TERMINATION OF EXCLUSIVE LICENSING AGREEMENT


         THIS AGREEMENT (the "Termination  Agreement") effective as of this 12th
day of October,  1999, between Glaxo Wellcome Inc., a corporation  organized and
existing under the laws of the State of North Carolina, with its principal place
of business at Five Moore Drive,  Research  Triangle Park,  North Carolina 27709
(hereinafter,  "GW") and Cellegy Pharmaceuticals,  Inc., a corporation organized
and  existing  under the laws of the  State of  California,  with its  principal
office at 349 Oyster Point Boulevard, Suite 200, South San Francisco, California
94080  (hereinafter,  "Cellegy"),  is  entered  into by the  parties in order to
terminate by mutual  agreement the  Exclusive  License  Agreement  between them,
dated the 11th of November,  1996 (the "License Agreement") pursuant to which GW
obtained an exclusive  license to certain rights to the compound  Glylorin under
patent rights and know-how possessed by Cellegy.

         WHEREAS,  GW and  Cellegy  mutually  agree  to  terminate  the  License
Agreement, subject to the terms and conditions set forth below.

         NOW, THEREFORE,  in consideration of the premises, the mutual covenants
contained herein and other valuable  consideration,  the receipt and sufficiency
of which are hereby acknowledged, GW and Cellegy hereby agree as follows:

         1.  Definitions.  Except as otherwise  defined herein,  all capitalized
terms used herein but not defined  herein  shall have the  meanings  ascribed to
such terms in the License Agreement.

         2.  Termination  of  Agreement.  GW and Cellegy  hereby  agree that the
License  Agreement  is  terminated  in its  entirety at the close of business on
October  15,  1999  (the  "Effective  Date")  and,  accordingly,  all  of  their
respective  rights,   obligations  and  duties  under  the  Agreement  shall  be
terminated  as of the  Effective  Date and shall  thereafter  no longer have any
force or effect,  except as may be  specifically  set forth in this  Termination
Agreement.

         3.  Certain   Payments.   This  effective  date  for  the  cut  off  of
charge-backs to GW for ongoing expenses, including, patent prosecution costs and
trademark  costs,  charges  for  ongoing  stability  work,  toxicology  work and
pharmaceutical  professional  fees, as well as all other charges relating to the
Compound,  shall be the  Effective  Date.  All such  charges (up to a maximum of
$104,427.56)  incurred  prior to the Effective  Date will be paid in full by GW.
Cellegy  will  ensure  that all  outstanding  charges  are  submitted  to GW for
collection prior to the Effective Date. Cellegy will pay GW $200,000 which

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such  amount  represents  the  net  amount  for (i) the  return  of the  prepaid
toxicology   milestone  payments  referenced  in  Section  4.4  of  the  License
Agreement,  less  (ii) an  amount  which  has been  previously  agreed to by the
parties as settlement  of a proof of principal  payment due to Cellegy under the
License Agreement.

         4.  Transfer of  Regulatory  Filings.  (a) The IND with  respect to the
ichthyosis  vulgaris  indication  (IND #  54,243),  as  well  as  copies  of all
regulatory   correspondence   between  GW  and  FDA  related  thereto,  will  be
transferred  to Cellegy  within sixty (60) days of the Effective  Date.  All FDA
reporting  requirements  related to such IND will be updated and completed by GW
through the Effective  Date.  Upon the date that GW transfers to Cellegy the IND
referred to above, Cellegy shall assume all regulatory  responsibilities related
to such IND, including the preparation and filing of annual reports with respect
to the IND.

         (b) The IND with  respect to the n-CIE  indication  (IND # 41,553),  as
well as copies  of all  regulatory  correspondence  between  GW and FDA  related
thereto,  will be transferred to Cellegy within sixty (60) days of the Effective
Date.  All FDA  reporting  requirements  related to such IND will be updated and
completed by GW through the Effective  Date.  Upon the date that GW transfers to
Cellegy  the  IND  referred  to  above,  Cellegy  shall  assume  all  regulatory
responsibilities  related to such IND,  including the  preparation and filing of
annual reports with respect to the IND.

         5. Transfer of Clinical Trial  Material.  (a) Within sixty (60) days of
the Effective  Date, GW shall transfer to Cellegy all quantities of the Compound
that GW has in its possession (hereinafter, the "Bulk Compound"). Thereafter, GW
and Cellegy  agree that  Cellegy  shall have legal  title to the Bulk  Compound.
Cellegy shall pay to GW a  non-refundable  fee of $33,225.68 in order to acquire
possession and legal title to the Bulk Compound.

         (b) GW DOES NOT  MAKE,  AND  SHALL  NOT BE  DEEMED  TO HAVE  MADE,  ANY
REPRESENTATION  OR WARRANTY OF ANY KIND WITH RESPECT TO THE  QUALITY,  SAFETY OR
UTILITY OF THE BULK  COMPOUND,  AND SUCH BULK COMPOUND IS BEING  TRANSFERRED  TO
CELLEGY  ON  AN  "AS  IS"  BASIS.  GW  EXPRESSLY  DISCLAIMS  ANY  WARRANTIES  OF
MERCHANTIBILITY  OR FITNESS FOR A  PARTICULAR  PURPOSE AND ANY OTHER  WARRANTIES
(EXPRESS OR IMPLIED) WITH RESPECT TO THE QUALITY, SAFETY, OR UTILITY OF THE BULK
COMPOUND.

         (c)   Cellegy   agrees   that   Cellegy   shall  bear  all   regulatory
responsibility  and liability for the use of the Bulk  Compound.  Cellegy agrees
that  it  shall  not use any of the  Bulk  Compound  in any  clinical  trial  or
otherwise in humans unless the results of Cellegy's  quality  assurance  testing
indicate that the Bulk  Compound  meets the  specifications  set forth in an IND
(which has been filed with, and not withdrawn from, the FDA) with respect to the
Compound.

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         6. Payment Mechanics. Each of GW and Cellegy acknowledge and agree that
the net total of the payments  referred to in Section 3 and Section 5(a) of this
Agreement  results in a net amount  due to GW equal to  $128,798.12,  which such
amount shall be paid by Cellegy to GW by wire  transfer  within thirty (30) days
of the Effective  Date to an account  designated  by GW. The  foregoing  payment
shall constitute full and complete payment of all amounts owed by Cellegy to GW,
and by GW to Cellegy, under the terms of the License Agreement.

         7. Acknowledgement. Cellegy acknowledges that prior to the date of this
Termination  Agreement,  GW has  transferred to Cellegy the completed  Phase III
clinical trial protocol for ichthyosis vulgaris free of charge.

         8. Transfer of Project  Files.  Within sixty (60) days of the Effective
Date,  GW  shall  transfer  to  Cellegy  a copy  of all of the GW  clinical  and
nonclinical  project files  relating to the  Compound.  Following the return and
review of the project files by Cellegy,  GW shall,  at Cellegy's  request (which
such request shall be made, if at all,  within thirty (30) days from the receipt
of  the  project  files  referred  to  above),  participate  in a  single  video
conference  with  Cellegy  (but such  video  conference  shall not  include  any
potential  future  licensees or  sublicensees  of the Compound),  the purpose of
which  shall be to  answer  any  outstanding  questions  that  Cellegy  may have
regarding the  development of the Compound.  Other than as specified  above,  GW
shall be  under  no  obligation  to  provide  any  further  data or  information
regarding the Compound.

         9.  Certain  Rights.  Upon  the  Effective  Date  of  this  Termination
Agreement,  all rights licensed or otherwise  transferred by Cellegy to GW under
the License  Agreement,  or  inventions  developed by GW pursuant to the License
Agreement  relating  to Patent  Rights,  Trademarks,  the  Compound,  a Licensed
Product,  intellectual  property or otherwise relating to the License Agreement,
shall revert to Cellegy and shall be  transferred  and assigned back to Cellegy.
GW shall  take  such  actions  and  execute  such  instruments  as  Cellegy  may
reasonably  request to reflect such  transfer.  Upon the Effective  Date of this
Termination Agreement,  GW shall retain all rights, under Section 12.5(d) of the
License  Agreement,  to use the  Know-How  to which it was  licensed  under  the
License Agreement;  provided, however, that GW complies with its confidentiality
obligations  under the License  Agreement  to the extent that such  Know-How may
relate to the Compound, a Licensed Product or other Confidential  Information of
Cellegy.

         10. No Grant of Rights.  GW represents  and warrants to Cellegy that GW
has not granted,  assigned nor sublicensed  any of its rights acquired  pursuant
to, or relating to the License  Agreement to any other person or entity.  To the
best  of GW's  knowledge,  GW has  taken  reasonable  measures  to  protect  the
confidentiality of the Know-How,  but Cellegy acknowledges that GW has disclosed
material portions of the Know-How or other  Confidential  Information  regarding
the Compound to the third parties listed on Exhibit A hereto. GW represents that
it has confidentiality  agreements, or that GW's clinical research organization,
CliniCor,   Inc.,   has   clinical   investigator   agreements   which   contain
confidentiality  provisions  with the third parties  listed on Exhibit A hereto,
relating to such Know-How or Confidential Information.

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         11.  Release  from  Confidentiality.  Upon the  Effective  Date of this
Termination Agreement,  Cellegy's  confidentiality and non-use obligations under
Section 10 of the License  Agreement  shall terminate and be of no further force
and effect as applied to any Confidential  Information  supplied by or on behalf
of GW to Cellegy under the License  Agreement,  and shall terminate and be of no
further  force and  effect,  notwithstanding  anything  to the  contrary  in the
License Agreement.

         12.  Limitation  of  Liability.  The  parties  acknowledge  that  GW is
terminating its involvement in the development of the Compound.  GW shall not be
liable  to  Cellegy,  its  Affiliates,   its  sublicensees  or  other  marketing
collaborators, or their customers, or any third party, for any damages or losses
whatsoever   (including  without  limitation  special,   incidental,   indirect,
consequential or exemplary  damages)  resulting from the  manufacture,  testing,
design,  labeling,  use, development,  testing,  promotion,  marketing,  sale or
disposal of the  Compound.  It is  acknowledged  and agreed,  however,  that the
obligation of GW to make the deliveries to Cellegy  contemplated  by Sections 4,
5, 8 and 9 hereof shall not be limited by the foregoing sentence.

         13. Indemnification.  (a) Cellegy agrees to defend,  indemnify and hold
harmless GW and its  Affiliates,  directors,  officers  and  employees  from and
against any liabilities,  losses, fines, penalties, damages, expenses (including
reasonable  attorney's  fees and  expenses  incurred  in  connection  with  this
provision),  actions,  or claims brought or threatened  after the Effective Date
and  which  relate  to,  or arise  out of,  the  manufacture,  testing,  design,
labeling, use, development,  testing, promotion,  marketing, sale or disposal of
the Compound by Cellegy or its Affiliates, sublicensees, successors and assigns.
It is acknowledged and agreed, however, that the foregoing obligation to defend,
indemnify  and hold  harmless  shall not apply with  respect to any  Compound or
Licensed  Product which was part of  manufactured  batch numbers C1148 and C0527
(hereinafter, the "Excluded Batches").

         (b) GW agrees to defend,  indemnify and hold  harmless  Cellegy and its
Affiliates,  directors, officers and employees from and against any liabilities,
losses,  fines,  penalties,  damages,  expenses (including reasonable attorney's
fees and expenses  incurred in  connection  with this  provision),  actions,  or
claims  brought or threatened  after the Effective  Date and which relate to, or
arise out of, the manufacture,  testing, design, labeling, use, development,  or
testing of the Excluded Batches.

         (c) A party which intends to seek indemnification under this Section 13
(such  party  hereinafter  referred  to as the  "Indemnitee")  in  respect  to a
liability,  loss, fine, penalty,  damage,  expense,  action, or claim brought or
threatened  against  such  Indemnitee  by a Third Party (such claim  hereinafter
referred to as a "Third  Party  Claim"),  shall  promptly  give  written  notice
thereof to the party  from whom  indemnification  is sought  (such  other  party
hereinafter  referred to as the "Indemnitor") within a reasonable period of time
after the  assertion  of such Third Party Claim by such Third  Party;  provided,
however,  that the failure to provide  written  notice of such Third Party Claim
within a reasonable  period of time shall not relieve the  Indemnitor  of any of
its obligations hereunder, except to the

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extent that the Indemnitor is prejudiced by such failure.  The Indemnitor  shall
have the right to assume the  complete  control of the  defense,  compromise  or
settlement  of any Third Party Claim  (provided  that no settlement of any Third
Party  Claim  shall  include  any  admission  of  wrongdoing  on the  part of an
Indemnitee,  without the prior written  consent of such  Indemnitee,  which such
consent  shall not be  unreasonably  withheld),  including,  at its own expense,
employment of legal counsel,  and at any time thereafter the Indemnitor shall be
entitled to exercise, on behalf of the Indemnitee, any rights which may mitigate
the extent or amount of such Third Party Claim;  provided,  however, that if the
Indemnitor  shall have exercised its right to assume control of such Third Party
Claim,  the Indemnitee  (i) may, in its sole  discretion and at its own expense,
employ legal counsel to represent it (in addition to the legal counsel  employed
by the Indemnitor) in any such matter,  and in such event legal counsel selected
by the Indemnitee shall be required to confer and cooperate with such counsel of
the  Indemnitor  in such defense,  compromise  or settlement  for the purpose of
informing and sharing  information  with the Indemnitor;  (ii) shall, at its own
expense, make available to Indemnitor those employees, officers and directors or
Indemnitee whose  assistance,  testimony or presence is necessary or appropriate
to assist the  Indemnitor  in  evaluating  and in defending any such Third Party
Claim;  provided,  however,  that any such access  shall be  conducted in such a
manner as not to interfere unreasonably with the operations of the businesses of
Indemnitee;  and (iii) shall  otherwise  fully cooperate with the Indemnitor and
its legal counsel in the investigation and defense of such Third Party Claim.

         14.  Headings.  All headings are for reference  purposes only and shall
not in any  way  affect  the  meaning  or  interpretation  of  this  Termination
Agreement.

         15.  Notices.  Any notice  required or permitted to be given  hereunder
shall be either  delivered by hand or mailed by certified or registered  mail or
delivered by nationally  recognized  courier service,  to the party to whom such
notice is required  or  permitted  to be given  hereunder.  Any notice  shall be
deemed to have been given when delivered, if delivered by hand, or then received
by the other party if otherwise mailed or delivered.

All notices to GW shall be addressed as follows:

Glaxo Wellcome Inc.                     Glaxo Wellcome Inc.
Five Moore Drive                        Five Moore Drive
Research Triangle Park, NC 27709        Research Triangle Park, NC 27709
Attn.: Vice President-Dermatology       Attn.: General Counsel

All notices to Cellegy shall be addressed as follows:

Cellegy Pharmaceuticals, Inc.
349 Oyster Point Boulevard
Suite 200
South San Francisco, California 94080
Attn.: A. Richard Juelis

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         16.  Successors and Assigns.  This  Termination  Agreement  shall bind,
inure to the benefit of, and be enforceable by the successors and assigns of the
parties hereto.

         17. Expenses.  Cellegy and GW shall each bear their own fees, costs and
expenses  incurred by them in  connection  with the  negotiation,  execution and
performance of this Agreement.

         18.  Entire  Agreement;   Modifications.   This  Termination  Agreement
constitutes  the entire  agreement  and  understanding  between the parties with
respect to the  termination  of the License  Agreement.  There are no collateral
understandings,  agreements  or other  representations,  expressed  or  implied,
between the parties  relating to such  termination.  Any  previous  discussions,
agreements or understandings  between the parties regarding such termination are
hereby superseded by this Termination Agreement.  This Termination Agreement may
not be modified,  altered or amended  except by written  agreement of authorized
representatives of the parties.

         19. Governing Law. This Termination  Agreement shall be governed by and
construed in accordance  with the laws of the North  Carolina,  exclusive of its
choice-of-law rules.

         20. Counterparts.  This Termination Agreement may be executed in one or
more counterparts,  each of which shall be deemed an original,  and all of which
shall constitute one and the same instrument.

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         IN WITNESS HEREOF, the parties have executed this Termination Agreement
as of the Effective Date.

GLAXO WELLCOME INC.                     CELLEGY PHARMACEUTICALS, INC.


/s/ Dean J. Mitchell                    /s/ K. Michael Forrest
-------------------------------         --------------------------------
By: Dean J. Mitchell                    By: K. Michael Forrest
    Vice President, Business                President and
    Development and Planning,               Chief Executive Officer
    General Manager, Specialty
    Divisions

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