Exhibit 4.03



                          CELLEGY PHARMACEUTICALS, INC.


                           1995 EQUITY INCENTIVE PLAN

                           Amended as of June 5, 2002


         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 4,850,000 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 anged 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


                                       1
<PAGE>

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.
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.

                                       2
<PAGE>


              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

                                       3
<PAGE>

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 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

                                       4
<PAGE>


              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 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:

                                       5
<PAGE>

              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  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

                                       6
<PAGE>

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  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;

                                       7
<PAGE>

         (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 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;

                                       8
<PAGE>

         (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) 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.

                                       9
<PAGE>

         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 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

                                       10
<PAGE>

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  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."

                                       11
<PAGE>

              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 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)

                                       12
<PAGE>


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


         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

                                       13
<PAGE>

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.

              "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.

                                       14
<PAGE>

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

                                       15