COPLEY PHARMACEUTICAL, INC.

                  1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN



         1. Purpose.  This  Non-Qualified  Stock Option Plan, to be known as the
1992  Non-Employee  Director  Stock  Option Plan  (hereinafter,  this "Plan") is
intended to promote the interests of Copley  Pharmaceutical,  Inc. (hereinafter,
the  "Company")  by providing an inducement to obtain and retain the services of
qualified  persons who are not  employees or officers of the Company to serve as
members of its Board of Directors (the "Board").

         2. Available  Shares.  The total number of shares of Common Stock,  par
value $.01 per share, of the Company (the "Common Stock"), for which options may
be granted under this Plan shall not exceed 67,500 shares, subject to adjustment
in  accordance  with  paragraph 10 of this Plan;  provided,  however,  that such
number of shares shall not be subject to adjustment by reason of the 1.5 for one
stock split in the form of a stock  dividend  declared by the Board of Directors
of the  Company at a meeting on April 9, 1992.  Shares  subject to this Plan are
authorized but unissued shares or shares that were once issued and  subsequently
reacquired  by  the  Company.  If  any  options  granted  under  this  Plan  are
surrendered before exercise or lapse without exercise,  in whole or in part, the
shares reserved therefor shall continue to be available under this Plan.

         3. Administration. This Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains  from  appointing a  Committee,  the Board shall have all
power and authority to administer this Plan. In such event, the word "Committee"
wherever  used herein shall be deemed to mean the Board.  The  Committee  shall,
subject to the provisions of the Plan,  have the power to construe this Plan, to
determine  all  questions  hereunder,  and to adopt  and  amend  such  rules and
regulations for the  administration  of this Plan as it may deem  desirable.  No
member  of the  Board  or the  Committee  shall  be  liable  for any  action  or
determination made in good faith with respect to this Plan or any option granted
under it.

         4. Automatic  Grant of Options.  Subject to the  availability of shares
under this Plan,  (a) each  person who is a member of the Board on April 1, 1992
and who is not an  employee  or  officer  of the  Company  on such date shall be
automatically  granted on April 1, 1992, without further action by the Board, an
option to purchase 13,500 shares of the Common Stock;  and (b) with respect to a
person who is first  elected as a member of the Board after April 1, 1992 during
the term of this Plan and who is not an  employee  or officer of the  Company on
the date of such election shall be  automatically  granted an option to purchase
13,500 shares of the Common Stock on the date of his or her first  election as a
member of the Board.  The options to be granted under this  paragraph 4 shall be
the only options ever to be granted at any time to such member under this Plan.

         Except for the specific options referred to above, no other options
shall be granted under this Plan.

         5. Option Price.  The purchase  price of the stock covered by an option
granted  pursuant  to this Plan shall be 100% of the fair  market  value of such
shares on the day the option is  granted.  The  option  price will be subject to
adjustment in accordance  with the  provisions of paragraph 10 of this Plan. For
purposes of this Plan,  if, at the time an option is granted under the Plan, the
Company's  Common  Stock  is  publicly  traded,  "fair  market  value"  shall be
determined as of the last business day for which the prices or quotes  discussed
in this  sentence  are  available  prior to the date such  option is granted and
shall  mean (i) the  average  (on that  date) of the high and low  prices of the
Common Stock on the principal national  securities  exchange on which the Common
Stock is traded,  if the Common  Stock is then  traded on a national  securities
exchange;  or (ii) the last  reported  sale  price (on that  date) of the Common
Stock on the NASDAQ National Market List, if the Common Stock is not then traded
on a national securities exchange; or (iii) the closing bid price (or average of
bid prices) last quoted (on that date) by an established  quotation  service for
over-the-counter  securities,  if the Common Stock is not reported on the NASDAQ
National  Market  List.  The "fair  market  value" of the  stock  issuable  upon
exercise of an option granted  pursuant to the Plan within 120 days prior to the
time the Company's  Common Stock is publicly  traded shall be deemed to be equal
to the initial per share purchase  price at which the Company's  Common Stock is
offered to the public.

         6. Period of Option.  Unless sooner  terminated in accordance  with the
provisions of paragraph 8 of this Plan, an option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the option.

         7.       Vesting of Shares and Non-Transferability of Options.

                  (a)  Vesting.  Options  granted  under  this Plan shall not be
exercisable until they become vested. Options granted under this Plan shall vest
in the optionee and thus become  exercisable,  in accordance  with the following
schedule,  provided that the optionee has continuously served as a member of the
Board through such vesting date:

   Percentage of Option Shares for
   which Option will be Exercisable
                                                             Date of Vesting
               33-1/3%                 Less than one year from the date of grant
 -------------------------------------
               66-2/3%                 One year from the date of grant
 -------------------------------------
                 100%                  Two years from the date of grant


                  The  number  of shares as to which  options  may be  exercised
shall be cumulative,  so that once the option shall become exercisable as to any
shares it shall continue to be exercisable as to said shares,  until  expiration
or termination of the option as provided in this Plan.

                  (b) Legend on Certificates. The certificates representing such
shares shall carry such appropriate legend, and such written  instructions shall
be  given  to the  Company's  transfer  agent,  as may be  deemed  necessary  or
advisable by counsel to the Company in order to comply with the  requirements of
the Securities Act of 1933 or any state securities laws.

                  (c)  Nontransferability.  Any option granted  pursuant to this
Plan shall not be assignable or  transferable  other than by will or the laws of
descent and distribution and shall be exercisable during the optionee's lifetime
only by him or her.

         8.       Termination of Option Rights.

                  (a) In the  event an  optionee  ceases  to be a member  of the
Board  for any  reason  other  than  death  or  permanent  disability,  any then
unexercised portion of options granted to such optionee shall, to the extent not
then vested,  immediately  terminate  and become void;  any portion of an option
which is then  vested but has not been  exercised  at the time the  optionee  so
ceases to be a member of the Board may be  exercised,  to the  extent it is then
vested,  by the optionee  within 90 days of the date the optionee ceased to be a
member of the Board;  and all options  shall  terminate  after such 90 days have
expired.

                  (b) In the event that an optionee ceases to be a member of the
Board by reason of his or her death or permanent disability,  any option granted
to such optionee shall be immediately and  automatically  accelerated and become
fully vested and all  unexercised  options shall be  exercisable by the optionee
(or by the optionee's personal representative,  heir or legatee, in the event of
death) until the scheduled expiration date of the option.

         9. Exercise of Option. Subject to the terms and conditions of this Plan
and the option agreements, an option granted hereunder shall, to the extent then
exercisable,  be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to Copley  Pharmaceutical,  Inc., 25 John
Road, Canton,  Massachusetts 02021, at its principal executive offices,  stating
the  number of shares  with  respect  to which  the  option is being  exercised,
accompanied  by payment in full for such  shares.  Payment  may be (a) in United
States  dollars  in cash or by  check,  (b) in whole or in part in shares of the
Common Stock of the Company  already  owned by the person or persons  exercising
the option or shares  subject to the option  being  exercised  (subject  to such
restrictions and guidelines as the Board may adopt from time to time), valued at
fair market value determined in accordance with the provisions of paragraph 5 or
(c) consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired  upon  exercise  of the  option and an  authorization  to the broker or
selling  agent to pay that  amount to the  Company,  which  sale shall be at the
participant's direction at the time of exercise. There shall be no such exercise
at any one  time  as to  fewer  than  one  hundred  (100)  shares  or all of the
remaining  shares  then  purchasable  by the  person or persons  exercising  the
option,  if fewer than one hundred (100) shares.  The Company's  transfer  agent
shall,  on  behalf  of  the  Company,  prepare  a  certificate  or  certificates
representing  such shares  acquired  pursuant  to exercise of the option,  shall
register  the  optionee  as the owner of such shares on the books of the Company
and shall cause the fully executed certificates)  representing such shares to be
delivered to the  optionee as soon as  practicable  after  payment of the option
price  in full.  The  holder  of an  option  shall  not  have  any  rights  of a
stockholder  with  respect to the shares  covered by the  option,  except to the
extent that one or more  certificates  for such shares shall be delivered to him
or her upon the due exercise of the option.

         10. Adjustments Upon Changes in Capitalization and Other Matters.  Upon
the occurrence of any of the following events, an optionee's rights with respect
to options  granted to him or her  hereunder  shall be adjusted  as  hereinafter
provided:

                  (a) Stock  Dividends and Stock Splits.  If, after May 1, 1992,
the shares of Common  Stock shall be  subdivided  or combined  into a greater or
smaller  number of shares or if the  Company  shall  issue any  shares of Common
Stock as a stock dividend on its outstanding  Common Stock, the number of shares
of Common Stock  deliverable upon the exercise of options shall be appropriately
increased or decreased  proportionately,  and appropriate  adjustments  shall be
made in the purchase price per share to reflect such subdivision, combination or
stock  dividend.  No such  adjustment  shall be made in respect  to reflect  the
1.5-for-1 stock split effected as a dividend on April 9, 1992.

                  (b)   Recapitalization   Adjustments.   In  the   event  of  a
reorganization,  recapitalization, merger, consolidation, or any other change in
the  corporate  structure or shares of the Company,  to the extent  permitted by
Rule 16b-3 under the Securities Exchange Act of 1934,  adjustments in the number
and kind of shares  authorized by this Plan and in the number and kind of shares
covered by, and in the option price of outstanding options under this Plan shall
be made if, and in the same  manner  as,  such  adjustments  are made to options
issued under the Company's other stock option plans.

                  (c)  Issuances of  Securities.  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 subject to options. No adjustments shall be made for dividends paid in
cash or in property other than securities of the Company.

                  (d)  Adjustments.  Upon the  happening of any of the foregoing
events,  the class and  aggregate  number of shares set forth in  paragraph 2 of
this Plan that are subject to options which previously have been or subsequently
may be granted under this Plan shall also be  appropriately  adjusted to reflect
such events. The Board shall determine the specific adjustments to be made under
this paragraph 10 and its determination shall be conclusive.

         11. Restrictions on Issuance of Shares.  Notwithstanding the provisions
of  paragraphs 4 and 9 of this Plan,  the Company  shall have no  obligation  to
deliver any certificate or certificates  upon exercise of an option until one of
the following conditions shall be satisfied:

                  (i) The  shares  with  respect  to which the  option  has been
         exercised  are at the  time of the  issue  of such  shares  effectively
         registered under applicable Federal and state securities laws as now in
         force or hereafter amended; or

                  (ii) Counsel for the Company  shall have given an opinion that
         such  shares are  exempt  from  registration  under  Federal  and state
         securities laws as now in force or hereafter  amended;  and the Company
         has complied  with all  applicable  laws and  regulations  with respect
         thereto,  including without limitation all regulations  required by any
         stock  exchange  upon which the Company's  outstanding  Common Stock is
         then listed.

         12.  Representation  of Optionee.  If  requested  by the  Company,  the
optionee  shall deliver to the Company  written  representations  and warranties
upon exercise of the option that are necessary to show  compliance  with Federal
and state  securities  laws,  including  representations  and  warranties to the
effect that a purchase of shares under the option is made for investment and not
with a view to their distribution (as that term is used in the Securities Act of
1933).

         13. Option Agreement.  Each option granted under the provisions of this
Plan shall be evidenced by an option  agreement,  which  agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not  inconsistent  with this Plan as may be determined by the officer
executing it.

         14. Termination and Amendment of Plan. Options may no longer be granted
under this P an after  April 8, 2002,  and this Plan  shall  terminate  when all
options granted or to be granted hereunder are no longer outstanding.  The Board
may at any time  terminate  this Plan or make  such  modification  or  amendment
thereof  as it deems  advisable;  provided,  however,  that the  Board  may not,
without  approval  by the  affirmative  vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and entitled to vote at the
meeting,  (a) materially increase the maximum number of shares for which options
may be granted  under this Plan (except by  adjustment  pursuant to Section 10),
(b) materially  modify the requirements as to eligibility to participate in this
Plan, (c)  materially  increase  benefits  accruing to option holders under this
Plan, or (d) amend this Plan in any manner which would cause Rule 16b3 to become
inapplicable to this Plan; and provided further that the provisions of this Plan
specified in Rule  (c)(2)(ii)(A) (or any successor or amended provision thereof)
under  the  Securities  Exchange  Act of  1934  (including  without  limitation,
provisions  as to  eligibility,  amount,  price and timing of awards) may not be
amended  more than once every six months,  other than to comport with changes in
the Internal Revenue Code, the Employee  Retirement  Income Security Act, or the
rules  thereunder.  Termination  or any  modification  or amendment of this Plan
shall not,  without consent of a participant,  affect his or her rights under an
option previously granted to him or her.

         15.  Withholding of Income Taxes.  Upon the exercise of an option,  the
Company,  in accordance with Section  3402(a) of the Internal  Revenue Code, may
require the optionee to pay withholding  taxes in respect of amounts  considered
to be compensation includible in the optionee's gross income.

         16.  Compliance with  Regulations.  It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor or amended version thereof) and any applicable Securities
and Exchange Commission  interpretations  thereof. If any provision of this Plan
is deemed not to be in compliance  with Rule 16b-3,  the provision shall be null
and void.

         17.  Governing Law. The validity and  construction of this Plan and the
instruments  evidencing  options  shall be  governed by the laws of the State of
Delaware, without giving effect to the principles of conflicts of law thereof.

Date Approved by Board of Directors of the Company:  April 23, 1992.

Date Approved by Stockholders of the Company:                 April 23, 1992.