<PAGE>
                                                                    Exhibit 10.2



                               [ALTEON LETTERHEAD]


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of February 11,
2002, by and between Alteon Inc., a Delaware corporation (the "Company"), and
Judith S. Hedstrom (the "Employee").

         WHEREAS, the Company wishes to employ the Employee as Senior Vice
President, Corporate Development; and

         WHEREAS, the Employee wishes to enter into the employ of the Company as
its Senior Vice President, Corporate Development;

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

         1.       Term of Employment. Subject to the terms and conditions
                  hereof, the Company will employ the Employee, and the Employee
                  will serve the Company, as Senior Vice President, Corporate
                  Development, for a period beginning on the date hereof and
                  terminating three years thereafter, subject to extension by
                  mutual agreement of the Company and the Employee (such term,
                  as it may be extended, is hereinafter referred to as the "Term
                  of Employment").

         2.       Duties. During the Term of Employment, the Employee will serve
                  as Senior Vice President, Corporate Development, subject to
                  the terms of this Agreement and the direction and control of
                  the Board of Directors, and/or the Chief Executive Officer of
                  the Company. The Employee will, during the Term of Employment,
                  serve the Company faithfully, diligently and competently and
                  to the best of Employee's ability, and will, consistent with
                  the dignity of the office of Senior Vice President, Corporate
                  Development, of the Company, hold, in addition to the office
                  of Senior Vice President, Corporate Development, of the
                  Company, such other offices in the Company to which Employee
                  may be appointed or assigned from time to time by the Board of
                  Directors and/or the Chief Executive Officer of the Company
                  and will discharge such duties in connection therewith. The
                  Employee shall devote substantially all of her business time
                  and attention to the performance of the duties hereunder;
                  provided, however, that the Employee may maintain a consulting
                  relationship with McKinsey & Company, Inc., so long as such
                  relationship does not interfere or conflict with her
                  responsibilities hereunder.

         3.       Compensation. During the Term of Employment, the Company will
                  pay to the Employee as compensation for the performance of
                  Employee's duties and obligations hereunder a base salary at
                  the rate of $215,000 per annum ("Salary"), payable in equal
                  semi-monthly installments. Such Salary shall be reviewed
                  annually by the Board of Directors of the Company in
                  accordance with the Company's compensation program. In each of
                  the Company's fiscal years during the Term of Employment, the
                  Employee shall be eligible to receive a cash bonus of up to
                  $30,000, to be awarded at the sole discretion of the Board of
                  Directors of the Company. The Board shall use as a basis for
                  determining the extent of such bonus awards the attainment of
                  stated goals and objectives for the Employee to be set by the
                  Compensation Committee of the Board after consultation with
                  the Chief Executive Officer.

         4.       Other Benefits. During the Term of Employment:

                  A.       The Employee shall be entitled during the Term of
                           Employment to participate in employee benefit plans
                           and programs of the Company to the extent that
                           Employee's position, tenure, salary, age, health and
                           other qualifications make Employee eligible to
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Employment Agreement                                                      Page 2
Judith S. Hedstrom




                           participate. The Company does not guarantee the
                           adoption or continuance of any particular employee
                           benefit plan or program during the Term of
                           Employment, and the Employee's participation in any
                           such plan or program shall be subject to the
                           provisions, rules, regulations and laws applicable
                           thereto; provided, however, that during the Term of
                           Employment, the Employee shall be entitled to health
                           and hospital insurance benefits consistent with the
                           past practices of the Company in effect with respect
                           to Company personnel generally.

                  B.       The Employee shall be entitled to 4 weeks vacation
                           per year while employed hereunder. Such vacation may
                           be taken by the Employee at such times as do not
                           unreasonably interfere with the business of the
                           Company. The accumulation of annual vacation time
                           earned, but not taken, will be in accordance with the
                           Company policy guidelines. Additional vacation will
                           be earned in accordance with Company policy.

                  C.       The Company shall grant to the Employee an incentive
                           stock option (or to the extent that such option does
                           not qualify as an incentive stock option, a
                           non-qualified stock option), pursuant to the
                           Company's Amended 1995 Stock Option Plan (the
                           "Plan"), to purchase 200,000 shares of Common Stock
                           of the Company ("Common Stock") with an exercise
                           price equal to the closing price of the Company's
                           Common Stock on the date of the grant of the option.
                           Such option shall be in the form of, and on such
                           terms and conditions as provided in, the Company's
                           standard form of Stock Option Grant Agreement in
                           effect as of the date of this Agreement. Such Stock
                           Option Grant Agreement for such option shall provide,
                           on condition that the Employee is employed by the
                           Company on the relevant vesting dates, that such
                           options shall vest as follows:

                           i)       25,000 shares shall vest on the first
                                    anniversary of the date of grant of the
                                    option and 75,000 shares shall vest in 36
                                    equal monthly installments on the first day
                                    of each calendar month after the first
                                    anniversary; and

                           ii)      100,000 shares shall vest upon the
                                    accomplishment by the Employee of specified
                                    milestones, as determined by the
                                    Compensation Committee of the Board after
                                    consultation with the Chief Executive
                                    Officer.

         5.       Expenses. During the Term of Employment, the Company will
                  reimburse the Employee for all travel and other reasonable
                  business expenses incident to the rendering of services by the
                  Employee under this Agreement, subject to the submission of
                  appropriate vouchers and receipts in accordance with the
                  Company's policy from time to time in effect. The Employee
                  will initially be based in or near Washington, D.C.; provided,
                  however, that the Company anticipates, upon the receipt of
                  favorable data from one or more of its pending clinical
                  trials, it may request that Employee relocate to the Company's
                  principal offices. If the Company requests that Employee
                  relocate, the Company shall reimburse Employee for reasonable
                  agreed upon costs associated with such relocation. Prior to
                  such relocation, Employee shall be required to maintain her
                  own office, either in her home or at some other location of
                  her preference, and Employee shall be responsible for costs
                  associated with maintaining such office; provided, however,
                  the Company shall reimburse Employee for such reasonable costs
                  associated with such office as the Company may agree upon.

6.       Death or Disability.

                  A.       This Agreement shall be terminated by the death of
                           the Employee. In addition, this Agreement may be
                           terminated by the Board of Directors of the Company
                           if the Employee shall be rendered incapable by
                           illness or any other disability, from complying with
                           the terms, conditions and provisions on Employee's
                           part to be kept, observed and performed for a period
                           in excess of 180 days (whether or not consecutive) or
                           90 days consecutively, as the case may be, during a
                           12-month period during the Term of Employment
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Employment Agreement                                                      Page 3
Judith S. Hedstrom




                           ("Disability"). If this Agreement is terminated by
                           reason of Disability of the Employee, the Company
                           shall give written notice to that effect to the
                           Employee in the manner provided herein. In the event
                           that the Employee receives disability insurance
                           benefits paid for by the Company during any period
                           prior to termination of this Agreement pursuant to
                           this Section 6(A), the Employee's Salary shall be
                           reduced by an amount equal to such disability
                           insurance benefits during such period.

                  B.       In addition to and not in substitution for any other
                           benefits which may be payable by the Company with
                           respect to the death or Disability of the Employee in
                           the event of such death or Disability, the Salary
                           payable hereunder shall continue to be paid at the
                           then current rate for three months after the
                           termination of employment, and any bonus to which the
                           Employee would have been entitled for the year in
                           which Employee's death occurs shall be pro rated to
                           the date of Employee's death and paid not later than
                           three months after the termination of employment. In
                           the event of the death of the Employee during the
                           Term of this Agreement, the sums payable hereunder
                           shall be paid to Employee's personal representative.

         7.       Disclosure of Information, Inventions and Discoveries. The
                  Employee shall promptly disclose to the Company all processes,
                  trademarks, inventions, improvements discoveries and other
                  information related to the business of the Company
                  (collectively, "Developments") conceived, developed or
                  acquired by Employee alone or with others during the Term of
                  Employment or during any earlier period of employment by the
                  Company or any predecessor of the Company, whether or not
                  during regular working hours or through the use of materials
                  or facilities of the Company. All such Developments shall be
                  the sole and exclusive property of the Company, and, upon
                  request, the Employee shall promptly deliver to the Company
                  all drawings, sketches, models and other data and records
                  relating to such Developments. In the event any such
                  Development shall be deemed by the Company to be patentable,
                  the Employee shall, at the expense of the Company, assist the
                  Company in obtaining a patent or patents thereon and execute
                  all documents and do all such other acts and things necessary
                  or proper to obtain letters of patents and to invest in the
                  Company full right, title and interest in and to such
                  Developments.

         8.       Non-Disclosure. The Employee shall not, at any time during or
                  after the Term of Employment, divulge, furnish or make
                  accessible to anyone (otherwise than in the regular course of
                  business of the Company), or use for Employee's own account or
                  for the account of any person, any knowledge or information
                  with respect to confidential or secret processes, inventions,
                  discoveries, improvements, formulae, plans, materials, devices
                  or ideas or other know-how, whether patentable or not, with
                  respect to any confidential or secret development or research
                  work or with respect to any other confidential or secret
                  aspects of the Company's business (including, without
                  limitation, customer lists, supplier lists and pricing
                  arrangements with customers or suppliers).

         9.       Non-Competition. The Company and the Employee agree that the
                  services rendered by the Employee hereunder are unique and
                  irreplaceable. The Employee hereby agrees that, during the
                  Term of Employment and for a period of one year thereafter,
                  the Employee shall not (i) in any geographical area in the
                  United States or in those foreign countries where the Company,
                  during the Term of Employment, conducts or proposes to conduct
                  business or initiates activities, engage or participate in,
                  directly or indirectly (whether as an officer, director,
                  employee, partner, consultant, holder of an equity or debt
                  investment, lender or in any other manner or capacity), or
                  lend Employee's name (or any part or variant thereof) to any
                  business which is, or as a result of the Employee's engagement
                  or participation would become, competitive with any aspect of
                  the business of the Company, such business being the
                  commercialization of the measurement, prevention therapy or
                  reversal of glucose-mediated non-enzymatic crosslinking of
                  macro-molecules, and such other specific technologies in which
                  the Company has, during the Term of Employment, initiated
                  significant
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Employment Agreement                                                      Page 4
Judith S. Hedstrom



                  plans to develop products, (ii) deal, directly or indirectly,
                  in a competitive manner with any customers doing business with
                  the Company during the Term of Employment (except in
                  connection with the performance of the duties and obligations
                  of the Employee during the Term of Employment), (iii) solicit
                  any officer, director, employee, consultant or agent of the
                  Company to become an officer, director, employee, consultant
                  or agent of the Employee, Employee's respective affiliates or
                  anyone else, and (iv) engage in or participate in, directly or
                  indirectly, any business conducted under any name that shall
                  be the same as or similar to the name of the Company or any
                  trade name used by it. Ownership, in the aggregate, of less
                  than one percent of the outstanding shares of capital stock of
                  any corporation with one or more classes of its capital stock
                  listed on a national securities exchange or publicly traded in
                  the over-the-counter market shall not constitute a violation
                  of the foregoing provision.

         10.      Remedies. The Employee acknowledges that irreparable damage
                  would result to the Company if the provisions of Sections 7,
                  8, 9 or 14 were not specifically enforced, and agrees that the
                  Company shall be entitled to any appropriate legal, equitable
                  or other remedy, including injunctive relief, in respect to
                  any failure to comply with the provisions of Sections 7, 8, 9
                  or 14.

         11.      Termination for Cause. In addition to any other remedy
                  available to the Company, either at law or in equity, the
                  Employee's employment with the Company may be terminated by
                  the Board of Directors for cause, which shall include (i) the
                  Employee's conviction for, or plea of nolo contendere, to a
                  felony or a crime involving moral turpitude, (ii) the
                  Employee's commission of an act of personal dishonesty or a
                  breach of fiduciary duty involving personal profit in
                  connection with the Employee's employment by the Company,
                  (iii) the Employee's commission of an act which the Board of
                  Directors shall reasonably have found to have involved willful
                  misconduct or gross negligence on the part of the Employee in
                  the conduct of Employee's duties under this Agreement, (iv)
                  habitual absenteeism, (v) the Employee's material breach of
                  any material provision of this Agreement, (vii) the willful
                  and continued failure by the Employee to perform substantially
                  Employee's duties with the Company (other than any such
                  failure resulting from Employee's incapacity due to physical
                  or mental illness), or (viii) the Employee's failure, at any
                  time after the first anniversary of the date of this
                  Agreement, to relocate to the Company's principal office
                  within a reasonable time following the request of the Company.
                  In the event of termination under this Section 11, the
                  Company's obligations under this Agreement shall cease and the
                  Employee shall forfeit all rights to receive any future
                  compensation under this Agreement. Notwithstanding any
                  termination of this Agreement pursuant to this Section 11, the
                  Employee, in consideration of Employee's employment hereunder
                  to the date of such termination, shall remain bound by the
                  provisions of Sections 7, 8, 9 and 14 hereof.

         12.      Termination Without Cause. Each of the Company and Employee
                  may terminate this Agreement at any time for any reasons
                  whatsoever, without any further liability or obligation of the
                  Company to the Employee or of the Employee to the Company from
                  and after the date of such termination (other than liabilities
                  or obligations accrued but unsatisfied on, or surviving, the
                  date of such termination), by sending 30 days' prior written
                  notice to the other party. In the event (a) the Company elects
                  to terminate this Agreement prior to the end of the Term of
                  Employment, or (b) the Company gives Employee notice of its
                  election not to extend the Term of Employment beyond the
                  expiration of the then current Term of Employment, or (c) by
                  the date which is four months prior to the end of the then
                  current Term of Employment, the Company has not offered to
                  extend the then current Term of Employment, the Company shall
                  continue to pay the Employee the full Salary (exclusive of
                  bonuses, if any) as such Salary would have otherwise accrued
                  for a period of six months. In the event the Employee elects
                  to terminate prior to the end of the Term of Employment, the
                  Company's obligation to pay Salary shall cease as of the
                  effective date of termination. Notwithstanding any termination
                  of this Agreement pursuant to this Section 12, the Employee,
                  in consideration of Employee's employment hereunder to the
                  date of such termination, shall remain bound by
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Employment Agreement                                                      Page 5
Judith S. Hedstrom



                  the provisions of Sections 7, 8, 9 and 14 hereof. Any
                  termination of this Agreement by the Company as provided in
                  this Section 12 shall be in addition to, and not in
                  substitution for, any rights with respect to termination of
                  the Employee which the Company may have pursuant to Section
                  11.

         13.      Resignation. In the event that the Employee's services under
                  this Agreement are terminated under any of the provisions of
                  this Agreement (except by death), the Employee agrees to
                  deliver written resignation from all positions held with the
                  Company to the Board of Directors, such resignation to become
                  effective immediately; provided, however, that nothing herein
                  shall be deemed to affect the provisions of Sections 7, 8, 9
                  and 14 hereof relating to the survival thereof following
                  termination of the Employee's services hereunder, and
                  provided, further, that except as expressly provided in this
                  Agreement, the Employee shall be entitled to no further
                  compensation hereunder.

         14.      Data. Upon termination of the Term of Employment or
                  termination pursuant to Sections 6, 11 or 12 hereof, the
                  Employee or Employee's personal representative shall promptly
                  deliver to the Company all books, electronic data, memoranda,
                  plans, records and written data of every kind relating to the
                  business and affairs of the Company which are then in
                  Employee's possession.

         15.      Insurance. The Company shall have the right, at its own cost
                  and expense, to apply for and to secure in its own name or
                  otherwise, life, health or accident insurance or any or all of
                  them covering the Employee, and the Employee agrees to submit
                  to usual and customary medical examinations and otherwise to
                  cooperate with the Company in connection with the procurement
                  of any such insurance, and any claims thereunder.

         16.      Waiver of Breach. Any waiver of any breach of this Agreement
                  shall not be construed to be a continuing waiver or consent to
                  any subsequent breach on the part either of the Employee or of
                  the Company.

         17.      Assignment. This Agreement shall inure to the benefit of and
                  be binding upon the successors and assigns of the Company upon
                  any sale of all or substantially all of the Company's assets,
                  or upon any merger or consolidation of the Company with or
                  into any other entity, all as though such successors and
                  assigns of the Company and their respective successors and
                  assigns were the Company. Insofar as the Employee is
                  concerned, this Agreement, being personal, may not be
                  assigned.

         18.      Severability. To the extent any provision of this Agreement
                  shall be invalid or unenforceable, it shall be considered
                  deleted therefrom and the remainder of such provision and of
                  this Agreement shall be unaffected and shall continue in full
                  force and effect. In furtherance and not in limitation of the
                  foregoing, should the duration or geographical extent of, or
                  business activities covered by, any provision of this
                  Agreement be in excess of that which is valid and enforceable
                  under applicable law, then such provision shall be construed
                  to cover only that duration, extent or activities which may be
                  validly covered and enforceable.

         19.      Notices. All notices, requests and other communications
                  pursuant to this Agreement shall be in writing and shall be
                  deemed to have been duly given, if delivered in person or by
                  courier, telegraphed, telexed or by facsimile transmission or
                  five business days after being sent by registered or certified
                  mail, return receipt requested, postage paid, addressed as
                  follows:

                  If to the Employee:

                           Judith S. Hedstrom
                           7811 Exeter Road
                           Bethesda, Maryland 20814
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Judith S. Hedstrom




                  If to the Company:

                           Alteon Inc.
                           170 Williams Drive
                           Ramsey, New Jersey 07446

                  with a copy to:

                           Richard J. Pinto, Esq.
                           Smith, Stratton, Wise, Heher & Brennan, LLP
                           600 College Road East
                           Princeton, New Jersey 08540

                  Any party may, by written notice to the other in accordance
                  with this Section 19, change the address to which notices to
                  such party are to be delivered or mailed.

         20.      General. Except as otherwise provided herein, the terms and
                  provisions of this Agreement and any Stock Option Grant
                  Agreements entered into between the Employee and the Company
                  shall constitute the entire agreement by the Company and the
                  Employee with respect to the subject matter hereof, and shall
                  supersede any and all prior agreements or understandings
                  between the Employee and the Company, whether written or oral.
                  This Agreement may be amended or modified only by a written
                  instrument executed by the Employee and the Company. This
                  Agreement may be executed in any number of counterparts, all
                  of which, when executed, shall be deemed to be an original,
                  and all of which together shall constitute one and the same
                  instrument.

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

                                   ALTEON INC.


                                   By: /s/ Kenneth I. Moch
                                       -----------------------------------------
                                           Kenneth I. Moch
                                           President and Chief Executive Officer


                                       /s/ Judith S. Hedstrom
                                       -----------------------------------------
                                           Judith S. Hedstrom