OK AS IS
            OK WITH CHANGES             MAKE CHANGES AND SEND ANOTHER PROOF 
  
 Colors Selected for Printing: Logo is FOR POSITION ONLY; LOW RESOLUTION: NOT SUITABLE
FOR PRINTING. Intaglio prints in SC-3 Dark Green. 
  
 COLOR: This proof was
printed from a digital file or art work on a graphics quality, color laser printer. It is a good representation of the color as it will appear on the final product. However, it is not an exact color rendition, and the final printed product may
appear slightly different from the proof due to the difference between the dyes and printing ink. 

 The following abbreviations, when used in the inscription on the face of this certificate, shall be
construed as though they were written out in full according to applicable laws or regulations: 
  

											
	 TEN COM
	 	– as tenants in common	  	UNIF GIFT MIN ACT –	  	__________Custodian__________
	 TEN ENT
	 	– as tenants by the entireties	  	 	  	(Cust)	 	 	  	(Minor)  
	 JT TEN
	 	– as joint tenants with right
    of survivorship and not as
    tenants in common	  	 	  	 under Uniform Gifts to Minors
 Act of                                    
   
         (State)

  
 Additional
abbreviations may also be used though not in the above list. 
  

					
	For Value Received,                                 
                                        
                                        
   hereby sell, assign and transfer unto                          
  
	
	                                       
                                        
                                        
                                        
                                        
                                        
              

	(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)                    
	
	                                       
                                        
                                        
                                        
                                        
                                        
              

	
	                                       
                                        
                                        
                                        
                                        
                                        
              

  

					
		
	PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE	  	 
	 	
	 	  	 
	
	                                      
                                        
                                        
                                        
                            Shares           
                                      
of the capital
stock represented by the within certificate, and do hereby irrevocably constitute and appoint
	
	                                      
                                        
                                        
                                        
                         Attorney             
                                   
to transfer the said stock on the
books of the within named Corporation with full power of substitution in the premises.

  
 Dated
                                        
         
  

					
	 	  	 	  	 
	 	  	NOTICE:	  	SIGNATURE MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE GUARANTEED BY A
BANK, BROKER OR ANY OTHER ELIGIBLE GUARANTOR INSTITUTION THAT IS AUTHORIZED TO DO SO UNDER THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (STAMP) UNDER RULES PROMULGATED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION

  

									
	 	 	AMERICAN BANK NOTE COMPANY	 	 	  	 PRODUCTION COORDINATOR: TODD DEROSSETT
 931-490-1720
	  	 
	 	 	711 ARMSTRONG LANE	 	 	  	PROOF OF JANUARY 18, 2005	  	 
	 	 	COLUMBIA, TENNESSEE 38401	 	 	  	TARGACEPT, INC.	  	 
	 	 	(931) 388-3003	 	 	  	TSB 18440 BK	  	 
	 	 	SALES:    J. NAPOLITANO      212-269-0339X14	 	 	  	Operator:                         Ron	  	 
	 	 	/ ETHER 13 / LIVE JOBS / T /TARGACEPT 18440 BK	 	 	  	New	  	 

  
 PLEASE INITIAL THE
APPROPRIATE SELECTION FOR THIS PROOF:          OK AS IS          OK WITH CHANGES
            MAKE CHANGES AND SEND ANOTHER PROOFINDEMNIFICATION AGREEMENT

 Exhibit 10.1 
  
 INDEMNIFICATION AGREEMENT 
  
 THIS AGREEMENT (the “Agreement”) is made and entered into as of February     , 2005 between Targacept, Inc., a
Delaware corporation (the “Company”), and                             , a director, officer
or member of the executive committee of the Company (“Indemnitee”). 
  
 WITNESSETH THAT: 
  
 WHEREAS,
Indemnitee performs a valuable service for the Company; and 
  
 WHEREAS, the Board of Directors of the Company (the “Board”) has adopted bylaws (the “Bylaws”) providing for or permitting the indemnification of officers, directors and employees of the Company to the fullest extent
permitted by the Delaware General Corporation Law, as amended (the “DGCL”); and 
  
 WHEREAS, the Bylaws and the DGCL, by their nonexclusive nature, permit agreements between the Company and its officers, directors and employees with respect to indemnification; and 
  
 WHEREAS, in order to induce Indemnitee to continue to serve as a director,
officer or member of the executive (management) committee of the Company, the Company has agreed to enter into this agreement with Indemnitee; 
  
 NOW, THEREFORE, in consideration of Indemnitee’s continued service as a director, officer or member of the executive committee of the Company after
the date hereof, the parties agree as follows: 
  
 1.
Definitions. For purposes of this Agreement: 
  
 (a) “Change of Control” means: 
  
 (i) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of (A) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);
provided that, notwithstanding the foregoing, none of the following acquisitions shall constitute a Change of Control: (1) an acquisition directly from the Company or from other stockholders that (x) was approved in advance by the Board and (y)
would not constitute a Change of Control under Section 1(a)(iii); (2) an acquisition by the Company; (3) an acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by, or under
common control with, the Company; or (4) an acquisition by an entity with respect to which the criteria set forth in Section 1(a)(iii)(A), (B) and (C) are met; or 
  
 (ii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a “Business Combination”); provided that, notwithstanding the foregoing, a Business Combination shall not constitute a Change of Control if: (A) the individuals and entities who are the
beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then
outstanding shares of common stock and of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the resulting, 

  

 
continuing or surviving entity in such Business Combination (including, if applicable, an entity that, as a result of such transaction, owns the Company or
all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportion as existed immediately prior to such Business Combination; (B) no Person (excluding the resulting,
continuing or surviving entity in such Business Combination or any employee benefit plan (or related trust) of such resulting, continuing or surviving entity) beneficially owns, directly or indirectly, twenty percent (20%) or more of the then
outstanding shares of common stock or of the combined voting power of the then outstanding voting securities of the resulting, continuing or surviving entity in such Business Combination, except to the extent that such ownership existed prior to the
Business Combination; and (C) at least a majority of the members of the board of directors of the resulting, continuing or surviving entity in such Business Combination are members of the Board at the time of the execution of the definitive
agreement providing for such Business Combination or of its authorization and approval by the Board; or 
  
 (iii) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 
  
 (b) “Company Position” means the status of a
person as a present or former director, officer, employee or agent of the Company or any other Enterprise. 
  
 (c) “Disinterested Director” means a director of the Company who is not and was not a party to the matter in respect of which
indemnification or advancement of Expenses is sought by Indemnitee. 
  
 (d) “Enterprise” shall mean the Company or any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for which Indemnitee serves, or did serve, at the request of the
Company as a director, officer, employee or agent. 
  
 (e) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (f) “Expenses” shall include all judgments, fines, ERISA excise taxes or penalties, amounts paid in settlement, reasonable
attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses
of a type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating in, or being or preparing to be a witness in a Proceeding. 
  
 (g) “Independent Counsel” means a law firm, a
partner or member of a law firm or an independent practitioner who (i) is experienced in matters of corporate law and (ii) would not, under the applicable standards of professional conduct then prevailing, have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement. 
  
 (h) “Person” means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

  
 (i) “Proceeding” includes any
threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding in which Indemnitee was, is or will be
involved as a party or otherwise, whether brought by or in the right of the Company or otherwise, whether civil, criminal, administrative or investigative, whether pending before or after the date of this 

  

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Agreement and whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be
provided under this Agreement, but specifically excluding an action initiated by an Indemnitee pursuant to Section 8 to enforce his rights under this Agreement. 
  

2. Indemnity of Indemnitee. The Company hereby agrees to indemnify and hold harmless Indemnitee to the fullest extent permitted by the
provisions of the DGCL, as may be amended from time to time. Without limiting the generality of the foregoing: 
  
 (a) Proceedings Other Than Proceedings by or in the Right of the Company. If Indemnitee was, is or is threatened to be made a party
to, or a participant in, any Proceeding (other than a Proceeding by or in the right of the Company) by reason of his Company Position, the Company shall indemnify him against all Expenses actually and reasonably incurred by him, or on his behalf, in
connection with such Proceeding (including, without limitation, any claim, issue or matter included therein) if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company, and with
respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful. 
  
 (b) Proceedings by or in the Right of the Company. If Indemnitee was, is or is threatened to be made a party to, or a participant
in, any Proceeding by or in the right of the Company by reason of his Company Position, the Company shall indemnify him against all Expenses actually and reasonably incurred by him, or on his behalf, in connection with the defense or settlement of
such Proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company; provided, however, if required by applicable law, no indemnification against such Expenses shall be made
in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such
indemnification may be made. 
  
 (c)
Indemnification for Expenses of a Party who is Wholly or Partially Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Company Position, a party to, and is successful in
defending (on the merits or otherwise), any Proceeding, the Company shall indemnify him to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him, or on his behalf, in connection therewith. If Indemnitee is
not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 2(c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 
  
 3. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 2, the Company shall
indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf if, by reason of his Company Position, he was, is or is threatened to be made, a party to, or participant in, any Proceeding
(including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s
obligations pursuant to this Agreement, other than those specified in Section 12, shall be that the Company shall not be obligated to make any 

  

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payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 7 and 8) to be unlawful under
Delaware law. 
  
 4. Contribution in the Event of Joint
Liability. 
  
 (a) Whether or not the
indemnification provided in Sections 2 and 3 is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in the first instance, the entire
amount of any judgment or settlement of such Proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter
into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

  
 (b) Without diminishing or impairing the
obligations of the Company set forth in Section 4(a), if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or
would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers,
directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding
arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent required by law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the
Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses, as well as any other
equitable considerations which are required to be considered under applicable law. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be
if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their respective actions were motivated by intent to gain personal profit or advantage,
the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. 
  
 (c) The Company shall fully indemnify and hold harmless Indemnitee from any claims of contribution that may be brought by any one or more
officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee. 
  
 5. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of
his Company Position, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. 
  
 6. Advancement of Expenses. Notwithstanding any other provision of
this Agreement, the Company shall advance all Expenses incurred in connection with any Proceeding by or on behalf of Indemnitee by reason of his Company Position within twenty (20) calendar days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding; provided that: (i) no determination has been made that the facts then known would preclude
indemnification pursuant to the terms of this Agreement; and (ii) Indemnitee (A) affirms in such written request that he acted in 

  

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good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Company (and, in the case of a criminal
Proceeding, that he had no reasonable cause to believe his conduct was unlawful), (B) undertakes in such written request to repay such amount to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified against
such Expenses and (C) provides appropriate supporting documentation for the Expenses for which he is seeking indemnification. Any advances and undertakings to repay pursuant to this Section 6 shall be unsecured and interest free. Notwithstanding the
foregoing, the obligation of the Company to advance Expenses pursuant to this Section 6 shall be subject to the condition that, if, when and to the extent that the Company determines that Indemnitee would not be permitted to be indemnified under
applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby expressly agrees to reimburse the Company) within thirty (30) days of such determination for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would
not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (and as to which
all rights of appeal therefrom have been exhausted or lapsed). 
  
 7. Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public
policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement: 
  
 (a) To obtain indemnification under this Agreement
(including, without limitation, the advancement of Expenses and contribution by the Company), Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing
that Indemnitee has requested indemnification. 
  
 (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made: (i) by
Independent Counsel, if requested by Indemnitee with its written request for indemnification; or (ii) if no request is made by the Indemnitee for a determination by Independent Counsel, (A) by the Board (or the Board of Directors of the resulting,
continuing or surviving entity following a Change of Control), by a majority vote of a quorum consisting of Disinterested Directors, (B) if such a quorum is not obtainable or if such quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion to the Board (or the Board of Directors of the resulting, continuing or surviving entity following a Change of Control), a copy of which shall be delivered to the Indemnitee, or (C) if a quorum of Disinterested Directors
so directs, by the stockholders of the Company. 
  
 (c) In the event the determination of entitlement to indemnification or advancement of Expenses is to be made by Independent Counsel at the request of the Indemnitee, the Independent Counsel shall be selected by the Board, unless there
shall have occurred, within two (2) years prior to the date of the commencement of the Proceeding with respect to which indemnification or advancement of Expenses is claimed, a Change of Control, in which case the Independent Counsel shall be
selected by the Indemnitee, unless the Indemnitee shall request that such selection be made 

  

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by the Board. Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver
to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the criteria of
“Independent Counsel” as defined in Section 1, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a
written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20)
days after submission by Indemnitee of a written request for indemnification pursuant to Section 7(a), no Independent Counsel shall have been selected without objection, either the Company or Indemnitee may petition the Court of Chancery of the
State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel
of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 7(b). The Company
shall pay any and all reasonable fees and expenses incurred by such Independent Counsel in connection with acting pursuant to Section 7(b), and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 7(c),
regardless of the manner in which such Independent Counsel was selected or appointed. 
  
 (d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to rebut this presumption shall have the burden of proof. 
  
 (e) Indemnitee shall be deemed to have acted in good faith if his action is based on the records or books of
account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers or other employees of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on
information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. The parties acknowledge and agree that the foregoing
does not represent an exclusive list of the means by which Indemnitee may be deemed to have acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company. In addition, the knowledge or
actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. 
  
 (f) If the person, persons or entity empowered or selected
under Section 7 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement,
in light of the context in which it was made, not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that (A) such 30-day period may be
extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or
evaluate documentation or information relating thereto and (B) the foregoing provisions of this Section 7(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 7(b) and (1)

  

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within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate,
resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made at such meeting, or (2) a special meeting of
stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made at such meeting.

  
 (g) Indemnitee shall cooperate with the
person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not
privileged or otherwise protected from disclosure, available to Indemnitee without undue effort or expense and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act
reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom. 
  
 (h) The
Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a
party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration), it shall be presumed that Indemnitee has been
successful on the merits or otherwise in such Proceeding. Anyone seeking to rebut this presumption shall have the burden of proof. 
  
 8. Remedies of Indemnitee. 
  
 (a) In the event that (i) a determination is made pursuant to Section 7 that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification is made pursuant to Section 7(b) within ninety (90) days after receipt by the Company of the written request
for indemnification, or (iv) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 7,
Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such
proceeding seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 8(a). The Company shall not oppose Indemnitee’s right to
seek any such adjudication. 
  
 (b) In the event
that a determination shall have been made pursuant to Section 7(b) that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 8 shall be conducted in all respects as a de novo trial on the merits,
and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 7(b). 
  
 (c) If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any 

  

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judicial proceeding commenced pursuant to this Section 8, absent a prohibition of such indemnification under applicable law. 
  
 (d) In the event that Indemnitee, pursuant to this Section
8, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on
his behalf, in advance (but subject to the same conditions as are set forth in Section 6 with regard to the advancement of Expenses), any and all expenses (of the types described in the definition of Expenses in Section 1) actually and reasonably
incurred by him in connection with such judicial adjudication. 
  
 (e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 8 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of this Agreement. 
  
 9. Nonexclusivity; Survival of Rights; Insurance; Subrogation. 
  
 (a) The rights of indemnification provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at
any time be entitled under applicable law, the certificate of incorporation of the Company (as may be amended or restated from time to time), the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Company Position prior to such amendment,
alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under this Agreement, it is the intent of the parties that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
right or remedy. 
  
 (b) To the extent that the
Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other Enterprise, Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. 
  
 (c) Except as provided in the last sentence of this Section 9(c), in the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers and take all action reasonably necessary to secure such rights, including execution of such
documents as are reasonably necessary to enable the Company to bring suit to enforce such rights. Notwithstanding the foregoing, no right of recovery of Indemnitee pursuant to any (i) director liability insurance policy that covers Indemnitee and is
purchased separately by Indemnitee, by any fund or other entity of which Indemnitee is a partner, member or stockholder or that employs Indemnitee (excluding the Company) or by any of their respective affiliates or (ii) indemnification from any fund
or other entity of which Indemnitee is a partner, member or stockholder or that employs Indemnitee or from any of its affiliates shall be subject to subrogation under this Section 9(c). 
  

 8 

 (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such amount under any insurance policy, contract, agreement or otherwise. 
  
 10. Mutual Acknowledgment. The Company and Indemnitee acknowledge that, in certain instances, Federal law or
applicable public policy (pursuant to the immediately following sentence) may prohibit the Company from indemnifying its directors, officers, employees, controlling persons, fiduciaries or other agents or affiliates under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a
determination of the Company’s rights under public policy to indemnify Indemnitee. 
  
 11. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director, officer or member of the executive committee of the Company
(or is or was serving at the request of the Company as a director, officer, employee or agent of any other Enterprise) and shall continue thereafter if and while Indemnitee shall be subject to any Proceeding (or any proceeding commenced under
Section 8) by reason of his Company Position, whether or not he is acting or serving in any such capacity at the time of initiation of the Proceeding, while the Proceeding is pending or at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. 
  
 12. Exceptions. Notwithstanding any other provision of this Agreement, the Company shall not be obligated pursuant to
the terms of this Agreement: 
  
 (a) Excluded
Action or Omissions. To indemnify the Indemnitee in respect of any intentional malfeasance by the Indemnitee or any act undertaken by the Indemnitee where the Indemnitee did not in good faith believe the Indemnitee was acting in the best
interests of the Company, or for any other acts, omissions or transactions from which the Indemnitee may not be relieved of liability under applicable law. 
  
 (b) Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to any Proceeding initiated or
brought voluntarily by Indemnitee and not by way of defense, except (i) with respect to a Proceeding to establish or enforce a right to indemnity under any agreement or insurance policy or under the Company’s certificate of incorporation or
Bylaws now or hereafter in effect relating to indemnification, (ii) in specific cases if the Board has approved the initiation or bringing of such Proceeding, or (iii) as otherwise required under Section 145 of the DGCL, regardless of whether such
Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be. 
  
 (c) Lack of Good Faith. To indemnify Indemnitee with respect to any (i) Proceeding instituted by Indemnitee as contemplated by
Section 12(b)(i) or (ii) proceeding instituted by Indemnitee under Section 8 to enforce its rights under this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding
was not made in good faith or was frivolous; or 
  

 9 

 (d) Claims Under Section 16(b). To indemnify Indemnitee for any Expenses and
disgorgement of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Exchange Act or any similar successor statute. 
  
 13. Enforcement. 
  
 (a) The Company expressly (i) confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby
in order to induce Indemnitee to serve as a director, officer or member of the executive committee of the Company and (ii) acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or member of the executive
committee of the Company. 
  
 (b) This Agreement
constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter
hereof. 
  
 14. Severability. If any provision or
provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. Without limiting the generality of the
foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable law. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve such conflict. 
  
 15. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both parties. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 
  
 16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or
otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter that may be subject to indemnification hereunder. The failure to so notify the Company shall not relieve
the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company. 
  
 17. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given if (i) delivered by hand and received by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed: 
  
 (a)
If to Indemnitee, to the address set forth below Indemnitee’s signature hereto. 
  

 10 

 (b) If to the Company, to: 
  
 Targacept, Inc. 
 200 East First Street, Suite 300 
 Winston-Salem, NC 27101-4165 
 Attention: Chief Financial Officer 
  
 or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. 
  
 18. Counterparts. This Agreement may be executed in two counterparts,
each of which shall for all purposes be deemed to be an original and both of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to
evidence the existence of this Agreement. 
  
 19. Headings.
The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. 
  
 20. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware without application of the principles of conflicts of laws thereof. 
  
 21. Gender. Use of the masculine pronoun herein shall be deemed to include also the corresponding feminine pronoun. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as
of the day and year first above written. 
  

							
	COMPANY:
	
	 TARGACEPT, INC.

		
	By:	 	 
	 	 	 	 	 Name:
	 	 
	 	 	 	 	 Title:
	 	 

  

					
	 INDEMNITEE:

	
	 
	 Name:
	 	 
	
	 Address:

	
	 
	 
	 

  

 11

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