CELLEGY PHARMACEUTICALS INC
1995 DIRECTORS STOCK OPTION PLAN
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>5
<FILENAME>p15914_ex10-8.txt
<DESCRIPTION>1995 DIRECTORS STOCK OPTION PLAN
<TEXT>
                                                                    Exhibit 10.8

                          CELLEGY PHARMACEUTICALS, INC.

                        1995 DIRECTORS STOCK OPTION PLAN

                          Amended through June 6, 2002


         1.  Purpose.  This 1995  Directors  Stock Option Plan (this  "Plan") is
established to provide equity incentives for nonemployee members of the Board of
Directors of Cellegy Pharmaceuticals, Inc. (the "Company"), who are described in
Section 6.1 below,  by granting such persons options to purchase shares of stock
of the Company.

         2. Adoption and Shareholder Approval. After this Plan is adopted by the
Board of Directors of the Company (the "Board"), 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.
Upon the Effective  Date of this Plan, no further stock options shall be granted
pursuant  to the 1992 Stock  Option  Plan of the  Company  (the  "Prior  Plan").
Options granted  pursuant to the Prior Plan shall continue to be governed by the
terms of the Prior Plan. This Plan shall be approved by the  shareholders of the
Company,  consistent with applicable  laws,  within twelve (12) months after the
date this Plan is adopted by the Board. Options ("Options") may be granted under
this Plan after the Effective Date provided that, in the event that  shareholder
approval is not obtained within the time period provided herein,  this Plan, and
all Options granted  hereunder,  shall terminate.  No Option that is issued as a
result of any  increase in the number of shares  authorized  to be issued  under
this Plan shall be exercised  prior to the time such  increase has been approved
by the shareholders of the Company and all such Options granted pursuant to such
increase shall similarly terminate if such shareholder approval is not obtained.
So long as the Company is subject to Section  16(b) of the  Securities  Exchange
Act of 1934, as amended,  (the "Exchange  Act") the Company will comply with the
requirements of Rule 16b-3 with respect to shareholder approval.

         3. Types of Options and Shares.  Options  granted under this Plan shall
be  nonqualified  stock  options  ("NQSOs").  The  shares  of stock  that may be
purchased  upon exercise of Options  granted under this Plan (the  "Shares") are
shares of the Common Stock of the Company.

         4. Number of Shares.  The  maximum  number of Shares that may be issued
pursuant to Options  granted under this Plan (the  "Maximum  Number") is 350,000
Shares (giving effect to a reverse split of the Company's Common Stock effective
at or before the closing of the Company's  registered initial public offering of
securities),  subject to  adjustment  as provided in this Plan. If any Option is
terminated  for any reason  without  being  exercised  in whole or in part,  the
Shares  thereby  released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the term
of this Plan, the Company shall reserve and keep available such number of Shares
as shall be required to satisfy the requirements of outstanding  Options granted
under  this  Plan;  provided,  however  that if the  aggregate  number of Shares
subject to outstanding Options granted under this Plan plus the aggregate number
of Shares  previously  issued by the Company pursuant to the exercise of Options
granted  under this Plan equals or exceeds the  Maximum  Number of Shares,  then
notwithstanding  anything  herein to the  contrary,  no further  Options  may be
granted  under this Plan until the Maximum  Number is increased or the aggregate
number of Shares subject to outstanding Options granted under this Plan plus the
aggregate  number of Shares  previously  issued by the  Company  pursuant to the
exercise of Options granted under this Plan is less than the Maximum Number.

         5. Administration. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer this
Plan (the "Committee").  As used in this Plan, references to the Committee shall
mean either such  Committee or the Board if no Committee  has been  established.
The interpretation by the Committee of any of the provisions of this Plan or any
Option  granted  under this Plan shall be


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                                                   Cellegy Pharmaceuticals, Inc.
                                                1995 Directors Stock Option Plan

final and binding  upon the  Company  and all persons  having an interest in any
Option or any Shares purchased pursuant to an Option.

         6. Eligibility and Award Formula.

                  6.1  Eligibility.  Options may be granted only to directors of
the Company who are not  employees of the Company or any Parent,  Subsidiary  or
Affiliate of the Company, as those terms are defined in Section 17 below.

                  6.2 Initial Grant.  Each Optionee who after the Effective Date
becomes a member of the Board will automatically be granted an Option for 30,000
Shares (the "Initial Grant"). Initial Grants shall be made on the first business
day after the date such Optionee is first elected to the Board.

                  6.3 Succeeding Grants. On the first business day after each of
the Company's annual meeting of shareholders,  if the Optionee is still a member
of the Board and has served  continuously  as a member of the Board for at least
one year, the Optionee will  automatically be granted an Option for 8,000 Shares
(a "Succeeding Grant").

         7. Terms and  Conditions  of Options.  Subject to the  following and to
Section 6 above:

                  7.1 Form of Option Grant.  Each Option granted under this Plan
shall be evidenced by a written Stock Option Grant ("Grant") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve,  which  Grant  shall  comply  with  and be  subject  to the  terms  and
conditions of this Plan.

                  7.2  Vesting.   Options  granted  under  this  Plan  shall  be
exercisable  as they vest.  The date an Optionee  receives an Initial Grant or a
Succeeding  Grant is  referred  to in this  Plan as the  "Start  Date"  for such
Option.

                           (a) Initial  Grants.  Each Initial Grant will vest as
follows, so long as the Optionee continuously remains a director of the Company:
(i) on the Start Date of the  Initial  Grant the  Initial  Grant will vest as to
twenty-five  percent  (25%) of the Shares;  (ii) with  respect to the  remaining
22,500 Shares:  (a) on the first (1st)  anniversary  of the Initial  Grant,  the
Initial  Grant will vest as to an  additional  twenty-five  percent (25%) of the
remaining Shares;  (b) on the second (2nd) anniversary of the Initial Grant, the
Initial  Grant will vest as to an  additional  twenty-five  percent (25%) of the
remaining  Shares;  (c) on the third (3rd) anniversary of the Initial Grant, the
Initial  Grant will vest as to an  additional  twenty-five  percent (25%) of the
remaining Shares;  and (d) on the fourth (4th) anniversary of the Initial Grant,
the Initial Grant will vest as to an additional twenty-five percent (25%) of the
remaining Shares.

                           (b) Succeeding  Grants.  Each  Succeeding  Grant will
vest as to  twenty-five percent (25%) of the Shares upon each of the first three
(3) successive  anniversaries  of the Start Date for such  Succeeding  Grant, so
long as the Optionee continuously remains a director of the Company.

                  7.3 Exercise  Price.  The exercise price of an Option shall be
the Fair Market  Value (as defined in Section  17.4) of the Shares,  at the time
that the Option is granted.

                  7.4  Termination  of Option.  Except as provided below in this
Section,  each  Option  shall  expire ten (10)  years  after its Start Date (the
"Expiration  Date"). The Option shall cease to vest if the Optionee ceases to be
a member of the Board.  The date on which the Optionee  ceases to be a member of
the Board  shall be  referred  to as the  "Termination  Date".  An Option may be
exercised after the Termination Date only as set forth below:

                           (a) Termination Generally.  If the Optionee ceases to
be a member of the Board for any reason except death or disability (as described
in 7.4(b)  below),  then each Option then held by such  Optionee,  to the extent
(and only to the extent) that it would have been  exercisable by the Optionee on
the  Termination  Date, may be exercised by the Optionee within three (3) months
after the Termination Date, but in no event later than the Expiration Date.

                                       2
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                                                   Cellegy Pharmaceuticals, Inc.
                                                1995 Directors Stock Option Plan

                           (b) Death or Disability. If the Optionee ceases to be
a member of the Board  because of the death of the Optionee or the  temporary or
permanent,  partial or total  disability  of the Optionee as  determined  by the
Board,  then each Option then held by such Optionee,  to the extent (and only to
the  extent)  that  it  would  have  been  exercisable  by the  Optionee  on the
Termination  Date,  may be exercised by the  Optionee (or the  Optionee's  legal
representative)  within twelve (12) months after the Termination Date, but in no
event later than the Expiration Date.

         8. Exercise of Options.

                  8.1 Notice.  Options may be exercised  only by delivery to the
Company of an exercise agreement in a form approved by the Committee stating the
number of Shares being  purchased,  the  restrictions  imposed on the Shares and
such representations and agreements  regarding the Optionee's  investment intent
and access to  information  as may be  required  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.

                  8.2 Payment. Payment for the Shares purchased upon exercise of
an Option  may be made (a) in cash or by check;  (b) by  surrender  of shares of
Common  Stock of the Company  that have been owned by the Optionee for more than
six (6) months  (and which have been paid for within the  meaning of  Securities
and Exchange Commission ("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 were  obtained  by the  Optionee  in the open public
market,  having a Fair Market Value equal to the  exercise  price of the Option;
(c) by waiver of  compensation  due or  accrued  to the  Optionee  for  services
rendered;  (d) provided  that a public  market for the  Company's  stock exists,
through a "same day sale" commitment from the Optionee and a broker-dealer  that
is a member of the National Association of Securities Dealers (an "NASD Dealer")
whereby the  Optionee  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;  (e) provided that a public market for
the Company's stock exists,  through a "margin" commitment from the Optionee and
a NASD Dealer whereby the Optionee 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.

                  8.3  Withholding  Taxes.  Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable.

                  8.4  Limitations  on  Exercise.  Notwithstanding  the exercise
periods set forth in the Grant, exercise of an Option shall always be subject to
the following limitations:

                           (a) An Option  shall not be  exercisable  until  such
time as this Plan (or, in the case of Options  granted  pursuant to an amendment
increasing the number of shares that may be issued  pursuant to this Plan,  such
amendment)  has been approved by the  shareholders  of the Company in accordance
with Section 15 hereof.

                           (b) An Option  shall not be  exercisable  unless such
exercise is in  compliance  with the  Securities  Act of 1933,  as amended  (the
"Securities  Act") and all  applicable  state  securities  laws,  as they are in
effect on the date of exercise.

                           (c) The  Committee  may specify a reasonable  minimum
number of Shares that may be purchased upon any exercise of an Option,  provided
that such minimum number will not prevent the Optionee from  exercising the full
number of Shares as to which the Option is then exercisable.

         9.  Nontransferability of Options. During the lifetime of the Optionee,
an  Option  shall  be  exercisable  only by the  Optionee  or by the  Optionee's
guardian or legal  representative,  unless otherwise permitted by the Committee.
No Option may be sold, pledged, assigned, hypothecated,  transferred or disposed
of in any manner other than by will or by the laws of descent and distribution.


                                       3
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                                                   Cellegy Pharmaceuticals, Inc.
                                                1995 Directors Stock Option Plan

         10.  Privileges of Stock  Ownership.  No Optionee shall have any of the
rights of a  shareholder  with respect to any Shares  subject to an Option until
the Option has been validly exercised. No adjustment shall be made for dividends
or  distributions or other rights for which the record date is prior to the date
of exercise,  except as provided in this Plan. The Company shall provide to each
Optionee a copy of the annual financial  statements of the Company, at such time
after the close of each fiscal  year of the Company as they are  released by the
Company to its shareholders.

         11.  Adjustment  of  Option  Shares.  In the event  that the  number of
outstanding  shares  of  Common  Stock  of the  Company  is  changed  by a stock
dividend,  stock split,  reverse stock split,  combination,  reclassification or
similar change in the capital  structure of the Company  without  consideration,
the number of Shares  available under this Plan and the number of Shares subject
to  outstanding  Options and the  exercise  price per share of such  outstanding
Options shall be proportionately adjusted, subject to any required action by the
Board or shareholders  of the Company and compliance with applicable  securities
laws; provided, however, that no fractional shares shall be issued upon exercise
of any Option and any resulting  fractions of a Share shall be rounded up to the
nearest whole Share.

         12. No Obligation to Continue as Director.  Nothing in this Plan or any
Option  granted  under  this  Plan  shall  confer on any  Optionee  any right to
continue as a director of the Company.

         13.  Compliance  With Laws.  The grant of Options  and the  issuance of
Shares upon  exercise of any Options  shall be subject to and  conditioned  upon
compliance with all applicable requirements of law, including without limitation
compliance with the Securities Act,  compliance with all other  applicable state
securities  laws and compliance  with the  requirements of any stock exchange or
national  market system on which the Shares may be listed.  The Company shall be
under no obligation to register the Shares with the SEC or to effect  compliance
with the registration or qualification requirement of any state securities laws,
stock exchange or national market system.

         14.  Acceleration  of  Options.  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),  (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 of
the  Internal  Revenue  Code of  1986,  as  amended  (the  "Code")  wherein  the
shareholders of the Company give up all of their equity interests 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 granted pursuant to this Plan will accelerate and the
options will become  exercisable in full prior to the consummation of such event
at such times and on such  conditions as the Committee  determines,  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.

         15.  Amendment or  Termination  of Plan.  The Committee may at any time
terminate  or amend this Plan (but may not  terminate  or amend the terms of any
outstanding option without the consent of the Optionee); provided, however, that
the  Committee  shall not,  without  the  approval  of the  shareholders  of the
Company,  increase the total number of Shares  available under this Plan (except
by operation of the  provisions  of Sections 4 and 11 above) or change the class
of persons  eligible to receive Options.  Further,  the provisions in Sections 6
and 7 of this Plan  shall not be amended  more than once  every six (6)  months,
other than to comport with changes in the Code, the Employee  Retirement  Income
Security Act or the rules thereunder. In any case, no amendment of this Plan may
adversely  affect  any then  outstanding  Options  or any  unexercised  portions
thereof without the written consent of the Optionee.

                                       4
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                                                   Cellegy Pharmaceuticals, Inc.
                                                1995 Directors Stock Option Plan

         16.  Term of Plan.  Options  may be granted  pursuant to this Plan from
time to time  within  a period  of ten (10)  years  from the date  this  Plan is
adopted by the Board.

         17.  Certain  Definitions.  As used in this Plan,  the following  terms
shall have the following meanings:

                  17.1 "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 the Option,  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.

                  17.2  "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 Option, each of the corporations other than the last
corporation in the unbroken chain owns stock  possessing  fifty percent (50%) or
more of the total  combined  voting  power of all classes of stock in one of the
other corporations in such chain.

                  17.3  "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.

                  17.4 "Fair Market Value" shall mean, 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 but  selling  prices are not  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 no quoted
prices for the date of grant, then for the last preceding  business day on which
there were quoted prices);  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.

                                       5

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