Document:

Exhibit 4.3

         THE WARRANTS  REPRESENTED BY THIS  CERTIFICATE AND THE SHARES
         ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED  UNDER
         THE  SECURITIES  ACT OF 1933,  AS  AMENDED  (THE  "SECURITIES
         ACT"),   OR  ANY  STATE   SECURITIES   LAWS  AND,  UNLESS  SO
         REGISTERED,  MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
         EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT  SUBJECT  TO, THE
         REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  ANY
         APPLICABLE STATE SECURITIES LAWS.

                         THE TRANSFER OF THIS WARRANT IS
                         RESTRICTED AS DESCRIBED HEREIN.

                          CELLEGY PHARMACEUTICALS, INC.

               Warrant for the Purchase of Shares of Common Stock,
                                  no par value

No. 2                                                             150,000 Shares

                  THIS CERTIFIES that, for value received, GRUNTAL & CO., L.L.C.
(the  "Holder"),  is  entitled  to  subscribe  for  and  purchase  from  CELLEGY
PHARMACEUTICALS,  INC., a California corporation (the "Company"), upon the terms
and  conditions  set  forth  herein,  at any  time  or from  time to time  after
September 21, 2001,  and before 5:00 p.m., New York time, on March 21, 2004 (the
"Exercise  Period"),  150,000 shares of the Company's Common Stock, no par value
("Common  Stock"),  at a price  of  $15.00  per  share  (the  "Exercise  Price")
(collectively,  including  any warrants  issued upon the exercise or transfer of
any such  warrants  in whole or in part,  the  "Warrants").  All of the  150,000
shares subject to the Warrant shall vest on the date hereof. As used herein, the
term "this  Warrant"  shall mean and  include  this  Warrant  and any Warrant or
Warrants  hereafter  issued as a consequence of the exercise or transfer of this
Warrant in whole or in part. This Warrant may not be sold, transferred, assigned
or hypothecated,  except that, upon compliance with the procedures  described in
Section  4, it may be  transferred,  in  whole  or in  part,  to (i) one or more
directors,  officers,  members or  employees  of the  Holder (or the  directors,
officers,  members or employees of any such  member);  (ii) any other firm which
participated  in the  transactions  contemplated  by the engagement  letter (the
"Transaction")  (or the  directors,  officers,  members or employees of any such
firm); (iii) a successor to the Holder, or the officers, members or employees of
such  successor;  (iv) a  purchaser  of  substantially  all of the assets of the
Holder;  or (v) by operation of law, in each case so long as the sale,  transfer
or assignment  complies  with  applicable  securities  laws and such assignee or
transferee  agrees  with the Company in writing to be bound by the terms of this
Warrant,  and the term the "Holder" as used herein shall include any  transferee
to whom this Warrant has been transferred in accordance with the above.

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                  The number of shares of Common Stock issuable upon exercise of
the Warrant (the "Warrant  Shares") and the Exercise  Price may be adjusted from
time to time as hereinafter set forth.

                  1. Exercise. This Warrant may be exercised during the Exercise
Period,  as to the whole or any lesser  number of whole Warrant  Shares,  by the
surrender  of this  Warrant  (with  the  election  form at the end  hereof  duly
executed) to the Company at its office at 394 Oyster Point Boulevard, Suite 200,
San  Francisco,  California  94080 or at such other  place as is  designated  in
writing by the  Company,  together  with a  certified  or bank  cashier's  check
payable to the order of the  Company in an amount  equal to the  Exercise  Price
multiplied  by the  number of Warrant  Shares  for which  this  Warrant is being
exercised (the "Stock Purchase Price").

                  2.  Conversion.  (a) In  lieu  of  the  payment  of the  Stock
Purchase  Price,  the Holder  shall have the right (but not the  obligation)  to
require the Company to convert this Warrant, in whole or in part, into shares of
Common  Stock (the  "Conversion  Right") as provided for in this Section 2. Upon
exercise  of the  Conversion  Right,  the  Company  shall  deliver to the Holder
(without  payment by the Holder of any of the Stock Purchase  Price) that number
of  shares of Common  Stock  (the  "Conversion  Shares")  equal to the  quotient
obtained by  dividing  (x) the value of this  Warrant (or portion  thereof as to
which the Conversion  Right is being exercised if the Conversion  Right is being
exercised in part) at the time the Conversion Right is exercised  (determined by
subtracting  the aggregate Stock Purchase Price of the shares of Common Stock as
to which the Conversion Right is being exercised in effect  immediately prior to
the exercise of the Conversion Right from the aggregate Current Market Price (as
defined in Section 6(c)  hereof),  as of the date of exercise of the  Conversion
Right,  of the shares of Common Stock as to which the Conversion  Right is being
exercised) by (y) the Current  Market Price of one share of Common Stock,  as of
the date of exercise of the Conversion Right.

                           (b) The Conversion Rights provided under this Section
2 may be  exercised,  in whole or in  part,  at any time and from  time to time,
while any portion of the Warrant remains  outstanding.  In order to exercise the
Conversion  Right,  the Holder shall  surrender to the Company,  at its offices,
this Warrant with the Cashless  Exercise  Form at the end hereof duly  executed.
The  presentation  and  surrender  shall  be  deemed a  waiver  of the  Holder's
obligation to pay all or any portion of the aggregate purchase price payable for
the shares of Common Stock as to which such Conversion Right is being exercised.
This Warrant (or so much thereof as shall have been  surrendered for conversion)
shall be  deemed  to have  been  converted  immediately  prior  to the  close of
business on the day of surrender of such Warrant for  conversion  in  accordance
with the foregoing provisions.

                  3. Holder of Record. Upon each exercise of the Holder's rights
to purchase Warrant Shares or Conversion  Shares,  the Holder shall be deemed to
be the holder of record of the Warrant Shares or Conversion Shares issuable upon
such  exercise or  conversion,  notwithstanding  that the transfer  books of the
Company shall then be closed or certificates representing such Warrant Shares or
Conversion Shares shall not then have been actually  delivered to the Holder. As
soon as practicable after each such exercise or conversion of this Warrant,  the
Company shall issue and deliver to the Holder a certificate or certificates  for
the  Warrant  Shares  or  Conversion  Shares  issuable  upon  such  exercise  or
conversion,  registered  in the  name of the  Holder  or its  designee.  If this
Warrant should be exercised or converted in part

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only,  the Company  shall,  upon  surrender  of this  Warrant for  cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the  balance of the Warrant  Shares (or  portions  thereof)  subject to purchase
hereunder.

                  4. Warrant Register.  Any Warrants issued upon the transfer or
exercise or  conversion  in part of this Warrant  shall be numbered and shall be
registered  in a Warrant  Register  as they are  issued.  The  Company  shall be
entitled to treat the registered  holder of any Warrant on the Warrant  Register
as the  owner  in fact  thereof  for all  purposes  and  shall  not be  bound to
recognize  any  equitable  or other claim to or interest in such  Warrant on the
part of any  other  person,  and shall not be  liable  for any  registration  or
transfer of Warrants  which are  registered or to be registered in the name of a
fiduciary  or the nominee of a fiduciary  unless made with the actual  knowledge
that a fiduciary or nominee is committing a breach of trust in  requesting  such
registration  or  transfer,  or with  the  knowledge  of  such  facts  that  its
participation  therein amounts to bad faith.  This Warrant shall be transferable
only on the books of the Company  upon  delivery  thereof  duly  endorsed by the
Holder or by his duly authorized  attorney or representative,  or accompanied by
proper  evidence of  succession,  assignment,  or authority to transfer.  In all
cases of transfer by an attorney,  executor,  administrator,  guardian, or other
legal representative,  duly authenticated evidence of his or its authority shall
be produced.  Upon any registration of transfer, the Company shall deliver a new
Warrant  or  Warrants  to the  person  entitled  thereto.  This  Warrant  may be
exchanged,  at the option of the Holder thereof,  for another Warrant,  or other
Warrants  of  different  denominations,  of like tenor and  representing  in the
aggregate  the right to  purchase a like number of Warrant  Shares (or  portions
thereof),   upon  surrender  to  the  Company  or  its  duly  authorized  agent.
Notwithstanding  the  foregoing,  the Company  shall have no obligation to cause
Warrants  to be  transferred  on its books to any person  if, in the  opinion of
counsel to the Company, such transfer does not comply with the provisions of the
Securities  Act of 1933, as amended (the "Act"),  and the rules and  regulations
thereunder.  In  connection  with any  proposed  sale,  transfer  or  assignment
(including  pursuant to the first  paragraph  of this  Warrant) of the  Warrant,
Warrant Shares or Conversion  Shares,  the Holder shall provide the Company with
such  information  regarding  the proposed  sale,  transfer or assignment as the
Company may reasonably request.  The Company may condition approval of the sale,
transfer or assignment  upon the receipt of an opinion of counsel to the Holder,
addressed to the Company and in form and substance  reasonably  satisfactory  to
the Company,  that the transfer complies with federal and state securities laws;
provided,  however, that no such opinion will be required in the case of routine
sales of Warrant Shares or Conversion  Shares  pursuant to Rule 144 where Holder
represents  that it has complied with Rule 144(d) and (e) in reasonable  detail,
the selling  broker  represents  that it has complied with Rule 144(f),  and the
Company is  provided  with a copy of  Holder's  notice of  proposed  sale and/or
transfer.

                  5. Valid Issuance.  The Company shall at all times reserve and
keep available out of its authorized and unissued  Common Stock,  solely for the
purpose of  providing  for the  exercise of the rights to  purchase  all Warrant
Shares and/or Conversion Shares granted pursuant to the Warrants, such number of
shares of Common Stock as shall, from time to time, be sufficient therefor.  The
Company covenants that all shares of Common Stock issuable upon exercise of this
Warrant,  upon receipt by the Company of the full Exercise Price  therefor,  and
all shares of Common Stock  issuable upon  conversion of this Warrant,  shall be
validly issued,  fully paid and  nonassessable,  without any personal  liability
attaching to the ownership  thereof,  and will not be issued in violation of any
preemptive rights of stockholders,  optionholders,

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warrantholders  and any other persons and the Holders will receive good title to
the  securities  purchased by them,  respectively,  free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders' agreements and
voting trusts which might be created by acts or omissions to act of the Company.

                  6. Adjustments.

                           (a)  Stock  Splits,  Recapitalizations,  Etc.  If the
Company (i) pays a dividend in shares of capital  stock or other  securities  on
its outstanding  Common Stock, (ii) subdivides its outstanding  shares of Common
Stock in a transaction  that increases the amount of its  outstanding  shares of
Common  Stock,  or (iii)  combines its  outstanding  shares of Common Stock in a
transaction that decreases the amount of its outstanding shares of Common Stock,
then upon  exercise or  conversion  of this  Warrant,  for each Warrant Share or
Conversion  Share acquired  ("Shares"),  Holder shall  receive,  without cost to
Holder,  the total number and kind of securities to which Holder would have been
entitled  had Holder  owned the  Shares of record as of the date such  dividend,
distribution, subdivision or combination occurred.

                           (b) Reclassification. In case of any reclassification
or change of the shares of Common Stock  issuable upon exercise or conversion of
this Warrant  (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination,  but including any
change in such shares into two or more  classes or series of shares),  excluding
any reclassification or change addressed elsewhere in this Section 6, or in case
of any consolidation or merger of another  corporation into the Company in which
the   Company  is  the   continuing   corporation   and  in  which  there  is  a
reclassification  or change  (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified  par value to no par value,  or as a result of a subdivision
or combination,  but including any change in the shares into two or more classes
or series of shares),  excluding any consolidation or merger addressed elsewhere
in this  Section 6, the Holder shall have the right  thereafter  to receive upon
exercise  of this  Warrant,  the kind,  amount and number of shares of stock and
other securities, property, cash or any combination thereof that are received as
a result of such reclassification, change, consolidation, or merger, by a holder
of record of the number of shares of Common Stock for which this  Warrant  would
have  been  exercisable  immediately  prior  to such  reclassification,  change,
consolidation or merger.

                           (c)  Adjustments of Warrant Price. If the outstanding
shares of Common  Stock are combined or  consolidated,  by  reclassification  or
otherwise,  into a  lesser  number  of  shares,  the  Exercise  Price  shall  be
proportionately increased. If the outstanding shares of Common Stock are divided
by reclassification or otherwise,  into a greater number of shares, the Exercise
Price shall be proportionately decreased.

                           (d) Adjustment is Cumulative.  The provisions of this
Section 6 shall similarly apply to successive stock  dividends,  stock splits or
combinations, reclassifications, exchanges, substitutions, or other events.

                           (e)  No   Impairment.   The  Company  shall  not,  by
amendment of its articles of incorporation or through a reorganization, transfer
of assets, consolidation,  merger, dissolution,  issue, or sale of securities or
any other voluntary action, avoid or seek to avoid the

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observance or performance of any of the terms to be observed or performed  under
this  Warrant  by the  Company,  but  shall at all  times  carry  out of all the
provisions of this Section 6.

                           (f)   Certificate  as  to   Adjustments.   Upon  each
adjustment of the Exercise Price,  the Company at its expense shall compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall,  upon written request,  furnish Holder a certificate  setting
forth the  Exercise  Price in effect  upon the date  thereof  and the  series of
adjustments leading to such Exercise Price. Any dispute relating to the accuracy
of the  computation of any such  adjustment  shall be resolved by submitting the
dispute to an independent  public  accounting firm of national  standing that is
not  associated  with either the  Company or the  Holder.  In the event that the
Company  and the  Holder are  unable to agree on such a firm,  each party  shall
select a firm and those two firms shall select a third firm, which shall resolve
the  dispute.  The fees and  expenses of any such firms shall be shared and paid
equally by the Company and the Holder.

                           (g) For purposes of this  Agreement,  "Current Market
Price" shall mean the Market Price on the relevant date, as long as the national
securities exchanges were open for trading on such date, provided, however, that
if the national securities  exchanges were not open for trading on such date, it
shall  mean the  Market  Price on the most  recent  date for which the  national
securities  exchanges were open for trading,  and further  provided,  that if no
Common  Stock is then listed or admitted to trading on any  national  securities
exchange or quoted in the  over-the-counter  market,  the Current  Market  Price
shall be the Market Price on such date. The "Market Price" shall mean the amount
per share of Common  Stock  equal to (a) the last sale  price of such  shares of
Common  Stock on such date or, if no such sale  takes  place on such  date,  the
average of the closing bid and asked prices  thereof on such date,  in each case
as officially reported on the principal national  securities  exchanges on which
such  shares of Common  Stock are then  listed or  admitted to trading or (b) if
such  shares of Common  Stock are not then  listed or admitted to trading on any
national  securities  exchange but are  designated  as a national  market system
security by the NASD,  the last  trading  price of the shares of Common Stock on
such  date,  or (c) if there  shall  have been no trading on such date or if the
shares of Common Stock are not so designated, the average of the closing bid and
asked  prices of the  shares  of Common  Stock on such date as shown by the NASD
automated  quotation  system, or (d) if such shares of Common Stock are not then
listed  or  admitted  to  trading  on any  national  exchange  or  quoted in the
over-the-counter  market, the higher of (x) the book value thereof as determined
by any firm of independent public accountants of recognized standing selected by
the Board of  Directors  of the  Company as of the last day of any month  ending
within sixty (60) days preceding the date as of which the determination is to be
made or (y) the fair  value  thereof  determined  in good  faith by the Board of
Directors  of the  Company as of a date which is within  twenty (20) days of the
date as of which the determination is to be made.

                           (h) No  adjustment  in the  Exercise  Price  shall be
required  if such  adjustment  is less than $.05;  provided,  however,  that any
adjustments  which by reason of this  Section  6(h) are not  required to be made
shall be carried  forward and taken into account in any  subsequent  adjustment.
All  calculations  under this  Section 6 shall be made to the nearest cent or to
the nearest one-thousandth of a share, as the case may be.

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                           (i)  The  Company  shall  not be  required  to  issue
fractions of shares of Common Stock or other  capital  stock of the Company upon
the exercise or conversion of this Warrant.  If any fraction of a share would be
issuable on the exercise or conversion  of this Warrant (or  specified  portions
thereof)  but for the  preceding  sentence,  the  Company  shall  purchase  such
fraction for an amount in cash equal to the same fraction of the Current  Market
Price of such share of Common  Stock on the date of  exercise or  conversion  of
this Warrant.

                  7.  Assumption of Obligations.

                           (a) In case of any  consolidation  with or  merger of
the  Company  with  or  into  another   corporation  (other  than  a  merger  or
consolidation  in which the Company is the surviving or continuing  corporation)
where the  consideration  for the  acquisition  to be received by the  Company's
shareholders consists solely of stock or securities of the acquiror or an entity
affiliated  with the  acquiror,  such  successor  corporation  shall  assume the
obligations  of this  Warrant  and shall  execute  with the Holder an  agreement
providing  that the Holder  shall  have the right  thereafter  to  receive  upon
exercise of this Warrant solely the kind and amount of shares of stock and other
securities  receivable  upon such  consolidation  or merger that would have been
issuable in the  consolidation or merger with respect to the number of shares of
Common  Stock for which this  Warrant  would have been  exercisable  immediately
prior to such consolidation or merger.

                           (b) Notwithstanding the foregoing. In the case of (a)
a merger or  consolidation  where the  consideration  for the  acquisition to be
received by the Company's  shareholders in return for their capital stock of the
Company consists of cash or a combination of cash and other property, or (b) the
proposed  liquidation  and  dissolution  of the Company,  the Company shall give
Holder at least  fifteen  (15) days  advance  written  notice of such event (the
"Company Notice"), which notice shall include the Company's best estimate of the
value of the Shares  receivable  upon exercise or conversion of this Warrant and
the proposed date upon which such event is expected to occur. During such notice
period,  Holder may  exercise or convert  this  Warrant in  accordance  with its
terms, whether or not exercise or conversion is contingent upon the happening of
such event. Subject to prior exercise or conversion as provided in the preceding
sentence, this Warrant will terminate at 5:00 p.m. Pacific time on the day prior
to the date such event is expected to occur as set forth in the Company  Notice,
provided that the event actually occurs within sixty (60) days after the date it
is expected to occur, as such date was specified in the Company Notice.

                           (c) The  above  provisions  of this  Section  7 shall
similarly apply to successive  reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales, leases or conveyances.

                  8.  Notice  of  Adjustments.  In case at any time the  Company
shall propose

                           (i) to pay any dividend or make any  distribution  on
shares of Common Stock in shares of Common Stock or make any other  distribution
(other than regularly scheduled cash dividends which are not in a greater amount
per share than the most recent such dividend) to all holders of Common Stock; or

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                           (ii)  to  issue  any   rights,   warrants   or  other
securities  to all  holders  of Common  Stock  entitling  them to  purchase  any
additional  shares  of  Common  Stock or any  other  rights,  warrants  or other
securities; or

                           (iii) to  effect  any  reclassification  or change of
outstanding shares of Common Stock, or any consolidation or merger where holders
of Common Stock will be entitled to receive  securities of another issuer,  or a
sale of all or substantially all of the Company's  assets,  described in Section
7; or

                           (iv)  to  effect  any  liquidation,   dissolution  or
winding-up of the Company; or

                           (v) to take any other  action  which  would  cause an
adjustment to the Exercise Price;

then,  and in any one or more of such  cases,  the  Company  shall give  written
notice  thereof,  by registered  mail,  postage  prepaid,  to each Holder at the
address for such Holder as it shall  appear in the Warrant  Register,  mailed no
later than the date on which such notice is given to the Company's shareholders,
and shall  include in such notice (i) the date as of which the holders of record
of  shares  of  Common  Stock to be  entitled  to  receive  any  such  dividend,
distribution,  rights, warrants, other securities are to be determined, (ii) the
approximate  date on which  any such  reclassification,  change  of  outstanding
shares of Common  Stock,  consolidation,  merger,  sale,  lease,  conveyance  of
property,   liquidation,   dissolution  or  winding-up  is  expected  to  become
effective,  and the date as of which it is  expected  that  holders of record of
shares of Common Stock shall be entitled to exchange their shares for securities
or other property,  if any,  deliverable upon such  reclassification,  change of
outstanding shares, consolidation,  merger, sale, lease, conveyance of property,
liquidation,  dissolution or winding-up,  or (iii) the date of such action which
would require an adjustment to the Exercise Price.

                  9. Taxes.  The issuance of any shares or other securities upon
the exercise or conversion of this Warrant,  and the delivery of certificates or
other instruments  representing  such shares or other securities,  shall be made
without  charge to the Holder for any tax (other than income  taxes,  if any, of
Holder) or other  charge in respect of such  issuance.  The  Company  shall not,
however,  be  required  to pay any tax which may be  payable  in  respect of any
transfer  involved in the issue and delivery of any  certificate in a name other
than  that of the  Holder  and the  Company  shall not be  required  to issue or
deliver any such certificate  unless and until the person or persons  requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

                  10. Registration Rights. (a) If, at any time during the period
commencing on September  21, 2001 and  continuing  through  March 21, 2005,  the
Company shall file a registration statement (other than on Form S-4, Form S-8 or
any  successor   form)  with  the  Securities  and  Exchange   Commission   (the
"Commission")  while  any  Eligible  Securities  (as  hereinafter  defined)  are
outstanding,  the  Company  shall give all of the then  holders of any  Eligible
Securities (the "Eligible Holders") at least 15 days prior written notice of the
filing of such  registration  statement.  If requested by any Eligible Holder in
writing within 15 days after delivery of any such notice,  the Company shall, at
the Company's sole expense (other than the

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fees and  disbursements of counsel for the Eligible Holders and the underwriting
discounts,  if any,  payable in respect of the Eligible  Securities  sold by any
Eligible Holder),  register or qualify all or, at each Eligible Holder's option,
any portion of the Eligible  Securities  of any  Eligible  Holder who shall have
made such request,  concurrently with the registration of such other securities,
all to the extent  required to permit a public offering and sale of the Eligible
Securities  through the facilities of all appropriate  securities  exchanges and
over-the-counter   markets  on  which  the  Company   Stock  are  then   traded.
Notwithstanding the foregoing,  if the managing underwriter of any such offering
shall advise the Company in writing that, in its opinion,  the  distribution  of
all or a portion of the Eligible Securities requested by the Eligible Holders to
be  included  in  the  registration   concurrently  with  the  securities  being
registered by the Company would materially  adversely affect the distribution of
such  securities  by the  Company  for  its  own  account,  then  such  Eligible
Securities shall be excluded from the registration, pro rata with shares held by
any other  shareholder  with  registration  rights who requested  that shares be
included in the registration  statement.  As used herein,  "Eligible Securities"
shall mean the Warrant  Shares and the  Conversion  Shares which,  in each case,
have not been previously sold pursuant to a registration statement or previously
sold, or which are not eligible for sale, pursuant to Rule 144 promulgated under
the Act or which would not be so eligible if the Warrant had been  converted and
Conversion Shares issued pursuant to Section 2.

                           (b) If,  during the  six-month  period  commencing on
September 21, 2001,  the Company has not filed a registration  statement  (other
than on Form S-4, Form S-8 or any successor form) with the Commission  while any
Eligible  Securities  are  outstanding,  and the Eligible  Holders have not been
given the opportunity to exercise their registration  rights pursuant to Section
10(a) above,  the Eligible Holders who in the aggregate own (or upon exercise of
all  Warrants  then  outstanding  would own) a majority  of the total  number of
shares of Common Stock then included (or upon such  exercise  would be included)
in the Eligible  Securities (the "Majority  Holders") will have the right to, at
any time during the three year period  commencing  after the  expiration  of the
six-month period mentioned above (i.e.,  March 21, 2002), give a written request
to the Company to register the sale of all or part of such Eligible  Securities.
The  Company  shall,  as  promptly  as  practicable,  prepare  and file with the
Commission a registration statement sufficient to permit the public offering and
sale of the  Eligible  Securities  through  the  facilities  of all  appropriate
securities exchanges and the over-the-counter  markets on which the Common Stock
is then listed,  and will use all reasonable  efforts to cause such registration
statement to become  effective as promptly as  practicable;  provided,  however,
that the Company shall only be obligated to file one such registration statement
for which all expenses incurred in connection with such registration (other than
the fees and  disbursements of counsel for the Eligible Holders and underwriting
discounts,  if any,  payable in respect of the Eligible  Securities  sold by the
Eligible  Holders)  shall  be  borne  by the  Company  and one  additional  such
registration statement for which all such expenses shall be paid by the Eligible
Holders.  Within three business days after receiving any request contemplated by
this  Section  10(b),  the Company  shall give  written  notice to all the other
Eligible  Holders advising each of them that the Company is proceeding with such
registration  and  offering  to include  therein  all or any portion of any such
other Eligible Securities,  provided that the Company receives a written request
to do so from such Eligible Holder within 15 days after delivery to him or it of
the Company's notice.

                           (c) In the event of a  registration  pursuant  to the
provisions  of this Section 10, the Company  shall use its best efforts to cause
the Eligible  Securities  so  registered  to

                                       8
<PAGE>

be  registered  or qualified  for sale under the  securities or blue sky laws of
such  jurisdictions as the Holder or Holders may reasonably  request;  provided,
however,  that the  Company  shall not for any such  purpose be  required to (A)
qualify  generally to do business as a foreign  corporation in any  jurisdiction
wherein it is not otherwise  required to be so qualified,  (B) subject itself to
taxation  in any  jurisdiction  wherein it is not so  subject or (C)  consent to
general  service of process in any such  jurisdiction  or otherwise  take action
that  would  subject  it to  the  general  jurisdiction  of  the  courts  of any
jurisdiction to which it is not so subject.

                           (d) The  Company  shall use its best  efforts to keep
effective any registration or qualification  contemplated by this Section 10 and
shall from time to time, subject to the provisions of Section 10(e) below, amend
or supplement each applicable  registration  statement,  preliminary prospectus,
final  prospectus,  application,  document and  communication for such period of
time as the Company,  in its  discretion,  maintains  the  effectiveness  of the
registration  statement,  provided,  however, that in the case of a registration
pursuant to Section  10(b),  the Company  shall use its best efforts to keep the
registration  statement  effective  as long as shall be  required  to permit the
Eligible  Holders  to  complete  the offer and sale of the  Eligible  Securities
covered thereby,  but the Company shall in no event be required to keep any such
registration  or  qualification  in effect  for a period in excess of six months
from the date on which the Eligible Holders are first free to sell such Eligible
Securities.

                           (e) Each  Eligible  Holder  shall give at least three
business  days'  prior  written  notice (a "Sale  Notice") to the Company of any
proposed sale of any Eligible  Securities pursuant to any registration and shall
not make such sale (i) unless such three  business days lapse  without  response
from the Company,  (ii) during any Blackout Period as described  below, or (iii)
if the Company  responds within such three business day period by stating that a
prospectus supplement or post-effective amendment will be filed pursuant to this
Warrant or that it is necessary  for the Company to make an  appropriate  filing
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), so as to
cause the prospectus to become current. Upon the occurrence of one of the events
described in the preceding  sentence,  such  Eligible  Holder shall not make any
such sale of any Eligible Securities until the Company has notified the Eligible
Holder that any such post-effective  amendment has become effective,  prospectus
supplement  has been  filed or 1934 Act filing  has been  made.  If the  Company
determines that an amendment,  supplement or 1934 Act filing will be prepared or
filed as provided above, it will cause the amendment, supplement or filing to be
made as soon as practicable  thereafter and, in all events,  within 45 days from
the date of delivery of the Sales  Notice and, in the case of an  amendment,  to
become  effective as soon as  practicable  and will notify the  Eligible  Holder
promptly when such filing has been made and, in the case of an amendment, become
effective.  A Sale  Notice  shall be  effective  for 30 days after the date upon
which an  Eligible  Holder is first  entitled  to sell the  Eligible  Securities
proposed for sale following a Sale Notice.

                           For  purposes of this  Warrant,  a "Blackout  Period"
means a period of time during  which the Company  would advise  against,  and/or
prohibit,  an executive  officer of the Company from  engaging in an open market
purchase  or  sale of the  Company's  securities  because  of the  existence  of
nonpublic  information that in the Company's reasonable judgment would require a
prospectus supplement or post-effective  amendment to be filed with the SEC, and
terminating  when  (i)  such   information  is  no  longer  material   nonpublic
information  or  (ii)  until  further  public  disclosures  (including,  without
limitation, an amendment or supplement to a

                                       9
<PAGE>

registration  statement or a 1934 Act filing) of such information are made. Each
Eligible Holder agrees that the Company may delay the Eligible  Holder's ability
to sell  Eligible  Securities  pursuant  to the  registration  statement  if the
Company delivers a certificate in writing to Holder (a "Blackout Notice") to the
effect  that a Blackout  Period is in  effect.  In such an event,  the  Eligible
Holder shall not sell or enter into any agreements or  arrangements  to sell any
Eligible  Securities,  from the period  commencing  with receipt of the Blackout
Notice and ending upon  receipt of the notice  referred to in the next  sentence
that the Blackout Period has terminated.  If the Eligible Holder has delivered a
Sale Notice and the Company has  delivered a Blackout  Notice,  then the Company
shall  notify the Eligible  Holder,  promptly but in no event later than two (2)
business days following the termination of any Blackout Period.  The Company may
not impose consecutive Blackout Notices.

                           (f) In the event of a  registration  pursuant  to the
provisions of this Section 10, the Company shall furnish to each Eligible Holder
such number of copies of the  registration  statement and of each  amendment and
supplement  thereto (in each case,  including  all  exhibits),  such  reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment  thereto  (including each preliminary  prospectus),
all of which  shall  conform  to the  requirements  of the Act and the rules and
regulations  thereunder,  and such other  documents,  as any Eligible Holder may
reasonably  request to facilitate  the  disposition  of the Eligible  Securities
included in such registration.

                           (g) In the event of a  registration  pursuant  to the
provisions of this Section 10, the Company shall furnish each Eligible Holder of
any Eligible Securities so registered with an opinion of its counsel (reasonably
acceptable  to  the  Eligible  Holders)  to the  effect  that  the  registration
statement has become effective under the Act and to such counsel's  knowledge no
order suspending the effectiveness of the registration statement,  preventing or
suspending the use of the registration  statement,  any preliminary  prospectus,
any final prospectus or any amendment or supplement thereto has been issued, nor
has the Commission or any  securities or blue sky authority of any  jurisdiction
instituted or threatened  to institute any  proceedings  with respect to such an
order.

                           (h) If the  registration  relates to an  underwritten
public offering of the Company's securities and Eligible Securities are included
in the registration, then the Company shall enter into an underwriting agreement
containing conventional representations,  warranties, indemnities, allocation of
expenses, and customary closing conditions.

                           (i) The Company  covenants and agrees that, until all
the  Eligible  Securities  have  been sold  under a  registration  statement  or
pursuant to Rule 144 under the Act, it shall keep current in filing all reports,
statements  and other  materials  required  to be filed with the  Commission  to
permit  holders of the Eligible  Securities to sell such  securities  under Rule
144.

                           (j) The Company may delay any requested  registration
hereunder  by giving  written  notice to Eligible  Holders  who have  elected to
include their Eligible Securities in a registration under this Section 10 if the
Company's  Board of Directors  determines in good faith that a  registration  at
such time would be materially  detrimental to the Company provided that any such
delay  shall not exceed  ninety (90) days and the Company  cannot  provide  this
notice more than twice in any twelve-month period.

                                       10
<PAGE>

                           (k) Each Holder hereby agrees that, without the prior
written  consent  of  the  managing  underwriters  (the  "Underwriters")  of  an
underwritten  public  offering of securities by the Company in which such Holder
participates after the date of this Warrant (the "Public Offering"),  and except
for any securities sold by the Holder in such Public Offering,  Holder will not,
during the period  commencing  on the date on which the  Company  notifies  such
Holder of its intention to effect such a Public Offering (but only if the Holder
actually  participates  as a selling  stockholder  in the Public  Offering)  and
ending 90 days  after the date of the final  prospectus  relating  to the Public
Offering (the  "Prospectus"),  (1) offer,  pledge,  sell or contract to sell any
option or contract to purchase,  purchase any option or contract to sell,  grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of,  directly  or  indirectly,  any  shares  of Common  Stock or any  securities
convertible  into or exercisable or exchangeable  for Common Stock, or (2) enter
into any swap or other  arrangement  that  transfers to another,  in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such  transaction  described in clauses (1) or (2) above is to be settled by
delivery of Common Stock or such other  securities,  in cash or  otherwise.  The
foregoing sentence shall apply only to the first Public Offering completed after
the date  hereof  and only if the  Holder  actually  participates  as a  selling
stockholder in the Public  Offering,  and shall not apply to (a) the sale of any
Eligible Securities to the Underwriters  pursuant to any underwriting  agreement
entered  into in  connection  with  the  Public  Offering,  or (b)  transactions
relating solely to shares of Common Stock or other  securities  acquired in open
market transactions after the completion of the Public Offering.

                  11.  Indemnification.  (a) Subject to the conditions set forth
below,  the Company agrees to indemnify and hold harmless each Eligible  Holder,
its  officers,  directors,  members,  employees,  agents and  counsel,  and each
person, if any, who controls any such person within the meaning of Section 15 of
the Act or Section  20(a) of the 1934 Act,  from and  against  any and all loss,
liability,  charge,  claim,  damage and expense whatsoever (which shall include,
for  all  purposes  of  this  Section  11,  but not be  limited  to,  reasonable
attorneys'  fees and any and all  reasonable  expenses  whatsoever  incurred  in
investigating,  preparing  or  defending  against any  litigation,  commenced or
threatened,  or any claim whatsoever, by a third party (i.e., a party other than
the  Company or its  officers,  directors,  employees  or agents)  against  such
persons and any and all amounts paid in settlement of any claim or  litigation),
as and when  incurred,  arising out of, based upon,  or in  connection  with any
untrue statement or alleged untrue statement of a material fact contained (A) in
any registration statement,  preliminary prospectus or final prospectus (as from
time to time amended and supplemented),  or any amendment or supplement thereto,
relating  to  the  sale  of  any  of  the  Eligible  Securities,  or  (B) in any
application or other document or communication  (in this Section 11 collectively
called an "application")  executed by or on behalf of the Company, or based upon
written  information  furnished  by or on  behalf of the  Company,  filed in any
jurisdiction  in order to  register or qualify  any of the  Eligible  Securities
under the  securities  or blue sky laws thereof or filed with the  Commission or
any securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading,  unless such statement or omission was made in reliance upon and
in conformity with written information  furnished to the Company with respect to
such Eligible  Holder by or on behalf of such person  expressly for inclusion in
any registration statement,  preliminary prospectus or final prospectus,  or any
amendment or supplement thereto, or in any application,  as the case may be. The
foregoing

                                       11
<PAGE>

agreement to  indemnify  shall be in addition to any  liability  the Company may
otherwise have, including liabilities arising under this Warrant.

                  If any action is brought against any Eligible Holder or any of
its  officers,   directors,  members,  employees,  agents  or  counsel,  or  any
controlling persons of such person (an "indemnified party"), in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such  indemnified  party or parties shall promptly notify the Company in writing
of the institution of such action  (provided that the failure so to notify shall
not relieve the Company from any liability  pursuant to this Section 11(a),  but
shall only  reduce the amount of the  indemnification  if any to the extent that
the Company is prejudiced by such delay) and the Company shall  promptly  assume
the defense of such action,  including  the  employment  of counsel  (reasonably
satisfactory to such indemnified party or parties) and payment of expenses. Such
indemnified  party or  parties  shall  have the right to employ its or their own
counsel in any such case,  but the fees and expenses of such counsel shall be at
the expense of such  indemnified  party or parties unless the employment of such
counsel shall have been  authorized in writing by the Company in connection with
the  defense of such  action or the  Company  shall not have  promptly  employed
counsel  reasonably  satisfactory to such  indemnified  party or parties to have
charge of the defense of such action or such indemnified  party or parties shall
have reasonably  concluded that there may be a conflict of interest  between the
indemnified  party or parties  and the  Company in the conduct of the defense of
such  action,  in any of which  events such  reasonable  fees and expenses (of a
single counsel for all such  indemnified  parties) shall be borne by the Company
and the Company shall not have the right to direct the defense of such action on
behalf of the indemnified  party or parties.  Anything in this Section 11 to the
contrary notwithstanding,  the Company shall not be liable for any settlement of
any such claim or action effected without its written  consent,  which shall not
be  unreasonably  withheld.  The Company  shall not,  without the prior  written
consent of each  indemnified  party that is not  released as  described  in this
sentence, settle or compromise any action, or permit a default or consent to the
entry of judgment in or otherwise  seek to terminate  any pending or  threatened
action,  in respect of which indemnity may be sought  hereunder  (whether or not
any indemnified party is a party thereto),  unless such settlement,  compromise,
consent or termination  includes an  unconditional  release of each  indemnified
party from all liability in respect of such action.  The Company agrees promptly
to  notify  the  Eligible  Holders  of the  commencement  of any  litigation  or
proceedings  against  the  Company  or any  of  its  officers  or  directors  in
connection  with  the  sale  of  any  Eligible  Securities  or  any  preliminary
prospectus,  prospectus,  registration  statement,  or amendment  or  supplement
thereto, or any application relating to any sale of any Eligible Securities.

                           (b) The Holder  agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who shall
have signed any registration  statement covering Eligible Securities held by the
Holder,  each other person,  if any, who controls the Company within the meaning
of Section 15 of the Act or Section  20(a) of the Exchange Act, and its or their
respective  employees,  agents and counsel,  to the same extent as the foregoing
indemnity from the Company to the Holder in Section 11(a), but only with respect
to  statements  or  omissions,  if  any,  made  in any  registration  statement,
preliminary  prospectus  or final  prospectus  (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application, in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company with respect to the Holder by or on behalf of the Holder

                                       12
<PAGE>

expressly  for  inclusion  in  any  such  registration  statement,   preliminary
prospectus or final prospectus,  or any amendment or supplement  thereto,  or in
any application,  as the case may be. If any action shall be brought against the
Company  or any  other  person  so  indemnified  based on any such  registration
statement,  preliminary  prospectus  or final  prospectus,  or any  amendment or
supplement thereto, or in any application, and in respect of which indemnity may
be sought against the Holder  pursuant to this Section  11(b),  the Holder shall
have the rights and duties given to the Company,  and the Company and each other
person so indemnified  shall have the rights and duties given to the indemnified
parties, by the provisions of Section 11(a).

                           (c) To provide for just and  equitable  contribution,
if an indemnified  party makes a claim for  indemnification  pursuant to Section
11(a) or 11(b) (subject to the  limitations  thereof) but it is found in a final
judicial determination, not subject to further appeal, that such indemnification
may not be enforced in such case, even though this Agreement  expressly provides
for  indemnification  in such case, then the Company (including for this purpose
any  contribution  made by or on  behalf of any  director  of the  Company,  any
officer  of  the  Company  who  signed  any  such  registration  statement,  any
controlling person of the Company, and its or their respective counsel),  as one
entity,  and the Eligible  Holders of the Eligible  Securities  included in such
registration in the aggregate  (including for this purpose any  contributions by
or on behalf of an indemnified  party), as a second entity,  shall contribute to
the losses, liabilities, claims, damages and expenses whatsoever to which any of
them may be subject,  on the basis of relevant equitable  considerations such as
the relative fault of the Company and such Eligible  Holders in connection  with
the facts  which  resulted  in such  losses,  liabilities,  claims,  damages and
expenses. The relative fault, in the case of an untrue statement, alleged untrue
statement,  omission or alleged  omission,  shall be determined  by, among other
things, whether such statement, alleged statement,  omission or alleged omission
relates to information  supplied by the Company or by such Eligible Holders, and
the parties' relative intent,  knowledge,  access to information and opportunity
to correct or prevent such  statement,  alleged  statement,  omission or alleged
omission.  The  Company  and the  Holder  agree  that it  would  be  unjust  and
inequitable  if the  respective  obligations  of the  Company  and the  Eligible
Holders for contribution were determined by pro rata or per capita allocation of
the aggregate  losses,  liabilities,  claims,  damages and expenses (even if the
Holder and the other  indemnified  parties  were  treated as one entity for such
purpose)  or by any  other  method  of  allocation  that  does not  reflect  the
equitable considerations referred to in this Section 11(c). In no case shall any
Eligible  Holder be  responsible  for a portion of the  contribution  obligation
imposed on all  Eligible  Holders  in excess of its pro rata share  based on the
number of shares of Common Stock owned by it (or which would be owned by it upon
exercise  of all  Eligible  Securities)  and  included in such  registration  as
compared to the number of shares of Common  Stock owned by it (or which would be
owned by it upon exercise of all Eligible  Securities  by all Eligible  Holders)
and  included  in  such   registration.   No  person   guilty  of  a  fraudulent
misrepresentation  (within  the  meaning of  Section  11(f) of the Act) shall be
entitled to  contribution  from any person who is not guilty of such  fraudulent
misrepresentation.  For purposes of this Section 11(c), each person, if any, who
controls  any  Eligible  Holder  within the  meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer,  director, member, employee,
agent and counsel of each such Eligible  Holder or control person shall have the
same rights to contribution as such Eligible Holder or control person,  and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the 1934 Act, each officer of the Company who shall have
signed any such registration statement, each director of the Company,

                                       13
<PAGE>

and its or their  respective  counsel shall have the same rights to contribution
as the Company,  subject in each case to the  provisions of this Section  11(c).
Anything in this Section 11(c) to the contrary  notwithstanding,  no party shall
be liable for contribution with respect to the settlement of any claim or action
effected  without  its  written  consent.  This  Section  11(c) is  intended  to
supersede any right to contribution under the Act, the 1934 Act or otherwise.

                  12. Representations and Warranties. The Company represents and
warrants to Holder as follows:

                           (a)  This  Warrant  has  been  duly   authorized  and
executed by the Company  and is a valid and  binding  obligation  of the Company
enforceable  in  accordance   with  its  terms  (i)  as  limited  by  applicable
bankruptcy,  insolvency,  reorganization,  moratorium, and other laws of general
application  affecting  enforcement  of  creditors'  rights  generally,  (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions  contained  herein  may be  limited  by  applicable  federal or state
securities laws;

                           (b) The  shares of Common  Stock  issuable  hereunder
have been duly  authorized  and reserved  for issuance by the Company and,  when
issued in accordance with the terms hereof,  will be validly issued,  fully paid
and nonassessable;

                           (c) The  execution  and  delivery of this  Warrant is
not,  and the  issuance  of the  shares of Common  Stock upon  exercise  of this
Warrant in accordance with the terms hereof will not be,  inconsistent  with the
Company's  articles of incorporation or by-laws,  do not and will not contravene
any law,  governmental  rule or regulation,  judgment or order applicable to the
Company,  and,  except for  consents  that have  already  been  obtained  by the
Company,  do not and will not conflict with or  contravene  any provision of, or
constitute  a  default  under,  any  indenture,   mortgage,  contract  or  other
instrument  of which the  Company  is a party or by which it is bound or require
the consent or approval  of, the giving of notice to, the  registration  with or
the  taking of any  action in  respect  of or by,  any  federal,  state or local
governmental authority or agency or other person.

                  13. Legend.  Unless  Warrant  Shares or Conversion  Shares are
being sold pursuant to a  registration  statement  pursuant to the provisions of
Section 10 hereof,  the Warrant Shares or Conversion Shares issued upon exercise
or conversion of the Warrants  shall be subject to a stop transfer order and the
certificate or certificates  evidencing such Warrant Shares or Conversion Shares
shall bear the following legend:

                  "THE  SHARES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
         REGISTERED   UNDER  THE   SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
         "SECURITIES  ACT"),  OR  ANY  STATE  SECURITIES  LAWS  AND,  UNLESS  SO
         REGISTERED,  MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION
         FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION  REQUIREMENTS
         OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS."

                                       14
<PAGE>

                  14.  Reservation and Listing of Securities.  The Company shall
at all times  reserve and keep  available  out of its  authorized  Common Stock,
solely for the  purpose of issuance  upon the  exercise  of the  Warrants,  such
number of shares of Common Stock or other  securities,  properties  or rights as
shall be issuable upon the exercise  thereof.  The Company  covenants and agrees
that,  upon exercise of the Warrants and payment of the Exercise Price therefor,
all Common Stock and other securities  issuable upon such exercise shall be duly
and validly issued, fully paid,  nonassessable and not subject to the preemptive
rights of any  shareholder.  As long as the Warrants shall be  outstanding,  the
Company  shall use its best efforts to cause all Common Stock  issuable upon the
exercise  of the  Warrants  to be  listed  on all  securities  exchanges  and/or
included in the automated  quotation  system of the Nasdaq  (subject to official
notice of issuance)  with respect to which the Common Stock issued to the public
in connection herewith may then be listed and/or quoted.

                  15.  Destroyed  or Lost  Warrants.  Upon  receipt of  evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant (and upon  surrender of any Warrant if  mutilated)  and, if requested by
the Company or its  transfer  agent,  the receipt by the Company of a reasonable
and   customary   indemnification   agreement  or  indemnity   bond,   and  upon
reimbursement of the Company's reasonable incidental expenses, the Company shall
execute and deliver to the Holder thereof a new Warrant of like date,  tenor and
denomination.

                  16. Notices to Warrant Holders. In the event of

                           (a) any  taking  by the  Company  of a record  of the
holders of any class of securities  for the purpose of  determining  the holders
thereof who are entitled to receive any dividend or other  distribution,  or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, or

                           (b) any capital  reorganization  of the Company,  any
reclassification  or recapitalization of the capital stock of the Company or any
consolidation  or merger  involving  the Company and any other  person where the
holders  of Common  Stock will be  entitled  to  receive  securities  of another
issuer, or any transfer of all or substantially all the assets of the Company to
any other person, or

                           (c)  any   voluntary  or   involuntary   dissolution,
liquidation or winding-up of the Company,

                           then  the  Company  will  mail  to each  Holder  of a
Warrant  a notice  specifying  (i) the date or  expected  date on which any such
record is to be taken for the purpose of such dividend,  distribution  or right,
and the amount and character of such dividend,  distribution or right,  and (ii)
the date or expected  date on which any such  reorganization,  reclassification,
recapitalization,  consolidation,  merger, transfer, dissolution, liquidation or
winding-up  is to take  place and time,  if any such time is to be fixed,  as of
which the  holders  of record of  Common  Stock (or other  securities)  shall be
entitled to exchange their shares of Common Stock (or other  securities) for the
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,    recapitalization,    consolidation,    merger,    transfer,
dissolution,  liquidation  or  winding-up.  Such notice shall be mailed no later
than the date on which such notice is given to the Company's shareholders.

                                       15
<PAGE>

                  17.  Notices.  All  notices,  requests,   consents  and  other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given or made at the time delivered by hand if personally  delivered;  five
calendar  days after  mailing if sent by  registered  or  certified  mail;  when
answered  back, if telexed;  one business day after  transmission  by telecopier
with electronic  confirmation of receipt; and the next business day after timely
delivery to the courier, if sent by overnight air courier  guaranteeing next day
delivery  (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee):

                           (a) If to the registered  Holder of the Warrants,  to
the address of such Holder as shown on the books of the Company, or

                           (b) If to the  Company,  to the  address set forth in
Section 1 hereof or to such other address as the Company may designate by notice
to the Holders.

                  18. Supplements and Amendments. The Company and the Holder may
from time to time supplement or amend this Agreement without the approval of any
other  Holders  of  Warrants  (other  than  such  Holder)  in  order to cure any
ambiguity,  to correct or supplement any provision contained herein which may be
defective  or  inconsistent  with  any  provisions  herein,  or make  any  other
provisions in regard to matters or questions arising hereunder which the Company
and the Holder may deem  necessary or  desirable.  In addition,  if a portion of
this  Warrant is  transferred  or assigned to one or more persons or entities so
that there is more than one Holder of Warrants,  then all  outstanding  Warrants
may be amended,  and any provision thereof may be waived,  either  prospectively
and retroactively  with the written agreement of the Company and Holders holding
a majority in interest (based on the number of Warrant Shares issued or issuable
to such Holder) of the Warrants, and any amendment or waiver so adopted shall be
binding on all Holders of Warrants.

                  19. No Notice of Meetings. The Holder of any Warrant shall not
have,  solely on account of such  status,  any  rights of a  stockholder  of the
Company,  either  at  law  or in  equity,  or  to  any  notice  of  meetings  of
stockholders or of any other  proceedings of the Company,  except as provided in
this Warrant.

                  20.  Governing  Law.  This  Warrant  shall be  governed by and
construed in  accordance  with the laws of the State of New York  applicable  to
contracts made and performed within such State, without regard to the principles
thereof respecting conflicts of law.

                  21. Representations and Warranties of the Holder.

                           (a)  Representations.  Holder hereby  represents  and
warrants to the Company as follows:  Holder is a  sophisticated  investor having
such knowledge and experience in business and investment  matters that Holder is
capable of protecting Holder's own interests in connection with the acquisition,
exercise or disposition of this Warrant.  Holder is an "accredited  investor" as
defined in  Regulation D  promulgated  under the Act.  Holder is aware that this
Warrant and the Shares (and the  securities  issuable,  directly or  indirectly,
upon  conversion  of  the  Shares,  if  any)  (hereinafter,   collectively,  the
"Restricted  Securities")  are being,  or will be,  issued to Holder in reliance
upon  Holder's  representation  in this  Warrant  and that such  securities

                                       16
<PAGE>

are  restricted  securities  that  cannot be  publicly  sold  except in  certain
prescribed situations. Holder is aware of the provisions of Rule 144 promulgated
under the Act and of the  conditions  under which sales may be made  thereunder.
Holder  has  received  such  information  about  the  Company  as  Holder  deems
reasonable,  has had the  opportunity to ask questions and receive  answers from
the Company  with  respect to its  business,  assets,  prospects  and  financial
condition and has verified any answers Holder has received from the Company with
independent  third parties to the extent Holder deems necessary.  The Holder, by
acceptance  hereof,  acknowledges  that  the  Restricted  Securities  are  being
acquired  solely for the Holder's own account and not as a nominee for any other
party, and for investment, and that the Holder will not offer, sell or otherwise
dispose  of this  Warrant  or any Shares to be issued  upon  exercise  hereof or
conversion  thereof  except  under  circumstances  that  will  not  result  in a
violation of the Act or any state securities laws.

                           (b)  Securities  Laws.  This  Warrant  and the Shares
issuable  upon  exercise of this Warrant may not be  transferred  or assigned in
whole or in part without compliance with applicable federal and state securities
laws by the transferor and the transferee  (including,  without limitation,  the
delivery of  investment  representation  letters and legal  opinions  reasonably
satisfactory to the Company, as provided in this Warrant).

                [Remainder of this page intentionally left blank]

                                       17
<PAGE>

                  IN WITNESS WHEREOF,  the parties have executed this Warrant as
of the date first written above.

Dated:   March 21, 2000

                                     CELLEGY PHARMACEUTICALS INC.

                                     By: /s/ K. Michael Forrest
                                         -------------------------------------
                                         Name:  K. Michael Forrest
                                         Title:  Chief Executive Officer

Attest
/s/ A. Richard Juelis
-------------------------------
A. Richard Juelis
Secretary

                                     Acknowledged and Accepted by:

                                     GRUNTAL & CO., LLC

                                     By: /s/ Roger C. Kahn
                                         -------------------------------------
                                         Name: Roger C. Kahn
                                         Title: Senior Managing Director

                  [Counterpart Signature Page to Warrant No. 2]

                                       18Exhibit 4.4

THIS WARRANT AND THE SHARES ISSUABLE  HEREUNDER HAVE NOT BEEN  REGISTERED  UNDER
THE  SECURITIES  ACT OF  1933,  AS  AMENDED,  AND MAY NOT BE SOLD,  PLEDGED,  OR
OTHERWISE  TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY  SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

THIS SECURITY IS SUBJECT TO CERTAIN  RESTRICTIONS  UPON TRANSFER,  INCLUDING BUT
NOT LIMITED TO, PROHIBITION ON SALE OF THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT  FOR A PERIOD  OF ONE YEAR FROM THE ISSUE  DATE OF THIS  WARRANT,  AND A
RIGHT OF FIRST  OFFER ON BEHALF  OF THE  COMPANY,  AS SET FORTH IN AN  AGREEMENT
BETWEEN  THE COMPANY  AND THE  STOCKHOLDER,  A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.

                            WARRANT TO PURCHASE STOCK

Corporation:                 Cellegy Pharmaceuticals, Inc.
Number of Shares:            171,146
Class of Stock:              Common Stock
Initial Exercise Price:      $6.60 per share
Issue Date:                  June 13, 2000
Expiration Date:             June 13, 2002

         This  Warrant  certifies  that,  for good and  valuable  consideration,
Richcone Pty Ltd ACN 064 469 861 ("Richcone")  (referred to herein as "Holder"),
as trustee of the Richcone Unit Trust, a trust  established by deed dated May 5,
1994 between  Richcone and Robert John George Miles is entitled to purchase from
the corporation  named above (the  "Company"),  until 5:00 p.m. Pacific Standard
Time,  on the  Expiration  Date set forth  above,  the  number of fully paid and
nonassessable  shares of the Common  Stock (the  "Shares") of the Company at the
initial exercise price per Share (the "Warrant  Price"),  all as set forth above
and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth in this Warrant.

1. EXERCISE.

         1.1 Vesting; Exercise; Registration. As of the Issue Date, this Warrant
shall be exercisable in full by Holder, and Holder may exercise this Warrant, in
whole  or in  part,  by  delivering  a  duly  executed  Notice  of  Exercise  in
substantially  the form  attached  as Exhibit A to the  principal  office of the
Company.  Holder  shall  also,  concurrently  with  delivery  of the  Notice  of
Exercise,  deliver  to the  Company a check or wire  transfer  in United  States
dollars for the aggregate Warrant Price for the Shares being purchased. Pursuant
to the provisions of a Securities Purchase Agreement between the original Holder
of this Warrant and the Company, the Company has agreed to include the Shares in
a  registration  statement  to be filed by the  Company  after  the date of this
Warrant.

                                       1
<PAGE>

         1.2  Delivery of  Certificate  and New Warrant.  Promptly  after Holder
exercises this Warrant, the Company shall deliver to Holder certificates for the
Shares  acquired and, if this Warrant has not been fully  exercised or converted
and has not expired,  this Warrant shall  automatically be reduced by the number
of Shares as to which the Warrant has been exercised and remain  exercisable for
such remaining  Shares as to which this Warrant has not been exercised,  and all
other terms of the Warrant shall otherwise remain in full force and effect as so
adjusted.  Upon final exercise of this Warrant for any such remaining  number of
Shares,  this  Warrant  shall be  surrendered  by the Holder to the  Company for
cancellation.

         1.3  Replacement  of  Warrants.   On  receipt  of  evidence  reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this Warrant and, in the case of loss,  theft or destruction,  on delivery of an
indemnity  agreement  reasonably  satisfactory in form and amount to the Company
or, in the case of mutilation,  or surrender and  cancellation  of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

         1.4 Sale, Merger, or Consolidation of the Company.

                  1.4.1.  "Acquisition".   For  the  purpose  of  this  Warrant,
"Acquisition"   means  any  sale  of  the  Company's   stock  by  the  Company's
stockholders  in one  transaction  or  series  of  related  transactions  or any
reorganization, consolidation or merger of the Company, in any case where, after
the transaction,  the holders of the Company's securities before the transaction
beneficially  own  less  than  fifty  percent  (50%) of the  outstanding  voting
securities of the surviving entity or of its parent corporation if the surviving
entity is a wholly owned subsidiary of such parent corporation.

                  1.4.2   Assumption  of  Warrant.   Upon  the  closing  of  any
Acquisition  where the  consideration  for the Acquisition to be received by the
Company's stockholders consists solely of stock or securities of the acquirer or
an entity  affiliated with the acquirer,  the successor  entity shall assume the
obligations of this Warrant,  and this Warrant shall be exercisable for the same
securities  as would be payable  for the Shares  issuable  upon  exercise of the
unexercised  portion of this Warrant as if such Shares were  outstanding  on the
record date for the  Acquisition  and subsequent  closing  thereof.  The Warrant
Price shall be adjusted accordingly.

                  1.4.3   Termination  of  Warrant.   In  the  case  of  (a)  an
Acquisition  where the  consideration  for the Acquisition to be received by the
Company's stockholders in return for their capital stock of the Company consists
of  cash or a  combination  of  cash  and  other  property  or (b) the  proposed
liquidation  and  dissolution  of the Company,  the Company shall give Holder at
least  fifteen  (15) days  advance  written  notice of such event (the  "Company
Notice"), which notice shall include the Company's best estimate of the value of
the Shares  receivable  upon  exercise  or  conversion  of this  Warrant and the
proposed  date upon which such event is  expected  to occur.  During such notice
period,  Holder may  exercise or convert  this  Warrant in  accordance  with its
terms, whether or not exercise or conversion is contingent upon the happening of
such event. Subject to prior exercise or conversion as provided in the preceding
sentence, this Warrant will terminate at 5:00 p.m. Pacific time on the day prior
to the date such event is expected to occur as set forth in the Company  Notice;
provided that the event actually occurs within sixty (60) days after the date it
is expected to occur, as such date was specified in the Company Notice.

         1.5 Restrictions on Exercise.  This Warrant may not be exercised if the
issuance of

                                       2
<PAGE>

the Shares upon such  exercise  would  constitute a violation of any  applicable
federal or state securities laws or other laws or regulations. As a condition to
the  exercise  of this  Warrant,  by the  Holder's  execution  of the  Notice of
Exercise attached hereto as Exhibit A, the Holder shall confirm, acknowledge and
agree to the representations,  warranties and agreements of the Holder set forth
in Section 4 hereof.

2. ADJUSTMENTS TO THE SHARES.

         2.1 Stock  Splits,  Recapitalizations,  Etc.  If the Company (i) pays a
dividend  in shares of  capital  stock or other  securities  on its  outstanding
Common  Stock,  (ii)  subdivides  its  outstanding  shares of Common  Stock in a
transaction that increases the amount of its outstanding shares of Common Stock,
or (iii) combines its outstanding  shares of Common Stock in a transaction  that
decreases  the  amount of its  outstanding  shares of  Common  Stock,  then upon
exercise or conversion of this Warrant,  for each Share  acquired,  Holder shall
receive,  without  cost to Holder,  the total number and kind of  securities  to
which Holder  would have been  entitled had Holder owned the Shares of record as
of the date such dividend, distribution, subdivision or combination occurred.

         2.2  Certain  Corporate   Transactions.   Upon  any   reclassification,
exchange,  substitution,  Acquisition of the Company or other similar event that
results in a change of the number and/or class of the  securities  issuable upon
exercise or conversion of this Warrant other than as provided in Section 2.1 and
other than an Acquisition described in Section 1.4.3 above (a "Reorganization"),
Holder  shall be entitled  to  receive,  upon  exercise  or  conversion  of this
Warrant,  the number and kind of securities  and property that Holder would have
received for the Shares if this Warrant had been  exercised  immediately  before
such Reorganization. The Company or its successor shall promptly issue to Holder
a new Warrant for such new securities or other  property.  The new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 2 including, without limitation,
appropriate  adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise or conversion of the new Warrant.

         2.3  Adjustments  of  Warrant  Price.  If the  outstanding  Shares  are
combined or consolidated, by reclassification or otherwise, into a lesser number
of  shares,  the  Warrant  Price  shall  be  proportionately  increased.  If the
outstanding Shares are divided by reclassification or otherwise,  into a greater
number of shares, the Warrant Price shall be proportionately decreased.

         2.4  Adjustment is  Cumulative.  The provisions of this Section 2 shall
similarly apply to successive,  stock  dividends,  stock splits or combinations,
reclassifications, exchanges, substitutions, or other events.

         2.5  No  Impairment.  The  Company  shall  not,  by  amendment  of  its
Certificate of  Incorporation or through a  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed  under this  Warrant by the  Company,  but
shall at all times carry out of all the provisions of this Section 2.

         2.6  Fractional  Shares.  No  fractional  Shares shall be issuable upon
exercise  or  conversion  of the  Warrant  and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any  exercise  or  conversion  of the

                                       3
<PAGE>

Warrant,  the Company shall eliminate such  fractional  Share interest by paying
Holder an amount by check computed by multiplying the fractional interest by the
fair market value of a full Share.

         2.7 Certificate as to Adjustments.  Upon each adjustment of the Warrant
Price,  the Company at its expense  shall compute such  adjustment,  and furnish
Holder with a  certificate  of its Chief  Financial  Officer  setting forth such
adjustment and the facts upon which such adjustment is based. The Company shall,
upon written  request,  furnish  Holder a certificate  setting forth the Warrant
Price in effect upon the date thereof and the series of  adjustments  leading to
such Warrant Price.

3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

         3.1 Representations  and Warranties.  The Company hereby represents and
warrants to the Holder that all Shares  which may be issued upon the exercise of
the purchase right  represented  by this Warrant,  and all  securities,  if any,
issuable  upon  conversion  of  the  Shares,   shall,  upon  issuance,  be  duly
authorized, validly issued, fully paid and nonassessable,  and free of any liens
and  encumbrances  except for  restrictions  on transfer  provided for herein or
under applicable federal and state securities laws.

         3.2  Reservation of the Shares.  If at any time the number of shares of
Common Stock or other  securities  issuable  upon exercise of this Warrant shall
not be sufficient to effect the exercise of this Warrant,  the Company will take
such  corporate  action as may, in the opinion of its  counsel,  be necessary to
increase its authorized but unissued shares of Common Stock or other  securities
issuable upon exercise of this Warrant as shall be sufficient for such purpose.

         3.3 No Rights or Liabilities as  Stockholder.  This Warrant does not by
itself entitle the Holder to any voting rights,  cash dividends or other rights,
nor subject Holder to any liabilities,  as a stockholder of the Company.  In the
absence of  affirmative  action by the Holder to purchase  Shares by exercise of
this Warrant,  no provisions of this Warrant,  and no enumeration  herein of the
rights or privileges  of the Holder,  shall cause the Holder to be a stockholder
of the company for any purpose.

4. REPRESENTATIONS OF HOLDER; TRANSFER.

         4.1  Representations.  Holder  hereby  represents  and  warrants to the
Company as follows: Holder is a sophisticated investor having such knowledge and
experience  in  business  and  investment  matters  that  Holder is  capable  of
protecting  Holder's own interests in connection with the acquisition,  exercise
or disposition of this Warrant. Holder is aware that this Warrant and the Shares
(and the securities  issuable,  directly or indirectly,  upon  conversion of the
Shares, if any)  (hereinafter,  collectively,  the "Restricted  Securities") are
being, or will be, issued to Holder in reliance upon Holder's  representation in
this Section 4 and that such securities are restricted securities that cannot be
publicly sold except in certain  prescribed  situations.  Holder is aware of the
provisions of Rule 144 promulgated  under the Securities Act of 1933, as amended
(the "Act") and of the  conditions  under  which  sales may be made  thereunder.
Holder  has  received  such  information  about  the  Company  as  Holder  deems
reasonable,  has had the  opportunity to ask questions and receive  answers from
the Company  with  respect to its  business,  assets,  prospects  and  financial
condition and has verified any answers Holder has received from the Company with
independent  third parties to the extent Holder deems necessary.  The Holder, by
acceptance  hereof,  acknowledges  that  the  Restricted  Securities  are  being
acquired  solely for the Holder's own account and not as a nominee for any other
party, and for investment, and that

                                       4
<PAGE>

the Holder  will not offer,  sell or  otherwise  dispose of this  Warrant or any
Shares to be issued upon  exercise  hereof or  conversion  thereof  except under
circumstances  that  will not  result  in a  violation  of the Act or any  state
securities laws.

         4.2 Legends. The Restricted  Securities shall be imprinted with legends
in substantially the following form:

         THIS SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES
         ACT OF 1933, AS AMENDED,  OR ANY STATE SECURITIES LAW AND MAY
         NOT BE SOLD,  PLEDGED  OR  OTHERWISE  TRANSFERRED  WITHOUT AN
         EFFECTIVE  REGISTRATION  THEREOF  UNDER  SUCH  ACT  OR LAW OR
         PURSUANT   TO  RULE  144  AND  ANY   STATE   EXEMPTION   FROM
         REGISTRATION OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
         TO THE CORPORATION AND ITS COUNSEL THAT SUCH  REGISTRATION IS
         NOT REQUIRED.

         THIS  SECURITY  IS  SUBJECT  TO  CERTAIN   RESTRICTIONS  UPON
         TRANSFER,  INCLUDING BUT NOT LIMITED TO,  PROHIBITION ON SALE
         OF THE SHARES  ISSUABLE  UPON  EXERCISE OF THIS WARRANT FOR A
         PERIOD OF ONE YEAR FROM THE ISSUE DATE OF THIS WARRANT, AND A
         RIGHT OF FIRST OFFER ON BEHALF OF THE  COMPANY,  AS SET FORTH
         IN AN AGREEMENT  BETWEEN THE COMPANY AND THE  STOCKHOLDER,  A
         COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

         4.3  Restrictions  on Transfer.  Neither this  Warrant,  nor any rights
hereunder,  may be  assigned,  conveyed  or  transferred,  in  whole or in part,
without the Company's  prior  written  consent which the Company may withhold in
its sole  discretion;  provided,  however,  that subject to compliance  with all
applicable  securities laws, the Company's  consent shall not be required for an
assignment  or  transfer  of this  Warrant to an  affiliate  (as defined in Rule
501(b) of the Act),  officer or any family  member of an officer of the  initial
Holder,  so  long  as such  assignment  or  transfer  complies  with  applicable
securities  laws and such assignee or transferee,  as the case may be, agrees in
writing  to be  bound  by  the  terms  of  this  Warrant.  In  addition,  Holder
acknowledges  that this Warrant is being issued pursuant to the terms of a Stock
Purchase  Agreement  dated April 14,  2000 by and between the initial  Holder of
this Warrant and the Company (the "Stock Purchase Agreement"), and that pursuant
to the provisions of Section 6.3 of the Stock Purchase Agreement,  Holder agrees
that for a period of one year after the Issue  Date,  Holder will not (i) offer,
pledge,  sell, contract to sell, sell any option,  right or warrant to purchase,
lend, or otherwise  transfer or dispose of,  directly or indirectly,  any of the
Warrant Shares,  or (ii) enter into any swap or other arrangement that transfers
to another,  in whole or in part, any of the economic  consequences of ownership
of such securities.

                  4.3.1 Right of First Refusal.  Except as provided herein,  the
Holder hereby  understands,  acknowledges and agrees that the Warrant may not be
sold or otherwise  transferred  without the  Company's  prior  written  consent.
Before the  Warrant  may be sold or  otherwise  transferred  (including  without
limitation a transfer by gift or operation of law) (the  "Offered  Securities"),
the  Company  and/or  its  assignee(s)  will  have a right of first  refusal  to
purchase the Warrant to be sold or  transferred  on the terms and conditions set
forth in this Section 4.3.1 (the "Right of First Refusal").

                                       5
<PAGE>

                           4.3.1.1  Notice of Proposed  Transfer.  The Holder of
the  Offered  Securities  will  deliver  to the  Company a written  notice  (the
"Transfer  Notice")  stating:  (i) the Holder's  bona fide  intention to sell or
otherwise  transfer  the Offered  Securities;  (ii) the name and address of each
proposed  purchaser or other transferee (the "Proposed  Transferee");  (iii) the
number or portion of such Offered  Securities to be transferred to each Proposed
Transferee;  (iv) the bona fide cash price or other  consideration for which the
Holder proposes to transfer the Offered  Securities (the "Offered  Price");  and
(v) that the Holder  acknowledges  this Transfer  Notice is an offer to sell the
Offered  Securities  to the  Company  pursuant to the  Company's  Right of First
Refusal at the Offered Price as provided for in this Warrant.

                           4.3.1.2  Exercise of Right of First  Refusal.  At any
time within thirty (30) days after the date of the Transfer Notice,  the Company
may, by giving written notice to the Holder, elect to purchase all (or, with the
consent of the  Holder,  less than all) the  Offered  Securities  proposed to be
transferred to any one or more of the Proposed Transferees named in the Transfer
Notice,  at the purchase price determined in accordance with Subsection  4.3.1.3
below.

                           4.3.1.3  Purchase  Price.  The purchase price for the
Offered  Securities  purchased  under this  Section  will be the Offered  Price,
provided that if the Offered Price consists of no legal  consideration  (as, for
example, in the case of a transfer by gift), the purchase price will be the fair
market value of the Offered Securities as determined by the Company (and, if the
Common Stock is then publicly traded,  based on the closing sales prices for the
Common Stock). If the Offered Price includes consideration other than cash, then
the value of the  non-cash  consideration,  as  determined  in good faith by the
Company's  Board  of  Directors,  will  conclusively  be  deemed  to be the cash
equivalent value of such non-cash consideration.

                           4.3.1.4  Payment.  Payment of the purchase  price for
the  Offered  Securities  will be  payable,  at the  option of the  Company,  as
applicable, by check, by wire transfer or by cancellation of all or a portion of
any  outstanding  indebtedness  owed by the  Holder to the  Company  (or to such
assignee,  in the case of a purchase of Offered  Securities by such assignee) or
by any  combination  thereof.  The purchase price will be paid without  interest
within  three (3)  business  days after the  Company's  election to exercise its
Right of First Refusal.

                           4.3.1.5  Holder's  Right to Transfer.  If the Company
has not elected to exercise  its Rights of First  Refusal as provided in Section
4.3.1.2  or Holder has not  consented  to the  purchase  of less than all of the
Offered Securities  proposed in the Transfer Notice to be transferred to a given
Proposed Transferee by the Company as provided in this Section,  then the Holder
may sell or  otherwise  transfer all such Offered  Securities  to each  Proposed
Transferee at the Offered Price or at a higher price (and if Holder consented to
the  purchase of less than all the Offered  Securities  proposed in the Transfer
Notice to be  transferred  to a given  Proposed  Transferee  by the  Company  as
provided in this  Section,  then the Holder may sell or  otherwise  transfer any
remaining Offered Securities to each Proposed Transferee at the Offered Price or
at a higher price), provided that (i) such sale or other transfer is consummated
within one hundred  twenty (120) days after the date of the Transfer  Notice and
(ii)  any  such  sale or other  transfer  is  effected  in  compliance  with all
applicable  securities laws. If the Offered Securities described in the Transfer
Notice are not transferred to each Proposed  Transferee  within such one hundred
twenty  (120)  day  period,  then a new  Transfer  Notice  must be  given to the
Company,  pursuant to which the Company will again be offered the Right of First
Refusal before the Warrant may be sold or otherwise transferred.

                                       6
<PAGE>

                           4.3.1.6 Exempt Transfers. Notwithstanding anything to
the contrary in this Section 4.3, the following transfers of the Warrant will be
exempt from the Right of First  Refusal:  (i) any  transfer of the Warrant  made
pursuant to a statutory merger or statutory consolidation of the Company with or
into another corporation or corporations (except that the Right of First Refusal
will continue to apply  thereafter  to the Warrant,  in which case the surviving
corporation of such merger or  consolidation  shall succeed to the rights of the
Company  under this  Section  unless the  agreement  of merger or  consolidation
expressly otherwise provides);  (ii) any transfer of the Warrant pursuant to the
winding up and dissolution of the Company;  (iii) any transfer of the Warrant to
any affiliate  (as defined in Rule 501(b) of the Act) of the Holder;  or (iv) to
any officer or any family member of an officer of the Holder.

                           4.3.1.7  Termination of Right of First  Refusal.  The
Right of First Refusal will terminate as to the Warrant on the first to occur of
the following:  (i) the Expiration  Date of this Warrant,  or (ii) the effective
date  of the  registration  of the  Shares  by the  Company  under  the  Act and
applicable  state  securities  law,  or  (iii)  the  date of  expiration  of any
statutory  holding  period  applicable to the Shares as required by Rule 144 and
any applicable state exemption from registration.

                           4.3.1.8  Encumbrances on the Warrant.  Holder may not
grant any lien or security  interest in, or pledge,  hypothecate or encumber the
Warrant.

                  4.3.2  Securities  Laws.  This Warrant and the Shares issuable
upon exercise of this Warrant may not be  transferred or assigned in whole or in
part without compliance with applicable federal and state securities laws by the
transferor and the transferee  (including,  without limitation,  the delivery of
investment  representation letters and legal opinions reasonably satisfactory to
the  Company,  as  reasonably  requested  by the  Company).  If,  subject to the
provisions  of this Section 4.3, the Holder is allowed to transfer  this Warrant
or the  Shares  issuable  upon  exercise  of this  Warrant  (or  the  securities
issuable,  directly or indirectly,  upon conversion of the Shares,  if any), the
Company shall not require Holder to provide an opinion of counsel if there is no
material question as to the availability of current information as referenced in
Rule 144(c),  Holder represents that it has complied with Rule 144(d) and (e) in
reasonable  detail, the selling broker represents that it has complied with Rule
144(f),  and the Company is provided with a copy of Holder's  notice of proposed
sale and/or transfer.

         4.4 Transfer Procedure.  If Holder is allowed to transfer or assign all
or part of this Warrant or any interest therein, Holder shall give the Company a
written  notice of the portion of the  Warrant  being  transferred,  such notice
setting  forth the  name,  address  and  taxpayer  identification  number of the
transferee,  and, together with such notice, Holder shall surrender this Warrant
to the Company for reissuance to the  transferee  (and to the new Warrant Holder
for any remaining  Shares, if applicable).  As a condition to sale,  transfer or
assignment (other than pursuant to a registration statement) of this Warrant and
the Shares  issuable upon exercise of this  Warrant,  the Holder shall  confirm,
acknowledge and agree to the representations, warranties and agreements forth in
Section 4 hereof.

5. GENERAL PROVISIONS.

         5.1  Notices.  Any and all notices  and  Transfer  Notices  required or
permitted to be given to a party pursuant to the provisions of this Warrant will
be in writing and will be effective and deemed to provide such party  sufficient
notice under this Warrant on the earliest of the  following:  (i) at the time of
personal delivery, if delivery is in person; (ii) at the time of

                                       7
<PAGE>

transmission by facsimile,  addressed to the other party at its facsimile number
specified  herein (or  hereafter  modified by  subsequent  notice to the parties
hereto),  with confirmation of receipt verifying successful  transmission of the
facsimile;  (iii) one (1) business day after  deposit with an express  overnight
courier  for  United  States  deliveries,  or two (2)  business  days after such
deposit for deliveries outside of the United States, with proof of delivery from
the courier  requested;  or (iv) three (3)  business  days after  deposit in the
United  States mail by certified  mail  (return  receipt  requested)  for United
States deliveries.

                  All notices  for  delivery  outside the United  States will be
sent by facsimile or by express courier. All notices not delivered personally or
by facsimile will be sent with postage and/or other charges prepaid and properly
addressed  to the party to be notified at the  address or  facsimile  number set
forth below the  signature  lines to this  Warrant,  or at such other address or
facsimile number as such other party may designate by one of the indicated means
of notice  herein to the other  parties  hereto.  Notices to the Company will be
marked "Attention: President". Notices by facsimile shall be machine verified as
received.

         5.2  Governing  Law.  This Warrant will be governed by and construed in
accordance  with the laws of the State of  California,  without giving effect to
that body of laws pertaining to conflict of laws.

         5.3 Further  Assurances.  The  parties  agree to execute  such  further
documents and  instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Warrant.

         5.4 Titles and  Headings.  The titles,  captions  and  headings of this
Warrant are  included  for ease of  reference  only and will be  disregarded  in
interpreting or construing this Warrant.  Unless otherwise  specifically stated,
all  references  herein to "sections" and  "exhibits"  will mean  "sections" and
"exhibits" to this Warrant.

         5.5  Counterparts.  This  Warrant  may be  executed  in any  number  of
counterparts,  each of which when so executed  and  delivered  will be deemed an
original, and all of which together shall constitute one and the same agreement.

         5.6 Severability. If any provision of this Warrant is determined by any
court  or  arbitrator  of  competent  jurisdiction  to be  invalid,  illegal  or
unenforceable  in any respect,  such  provision  will be enforced to the maximum
extent  possible  given the  intent of the  parties  hereto.  If such  clause or
provision  cannot be so enforced,  such  provision  shall be stricken  from this
Warrant and the  remainder of this Warrant shall be enforced as if such invalid,
illegal or unenforceable clause or provision had (to the extent not enforceable)
never been contained in this Warrant. Notwithstanding the forgoing, if the value
of this Warrant based upon the substantial  benefit of the bargain for any party
is materially  impaired,  which  determination as made by the presiding court or
arbitrator of competent  jurisdiction shall be binding,  then both parties agree
to substitute such provision(s) through good faith negotiations.

         5.7 Facsimile Signatures. This Warrant may be executed and delivered by
facsimile and upon such delivery the facsimile  signature will be deemed to have
the same effect as if the  original  signature  had been  delivered to the other
party.  The  original  signature  copy shall be  delivered to the other party by
express overnight  delivery.  The failure to deliver the original signature copy
and/or the  nonreceipt of the original  signature copy shall have no effect upon
the binding and enforceable nature of this Warrant.

                                       8
<PAGE>

         5.8  Amendment  and  Waivers.  This  Warrant  may be amended  only by a
written  agreement  executed by each of the parties  hereto.  No amendment of or
waiver  of,  or  modification  of any  obligation  under  this  Warrant  will be
enforceable  unless  set forth in a writing  signed by the party  against  which
enforcement is sought.  Any amendment  effected in accordance  with this Section
5.8  will be  binding  upon all  parties  hereto  and  each of their  respective
successors  and  assigns.  No delay or  failure to  require  performance  of any
provision of this Warrant shall constitute a waiver of that provision as to that
or any other  instance.  No waiver  granted  under  this  Warrant  as to any one
provision  herein shall  constitute a subsequent  waiver of such provision or of
any  other  provision  herein,  nor  shall  it  constitute  the  waiver  of  any
performance other than the actual performance specifically waived.

         5.9 Entire  Agreement.  This  Warrant  and the  documents  referred  to
herein,  including  but not  limited  to the Stock  Purchase  Agreement  between
Company and Holder dated of even date herewith,  constitute the entire agreement
and  understanding  of the parties  with  respect to the subject  matter of this
Warrant, and supersede all prior understandings and agreements,  whether oral or
written,  between or among the  parties  hereto  with  respect  to the  specific
subject matter hereof.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       9
<PAGE>

         IN WITNESS  WHEREOF,  the parties have  executed this Warrant as of the
date first written above.

WARRANT HOLDER:

RICHCONE  PTY  LIMITED AS                          )
TRUSTEE  OF THE  RICHCONE  UNIT
TRUST
is affixed in accordance with its constitution     )
in the presence of:                                )

/s/ Estelle Sheli Lubowski              /s/ David Zachary Lubowski
 ...................................    ...................................
Secretary/Director                     Director

Estelle Sheli Lubowski                  David Zachary Lubowski
 ...................................    ...................................
Name of Secretary/Director (print)     Name of Director (print)

Address: 4 Cranbrook Road, Rose Bay, NSW, Australia, 2029

Attention to: Mr David Lubowski & Mr Michael Kloster

Facsimile: (02) 9362 0367 & (02) 9363 5526

COMPANY:

CELLEGY PHARMACEUTICALS, INC.

By: /s/ A. Richard Juelis
   --------------------------------------------------

Title: VP, Finance & CFO
      -----------------------------------------------

Address:      349 Oyster Point Blvd., #200
              South San Francisco, CA 94080
Attention to: President

Facsimile: 650-616-2222

                                       10
<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

                  (TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)

1. Election. The undersigned hereby elects to purchase ___________ shares of the
Common  Stock  of  CELLEGY  PHARMACEUTICALS,  INC.,  a  California  corporation,
pursuant to the terms of the  attached  Warrant to Purchase  Stock with an Issue
Date of _________,  2000 (the "Warrant"),  and the Undersigned  tenders herewith
payment of the total purchase price of such shares in full,  pursuant to a check
or wire transfer, in the amount of $__________.

2. Please issue a certificate or  certificates  representing  said shares in the
name of the  undersigned.  The  undersigned  represents that it is acquiring the
shares  solely for its own  account and not as a nominee for any other party and
not with a view toward the resale or distribution thereof except to an affiliate
(as defined in Rule 501(b) of the Act) in compliance with applicable  securities
laws and hereby  confirms  and  agrees to the  representations,  warranties  and
agreements that are set forth in Section 4 of the attached Warrant.

                                            __________________________________
                                            (Name)
                                            __________________________________
                                            __________________________________
                                            __________________________________
                                            Address

                                            __________________________________
                                            (Signature of Holder)

                                            SIGNATURE GUARANTEE

                                            __________________________________

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