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                                                                    EXHIBIT 4(h)

                                 SOUTHTRUST CORPORATION
                          DISCOUNT STOCK PAYROLL PURCHASE PLAN

       The following constitute the provisions of the Discount Stock Payroll
Purchase Plan of SouthTrust Corporation.

1.                Purpose. The purpose of the Plan is to provide employees of
       the Company and its Designated Subsidiaries with an opportunity to
       purchase Common Stock of the Company through accumulated payroll
       deductions. It is the intention of the Company to have the Plan qualify
       as an "Employee Stock Purchase Plan" under Section 423 of the Code. The
       provisions of the Plan, accordingly, shall be construed so as to extend
       and limit participation in a manner consistent with the requirements of
       that section of the Code.

2.            Definitions.

       a.            "Board" shall mean the Board of Directors of the Company.

       b.            "Code" shall mean the Internal Revenue Code of 1986, as
              amended.

       c.            "Committee" shall mean the Human Resources Committee of the
              Board.

       d.            "Common Stock" shall mean the common stock, par value $2.50
              per share, of the Company.

       e.            "Company" shall mean SouthTrust Corporation, a Delaware
              corporation, and any Designated Subsidiary of the Company.

       f.            "Compensation" shall mean, the annualized rate of base
              straight time earnings as as determined on the first day of the
              Plan Year, but excludes payments for commissions, overtime, shift
              premium, incentive compensation, incentive payments, bonuses and
              other compensation.

       g.            "Continuous Service" shall mean the number of full years
              and completed months of continuous employment with the Company
              calculated from an Employee's last hire date to his date of
              severance of employment for any reason. Continuous Service shall
              not be broken and shall be credited for absences due to vacation,
              temporary sickness or injury, other paid or unpaid leaves of
              absence authorized by the Company and leaves of absence which
              would not cause an individual to cease to be an Employee.

       h.            "Designated Subsidiary" shall mean any Subsidiary which has
              been designated by the Board from time to time in its sole
              discretion as eligible to participate in the Plan.

       i.            "Employee" shall mean any individual who is an Employee of
              the Company for tax purposes whose customary employment with the
              Company is at least twenty (20) hours per week and more than five
              (5) months in any calendar year. For purposes of the Plan, the
              employment relationship shall be treated as continuing intact
              while the individual is on sick leave or other leave of absence
              approved by the Company. Where the period of leave

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              exceeds 180 days and the individual's right to reemployment is not
              guaranteed either by statute or by contract, the employment
              relationship shall be deemed to have terminated on the 181st day
              of such leave.

       j.            "Exercise Date" shall mean the last Trading Day of each
              Plan Year.

       k.            "Fair Market Value" shall mean, as of any date, the last
              sales price of the Common Stock as reported on the Automated
              Quotation System of the National Association of Securities
              Dealers, Inc. -- National Market System ("NASDAQ") on the date of
              such determination, as reported in The Wall Street Journal or such
              other source as the Committee deems reliable.

       l.            "Grant Date" shall mean the first Trading Day of each Plan
              Year.

       m.            "Plan" shall mean this Discount Stock Payroll Purchase
              Plan.

       n.            "Plan Year" shall mean the period of approximately twelve
              (12) months commencing on the first Trading Day on or after
              January 1st of each calendar year and terminating on the last
              Trading Day of each calendar year.

       o.            "Purchase Price" shall mean 85% of the Fair Market Value of
              a share of Common Stock on the Grant Date or on the Exercise Date,
              whichever is lower; provided however, that the Purchase Price may
              be adjusted by the Committee pursuant to Section 20.

       p.            "Subsidiary" shall mean a corporation, domestic or foreign,
              of which not less than 50% of the voting shares are held by the
              Company or a Subsidiary, whether or not such corporation now
              exists or is hereafter organized or acquired by the Company or a
              Subsidiary.

       q.            "Trading Day" shall mean a day on which NASDAQ is open for
              trading.

3.            Eligibility.

       a.            Subject to the limitations set forth herein, every Employee
              of the Company shall be eligible to participate in the Plan as of
              the Grant Date coincident with or immediately following his or her
              completion of at least two years of Continuous Service.

       b.            Any provisions of the Plan to the contrary notwithstanding,
              no Employee shall be granted an option under the Plan (i) to the
              extent that, immediately after the grant, such Employee (or any
              other person whose stock would be attributed to such Employee
              pursuant to Section 424(d) of the Code) would own capital stock of
              the Company and/or hold outstanding options to purchase such stock
              possessing five percent (5%) or more of the total combined voting
              power or value of all classes of the capital stock of the Company
              or of any Subsidiary, or (ii) to the extent that his or her rights
              to purchase stock under all employee stock purchase plans of the
              Company and its subsidiaries accrues at a rate which exceeds
              Twenty-Five Thousand Dollars ($25,000) worth of capital stock
              (determined at the fair market value of the shares at the time
              such option is granted) for each calendar year in which such
              option is outstanding at any time.

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4.            Plan Years. The Plan shall be implemented by consecutive Plan
       Years with a new Plan Year commencing on the first Trading Day on or
       after January 1st each year, or on such other date as the Committee shall
       determine, and continuing thereafter until terminated in accordance with
       Section 20 hereof.

5.            Participation.

       a.            An eligible Employee may become a participant in the Plan
              by completing an enrollment form authorizing payroll deductions in
              the form of Exhibit A to this Plan and filing it with the
              Company's payroll office. If an Employee is eligible to
              participate in the Plan before the first day of the Plan Year,
              such Employee will begin participating in the Plan on the Grant
              Date by filing the enrollment form in the payroll office prior to
              that date. If an Employee, who is eligible to participate in the
              Plan before the first day of the Plan Year, files an enrollment
              form after the Grant Date, such Employee will begin to participate
              in the Plan as soon as administratively possible, but not more
              than 30 days after the filing of the enrollment form.  If an
              Employee becomes eligible to participate in the Plan after the
              beginning of the Plan Year and files an enrollment form in the
              payroll office, such Employee's participation in the Plan will not
              commence until the following Plan Year.

       b.            Payroll deductions for a participant shall commence on the
              first payroll following the date the enrollment form is filed in
              the Company's payroll office and shall end on the last payroll in
              the Plan Year to which such authorization is applicable, unless
              sooner terminated by the participant as provided in Section 10
              hereof.

6.            Payroll Deductions.

       a.            At the time a participant files his or her enrollment form,
              he or she shall elect to have payroll deductions made on each pay
              day during the Plan Year. A participant may authorize payroll
              deductions in an amount not less than Twenty and No/100 Dollars
              ($20.00) per pay period and not more than ten percent (10%) of the
              participant's Compensation during the Plan Year. Notwithstanding
              the foregoing, the minimum amount which must be deducted from an
              eligible Employee's payroll during the Plan Year shall be Three
              Hundred and No/100 Dollars ($300.00) and the maximum amount which
              may be deducted from an eligible Employee's payroll during the
              Plan Year shall be equal to the lesser of (i) Twenty-Five Thousand
              and No/100 Dollars ($25,000.00), or (ii) Ten Percent (10%) of such
              eligible Employee's Compensation during the Plan Year.

       b.            All payroll deductions made for a participant shall be
              credited to his or her account under the Plan and shall be
              withheld in whole percentages or whole dollar amounts only.

       c.            A participant may discontinue his or her participation in
              the Plan as provided in Section 10 hereof, or may increase or
              decrease the rate of his or her payroll deductions during the Plan
              Year by completing or filing with the Company a new enrollment
              form authorizing a change in payroll deduction rate.  A
              participant may not change the payroll deduction rate more than
              two times in any one Plan Year. The Committee may, in its
              discretion, further limit the number of participation rate changes
              during any Plan Year. The change in rate shall be effective with
              the first full payroll period following five (5) business days
              after the Company's receipt of the new enrollment form unless the
              Company

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              elects to process a given change in participation more quickly. A
              participant's enrollment form shall remain in effect for
              successive Plan Years unless terminated as provided in Section 10
              hereof.

       d.            Notwithstanding the foregoing, to the extent necessary to
              comply with Section 423(b)(8) of the Code and Section 3(b) hereof,
              a participant's payroll deductions may be decreased to zero
              percent (0%) at any time during a Plan Year. Payroll deductions
              shall recommence at the rate provided in such participant's
              enrollment form at the beginning of the next Plan Year, unless
              terminated by the participant as provided in Section 10 hereof.

       e.            At the time the option is exercised, in whole or in part,
              or at the time some or all of the Company's Common Stock issued
              under the Plan is disposed of, the participant must make adequate
              provision for the Company's federal, state, or other tax
              withholding obligations, if any, which arise upon the exercise of
              the option or the disposition of the Common Stock or withdrawal
              from the Plan pursuant to Section 10 hereof. At any time, the
              Company may, but shall not be obligated to, withhold from the
              participant's Compensation the amount necessary for the Company to
              meet applicable withholding obligations, including any withholding
              required to make available to the Company any tax deductions or
              benefits attributable to sale or early disposition of Common Stock
              by the Employee.

7.            Grant of Option.  On the Grant Date of each Plan Year, each
       eligible Employee participating in such Plan Year shall be granted an
       option to purchase on each Exercise Date during such Plan Year (at the
       applicable Purchase Price) up to a number of shares of the Company's
       Common Stock determined by dividing such Employee's payroll deductions
       accumulated prior to such Exercise Date and retained in the participant's
       account as of the Exercise Date by the applicable Purchase Price;
       provided that such purchase shall be subject to the limitations set forth
       in Sections 3(b) and 13 hereof. The Committee may, in its absolute
       discretion, establish a maximum number of shares of the Company's Common
       Stock that an Employee may purchase during each Plan Year by giving
       written notice to participants of the establishment of such maximum prior
       to the effective date of such maximum. Exercise of the option shall occur
       as provided in Section 8 hereof, unless the participant has withdrawn
       pursuant to Section 10 hereof. The option shall expire on the last day of
       the Plan Year.

8.            Exercise of Option.

       a.            Unless a participant withdraws from the Plan as provided in
              Section 10 hereof, his or her option for the purchase of shares
              shall be exercised automatically on the Exercise Date, and the
              maximum number of full shares subject to option shall be
              purchased for such participant at the applicable Purchase Price
              with the accumulated payroll deductions in his or her account.
              No fractional shares shall be purchased; any payroll deductions
              accumulated in a participant's account which are not sufficient to
              purchase a full share shall be retained in the participant's
              account for the subsequent Plan Year, subject to earlier
              withdrawal by the participant as provided in Section 10 hereof.
              Any other monies left over in a participant's account after the
              Exercise Date shall be returned to the participant. During a
              participant's lifetime, a participant's option to purchase shares
              hereunder is exercisable only by him or her.

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       b.            If the Committee determines that, on a given Exercise Date,
              the number of shares with respect to which options are to be
              exercised may exceed (i) the number of shares of Common Stock that
              were available for sale under the Plan on the Grant Date of the
              applicable Plan Year, or (ii) the number of shares available for
              sale under the Plan on such Exercise Date, the Committee may in
              its sole discretion (x) provide that the Company shall make a pro
              rata allocation of the shares of Common Stock available for
              purchase on such Grant Date or Exercise Date, as applicable, in as
              uniform a manner as shall be practicable and as it shall determine
              in its sole discretion to be equitable among all participants
              exercising options to purchase Common Stock on such Exercise Date,
              and continue the Plan Year then in effect, or (y) provide that the
              Company shall make a pro rata allocation of the shares available
              for purchase on such Grant Date or Exercise Date, as applicable,
              in as uniform a manner as shall be practicable and as it shall
              determine in its sole discretion to be equitable among all
              participants exercising options to purchase Common Stock on such
              Exercise Date, and terminate the Plan Year then in effect pursuant
              to Section 20 hereof. The Company may make pro rata allocation of
              the shares available on the Grant Date of any applicable Plan Year
              pursuant to the preceding sentence, notwithstanding any
              authorization of additional shares for issuance under the Plan by
              the Company's shareholders subsequent to such Grant Date.

9.            Delivery of Stock Certificates; Restrictions on Resale.

       a.            As promptly as practicable after each Exercise Date on
              which a purchase of shares occurs, the Company shall instruct its
              transfer agent to prepare and deliver to the Human Resources
              Department of the Company one or more certificates representing
              the shares purchased upon exercise by each participant in the
              Plan, which shall be held in escrow by the Company for the benefit
              of each such participant until the expiration of the Company's
              repurchase option described in Section 9(b) below. As promptly as
              practicable after the termination of such repurchase option, the
              Company shall deliver to each participant each certificate held in
              escrow by the Company for the benefit of such participant for
              which the option has so terminated.

       b.            If a participant or former participant proposes to dispose
              of a share of Common Stock obtained under the Plan (i) prior to
              two years after the date on which the option to purchase such
              share of Common Stock was granted, or (ii) prior to one year after
              the Exercise Date on which the option to purchase such share of
              Common Stock was exercised, that participant or former participant
              must immediately deliver to the Committee written notice of such
              proposed disposition. Upon receipt of such notice, the Company
              shall have the exclusive option, for a period of ten (10) days
              after receipt of such notice, to purchase such Common Stock for a
              price equal to the lesser of (i) the Purchase Price for such
              shares or (ii) the Fair Market Value of such Common Stock on the
              date of such repurchase. If the Company does not elect to exercise
              its option to purchase such Common Stock, then the participant or
              former participant may proceed with the proposed disposition.

10.           Withdrawal.

       a.            A participant may withdraw all but not less than all the
              payroll deductions credited to his or her account and not yet used
              to exercise his or her option under the Plan at any time by giving
              written notice to the Company in the form of Exhibit B to this
              Plan. All of the participant's payroll deductions credited to his
              or her account shall be paid to such

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              participant promptly after receipt of notice of withdrawal and
              such participant's option for the Plan Year shall be automatically
              terminated, and no further payroll deductions for the purchase of
              shares shall be made for such Plan Year. If a participant
              withdraws from a Plan Year, payroll deductions shall not resume at
              the beginning of the succeeding Plan Year unless the participant
              delivers to the Company a new enrollment form.

       b.            A participant's withdrawal from a Plan Year shall not have
              any effect upon his or her eligibility to participate in any
              similar plan which may hereafter be adopted by the Company or in
              succeeding Plan Years which commence after the termination of the
              Plan Year from which the participant withdraws.

11.           Termination of Employment.

       a.           Upon a participant's ceasing to be an Employee as a result
              of such Employee's death, disability, or retirement (each, a
              "Termination Event"), the Plan Year then in progress with respect
              to such participant shall be shortened by setting a new Exercise
              Date for such participant, which shall be the last day of the
              month in which the Termination Event occurs (the "Termination
              Event Exercise Date"). The participant's option shall be deemed to
              have been exercised automatically on the Termination Event
              Exercise Date.

       b.           Upon a participant's ceasing to be an Employee other than by
              reason of such Employee's death, disability or retirement, he or
              she shall be deemed to have elected to withdraw from the Plan and
              the payroll deductions credited to such participant's account
              during the Plan Year but not yet used to exercise the option shall
              be returned to such participant or, in the case of his or her
              death, to the person or persons entitled thereto under Section 15
              hereof, and such participant's option shall be automatically
              terminated.

12.           Interest. No interest shall accrue on the payroll deductions of a
       participant in the Plan.

13.           Stock.

       a.            Subject to adjustment upon changes in capitalization of the
              Company as provided in Section 19 hereof, the maximum number of
              shares of the Company's Common Stock which shall be made available
              for sale under the Plan shall be One Million Shares (1,000,000)
              shares, plus an annual increase to be added on the first day of
              the Company's fiscal year beginning in 2001 equal to the lesser of
              (i) 100,000 shares or (ii) a lesser amount determined by the
              Board.

       b.            The participant shall have no interest or voting right in
              shares covered by his option until such option has been exercised.

       c.            Shares to be delivered to a participant under the Plan
              shall be registered in the name of the participant or in the name
              of the participant and his or her spouse.

14.           Administration. The Plan shall be administered by the Committee.
       The Committee shall have full power and authority to administer the
       Plan, to interpret and construe any provision of the Plan finally and
       conclusively with respect to all persons having any interest
       thereunder, to adopt rules and regulations not inconsistent with the
       Plan for carrying out the Plan, providing for matters not specifically
       covered thereby, and to alter, amend or revoke any rules or regulations
       so adopted.

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       Every finding, decision and determination made by the Board or the
       Committee shall, to the full extent permitted by law, be final and
       binding upon all parties.

15.           Designation of Beneficiary.

       a.            A participant may file a written designation of a
              beneficiary who is to receive any shares and cash, if any, from
              the participant's account under the Plan in the event of such
              participant's death subsequent to an Exercise Date on which the
              option is exercised but prior to delivery to such participant of
              such shares and cash. In addition, a participant may file a
              written designation of a beneficiary who is to receive any cash
              from the participant's account under the Plan in the event of such
              participant's death prior to exercise of the option.

       b.            Such designation of beneficiary may be changed by the
              participant at any time by written notice. In the event of the
              death of a participant and in the absence of a beneficiary validly
              designated under the Plan who is living at the time of such
              participant's death, the Company shall deliver such shares and/or
              cash to the executor or administrator of the estate of the
              participant, or if no such executor or administrator has been
              appointed (to the knowledge of the Company), the Company, in its
              discretion, may deliver such shares and/or cash to the spouse or
              to any one or more dependents or relatives of the participant, or
              if no spouse, dependent or relative is known to the Company, then
              to such other person as the Company may designate.

16.           Transferability. Neither payroll deductions credited to a
       participant's account nor any rights with regard to the exercise of an
       option or to receive shares under the Plan may be assigned,
       transferred, pledged or otherwise disposed of in any way (other than by
       will, the laws of descent and distribution or as provided in Section 15
       hereof) by the participant. Any such attempt at assignment, transfer,
       pledge or other disposition shall be without effect, except that the
       Company may treat such act as an election to withdraw funds from a Plan
       Year in accordance with Section 10 hereof.

17.           Use of Funds. All payroll deductions received or held by the
       Company under the Plan may be used by the Company for any corporate
       purpose, and the Company shall not be obligated to segregate such
       payroll deductions.

18.           Reports. Individual accounts shall be maintained for each
       participant in the Plan. Statements of account shall be given to
       participating Employees at least annually, which statements shall set
       forth the amounts of payroll deductions, the Purchase Price, the number
       of shares purchased and the remaining cash balance, if any.

19.           Adjustments Upon Changes in Capitalization, Dissolution,
       Liquidation, Merger or Asset Sale.

       a.            Changes in Capitalization. Subject to any required action
              by the shareholders of the Company, the maximum number of shares
              which have been authorized for issuance under the Plan but not yet
              placed under option, the maximum number of shares each participant
              may purchase each Plan Year (pursuant to Section 7), as well as
              the price per share and the number of shares of Common Stock
              covered by each option under the Plan which has not yet been
              exercised shall be proportionately adjusted for any increase or

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              decrease in the number of issued shares of Common Stock resulting
              from a stock split, reverse stock split, stock dividend,
              combination or reclassification of the Common Stock, or any other
              increase or decrease in the number of shares of Common Stock
              effected without receipt of consideration by the Company;
              provided, however, that conversion of any convertible securities
              of the Company shall not be deemed to have been "effected without
              receipt of consideration". Such adjustment shall be made by the
              Committee, whose determination in that respect shall be final,
              binding and conclusive. Except as expressly provided herein, no
              issuance by the Company of shares of stock of any class, or
              securities convertible into shares of stock of any class, shall
              affect, and no adjustment by reason thereof shall be made with
              respect to, the number or price of shares of Common Stock subject
              to an option.

       b.            Dissolution or Liquidation. In the event of the proposed
              dissolution or liquidation of the Company, the Plan Year then in
              progress shall be shortened by setting a new Exercise Date (the
              "Dissolution or Liquidation Exercise Date"), and shall terminate
              immediately prior to the consummation of such proposed dissolution
              or liquidation, unless provided otherwise by the Board. The
              Dissolution or Liquidation Exercise Date shall be before the date
              of the Company's proposed dissolution or liquidation. The
              Committee shall notify each participant in writing, at least ten
              (10) business days prior to the Dissolution or Liquidation
              Exercise Date, that the Exercise Date for the participant's option
              has been changed to the Dissolution or Liquidation Exercise Date
              and that the participant's option shall be exercised automatically
              on the Dissolution or Liquidation Exercise Date, unless prior to
              such date the participant has withdrawn from the Plan Year as
              provided in Section 10 hereof.

       c.            Merger or Asset Sale.  In the event of a proposed sale of
              all or substantially all of the assets of the Company, or the
              merger of the Company with or into another corporation, in a
              transaction in which the Company is not the surviving corporation
              of such merger, each outstanding option shall be assumed or an
              equivalent option substituted by the successor corporation or a
              parent or Subsidiary of the successor corporation. In the event
              that the successor corporation refuses to assume or substitute for
              the option, the Plan Year then in progress shall be shortened by
              setting a new Exercise Date (the "Merger or Asset Sale Exercise
              Date") and any Plan Years then in progress shall end on the Merger
              or Asset Sale Exercise Date. The Merger or Asset Sale Exercise
              Date shall be before the date of the Company's proposed sale or
              merger. The Committee shall notify each participant in writing, at
              least ten (10) business days prior to the Merger or Asset Sale
              Exercise Date, that the Exercise Date for the participant's option
              has been changed to the Merger or Asset Sale Exercise Date and
              that the participant's option shall be exercised automatically on
              the Merger or Asset Sale Exercise Date, unless prior to such date
              the participant has withdrawn from the Plan Year as provided in
              Section 10 hereof.

20.           Amendment or Termination.

       a.            The Board (or the Committee) may at any time and for any
              reason terminate or amend the Plan. Except as provided in Section
              19 hereof, no such termination can affect options previously
              granted, provided that a Plan Year may be terminated by the Board
              on any Exercise Date if the Board determines that the termination
              of the Plan Year or the Plan is in the best interests of the
              Company and its shareholders. Except as provided in Section 19 and
              this Section 20 hereof, no amendment may make any change in any
              option

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              theretofore granted which adversely affects the rights of any
              participant. To the extent necessary to comply with Section 423 of
              the Code (or any successor rule or provision or any other
              applicable law, regulation or stock exchange rule), the Company
              shall obtain shareholder approval in such a manner and to such a
              degree as required.

       b.            Without shareholder consent and without regard to whether
              any participant rights may be considered to have been "adversely
              affected," the Board (or the Committee) shall be entitled to
              change the Plan Years, limit the frequency and/or number of
              changes in the amount withheld during a Plan Year, establish the
              exchange ratio applicable to amounts withheld in a currency other
              than U.S. dollars, permit payroll withholding in excess of the
              amount designated by a participant in order to adjust for delays
              or mistakes in the Company's processing of properly completed
              withholding elections, establish reasonable waiting and adjustment
              periods and/or accounting and crediting procedures to ensure that
              amounts applied toward the purchase of Common Stock for each
              participant properly correspond with amounts withheld from the
              participant's Compensation, and establish such other limitations
              or procedures as the Board (or the Committee) determines in its
              sole discretion to be advisable which are consistent with the
              Plan.

       c.            In the event the Committee determines that the ongoing
              operation of the Plan may result in unfavorable financial
              accounting consequences, the Committee may, in its discretion and,
              to the extent necessary or desirable, modify or amend the Plan to
              reduce or eliminate such accounting consequence including, but not
              limited to:

              i.            altering the Purchase Price for any Plan Year
                     including a Plan Year underway at the time of the change in
                     Purchase Price;

              ii.           shortening any Plan Year so that Plan Year ends on a
                     new Exercise Date, including a Plan Year underway at the
                     time of the Committee action; and

              iii.          allocating shares.

              Such modifications or amendments shall not require stockholder
       approval or the consent of any Plan participants.

21.           Notices. All notices or other communications by a participant to
       the Company under or in connection with the Plan shall be deemed to
       have been duly given when received in the form specified by the Company
       at the location, or by the person, designated by the Company for the
       receipt thereof.

22.           Conditions Upon Issuance of Shares. Shares shall not be issued
       with respect to an option unless the exercise of such option and the
       issuance and delivery of such shares pursuant thereto shall comply with
       all applicable provisions of law, domestic or foreign, including,
       without limitation, the Securities Act of 1933, as amended, the
       Securities Exchange Act of 1934, as amended, the rules and regulations
       promulgated thereunder, and the requirements of any stock exchange upon
       which the shares may then be listed, and shall be further subject to
       the approval of counsel for the Company with respect to such compliance.

              As a condition to the exercise of an option, the Company may
       require the person exercising such option to represent and warrant at the
       time of any such exercise that the shares are being

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       purchased only for investment and without any present intention to sell
       or distribute such shares if, in the opinion of counsel for the Company,
       such a representation is required by any of the aforementioned applicable
       provisions of law.

23.           Term of Plan. The Plan shall become effective upon the earlier to
       occur of its adoption by the Board or its approval by the shareholders
       of the Company and shall continue in effect for a term of ten (10)
       years unless sooner terminated under Section 20 hereof.; provided,
       however, that the Plan shall be null and void and of no force and
       effect in the event that the shareholders of the Company fail to
       approve the Plan within twelve (12) months after its adoption by the
       Board.

24.           Governing Law. The law of the State of Delaware will govern all
       matters relating to this Plan except to the extent it is superseded by
       the laws of the United States.

25.           No Continued Employment. The Plan does not constitute a contract
       of employment or continued service, and participation in the Plan will
       not give any Employee the right to be retained in the employ of the
       Company or any right or claim to any benefit under the Plan unless such
       right or claim has specifically accrued under the terms of the Plan.

26.           Treatment as Stockholder. Any contribution made by a participant
       under the Plan shall not create any rights in such participant as a
       stockholder of the Company until shares of Common Stock are registered
       in the name of such person.

27.           No Liability.  No liability whatsoever shall attach to or be
       incurred by any past, present or future shareholders, officers, directors
       or members of any committee of the Board, as such, of the Company, under
       or by reason of any of the terms, conditions or agreements contained in
       the Plan or implied therefrom, any and all liabilities of, and any and
       all rights and claims against the Company, or any shareholder, officer,
       director or committee member, as such, whether arising at common law or
       in equity or created by statute or constitution or otherwise, pertaining
       to the Plan, are hereby expressly waived and released by every
       participant, as a part of the consideration for any benefits provided by
       the Company under the Plan.

28.           Indemnification.  With respect to administration of the Plan, the
       Company shall indemnify each past, present and future member of the
       Committee and the Board against, and each member of the Committee and
       the Board shall be entitled without further act on his or her part to
       indemnity from the Company, for all expenses (including the amount of
       judgments and the amount of approved settlements made with a view to
       the curtailment of costs of litigation, other than amounts paid to the
       Company itself) reasonably incurred by him in connection with or
       arising out of any action, suit or proceeding in which he or she may be
       involved by reason of his or her being or having been a member of the
       Committee or the Board, whether or not he or she continues to be a
       member of the Committee or the Board at the time of incurring such
       expenses; provided, however, that such indemnify shall not include any
       expenses incurred by any member of the Committee or the Board (a) in
       respect of matters as to which he or she shall be finally adjudged in
       any such action, suit or proceeding to have been guilty of gross
       negligence or willful misconduct in the performance of his or her duty
       as a member of the Committee or the Board, or (b) in respect of any
       matter in which any settlement is effected, to an amount in excess of
       the amount approved by the Company on the advice of its legal counsel;
       and provided, further, that no right of indemnification under the
       provisions set forth herein shall be available to or enforceable by any
       member of the Committee or the Board unless, within 60 days after
       institution of any such action, suit or proceeding, he or she shall
       have offered the Company, in writing, the opportunity to handle and
       defend same at its

                                       10

<PAGE>   11

       own expense. The foregoing right of indemnification shall inure to the
       benefit of the heirs, executors or administrators of each member of the
       Committee and the Board and shall be in addition to all other rights to
       which such member of the Committee or the Board may be entitled as a
       matter of law, contract, or otherwise.

                                       11<PAGE>   1
                                                                    EXHIBIT 4.02

                              AMENDED AND RESTATED
                             MASTER RIGHTS AGREEMENT

                  This Master Rights Agreement (the "Agreement") is made and
entered into as of the 31st day of October, 1995 by and among AtheroGenics,
Inc., a Georgia corporation (the "Company"), Alliance Technology Ventures,
Limited Partnership, a Delaware limited partnership ("Alliance"), ATV/GP
Parallel Fund, Limited Partnership, a Delaware limited partnership ("ATV/GP"),
ATV/MFJ Parallel Fund, Limited Partnership, a Delaware limited partnership
("ATV/MFJ"), Intelligent Systems Corporation, a Georgia corporation
("Intelligent Systems"), International Murex Technologies Corp., a company
organized under the laws of British Columbia, Canada ("Murex"), Sanderling III
Limited, a Cayman Islands limited partnership ("Sanderling Limited"), Sanderling
Venture Partners III, a California limited partnership, ("Sanderling Venture"),
Sanderling III Biomedical, a California limited partnership ("Sanderling
Biomedical"), Sanderling Ventures Management, a California limited partnership,
("Sanderling Management") and New York Life Insurance Company, a New York
corporation ("NY Life").

                                    AGREEMENT

                  In consideration of the following mutual covenants and
agreements, and subject to the terms and conditions set forth herein, the
parties hereto agree as follows:

                                   ARTICLE I.

         1.1      Definitions. The following definitions shall be applicable to
the terms set forth below as used in this Agreement:

                  (a)      "Affiliates." The term "Affiliate" shall mean, with
respect to any Person, any other Person which directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with such Person.

                  (b)      "Articles." The term "Articles" shall mean the
Company's Articles of Incorporation, as amended from time to time.

                  (c)      "Board." The term "Board" shall mean the Board of
Directors of the Company.

                  (d)      "Budget." The term "Budget" shall have the meaning
set forth in Section 2.1(d) hereof.

<PAGE>   2

                  (e)      "Commission." The term "Commission" shall mean the
Securities and Exchange Commission or any other federal agency at the time
administering the federal securities laws.

                  (f)      "Common Stock." The term "Common Stock" shall mean
the Company's Common Stock as constituted on the date hereof.

                  (g)      "Company's Notice." The term "Company's Notice" shall
have the meaning set forth in Section 3.3 hereof.

                  (h)      "Conversion Shares." The term "Conversion Shares"
shall mean any Common Stock issued or issuable upon conversion of the Preferred
Stock held by the Investors.

                  (i)      "Equity Securities." The term "Equity Securities"
shall have the meaning set forth in Section 2.3 hereof.

                  (j)      "GAAP." The term "GAAP" shall mean generally accepted
accounting principles (as such principles are applied in the United States of
America as of the date of the financial statement with respect to which the term
is used), consistently applied.

                  (k)      "Initiating Holders." The term "Initiating Holders"
shall mean the holders of Registrable Stock initially requesting registration of
Registrable Stock pursuant to Section 3.1 of this Agreement.

                  (l)      "Investors." The term "Investors" shall mean
Alliance, ATV/GP, ATV/MFJ, Intelligent Systems, Murex, Sanderling Limited,
Sanderling Venture, Sanderling Biomedical, Sanderling Management and NY Life,
their respective successors and assigns and any other holder of Preferred Stock
or of warrants, options or other rights to acquire Preferred Stock who by
amendment is added as a party to this Agreement.

                  (m)      "Investors' Notice." The term "Investors' Notice"
shall have the meaning set forth in Section 3.3 hereof.

                  (n)      "Long-Form Registration Statement." The term
"Long-Form Registration Statement" shall mean a registration statement on Form
S-1, Form S-2, Form SB-1 or Form SB-2, or any similar form of registration
statement adopted by the Commission from and after the date hereof.

                  (o)      "Permitted Transferees." The term "Permitted
Transferees" of an Investor shall mean (i) any other Investor; (ii) any
Affiliate of any Investor; (iii) any one or more members of a class consisting
of the spouse, children and grandchildren of an Investor, or a trust for the
benefit of any one or more members of such class; or (iv) any shareholder or

                                        2

<PAGE>   3

partner of any non-natural Investor upon a pro rata distribution by a
partnership to its partners or otherwise upon the dissolution or liquidation of
the non-natural Investor.

                  (p)      "Person." The term "Person" shall mean any
individual, firm, corporation, partnership, trust, joint venture, governmental
authority or other entity, and shall include any successor (by merger or
otherwise) of such entity.

                  (q)      "Preferred Stock." The term "Preferred Stock" shall
mean the Company's Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock.

                  (r)      "Prospective Sellers." The term "Prospective Sellers"
shall have the meaning set forth in Section 3.6(a)(ii) hereof.

                  (s)      "Register." The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act.

                  (t)      "Registrable Stock." The term "Registrable Stock"
shall mean (i) any Common Stock issued or issuable upon conversion of the
Preferred Stock held or acquired by any of the Investors; (ii) any Common Stock
issued or issuable with respect to the Conversion Shares by reason of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization, and (iii) any
other shares of Common Stock now held or hereafter acquired by Persons holding
the securities described in clauses (i) and (ii) above. A Person shall be deemed
to be a holder of Registrable Stock when such Person has a right to acquire such
Registrable Stock (whether by conversion or otherwise) regardless of whether
such acquisition has actually been effected. Each share of Registrable Stock
shall continue to be Registrable Stock in the hands of each subsequent holder
thereof subject to the limitations set forth in Section 3.14 hereof; provided
that each share of Registrable Stock shall cease to be Registrable Stock when
transferred (x) to any Person who is not a Permitted Transferee or if the
transfer does not comply with the terms of this Agreement, (y) pursuant to a
registered public offering, or (z) in accordance with Rule 144 promulgated by
the Commission under the Securities Act.

                  Notwithstanding anything to the contrary herein, the term
"Registrable Stock" (solely for the purposes of Sections 3.3 to 3.8, inclusive,
3.10 and 3.13) shall include (i) any Common Stock outstanding on the date hereof
and (ii) any Common Stock issued out of the Reserved Shares. Moreover, the
registration rights for such Registrable Stock described in the immediately
preceding sentence shall not be transferable, except in a transfer to a
Permitted Transferee.

                                        3

<PAGE>   4

                  (u)      "Requesting Holders." The term "Requesting Holders"
shall have the meaning set forth in Section 3.1(c) hereof.

                  (v)      "Reserved Shares." The term "Reserved Shares" shall
mean shares of Common Stock reserved for issuance to directors, officers,
employees and consultants upon the exercise of outstanding or future options of
the Company.

                  (w)      "Securities Act." The term "Securities Act" shall
mean the Securities Act of 1933, as amended.

                  (x)      "Short-Form Registration Statement." The term
"Short-Form Registration Statement" shall mean a registration statement on Form
S-3 or any similar form of registration statement adopted by the Commission from
and after the date hereof.

         1.2      Additional Definitions. In addition to the foregoing,
capitalized terms used in this Agreement and not otherwise defined in this
Article I shall have the meanings so given to such terms herein.

                                   ARTICLE II.
                   COVENANTS OF THE COMPANY AND THE INVESTORS

         2.1      Accounting; Financial Statements and Other Information;
Inspection Rights.

                  (a)      Accounting. The Company shall maintain and cause each
of its subsidiaries to maintain a system of accounting established and
administered in accordance with GAAP and shall set aside on its books and cause
each of its operating subsidiaries to set aside on its books all such proper
reserves as shall be required by GAAP.

                  (b)      Financial Statements. So long as there are any shares
of Preferred Stock outstanding and an Investor holds not less than 7.5% of the
outstanding Preferred Stock, the Company shall deliver to each such Investor,
within 90 days after the end of each fiscal year of the Company, a consolidated
and consolidating balance sheet of the Company and its subsidiaries as of the
end of such year and consolidated and consolidating statements of operations,
cash flows and stockholders' equity (deficit) of the Company and its
subsidiaries for such year, setting forth in each case comparisons to the Budget
and the previous fiscal year, all in reasonable detail and accompanied by the
opinion thereon of independent public accountants of national standing, which
opinion shall not be qualified and shall state that the financial statements
were prepared in accordance with GAAP applied on a basis consistent with that of
the previous fiscal year, fairly present the consolidated financial condition of
the Company as of the date thereof and for the periods covered thereby and that
the audit by such accountants in

                                        4

<PAGE>   5

connection with such financial statements has been made in accordance with
generally accepted auditing standards.

                  (c)      Additional Information. So long as there are any
shares of Preferred Stock outstanding and an Investor Stock holds not less than
7.5% of the outstanding Preferred, the Company shall deliver to each such
Investor:

                           (i)      within 30 days after the end of each of (A)
the monthly accounting periods, and (B) the quarterly accounting periods in each
fiscal year of the Company, a consolidated and consolidating balance sheet of
the Company and its subsidiaries as of the end of each such period, and
consolidated and consolidating statements of operations, cash flows and
stockholders' equity (deficit) of the Company and its subsidiaries and changes
in consolidated and consolidating financial position of the Company and its
subsidiaries for each such period and for the period from the beginning of the
current fiscal year to the end of such monthly or quarterly period, setting
forth in each case comparisons to the Budget and the corresponding periods of
the previous fiscal year, all in reasonable detail and certified by the chief
financial officer of the Company;

                           (ii)     concurrently with the delivery of each of
the financial statements referred to in Sections 2.1(b) and 2.1(c)(i) above, an
executed written report by the chief executive officer of the Company with
respect to the operations of the Company during the period covered by such
statements, including a discussion, in reasonable detail, of operating results
versus Budget and of problems and achievements versus goals and milestones and
setting forth goals and milestones for the ensuing month, quarter and year;

                           (iii)    within 90 days after the end of each fiscal
year of the Company, a copy of any management letter delivered to the Company by
its independent public accountants with respect to such year;

                           (iv)     promptly (but in any event within ten days)
after any material adverse event or circumstance affecting the Company or any of
its subsidiaries (including, but not limited to, the filing of any material
litigation against the Company or any of its subsidiaries and the discovery that
the Company or any of its subsidiaries is not, or with the passage of time will
not be, in compliance with any provision of this Agreement, its Bylaws, the
Articles or any other material agreement of the Company or any of its
subsidiaries), a notice specifying the nature and period of existence thereof,
and the actions the Company has taken and/or proposes to take with respect
thereto; and

                           (v)      promptly (but in any event within ten days)
after transmission thereof, copies of any general communication from the Company
or any of its subsidiaries to its stockholders, directors or the financial
community at large, and any reports filed by the Company or any of its
subsidiaries with any securities exchange, the National Association of
Securities Dealers, Inc., any state official or agency charged with securities
regulation, the

                                        5

<PAGE>   6

Commission or any other governmental agency, domestic or foreign (including,
without limitation, any correspondence between the Company or any of its
subsidiaries and any of the foregoing which contains information materially
adverse to the Company or any of its subsidiaries).

                  (d)      Annual Budget.

                           (i)      Prior to each December 31, the Company shall
prepare a Budget (the "Budget") for each succeeding 12-month period commencing
each subsequent January 1, which shall meet the approval of the Board. The
initial draft of the Budget will be prepared by the chief executive officer of
the Company and submitted to all Board members at least 15 days prior to the
meeting at which it is to be considered and in no event later than November 1st
of each year. The Budget shall contain the current business and marketing plans
of the Company for the 12-month period covered by it, including but not limited
to, cash flow and pro forma profit and loss statements for each month included
in such period. The Company agrees to use its best efforts to conduct its
business in conformity with the Budget.

                           (ii)     At each meeting of the Board, operating
management will report on the receipts and expenditures of the Company as of a
date reasonably close to the date of the meeting and will recommend for action
by the Board any changes in the Budget which it considers necessary or
appropriate. Unless provided for in the Budget, no expenditure may be made by or
on behalf of the Company without action by the Board.

                           (iii)    The Budget may be amended or otherwise
modified by the Board at such time or times as the Board deems appropriate.

                           (iv)     So long as there are any shares of Preferred
Stock outstanding and an Investor holds not less than 7.5% of the outstanding
Preferred Stock, the Company shall furnish to each such Investor (in person or
by first-class mail) a copy of such Budget at least 30 days prior to the
commencement of the period covered by such Budget.

                  (e)      Inspection Rights. The Company shall permit any
Investor or any representative designated by any Investor, at such Investor's
expense, to visit and inspect any of the properties of the Company or any of its
subsidiaries, including its and their books of account (and to make copies
thereof and to take extracts therefrom), and to discuss its and their affairs,
finances and accounts with its and their officers or employees and with
representatives of the Company's lenders, all at such reasonable times and as
often as may be reasonably requested; provided that such rights shall be
exercised in a manner so as not to materially and adversely disrupt the ordinary
course of business of the Company or any of its subsidiaries.

                  (f)      Limitation of Rights. The rights of the Investors to
receive the information and conduct any inspections provided for in this Section
2.1 are subject to the right of the Company, prior to any such receipt of
information or inspection by any person, to demand

                                        6

<PAGE>   7

that such person hold all such information confidential and sign a
confidentiality agreement in a form mutually acceptable to the Company and the
Investors ("Confidentiality Agreement"). The receipt by any third person of such
information shall be subject to the prior receipt by the Company of a signed
Confidentiality Agreement from that third person.

                  2.2      Right of First Refusal for Issuance of Equity
Securities.

                           (a)      If the Company determines to issue any
additional shares of its capital stock, or warrants, options, rights or other
securities convertible into its capital stock (collectively, the "Equity
Securities"), from and after the date of this Agreement for the purpose of
financing its business, the Company shall first give each of the Investors then
holding Preferred Stock the right to purchase such Equity Securities by
delivering to them a written offer which shall state the price and other terms
and conditions of the proposed issuance. If the Company proposes to issue the
Equity Securities for consideration other than solely cash and/or promissory
notes, the offer to the Investors then holding Preferred Stock shall, to the
extent of such consideration, permit such Investors to pay in lieu thereof, cash
equal to the fair market value of such consideration, and the offer shall state
the Company's estimate of such fair market value. The Board shall fix the period
of the offer which shall be a minimum of 30 days or such longer period as is
necessary to determine the fair market value of the consideration referred to in
the preceding sentence. Each Investor then holding Preferred Stock shall have
the right to assign any of the rights such Investor may have to purchase Equity
Securities under this Section 2.2 to any Permitted Transferee.

                           (b)      An Investor then holding Preferred Stock may
accept an offer only by giving written notice to the Company before the offer
expires that such Investor has accepted the offer to purchase some or all of the
securities offered (the "Accepted Securities"); provided, however, that the
maximum number or amount of securities such Investor shall be entitled to
purchase shall be equal to that number or amount of securities to be issued
multiplied by a fraction, the numerator of which shall be the aggregate number
of Conversion Shares to which such Investor is entitled and the denominator of
which shall be the aggregate number of shares of voting capital stock of the
Company then outstanding. Notwithstanding the foregoing, any such Investor may,
at the time it accepts the offer, subscribe to purchase any or all securities
offered ("Oversubscription Securities") which may be available as a result of
the rejection, or partial rejection, of the offer by other such Investors. All
Oversubscription Securities shall be allocated on a pro rata basis among those
Investors subscribing to purchase them. If any such Investor declines to
purchase all or part of such Investor's pro rata allocation of Oversubscription
Securities, any remaining Oversubscription Securities shall be offered, on a pro
rata basis, to those Investors electing to purchase Oversubscription Securities.
The sale of Oversubscription Securities shall continue pursuant to the process
set forth in the immediately preceding sentence until all of the Equity
Securities have been purchased by the Investors or until no Investor desires to
purchase any remaining Oversubscription Securities.

                                        7

<PAGE>   8

                  Promptly following the expiration of the offer, the Company
shall allocate the securities subscribed for among the Investors then holding
Preferred Stock accepting or partially accepting the offer (the "Subscribing
Holders") in the manner described in the immediately preceding paragraph and
shall by written notice (the "Acceptance Notice") advise all Subscribing Holders
of the number or amount of securities allocated to each of the Subscribing
Holders. Within ten days following receipt of the Acceptance Notice, each of the
Subscribing Holders shall deliver to the Company payment in full for the
Accepted Securities purchased by it against delivery by the Company to each
Subscribing Holder of a certificate or certificates evidencing the Accepted
Securities purchased by it.

                  To the extent the offer is not subscribed in full by the
Investors then holding Preferred Stock, the Company may, for a period of 90 days
thereafter, issue and sell the unaccepted securities, or any of them, at the
same price, and upon the other terms and conditions specified in such offer, to
any Person or Persons.

                  (c)      Notwithstanding the provisions of this Section 2.2,
the Company shall not be required to first offer the Equity Securities to
Investors holding Preferred Stock if:

                           (i)      the issuance is pursuant to the conversion
of any shares of the Preferred Stock;

                           (ii)     the Company proposes to issue Reserved
Shares, or nontransferable options to purchase Common Stock, for cash only, to
its officers or employees, or officers or employees of any of its subsidiaries,
or to outside consultants or contractors in connection with services performed
for the Company, pursuant to employment or compensation plans or other
arrangements approved by the Company's Board, provided the total of all such
shares does not exceed 800,000 shares;

                           (iii)    the issuance is in connection with any stock
split, stock dividend or recapitalization of the Company;

                           (iv)     the issuance is pursuant to an underwritten
public offering;

                           (v)      the issuance is pursuant to the acquisition
of another company;

                           (vi)     the issuance is to Pheonix Growth Capital
Corp., or its Affiliate or assignee, in connection with an equipment lease
facility for the Company, provided the total of all such shares does not exceed
12,500 shares;

                           (vii)    the issuance is to International Murex
Technologies Corporation, or its Affiliate or assignee, in connection with the
Company's rental obligations under that certain Sublease Agreement dated March
1, 1995 or in connection with certain capital

                                        8

<PAGE>   9

leasehold improvements made to the leased premises pursuant to that certain
Letter Agreement dated September 11, 1995, provided the total of all such shares
does not exceed 200,294 shares;

                           (viii)   the issuance is to Emory University pursuant
to the terms of that certain Common Stock Purchase Agreement dated January 11,
1995; or

                           (ix)     the issuance is to one or more of the
holders of the Preferred Stock upon the exercise of warrants to purchase shares
of Series B Convertible Preferred Stock issued pursuant to that certain Series B
Convertible Preferred Stock Purchase Agreement of even date herewith.

                  2.3       Reserved Shares.

                           (a)      The Reserved Shares shall be issued from
time to time to directors, officers, employees and consultants of the Company
under such arrangements, contracts or plans as are recommended by the management
of the Company and approved by the unanimous consent of those members of the
Board of Directors elected by the holders of Preferred Stock.

                           (b)      Unless otherwise approved by the unanimous
consent of those members of the Board of Directors elected by the holders of
Preferred Stock, any such arrangements, contracts or plans with respect to the
Reserved Shares shall not provide for a vesting schedule at a rate in excess of
20% per annum from the date of issuance. Unless otherwise approved by the
unanimous consent of those members of the Board of Directors elected by the
holders of Preferred Stock, holders of the Reserved Shares shall be required to
execute Stock Restriction Agreements substantially in the form of Exhibit 2.3.

                  2.4      Patent, Copyright and Nondisclosure Agreement. Unless
otherwise approved by the unanimous consent of those members of the Board of
Directors elected by the holders of Preferred Stock, the Company shall require
all present and future officers, directors and technical employees of, and
consultants to, the Company and its subsidiaries to execute and deliver a
Patent, Copyright and Nondisclosure Agreement substantially in the form of
Exhibit 2.4.

                  2.5      Stock Restriction and Optionee Restriction
Agreements. Unless otherwise approved by the unanimous consent of those members
of the Board of Directors elected by the holders of Preferred Stock, the Company
shall cause all future purchasers of, and all future holders of options to
purchase, the Company's Common Stock who are employees or consultants of the
Company to execute and deliver a Stock Restriction Agreement or Optionee
Restriction Agreement substantially in the form of Exhibits 2.3 and 2.5,
respectively.

                  2.6      Termination of Company Agreements. The provisions of
Sections 2.1 through 2.5 above shall remain in full force and effect so long as
any Preferred Stock remains outstanding.

                                        9

<PAGE>   10

                  2.7      Board of Directors. Unless otherwise approved by the
holders of a majority of the outstanding shares of Preferred Stock, the Articles
shall, for so long as any shares of Preferred Stock remain outstanding, provide
for a Board of Directors of up to seven members. The Investors hereby agree (a)
not to exercise their right to vote to enlarge the Board from its current four
members to seven members prior to April 1, 1996 and (b) not to take any action,
prior to April 1, 1996, to remove or replace any of the current directors unless
holders of more than fifty percent (50%) of the outstanding shares of Preferred
Stock agree to such action.

                                  ARTICLE III.
                               REGISTRATION RIGHTS

                  3.1      Required Registrations.

                           (a)      If, at any time after the earlier to occur
of January 1, 2001 or six months after the effective date of the first
registration statement filed by the Company covering an offering of the
Company's securities (other than a registration relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a transaction under Rule 145 of the Securities Act,
or a registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Stock), holders of at least 40% of the
Registrable Stock then outstanding propose to dispose of at least 20% of the
Registrable Stock then outstanding or any lesser percentage if the anticipated
aggregate offering price would exceed $15,000,000, then such holders may request
the Company in writing to effect such registration, stating the form of
registration statement under the Securities Act to be used (subject to the
Company being eligible to use such registration statement), the number of shares
of Registrable Stock to be disposed of and the intended method of disposition of
such shares.

                           (b)      If, at any time at which the Company is
eligible to file a registration statement on a Short-Form Registration
Statement, holders of Registrable Stock propose to dispose of shares of
Registrable Stock which such holders in their good faith discretion determine
would have an anticipated aggregate offering price of at least $1,000,000
pursuant to a Short-Form Registration Statement, then such holders may request
the Company in writing to effect such registration on a Short-Form Registration
Statement, stating the form of such registration statement under the Securities
Act to be used, the number of shares of Registrable Stock to be disposed of and
the intended method of disposition of such shares.

                           (c)      Upon receipt of the request of the holders
pursuant to Section 3.1(a) or Section 3.1(b) above (in the case of Section
3.1(a) or Section 3.1(b), hereinafter referred to as the "Initiating Holders"),
the Company shall give prompt written notice thereof to all other holders of
Registrable Stock. Subject to the provisions of Section 3.2 below, the Company
shall (i) with respect to Section 3.1(a), use its best efforts promptly to
effect, and (ii) with respect to Section 3.1(b) shall promptly effect, the
registration under the Securities Act of all shares of Registrable Stock
specified in the requests of the Initiating Holders and the requests (stating
the

                                       10

<PAGE>   11

number of shares of Registrable Stock to be disposed of and the intended method
of disposition of such shares) of other holders of shares of Registrable Stock
("Requesting Holders") given within 30 days after receipt of such notice from
the Company.

                  3.2      Limitations on Required Registration.

                           (a)      The Company shall not be required to prepare
and file more than two Long-Form Registration Statements, which actually become
or are declared effective, at the request of the Initiating Holders pursuant to
Section 3.1(a) hereof. The two required filings shall include any Long-Form
Registration Statement filed and subsequently withdrawn at the request of the
Initiating Holders unless such request is prompted by market conditions. Nothing
contained herein, however, shall limit the Company's obligation from time to
time to prepare and file a Short-Form Statement requested by the Initiating
Holders pursuant to Section 3.1(b) hereof.

                           (b)      Only Common Stock may be included in a
registration, and, whenever a registration requested by holders of Registrable
Stock is for a firm commitment underwritten offering, if the Initiating Holders
determine that the number of shares of Common Stock so included which are to be
sold by the holders of Registrable Stock is limited due to market conditions,
the holders (including both the Initiating Holders and the Requesting Holders)
of Registrable Stock proposing to sell their shares in such underwriting and
registration shall share pro rata in the available portion of the registration
in question, such sharing to be based upon the number of shares of Registrable
Stock then held by such holders, respectively. If any holder of Registrable
Stock disapproves of the terms of the underwriting, such holder may elect to
withdraw therefrom by written notice to the Company, the underwriter and the
Initiating Holders. The Registrable Stock so withdrawn shall also be withdrawn
from registration; provided, however, that, if by the withdrawal of such
Registrable Stock, a greater number of shares of Registrable Stock held by other
holders of Registrable Stock may be included in such registration (up to the
maximum of any limitation imposed by the Initiating Holders), then the Company
shall offer to all holders of Registrable Stock who have included Registrable
Stock in the registration the right to include additional Registrable Stock in
the same proportion used in determining the limitation imposed by the provisions
of this Section 3.2(b).

                           (c)      The Company shall not be required to prepare
and file a registration statement pursuant to Section 3.1 hereof which could
become effective within 180 days following the effective date of any
registration statement filed by the Company with the Commission pertaining to an
underwritten public offering of securities for cash for the account of the
Company if the Initiating Holders' request for registration is received by the
Company subsequent to such time as the Company in good faith gives written
notice to the holders of Registrable Stock that the Company is commencing to
prepare a Company-initiated registration statement and the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective.

                                       11

<PAGE>   12

                           (d)      Notwithstanding the foregoing, if the
Company shall furnish to the Initiating Holders and Requesting Holders a
certificate signed by the president of the Company stating that, in the good
faith judgment of the Board, it would be seriously detrimental to the Company
and its stockholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of not more than
90 days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any
12-month period.

                  3.3      Incidental Registration . If the Company at any time
proposes to register any of its securities for sale for its own account or for
the account of any other Person (other than a registration relating either to
the sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or a Rule 145 transaction, or a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Stock), it shall each such time give written notice (the "Company's
Notice"), at its expense, to all holders of Registrable Stock of its intention
to do so at least 45 days prior to the filing of a registration statement with
respect to such registration with the Commission. If any holder of Registrable
Stock desires to dispose of all or part of its Registrable Stock, it may request
registration thereof in connection with the Company's registration by delivering
to the Company, within 30 days after receipt of the Company's Notice, written
notice of such request (the "Investors' Notice") stating the number of shares of
Registrable Stock to be disposed of and the intended method of disposition of
such shares by such holder or holders. The Company shall use its best efforts to
cause all shares of Registrable Stock specified in the Investors' Notice to be
registered under the Securities Act so as to permit the sale or other
disposition (in accordance with the intended methods thereof as aforesaid) by
such holder or holders of the shares so registered, subject, however, to the
limitations set forth in Section 3.4 hereof.

                  3.4      Limitations on Incidental Registration.

                           (a)      If the registration of which the Company
gives notice pursuant to Section 3.3 above is for the purpose of permitting a
disposition of securities by the Company pursuant to a firm commitment
underwritten offering, the notice shall so state, and the Company shall have the
right to limit the aggregate size of the offering or the number of shares to be
included therein by stockholders of the Company if requested to do so in good
faith by the managing underwriter of the offering and only securities which are
to be included in the underwriting may be included in the registration.

                           (b)      Whenever the number of shares which may be
registered pursuant to Section 3.3 is limited by the provisions of Section
3.4(a) above, the holders of Registrable Stock shall have priority as to sales
over the other holders of the Company's securities and the Company shall cause
such other holders to withdraw from such offering to the extent necessary to
allow all requesting holders of Registrable Stock to include all of the shares
so requested to be

                                       12

<PAGE>   13

included within such registration. Whenever the number of shares which may be
registered pursuant to Section 3.3 is still limited by the provisions of Section
3.4(a) above, after the withdrawal of the other holders of the Company's
securities, the Company shall have priority as to sales over the holders of
Registrable Stock and each holder hereby agrees that it shall withdraw its
securities from such registration to the extent necessary to allow the Company
to include all the shares which the Company desires to sell for its own account
to be included within such registration; provided, that, except with respect to
the first Long-Form Registration Statement effected by the Company on its own
initiative, in no event shall the Registrable Stock requested to be included
pursuant to Section 3.3 above be reduced below 20% of the total amount of
securities included in such offering. The holders of Registrable Stock given
rights by Section 3.3 above shall share pro rata in the available portion of the
registration in question, such sharing to be based upon the number of shares of
Registrable Stock then held by each of such holders, respectively.

                  3.5      Designation of Underwriter. In the case of any
registration initiated by the Initiating Holders pursuant to the provisions of
Section 3.1 hereof which is proposed to be effected pursuant to a firm
commitment underwriting and, subject to the approval of the Company, which
approval shall not be unreasonably withheld, the Initiating Holders shall have
the right to designate the managing underwriter, and all holders of Registrable
Stock participating in the registration shall sell their shares only pursuant to
such underwriting.

                  3.6      Registration Procedures.

                           (a)      If and when the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of shares of Registrable Stock, the Company shall:

                                    (i)      prepare and file with the
Commission a registration statement (the form and substance of which shall be
subject to the approval of the holders of a majority of the Registrable Stock to
be included in such registration) with respect to such shares and use its best
efforts to cause such registration statement to become and remain effective for
a period described in Section 3.15 hereof;

                                    (ii)     prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectuses used in connection therewith as may be necessary to keep such
registration statement effective and current and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of all
shares covered by such registration statement, including such amendments and
supplements as may be necessary to reflect the intended method of disposition
from time to time of the holder or holders of Registrable Stock who have
requested that any of their shares be sold or otherwise disposed of in
connection with the registration (the "Prospective Sellers");

                                       13

<PAGE>   14

                                    (iii)    furnish to each Prospective Seller
such number of copies of each prospectus, including preliminary prospectuses, in
conformity with the requirements of the Securities Act, and such other
documents, as the Prospective Seller may reasonably request in order to
facilitate the public sale or other disposition of the shares owned by it;

                                    (iv)     use its best efforts to register or
qualify the shares covered by such registration statement under such other
securities or blue sky or other applicable laws of such jurisdictions as each
Prospective Seller shall reasonably request to enable such seller to consummate
the public sale or other disposition of the shares owned by such seller,
provided that the Company shall not be required in connection therewith or as an
election thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction;

                                    (v)      upon written request, furnish to
each Prospective Seller a signed counterpart, addressed to the Prospective
Sellers and their underwriters, if any, of: (A) an opinion of counsel for the
Company, dated the effective date of the registration statement; and (B) a
"comfort" letter signed by the independent public accountants who have certified
the Company's financial statements included in the registration statement;
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants' letter) with respect to the events subsequent to the date of the
financial statements, as are customarily covered (at the time of such
registration) in the opinions of issuers' counsel and in accountants' letters
delivered to the underwriters in connection with underwritten public offerings
of securities;

                                    (vi)     cause all such Registrable Stock to
be listed on each securities exchange or other securities trading market on
which similar securities issued by the Company are then listed;

                                    (vii)    provide a transfer agent and
registrar for all such Registrable Stock not later than the effective date of
such registration statement;

                                    (viii)   enter into such customary
agreements (including an underwriting agreement) and take all such other
customary actions as the holders of a majority of the Registrable Stock being
sold reasonably request in order to expedite or facilitate the disposition of
such Registrable Stock; and

                                    (ix)     make available for inspection by
any Prospective Seller, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with the preparation of such registration statement.

                                       14

<PAGE>   15

                           (b)      Each Prospective Seller of Registrable
Stock, shall furnish to the Company such information as the Company may
reasonably require from the Prospective Seller for inclusion in the registration
statement (and the prospectus included therein).

                           (c)      The Prospective Sellers shall not (until
further notice) effect sales of the shares covered by the registration statement
after receipt of telegraphic or written notice from the Company to suspend sales
to permit the Company to correct or update a registration statement or
prospectus.

                  3.7      Expenses of Registration.

                           (a)      All expenses incurred in effecting any
registration requested pursuant to Section 3.1 or 3.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, expenses of
compliance with blue sky laws, fees and disbursements of counsel for the
Company, fees and disbursements of one counsel for the holders of Registrable
Stock selected by the holders of a majority of the Registrable Stock so to be
offered for sale and reasonably acceptable to the Company, expenses of any
audits incidental to or required by any such registration, and reasonable
expenses of all marketing and promotional efforts requested by the managing
underwriter shall be borne by the Company; provided, however, that each
Prospective Seller shall bear its own underwriting discounts or brokerage fees
or commissions relating to the sale of its Registrable Stock.

                  3.8      Indemnification.

                           (a)      In the event of any registration of any of
its securities under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless each Investor requesting or joining in a
registration of such securities, each underwriter (as defined in the Securities
Act), each officer, director and partner of any Investor or underwriter and each
controlling person of any Investor or underwriter, if any (within the meaning of
the Securities Act), against any expenses, losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which such
Investor, underwriter, officer, director, partner or controlling person may be
subject under the Securities Act, under any other statute or at common law,
insofar as such expenses, losses, claims, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or are based upon (i) any
untrue statement (or alleged untrue statement) of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any summary prospectus issued in connection with any securities
being registered or any other document, or any amendment or supplement thereto,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in light of the circumstances in which they were made or (ii) any violation by
the Company of the Securities Act or any blue sky law, or any rule or regulation
promulgated under the Securities Act or any blue sky law, or any other law,
applicable to the Company in connection

                                       15

<PAGE>   16

with any such registration, qualification or compliance of any shares of
Registrable Stock, and shall reimburse each such Investor, underwriter, officer,
director, partner or controlling person for any legal or other expenses
reasonably incurred by such Investor, underwriter, officer, director, partner or
controlling person in connection with investigating, preparing or defending any
such expense, loss, claim, damage, liability or action; provided, however, that
the Company shall not be liable to any Investor, underwriter, officer, director,
partner or controlling person in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or omission made in such registration statement, preliminary
prospectus, summary prospectus, final prospectus or any other document, or
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Investor, underwriter, officer,
director, partner or controlling person, respectively, specifically for use
therein. The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of such Investor,
underwriter, officer, director, partner or controlling person, and shall survive
the transfer of such securities by such Investor.

                           (b)      The Company may require, as a condition to
including any Registrable Stock of a Prospective Seller in any registration
statement filed pursuant to Section 3.1 or Section 3.3, that the Company shall
have received an undertaking satisfactory to it from such Prospective Seller,
severally and not jointly, to indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 3.8(a)) the Company, each
director of the Company, each officer of the Company who shall sign such
registration statement and each other person, if any, who controls the Company
within the meaning of the Securities Act (except the indemnifying Investor, if
such indemnifying Investor so controls the Company), with respect to (i) any
untrue statement (or alleged untrue statement) of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any summary prospectus issued in connection with any securities
being registered or any other document, or any amendment or supplement thereto,
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in light of the circumstances in which they were made or (ii) any violation by
the Prospective Investor of the Securities Act or any blue sky law, or any rule
or regulation promulgated under the Securities Act or any blue sky law, or any
other law, applicable to the Company in connection with any such registration,
qualification or compliance of any shares of Registrable Stock, in each case if
such statement or omission was made in reliance on and in conformity with
written information furnished to the Company by such Prospective Seller
specifically for use in preparing any such registration statement, preliminary
prospectus, final prospectus, summary prospectus or amendment or supplement
thereto, or in making any such filing or representation. Each Prospective Seller
hereunder shall promptly provide such indemnification upon request. The
indemnity provided for herein shall remain in full force and effect regardless
of any investigation made by or on behalf of the indemnified party and shall
survive any transfer of the Registrable Stock held by the indemnifying party. In
no event shall a Prospective Seller's obligation to

                                       16

<PAGE>   17

indemnify any Person hereunder exceed the net proceeds from the sale of the
Prospective Seller's Registrable Stock in the offering.

                  (c)      If the indemnification provided for in Section 3.8(a)
or Section 3.8(b) above is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any expenses, losses, claims,
damages or liabilities referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such expenses,
losses, claims, damages or liabilities, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified parties on the other in connection with the statements or omissions
or violations which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

                  The Company and the Investors agree that it would not be just
and equitable if contribution pursuant to this Section 3.8(c) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities or actions in respect
thereof referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.8(c), no Prospective Seller shall be required to contribute any amount
in excess of the net proceeds from the sale of the Prospective Seller's
Registrable Stock in the Offering. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Company may require, as a condition to
including any Registrable Stock of a Prospective Seller in any registration
statement filed pursuant to Section 3.1 or Section 3.3, that the Company shall
have received an undertaking satisfactory to it from such Prospective Seller of
such Registrable Stock, severally and not jointly, to contribute to the amount
paid or payable by an indemnified party hereunder as and to the extent set forth
in this Section 3.8(c), and each Investor hereunder shall promptly provide such
undertaking upon request.

                  (d)      Promptly after receipt by an indemnified party under
Section 3.8(a) or Section 3.8(b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made under such Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under

                                       17

<PAGE>   18

such Section or to the extent that it has not been prejudiced as a proximate
result of such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
with counsel satisfactory to such indemnified party; provided, however, that, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses (in which case the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties). Upon the permitted assumption by
the indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 3.8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs of investigation) unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time, (iii) the indemnified party and its counsel do not actively
and vigorously pursue the defense of such action, or (iv) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.

                  3.9      Inclusion of Additional Shares in Required
Registrations; Other Company Initiated Registrations. The Company shall not
register securities for sale for its own account or for the account of any other
Person in any registration requested by the holders of Registrable Stock
pursuant to Section 3.1 hereof unless permitted to do so by the written consent
of the holders of at least 51% of the Registrable Stock as to which registration
has been requested. The Company may not cause any other registration of
securities for sale for its own account or for the account of any other Person
to become effective within 180 days after the effective date of any registration
requested by the holders of Registrable Stock pursuant to Section 3.1 hereof
except pursuant to registrations on Form S-8 or Form S-4 or any successors
thereto.

                  3.10     Rights Which May Be Granted to Other Persons. The
Company shall not grant any Person registration rights which shall in any way
whatsoever impair the priority of the registration rights granted to the
Investors in this Agreement; provided, that the Company may grant to Phoenix
Growth Capital Corporation ("Phoenix") registration rights which are on parity
with the registration rights granted to the Investors herein and may, in
connection therewith, require Phoenix to become a party to this Agreement.

                  3.11     Rule 144 Requirements. Immediately after the date on
which a registration statement filed by the Company under the Securities Act
becomes effective, the Company shall undertake to make publicly available, and
available to the holders of Registrable Stock, such information as is necessary
to enable the holders of Registrable Stock to make sales of Registrable

                                       18

<PAGE>   19

Stock pursuant to Rule 144 of the Commission under the Securities Act. The
Company shall furnish to any holder of Registrable Stock, upon request, a
written statement executed by the Company as to the steps it has taken to comply
with the current public information requirements of Rule 144.

                  3.12     Sale of Preferred Stock to Underwriter.
Notwithstanding any provision of this Agreement to the contrary, in lieu of
converting any shares of Preferred Stock prior to the filing of any registration
statement filed pursuant to this Agreement, the holder of such shares may sell
such shares of Preferred Stock to the underwriters of the offering being
registered upon the undertaking of such underwriters to convert the Preferred
Stock on or prior to the closing date of the offering. The Company agrees to
cause the Common Stock issuable on the conversion of the Preferred Stock to be
issued within such time period as will permit the underwriters to make and
complete the distribution contemplated by the underwriting.

                  3.13     Holdback. If the Company files a registration
statement in connection with an underwritten public offering, a holder of
Registrable Stock, if so requested by the managing underwriter of such public
offering, shall not effect any sale or distribution of any shares (except
pursuant to such registration statement) of the capital stock of the Company,
whether now owned or hereafter acquired, during the period commencing with the
effective date of such registration statement and ending on the close of
business on the 120th day thereafter or such time as the registration statement
is withdrawn, whichever is earlier.

                  3.14     Transfer of Registration Rights. The registration
rights of any Investor under this Agreement may be transferred only to (i) any
transferee who acquires at least twenty percent (20%) of such Investor's
Registrable Stock, or (ii) a Permitted Transferee.

                  3.15     Effective Period of Registration. Once any
registration effected by the Company pursuant to this Article III becomes
effective, the Company shall file all reports, financial statements and other
documents necessary to keep such registration statement current and the
registration in effect until the earlier of (i) the sale of all securities
offered for sale pursuant to the registration statement, or (ii) three months
from the effective date of the registration statement.

                                   ARTICLE IV.
                            RESTRICTIONS ON TRANSFER

                  4.1      Notice. If an Investor desires to offer, sell,
assign, pledge, transfer or dispose of its Preferred Stock or Registrable Stock
(the "Offered Shares") to a Person in a transaction other than to a Permitted
Transferee, pursuant to Sections 3.1 or 3.3 hereof, or pursuant to Rule 144
under the Securities Act, such Investor (the "Offeror") shall notify (the "Sale
Notice") the other Investors (the "Nonoffering Investors") and the Company in
writing of the (a) proposed price (the "Price") and terms of payment (the
"Terms") for all Offered Shares

                                       19

<PAGE>   20

owned by the Offeror that the Offeror seeks for its Offered Shares, and (b)
class and the percentage of the total number of shares of that class and of all
Preferred Stock and Registrable Stock then held by such Investor represented by
the Offered Shares. The Sale Notice shall constitute an offer by the Offeror to
the Nonoffering Investors and to the Company to sell all Offered Shares owned by
the Offeror to the Nonoffering Investors and to the Company at the Price and on
the Terms.

                  4.2      Nonoffering Investors' Exercise of Right of First
Refusal. Each Nonoffering Investor shall have the right to purchase, at the
Price and payable in accordance with the Terms, that proportion of the Offered
Shares equal to an amount which the number of shares of Preferred Stock and
Registrable Stock then owned of record by such Nonoffering Investor bears to the
total number of shares of Preferred Stock and Registrable Stock then owned of
record by all Investors other than the Offeror. The Nonoffering Investors may
exercise their rights by giving written notice to the Offeror within 30 days
after the date of receipt of the Sale Notice.

                  In the event any Nonoffering Investor does not elect to
purchase any or all of the Offered Shares under this Section 4.2 (the
"Unpurchased Offered Shares"), then the other Nonoffering Investors so electing
to purchase the Offered Shares shall have the right to elect to purchase that
proportion of the Unpurchased Offered Shares equal to an amount which the number
of Offered Shares originally requested to be purchased by such Nonoffering
Investor bears to the total number of Offered Shares originally requested to be
purchased by all Nonoffering Investors. Any Nonoffering Investor electing to
purchase the Offered Shares (a "Purchasing Investor") shall give written notice
to the Offeror, the other Investors and the Company of such election to purchase
the Offered Shares (and the maximum number of Offered Shares that such Investor
is willing to purchase) within the 30-day period specified in this Section 4.2.

                  4.3      Company's Exercise of Right of First Refusal. In the
event the Nonoffering Investors do not elect to purchase all of the Offered
Shares pursuant to Section 4.2 hereof, then the Company shall have the right to
purchase any remaining Unpurchased Offered Shares at the Price and payable in
accordance with the Terms. The Company may exercise its right by giving written
notice to the Offeror within 30 days after the expiration of the 30-day period
specified in Section 4.2 hereof. The Offeror shall not participate in the
determination by the Company on whether to exercise the right provided in this
Section 4.3. If the Company does not exercise its right or does not purchase all
of the remaining Unpurchased Offered Shares at the Price and in accordance with
the Terms, it shall notify the Offeror and the Purchasing Investors that it is
not doing so within such 30-day period. Unless otherwise agreed by the Offeror,
all the Offered Shares must be purchased by the Nonoffering Investors and the
Company pursuant to Section 4.2 and this Section 4.3, respectively, or none may
be so purchased.

                  4.4      Closing. The consummation of the purchase by the
Purchasing Investors and the Company pursuant to any exercise of the rights set
forth above shall occur at a closing (the "Closing") to be held at the principal
offices of the Company not later than 75 days following the date on which the
Nonoffering Investors and the Company received the Sale Notice described

                                       20

<PAGE>   21

in Section 4.1. At the Closing, the Purchasing Investors and the Company, as
appropriate, shall make payment for the Offered Shares in accordance with the
Terms, and the Offeror shall deliver the Offered Shares, duly endorsed for
transfer, to the Purchasing Investors and the Company, as appropriate, with all
required revenue stamps attached.

                  4.5      Transfer to Third Party. If the rights provided above
are not exercised as to all of the Offered Shares (unless otherwise agreed to by
the Offeror), or if the purchase by the Nonoffering Investors and the Company is
not consummated within the time specified in Section 4.4 through no fault of the
Offeror, then the Offeror may transfer all, but not less than all, of the
Offered Shares not so purchased to any third party at not less than the Price
and payable in accordance with the Terms or on such other terms as the Board, in
its sole discretion, determines in good faith would not have been accepted by
the Nonoffering Investors and the Company if such terms had been offered to the
Nonoffering Investors and the Company. If the transfer by the Offeror of the
Offered Shares to a third party is not consummated within 150 days after the
date the Offeror first becomes free to make such transfer, the right to transfer
in accordance with this Article IV shall expire. In such event, the restrictions
of this Agreement shall be reinstated as to the Offered Shares and any transfer
of such Offered Shares proposed to be made by the Offeror subsequent to the
expiration of that 150-day period must be made in accordance with this
Agreement.

                                   ARTICLE V.
                                  MISCELLANEOUS

                  5.1      Adjustments Affecting Registrable Securities. The
Company shall not effect a stock split or combination of shares or take any
other action, or permit any change to occur, with respect to its Equity
Securities that would adversely affect at such time the ability of the holders
of Registrable Stock to include such Registrable Stock in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Stock in any such registration.

                  5.2      Notices. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, mailed by certified mail (return receipt requested), sent by
overnight courier service or telecopied (transmission confirmed), or otherwise
actually delivered:

                                       21

<PAGE>   22

         If to Investors:   Alliance Technology Ventures, Limited Partnership
                            ATV/GP Parallel Fund, Limited Partnership
                            ATV/MFJ Parallel Fund, Limited Partnership
                            285 Peachtree Center Avenue, Suite 1750
                            Atlanta, Georgia 30303
                            Attention: Michael A. Henos
                            Telephone: (404) 816-4791
                            Facsimile: (404) 816-4891

                            Intelligent Systems Corporation
                            4355 Shackleford Road
                            Norcross, Georgia 30093
                            Attention: Leland Strange
                            Telephone: (770) 381-2900
                            Facsimile: (770) 381-2808

                            International Murex Technologies Corporation
                            3075 Northwoods Circle
                            Norcross, Georgia 30071
                            Attention: President
                            Attention: Secretary
                            Telephone: (770) 662-0660
                            Facsimile: (770) 242-3861

                            Sanderling III Limited
                            Sanderling Venture Partners III
                            Sanderling III Biomedical
                            Sanderling Venture Management
                            2730 Sand Hill Road
                            Suite 200
                            Menlo Park, California 94025-7067
                            Attention: Robert McNeil
                            Telephone: (415) 854-9855
                            Facsimile: (415) 854-3648

                            New York Life Insurance Company
                            51 Madison Avenue
                            New York, New York 10010
                            Attention: Dominique Semon
                            Telephone: (212) 576-6856
                            Facsimile: (212) 576-8080

                              22

<PAGE>   23

         If to Company:     AtheroGenics, Inc.
                            3065 Northwoods Circle
                            Norcross, Georgia 30071
                            Attention: R. Wayne Alexander
                            Telephone: (404) 447-1866
                            Facsimile: (404) 447-1886

         If to any other Investor:  At the address and numbers set forth in the
                                    Company's records, marked for attention as
                                    therein indicated;

or at such other address and numbers as may have been furnished by such person
in writing to the other parties.

                  5.3      Severability and Governing Law. Should any Section or
any part of a Section within this Agreement be rendered void, invalid or
unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement. This Agreement is made and
entered into in the State of Georgia and the laws of said state shall govern the
validity and interpretation hereof and the performance by the parties hereto of
their respective duties and obligations hereunder.

                  5.4      Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

                  5.5      Captions and Section Headlines. Section titles or
captions contained in this Agreement are inserted as a matter of convenience and
for reference purposes only, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.

                  5.6      Singular and Plural, Etc. Whenever the singular
number is used herein and where required by the context, the same shall include
the plural, and the neuter gender shall include the masculine and feminine
genders.

                  5.7      Costs and Attorneys' Fees. In the event that any
action, suit or other proceeding is instituted concerning or arising out of this
Agreement, the prevailing party shall recover all of such party's costs, and
attorneys' fees incurred in each and every such action, suit or other
proceeding, including any and all appeals or petitions therefrom. As used
herein, "attorneys' fees" shall mean the full and actual costs of any legal
services actually rendered in connection with the matters involved, calculated
on the basis of the usual fee charged by the attorneys performing such services.

                                       23

<PAGE>   24

                  5.8      Amendments and Waivers. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated orally or in
writing, except that any term of this Agreement may be amended and the
observance of any such term may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and the holders of at least 66-2/3% of the Registrable
Stock then in existence; provided, however, that no such amendment or waiver
shall affect the provisions of this Section 5.8 and no such waiver shall extend
to or affect any other obligation not expressly waived. No failure to exercise
and no delay in exercising, on the part of any party, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance of
any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.

                  5.9      Successors and Assigns. All rights, covenants and
agreements of the parties contained in this Agreement shall, except as otherwise
provided herein, be binding upon and inure to the benefit of their respective
successors and assigns.

                  5.10     Specific Performance. The parties hereto agree that
the capital stock of the Company cannot be purchased or sold in the open market
and that, for these reasons, among others, the parties will be irreparably
damaged in the event that this Agreement is not specifically enforceable.
Accordingly, in the event of any controversy concerning the capital stock which
is the subject of this Agreement, or any right or obligation to register such
securities, such right or obligation shall be enforceable in a court of equity
by specific performance. The rights granted in this Section 5.10 shall be
cumulative and not exclusive, and shall be in addition to any and all other
rights which the parties hereto may have hereunder, at law or in equity.

                  5.11     Entire Agreement. This Agreement contains the entire
understanding of the parties and there are no further or other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter hereof unless expressly referred to herein. Without limiting the
foregoing, this Agreement specifically supersedes that certain Master Rights
Agreement dated May 6, 1994 between the Company and Alliance.

                  5.12     No Third-Party Beneficiaries. With the exception of
the parties to this Agreement and the holders of Common Stock afforded the
limited registration rights described herein, there shall exist no right of any
Person to claim a beneficial interest in this Agreement, or any rights accruing
by virtue of this Agreement.

                                       24

<PAGE>   25

                  IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Master Rights Agreement by duly authorized officers as of the
date first above written.

                               ATHEROGENICS, INC.

                               By: /s/ Russell M. Medford
                                  ------------------------------------------
                               Name: Russell M. Medford
                                    ----------------------------------------
                               Title: Exec. Vice President Secretary
                                     ---------------------------------------

                               ALLIANCE TECHNOLOGY VENTURES,
                               LIMITED PARTNERSHIP

                               By: /s/ Michael A. Henos
                                  ------------------------------------------
                               Name:  Michael A. Henos
                                    ----------------------------------------
                               Title: General Partner
                                     ---------------------------------------

                               ATV/GP PARALLEL FUND, LIMITED
                               PARTNERSHIP

                               By: /s/ Michael A. Henos
                                  ------------------------------------------
                               Name: Michael A. Henos
                                    ----------------------------------------
                               Title: General Partner
                                     ---------------------------------------

                               ATV/MFJ PARALLEL FUND, LIMITED
                               PARTNERSHIP

                               By: /s/ Michael A. Henos
                                  ------------------------------------------
                               Name: General Partner
                                    ----------------------------------------
                               Title:
                                     ---------------------------------------

                               INTELLIGENT SYSTEMS CORPORATION

                               By: /s Bonnie Herron
                                  ------------------------------------------
                               Name: Bonnie Herron
                                    ----------------------------------------
                               Title: V.P..
                                     ---------------------------------------

                                       S-1

<PAGE>   26

                               INTERNATIONAL MUREX TECHNOLOGIES
                               CORP.

                               By: /s/ J. David Tholen
                                  ------------------------------------------
                               Name: J. David Tholen
                                    ----------------------------------------
                               Title: President & CEO, COO
                                     ---------------------------------------

                               SANDERLING III LIMITED

                               By: /s/ Robert G. McNeil
                                  ------------------------------------------
                               Name: Robert G. McNeil
                                    ----------------------------------------
                               Title: General Partner
                                     ---------------------------------------

                               SANDERLING VENTURE PARTNERS III

                               By: /s/ Robert G. McNeil
                                  ------------------------------------------
                               Name: Robert G. McNeil
                                    ----------------------------------------
                               Title: General Partner
                                     ---------------------------------------

                               SANDERLING III BIOMEDICAL

                               By: /s/ Robert G. McNeil
                                  ------------------------------------------
                               Name: Robert G. McNeil
                                    ----------------------------------------
                               Title: General Partner
                                     ---------------------------------------

                               SANDERLING VENTURES MANAGEMENT

                               By: /s/ Robert G. McNeil
                                  ------------------------------------------
                               Name: Robert G. McNeil
                                    ----------------------------------------
                               Title: General Partner
                                     ---------------------------------------

                                       S-2

<PAGE>   27

                     FIRST AMENDMENT TO AMENDED AND RESTATED
                             MASTER RIGHTS AGREEMENT

         THIS FIRST AMENDMENT TO AMENDED AND RESTATED MASTER RIGHTS AGREEMENT
(the "Amendment"), dated as of November 1, 1995, is entered into by and among
ATHEROGENICS, INC., a Georgia corporation (the "Company"), and the other parties
hereto, with respect to the Amended and Restated Master Rights Agreement, dated
as of October 31, 1995, by and among the Company and the other parties thereto
(the "Agreement").

                                    RECITALS

         WHEREAS, the Company proposes to issue a Warrant (the "Phoenix
Warrant") to Phoenix Leasing Incorporated ("Phoenix") to acquire shares of the
Company's Series B Convertible Preferred Stock (the shares acquirable under the
Phoenix Warrant hereafter the "Warrant Shares");

         WHEREAS, under the terms of the Phoenix Warrant, the Company must grant
to Phoenix with respect to the Warrant Shares the same registration rights as
granted to the Investors, as defined in the Agreement;

         WHEREAS, to grant Phoenix registration rights in its capacity as the
holder of the Phoenix Warrant would require certain amendments to the Agreement;

         WHEREAS, under Section 5.8 of the Agreement, the Agreement may be
amended only with the written consent of the holders of at least 66-2/3% of the
Registrable Stock, as defined in the Agreement, then in existence; and

         WHEREAS, in order to grant Phoenix the rights required under the
Phoenix Warrant, the parties hereto desire to enter into this Amendment in
accordance with Section 5.8 of the Agreement;

         NOW, THEREFORE, IT IS AGREED THAT:

         1. Definitions. All capitalized terms used herein without definition
shall have the meanings ascribed to them in the Agreement.

         2. Amendments. The Agreement is hereby amended as follows:

                  (a)      Section 1.1(l) is amended to read as follows:

                                       1
<PAGE>   28

                           (1) "Investors." The term "Investors" shall mean
                  Alliance, ATV/GP, ATV/MFJ, Intelligent Systems, Murex,
                  Sanderling Limited, Sanderling Venture, Sanderling Biomedical,
                  Sanderling Management, NY Life and Phoenix Leasing
                  Incorporated, their respective successors and assigns and any
                  other holder of Preferred Stock who by amendment is added as a
                  party to this Agreement.

                  (b)      Section 2.2(c)(vi) is amended to read as follows:

                           (vi) the issuance is pursuant to the Warrant, dated
                  November 1, 1995, issued to Phoenix Leasing Incorporated.

         3.       Phoenix. Upon the effectiveness of this Amendment, as provided
in Section 4 hereof, Phoenix Leasing Incorporated agrees to be bound by all of
the terms and conditions of the Agreement applicable to Investors.

         4.       Effectiveness. This Amendment shall become effective upon the
execution hereof by (a) the Company, and (b) the holders 66-2/3% of the
Registrable Stock.

         5.       Effect of Amendment. Except as amended as set forth above, the
Agreement shall continue in full force and effect.

         6.       Counterparts. This Amendment may be signed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be deemed one and the same documents.

                                        2

<PAGE>   29

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

                                       ATHEROGENICS, INC.

                                       By:  /s/ Russell M. Medford, MD, PhD
                                          -------------------------------------
                                       Name:  Russell M. Medford, MD, PhD
                                            -----------------------------------
                                       Title: President and C.E.O.
                                             ----------------------------------

                                       ALLIANCE TECHNOLOGY VENTURES, L.P.
                                       ATV/GP PARALLEL FUND, L.P.
                                       ATV/MFJ PARALLEL FUND, L.P.

                                       By: /s/ Michael A. Henos
                                          -------------------------------------
                                       Name:  Michael A. Henos
                                            -----------------------------------
                                       Title: General Partner
                                             ----------------------------------

                                       INTELLIGENT SYSTEMS CORPORATION

                                       By: /s/ J. Leland Strange
                                          -------------------------------------
                                       Name:  J. Leland Strange
                                            -----------------------------------
                                       Title:  President
                                             ----------------------------------

                                       INTERNATIONAL MUREX TECHNOLOGIES
                                       CORPORATION

                                       By: /s/ J. David Tholen
                                          -------------------------------------
                                       Name:  J. David Tholen
                                            -----------------------------------
                                       Title:  President/CEO
                                             ----------------------------------

                                       NEW YORK LIFE INSURANCE COMPANY

                                       By:  /s/ Dominique O. Semon
                                          -------------------------------------
                                       Name:  Dominique O. Semon
                                            -----------------------------------
                                       Title: Assistant Vice President
                                             ----------------------------------

<PAGE>   30

                                       SANDERLING III LIMITED PARTNERSHIP
                                       SANDERLING VENTURE PARTNERS III, L.P.
                                       SANDERLING III BIOMEDICAL, L.P.
                                       SANDERLING VENTURES MANAGEMENT

                                       By: /s/ Robert G. McNeil
                                          -------------------------------------
                                       Name:  Robert G. McNeil
                                            -----------------------------------
                                       Title: General Partner
                                             ----------------------------------

                                       PHOENIX LEASING INCORPORATED

                                       By: /s/ N. H. Nelson
                                          -------------------------------------
                                       Name:  N. H. Nelson
                                            -----------------------------------
                                       Title: Vice President
                                             ----------------------------------

                                        2

<PAGE>   31

                    SECOND AMENDMENT TO AMENDED AND RESTATED
                             MASTER RIGHTS AGREEMENT

         THIS SECOND AMENDMENT TO AMENDED AND RESTATED MASTER RIGHTS AGREEMENT
(the "Amendment"), dated as of July 30, 1996, is entered into by and among
ATHEROGENICS, INC., a Georgia corporation (the "Company"), and the other parties
listed on the signature page hereto, with respect to the Amended and Restated
Master Rights Agreement, dated as of October 31, 1995, by and among the Company
and the other parties thereto, as amended (the "Agreement").

                                    RECITALS

         WHEREAS, the Company intends to sell additional shares of its Series B
Convertible Preferred Stock (the "Series B Preferred") to certain purchasers
(the "Purchasers") pursuant to the terms of a Series B Convertible Preferred
Stock Purchase Agreement of even date herewith (the "Purchase Agreement"); and

         WHEREAS, pursuant to the terms of the Purchase Agreement, the
Purchasers who are not already holders of Registrable Stock (as defined in the
Agreement) (the "New Purchasers") must be added as parties to the Agreement; and

         WHEREAS, to add the New Purchasers as parties to the Agreement would
require certain amendments to the Agreement; and

         WHEREAS, pursuant to Section 5.8 of the Agreement, the Agreement may be
amended only with the written consent of the Company and the holders of at least
66-2/3% of the Registrable Stock then in existence; and

         WHEREAS, in order to add the New Purchasers as parties to the Agreement
and to make certain other amendments to the Agreement, the parties hereto desire
to enter into this Amendment in accordance with Section 5.8 of the Agreement;

         NOW, THEREFORE, IT IS AGREED THAT:

         1.       Definitions.  All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Agreement.

         2.       Amendments. The Agreement is hereby amended as follows:

                  (a)      Section 1.1(l) is amended to read as follows:

<PAGE>   32

                           (1) "Investors." The term "Investors" shall mean
                  Alliance, ATV/GP, ATV/MFJ, Intelligent Systems, Murex,
                  Sanderling Limited, Sanderling Venture, Sanderling Biomedical,
                  Sanderling Management, NY Life , Phoenix Leasing Incorporated,
                  Sprout Capital VII, L.P., Sprout CEO Fund, L.P., DLJ Capital
                  Corp., DLJ First ESC L.L.C., DP III Associates, L.P., Old
                  Court Limited, Domain Partners III, L.P., Roy M. Barbee,
                  Vaughn D. Bryson, Joe C. Cook, Arthur M. Pappas, their
                  respective successors and assigns and any other holder of
                  Preferred Stock who by amendment is added as a party to this
                  Agreement.

                  (b)      Section 2.2(c)(ii) is hereby amended by deleting
         therefrom the number "800,000" and replacing it with the number
         "2,038,500".

                  (c)      Section 2.2(c) is hereby amended by adding a new
         subparagraph (x) to that section which shall be and read in its
         entirety as follows:

                           "(x) the issuance is of additional shares of Series B
                           Convertible Preferred Stock at a price per share of
                           not less than $3.00, provided, that the total of all
                           such shares does not exceed 3,053,334 shares."

         3.       New Purchasers. Upon the effectiveness of this Amendment, as
provided in Section 4 hereof, the New Purchasers shall have all of the rights
and privileges and shall be bound by all of the terms and conditions of the
Agreement applicable to Investors.

         4.       Effectiveness. This Amendment shall become effective upon the
execution hereof by (a) the Company, (b) the holders of 66-2/3% of the
Registrable Stock outstanding immediately prior to the issuance of shares of
Series B Preferred pursuant to the Purchase Agreement and (c) the New Investors.

         5.       Effect of Amendment. Except as amended as set forth above, the
Agreement shall continue in full force and effect.

         6.       Intent of the Parties. The Parties intend that the Recitals
set forth in this Agreement shall be part of this Agreement.

         7.       Counterparts. This Amendment may be signed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be deemed one and the same documents.

                                       2
<PAGE>   33

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

                                    ATHEROGENICS, INC.

                                    By:      /s/ Russell M Medford MD PhD
                                       -----------------------------------------

                                    Name:      RUSSELL M MEDFORD MD PHD
                                         ---------------------------------------

                                    Title:        PRESIDENT & CEO
                                          --------------------------------------

                                    ALLIANCE TECHNOLOGY VENTURES, L.P.
                                    ATV/GP PARALLEL FUND, L.P.
                                    ATV/MFJ PARALLEL FUND, L.P.

                                    By:         /s/ Michael A Henos
                                       -----------------------------------------

                                    Name:         Michael A Henos
                                         ---------------------------------------

                                    Title:     Managing Gen. Partner
                                          --------------------------------------

                                    INTELLIGENT SYSTEMS CORPORATION

                                    By:        /s/ J. Leland Strange
                                       -----------------------------------------

                                    Name:        J. Leland Strange
                                         ---------------------------------------

                                    Title:          President
                                          --------------------------------------

                                    INTERNATIONAL MUREX TECHNOLOGIES
                                    CORPORATION

                                    By:          /s/ J. D. Tholen
                                       -----------------------------------------

                                    Name:          J. D. Tholen
                                         ---------------------------------------

                                    Title:        President/CEO
                                          --------------------------------------

                                    NEW YORK LIFE INSURANCE COMPANY

                                    By:        /s/ Dominique O. Semon
                                       -----------------------------------------

                                    Name:        Dominique O. Semon
                                         ---------------------------------------

                                    Title:    Assistant Vice President
                                          --------------------------------------

                                       S-1

<PAGE>   34

                                    SANDERLING III LIMITED PARTNERSHIP
                                    SANDERLING VENTURE PARTNERS III, L.P.
                                    SANDERLING III BIOMEDICAL, L.P.
                                    SANDERLING VENTURES MANAGEMENT

                                    By:
                                       -----------------------------------------

                                    Name:
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                                    PHOENIX LEASING INCORPORATED

                                    By:       /s/ N. H. Nelson
                                       -----------------------------------------

                                    Name:     N. H. Nelson
                                         ---------------------------------------

                                    Title:    Vice President
                                          --------------------------------------

                                    DP III ASSOCIATES, L.P.
                                    By: One Palmer Square Associates, L.P.
                                    Its: General Partner

                                    By:       /s/ Kathleen K. Schoemaker
                                       -----------------------------------------

                                    Name:      Kathleen K. Schoemaker
                                         ---------------------------------------

                                    Title:     General Partner
                                          --------------------------------------

                                    BIOTECHNOLOGY INVESTMENTS LIMITED
                                    By: Old Court Limited
                                    Its: Custodian
                                        ----------------------------------------

                                    By:       /s/ Kathleen K. Schoemaker
                                       -----------------------------------------

                                    Name:      Kathleen K. Schoemaker
                                         ---------------------------------------

                                    Title:        Attorney-in-Fact
                                          --------------------------------------

                                       S-2

<PAGE>   35

                                    DOMAIN PARTNERS III, L.P.
                                    By: One Palmer Square Associates III, L.P.
                                    Its: General Partner

                                    By:       /s/ Kathleen K. Schoemaker
                                       -----------------------------------------

                                    Name:      Kathleen K. Schoemaker
                                         ---------------------------------------

                                    Title:     General Partner
                                          --------------------------------------

                                    SPROUT CAPITAL VII, L.P.
                                    By: DLJ Capital Corp.
                                    Its: Managing General Partner

                                    By:    /s/ Philippe Chambon, M.D., Ph.D.
                                       -----------------------------------------

                                    Name:      Philippe Chambon, M.D., Ph.D.
                                         ---------------------------------------

                                    Title:     Attorney-in-Fact
                                          --------------------------------------

                                    SPROUT CEO FUND, L.P.
                                    By: DLJ Capital Corp.
                                    Its: General Partner

                                    By:    /s/ Philippe Chambon, M.D., Ph.D.
                                       -----------------------------------------

                                    Name:      Philippe Chambon, M.D., Ph.D.
                                         ---------------------------------------

                                    Title:     Attorney-in-Fact
                                          --------------------------------------

                                    DLJ CAPITAL CORP.

                                    By:    /s/ Philippe Chambon, M.D., Ph.D.
                                       -----------------------------------------

                                    Name:      Philippe Chambon, M.D., Ph.D.
                                         ---------------------------------------

                                    Title:     Attorney-in-Fact
                                          --------------------------------------

                                       S-3

<PAGE>   36

                                    DLJ FIRST ESC, L.L.C.
                                    By: DLJ LBO Plans Management Corporation
                                    Its: Manager

                                    By:    /s/ Philippe Chambon, M.D., Ph.D.
                                       -----------------------------------------

                                    Name:      Philippe Chambon, M.D., Ph.D.
                                         ---------------------------------------

                                    Title:     Attorney-in-Fact
                                          --------------------------------------

                                    /s/ Roy M. Barbee
                                    --------------------------------------------
                                    Roy M. Barbee

                                    /s/ Vaughn D. Bryson
                                    --------------------------------------------
                                    Vaughn D. Bryson

                                    /s/ Joe C. Cook
                                    --------------------------------------------
                                    Joe C. Cook

                                    /s/ Arthur M. Pappas
                                    --------------------------------------------
                                    Arthur M. Pappas

                                       S-4
<PAGE>   37

                     THIRD AMENDMENT TO AMENDED AND RESTATED
                             MASTER RIGHTS AGREEMENT

         THIS THIRD AMENDMENT TO AMENDED AND RESTATED MASTER RIGHTS AGREEMENT
(the "Amendment"), dated as of April 13, 1999, is entered into by and among
ATHEROGENICS, INC., a Georgia corporation (the "Company"), and the other parties
listed on the signature pages hereto, with respect to the Amended and Restated
Master Rights Agreement, dated as of October 31, 1995, by and among the Company
and the other parties thereto, as amended (the "Agreement").

                                    RECITALS

         WHEREAS, the Company intends to sell shares of its Series C Convertible
Preferred Stock (the "Series C Preferred") to certain purchasers (the
"Purchasers") pursuant to the terms of a Series C Convertible Preferred Stock
Purchase Agreement dated of even date herewith (the "Purchase Agreement");

         WHEREAS, pursuant to the terms of the Purchase Agreement, the
Purchasers must be added as parties to the Agreement;

         WHEREAS, to add the Purchasers as parties to the Agreement requires
certain amendments to the Agreement;

         WHEREAS, pursuant to Section 5.8 of the Agreement, the Agreement may be
amended only with the written consent of the Company and the holders of at least
66-2/3% of the Registrable Stock then in existence; and

         WHEREAS, in order to add the Purchasers as parties to the Agreement and
to make certain other amendments to the Agreement, the parties hereto desire to
enter into this Amendment in accordance with Section 5.8 of the Agreement;

         NOW, THEREFORE, for and in consideration of the premises, the
agreements and covenants set forth herein, and other consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.       Definitions. All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Agreement.

         2.       Amendments. The Agreement is hereby amended as follows:

                  (a)      Section 1.1(l) is amended in its entirety to read as
         follows:

                           (1) "Investors." The term "Investors" shall mean
                  Alliance, ATV/GP, ATV/MFJ, Intelligent Systems, Murex,
                  Sanderling Limited, Sanderling Venture, Sanderling Biomedical,
                  Sanderling Management, NY Life , Phoenix Leasing Incorporated,
                  Sprout Capital VII, L.P., Sprout CEO Fund, L.P., DLJ Capital
                  Corp., DLJ First ESC L.L.C., DP III Associates, L.P., Old
                  Court Limited, Domain

<PAGE>   38

                  Partners III, L.P., Roy M. Barbee, Vaughn D. Bryson, Joe C.
                  Cook, Arthur M. Pappas, Long Aldridge & Norman LLP, Cordova
                  Technology Partners, L.P., Live Oak Equity Partners, L.P.,
                  Sentron Medical, Inc., Trustees of Boston University, Pacific
                  Horizons Partners II L.P., Pacific Horizons Partners III L.P.,
                  their respective successors and assigns and any other holder
                  of Preferred Stock who by amendment is added as a party to
                  this Agreement.

                  (b)      Section 1.1(o) is hereby amended in its entirety to
         read as follows:

                           (o)      "Permitted Transferees." The term "Permitted
                                    Transferees" of an Investor shall mean (i)
                                    any other Investor; (ii) any Affiliate of
                                    any Investor; (iii) any one or more members
                                    of a class consisting of the spouse,
                                    children and grandchildren of an Investor,
                                    or a trust for the benefit of any one or
                                    more members of such class; or (iv) any
                                    shareholder or partner of any non-natural
                                    Investor upon a distribution by a
                                    partnership to its partners or otherwise
                                    upon the dissolution or liquidation of the
                                    non-natural Investor.

                  (c)      Section 1.1(q) is hereby amended in its entirety to
         read as follows:

                           (q)      "Preferred Stock." The term "Preferred
                                    Stock" shall mean the Company's Series A
                                    Convertible Preferred Stock, Series B
                                    Convertible Preferred Stock and Series C
                                    Convertible Preferred Stock.

                  (d)      Sections 2.1(b) and 2.1(c) are hereby amended by
         deleting from each such section the percentage "7.5%" and replacing it
         with the percentage "3.0%".

                  (e)      Section 2.2(c)(x) is hereby amended by deleting
         therefrom the number "3,053,334" and replacing it with the number
         "4,854,316".

                  (f)      Section 2.2(c) is hereby amended by adding a new
         subparagraph (xi) to that section which shall be and read in its
         entirety as follows:

                           "(xi) the issuance is of shares of Series C
                           Convertible Preferred Stock at a price per share of
                           not less than $3.00, provided, that the total of all
                           such shares does not exceed 4,715,385 shares."

                  (g)      Section 3.1(a) is hereby amended by deleting
         therefrom the date "January 1, 2001" and replacing it with the date
         "April 15, 2004".

         3.       Purchasers. Upon the effectiveness of this Amendment, as
provided in Section 4 hereof, the Purchasers shall have all of the rights and
privileges and shall be bound by all of the terms and conditions of the
Agreement applicable to Investors.

                                        2

<PAGE>   39

         4.       Effectiveness. This Amendment shall become effective upon the
execution hereof by (a) the Company, (b) the holders of 66-2/3% of the
Registrable Stock outstanding immediately prior to the issuance of shares of
Series C Preferred pursuant to the Purchase Agreement and (c) the Purchasers.

         5.       Effect of Amendment. Except as amended as set forth above, the
Agreement shall continue in full force and effect.

         6.       Intent of the Parties. The Parties intend that the Recitals
set forth in this Agreement shall be part of this Agreement.

         7.       Counterparts. This Amendment may be signed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be deemed one and the same Amendment.

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

                                     ATHEROGENICS, INC.

                                     By:   /s/ M.P. Colonnese
                                        ---------------------------------------
                                     Name:  M.P. Colonnese
                                          -------------------------------------
                                     Title:  Vice President
                                           ------------------------------------

                                     ALLIANCE TECHNOLOGY VENTURES, L.P.
                                     ATV/GP PARALLEL FUND, L.P.
                                     ATV/MFJ PARALLEL FUND, L.P.

                                     By:   /s/ Michael A. Henos
                                        ---------------------------------------
                                     Name:  Michael A. Henos
                                          -------------------------------------
                                     Title:  Managing G.P.
                                           ------------------------------------

                                     INTELLIGENT SYSTEMS CORPORATION

                                     By:   /s/
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     INTERNATIONAL MUREX TECHNOLOGIES
                                     CORPORATION

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                    [Signatures continued on following page]

                                       S-1

<PAGE>   40

                                     NEW YORK LIFE INSURANCE COMPANY

                                     By:   /s/ Richard F. Drake
                                        ---------------------------------------
                                     Name:   Richard F. Drake
                                          -------------------------------------
                                     Title:  Director, Venture Capital
                                           ------------------------------------

                                     SANDERLING III LIMITED PARTNERSHIP
                                     SANDERLING VENTURE PARTNERS III, L.P.
                                     SANDERLING III BIOMEDICAL, L.P.
                                     SANDERLING VENTURES MANAGEMENT

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     PHOENIX LEASING INCORPORATED

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     DP III ASSOCIATES, L.P.
                                     By: One Palmer Square Associates, L.P.
                                     Its: General Partner

                                     By:   /s/ Kathleen K. Schoemaker
                                        ---------------------------------------
                                     Name:   Kathleen K. Schoemaker
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                                     BIOTECHNOLOGY INVESTMENTS LIMITED
                                     By: Old Court Limited
                                     Its:  Custodian
                                        ---------------------------------------

                                     By:    /s/ Kathleen K. Schoemaker
                                        ---------------------------------------
                                     Name:  Katheleen K. Schoemaker
                                          -------------------------------------
                                     Title:  Attorney-In-Fact
                                           ------------------------------------

                    [Signatures continued on following page]

                                       S-2

<PAGE>   41

                                     DOMAIN PARTNERS III, L.P.
                                     By: One Palmer Square Associates III, L.P.
                                     Its: General Partner

                                     By:    /s/  Kathleen K. Schoemaker
                                        ---------------------------------------
                                     Name:   Kathleen K. Schoemaker
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                                     SPROUT CAPITAL VII, L.P.
                                     By: DLJ Capital Corp.
                                     Its: Managing General Partner

                                     By:    /s/
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     SPROUT CEO FUND, L.P.
                                     By: DLJ Capital Corp.
                                     Its: General Partner

                                     By:    /s/
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     DLJ CAPITAL CORP.

                                     By:    /s/
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                    [Signatures continued on following page]

                                       S-3

<PAGE>   42

                                     DLJ FIRST ESC, L.L.C.
                                     By: DLJ LBO Plans Management Corporation
                                     Its: Manager

                                     By:   /s/
                                        -------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     ------------------------------------------
                                     Roy M. Barbee

                                     ------------------------------------------
                                     Vaughn D. Bryson

                                     ------------------------------------------
                                     Joe C. Cook

                                      /s/ Arthur M. Pappas
                                     ------------------------------------------
                                     Arthur M. Pappas

                                     CORDOVA TECHNOLOGY PARTNERS, L.P.

                                     By:   /s/
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title: Managing Partner
                                           ------------------------------------

                                     LIVE OAK EQUITY PARTNERS, L.P.

                                     By:  /s/ Murali Anantharaman
                                        ---------------------------------------
                                     Name: Murali Anantharaman
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                    [Signatures continued on following page]

                                       S-4

<PAGE>   43

                                 SENTRON MEDICAL, INC.

                                 By:  /s/ Steven E. Guilar
                                    -------------------------------------------
                                 Name:  Steven E. Guilar
                                      -----------------------------------------
                                 Title:  Group Director Venture Projects
                                       ----------------------------------------

                                 TRUSTEES OF BOSTON UNIVERSITY

                                 By:   /s/ Matthew J. Burns
                                    -------------------------------------------
                                 Name:  Matthew J. Burns
                                      -----------------------------------------
                                 Title: Assistant Treasurer/Boston University
                                       ----------------------------------------

                                 PACIFIC HORIZONS PARTNERS II L.P.

                                 By:  /s/ Donald J. Elmer
                                    -------------------------------------------
                                 Name:  Donald J. Elmer
                                      -----------------------------------------
                                 Title: General Partner
                                       ----------------------------------------

                                 PACIFIC HORIZONS PARTNERS III L.P.

                                 By:  /s/ Donald J. Elmer
                                    -------------------------------------------
                                 Name:  Donald J. Elmer
                                      -----------------------------------------
                                 Title: General Partner
                                       ----------------------------------------

                                 LONG ALDRIDGE & NORMAN LLP

                                 By:  /s/ Leonard A. Silverstein
                                    -------------------------------------------
                                 Name:  Leonard A. Silverstein
                                      -----------------------------------------
                                 Title: Partner
                                       ----------------------------------------

                                       S-5
<PAGE>   44

                    FOURTH AMENDMENT TO AMENDED AND RESTATED
                             MASTER RIGHTS AGREEMENT

         THIS FOURTH AMENDMENT TO AMENDED AND RESTATED MASTER RIGHTS AGREEMENT
(the "Amendment"), dated as of May 11, 1999, is entered into by and among
ATHEROGENICS, INC., a Georgia corporation (the "Company"), and the other parties
listed on the signature pages hereto, with respect to the Amended and Restated
Master Rights Agreement, dated as of October 31, 1995, by and among the Company
and the other parties thereto, as amended (the "Agreement").

                                    RECITALS

         WHEREAS, the Company intends to sell shares of its Series C Convertible
Preferred Stock (the "Series C Preferred") to certain purchasers (the
"Purchasers") pursuant to the terms of a Series C Convertible Preferred Stock
Purchase Agreement dated of even date herewith (the "Purchase Agreement");

         WHEREAS, pursuant to the terms of the Purchase Agreement, the
Purchasers must be added as parties to the Agreement;

         WHEREAS, to add the Purchasers as parties to the Agreement requires
certain amendments to the Agreement;

         WHEREAS, pursuant to Section 5.8 of the Agreement, the Agreement may be
amended only with the written consent of the Company and the holders of at least
66-2/3% of the Registrable Stock then in existence; and

         WHEREAS, in order to add the Purchasers as parties to the Agreement and
to make certain other amendments to the Agreement, the parties hereto desire to
enter into this Amendment in accordance with Section 5.8 of the Agreement;

         NOW, THEREFORE, for and in consideration of the premises, the
agreements and covenants set forth herein, and other consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.       Definitions.  All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Agreement.

         2.       Amendments. The Agreement is hereby amended as follows:

                  (a)      Section 1.1(l) is amended in its entirety to read as
         follows:

                           (1) "Investors." The term "Investors" shall mean
                  Alliance, ATV/GP, ATV/MFJ, Intelligent Systems, Murex,
                  Sanderling Limited, Sanderling Venture, Sanderling Biomedical,
                  Sanderling Management, NY Life , Phoenix Leasing Incorporated,
                  Sprout Capital VII, L.P., Sprout CEO Fund, L.P., DLJ Capital
                  Corp., DLJ First ESC L.L.C., DP III Associates, L.P., Old
                  Court Limited, Domain

<PAGE>   45

                  Partners III, L.P., Roy M. Barbee, Vaughn D. Bryson, Joe C.
                  Cook, Arthur M. Pappas, Long Aldridge & Norman LLP, Cordova
                  Technology Partners, L.P., Live Oak Equity Partners, L.P.,
                  Sentron Medical, Inc., Trustees of Boston University, Pacific
                  Horizons Partners II L.P., Pacific Horizons Partners III L.P.,
                  Zeist Foundation, Inc., George W. Brumley, Jr. and Jean S.
                  Brumley, Joint Tenants with Right of Survivorship, George
                  William Brumley III, Oakwood Medical Investors II, L.L.C.,
                  Community Investment Partners III L.P., LLLP, their respective
                  successors and assigns and any other holder of Preferred Stock
                  who by amendment is added as a party to this Agreement.

                  (b) Section 2.2(c)(xi) is hereby amended by deleting therefrom
         the number "4,715,385" and replacing it with the number "7,500,000".

         3.       Purchasers. Upon the effectiveness of this Amendment, as
provided in Section 4 hereof, the Purchasers shall have all of the rights and
privileges and shall be bound by all of the terms and conditions of the
Agreement applicable to Investors.

         4.       Effectiveness. This Amendment shall become effective upon the
execution hereof by (a) the Company, (b) the holders of 66-2/3% of the
Registrable Stock outstanding immediately prior to the issuance of shares of
Series C Preferred pursuant to the Purchase Agreement and (c) the Purchasers.

         5.       Effect of Amendment. Except as amended as set forth above, the
Agreement shall continue in full force and effect.

         6.       Intent of the Parties. The Parties intend that the Recitals
set forth in this Agreement shall be part of this Agreement.

         7.       Counterparts. This Amendment may be signed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be deemed one and the same Amendment.

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

                                    ATHEROGENICS, INC.

                                    By:   /s/ M. P. Colonnese
                                       -----------------------------------------

                                    Name:   M. P. Colonnese
                                         ---------------------------------------

                                    Title:  Vice President
                                          --------------------------------------

                                    ALLIANCE TECHNOLOGY VENTURES, L.P.
                                    ATV/GP PARALLEL FUND, L.P.
                                    ATV/MFJ PARALLEL FUND, L.P.

                                    By:   /s/ Michael A. Henos
                                       -----------------------------------------

                                    Name:
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                    [Signatures continued on following page]

                                       S-1
<PAGE>   46

                                    INTELLIGENT SYSTEMS CORPORATION

                                    By:   /s/ Bonnie L. Herron
                                       -----------------------------------------

                                    Name:       Bonnie L. Herron
                                         ---------------------------------------

                                    Title:       Vice President
                                          --------------------------------------

                                    INTERNATIONAL MUREX TECHNOLOGIES
                                    CORPORATION

                                    By:
                                       -----------------------------------------

                                    Name:
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                                    NEW YORK LIFE INSURANCE COMPANY

                                    By:   /s/ Richard F. Drake
                                       -----------------------------------------

                                    Name:       RICHARD F. DRAKE
                                         ---------------------------------------

                                    Title:      DIRECTOR, VENTURE CAPITAL
                                          --------------------------------------

                                    SANDERLING III LIMITED PARTNERSHIP
                                    SANDERLING VENTURE PARTNERS III, L.P.
                                    SANDERLING III BIOMEDICAL, L.P.
                                    SANDERLING VENTURES MANAGEMENT

                                    By:   /s/ Robert McNeil
                                       -----------------------------------------

                                    Name:      Robert McNeil
                                         ---------------------------------------

                                    Title:     General Partner
                                          --------------------------------------

                                    PHOENIX LEASING INCORPORATED

                                    By:
                                       -----------------------------------------

                                    Name:
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                    [Signatures continued on following page]

                                       S-2

<PAGE>   47

                                    DP III ASSOCIATES, L.P.
                                    By: One Palmer Square Associates III, L.P.
                                    Its: General Partner

                                    By:  /s/ Kathleen K. Schoemaker
                                       -----------------------------------------

                                    Name:     Kathleen K. Schoemaker
                                         ---------------------------------------

                                    Title:        General Partner
                                          --------------------------------------

                                    BIOTECHNOLOGY INVESTMENTS LIMITED
                                    By: Old Court Limited
                                    Its: Custodian

                                    By:  /s/ Kathleen K. Schoemaker
                                       -----------------------------------------

                                    Name:     Kathleen K. Schoemaker
                                         ---------------------------------------

                                    Title:       Attorney-In-Fact
                                          --------------------------------------

                                    DOMAIN PARTNERS III, L.P.
                                    By: One Palmer Square Associates III, L.P.
                                    Its: General Partner

                                    By:  /s/ Kathleen K. Schoemaker
                                       -----------------------------------------

                                    Name:     Kathleen K. Schoemaker
                                         ---------------------------------------

                                    Title:       General Partner
                                          --------------------------------------

                                    SPROUT CAPITAL VII, L.P.
                                    By: DLJ Capital Corp.
                                    Its: Managing General Partner

                                    By: /s/ Philippe O. Chambon
                                       -----------------------------------------

                                    Name:    Philippe O. Chambon
                                         ---------------------------------------

                                    Title:     Attorney-In-Fact
                                          --------------------------------------

                    [Signatures continued on following page]

                                       S-3

<PAGE>   48

                                    SPROUT CEO FUND, L.P.
                                    By: DLJ Capital Corp.
                                    Its: General Partner

                                    By:   /s/ Philippe O. Chambon
                                       -----------------------------------------

                                    Name:     Philippe O. Chambon
                                         ---------------------------------------

                                    Title:    Attorney-In-Fact
                                          --------------------------------------

                                    DLJ CAPITAL CORP.

                                    By:   /s/ Philippe O. Chambon
                                       -----------------------------------------

                                    Name:     Philippe O. Chambon
                                         ---------------------------------------

                                    Title:    Attorney-In-Fact
                                          --------------------------------------

                                    DLJ FIRST ESC, L.L.C.
                                    By: DLJ LBO Plans Management Corporation
                                    Its: Manager

                                    By:   /s/ Philippe O. Chambon
                                       -----------------------------------------

                                    Name:     Philippe O. Chambon
                                         ---------------------------------------

                                    Title:    Attorney-In-Fact
                                          --------------------------------------

                                    --------------------------------------------
                                    Roy M. Barbee

                                    /s/ Vaughn D. Bryson
                                    --------------------------------------------
                                    Vaughn D. Bryson

                                    /s/ Joseph C. Cook
                                    --------------------------------------------
                                    Joe C. Cook

                                    /s/ Arthur M. Pappas
                                    --------------------------------------------
                                    Arthur M. Pappas

                    [Signatures continued on following page]

                                       S-4

<PAGE>   49

                                 CORDOVA TECHNOLOGY PARTNERS, L.P.

                                 By:   /s/
                                    --------------------------------------------

                                 Name:
                                      ------------------------------------------

                                 Title:     Managing Partner
                                       -----------------------------------------

                                 LIVE OAK EQUITY PARTNERS, L.P.

                                 By:   /s/
                                    --------------------------------------------

                                 Name:
                                      ------------------------------------------

                                 Title:     General Partner
                                       -----------------------------------------

                                 SENTRON MEDICAL, INC.

                                 By:   /s/ Vincent M. Paglino
                                    --------------------------------------------

                                 Name:     Vincent M. Paglino
                                      ------------------------------------------

                                 Title: Vice President for Sentron Medical, Inc.
                                       -----------------------------------------

                                 TRUSTEES OF BOSTON UNIVERSITY

                                 By:   /s/ Matthew J. Burns
                                    --------------------------------------------

                                 Name:     Matthew J. Burns
                                      ------------------------------------------

                                 Title:    Assistant Treasurer
                                       -----------------------------------------

                                 PACIFIC HORIZONS PARTNERS II L.P.

                                 By:   /s/
                                    --------------------------------------------

                                 Name:
                                      ------------------------------------------

                                 Title:    General Partner
                                       -----------------------------------------

                                 PACIFIC HORIZONS PARTNERS III L.P.

                                 By:   /s/
                                    --------------------------------------------

                                 Name:
                                      ------------------------------------------

                                 Title:    General Partner
                                       -----------------------------------------

                    [Signatures continued on following page]

                                       S-5

<PAGE>   50

                                    LONG ALDRIDGE & NORMAN LLP

                                    By:   /s/ Leonard A. Silverstein
                                       -----------------------------------------

                                    Name:     Leonard A. Silverstein
                                         ---------------------------------------

                                    Title:    Partner
                                          --------------------------------------

                                    ZEIST FOUNDATION, INC.

                                    By:   /s/ George W. Brumley, Jr.
                                       -----------------------------------------

                                    Name:     George W. Brumley, Jr.
                                         ---------------------------------------

                                    Title:    President
                                          --------------------------------------

                                    /s/ George W. Brumley, Jr.
                                    --------------------------------------------
                                    George W. Brumley, Jr.

                                    /s/ Jean S. Brumley
                                    --------------------------------------------
                                    Jean S. Brumley

                                    /s/ George William Brumley III
                                    --------------------------------------------
                                    George William Brumley III

                                    OAKWOOD MEDICAL INVESTORS II, L.L.C.

                                    By:   /s/ Raul E. Perez, M.D.
                                       -----------------------------------------

                                    Name:     Raul E. Perez, M.D.
                                         ---------------------------------------

                                    Title:
                                          --------------------------------------

                                    COMMUNITY INVESTMENT
                                    PARTNERS III L.P., LLLP

                                    By:   /s/ Daniel A. Burkhardt
                                       -----------------------------------------

                                    Name:     Daniel A. Burkhardt
                                         ---------------------------------------

                                    Title:    President
                                          --------------------------------------

                                     S-6

<PAGE>   51

                    FIFTH AMENDMENT TO AMENDED AND RESTATED
                            MASTER RIGHTS AGREEMENT

         THIS FIFTH AMENDMENT TO AMENDED AND RESTATED MASTER
RIGHTS AGREEMENT (the "Amendment"), dated as of August 30, 1999, is entered
into by and among ATHEROGENICS, INC., a Georgia corporation (the "Company"),
and the other parties listed on the signature pages hereto, with respect to the
Amended and Restated Master Rights Agreement, dated as of October 31, 1995, by
and among the Company and the other parties thereto, as amended (the
"Agreement").

                                    RECITALS

         WHEREAS, the Company intends to sell shares of its Series C
Convertible Preferred Stock (the "Series C Preferred") to William Blair Capital
Partners VI, L.P. (the "Purchaser") pursuant to the terms of a Series C
Convertible Preferred Stock Purchase Agreement dated of even date herewith (the
"Purchase Agreement");

         WHEREAS, pursuant to the terms of the Purchase Agreement, the
Purchaser must be added as a party to the Agreement;

         WHEREAS, to add the Purchaser as a party to the Agreement requires
certain amendments to the Agreement;

         WHEREAS, pursuant to Section 5.8 of the Agreement, the Agreement may
be amended only with the written consent of the Company and the holders of at
least 66-2/3% of the Registrable Stock then in existence; and

         WHEREAS, in order to add the Purchaser as a party to the Agreement and
to make certain other amendments to the Agreement, the parties hereto desire to
enter into this Amendment in accordance with Section 5.8 of the Agreement;

         NOW, THEREFORE, for and in consideration of the premises, the
agreements and covenants set forth herein, and other consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.       Definitions. All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Agreement.

         2.       Amendments. The Agreement is hereby amended as follows:

                  (a)      Section 1.1(l) is amended in its entirety to read as
         follows:

                           (1)      "Investors." The term "Investors" shall
                  mean Alliance, ATV/GP, ATV/MFJ, Intelligent Systems, Murex,
                  Sanderling Limited, Sanderling Venture,

<PAGE>   52

                  Sanderling Biomedical, Sanderling Management, NY Life ,
                  Phoenix Leasing Incorporated, Sprout Capital VII, L.P.,
                  Sprout CEO Fund, L.P., DLJ Capital Corp., DLJ First ESC
                  L.L.C., DP III Associates, L.P., Old Court Limited, Domain
                  Partners III, L.P., Roy M. Barbee, Vaughn D. Bryson, Joe C.
                  Cook, Arthur M. Pappas, Long Aldridge & Norman LLP, Cordova
                  Technology Partners, L.P., Live Oak Equity Partners, L.P.,
                  Sentron Medical, Inc., Trustees of Boston University, Pacific
                  Horizons Partners II L.P., Pacific Horizons Partners III
                  L.P., Zeist Foundation, Inc., George W. Brumley, Jr. and Jean
                  S. Brumley, Joint Tenants with Right of Survivorship, George
                  William Brumley III, Oakwood Medical Investors II, L.L.C.,
                  Community Investment Partners III L.P., LLLP, William Blair
                  Capital Partners VI, L.P., their respective successors and
                  assigns and any other holder of Preferred Stock who by
                  amendment is added as a party to this Agreement.

                  (b)      Section 2.2(c)(xi) is hereby amended by deleting
         therefrom the number "7,500,000" and replacing it with the number
         "8,500,000".

         3.       Purchaser. Upon the effectiveness of this Amendment, as
provided in Section 4 hereof, the Purchaser shall have all of the rights and
privileges and shall be bound by all of the terms and conditions of the
Agreement applicable to Investors.

         4.       Effectiveness. This Amendment shall become effective upon the
execution hereof by (a) the Company, (b) the holders of 66-2/3% of the
Registrable Stock outstanding immediately prior to the issuance of shares of
Series C Preferred pursuant to the Purchase Agreement and (c) the Purchaser.

         5.       Effect of Amendment. Except as amended as set forth above,
the Agreement shall continue in full force and effect.

         6.       Intent of the Parties. The Parties intend that the Recitals
set forth in this Agreement shall be part of this Agreement.

         7.       Counterparts. This Amendment may be signed in one or more
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be deemed one and the same Amendment.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
                                                     ATHEROGENICS, INC.

                                                     By: /s/ M. P. Colonnese
                                                        -----------------------
                                                   Name:   M. P. Colonnese
                                                        -----------------------
                                                  Title:    Vice President
                                                        -----------------------

                    [Signatures continued on following page]

                                      S-1
<PAGE>   53

                                     ALLIANCE TECHNOLOGY VENTURES, L.P.
                                     ATV/GP PARALLEL FUND, L.P.
                                     ATV/MFJ PARALLEL FUND, L.P.

                                     By: /s/
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     INTELLIGENT SYSTEMS CORPORATION

                                     By: /s/
                                        ---------------------------------------
                                     Name:   J. L.
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     INTERNATIONAL MUREX TECHNOLOGIES
                                     CORPORATION

                                     By:
                                        --------------------------------------
                                     Name:
                                          ------------------------------------
                                     Title:
                                           -----------------------------------

                                     NEW YORK LIFE INSURANCE COMPANY

                                     By:/s/ Richard Drake
                                        ---------------------------------------
                                     Name:   Richard F. Drake
                                          -------------------------------------
                                     Title:  Director, Venture Capital
                                           ------------------------------------

                                     SANDERLING III LIMITED PARTNERSHIP
                                     SANDERLING VENTURE PARTNERS III, L.P.
                                     SANDERLING III BIOMEDICAL, L.P.
                                     SANDERLING VENTURES MANAGEMENT

                                     By:/s/ Fred A. Middleton
                                        ---------------------------------------
                                     Name:   Fred A. Middleton
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                    [Signatures continued on following page]

                                      S-2
<PAGE>   54

                                     PHOENIX LEASING INCORPORATED

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     DP III ASSOCIATES, L.P.
                                     By: One Palmer Square Associates III, L.P.
                                     Its: General Partner

                                     By:/s/ Kathleen K. Schoemaker
                                        ---------------------------------------
                                     Name:   Kathleen K. Schoemaker
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                                     BIOTECHNOLOGY INVESTMENTS LIMITED
                                     By: Old Court Limited
                                     Its:   Custodian
                                         --------------------------------------

                                     By:/s/ Kathleen K. Schoemaker
                                        ---------------------------------------
                                     Name:   Kathleen K. Schoemaker
                                          -------------------------------------
                                     Title:  Attorney-In-Fact
                                           ------------------------------------

                                     DOMAIN PARTNERS III, L.P.
                                     By: One Palmer Square Associates III, L.P.
                                     Its: General Partner

                                     By:/s/ Kathleen K. Schoemaker
                                        ---------------------------------------
                                     Name:   Kathleen K. Schoemaker
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                    [Signatures continued on following page]

                                      S-3
<PAGE>   55

                                     SPROUT CAPITAL VII, L.P.
                                     By: DLJ Capital Corp.
                                     Its: Managing General Partner

                                     By:/s/ Philippe O. Chambon
                                        ---------------------------------------
                                     Name:   Philippe O. Chambon
                                          -------------------------------------
                                     Title:  Attorney-In-Fact
                                           ------------------------------------

                                     SPROUT CEO FUND, L.P.
                                     By: DLJ Capital Corp.
                                     Its: General Partner

                                     By:/s/ Philippe O. Chambon
                                        ---------------------------------------
                                     Name:   Philippe O. Chambon
                                          -------------------------------------
                                     Title:  Attorney-In-Fact
                                           ------------------------------------

                                     DLJ CAPITAL CORP.

                                     By:/s/ Philippe O. Chambon
                                        ---------------------------------------
                                     Name:   Philippe O. Chambon
                                          -------------------------------------
                                     Title:  Attorney-In-Fact
                                           ------------------------------------

                                     DLJ FIRST ESC, L.L.C.
                                     By: DLJ LBO Plans Management Corporation
                                     Its: Manager

                                     By:/s/ Philippe O. Chambon
                                        ---------------------------------------
                                     Name:   Philippe O. Chambon
                                          -------------------------------------
                                     Title:  Attorney-In-Fact
                                           ------------------------------------

                                     ------------------------------------------
                                     Roy M. Barbee

                    [Signatures continued on following page]

                                      S-4
<PAGE>   56

                                     /s/ Vaughn D. Bryson
                                     ------------------------------------------
                                     Vaughn D. Bryson

                                     /s/ Joseph C. Cook
                                     ------------------------------------------
                                     Joe C. Cook

                                     /s/ Arthur M. Pappas
                                     ------------------------------------------
                                     Arthur M. Pappas

                                     CORDOVA TECHNOLOGY PARTNERS, L.P.

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:  Managing Partner
                                           ------------------------------------

                                     LIVE OAK EQUITY PARTNERS, L.P.

                                     By:
                                        ---------------------------------------
                                     Name:   Murali
                                          -------------------------------------
                                     Title:  General Partner
                                           ------------------------------------

                                     SENTRON MEDICAL, INC.

                                     By:/s/ Steven R. Gailar
                                        ---------------------------------------
                                     Name:   Steven R. Gailar
                                          -------------------------------------
                                     Title:  Group Director, Venture Projects
                                           ------------------------------------

                                     TRUSTEES OF BOSTON UNIVERSITY

                                     By:/s/ Matthew J. Burns
                                        ---------------------------------------
                                     Name:   Matthew J. Burns
                                          -------------------------------------
                                     Title:  Assistant Treasurer
                                             Boston University
                                           ------------------------------------

                    [Signatures continued on following page]

                                      S-5
<PAGE>   57

                                     PACIFIC HORIZONS PARTNERS II L.P.

                                     By:/s/ Donald J. Elmer
                                        ---------------------------------------
                                     Name:   Donald J. Elmer
                                          -------------------------------------
                                     Title:  G. P.
                                           ------------------------------------

                                     PACIFIC HORIZONS PARTNERS III L.P.

                                     By:/s/ Donald J. Elmer
                                        ---------------------------------------
                                     Name:   Donald J. Elmer
                                          -------------------------------------
                                     Title:  G. P.
                                           ------------------------------------

                                     LONG ALDRIDGE & NORMAN LLP

                                     By:/s/ Leonard A. Silverstein
                                        ---------------------------------------
                                     Name:   Leonard A. Silverstein
                                          -------------------------------------
                                     Title:  Partner
                                           ------------------------------------

                                     ZEIST FOUNDATION, INC.

                                     By:/s/ George W. Brumley, Jr.
                                        ---------------------------------------
                                     Name:   George W. Brumley, Jr.
                                          -------------------------------------
                                     Title:  Co-President
                                           ------------------------------------

                                     /s/ George W. Brumley, Jr.
                                     ------------------------------------------
                                     George W. Brumley, Jr.

                                     /s/ Jean S. Brumley
                                     ------------------------------------------
                                     Jean S. Brumley

                                     /s/ George W. Brumley III
                                     ------------------------------------------
                                     George William Brumley III

                    [Signatures continued on following page]

                                      S-6
<PAGE>   58

                                     OAKWOOD MEDICAL INVESTORS II, L.L.C.

                                     By:/s/ Raul E. Perez, M. D.
                                        ---------------------------------------
                                     Name:   Raul E. Perez, M. D.
                                          -------------------------------------
                                     Title:  Manager
                                           ------------------------------------

                                     COMMUNITY INVESTMENT
                                     PARTNERS III L.P., LLLP

                                     By:/s/ Dan Burkhardt
                                        ---------------------------------------
                                     Name:   Dan Burkhardt
                                          -------------------------------------
                                     Title:  Chairman
                                           ------------------------------------

                                     WILLIAM BLAIR CAPITAL PARTNERS VI, L.P.

                                     By:/s/ A. M. Minocherhomjee
                                        ---------------------------------------
                                     Name:   Arda M. Minocherhomjee
                                          -------------------------------------
                                     Title:  Managing Director
                                           ------------------------------------

                                      S-7

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