CELLEGY PHARMACEUTICALS, INC.             Exhibit 4.04


                           1995 EQUITY INCENTIVE PLAN

                            As Adopted June 26, 1995
                           Amended as of May 31, 2000

                1. PURPOSE. The purpose of this Plan is to provide incentives to
attract,  retain and  motivate  eligible  persons  whose  present and  potential
contributions  are  important  to  the  success  of  the  Company,  its  Parent,
Subsidiaries  and Affiliates,  by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses.  Capitalized terms not defined in the text are defined in Section
23.

                2. SHARES SUBJECT TO THE PLAN.

                    2.1 Number of Shares Available.  Subject to Sections 2.2 and
18, the total  number of Shares  reserved and  available  for grant and issuance
pursuant to this Plan will be 3,450,000 less any shares which are issued, or are
issuable upon exercise of options granted pursuant to the 1992 Stock Option Plan
adopted by the Company (the "Prior Plan"). The pool of Shares issuable hereunder
is  comprised  of any Shares not  subject to an option  granted  pursuant to the
Prior Plan plus any Shares issuable upon exercise of options granted pursuant to
the Prior Plan that expire or become unexercisable for any reason without having
been exercised in full. Upon the Effective Date (as defined below) of this Plan,
no further stock options  shall be granted  pursuant to the Prior Plan.  Options
granted pursuant to the Prior Plan shall continue to be governed by the terms of
the Prior Plan.  Subject to Sections 2.2 and 18, Shares that: (a) are subject to
issuance  upon  exercise of an Option but cease to be subject to such Option for
any reason  other than  exercise  of such  Option;  (b) are  subject to an Award
granted  hereunder  but are forfeited or are  repurchased  by the Company at the
original issue price;  or (c) are subject to an Award that otherwise  terminates
without  Shares being issued;  will again be available for grant and issuance in
connection  with future  Awards under this Plan.  At all times the Company shall
reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding  Options granted under this Plan and
all other outstanding but unvested Awards granted under this Plan.

                    2.2  Adjustment  of Shares.  In the event that the number of
outstanding  Shares is  changed  by a stock  dividend,  recapitalization,  stock
split,  reverse  stock  split,  subdivision,  combination,  reclassification  or
similar change in the capital  structure of the Company  without  consideration,
then (a) the number of Shares  reserved  for issuance  under this Plan,  (b) the
Exercise Prices of and number of Shares subject to outstanding  Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the shareholders of the
Company and compliance with applicable securities laws; provided,  however, that
fractions  of a Share will not be issued but will  either be  replaced by a cash
payment  equal to the Fair Market  Value of such  fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.

                3. ELIGIBILITY.  ISOs (as  defined  in  Section 5 below) may  be
granted  only to  employees  (including  officers  and  directors  who are  also
employees) of the Company or of a Parent or


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Subsidiary  of the  Company.  All other  Awards  may be  granted  to  employees,
officers,  directors,  consultants  and  advisors  of the Company or any Parent,
Subsidiary or Affiliate of the Company;  provided such  consultants and advisors
render  bona  fide  services  not in  connection  with  the  offer  and  sale of
securities  in a  capital-raising  transaction.  No person  will be  eligible to
receive more than 350,000  Shares in any calendar  year under this Plan pursuant
to the grant of Awards  hereunder.  A person may be granted  more than one Award
under this Plan.

                4. ADMINISTRATION.

                    4.1 Committee  Authority.  This Plan will be administered by
the  Committee or by the Board acting as the  Committee.  Subject to the general
purposes,  terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

               (a)  construe and interpret  this Plan,  any Award  Agreement and
                    any other  agreement or document  executed  pursuant to this
                    Plan;

               (b)  prescribe,  amend and rescind rules and regulations relating
                    to this Plan;

               (c)  select persons to receive Awards;

               (d)  determine  the form and terms of Awards  (which  need not be
                    identical),  including but not limited to, the time or times
                    at which Options shall be  exercisable  and the extension or
                    acceleration of any such provisions or limitations, based in
                    each case on such factors as the Committee shall  determine,
                    in its sole discretion;

               (e)  determine  the  number  of  Shares  or  other  consideration
                    subject to Awards;

               (f)  determine   whether  Awards  will  be  granted  singly,   in
                    combination  with, in tandem with, in replacement  of, or as
                    alternatives  to,  other Awards under this Plan or any other
                    incentive or compensation plan of the Company or any Parent,
                    Subsidiary or Affiliate of the Company;

               (g)  grant waivers of Plan or Award conditions;

               (h)  determine the vesting, exercisability and payment of Awards;

               (i)  correct any defect,  supply any  omission or  reconcile  any
                    inconsistency   in  this  Plan,   any  Award  or  any  Award
                    Agreement;

               (j)  determine whether an Award has been earned;

               (k)  make all other determinations necessary or advisable for the
                    administration of this Plan.

                    4.2  Committee  Discretion.  Any  determination  made by the
Committee  with respect to any Award will be made in its sole  discretion at the
time of grant of the Award or,  unless in  contravention  of any express term of
this Plan or Award, at any later time, and such  determination will be final and
binding on the Company and on all persons  having an interest in any Award under
this Plan.

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The  Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to  Participants  who are not  Insiders of the
Company.

                    4.3  Compliance  with Code  Section  162(m).  If two or more
members of the Board are Outside Directors,  the Committee shall be comprised of
at least two members of the Board, all of whom are Outside Directors.

                    4.4  Liability  and  Indemnification  of the  Committee.  No
member of the group  constituting the Committee,  or any employee of the Company
to whom the Committee delegates certain administrative  responsibilities,  shall
be liable for any act or  omission  on such  member's  or  employee's  own part,
including  but not limited to the exercise of any power or  discretion  given to
such member, or employee as delegatee, under this Plan, except for those acts or
omissions  resulting  from such member's or employee's  own gross  negligence or
willful  misconduct.  The Company shall indemnify each present and future member
of the group  constituting  the Committee  and each present and future  employee
delegated  administrative  responsibilities by such Committee against,  and each
member  of  the  group   constituting   the  Committee  or  employee   delegated
administrative  responsibilities  by such  Committee  shall be entitled  without
further act on his or her part to  indemnity  from the Company for, all expenses
(including  the amount of judgments or  settlements  approved by the Company and
made with a view to the  curtailment of costs of litigation,  other than amounts
paid to the Company  itself)  reasonably  incurred by such person in  connection
with or  arising  out of any  action,  suit or  proceeding  to the  full  extent
permitted by law and by the Articles of Incorporation and Bylaws of the Company.

                5. OPTIONS.  The Committee may grant Options to eligible persons
and will determine  whether such Options will be Incentive  Stock Options within
the meaning of the Code ("ISOs") or Nonqualified  Stock Options  ("NQSOs"),  the
number of Shares subject to the Option,  the Exercise  Price of the Option,  the
period  during  which the  Option  may be  exercised,  and all  other  terms and
conditions of the Option, subject to the following:

                    5.1 Form of Option  Grant.  Each Option  granted  under this
Plan will be evidenced by an Award Agreement  which will expressly  identify the
Option as an ISO or an NQSO ("Stock Option Agreement"), and will be in such form
and contain such provisions (which need not be the same for each Participant) as
the Committee  may from time to time approve,  and which will comply with and be
subject to the terms and conditions of this Plan.

                    5.2 Date of Grant.  The date of grant of an  Option  will be
the date on which the Committee  makes the  determination  to grant such Option,
unless  otherwise  specified by the Committee.  The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant  within a reasonable time
after the granting of the Option.

                    5.3 Exercise  Period.  Unless  otherwise  established by the
Committee with respect to any individual or group of individuals, an Option will
become exercisable with respect to 25% of the Shares on the first anniversary of
the Vesting Start Date (as defined below),  with respect to an additional 25% of
the Shares on the second  anniversary of the Vesting Start Date, with respect to
an additional  25% of the Shares on the third  anniversary  of the Vesting Start
Date, with respect to an additional 25% of the Shares on the fourth  anniversary
of the Vesting Start Date. The Vesting Start Date is the date of grant,  or such
other date as the Committee determines in its discretion.  The Committee may use
its  discretion to establish  different  vesting  schedules  with respect to any
individual  or group of  individuals.  No Option will be  exercisable  after the
expiration  of ten (10) years from the date the Option is granted;  and provided
further that no ISO granted to a person who directly or by attribution owns more
than ten  percent  (10%) of the total  combined  voting  power of all classes of
stock of the Company or of

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any Parent or  Subsidiary of the Company  ("Ten  Percent  Shareholder")  will be
exercisable  after the  expiration  of five (5)  years  from the date the ISO is
granted.  The  Committee  also may provide for the exercise of Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the  Committee  determines.  Options
granted to Insiders,  however,  may not be exercisable,  in whole or in part, at
any time prior to the  six-month  anniversary  of the date of grant,  unless the
Committee  determines  that the  foregoing  provision is not necessary to comply
with  the  provisions  of Rule  16b-3 as  promulgated  under  Section  16 of the
Exchange Act or that such Rule is not applicable to the Plan or the Participant.

                    5.4 Exercise  Price.  The Exercise  Price of an NQSO will be
determined by the Committee when the Option is granted; provided,  however, that
if expressly  required by one or more state securities  authorities or laws as a
condition of issuing Awards and Shares in compliance with the securities laws of
such state, the exercise price of an NQSO shall not be less than 85% of the Fair
Market  Value of the Shares on the date of grant and the  Exercise  Price of any
NQSO  granted to a Ten  Percent  Shareholder  shall not be less than 110% of the
Fair Market Value of the Shares on the date of grant.  The Exercise  Price of an
ISO will be not less than  100% of the Fair  Market  Value of the  Shares on the
date of  grant  and the  Exercise  Price  of any ISO  granted  to a Ten  Percent
Shareholder will not be less than 110% of the Fair Market Value of the Shares on
the date of grant.  Payment for the Shares  purchased  may be made in accordance
with Section 8 of this Plan.

                    5.5 Method of  Exercise.  Options may be  exercised  only by
delivery  to the  Company of a written  stock  option  exercise  agreement  (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each  Participant),  stating the number of Shares being purchased,  the
restrictions  imposed on the Shares purchased under such Exercise Agreement,  if
any, and such representations and agreements regarding Participant's  investment
intent and access to information  and other matters,  if any, as may be required
or desirable by the Company to comply with applicable  securities laws, together
with  payment  in full of the  Exercise  Price for the  number  of Shares  being
purchased.

                    5.6  Termination.  Notwithstanding  the exercise periods set
forth in the  Stock  Option  Agreement,  exercise  of an Option  will  always be
subject to the following:

               (a)  If the Participant is Terminated for any reason except death
                    or  Disability,  then  the  Participant  may  exercise  such
                    Participant's  Options  only to the extent that such Options
                    would have been  exercisable  upon the  Termination  Date no
                    later than three (3) months after the  Termination  Date (or
                    such  shorter or longer time period not  exceeding  five (5)
                    years  as  may be  determined  by the  Committee,  with  any
                    exercise beyond three (3) months after the Termination  Date
                    deemed to be an NQSO),  but in any event,  no later than the
                    expiration date of the Options.

               (b)  If the  Participant is Terminated  because of  Participant's
                    death or Disability  (or the  Participant  dies within three
                    (3)  months  after  a  Termination  other  than  because  of
                    Participant's  death  or  Disability),   then  Participant's
                    Options  may be  exercised  only  to the  extent  that  such
                    Options would have been  exercisable  by  Participant on the
                    Termination  Date and must be exercised by  Participant  (or
                    Participant's legal  representative or authorized  assignee)
                    no later than twelve (12) months after the Termination  Date
                    (or such  shorter  (but not less than six  months) or longer
                    time  period  not  exceeding   five  (5)  years  as  may  be
                    determined by the Committee,  with any such exercise  beyond
                    (a) three (3)  months  after the  Termination  Date when the
                    Termination  is for any reason other than the  Participant's
                    death or disability  other

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                    than defined in Section  22(e)(3) of the Code, or (b) twelve
                    (12) months after the Termination  Date when the Termination
                    is for  Participant's  death or Disability,  deemed to be an
                    NQSO), but in any event no later than the expiration date of
                    the Options.

                    5.7  Limitations  on Exercise.  The  Committee may specify a
reasonable  minimum number of Shares that may be purchased on any exercise of an
Option,  provided  that such minimum  number will not prevent  Participant  from
exercising  the  Option  for the full  number  of  Shares  for  which it is then
exercisable.

                    5.8  Limitations  on ISOs.  The aggregate  Fair Market Value
(determined  as of the date of grant) of Shares  with  respect to which ISOs are
exercisable for the first time by a Participant  during any calendar year (under
this Plan or under any other  incentive  stock option plan of the Company or any
Affiliate, Parent or Subsidiary of the Company) will not exceed $100,000. If the
Fair Market  Value of Shares on the date of grant with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000,  then the  Options  for the first  $100,000  worth of Shares to become
exercisable in such calendar year will be ISOs and the Options for the amount in
excess of $100,000 that become  exercisable in that calendar year will be NQSOs.
In the event that the Code or the regulations promulgated thereunder are amended
after the  Effective  Date of this Plan to provide for a different  limit on the
Fair Market  Value of Shares  permitted  to be subject to ISOs,  such  different
limit will be  automatically  incorporated  herein and will apply to any Options
granted after the effective date of such amendment.

                    5.9  Modification,  Extension or Renewal.  The Committee may
modify,  extend or renew  outstanding  Options  and  authorize  the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant,  impair any of such  Participant's  rights
under any Option  previously  granted.  Any  outstanding  ISO that is  modified,
extended,  renewed or  otherwise  altered  will be treated  in  accordance  with
Section  424(h) of the Code.  The  Committee  may reduce the  Exercise  Price of
outstanding  Options without the consent of  Participants  effected by a written
notice to them;  provided,  however,  that the Exercise Price may not be reduced
below the minimum  Exercise  Price that would be permitted  under Section 5.4 of
this Plan for  Options  granted  on the date the  action is taken to reduce  the
Exercise Price.

                    5.10  No   Disqualification.   Notwithstanding   any   other
provision  in  this  Plan,  no  term  of this  Plan  relating  to  ISOs  will be
interpreted,  amended or altered,  nor will any discretion or authority  granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant  affected, to disqualify any
ISO under Section 422 of the Code.

                6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible  person Shares that are subject to  restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the  person  may  purchase,  the price to be paid (the  "Purchase  Price"),  the
restrictions  to which the Shares will be subject,  if any,  and all other terms
and conditions of the Restricted Stock Award, subject to the following:

                    6.1 Form of Restricted  Stock Award.  All purchases  under a
Restricted  Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement  ("Restricted  Stock  Purchase  Agreement")  that will be in such form
(which need not be the same for each  Participant)  as the  Committee  will from
time to time  approve,  and will  comply  with and be  subject  to the terms and
conditions of this Plan.  The offer of Restricted  Stock will be accepted by the
Participant's

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execution  and delivery of the  Restricted  Stock  Purchase  Agreement  and full
payment for the Shares to the Company  within thirty (30) days from the date the
Restricted Stock Purchase  Agreement is delivered to the person.  If such person
does not execute and deliver the Restricted Stock Purchase  Agreement along with
full  payment for the Shares to the Company  within  thirty (30) days,  then the
offer  will  terminate,  unless  otherwise  determined  by  the  Committee.  The
Committee,  however,  may provide that, if required under Rule 16b-3 promulgated
under  Section  16 of the  Exchange  Act,  Restricted  Stock  Awards  granted to
Insiders  shall not  become  exercisable  until six months and one day after the
grant date and shall then be  exercisable  for 10 trading  days at the  Purchase
Price specified by the Committee in accordance with Section 6.2.

                    6.2  Purchase  Price.  The  Purchase  Price of  Shares  sold
pursuant  to a  Restricted  Stock  Award will be  determined  by the  Committee;
provided,  that if expressly  required by any state securities  authorities as a
condition of the offer and sale of Shares subject to Restricted  Stock Awards in
compliance with the securities laws of such state, the Purchase Price will be at
least 85% of the Fair  Market  Value of the  Shares  on the date the  Restricted
Stock  Award  is  granted,  except  in  the  case  of a  sale  to a Ten  Percent
Shareholder,  in which case the  Purchase  Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.

                    6.3 Restrictions. Restricted Stock Awards will be subject to
such  restrictions  (if any) as the  Committee  may impose.  The  Committee  may
provide for the lapse of such restrictions in installments and may accelerate or
waive  such  restrictions,  in whole  or  part,  based  on  length  of  service,
performance or such other factors or criteria as the Committee may determine.

                7.  STOCK BONUSES.

                    7.1 Awards of Stock  Bonuses.  A Stock  Bonus is an award of
Shares  (which may consist of  Restricted  Stock) for  services  rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past  services  already  rendered to the Company,  or any Parent,
Subsidiary or Affiliate of the Company  (provided that the Participant  pays the
Company  the par value,  if any,  of the Shares  awarded by such Stock  Bonus in
cash) pursuant to an Award Agreement (the "Stock Bonus  Agreement") that will be
in such form (which need not be the same for each  Participant) as the Committee
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. A Stock Bonus may be awarded upon  satisfaction  of
such performance goals as are set out in advance in the Participant's individual
Award Agreement (the  "Performance  Stock Bonus Agreement") that will be in such
form (which need not be the same for each  Participant)  as the  Committee  will
from time to time approve,  and will comply with and be subject to the terms and
conditions of this Plan.  Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company,  Parent,  Subsidiary or Affiliate and/or individual performance factors
or upon such other criteria as the Committee may determine.

                    7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the  Participant  and whether such Shares will
be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of
performance  goals  pursuant to a Performance  Stock Bonus  Agreement,  then the
Committee will determine: (a) the nature, length and starting date of any period
during which performance is to be measured (the  "Performance  Period") for each
Stock Bonus;  (b) the  performance  goals and criteria to be used to measure the
performance,  if any;  (c) the  number  of  Shares  that may be  awarded  to the
Participant;  and (d) the extent to which such Stock  Bonuses  have been earned.
Performance Periods may overlap and Participants may participate  simultaneously
with respect to Stock Bonuses that are subject to different  Performance Periods
and different performance

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goals  and other  criteria.  The  number  of Shares  may be fixed or may vary in
accordance with such performance  goals and criteria as may be determined by the
Committee.  The Committee  may adjust the  performance  goals  applicable to the
Stock  Bonuses to take into account  changes in law and  accounting or tax rules
and to make such  adjustments as the Committee deems necessary or appropriate to
reflect the impact of extraordinary or unusual items, events or circumstances to
avoid windfalls or hardships.

                    7.3 Form of Payment. The earned portion of a Stock Bonus may
be paid  currently  or on a  deferred  basis  with  such  interest  or  dividend
equivalent,  if any, as the Committee may determine.  Payment may be made in the
form of  cash,  whole  Shares,  including  Restricted  Stock,  or a  combination
thereof,  either in a lump sum payment or in installments,  all as the Committee
will determine.

                    7.4 Termination During Performance  Period. If a Participant
is Terminated during a Performance Period for any reason,  then such Participant
will be entitled to payment (whether in Shares,  cash or otherwise) with respect
to the Stock Bonus only to the extent  earned as of the date of  Termination  in
accordance  with the  Performance  Stock Bonus  Agreement,  unless the Committee
determines otherwise.

                8.  PAYMENT FOR SHARE PURCHASES.

                    8.1 Payment.  Payment for Shares purchased  pursuant to this
Plan  may be made in cash  (by  check)  or,  where  expressly  approved  for the
Participant by the Committee and where permitted by law:

               (a)  by  cancellation  of  indebtedness  of  the  Company  to the
                    Participant;

               (b)  by surrender  of shares that either:  (1) have been owned by
                    Participant  for more than six (6) months and have been paid
                    for within the meaning of SEC Rule 144 (and,  if such shares
                    were purchased from the Company by use of a promissory note,
                    such note has been fully paid with respect to such  shares);
                    or (2) were obtained by Participant in the public market;

               (c)  by tender of a full  recourse  promissory  note  having such
                    terms  as  may be  approved  by the  Committee  and  bearing
                    interest at a rate sufficient to avoid  imputation of income
                    under Sections 483 and 1274 of the Code; provided,  however,
                    that  Participants who are not employees or directors of the
                    Company  will not be  entitled  to  purchase  Shares  with a
                    promissory  note  unless the note is  adequately  secured by
                    collateral other than the Shares;  provided,  further,  that
                    the portion of the Purchase  Price equal to the par value of
                    the Shares, if any, must be paid in cash;

               (d)  by waiver of compensation  due or accrued to the Participant
                    for services rendered;  provided,  further, that the portion
                    of the Purchase  Price equal to the par value of the Shares,
                    if any, must be paid in cash;

               (e)  with respect only to purchases  upon  exercise of an Option,
                    and provided that a public  market for the  Company's  stock
                    exists:

                    (1)  through  a  "same  day   sale"   commitment   from  the
                         Participant and a broker-dealer that is a member of the
                         National  Association  of Securities  Dealers (an "NASD
                         Dealer") whereby the Participant  irrevocably elects to
                         exercise the

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                         Option and to sell a portion of the Shares so purchased
                         to pay for the  Exercise  Price,  and  whereby the NASD
                         Dealer irrevocably  commits upon receipt of such Shares
                         to forward the Exercise  Price directly to the Company;
                         or

                    (2)  through a "margin"  commitment from the Participant and
                         a  NASD  Dealer  whereby  the  Participant  irrevocably
                         elects to exercise  the Option and to pledge the Shares
                         so purchased to the NASD Dealer in a margin  account as
                         security  for a loan from the NASD Dealer in the amount
                         of the  Exercise  Price,  and  whereby  the NASD Dealer
                         irrevocably  commits  upon  receipt  of such  Shares to
                         forward the Exercise Price directly to the Company; or

               (f)  by any combination of the foregoing.

                    8.2 Loan Guarantees.  The Committee may help the Participant
pay for Shares  purchased  under this Plan by  authorizing  a  guarantee  by the
Company of a third-party loan to the Participant.

                9.  WITHHOLDING TAXES.

                    9.1 Withholding Generally.  Whenever Shares are to be issued
in  satisfaction  of Awards granted under this Plan, the Company may require the
Participant  to remit to the Company an amount  sufficient  to satisfy  federal,
state  and local  withholding  tax  requirements  prior to the  delivery  of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount  sufficient  to  satisfy  federal,   state,  and  local  withholding  tax
requirements.

                    9.2 Stock  Withholding.  When,  under applicable tax laws, a
Participant  incurs tax liability in connection  with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld,  the Committee may allow the
Participant  to satisfy the minimum  withholding  tax  obligation by electing to
have the  Company  withhold  from the Shares to be issued  that number of Shares
having a Fair Market Value equal to the minimum amount  required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date").  All  elections by a Participant  to have Shares  withheld for
this purpose will be made in writing in a form  acceptable  to the Committee and
will be subject to the following restrictions:

               (a)  the election must be made on or prior to the applicable
                    Tax Date;

               (b)  once made, then except as provided below,  the election will
                    be irrevocable  as to the particular  Shares as to which the
                    election is made;

               (c)  all elections  will be subject to the consent or disapproval
                    of the Committee;

               (d)  if the  Participant  is an  Insider  and if the  Company  is
                    subject  to  Section  16(b)  of the  Exchange  Act:  (1) the
                    election  may not be made  within six (6) months of the date
                    of grant of the Award,  except as otherwise permitted by SEC
                    Rule 16b-3(e) under the Exchange Act, and (2) either (A) the
                    election to use stock  withholding  must be irrevocably made
                    at least six (6) months prior to the Tax Date (although such
                    election  may be revoked at any time at least six (6) months
                    prior to the Tax Date)

                                       8
<PAGE>

                    or (B) the  exercise  of the Option or election to use stock
                    withholding  must  be  made  in  the  ten  (10)  day  period
                    beginning  on the third day  following  the  release  of the
                    Company's  quarterly or annual summary statement of sales or
                    earnings; and

               (e)  in the  event  that the Tax Date is  deferred  until six (6)
                    months after the delivery of Shares under  Section  83(b) of
                    the Code,  the  Participant  will receive the full number of
                    Shares with respect to which the exercise  occurs,  but such
                    Participant will be unconditionally obligated to tender back
                    to the Company the proper number of Shares on the Tax Date.

                10. PRIVILEGES OF STOCK OWNERSHIP.

                    10.1 Voting and Dividends.  No Participant  will have any of
the rights of a  shareholder  with  respect  to any Shares  until the Shares are
issued to the  Participant.  After  Shares  are issued to the  Participant,  the
Participant  will be a shareholder and have all the rights of a shareholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares;  provided, that if
such  Shares  are  Restricted  Stock,  then any  new,  additional  or  different
securities the  Participant  may become entitled to receive with respect to such
Shares by virtue of a stock  dividend,  stock  split or any other  change in the
corporate  or  capital  structure  of the  Company  will be  subject to the same
restrictions as the Restricted Stock;  provided,  further,  that the Participant
will have no right to retain such stock  dividends or stock  distributions  with
respect to Shares that are repurchased at the  Participant's  original  Purchase
Price pursuant to Section 12.

                    10.2  Financial  Statements.  If  expressly  required by any
state securities  authorities as a condition of the offer and issuance of Awards
in compliance with the securities laws of such state,  the Company shall provide
to each  Participant  during the period such  Participant  holds an  outstanding
Award a copy of the financial  statements  of the Company as prepared  either by
the Company or independent  certified  public  accountants of the Company.  Such
financial statements shall be delivered as soon as practicable following the end
of the Company's fiscal year during the period Awards are outstanding; provided,
however,  the Company will not be required to provide such financial  statements
to Participants whose services in connection with the Company assure them access
to equivalent information.

                11.  TRANSFERABILITY.  Awards  granted under this Plan,  and any
interest therein, will not be transferable or assignable by Participant, and may
not be made subject to execution,  attachment or similar process, otherwise than
by will or by the laws of descent and  distribution  or as  consistent  with the
specific  Plan and Award  Agreement  provisions  relating  thereto.  During  the
lifetime  of  the  Participant  an  Award  will  be  exercisable   only  by  the
Participant, and any elections with respect to an Award, may be made only by the
Participant.

                12.  RESTRICTIONS ON SHARES. At the discretion of the Committee,
the Company may reserve to itself and/or its  assignee(s) in the Award Agreement
a right to  repurchase  a portion of or all  Shares  that are not  "Vested"  (as
defined in the Stock Option  Agreement)  held by a  Participant  following  such
Participant's Termination at any time within ninety (90) days after the later of
Participant's  Termination Date and the date Participant  purchases Shares under
this Plan, for cash and/or cancellation of purchase money  indebtedness,  at the
Participant's  original Purchase Price,  provided,  that the right to repurchase
lapses at the rate of at least  20% per year  over five (5) years  from the date
the Shares were  purchased  (or from the date of grant of options in the case of
Shares obtained  pursuant to a Stock Option  Agreement and Stock Option Exercise
Agreement),  and if the right to repurchase is

                                       9
<PAGE>

assignable,  the assignee must pay the Company,  upon assignment of the right to
repurchase, cash equal to the excess of the Fair Market Value of the Shares over
the original Purchase Price.

                13.   CERTIFICATES.   All   certificates  for  Shares  or  other
securities  delivered  under this Plan will be  subject  to such stock  transfer
orders,  legends and other  restrictions  as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules,  regulations and other  requirements of the SEC or
any stock  exchange or automated  quotation  system upon which the Shares may be
listed or quoted.

                14. ESCROW;  PLEDGE OF SHARES.  To enforce any restrictions on a
Participant's  Shares,  the Committee may require the Participant to deposit all
certificates  representing  Shares  (other  than  Shares  with  respect to which
consideration  has been fully paid by the  Participant  (in forms  other than by
promissory  notes) and received by the  Company),  together with stock powers or
other instruments of transfer approved by the Committee,  appropriately endorsed
in blank,  with the  Company or an agent  designated  by the  Company to hold in
escrow until such restrictions have lapsed or terminated,  and the Committee may
cause a legend or  legends  referencing  such  restrictions  to be placed on the
certificates.  Any  Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required  to pledge and  deposit  with the  Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory  note;  provided,  however,  that the Committee may
require or accept other or additional  forms of collateral to secure the payment
of such  obligation  and,  in any event,  the  Company  will have full  recourse
against the Participant under the promissory note  notwithstanding any pledge of
the  Participant's  Shares or other collateral or the Company's resort to any or
all of such collateral. In connection with any pledge of the Shares, Participant
will be required to execute and deliver a written pledge  agreement in such form
as the Committee will from time to time approve.  The Shares  purchased with the
promissory  note may be  released  from the  pledge  on a pro rata  basis as the
promissory note is paid.  Notwithstanding  any other provision in this Plan, the
Committee  may not  require  deposit in escrow or retain in escrow  evidence  of
unencumbered  Shares  for  which  consideration  has  been  fully  paid  by  the
Participant  (in a form other than by  promissory  notes)  and  received  by the
Company.

                15.  EXCHANGE AND BUYOUT OF AWARDS.  The  Committee  may, at any
time or from  time to time,  authorize  the  Company,  with the  consent  of the
respective  Participants,  to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding  Awards.  Notwithstanding  the foregoing,
the Committee may at any time buy from a Participant an Award previously granted
with   payment  in  cash,   Shares   (including   Restricted   Stock)  or  other
consideration,  based on such  terms and  conditions  as the  Committee  and the
Participant may agree. The Committee may at any time cancel Options upon payment
to each  Participant  in cash,  with  respect to each  Option to the extent then
exercisable,  of any amount which, in the absolute  discretion of the Committee,
is  determined  to be  equivalent  to any  excess  of the  market  value (at the
effective time of such event) of the  consideration  that such Participant would
have received if the Option had been  exercised  before the effective  time over
the Exercise Price of the Option.

                16.  SECURITIES LAW AND OTHER  REGULATORY  COMPLIANCE.  An Award
will not be effective  unless such Award is in  compliance  with all  applicable
federal and state  securities  laws,  rules and regulations of any  governmental
body, and the  requirements of any stock exchange or automated  quotation system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise  or other  issuance.
Notwithstanding  any other  provision  in this Plan,  the  Company  will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a)  obtaining  any  approvals  from  governmental

                                       10
<PAGE>

agencies that the Company  determines  are  necessary or  advisable;  and/or (b)
completion of any  registration or other  qualification of such Shares under any
state or  federal  law or  ruling  of any  governmental  body  that the  Company
determines to be necessary or advisable. The Company will be under no obligation
to  register  the  Shares  with  the  SEC  or  to  effect  compliance  with  the
registration,  qualification  or listing  requirements  of any state  securities
laws, stock exchange or automated quotation system, and the Company will have no
liability for any inability or failure to do so.

                17. NO OBLIGATION  TO EMPLOY.  Nothing in this Plan or any Award
granted  under this Plan will  confer or be deemed to confer on any  Participant
any right to continue in the employ of, or to  continue  any other  relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent,  Subsidiary  or  Affiliate of
the Company to terminate  Participant's  employment or other relationship at any
time, with or without cause.

                18. CORPORATE TRANSACTIONS.

                    "18.1  Assumption or Replacement of Awards by Successor.  In
the event of (a) a dissolution or  liquidation  of the Company,  (b) a merger or
consolidation in which the Company is not the surviving  corporation (other than
a merger or consolidation with a wholly-owned  subsidiary,  a reincorporation of
the Company in a different jurisdiction,  or other transaction in which there is
no substantial change in the shareholders of the Company or their relative stock
holdings  and the Awards  granted  under  this Plan are  assumed,  converted  or
replaced by the successor  corporation,  which assumption will be binding on all
Participants),  (c) a merger in which the Company is the  surviving  corporation
but after  which the  shareholders  of the Company  (other than any  shareholder
which merges (or which owns or controls another  corporation  which merges) with
the Company in such merger) cease to own their shares or other equity  interests
in the Company,  (d) the sale of substantially all of the assets of the Company,
or (e) any other transaction which qualifies as a "corporate  transaction" under
Section 424(a) of the Code wherein the  shareholders  of the Company give up all
of their equity  interest in the Company  (except for the  acquisition,  sale or
transfer of all or  substantially  all of the outstanding  shares of the Company
from or by the shareholders of the Company),  the vesting of all Options held by
an employee of the Company on the date of such transaction  shall accelerate and
the options will become  exercisable in full prior to the  consummation  of such
events at such time and on such  conditions  as the Board will  determine and if
such  options  are not  exercised  prior to the  consummation  of the  corporate
transaction,  they shall  terminate in  accordance  with the  provisions of this
Plan.  Notwithstanding  the  foregoing,  the Board may, in its sole  discretion,
provide  that the vesting of any or all other  Awards  granted  pursuant to this
Plan will accelerate  upon a transaction  described in this Section 18.1. If the
Board  exercises  such  discretion  with  respect to Options,  such Options will
become  exercisable in full prior to the consummation of such event at such time
and on such  conditions  as the Board  determines,  and if such  Options are not
exercised  prior to the  consummation of the corporate  transaction,  they shall
terminate at such time as determined by the Board."

                    18.2  Other  Treatment  of Awards.  Subject  to any  greater
rights granted to  Participants  under the foregoing  provisions of this Section
18, in the event of the occurrence of any transaction described in Section 18.1,
any outstanding  Awards will be treated as provided in the applicable  agreement
or plan of merger,  consolidation,  dissolution,  liquidation, sale of assets or
other "corporate transaction."

                    18.3 Assumption of Awards by the Company. The Company,  from
time to time,  also may  substitute  or assume  outstanding  awards  granted  by
another company, whether in connection with an acquisition of such other company
or otherwise,  by either;  (a) granting an Award under this Plan in substitution
of such other  company's  award;  or (b)  assuming  such award as if it had

                                       11
<PAGE>

been granted under this Plan if the terms of such assumed award could be applied
to an Award granted under this Plan.  Such  substitution  or assumption  will be
permissible  if the holder of the  substituted  or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant.  In the event the Company assumes an award
granted by another  company,  the terms and conditions of such award will remain
unchanged  (except that the  exercise  price and the number and nature of Shares
issuable  upon  exercise  of any  such  option  will be  adjusted  appropriately
pursuant  to Section  424(a) of the Code).  In the event the  Company  elects to
grant a new Option rather than assuming an existing option,  such new Option may
be granted with a similarly adjusted Exercise Price.

                19.  ADOPTION AND  SHAREHOLDER  APPROVAL.  This Plan will become
effective on the closing of the Company's  registered initial public offering of
securities (the "Effective Date"); provided, however, that if the Effective Date
does not occur on or before December 31, 1995, this Plan and any Options granted
hereunder will terminate as of December 31, 1995 having never become  effective.
This Plan shall be approved by the shareholders of the Company (excluding Shares
issued pursuant to this Plan),  consistent with applicable  laws,  within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective  Date,  the Board may grant  Awards  pursuant to this Plan;  provided,
however,  that:  (a) no Option may be  exercised  prior to  initial  shareholder
approval  of this Plan;  (b) no Option  granted  pursuant  to an increase in the
number of Shares  subject to this Plan  approved by the Board will be  exercised
prior to the time such  increase has been  approved by the  shareholders  of the
Company;  and (c) in the event that shareholder approval of such increase is not
obtained within the time period provided  herein,  all Awards granted  hereunder
will be canceled,  any Shares issued pursuant to any Award will be canceled, and
any purchase of Shares  hereunder  will be rescinded.  So long as the Company is
subject to Section  16(b) of the Exchange  Act, the Company will comply with the
requirements of SEC Rule 16b-3  promulgated  thereunder (or its  successor),  as
amended, with respect to shareholder approval.

                20. TERM OF PLAN. Unless earlier  terminated as provided herein,
this Plan will  terminate  ten (10)  years from the date this Plan is adopted by
the Board or, if earlier, the date of shareholder approval.

                21.  AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate  or amend  this  Plan in any  respect,  including  without  limitation
amendment of any form of Award  Agreement or instrument to be executed  pursuant
to this Plan; provided,  however,  that the Board will not, without the approval
of the shareholders of the Company,  amend this Plan in any manner that requires
such shareholder  approval  pursuant to the Code or the regulations  promulgated
thereunder as such  provisions  apply to ISO plans or (if the Company is subject
to the  Exchange  Act or Section  16(b) of the  Exchange  Act)  pursuant  to the
Exchange Act or SEC Rule 16b-3  promulgated  thereunder (or its  successor),  as
amended, respectively.

                22.  NONEXCLUSIVITY  OF THE PLAN.  Neither the  adoption of this
Plan by the  Board,  the  submission  of this  Plan to the  shareholders  of the
Company  for  approval,  nor any  provision  of this Plan will be  construed  as
creating  any  limitations  on the power of the Board to adopt  such  additional
compensation  arrangements  as  it  may  deem  desirable,   including,   without
limitation,  the granting of stock options and bonuses otherwise than under this
Plan, and such  arrangements  may be either  generally  applicable or applicable
only in specific cases.

                                    Exhibit 1

                                       12
<PAGE>

                23. DEFINITIONS.  As used in this Plan, the following terms will
have the following meanings:

                    "Affiliate"   means  any  corporation   that  directly,   or
indirectly through one or more intermediaries,  controls or is controlled by, or
is under common control with, another  corporation,  where "control"  (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect,  of the power to cause the direction of the  management  and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.

                    "Award"  means any award  under  this  Plan,  including  any
Option, Restricted Stock or Stock Bonus.

                    "Award  Agreement"  means,  with respect to each Award,  the
signed written agreement  between the Company and the Participant  setting forth
the terms and conditions of the Award.

                    "Board" means the Board of Directors of the Company.

                    "Code" means the Internal Revenue Code of 1986, as amended.

                    "Committee"  means the  committee  appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board.

                    "Company" means Cellegy Pharmaceuticals,  Inc. a corporation
organized  under  the  laws  of  the  State  of  California,  or  any  successor
corporation.

                    "Disability"  means  a  disability,   whether  temporary  or
permanent, partial or total, as determined by the Committee.

                    "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                    "Exercise  Price"  means  the  price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.

                    "Fair Market  Value" means,  as of any date,  the value of a
share  of the  Company's  Common  Stock  determined  by the  Board  in its  sole
discretion, exercised in good faith; provided, however, that if the Common Stock
of the Company is quoted on the Small Cap Market of the National  Association of
Securities  Dealers  Automated  Quotation  System  or is  regularly  quoted by a
recognized  securities dealer, and selling prices are reported,  the Fair Market
Value per share shall be the  closing  sales price for such stock or the closing
bid if no sales were reported,  as quoted on such system or by such dealer,  for
the date the value is to be determined (or if there are not sales for such date,
then for the last preceding  business day on which there were sales);  provided,
however,  that if the Common  Stock of the Company is listed on any  established
stock exchange or a national  market system,  including  without  limitation the
National  Market  System  of the  National  Association  of  Securities  Dealers
Automated Quotation System, the Fair Market Value per share shall be the closing
sales  price for such stock or the  closing  bid if no sales were  reported,  as
quoted on such system or exchange  (or the largest such  exchange)  for the date
the value is to be determined (or if there are not sales for such date, then for
the last preceding  business day on which there were sales),  as reported in the
Wall Street Journal or similar publication.

                                       13
<PAGE>

                    "Insider" means an officer or director of the Company or any
other person whose  transactions  in the  Company's  Common Stock are subject to
Section 16 of the Exchange Act.

                    "Option"  means an award of an  option  to  purchase  Shares
pursuant to Section 5.

                    "Outside Directors" shall mean any director who is not (i) a
current  employee of the Company or any Parent,  Subsidiary  or Affiliate of the
Company,  (ii) a former  employee of the Company or any  Parent,  Subsidiary  or
Affiliate of the Company who is receiving  compensation for prior service (other
than benefits under a  tax-qualified  pension  plan),  (iii) a current or former
officer of the Company or any Parent,  Subsidiary or Affiliate of the Company or
(iv) currently  receiving  compensation  for personal  services in any capacity,
other  than as a  director,  from  the  Company  or any  Parent,  Subsidiary  or
Affiliate  of the  Company;  provided,  however,  that at such  time as the term
"Outside  Director",  as  used in  Section  162(m)  is  defined  in  regulations
promulgated under Section 162(m) of the Code,  "Outside Director" shall have the
meaning  set  forth in such  regulations,  as  amended  from time to time and as
interpreted by the Internal Revenue Service.

                    "Parent" means any  corporation  (other than the Company) in
an unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under this Plan, each of such  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 such chain.

                    "Participant"  means a person who  receives  an Award  under
this Plan.

                    "Plan" means this Cellegy  Pharmaceutical,  Inc. 1995 Equity
Incentive Plan, as amended from time to time.

                    "Restricted  Stock Award" means an award of Shares  pursuant
to Section 6.

                    "SEC" means the Securities and Exchange Commission.

                    "Securities  Act"  means  the  Securities  Act of  1933,  as
amended.

                    "Shares" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.

                    "Stock  Bonus" means an award of Shares,  or cash in lieu of
Shares, pursuant to Section 7.

                    "Subsidiary"  means any corporation (other than the Company)
in an unbroken chain of corporations  beginning with the Company if, at the time
of  granting  of the  Award,  each  of the  corporations  other  than  the  last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined  voting power of all classes of stock in one of the other  corporations
in such chain.

                    "Termination"  or "Terminated"  means,  for purposes of this
Plan with  respect to a  Participant,  that the  Participant  has for any reason
ceased to provide  services as an employee,  director,  consultant or advisor to
the Company or a Parent,  Subsidiary or Affiliate of the Company,  except in the
case of sick leave,  military leave,  or any other leave of absence  approved by
the Committee,  provided that such leave is for a period of not more than ninety
(90) days, or  reinstatement  upon the expiration of such leave is guaranteed by
contract  or statute.  The  Committee  will have sole  discretion  to  determine

                                       14

<PAGE>

whether a Participant  has ceased to provide  services and the effective date on
which the Participant ceased to provide services (the "Termination Date").


                                       15