Document:

exv10w1

 

Exhibit 10.1

Exelon Corporation

P.O. Box 805398

Chicago, IL 60680-5398

December 19, 2003

Michael B. Bemis

263 Eastbrooke Street

Jackson Hinds, MS 39216

Dear Michael:

This letter will confirm our mutual understanding
concerning your continued employment with Exelon Corporation.

You have agreed to remain in your current
positions as Senior Vice President, Exelon Corporation and
President, Exelon Energy Delivery Company, LLC, until
January 31, 2004. During this period, you will continue to
devote your full attention and time to Exelon’s business
and affairs, and use your best efforts in the performance of
your duties. The other current terms and conditions of your
employment will also remain in effect, with the changes noted
below.

		
	 	     
    1. Your current annual base salary of
    $450,000 will remain in effect for the duration of your
    employment.
    
	 
	 	     
    2. Your 2003 annual incentive award target
    (65% of base salary) and performance share target (6,603 shares)
    will remain in effect, and payment of your earned awards will be
    made at the time such payments are made to other senior
    executives. You will not be eligible for annual or long-term
    incentive awards for 2004, nor a stock option grant since
    vesting would occur after your departure.
    
	 
	 	     
    3. You will resign effective
    February 1, 2004 from all your positions with Exelon
    Corporation and its affiliates. Upon your resignation, you will
    receive the following benefits:
    

		
	 	     
    a. A lump sum severance payment of $450,000,
    representing one year’s base salary;
    
	 
	 	     
    b. A fully vested award of 15,000 shares of
    Exelon Corporation common stock, representing final payment of
    your special incentive award program with respect to the Sithe
    transition;
    
	 
	 	     
    c. Continued health care and life insurance
    coverage for a period of one year, at the same cost charged to
    active senior executives, with coverage under COBRA available
    thereafter for the remaining statutory period;
    
	 
	 	     
    d. Reimbursement of reasonable expenses for
    personal financial counseling, income tax preparation and estate
    planning services through December 31, 2004 in accordance
    with Exelon’s policies for senior executives; and
    

 

Michael B. Bemis

December 19, 2003

Page 2

		
	 	     
    e. Continued directors and officers
    liability coverage for a period of six years. These benefits are
    offered in lieu of any other separation benefits to which you
    might otherwise be entitled upon a termination of employment,
    and your entitlement to these benefits is subject to your prompt
    execution of the attached release following your resignation. In
    the event you resign your employment prior to January 31,
    2004, you will not be eligible for any separation benefits. If
    Exelon relieves you of your duties prior to January 31,
    2004, you will remain on the payroll until your resignation on
    January 31, 2004.
    

		
	 	     
    4. Upon your resignation, you will receive
    payment for any accrued but unpaid salary and vacation, and any
    outstanding, unexercised stock options will remain exercisable,
    to the extent then vested, for ninety days.
    
	 
	 	     
    5. Exelon will continue to reimburse your
    lease payments on your current apartment in Philadelphia through
    August 31, 2004.
    
	 
	 	     
    6. You will remain subject to the Exelon
    Corporation Restrictive Covenants for a two-year period after
    your resignation. However, Exelon will not seek to enforce the
    non-competition provisions of these covenants in situations
    where it does not reasonably believe your acceptance of a
    position would be potentially adverse to its interests.
    
	 
	 	     
    7. You will not make or cause to be made any
    statements that disparage or accuse Exelon Corporation or its
    affiliates, directors, officers or employees of misconduct or
    unlawful behavior, and Exelon Corporation will use reasonable
    efforts to ensure its officers, directors and official
    spokespersons do make or cause to be made any statements that
    disparage or accuse you of misconduct or unlawful behavior.
    These prohibitions will not apply to truthful testimony as a
    witness or compliance with other legal obligations.
    
	 
	 	     
    8. All payments and other benefits hereunder
    will be subject to reduction for applicable federal, state and
    local tax withholding.
    

     
Please confirm your acceptance of this
arrangement by signing this letter in the space provided below
and returning this letter to me at your earliest convenience.

		
	 	
    Very truly yours,
    

			
	 	By: 	
    /s/ S. GARY SNODGRASS
    

		
	 	
    

	 	
    S. Gary Snodgrass
    
	 	
    Senior Vice President and
	 	
    Chief Human Resources Officer

AGREED AND ACCEPTED BY:

	 	 	 	 	 	 	 
	 
	
    /s/ MICHAEL B. BEMIS

    
Michael B. Bemis
    	 	 	 	 

Date: 12/23/03

		
	cc:	
    John W. Rowe
    

Oliver D. Kingsley, Jr.

 

WAIVER AND RELEASE

     
In consideration for receiving the benefits and
severance pay under the letter agreement dated December 19,
2003 between Exelon Corporation (the “Company”) and
Michael B. Bemis (the “Executive”) dated as of
December 19, 2003, (the “Agreement”), the
Executive hereby agrees as follows:

		
	 	     
    1. Release. Except with respect to the
    Company’s obligations under the Agreement, the Executive,
    on behalf of himself and his heirs, executors, assigns, agents,
    legal representatives and personal representatives, hereby
    releases, acquits and forever discharges the Company, its
    agents, subsidiaries, affiliates, and their respective officers,
    directors, agents, servants, employees, attorneys, shareholders,
    successors, assigns and affiliates, of and from any and all
    claims, liabilities, demands, causes of action, costs, expenses,
    attorneys fees, damages, indemnities and obligations of every
    kind and nature, in law, equity, or otherwise, known and
    unknown, foreseen or unforeseen, disclosed and undisclosed,
    suspected and unsuspected, arising out of or in any way related
    to agreements, events, acts or conduct at any time prior to the
    execution of this Waiver and Release, including but not limited
    to any and all such claims and demands directly or indirectly
    arising out of or in any way connected with the Executive’s
    employment or other service with the Company, or any of its
    subsidiaries or affiliates; the Executive’s termination of
    employment and other service with the Company or any of its
    subsidiaries or affiliates. This Waiver and Release does not
    apply to the payment of any benefits to which the Executive may
    be entitled under a Company-sponsored tax qualified savings plan.
    
	 
	 	     
    2. Time to Consider; Revocation. The
    Executive has read this Waiver and Release, and understands its
    legal and binding effect, including that by signing and not
    revoking this Waiver and Release the Executive waives and
    releases any and all claims under the Age Discrimination in
    Employment Act of 1967, as amended, including but not limited to
    the Older Workers Benefits Protection Act. The Executive has had
    the opportunity to consult legal counsel or other advisors prior
    to signing it, and understands that he may revoke it within
    seven (7) days after signing it. The Executive understands
    that this Waiver and Release will not be effective until after
    the seven-day period has expired and no consideration will be
    due the Executive if the Executive revokes it.
    
	 
	 	     
    3. Limitation. Nothing in this Waiver and
    Release shall be construed to prohibit the Executive from
    communicating with, including testifying in any administrative
    proceeding before, the Nuclear Regulatory Commission, the United
    States Department of Labor, the Securities Exchange Commission
    or from otherwise addressing issues related to nuclear safety
    with any party or taking any other action protected under
    Section 211 of the Energy Reorganization Act; provided,
    however, that if the Executive is entitled under
    Section 211 of the Energy Reorganization Act to pursue a
    claim, complaint or charge seeking damages, costs or fees, the
    Executive agrees that the consideration provided to the
    Executive pursuant to this Agreement shall be fully inclusive of
    all such damages, costs and fees that could have been awarded to
    the Executive, that such consideration is being paid in full and
    that the Executive under no circumstances shall be entitled to
    compensation of any kind from the Company or any of the other
    parties released hereunder not expressly provided for pursuant
    to this Agreement.
    

     
IN WITNESS WHEREOF, the Executive has executed
this Waiver and Release as of the date specified below.

			
	 	 	
    /s/ MICHAEL B. BEMIS
    

		
	 	
    

	 	
    Michael B. Bemis
    
	 
	 	
    Date: 12/23/03<PAGE>

                                                                     EXHIBIT 4.4

                               ATHEROGENICS, INC

                           2004 EQUITY OWNERSHIP PLAN

     AtheroGenics, Inc. hereby establishes this Plan as the AtheroGenics, Inc.
2004 Equity Ownership Plan, to: (a) provide incentive to employees, directors,
consultants and advisors of the Company and its affiliates to stimulate their
efforts toward the continued success of the Company and to operate and manage
the business in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by employees,
directors, consultants and advisors by providing them with a means to acquire a
proprietary interest in the Company by acquiring shares of Stock or to receive
compensation which is based upon appreciation in the value of Stock; and (c)
provide a means of attracting, retaining and rewarding highly qualified
employees, directors, advisors and consultants.

                                   SECTION 1

                                  DEFINITIONS

     1.1  Definitions.  Whenever used herein, the masculine pronoun shall be
deemed to include the feminine and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:

          (a) "Administrator" means the committee appointed by the Board to
     administer and interpret the Plan in accordance with Section 2.3 below. If,
     at any time, no such committee has been appointed, the Board shall serve as
     the Administrator.

          (b) "Alternate Grantee" means an entity of which a Director is an
     affiliate and to which a Non-Qualified Stock Option grant is made at the
     direction of the Director pursuant to Section 2.4.

          (c) "Award" means any Option, Stock Appreciation Right, or Stock Award
     granted under the Plan.

          (d) "Beneficiary" means the person or persons designated by a
     Participant to exercise an Award in the event of the Participant's death
     while the Award is exercisable, or in the absence of such designation, the
     executor or administrator of the Participant's estate.

          (e) "Board" means the Board of Directors of the Company.

          (f) "Cause" means conduct by the Participant amounting to (1) fraud or
     dishonesty against the Company, (2) willful misconduct, repeated refusal to
     follow the reasonable directions of an individual or group authorized to
     give such directions, or knowing violation of law in the course of
     performance of the duties of Participant's service with the Company, (3)
     repeated absences from work without a reasonable excuse, (4) intoxication
     with alcohol or drugs while on the Company's premises during regular
     business hours, (5) a conviction or plea of guilty or nolo contendere to a
     felony or a crime involving dishonesty, or (6) a breach or violation of the
     terms of any employment or other agreement to which Participant and the
     employer are party.

          (g) "Change in Control" shall be deemed to have occurred if (i) a
     tender offer shall be made for and consummated with respect to the
     ownership of 50% or more of the outstanding voting securities of the
     Company, (ii) the Company shall be merged or consolidated with another
     corporation and as a result of such merger or consolidation less than 50%
     of the outstanding voting securities of the surviving or resulting
     corporation shall be owned in the aggregate by the former shareholders of
     the Company, other than affiliates (within the meaning of the Exchange Act)
     of any party to such merger or consolidation, (iii) the Company shall sell
     substantially all of its assets to another corporation which corporation is
     not wholly owned by the Company, or (iv) a person, within the meaning of
     Section 3(a)(9) or of Section 13(d)(3) (as in effect on the date hereof) of
     the Exchange Act, shall acquire 50% or more of the outstanding voting
     securities of the Company (whether directly, indirectly, beneficially or of
     record). For

                                       1
<PAGE>

     purposes hereof, ownership of voting securities shall take into account and
     shall include ownership as determined by applying the provisions of Rule
     13d-3(d)(l)(i) (as in effect on the date hereof) pursuant to the Exchange
     Act.

          (h) "Code" means the Internal Revenue Code of 1986, as amended, and
     the regulations promulgated thereunder.

          (i) "Company" means AtheroGenics, Inc., a Georgia corporation.

          (j) "Constructive Discharge" means a Participant's termination of his
     or her employment with the Company and its affiliates on account of (i) any
     material reduction in the Participant's compensation, (ii) any material
     reduction in the level or scope of job responsibility or status of the
     Participant occurring without the consent of the Participant, or (iii) any
     relocation to an office of the Company which is more than fifty (50) miles
     from the office where the Participant was previously located to which the
     Participant has not agreed.

          (k) "Director" means a member of the Board or a member of the Board of
     Directors of any affiliate of the Company.

          (l) "Disability" has the same meaning as provided in the long-term
     disability plan maintained by the Company. If, at any time during the
     period that this Plan is in operation, the Company does not maintain a
     long-term disability plan, Disability shall mean a physical or mental
     condition which, in the judgment of the Administrator, permanently prevents
     a Participant from performing his usual duties for the Company or such
     other position or job which the Company makes available to him and for
     which the Participant is qualified by reason of his education, training and
     experience. In making its determination the Administrator may, but is not
     required to, rely on advice of a physician competent in the area to which
     such Disability relates. In the event of a dispute, the determination of
     Disability shall be made by the Administrator in its sole discretion. Any
     decision of the Administrator will be final and binding on all parties.

          (m) "Disposition" means any conveyance, sale, transfer, assignment,
     pledge or hypothecation, whether outright or as security, inter vivos or
     testamentary, with or without consideration, voluntary or involuntary.

          (n) "Equity Ownership Agreement" means an agreement between the
     Company and a Participant or other documentation evidencing an Award. The
     Equity Ownership Agreements authorized under the Plan may contain such
     provisions as the Administrator shall deem advisable, not inconsistent with
     the provisions of the Plan.

          (o) "Exchange Act" means Securities Exchange Act of 1934, as amended,
     and guidance issued thereunder.

          (p) "Exercise Price" means the purchase price per share of the shares
     of Stock underlying an Option.

          (q) "Expiration Date" means the last date upon which an Option or
     Stock Appreciation Right can be exercised (or paid, if applicable).

          (r) "Fair Market Value" means, for any particular date, (i) for any
     period during which the Stock shall be listed for trading on a national
     securities exchange or NASDAQ, the closing price per share of Stock on such
     exchange or the NASDAQ closing bid price as of the close of such trading
     day, or (ii) the market price per share of Stock as determined in good
     faith by the Board in the event (i) above shall not be applicable. If the
     Fair Market Value is to be determined as of a day when the securities
     markets are not open, the Fair Market Value on that day shall be the Fair
     Market Value (determined in accordance with the preceding sentence) on the
     next succeeding day when the markets are open.

          (s) "Incentive Stock Option" means an incentive stock option, as
     defined in Code Section 422.

                                       2
<PAGE>

          (t) "Involuntary Termination" means a Termination of Employment but
     does not include a Termination of Employment for Cause or a Voluntary
     Resignation.

          (u) "Maximum Plan Shares" has the meaning set forth in Section 2.2.

          (v) "NASDAQ" means The NASDAQ Stock Market.

          (w) "Non-Qualified Stock Option" means a stock option other than an
     option qualifying as an Incentive Stock Option.

          (x) "Non-Employee Board Member" means a member of the Board who is not
     an employee of the Company.

          (y) "Option" means a Non-Qualified Stock Option or an Incentive Stock
     Option.

          (z) "Over 10% Owner" means an individual who at the time an Incentive
     Stock Option is granted owns more than 10% of the total combined voting
     power of all classes of stock of the Company or any one of its Parents or
     Subsidiaries, determined by applying the attribution rules of Code Section
     424(d).

          (aa) "Parent" means any corporation (other than the Company) in an
     unbroken chain of corporations ending with the Company if, with respect to
     Incentive Stock Options, at the time of granting of the Option, each of the
     corporations other than the Company owns stock possessing 50% or more of
     the total combined voting power of all classes of stock in one of the other
     corporations in the chain.

          (bb) "Participant" means an individual who receives an Award
     hereunder.

          (cc) "Plan" means this AtheroGenics, Inc. 2004 Equity Ownership Plan,
     as amended from time to time.

          (dd) "SAR Price" means a price specified for a given Stock
     Appreciation Right which shall be the base value for determination of the
     payment attributable to such Stock Appreciation Right as provided in
     Section 3.3 of the Plan.

          (ee) "Securities Act" means Securities Act of 1933, as amended, and
     guidance issued thereunder.

          (ff) "Stock" means the Company's no par value common stock.

          (gg) "Stock Appreciation Right" means the right to receive payment in
     cash or stock as described in Plan Section 3.3.

          (hh) "Stock Award" means a grant of Stock to a Participant, subject to
     the conditions and restrictions determined by the Administrator, as
     described in Plan Section 3.4.

          (ii) "Subsidiary" means any corporation (other than the Company) in an
     unbroken chain of corporations beginning with the Company if, with respect
     to Incentive Stock Options, at the time of the granting of the Option, each
     of the corporations other than the last corporation in the unbroken chain
     owns stock possession 50% or more of the total combined voting power of all
     classes of stock in one of the other corporations in the chain.

          (jj) "Termination of Affiliation" means the termination of all
     Director, advisor and/or consultant relationships, for any reason, between
     a Director, advisor or consultant who is a Participant and the Company or
     its affiliates. A Termination of Affiliation shall be deemed to have
     occurred as of the date written notice to that effect is hand delivered or
     mailed to the Participant.

          (kk) "Termination of Employment" means the termination of the
     employee-employer relationship between a Participant and the Company and
     its affiliates for any reason, regardless of the fact that severance or
     similar payments are made to the Participant. The Administrator shall, in
     its absolute discretion, determine all matters and questions relating to
     Termination of Employment, including, but not by way of limitation, the
     question of whether a leave of absence constitutes a Termination of
     Employment, or whether a Termination of Employment is for Cause or is a
     Constructive Discharge.

                                       3

<PAGE>

          (ll) "Vest" or "Vested" means (i) with regard to a designated number
     of shares of Stock included in an Option or Stock Appreciation Right Award,
     that such designated number of shares is exercisable and/or payable, and
     (ii) with respect to a designated number of shares included in a Stock
     Award, means that certain restrictions and conditions on such Award have
     lapsed, in each case as provided in the Equity Ownership Agreement.

          (mm) "Voluntary Resignation" means a Termination of Employment as a
     result of the Participant's resignation but does not include a Constructive
     Discharge.

                                   SECTION 2

                                 GENERAL TERMS

     2.1  Purpose of the Plan.  The Plan is intended to (a) provide incentive to
employees, directors, consultants and advisors of the Company and its affiliates
to stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
employees, directors, consultants and advisors by providing them with a means to
acquire a proprietary interest in the Company by acquiring shares of Stock or to
receive compensation which is based upon appreciation in the value of Stock; and
(c) provide a means of attracting, retaining and rewarding highly qualified
employees, directors, advisors and consultants.

     2.2  Stock Subject to the Plan.  Subject to adjustment in accordance with
Section 5.2, 4,500,000 shares of Stock (the "Maximum Plan Shares") out of the
Company's authorized but unissued or reacquired shares are hereby reserved and
subject to issuance under the Plan, any of which may be issued as Incentive
Stock Options. At no time shall the Company have outstanding Awards and shares
of Stock issued in respect to Awards in excess of the Maximum Plan Shares. To
the extent permitted by law, the shares of Stock attributable to the nonvested,
unpaid, unexercised, unconverted or otherwise unsettled portion of any Award
that is forfeited, canceled, expired or terminated for any reason without
becoming vested, paid, exercised, converted or otherwise settled in full shall
again be available for purposes of the Plan.

     2.3  Administration of the Plan.

     (a) General.  The Plan shall be administered by the Administrator. The
Administrator shall have full authority in its discretion to determine those
eligible under Section 2.4(a) to whom Awards shall be granted and the terms and
provisions of Awards, subject to the Plan. Subject to the provisions of the
Plan, the Administrator shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Equity Ownership
Agreements and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Administrator's determination under the
Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Awards under the Plan (whether or not such
persons are similarly situated). The Administrator's decisions shall be final
and binding on all Participants.

     (b) Appointment.  The Board shall appoint the Administrator from among its
members to serve at the pleasure of the Board; provided, if at any time no such
Administrator is appointed, the Board shall serve as the Administrator. The
Administrator shall at all times either consist of: (i) the full Board, or (ii)
a committee composed solely of "non-employee directors" as defined in Rule 16b-3
promulgated under the Exchange Act.

     (c) Delegation by Administrator.  Unless prohibited by applicable law or
the applicable rules of a stock exchange or NASDAQ, the Administrator may
allocate all or some of its responsibilities and powers to any one or more of
its members. The Administrator also may delegate all or some of its
responsibilities and powers to any person or persons it selects (except that
Awards under the Plan must be granted by the Board or a committee meeting the
requirements of Section 2.4(b)(2)). The Administrator may revoke any such
allocation or delegation at any time.

                                       4
<PAGE>

     2.4  Eligibility and Limitations.

     (a) Participants in the Plan shall be selected by the Administrator from
among the employees, directors, advisors and consultants of the Company and its
affiliates; provided, however, that (i) only individuals who are employees of
the Company or a Parent or Subsidiary on the date of grant may receive Incentive
Stock Options and (ii) under the circumstances specified below in this
subsection (a), an Alternate Grantee who is an affiliate of a Director may, at
the discretion of the Administrator, be granted Non-Qualified Stock Options even
if such entity is not an employee, director, advisor or consultant of the
Company or its affiliates. A grant of Non-Qualified Stock Options may be made to
an Alternate Grantee if the Administrator in its discretion determines that (i)
a Director to whom an option grant would normally be made is barred from
receiving or retaining such grant by contractual or legal restrictions
applicable to him/her by virtue of his/her relationship to the Alternate
Grantee, (ii) the Director has refused or waived the grant originally intended
for him/her (and such grant has been cancelled) and has informed the
Administrator of the identity of the Alternate Grantee; (iii) there is an
appropriate exemption under the Securities Act pursuant to which a grant to the
Alternate Grantee may be made without meeting the registration requirements of
such act; and (iv) it would be consistent with the purposes of the Plan and in
the Company's best interest to make such a grant of Non-Qualified Stock Options
to the Alternate Grantee.

     (b) In the case of Incentive Stock Options, the aggregate Fair Market Value
(determined at the date an Incentive Stock Option is granted) of Stock with
respect to which Options intended to meet the requirements of Code Section 422
become exercisable for the first time by an individual during any calendar year
under all plans of the Company and its Parents and Subsidiaries shall not exceed
$100,000; provided further, that if the limitation is exceeded, the Incentive
Stock Options(s) which cause the limitation to be exceeded shall be treated as
Non-Qualified Stock Option(s).

                                   SECTION 3

                                TERMS OF AWARDS

     3.1  Terms and Conditions of All Awards.

     (a) Number of Shares Subject to Award.  The number of shares of Stock as to
which an Award shall be granted shall be determined by the Administrator in its
sole discretion, subject to the provisions of Sections 2.2 as to the total
number of shares available for grants under the Plan and 2.4 as to eligibility
and limitations.

     (b) Equity Ownership Agreement.  Each Award shall be evidenced by an Equity
Ownership Agreement in such form as the Administrator may determine is
appropriate, subject to the provisions of the Plan. In the event of a
discrepancy between the Equity Ownership Agreement and the Plan, the Plan shall
control.

     (c) Vesting.  The Administrator may provide in any Equity Ownership
Agreement a vesting schedule. The vesting schedule shall specify when an Award
shall become Vested (and thus exercisable, if applicable). The Administrator may
accelerate the vesting schedule set forth in the Equity Ownership Agreement at
any time if the Administrator determines that it is in the best interests of the
Company to do so. Except as provided in an individual employment agreement
entered into between a Participant and the Company, notwithstanding any vesting
schedule which may be specified in an Equity Ownership Agreement, or any
determination made by the Administrator, or any provision of the Plan to the
contrary, no Award may Vest to the extent that vesting would create a situation
in which the exercisability of any such Award would result in an "excess
parachute payment" within the meaning of Section 280G of the Code.

     (d) Transferability.  Awards shall not be transferable or assignable except
by will or by the laws of descent and distribution and shall be exercisable
during the Participant's lifetime only by the Participant, or, in the event of
the Disability of the Participant, by the legal representative of the
Participant.

     (e) Treatment of Awards Upon Termination of Employment or
Affiliation.  Except as otherwise provided by Plan Section 3.2(f) and (g), any
Award (or portion thereof) under this Plan to a Participant who incurs a
Termination of Employment or Termination of Affiliation shall be canceled,
accelerated, paid or continued, as provided in the Equity Ownership Agreement.
Except as otherwise determined by the
                                       5
<PAGE>

Administrator, the portion of any Award which has not Vested shall terminate
immediately upon Termination of Employment or Termination of Affiliation.

     (f) Other Conditions.  In the applicable Equity Ownership Agreement, the
Administrator may impose any other conditions, restrictions and contingencies on
Awards not inconsistent with the provisions of the Plan as it determines
appropriate.

     3.2  Terms and Conditions of Options.  At the time any Option is granted,
the Administrator shall determine whether the Option is to be an Incentive Stock
Option or a Non-Qualified Stock Option, and the Option shall be clearly
identified as to its status as an Incentive Stock Option or a Non-Qualified
Stock Option. At the time any Incentive Stock Option is exercised, the Company
shall be entitled to place a legend on the certificates representing the shares
of Stock purchased pursuant to the Option to clearly identify them as shares of
Stock purchased upon exercise of an Incentive Stock Option. An Incentive Stock
Option may only be granted within ten (10) years from the date the Plan is
adopted or the date such Plan is approved by the Company's shareholders,
whichever is earlier.

          (a) Option Price.  Subject to adjustment in accordance with Section
     5.2 and the other provisions of this Section 3.2, the Exercise Price of
     Stock purchasable under any Option shall be as determined by the
     Administrator and set forth in the applicable Equity Ownership Agreement.
     With respect to each grant of an Incentive Stock Option to a Participant
     who is not an Over 10% Owner, the Exercise Price shall not be less than the
     Fair Market Value on the date the Option is granted. With respect to each
     grant for an Incentive Stock Option to a Participant who is an Over 10%
     Owner, the Exercise Price shall not be less than 110% of the Fair Market
     Value on the date the Option is granted.

          (b) Option Term.  The Administrator shall determine the term and
     Expiration Date of each Option. The Equity Ownership Agreement shall set
     forth the term of each Option. Any Incentive Stock Option granted to a
     Participant who is not an Over 10% Owner shall not be exercisable after the
     expiration of ten (10) years after the date the Option is granted. Any
     Incentive Stock Option granted to an Over 10% Owner shall not be
     exercisable after the expiration of five (5) years after the date the
     Option is granted. In either case, the Administrator may specify a shorter
     term and state such term in the Equity Ownership Agreement.

          (c) Method of Exercise.  A Participant may exercise the Option by
     written notice to the Administrator pursuant to any procedures established
     by the Administrator. Unless otherwise determined by the Administrator and
     set forth in the Equity Ownership Agreement, the exercise of an Option may
     be for less than the full number of shares of Stock subject to such Option,
     but such exercise shall not be made for less than (i) 100 shares or (ii)
     the total remaining shares subject to the Option, if such total is less
     than 100 shares. Each notice of exercise shall identify the Option and
     shall be accompanied by payment of the Exercise Price for the number of
     shares specified in such notice and by any documents required by the Plan.
     Except as provided in Section 4 of the Plan, the Company shall make
     delivery of such shares within a reasonable period of time; provided, if
     any law or regulation requires the Company to take any action (including,
     but not limited to, the filing of a registration statement under the
     Securities Act and causing such registration statement to become effective)
     with respect to the shares specified in such notice before the issuance
     thereof, then the date of delivery of such shares shall be extended for the
     period necessary to take such action. For Options which are Incentive Stock
     Options, written statements on Form 3921 shall be furnished to the
     Participant in accordance with Section 6039 of the Code on or before
     January 31 of the year following the year in which the Option was
     exercised. See Treas. Reg. sec.sec.1.6039-1 and -2, and 301.6039.1.

          (d) Payment of Exercise Price.  Payment for all shares of Stock
     purchased pursuant to exercise of an Option shall be made in any form or
     manner authorized by the Administrator in the Equity Ownership Agreement or
     by amendment thereto, which may include, without limitation, cash or, if
     the Equity Ownership Agreement provides, (i) by delivery or deemed delivery
     (based on an attestation to the ownership thereof) to the Company of a
     number of shares of Stock which have been owned by the holder for at least
     six (6) months prior to the date of exercise having an aggregate Fair
     Market Value on the date of exercise equal to the Exercise Price or (ii) by
     tendering a combination of cash and Stock. Payment
                                       6
<PAGE>

     shall be made at the time that the Option or any part thereof is exercised,
     and no shares shall be issued or delivered upon exercise of an Option until
     full payment has been made by the Participant.

          (e) Rights as a Shareholder.  The holder of an Option, as such, shall
     have none of the rights of a shareholder.

          (f) Condition to the Exercise of an Option.  Each Option granted under
     the Plan shall be exercisable by whom, at such time or times, or upon the
     occurrence of such event or events, and in such amounts, as the
     Administrator shall determine and specify in the Equity Ownership
     Agreement. Subsequent to the grant of an Option, the Administrator, at any
     time before complete termination of such Option, (i) may accelerate the
     time or times at which such Option may be exercised in whole or in part,
     including, without limitation, upon a Change in Control, and (ii) may
     permit the Option (or any portion thereof) to be exercised, for all or part
     of the remaining Option term notwithstanding any provision of the Equity
     Ownership Agreement to the contrary. In particular, the Administrator may
     extend the exercisability of any Option following Termination of Employment
     or Termination of Affiliation at any time at its discretion.

          (g) Termination of Employment or Affiliation.  Notwithstanding
     subsection (f) above, with respect to an Incentive Stock Option, in the
     event of Termination of Employment of a Participant, the Option or portion
     thereof held by the Participant which is unexercised but Vested shall
     expire, terminate, and become unexercisable no later than the expiration of
     three (3) months after the date of Termination of Employment; provided,
     however, that in the case of a Participant whose Termination of Employment
     is due to death or Disability, one (1) year shall be substituted for such
     three (3) month period. Notwithstanding the foregoing, the Administrator
     may extend the exercisability of any Incentive Stock Option following
     Termination of Employment, but in such case, such Incentive Stock Option
     shall be converted to a Non-Qualified Stock Option. For purposes of this
     Subsection (g), Termination of Employment of the Participant shall not be
     deemed to have occurred if the Participant is employed by another
     corporation (or a parent or subsidiary corporation of such other
     corporation) which has assumed the Incentive Stock Option of the
     Participant in a transaction to which Code Section 424(a) is applicable.

          (h) Special Provisions for Certain Substitute
     Options.  Notwithstanding anything to the contrary in this Section 3.2, any
     Option issued in substitution for an option previously issued by another
     entity, which substitution occurs in connection with a transaction to which
     Code Section 424(a) is applicable, may provide for an exercise price
     computed in accordance with such Code Section and the regulations
     thereunder, may be issued to individuals who would not otherwise be
     eligible for grants under Section 2.4(a) of the Plan, and may contain such
     other terms and conditions as the Administrator may prescribe to cause such
     substitute Option to contain as nearly as possible the same terms and
     conditions (including the applicable vesting and termination provisions) as
     those contained in the previously issued option being replaced thereby.

          (i) Conversion of Incentive Stock Options to Non-Qualified Stock
     Options.  In the event any part or all of an Option granted under the Plan
     which is intended to be an Incentive Stock Option at any time fails to
     satisfy all of the requirements of an Incentive Stock Option, then such
     Incentive Stock Option shall be split into an Incentive Stock Option and
     Non-Qualified Stock Option so that the portion of the Option, if any, that
     still qualifies as an Incentive Stock Option shall remain an Incentive
     Stock Option and the portion that does not qualify as an Incentive Stock
     Option shall become a Non-Qualified Stock Option.

     3.3  Terms and Conditions of Stock Appreciation Rights.

          (a) Grant.  A Stock Appreciation Right may be granted in connection
     with all or any portion of a previously or contemporaneously granted Award
     or not in connection with an Award. A Stock Appreciation Right granted in
     connection with an Award may be exercised only to the extent that the
     related Award has not been exercised, paid or otherwise settled. The
     exercise of a Stock Appreciation

                                       7

<PAGE>

     Right granted in connection with an Award shall result in a pro rata
     surrender or cancellation of any related Award to the extent the Stock
     Appreciation Right has been exercised.

          (b) Rights as a Shareholder.  The holder of a Stock Appreciation
     Right, as such, shall have none of the rights of a shareholder.

          (c) Payment.  A Stock Appreciation Right shall entitle the Participant
     to receive the excess of (1) the Fair Market Value of a specified or
     determinable number of shares of Stock at the time of payment or exercise
     over (2) the SAR Price. The SAR Price shall be determined by the
     Administrator in its discretion and set forth in the Equity Ownership
     Agreement, provided that in the case of a Stock Appreciation Right granted
     in connection with an Option, the SAR Price shall be not less than the
     Exercise Price for the Option. Upon payment or exercise of a Stock
     Appreciation Right, the Company shall pay such amount to the Participant in
     cash or shares of Stock (valued at the aggregate Fair Market Value on the
     date of payment or exercise) as provided in the Equity Ownership Agreement
     or, in the absence of such provision, as the Administrator may determine.

          (d) Conditions to Exercise or Payment.  Each Stock Appreciation Right
     granted under the Plan shall be exercisable or payable at such time or
     times, or upon the occurrence of such event or events, and in such amounts,
     as the Administrator shall determine and specify in the Equity Ownership
     Agreement; provided, however, that subsequent to the grant of a Stock
     Appreciation Right, the Administrator, at any time before complete
     termination of such Stock Appreciation Right, may accelerate the time or
     times at which such Stock Appreciation Right may be exercised or paid in
     whole or in part. The Administrator may extend any Stock Appreciation Right
     at any time in its sole discretion.

          (e) Method of Exercise.  A Participant may exercise the Stock
     Appreciation Right by written notice to the Administrator pursuant to any
     procedures established by the Administrator. Unless otherwise determined by
     the Administrator and set forth in the Equity Ownership Agreement, the
     exercise of a Stock Appreciation Right may be for less than the full number
     of shares of Stock subject to such Stock Appreciation Right, but such
     exercise shall not be made for less than (i) 100 shares or (ii) the total
     remaining shares subject to the Stock Appreciation Right, if such total is
     less than 100 shares.

     3.4  Terms and Conditions of Stock Awards.

     (a) Grant.  The number of shares of Stock subject to a Stock Award and
restrictions or conditions on such shares, if any, shall be as the Administrator
determines and sets forth in the Equity Ownership Agreement, and the certificate
for such shares shall bear evidence of any restrictions or conditions. The
Administrator may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.

     (b) Lapse of Restrictions.  Restrictions or conditions on such shares shall
lapse, and the Stock Award shall become vested and nonforfeitable, if at all, as
determined by the Administrator and set forth in the Equity Ownership Agreement.
Subsequent to the date of the grant of the Stock Award, the Administrator shall
have the power at any time to permit, in its discretion, an acceleration of the
expiration of all or any restrictions or conditions with respect to any part or
all of the shares awarded to a Participant.

                                   SECTION 4

                             RESTRICTIONS ON STOCK

     4.1 Escrow of Shares.  Any certificates representing the shares of Stock
issued under the Plan shall be issued in the Participant's name, but, if the
Equity Ownership Agreement so provides, the shares of Stock shall be held by a
custodian designated by the Administrator (the "Custodian"). Each Equity
Ownership Agreement providing for transfer of shares of Stock to the Custodian
shall appoint the Custodian as the attorney-in-fact for the Participant for the
term specified in the Equity Ownership Agreement, with full power and authority
in the Participant's name, place and stead to transfer, assign and convey to the
Company any
                                       8
<PAGE>

shares of Stock held by the Custodian for such Participant, if the Participant
forfeits the shares under the terms of the Equity Ownership Agreement. During
the period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the Equity
Ownership Agreement, applicable to shares of Stock not so held. Any dividends
declared on shares of Stock held by the Custodian shall, as the Administrator
may provide in the Equity Ownership Agreement, be paid directly to the
Participant or, in the alternative, be retained by the Custodian until the
expiration of the term specified in the Equity Ownership Agreement and shall
then be delivered, together with any proceeds, with the shares of Stock to the
Participant or the Company, as applicable.

     4.2 Forfeiture of Shares.  Notwithstanding any vesting schedule set forth
in any Equity Ownership Agreement, to the extent permitted by applicable law, in
the event that a Participant has violated a noncompetition agreement or any
other employment or employment-related agreement between the Participant and the
Company or its affiliates as set forth in the Equity Ownership Agreement, all
Awards and shares of Stock issued to the Participant pursuant to the Plan shall
be forfeited; provided, however, that the Company shall return to the
Participant the lesser of any consideration paid by the Participant in exchange
for Stock issued to the Participant pursuant to the Plan or the then Fair Market
Value of the Stock forfeited hereunder.

     4.3 Restrictions on Transfer.  The Participant shall not have the right to
make or permit to exist any Disposition of the shares of Stock issued pursuant
to the Plan except as provided in the Plan or the Equity Ownership Agreement.
Any Disposition of the shares of Stock issued under the Plan by the Participant
not made in accordance with the Plan or the Equity Ownership Agreement,
including, but not limited to, any right of repurchase or right of first
refusal, shall be void. The Company shall not recognize, or have the duty to
recognize, any Disposition not made in accordance with the Plan and the Equity
Ownership Agreement, and the shares of Stock so transferred shall continue to be
bound by the Plan and the Equity Ownership Agreement.

                                   SECTION 5

                               GENERAL PROVISIONS

     5.1 Withholding.  The Company shall deduct from all cash distributions
under the Plan any taxes required to be withheld pursuant to the requirements of
any federal, state or local government. Whenever the Company proposes or is
required to issue or transfer shares of Stock under the Plan or upon the vesting
of any Stock Award, the Company shall have the right to require the recipient to
remit to the Company an amount sufficient to satisfy any federal, state and
local withholding tax requirements prior to the delivery of any certificate or
certificates for such shares or the vesting of such Stock Award (and benefits
under the Plan shall be conditioned upon such payment). A Participant may pay
the withholding tax in cash, or, if the Equity Ownership Agreement provides, a
Participant may also elect to have the number of shares of Stock he is to
receive reduced by, or with respect to a Stock Award, tender back to the
Company, the smallest number of whole shares of Stock which, when multiplied by
the Fair Market Value of the shares determined as of the Tax Date (defined
below), is sufficient to satisfy federal, state and local withholding taxes, if
any, arising from exercise or payment of an Award (a "Withholding Election"). A
Participant may make a Withholding Election only if both of the following
conditions are met:

          (a) The Withholding Election must be made on or prior to the date on
     which the amount of tax required to be withheld is determined (the "Tax
     Date") by executing and delivering to the Company a properly completed
     notice of Withholding Election as prescribed by the Administrator; and

          (b) Any Withholding Election made will be irrevocable; however, the
     Administrator may in its sole discretion approve or give no effect to the
     Withholding Election.

     5.2  Changes in Capitalization; Merger; Liquidation.  All adjustments the
Administrator makes under this Section 5.2 shall be conclusive.

          (a) The number of shares of Stock reserved for the grant of Options,
     Stock Appreciation Rights and Stock Awards; the number of shares of Stock
     issuable upon the exercise or payment, as applicable, of

                                       9
<PAGE>

     each outstanding Option and Stock Appreciation Right and upon vesting or
     grant, as applicable, of each Stock Award; the Exercise Price of each
     outstanding Option, the SAR Price of each outstanding Stock Appreciation
     Right and the specified number of shares of Stock to which each outstanding
     Stock Appreciation Right pertains may be proportionately adjusted by the
     Administrator for any increase or decrease in the number of issued shares
     of Stock resulting from a subdivision or combination of shares or the
     payment of a stock dividend in shares of Stock to holders of outstanding
     shares of Stock or any other increase or decrease in the number of shares
     of Stock outstanding effected without receipt of consideration by the
     Company.

          (b) In the event of a merger, consolidation or other reorganization of
     the Company or tender offer for shares of Stock, the Administrator may make
     such adjustments with respect to Awards and take such other action as it
     deems necessary or appropriate to reflect or in anticipation of such
     merger, consolidation, reorganization or tender offer, including, without
     limitation, the substitution of new Awards, the termination or adjustment
     of outstanding Awards, the acceleration of Awards or the removal of
     restrictions on outstanding Awards. Any adjustment pursuant to this Section
     5.2 may provide, in the Administrator's discretion, for the elimination
     without payment therefor of any fractional shares that might otherwise
     become subject to any Award.

          (c) The existence of the Plan and the Awards granted pursuant to the
     Plan shall not affect in any way the right or power of the Company to make
     or authorize any adjustment, reclassification, reorganization or other
     change in its capital or business structure, any merger or consolidation of
     the Company, any issue of debt or equity securities having preferences or
     priorities as to the Stock or the rights thereof, the dissolution or
     liquidation of the Company, any sale or transfer of all or any part of its
     business or assets, or any other corporate act or proceeding. Any issuance
     by the Company of stock of any class, or securities convertible into shares
     of stock of any class, shall not affect the Plan, and no adjustment
     hereunder by reason thereof shall be made, except as specifically provided
     otherwise in this Section.

     5.3 Cash Awards.  The Administrator may, at any time and in its discretion,
grant to any Participant the right to receive, at such times and in such amounts
as determined by the Administrator in its discretion, a cash amount which is
intended to reimburse such person for all or a portion of the federal, state and
local income taxes imposed upon such person as a consequence of the receipt of
the Award or the exercise of rights thereunder.

     5.4 Compliance with Code.  All Incentive Stock Options to be granted
hereunder are intended to comply with Code Sections 421, 422 and 424, and all
provisions of the Plan and all Incentive Stock Options granted hereunder shall
be construed in such manner as to effectuate that intent.

     5.5 Right to Terminate Employment or Affiliation.  Nothing in the Plan or
in any Award shall confer upon any Participant the right to continue as an
employee, director, officer, advisor, or consultant of the Company or any of its
affiliates or affect the right of the Company or any of its affiliates to
terminate the Participant's employment or affiliation at any time.

     5.6 Restrictions on Delivery and Sale of Shares; Legends.  Each Award is
subject to the condition that if at any time the Administrator, in its
discretion, shall determine that the listing, registration or qualification of
the shares covered by such Award upon any securities exchange or NASDAQ or under
any state or federal law is necessary or desirable as a condition of or in
connection with the granting of such Award or the purchase or delivery of shares
thereunder, the delivery of any or all shares pursuant to such Award may be
withheld unless and until such listing, registration or qualification shall have
been effected. If a registration statement is not in effect under the Securities
Act or any applicable state securities laws with respect to the shares of Stock
purchasable or otherwise deliverable under Awards then outstanding, the
Administrator may require, as a condition of exercise of any Option or as a
condition to any other delivery of Stock pursuant to an Award, that the
Participant or other recipient of an Award represent, in writing, that the
shares received pursuant to the Award are being acquired for investment and not
with a view to distribution and agree that shares will not be disposed of except
pursuant to an effective registration statement, unless the Company shall have
received an opinion of counsel that such disposition is exempt from such
requirement under the Securities Act and any

                                       10
<PAGE>

applicable state securities laws. The Company may include on certificates
representing shares delivered pursuant to an Award such legends referring to the
foregoing representations or restrictions or any other applicable restrictions
on resale as the Company, in its discretion, shall deem appropriate.

     5.7 Non-Alienation of Benefits.  Other than as specifically provided with
regard to the death of a Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.

     5.8 Termination and Amendment of the Plan.  The Board at any time may amend
or terminate the Plan; provided, however, such action must be approved by the
shareholders of the Company if such approval is necessary with respect to tax,
securities or other applicable laws or the applicable rules or regulations of
any stock exchange or NASDAQ. No such termination or amendment shall, without
the consent of the holder of an existing Award as evidenced in a writing signed
by the Participant and the Administrator, adversely affect the rights of the
Participant under such Award. The Plan shall automatically terminate upon the
earlier of (i) 10 years from the effective date of the Plan as provided in
Section 5.11 or (ii) when all of the Maximum Plan Shares have been issued under
the Plan. Upon termination of the Plan, its provisions shall remain in effect as
long as any Awards are outstanding with respect to such outstanding Awards.

     5.9 Shareholder Approval.  The Plan shall be submitted to the shareholders
of the Company for their approval within twelve (12) months of the adoption of
the Plan by the Board.

     5.10 Choice of Law.  The laws of the State of Georgia shall govern the
Plan, to the extent not preempted by federal law.

     5.11 Effective Date of Plan.  The Plan shall be adopted effective as of the
date it is approved by the shareholders of the Company as provided in Section
5.9 above.

     5.12 Headings.  The headings in this Plan are for convenience of reference.
Headings are not a part of the Plan and shall not be considered in the
construction hereof.

     5.13 Legal References.  Except as explicitly provided herein, any reference
in this Plan to a provision of law which is later revised, modified, amended,
finalized or redesignated, shall automatically be considered a reference to such
revised, modified, amended, finalized or redesignated provision of law.

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

<Table>
<S>                                                       <C>
ATHEROGENICS, INC                                         ATTEST:

By:                                                       By: /s/ Mark P. Colonnese
    /s/ Russell M. Medford                                    --------------------
--------------------------------------------------        Name:    Mark P. Colonnese
Name:    Russell M. Medford, M.D., Ph.D.                          Secretary
        President and Chief Executive Officer

                                                          [CORPORATE SEAL]
</Table>

                                       11

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