EMPLOYMENT AGREEMENT





THIS AGREEMENT ("Agreement"), effective as of the 1st day of March, 2001 is made

and entered into by and between AtheroGenics, Inc., a Georgia corporation

(hereinafter called "the Employer"), and Russell M. Medford, M.D., a resident of

the State of Georgia, (hereinafter the "Executive").



                                   WITNESSETH:



WHEREAS, the Executive is qualified to serve, and has been serving, as President

and Chief Executive Officer of the Employer for a period in excess of 4 years in

a highly satisfactory manner; and



WHEREAS, the Employer and the Executive mutually desire that the Executive's

employment be continued; and



WHEREAS, the Executive and the Employer mutually desire to renegotiate the terms

of said employment and to enter into an employment contract which will supersede

any prior contracts.



NOW, THEREFORE, in consideration of the promises and the mutual covenants and

agreements herein contained, the parties hereto agree as follows:



1.   PERIOD OF EMPLOYMENT.



    In exchange for the Compensation, Benefits and Perquisites described in this

Agreement, and upon such other terms and conditions hereinafter set forth, the

Employer agrees to employ the Executive for the Period of Employment. For

purposes of this Agreement, the Period of Employment shall commence as of the

effective date of this Agreement and shall consist of a period of three (3)

years, unless it is terminated earlier as provided in this Agreement. It is the

intention of the parties that upon the second anniversary of the effective date

of the Agreement and each anniversary date thereafter, the Period of Employment

shall be automatically extended by twelve additional calendar months, unless six

(6) months prior to such date, the Employer shall deliver to the Executive or

the Executive shall deliver to the Employer, written notice that the Period of

Employment will end at the expiration of the then existing Period of Employment,

including any extensions, and will not be further extended except by agreement

of the Employer and the Executive.



2.   POSITION AND RESPONSIBILITIES.



    During the Period of Employment, the Executive agrees to serve as the

President and Chief Executive Officer of AtheroGenics, Inc. reporting directly

to the Board of Directors of the Employer (hereinafter "the Board"), and to

perform those functions and duties customarily assigned to individuals serving

in the position in which the Executive serves hereunder.



3.   COMPENSATION, BENEFITS AND PERQUISITES.



     (A) BASE SALARY



         In exchange for the performance of his duties and responsibilities

         hereunder and all other services rendered by the Executive in any

         capacity to the Employer, the Employer agrees to pay base salary ("Base

         Salary") to the Executive at a rate of not less than $275,000 per year.

         For any period thereafter during which this Agreement remains in

         effect, the Executive's Base Salary shall be reviewed based upon an

         annual performance appraisal and competitive market conditions and may

         be increased from time to time by the Employer to reflect the

         Executive's performance and the Employer's profitability. Once

         increased, the Base Salary may not be decreased. Base Salary shall be

         payable according to the customary payroll practices of the Employer.



     (B) INCENTIVE COMPENSATION



         In addition to Base Salary, the Executive shall be eligible to receive

         such annual incentive compensation ("Incentive Compensation") as shall

         be determined by the Board. The amount of such Incentive Compensation

         shall be based upon certain strategic and financial goals, which shall

         be determined by the Executive and the Board of Directors of the

         Employer. Such strategic and financial goals and target Incentive

         Compensation shall be set forth in the Employer's





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         annual budget prior to each year during the term of this Agreement. For

         the first year of this Agreement, the target annual Incentive

         Compensation shall be at least $104,500, or 38% of Base Salary. In

         subsequent years it is anticipated that the target annual Incentive

         Compensation shall be a similar or greater percentage of Base Salary.

         Incentive Compensation shall be payable no later than thirty (30) days

         following the expiration of each year of employment under this

         Agreement.



     (C) EQUITY COMPENSATION



         The Executive shall be eligible to participate in the Employer's Equity

         Ownership Plan and receive such awards of stock and/or options

         thereunder as shall be determined by the Board. The Board will annually

         grant the Executive stock or stock options the value of which will be

         equal to 60% or more of the Executive's then Base Salary. Option value,

         for purposes of the preceding sentence, shall be determined using the

         Black-Scholes option valuation methodology or a similar method.



     (D) BENEFITS AND PERQUISITES



         During the term of this Agreement, the Executive shall be entitled to

         participate, under the terms and conditions thereof, in all employee

         benefit plans or perquisite programs generally available to management

         personnel of the Employer which may be in effect from time to time

         during the term of this Agreement; provided, however, that nothing

         contained herein shall require the Employer to establish, or maintain,

         any such plan. These benefits are provided in accordance with the

         provisions of each individual plan and are listed and described on

         Schedule 1 attached hereto.



     (E) DISABILITY COVERAGE



         In addition to the employee benefit plan coverage provided under

         subsection (d) above, the Executive will be provided with additional

         long term Disability benefits in an amount such that the total annual

         long term Disability benefit payable under both this provision and any

         long-term incentive program or policy maintained by the Employer will

         be equal to 100% of the Executive's annualized Base Salary immediately

         prior to the Disability. The Disability benefit provided will be paid

         from the date of the Disability until the earlier of (i) the

         Executive's death; (ii) the Executive's attainment of age 65; or (iii)

         the date when the long-term disability policy benefits terminate

         pursuant to the terms of that policy.



    The Employer also agrees to provide such other benefits and perquisites

under Subparagraph 3(d) for the first two years that the Executive is receiving

payments under this Subparagraph 3(e), or until such time as the Executive is

eligible to participate in a subsequent employer's benefits program, whichever

is sooner. Thereafter, the Executive shall be permitted to participate in the

Employer's health benefit program at Executive's expense for such time as the

Executive is receiving disability payments.



         For purposes of this Agreement, the term "disability" ("Disability" or

         "Disabled") has the same meaning as provided in the long-term

         disability plan maintained by the Employer. In the event of a dispute,

         the determination of Disability or Disabled shall be made by the Board.

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