Document:

Exhibit 4.5

                            STOCK PURCHASE AGREEMENT

                           This Stock Purchase  Agreement (the  "Agreement")  is
dated  as of  April  14,  2000  and  is  entered  into  by and  between  Cellegy
Pharmaceuticals,  Inc., a California  corporation of 349 Oyster Point Boulevard,
Suite  200 South San  Francisco,  California  94080,  United  States of  America
("Cellegy"  or  "Purchaser"),  Quay  Pharmaceuticals  Pty.  Ltd.,  an Australian
corporation ACN 084 808 882 of Level 5, 203-233 New South Head Road,  Edgecliff,
New South Wales,  Australia ("Quay"),  Richcone Pty Ltd ACN 064 469 861 of Level
5,  203-233 New South Head Road,  Edgecliff  2027,  New South  Wales,  Australia
("Richcone"),  as trustee of the Richcone Unit Trust,  being a trust established
by  deed  dated 5 May  1994  between  Richcone  and  Robert  John  George  Miles
("Richcone  Unit  Trust"),  Cellegy  Australia  Pty  Ltd ACN  092  129  596,  an
Australian  corporation ("Newco") which is a wholly owned subsidiary of Richcone
Pty Ltd as  trustee  of the  Richcone  Unit  Trust,  and Dr.  David Z.  Lubowski
("Lubowski").

                                   BACKGROUND

         A. In December 1997, Cellegy acquired all of the intellectual  property
and certain  other  assets of Neptune  Pharmaceuticals  Corporation  ("Neptune")
relating to a product candidate named "Anogesic." Pursuant to an Agreement dated
December 29, 1997 between  Lubowski and Neptune,  Neptune  acquired an exclusive
license  (with the right to  sublicense)  to  certain  products,  including  the
Product,  subject to a reservation of rights by Lubowski to grant a license to a
company owned or  controlled  by Lubowski to develop and market a  nitroglycerin
ointment product in Australia.

         B. Quay has an ongoing  business  distributing  in Australia a product,
Rectogesic(TM)  (nitroglycerin  ointment), for the treatment of anal fissures in
Australia and also intends to market Rectogesic for the treatment of hemorrhoids
in  Australia.  In  addition,  Quay has  compiled a  regulatory  package for the
purpose of obtaining  approval of Rectogesic in South Africa and for the purpose
of applying for  registration  of the product for the treatment of anal fissures
and hemorrhoids in South Africa.

         C.  Newco is a newly  formed  Australian  corporation  wholly  owned by
Richcone as trustee of the Richcone Unit Trust.

         D. Richcone is the  proprietor of a patent in relation to Rectogesic in
South Africa and to patent  applications in relation to Rectogesic in Australia.
Quay is the registered proprietor of the trademark  "Rectogesic" in South Africa
and  Australia.  Lubowski owns certain  other  intellectual  property  rights in
relation to Rectogesic.  Before the Closing, the Sellers shall transfer to Newco
the Product and the Acquired  Assets (as defined  below),  the ongoing  business
interests  related to Rectogesic in Australia,  and all remaining  rights to the
foregoing  in South  Africa and the rest of the world.  Cellegy  has  offered to
acquire the entire issued share capital of Newco at the Closing and Richcone has
agreed to sell the same to Cellegy.

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                                    AGREEMENT

         THE PARTIES AGREE AS FOLLOWS:

1.  Definitions.  As used in this Agreement,  the following terms shall have the
following meanings.

         "Acquired  Assets"  means  (i)  all  Regulatory  Materials,   (ii)  all
Intellectual  Property,  and (iii) all  inventory as of the Closing Date of Quay
(including but not limited to the inventory in Quay's  possession at Closing and
in respect of which Quay will  receive an invoice for payment for the  inventory
after  Closing),  which shall  constitute all of the inventory of Quay as of the
Closing  Date that relate to the  Business,  and the  benefit of any  warranties
provided by  manufacturers  of the inventory to Quay, (iv) the business  records
and customer  database  relating to the Business of Quay as of the Closing Date,
all of which shall have been  transferred  to Newco as of the Closing Date,  and
(v) if not reflected on Exhibit A, any other assets, contracts or instruments to
which any Seller is a party or  otherwise  bound that relate to the  Business or
the Acquired  Assets,  if Purchaser in its discretion  elects to so acquire such
assets after the Closing.

         "Accounts  Receivable"  means all  amounts  due or  accruing to Quay in
connection  with the  Business as at the Closing  Date by or in respect of trade
debtors (each a "Debtor").

         "Act": Section 3.11.

         "Action": Section 3.8.

         "Asset Sellers" means Quay and Lubowski.

         "Assumed Obligations" means the contracts,  liabilities and obligations
of Sellers relating to the Business which are set forth on Exhibit A hereto.

         "Base Reference Price": Section 2.2.

         "Business"  means the  business of Quay  relating  to the  development,
marketing and distribution in Australia of a nitroglycerin  ointment product for
the  treatment of anal fissures  and/or  hemorrhoids  in  Australia,  and Quay's
business  relating to research  and  development  of, and  obtaining  regulatory
approval  for,  a  nitroglycerin  ointment  product  for the  treatment  of anal
fissures and  hemorrhoids in South Africa,  all of which shall be transferred to
Newco as of the Closing Date.

         "Cellegy  Shares" means the shares of Cellegy common stock that will be
issued at the Closing to the Sellers  pursuant to the  provisions of Section 2.2
below.

         "Closing": Article 7.

         "Closing Date": Article 7.

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         "Closing Date Market Price": Section 2.2.

         "Consulting Agreement": Section 6.1.

         "Dollars" or "$" refers to United  States  dollars,  and the term "AU$"
refers to Australian dollars.

         "Encumbrances" means all mortgages, pledges, liens, licenses, rights of
possession,  security interests,  restrictions,  encumbrances,  claims, charges,
title retention,  conditional sale or other security  arrangements,  relating to
the Acquired Assets or by which any Acquired Asset is bound or subject.

         "End Date" means sixty (60) days from the date of this Agreement.

         "Exchange Rate": Section 2.2.

         "Excluded  Obligations"  means all  liabilities  and obligations of any
Seller other than the Assumed  Obligations,  and any other assets that Purchaser
designates as Excluded Obligations before the Closing Date.

         "Further Agreement": Section 2.6.

         "Indemnitee": Section 11.7.

         "Indemnitor": Section 11.7.

         "Intellectual   Property"  means  all  patents,   patent  applications,
registered and unregistered copyrights,  registered and unregistered trademarks,
trade names,  service marks or service  names,  licenses or license  agreements,
clinical and pre-clinical data and information,  regulatory applications and all
other  materials  relating to  Australian,  South African,  or other  regulatory
matters, know-how, contracts,  agreements or other instruments,  relating to the
Product or any Regulatory Materials and any of the foregoing that any Seller may
acquire  after the  Closing  Date that  relates to the  Product,  whether or not
listed on Exhibit A attached hereto.

         "Knowledge  of the Sellers or the  Warrantors"  means the  knowledge of
Lubowski,  Sheli Lubowski,  and/or Michael Kloster,  after  reasonable  inquiry;
provided,  however,  that  Purchaser  acknowledges  that with respect to matters
relating to the patents and patent application included in the Product, it means
the actual knowledge of Lubowski,  Sheli Lubowski and Michael Kloster,  it being
expressly  acknowledged by Cellegy that such knowledge or recollection of events
may be  imperfect  and for the  avoidance  of doubt  shall  not mean the  actual
knowledge  any of them  would  have if they had made  all  reasonable  inquiries
concerning the patents and patent application.

         "Loss" means any liability,  injury,  damage,  expense,  cost,  fine or
penalty  (including  without  limitation  costs of  investigation,  prosecution,
defense or settlement),  including  attorney's  fees, costs and expenses related
thereto.

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         "Marketed Product": Section 2.3.

         "Maximum Reference Price": Section 2.2.

         "Minimum Reference Price": Section 2.2.

         "Net Sales" means  revenues of Purchaser or, after the Closing,  Newco,
from direct sales of Marketed Products to independent third parties, less:

                  (a)  transportation  charges or  allowances  actually  paid or
granted;

                  (b)  trade,  quantity,  cash or  other  ,  brokers  or  agents
commissions,  if any,  allowed  and paid by  Purchaser  or Newco to  independent
parties in arms-length transactions;

                  (c) credits or allowances made or given by Cellegy or Newco on
account of rejects,  returns,  bad debts or retroactive price reductions for any
amount not collected; and

                  (d)  any  tax or  governmental  charge  directly  on  sale  or
transportation (including, but not limited to, duties and importation fees), use
or  delivery  of Products  paid by Cellegy or Newco and not  recovered  from the
purchaser of Products.

Sales between Cellegy and Newco shall not be included in Net Sales.

         "Product" means Australian  Patent  Application No. 708694  (74545/94),
pending divisional  Australian  application NO. 88330/98,  and Republic of South
Africa Patent No. 95/0511,  and including all of Richcone's rights, all of which
shall have been transferred to Newco before the Closing Date,  relating (but not
limited) to the  nitroglycerin  product  currently named  "Rectogesic,"  for the
treatment of anal fissures, hemorrhoids, and all other conditions, including but
not limited to prescription and non-prescription products but excluding (for the
avoidance  of doubt) the rights of Richcone  insofar as it is a plaintiff to the
litigation  proceedings  previously disclosed by Sellers to Cellegy, any related
or corresponding  foreign patent or patent applications,  and all other patents,
patent  applications  (and  any  reissue,  extension,   division,   improvement,
continuation  or  continuation-in-part  of  any of the  foregoing)  of  Richcone
relating to the foregoing patent or patent application.

         "Purchaser" means Cellegy.

         "Regulatory  Materials"  means all  applications,  correspondence,  all
other written materials, and any intellectual property rights of Sellers and any
equity owners of Sellers,  relating to Rectogesic or related products or product
candidates or any other Acquired Asset, relating to Australia,  South Africa, or
any other country,  all of which shall have been transferred to Newco before the
Closing Date.

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         "Securities": Section 3.11.

         "Sellers" means Richcone, Quay and Lubowski.

         "Shares"  means the  ordinary  shares in the  issued  share  capital of
Newco,  constituting all of the outstanding equity securities of Newco as of the
Closing  Date,  all of which will be held by Richcone as trustee of the Richcone
Unit Trust..

         "Territory" means worldwide, including without limitation Australia and
South Africa.

         "Transaction" means the transactions contemplated by this Agreement.

         "U.S. Dollar Purchase Price": Section 2.2.

         "Warrantors" means Sellers, individually and collectively.

         "Warrants": Section 2.4.

         "Warrant  Shares"  means  the  shares  issuable  upon  exercise  of the
Warrant.

2. Purchase of the Shares.

         2.1 Purchase of the Shares. At the Closing, (i) Richcone shall sell and
transfer the Shares to Purchaser,  and Purchaser  shall purchase the Shares from
Richcone.  Before  the  Closing,  Sellers  shall have  transferred  to Newco the
Product  and all  Acquired  Assets,  and Newco  shall have  assumed  the Assumed
Obligations. At any time after the Closing, Purchaser may in its discretion, but
need  not,  require  Sellers  to  transfer  to Newco  any  asset,  liability  or
obligation  that was required to be identified on Exhibit A as an Acquired Asset
or Assumed Obligation but was not so listed.

         2.2 Purchase Price. (a) The purchase price for the Shares shall consist
of an  aggregate  of a  number  of  shares  of  Cellegy  Common  Stock  equal to
AU$1,577,248,  expressed in U.S. dollars and converted based on an exchange rate
of the cross rate quoted in the Wall Street Journal (the "Exchange Rate") on the
date of this Agreement (the "US Dollar Purchase Price"). The number of shares of
Cellegy  Common Stock to be issued at the Closing will be determined as follows:
the closing  price of Cellegy  Common Stock as quoted on the Nasdaq Stock Market
on the date of this  Agreement  will be the  "Base  Reference  Price,"  the U.S.
dollar amount which is $2.00 above the Base Reference Price will be the "Maximum
Reference  Price,"  and the U.S.  dollar  amount  which is $2.00  below the Base
Reference Price will be the "Minimum  Reference  Price." If the closing price of
the Common Stock for the day immediately  preceding the Closing Date (determined
either pursuant to this Agreement or the Further Agreement, if any) the "Closing
Date  Market  Price") is between  the  Maximum  Reference  Price and the Minimum
Reference  Price  (including  equal to the  Maximum  Reference  Price or Minimum
Reference  Price),  then the number of shares to be issued  shall equal the U.S.
dollar equivalent of AU$1,577,248 (calculated as described above) divided by the
Closing Date Market  Price.  If the Closing Date Market Price is higher than the
Maximum  Reference Price, then the number of

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shares to be issued  shall  equal the U.S.  dollar  equivalent  of  AU$1,577,248
divided by the Maximum  Reference  Price.  If the Closing  Date Market  Price is
lower than the Minimum  Reference Price,  then the number of shares to be issued
shall equal the U.S. dollar equivalent of AU$1,577,248  (calculated as described
above) divided by the Minimum Reference Price. The total purchase price shall be
allocated between the Sellers as follows: (i) Richcone: the sum of AU$1,577,247;
and (ii) Quay: the sum of AU$1.00 (or one share of Cellegy  Common  Stock).  The
purchase price shall also include a payment,  by direction,  at the Closing,  of
AU$500,000, in cash or by check, to Lubowski.

                  (b) Cellegy  shall also  purchase all of the inventory of Quay
relating to the Business as of the Closing Date.  Such inventory is described in
Exhibit A. The purchase price for such  inventory  shall be equal to the cost to
Quay of such  inventory (as  disclosed in writing by Quay to Cellegy  before the
date of this Agreement) as of the Closing Date. The purchase price shall be paid
by delivery by Purchaser of a number of shares of Cellegy Common Stock, with the
number of shares  determined  based on the same  methodology  as is set forth in
paragraph (a) above with respect to the purchase price for the Shares.

         2.3  Additional  Contingent  Payments.  (a) After the Closing,  Cellegy
shall be  responsible  for  costs  and  expenses  relating  to  preparation  and
submission of any regulatory packages relating to obtaining  regulatory approval
for the Product in South Africa (including  without  limitation for fissures and
hemorrhoids).  However,  the first $10,000 of any amounts  otherwise  payable by
Cellegy  to  Richcone  pursuant  to the  provisions  of  subparagraph  (b) below
regarding  marketing  or  sale  of a  Marketed  Product  for  treatment  of anal
fissures,  hemorrhoids  and/or  other  conditions  shall be offset in respect of
expenses incurred by Cellegy in connection with such regulatory package.

         (b) Cellegy agrees to pay to Richcone for the life of the South African
patent  which is included in the  Product,  an amount,  in  Australian  dollars,
equivalent  to (i) 25% of any  pre-marketing  payments  relating to South Africa
received by Cellegy from any  distributor or licensee,  if any, of Rectogesic in
South Africa or any other nitroglycerin product marketed in South Africa under a
different  name for the  treatment of anal  fissures,  hemorrhoids  or any other
conditions, which incorporates the South African patent which is included in the
Product, including but not limited to prescription and non-prescription products
("Marketed  Products"),  and (ii) 25% of all royalty payments  relating to South
Africa received by Cellegy from any distributor or licensee, if any, of Marketed
Products in South  Africa.  If Cellegy or any associate of Cellegy (as that term
is  defined  in the  Corporations  Law of  Australia)  (but  not  including  any
independent  third party) instead  markets the Marketed  Product in South Africa
directly rather than through  licensees or distributors,  then Cellegy shall pay
to Richcone  during the period  specified  above an amount  equal to two percent
(2%) of Net Sales of Marketed  Products in South  Africa.  The payments  will be
made solely to Richcone  quarterly  in arrears.  Regardless  of whether  Cellegy
markets the Marketed  Products in South Africa directly or indirectly  through a
distributor  or licensee,  Cellegy  must:  (i) notify  Richcone of the number of
Marketed  Products  sold during the  quarter and the Net Sales of each  Marketed
Product in South  Africa sold during the quarter;  (ii)  maintain or cause to be
maintained  for the life of the South  African  patent  which is included in the
Product,  in a manner  reasonably  approved by  Richcone,  separate and accurate
records and  accounts of the sale of the  Marketed  Products in South Africa and
other  information

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that is relevant to the calculation of such Net Sales;  (iii) permit or cause to
be permitted an  accountant  or auditor of Richcone from time to time and during
ordinary  business hours to inspect and verify all or any records required to be
maintained by Cellegy  under this  section;  and (iv) give and cause to be given
all assistance  reasonably  necessary to such accountant or auditor to carry out
such an inspection and  verification and permit him or her to take copies of any
such records,  subject to customary  agreements by such accountant or auditor to
maintain the confidentiality of Cellegy confidential or proprietary information.

         2.4 Warrants.  In addition,  at the Closing  Cellegy shall issue to the
Richcone  a  warrant  (the  "Warrant")  to  purchase  shares  of  Common  Stock,
substantially in the form provided to Richcone as of the date of this Agreement.
The term of the  Warrants  will be two years from the  Closing  Date.  The total
number of shares of Common Stock issuable upon exercise of the Warrants shall be
the U.S. Dollar Purchase Price divided by the Base Reference Price. The exercise
price per share shall be equal to 120% of the Base Reference Price. The exercise
price  shall  be  payable  in  cash  or by  check,  in  U.S.  dollars.  Richcone
acknowledges  that shares issuable upon exercise of the Warrant shall constitute
"restricted  securities" as defined in Rule 144 promulgated under the Securities
Act of 1933, as amended.

         2.5 Excluded  Obligations.  Sellers  shall not transfer to Newco any of
the Excluded Obligations, and Warrantors covenant that neither Newco nor Cellegy
shall incur any obligations with respect to such Excluded  Obligations.  Without
limiting  the  foregoing,  neither  Cellegy  nor  Newco  shall  assume or become
obligated to pay any liabilities, debts or obligations of Sellers except for the
Assumed  Obligations.  In addition,  Quay shall be  responsible  for any amounts
owing to its employees  that accrue before the closing and for any amounts owing
to  employees  who do not  receive  an  offer or who do not  accept  an offer of
employment with Cellegy or Newco.

         2.6 Further Agreement; Due Diligence. The parties may enter into a more
comprehensive  agreement (the "Further  Agreement")  incorporating  the material
terms and conditions  described in this Agreement.  Unless and until the Further
Agreement becomes  effective,  however,  the parties agree to be bound by all of
the  terms  and  conditions  of this  Agreement.  The  parties  hereby  agree to
negotiate  in good faith,  as soon as possible  but in any event  before the End
Date, a more comprehensive Further Agreement on terms consistent in all material
respects  with the terms set forth in this  Agreement.  If the parties  have not
executed the Further  Agreement by the End Date (or, if it occurs  earlier,  the
Closing),  then  the  terms  and  conditions  set  out in  this  Agreement  will
constitute the Further  Agreement  (subject to any  amendments  agreed to by the
parties), and the Closing Date will be the End Date.

         2.7 No Obligations to Third Parties. The execution and delivery of this
Agreement  shall not be deemed to confer  any  rights  upon any person or entity
other than the  parties  hereto,  or to make any person or entity a third  party
beneficiary of this  Agreement,  or to obligate the parties hereto to any person
or entity other than the parties to this Agreement.

3.  Representations  and  Warranties of Warrantors.  Each Warrantor  jointly and
severally represents and warrants to Cellegy and, after the Closing Date, Newco,
that each of the following is a true and complete statement:

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         3.1  Organization.

                  (a) Newco is a corporation duly incorporated under the laws of
New South Wales and is qualified or licensed to do business in all jurisdictions
where Seller is required to be so qualified  or licensed.  All right,  title and
interest in and into the Product  will have been  transferred  from  Richcone to
Newco  pursuant  to valid  and  enforceable  instruments  of  transfer,  and all
necessary or appropriate  regulatory  filings have been made to lawfully  effect
such  transfer.  All right,  title and interest in and into the Acquired  Assets
will have  been  transferred  by Quay and  Lubowski  to Newco on or  before  the
Closing  Date.  As of the  Closing,  other  than  title to the  Product  and the
Acquired Assets, Newco will not have engaged in any business, has no significant
assets, has no liabilities, has no employees, and has not entered into any other
agreements or instruments with any third parties.

                  (b) Quay is a corporation duly incorporated  under the laws of
New South Wales and is qualified or licensed to do business in all jurisdictions
where Quay is required to be so qualified or licensed.

                  (c) Richcone is a corporation duly incorporated under the laws
of New South Wales and is the trustee of the Richcone Unit Trust.

         3.2 Authorization; Enforceability. Before the Closing Date Sellers will
have  taken all  corporate,  shareholder  and  unitholder  action  necessary  to
authorize   consummation  of  the  Transaction  and  the  performance  of  their
respective  obligations  under this  Agreement.  This Agreement when executed by
Sellers, will be (assuming due authorization,  execution and delivery of same by
Cellegy) the valid and binding  obligation of each Seller,  enforceable  against
each Seller (under  applicable  Australian  law) in  accordance  with its terms,
subject only to the effect of (a)  applicable  bankruptcy and other similar laws
affecting  the  rights of  creditors  generally  and (b) rules of law and equity
governing specific performance, injunctive relief and other equitable remedies.

         3.3 No  Conflict.  The  execution  of this  Agreement,  the transfer to
Purchaser  of the Shares  and the  performance  of  Sellers'  other  obligations
hereunder will not (A) cause a violation of Sellers'  articles of  incorporation
or bylaws or other charter  instruments,  (B) cause a breach under, or allow any
party to  terminate,  or require  the  consent  of any third  party  under,  any
agreement to which any Seller is a party or by which the business or property of
any  Seller is  bound,  or (C) cause any  violation  of  Australian  law or of a
judgment or order of any Australian court or Australian governmental body.

         3.4 Title; Intellectual Property.  Cellegy acknowledges and agrees that
before the date of the Agreement Sellers have made, and between the date of this
Agreement  and  Closing  Date  Sellers  may  make,   several  oral  and  written
disclosures to Cellegy regarding the patent and patent  application  included in
the Product and related intellectual property matters concerning the Product and
such patent and patent  applications.  All of the representations and warranties
in this Section are qualified in their entirety by such disclosures, the content
of  which  Cellegy  acknowledges  having  received.  To  the  Knowledge  of  the
Warrantors,  (A) the Asset Sellers

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collectively hold good and merchantable  title to all Acquired Assets,  free and
clear of any  Encumbrances;  (B) prior to the  transfer  of the Product to Newco
Richcone held good and  merchantable  title to the Product free and clear of any
Encumbrances;  and (C) the Asset  Sellers have not  transferred,  encumbered  or
created any third party  interests  in their  respective  titles to the Acquired
Assets except for transfer of the Acquired  Assets to Newco as  contemplated  by
this Agreement. To the Knowledge of the Warrantors, the Sellers collectively own
all  intellectual  property  rights to each item included in the Product and the
Acquired Assets without  infringement of any third party  intellectual  property
interest,  and no other party has any right or interest whatsoever in any of the
Product and the  Acquired  Assets,  including  without  limitation  any license,
option, right of first refusal or right to acquire, or development, manufacture,
marketing or distribution rights, relating to the Product or any of the Acquired
Assets.  To the  Knowledge of the  Warrantors,  as of the Closing Date, no other
person or entity  other than Newco has any right or interest  whatsoever  in the
Product,  including  without  limitation  any  license,  option,  right of first
refusal  or  right  to  acquire,  or  development,   manufacture,  marketing  or
distribution  rights  relating to the Product.  To the Knowledge of  Warrantors,
neither the Product nor any item included in the Acquired Assets  infringes upon
or violates any patent, copyright, trademark, trade secret or other intellectual
property  rights of any other person or entity.  To the Knowledge of Warrantors,
each of the patents included in the Product is valid and enforceable and will be
valid and enforceable by Newco after the Closing Date. There are no other assets
of any Seller that relate to the Product  other than such as are included in the
Acquired Assets, and to the Knowledge of the Warrantors, no director, officer or
employee of any Seller has any substantial  intellectual property related to the
Product that is not included in the Intellectual  Property being  transferred to
Purchaser hereunder.

         3.5  Acquired Assets; Assumed Obligations.

                  (a)  Exhibit  A lists  (i) all of the  assets  (including  all
Intellectual  Property,  Regulatory Materials,  agreements and instruments) that
are required to be included within the definition of "Acquired Assets", (ii) all
of the liabilities  and obligations  that are required to be included within the
definition  of  "Assumed  Obligations",  and  (iii) all of the  liabilities  and
obligations  that are required to be included within the definition of "Excluded
Obligations."  Sellers  have  delivered  to Purchaser a true and correct copy of
each agreement relating to the Acquired Assets.

                  (b) Sellers have validly  transferred to Newco all of Sellers'
interest in any item included within the definition of Acquired Assets,  Assumed
Obligations,  Product,  Regulatory Materials or Intellectual Property.  Richcone
has made all filings  with all  regulatory  authorities  that are  necessary  to
effect the transfer of the Product  from  Richcone to Newco and to vest in Newco
full title to the patent and patent applications included in the Product.

         3.6  Financial  Information.   Sellers  have  previously  delivered  to
Purchaser  the balance  sheet and  statement of income of Quay as of and for the
period  ended March 31,  2000.  Such  financial  statements  fairly  present the
financial  condition of the Acquired Assets (insofar as they are the property of
Quay) and the Business as of such date.

         3.7 Taxes. At or as soon after the Closing as  practicable,  Newco will
have paid all stamp duty owing in respect of the  acquisition of the Product and
the Acquired Assets. There are

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                                                                    Confidential

no federal,  state or local tax liens against the Product or any of the Acquired
Assets transferred to Newco. At the Closing,  there will be no federal, state or
local tax liens against,  or any  unsatisfied  liabilities for taxes of any kind
imposed on or levied with respect to, any of the Acquired  Assets or the Product
other than liens for any such taxes  which have not yet become due and  payable.
Sellers  have paid or will pay,  when due,  any  federal,  state or local  taxes
accrued before the Closing Date with respect to the Product, the Acquired Assets
or Sellers' business which, if unpaid, may result in a liability of Purchaser or
a lien against Newco or any assets of Newco.

         3.8  Litigation.  To the  Knowledge  of the  Warrantors,  and except as
previously  disclosed  orally or in writing to Cellegy,  there is no litigation,
arbitration,  claim, proceeding or governmental investigation (each an "Action")
pending  against any Seller or any  Seller's  properties,  business,  directors,
officers or employees in connection with the Product or the Acquired Assets, nor
to the  Knowledge of the  Warrantors is there any factual or legal basis for any
Action.

         3.9 Brokers Fees. Neither Purchaser nor Newco shall incur any liability
to any third party with respect to any  brokerage or finder's fee payable by any
Warrantor in connection with the Transaction or the Agreement.

         3.10 Undisclosed Liabilities. To the Knowledge of the Warrantors, there
are no liabilities,  obligations,  or claims  (whether  contingent or otherwise)
relating to the  Product or the  Acquired  Assets that have not been  previously
identified orally or in writing to Cellegy before the date of this Agreement.

         3.11  Securites  Law  Matters.  Each Seller  represents,  warrants  and
acknowledges as follows:

                  (a) Purchase  Entirely for Own Account.  The Cellegy Shares to
be  received  by such  Seller,  the  Warrants,  and the  shares of Common  Stock
issuable  upon exercise of the Warrants  (collectively,  the  "Securities")  are
being  acquired for  investment  for  Seller's own account,  not as a nominee or
agent,  and not with a view to the resale or  distribution  of any part thereof.
Seller has no present  intention of selling,  granting any  participation in, or
otherwise  distributing  the same other than to an affiliate (as defined in Rule
501(b) of the Act) of Richcone in compliance  with  applicable  U.S.  securities
laws. Seller does not have any contract,  undertaking,  agreement or arrangement
with any person to sell,  transfer or grant  participations to such person or to
any third person, with respect to any Securities.

                  (b) Disclosure of Information. Seller believes it has received
all the information it considers  necessary or appropriate for deciding  whether
to  acquire  the  Securities.  Seller  further  represents  that  it has  had an
opportunity  to ask  questions  and receive  answers from Cellegy  regarding the
terms  and  conditions  of the  offering  of the  Securities  and the  business,
properties,  prospects and financial condition of Cellegy. Sellers, individually
and  collectively,  have disclosed all information  relevant and material to the
sale of the Product and/or  Acquired Assets and have not omitted to disclose any
information  which might  materially  affect the operation of the Product and/or
assets after the Closing, including without limitation the intellectual property
being transferred.  Without limiting the foregoing,  neither this Agreement,

                                      -10-
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                                                                    Confidential

nor written materials delivered by Sellers to Cellegy relating to the Product or
Acquired Assets or the matters  contemplated by this Agreement,  taken together,
contains any untrue  statement of a material fact or omits to state any material
fact necessary in order to make the statements  contained herein and therein, in
light  of  the  circumstances   under  which  such  statements  were  made,  not
misleading.

                  (c) Investment Experience. Seller acknowledges that it is able
to fend for itself,  can bear the economic risk of its investment,  and has such
knowledge and experience in financial or business  matters that it is capable of
evaluating the merits and risks of the investment in the Securities. Seller also
represents  it  has  not  been  organized  for  the  purpose  of  acquiring  the
Securities.

                  (d)  Restricted   Securities.   Seller  understands  that  the
Securities it is acquiring are  characterized as "restricted  securities"  under
the United States federal  securities  laws inasmuch as the Securities are being
acquired in a transaction  not  involving a public  offering and that under such
laws and  applicable  regulations  the  Securities  may be resold in the  United
States without registration under the Act only in certain limited circumstances.
In  this  connection,  Seller  represents  that it is  familiar  with  Rule  144
promulgated  under the  Securities  Act of 1933,  as  amended  (the  "Act"),  as
presently in effect, and understands the resale limitations  imposed thereby and
by the Act.  Seller  understands  that the  holding  period  under Rule 144 with
respect to shares  acquired  upon  exercise of the Warrants will commence on the
date that the shares are purchased and fully paid for.

                  (e) Further  Limitations  on  Disposition.  Without in any way
limiting the  representations set forth above, Seller further agrees not to make
any disposition of all or any portion of the Securities unless:

                           (i) There is then in effect a registration  statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

                           (ii) (A) Seller  shall have  notified  Cellegy of the
proposed  disposition and shall have furnished Cellegy with a detailed statement
of the circumstances surrounding the proposed disposition, and (B) if reasonably
requested  by Cellegy,  Seller shall have  furnished  Cellegy with an opinion of
counsel,  reasonably  satisfactory  to Cellegy  that such  disposition  will not
require  registration  of such shares  under the Act. It is agreed that  Cellegy
will not require opinions of counsel for transactions  made pursuant to Rule 144
except in unusual circumstances.

                  (f) Legends.  Seller  understands  and agrees that the legends
set  forth  below  or  similar  legends  will be  placed  on any  certificate(s)
evidencing the Securities,  together with any other legends that may be required
by applicable securities laws:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "ACT"),  OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.  THE
         SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
         RESALE AND MAY NOT BE

                                      -11-
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                                                                    Confidential

         TRANSFERRED, PLEDGED, RESOLD, OR OTHERWISE DISPOSED OF EXCEPT
         AS PERMITTED  UNDER THE ACT AND APPLICABLE  STATE  SECURITIES
         LAWS,  PURSUANT TO REGISTRATION OR EXEMPTION  THEREFROM.  THE
         ISSUER OF THE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
         FORM AND SUBSTANCE  SATISFACTORY  TO THE ISSUER TO THE EFFECT
         THAT ANY PROPOSED  TRANSFER OR RESALE IS IN  COMPLIANCE  WITH
         THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS."

                  (g) Refusal to Transfer.  Seller  acknowledges and agrees that
Cellegy  will not be required (i) to transfer on its books any  Securities  that
have been sold or otherwise transferred in violation of any of the provisions of
this  Agreement or (ii) to treat as owner of such  Securities,  or to accord the
right to vote or pay dividends to, any other  transferee to whom such Securities
have been so transferred.

       3.12 Regulatory Filings.  To the Knowledge of the Warrantors,  Seller has
made all  filings  with  governmental  agencies  and  obtained  all  assignments
necessary to claim and protect its rights in all intellectual  property included
in the  Product and the  Acquired  Assets;  provided,  however,  that  Purchaser
acknowledges  that neither  regulatory  approval of the Product in South Africa,
nor  registration  of the  Product  for  the  treatment  of  anal  fissures  and
hemorrhoids in South Africa,  has been obtained,  and that Sellers do not intend
to undertake any significant  additional efforts before the Closing with respect
to obtaining such approvals.

       3.13 Liability  Insurance.  Quay has  maintained  all insurance  policies
required  at law for it to carry  on the  Business.  All  premiums  for  product
liability insurance policy relating to the Product and research, development and
trials  related  thereto  have been paid by Quay for all  periods up to, and for
certain periods  beyond,  the Closing Date. Quay shall take such actions and pay
such premiums as are required to maintain  coverage under such product liability
policies (or other comparable  policies) after the Closing Date, with respect to
pre-Closing  research,  development and trials and Products manufactured or sold
before the Closing Date (including  inventory to be acquired by Cellegy pursuant
to this Agreement).

4. Representations and Warranties of Cellegy. Cellegy represents and warrants to
each of the Sellers that each of the following is a true and complete statement:

         4.1  Organization.  Cellegy is a corporation  duly organized  under the
laws of the State of California.

         4.2 Authorization.  Before the Closing Date Cellegy will have taken all
corporate  action necessary to authorize its consummation of the Transaction and
the performance of its obligations under this Agreement.

         4.3 No Conflict. The execution of this Agreement and the performance of
Cellegy's  obligations  hereunder  will not (A) cause a violation  of  Cellegy's
articles of  incorporation  or bylaws,  (B) cause a breach  under,  or allow any
party to  terminate,  or require  the  consent  of any third  party  under,  any
agreement  to which  Cellegy is a party or by which the  business or property of
Cellegy is bound  (other  than such  consents,  if any,  as Cellegy  will obtain
before the Closing),

                                      -12-
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                                                                    Confidential

or (C)  cause any  violation  of law or of a  judgment  or order of any court or
governmental body. This Agreement when executed by Cellegy will be (assuming due
authorization, execution and delivery of the same by the Sellers), the valid and
binding  obligation of Cellegy,  enforceable  against Cellegy (under  applicable
U.S.  law) in  accordance  with its  terms,  subject  only to the  effect of (a)
applicable  bankruptcy  and other similar laws affecting the rights of creditors
generally  and (b)  rules  of law and  equity  governing  specific  performance,
injunctive relief and other equitable remedies.

         4.4 No  Tax  Representations.  Cellegy  expressly  does  not  make  any
representation  or warranty  concerning the tax consequences of the transactions
contemplated by this Agreement to Sellers or their  shareholders or unitholders,
as the case may be.

5. Covenants.

         5.1 Due Diligence.  Between the date of this Agreement and the Closing,
Sellers  and  Newco  shall  allow  Purchaser  and its  representatives  to fully
investigate  Newco's and  Sellers'  (insofar  as it relates to the  transactions
contemplated by this Agreement)  business,  technology and financial  condition,
subject to prior approval of Seller,  as to the times at which,  and the persons
from whom,  inquiries  are made in the course of such  investigations  and as to
whether Purchaser and its representatives may have access to or to copies of any
documentation  held by third parties relating to the Product and/or the Acquired
Assets and which are not in the public domain.  Sellers will afford Purchaser or
its representative reasonable access to Sellers' and Newco's properties, offices
and files,  upon  reasonable  prior  notice and in a manner so as not to disrupt
Sellers'  business,  whether  before  or after  the  Closing,  for  purposes  of
conducting due diligence relating to the Product and Acquired Assets.  Purchaser
shall give Seller  prior  notice of any  proposed  communication  with any third
party that Purchaser or any representative of Purchaser proposes to make as part
of its  investigation,  and shall not contact such third party without  Seller's
prior consent.

         5.2 No Other  Negotiations.  Seller  agrees  that from the date of this
Agreement  until the earlier to occur of the Closing or the  termination of this
Agreement pursuant to its terms, Sellers will not, and will use best efforts not
to allow any  officer  or  director  of Seller or any other  person on behalf of
Seller to,  negotiate or accept any offer from any party concerning the possible
disposition  of all or any  substantial  portion of Sellers'  assets,  equity or
business or any shares or units in the Sellers, as the case may be. Sellers will
promptly notify Cellegy of any such inquiries or proposals.

         5.3 Existing  Litigation.  Before the Closing,  Sellers  shall take all
necessary  actions to remove from the Product or Acquired  Assets any connection
with any ongoing  litigation  relating  thereto  (including  without  limitation
litigation  against Sellers' former attorneys)  insofar as such a connection may
affect their title to the Product or Acquired Assets,  and Sellers agree to bear
all costs,  fees and  expenses,  and to  indemnify  Newco and  Cellegy and their
employees,  officers and agents  against any loss,  liability,  expense and cost
(including  costs of  investigation,  prosecution  and settlement and attorneys'
fees and expenses) relating to any such litigation.

                                      -13-
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                                                                    Confidential

         5.4 Cooperation.  Cellegy and Sellers will cooperate and use their good
faith  efforts to satisfy the  conditions to closing  described  below and, upon
satisfaction of such  conditions,  to consummate the  transactions  contemplated
hereby.

         5.5 Conduct of  Business.  Between the date of this  Agreement  and the
Closing:

                  (i) Quay shall use its best  efforts to operate  its  business
(insofar as it relates to the Product or Acquired Assets) in the ordinary course
thereof and  consistently  with its past  practices  (however,  it is  expressly
acknowledged  that the Sellers shall be under no obligation to obtain regulatory
approval of Rectogesic in South Africa nor  registration  of the product for the
treatment of anal  fissures and  hemorrhoids  in South Africa) and Richcone will
ensure that Newco does not enter into any  transaction  or agreement or take any
action  out of the  ordinary  course or enter into any  transaction  or make any
commitment involving an expense or capital expenditure by Seller relating to the
Acquired Assets, in excess of $5,000, without Cellegy's prior written consent;

                  (ii) each Seller shall use all  reasonable  efforts to protect
the Product and Acquired Assets, cooperate with Cellegy concerning protection of
intellectual  property  rights  relating to the Product and Acquired Assets (but
the foregoing  shall not obligate  Sellers to undertake any expenditure of funds
for the protection of such assets and rights  outside of the ordinary  course of
business) and take such actions as Cellegy may reasonably  request (at Cellegy's
expense)  relating to protection of such assets,  and except as  contemplated by
this  Agreement  effect  no  transfer,  sale,  assignment,   lease,  license  or
encumbrance of any of its Acquired Assets;

                  (iii) each Seller shall engage in no  transactions  materially
inconsistent with its  representations  and warranties of the Warrantors in this
Agreement;

                  (iv) each Seller shall  provide  Cellegy with all  information
and  supporting  documents  concerning  the  Product,  Acquired  Assets  and the
Business that Cellegy  reasonably  requests in connection with its due diligence
conducted in accordance with Section 5.1 above;

                  (v) each Seller shall use its best  efforts to obtain,  before
the Closing,  the written consent of all third parties  necessary for Sellers to
consummate the  Transaction  and to transfer and assign the Product and Acquired
Assets to Newco and Cellegy;

                  (vi) each Seller shall notify Cellegy promptly upon receipt of
any  communication  or legal  process  which  commences or threatens  litigation
against any Seller in connection  with the  Business,  the Product or any of the
Acquired Assets;

                  (vii) each Seller shall  provide  Cellegy,  whether  before or
after the Closing,  with any further documents which Cellegy reasonably requests
relating to the Product, Acquired Assets or the Business or to carry into effect
the Transaction, subject to Section 5.1; and

                  (ix) each  Seller  shall  upon the  Closing,  cease use of the
Intellectual Property without Cellegy's prior written consent.

                                      -14-
<PAGE>
                                                                    Confidential

         5.6 Taxes.  Sellers  agree to pay any sales,  use or other taxes (other
than   capital  gain  or  income  taxes   imposed  on  the   individual   Seller
shareholders),  other than any taxes  arising under United States tax laws, as a
result of the  Transaction.  Cellegy agrees to be responsible for any sales, use
or other taxes arising under United States tax laws arising from consummation of
the  Transaction.  Cellegy  agrees to be  responsible  for any stamp  duty taxes
arising out of the Transaction.

         5.7  Cellegy  Covenants.  Cellegy  agrees  that  from  the date of this
Agreement  until the  Closing,  subject  to its rights  described  herein not to
consummate  the  Transaction,  it will (i) use its best  efforts to conduct  its
business  in  such  a  manner  so as  to  not  be  in  material  breach  of  the
representations and warranties made to Sellers herein, (ii) use its best efforts
to obtain before the Closing the written consent of all third parties  necessary
for Cellegy to consummate the  Transaction,  and (iii) notify  Sellers  promptly
upon receipt of any  communication or legal process which commences or threatens
litigation  relating  to  the  Product,  Acquired  Assets  or  the  transactions
contemplated hereby.

6. Additional Agreements.

         6.1 Consulting Agreement; Transition.

                  (a) The Sellers agree to use their best efforts to ensure that
Sheli  Lubowski  will,  if Cellegy  requests,  before the  Closing  enter into a
consulting  agreement (the "Consulting  Agreement") to provide their services to
Cellegy and Newco during a six-month  transition  period so as to assist Cellegy
and Newco in running  the  Business,  including  but not  limited  to  assisting
Cellegy and Newco in obtaining  regulatory  approval for and commercializing the
Product and Acquired Assets,  at a commercially  reasonable fee (but in no event
more  than  AU$8,333/per  month)  and on the  basis  that  Cellegy  or Newco may
terminate the  transition  period,  and payments to such  persons,  upon 30 days
written  notice and on such other terms and  conditions  as they and Cellegy may
agree.

                  (b) Lubowski further agrees to provide his services to Cellegy
in relation to the prosecution of Cellegy's  worldwide patent  applications with
respect to other products similar to the Product,  for a period of two (2) years
after  the  end of the  term  of the  consulting  period  under  the  Consulting
Agreement, on the basis that:

                           (A) the  services  will be  provided  in return for a
nominal fee only and  Lubowski  must bear all  reasonable  expenses  incurred in
relation to the provision of the services and will be  indemnified by Cellegy in
respect of expenses incurred exceeding the sum of AU$500 (provided that Lubowski
complies  with  Cellegy's  policies,  disclosed  to  Lubowski,   concerning  the
requirement for prior approval by Cellegy of certain expenses); and

                           (B) Lubowski will be entitled to provide the services
at such times as he determines,  acting  reasonably,  having regard to his other
employment commitments.

                                      -15-
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                                                                    Confidential

         6.2  Non-Competition.  For a period consisting of the longer of (i) the
life of the South  African  and  Australian  patents  which are  included in the
Product or (ii) ten (10) years from the Closing  Date,  Sellers  agree that they
will not engage in any  business,  whether as an employee,  officer,  consultant
shareholder,  lender or  otherwise,  or  otherwise  utilize  their  expertise to
register,  seek regulatory approval for, market,  distribute or sell Rectogesic,
any product  included within the Product,  any Acquired Asset, or any comparable
product  for  the  treatment  of  anorectal  disorders,  in  any  market  of the
Territory.

         6.3  Restrictions  on  Transfers of Shares.  Without the prior  written
consent of Cellegy,  Sellers  will not for a period of (i) six (6) months in the
case of the Cellegy  Shares and (ii) one year in the case of the Warrant  Shares
(or such  shorter  period  as the  parties  may  mutually  agree in the  Further
Agreement) after the Closing Date, (1) 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 Cellegy  Shares or any Warrant
Shares  (other  than to an  affiliate  (as defined in Rule 501(b) of the Act) of
Richcone) in  compliance  with  applicable  U.S.  securities  laws who agrees in
writing  to be bound by the same  restrictions,  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  such  securities  (other  than  to an
affiliate (as defined in Rule 501(b) of the Act) of Richcone) in compliance with
applicable  U.S.  securities  laws who agrees in writing to be bound by the same
restrictions.

         6.4 Efforts to Market the Product.  Cellegy  confirms that it will seek
to develop,  market and sell the Product in Australia and South Africa,  through
the use of commercially  reasonable  efforts in relation to a product of similar
potential as the Product in such markets; provided,  however, that the foregoing
shall not obligate  Cellegy to devote  resources to develop,  market or sell the
Product  where  Cellegy in good faith  concludes  that it would be  commercially
unreasonable  to  do  so in  light  of  Cellegy's  overall  business,  financial
condition, prospects, results of operations, and other business opportunities.

         6.5 Accounts Receivable. The Purchaser acknowledges and agrees that the
Accounts Receivable will remain the property of Quay and will not be transferred
from Quay to Newco. The Purchaser shall:

         (a) act as agent of Quay  during the period of 90 days from the Closing
         Date  ("Collection  Period") and shall use all reasonable  endeavors to
         collect the Trade Debts for Quay during the Collection Period ;

         (b) promptly  account to Quay for any amount  received by the Purchaser
         after the Collection  Period or any extension of the Collection  Period
         in respect of the Trade Debts,  less a commission of 12.5% of the Trade
         Debts  collected by way of a collection  fee in favor of the  Purchaser
         ("Commission");

         (c)  provide a statement  in writing to Quay on a monthly  basis of all
         monies  received  in respect of each of the Debtors  including  without
         limitation  the name of the  Debtor,  the  amounts  (in respect of each
         Debtor) and all customer  references and other details as to allocation
         of the moneys and the deduction of the Commission;

                                      -16-
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                                                                    Confidential

         (d) at all  reasonable  times afford Quay full,  free and  unrestricted
         access to all relevant records pertaining to the Trade Debts; and

         (e) pay to the  credit of such bank  account as shall be  nominated  in
         writing by Quay to the Purchaser on or prior to Closing for the purpose
         all  amounts  received  in  respect  of each of the  Debtors  (less the
         Commission) as soon as practicable after receipt and, in any event, not
         later than 4 Business  Days after the date of  receipt.  The  Purchaser
         acknowledges  that such  amounts  are to be paid free from all  claims,
         demands,  rights of set-off (other than in relation to the Commission),
         contribution,  counter claim,  marshalling or any other right at law or
         in equity  whatsoever  which the Purchaser may have against Quay on any
         account.

         Any  part of the  Trade  Debts  outstanding  at the  expiration  of the
Collection  Period are to be collected by Quay. Upon receipt by the Purchaser of
payment of any Trade Debt,  the  Purchaser  is  authorized  by Quay,  during the
Collection Period, to give a full and valid discharge of the amount received.

7. Closing. The closing of the transactions  contemplated by this Agreement (and
the  Further  Agreement,  if any)  (the  "Closing")  will  occur  promptly  upon
satisfaction  of all  closing  conditions,  but  (assuming  satisfaction  of all
closing  conditions) in all events not later than the End Date (or, if a Further
Agreement is entered  into,  then the date  specified in the Further  Agreement)
(the date on which the  Closing  occurs,  referred  to as the  "Closing  Date"),
unless one or more  regulatory  or  governmental  consents or approvals  that is
required to be obtained  before the  Closing  has not been  obtained  through no
fault of any party,  in which case the Closing shall occur as soon as reasonably
possible  after such  consent or approval  has been  obtained.  At the  Closing,
Sellers shall  transfer,  sell and assign to Purchaser  all of the Shares,  such
that  Cellegy is the sole owner of Newco,  and Newco is the sole owner of all of
the Acquired Assets, Intellectual Property and Regulatory Materials, and Cellegy
will deliver the purchase price for the Shares in accordance with Section 2.2.

8. Cellegy's Closing Conditions.  Cellegy's obligations under this Agreement are
subject  to the  satisfaction  of each of the  following  conditions,  except as
Cellegy may waive in writing.

         8.1 Due Diligence.  Cellegy shall have completed such  investigation of
the Product,  Acquired Assets and the Business as it deems appropriate and shall
in its discretion be satisfied with its due diligence, including with respect to
Richcone's,  Newco's  and Quay's  respective  ownership  of the  Product and the
Acquired Assets.

         8.2 No Material  Adverse Change.  No material adverse change shall have
occurred in Newco's or Sellers'  business or in the  Acquired  Assets  since the
date of this Agreement.

         8.3  Representations,  Warranties and  Covenants.  The Sellers' and the
Warrantors'  representations  and warranties made in this Agreement shall remain
true in all  material  respects  as if  made on the  Closing  Date  (except  for
representations  and warranties  which are  themselves  qualified by concepts of
materiality, in which case such representations and warranties shall remain true
and correct in all respects as if made on the Closing  Date),  and Sellers shall
have

                                      -17-
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                                                                    Confidential

performed in all  material  respects  all of the terms and  obligations  of this
Agreement that are required to be performed by Sellers before the Closing.

         8.4 Third Party  Consents.  All third party consents which are required
in order to assign and transfer the Acquired  Assets to Newco and to  consummate
the Transaction shall have been obtained.

         8.5 Compliance  Certificate.  Cellegy shall have received a certificate
with respect to  satisfaction  of the  conditions set forth in Sections 8.2, 8.3
and  8.4  signed  on  behalf  of   Sellers  by  one  or  more  duly   authorized
representatives of Sellers.

         8.6 No  Litigation.  No  action,  claim or  proceeding  shall have been
brought or  threatened  against any party  seeking to  challenge or prohibit the
transactions  contemplated  hereby or claims any  rights to any of the  Acquired
Assets.

         8.7 Opinion of  Counsel.  Cellegy  shall have  received  the  favorable
opinion of Corrs Chambers  Westgarth,  counsel to Sellers, in form and substance
reasonably satisfactory to Cellegy, concerning due incorporation of Newco, valid
transfer of Product and  Acquired  Assets from Quay,  Richcone  and  Lubowski to
Newco,  all required  corporate,  shareholder  and unitholder  approvals of this
Agreement and the  transactions  contemplated  hereby,  no conflict between this
Agreement and any Australian law or regulation,  enforceability of the Agreement
under  Australian law, and such other matters as the parties may mutually agree.
Cellegy  agrees to  reimburse  Sellers for up to AU $2,000 of the legal fees and
expenses of such firm incurred in the preparation of such opinion.

         8.8  Consulting  Agreement.  Sheli Lubowski shall have entered into the
Consulting Agreement.

         8.9 Delivery of Assets: Assignments. Sellers shall have transferred and
delivered, and Newco shall have received, all the Acquired Assets free and clear
of all  Encumbrances.  Sellers shall have  executed,  and Newco or Cellegy shall
have  received,   assignment  agreements,   in  form  and  substance  reasonably
satisfactory  to Cellegy,  for all  trademark  and other  intellectual  property
rights related to the Acquired Assets.

         8.10 Faulding Agreement.  The manufacturing agreement dated 22 February
1999 between Quay and Faulding  shall have been assigned to Newco,  and Faulding
shall have consented in writing to such assignment.

9. Seller's Closing  Conditions.  Sellers'  obligations under this Agreement are
subject to the satisfaction of each of the following  conditions,  except as any
Seller may waive in writing with respect to itself.

         9.1    Representations,    Warranties    and    Covenants.    Cellegy's
representations  and warranties  made in this Agreement shall remain true in all
material respects as if made on the Closing Date (except for representations and
warranties which are themselves  qualified by concepts of materiality,  in which
case such  representations  and warranties  shall remain true and

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                                                                    Confidential

correct in all respects as if made on the Closing Date),  and Cellegy shall have
performed  in material  respects and be in material  compliance  with all of the
terms and  obligations  of this  Agreement  that are required to be performed by
Cellegy at or before the Closing Date.

         9.2  Delivery of  Purchase  Price.  Cellegy  shall have  delivered  the
Purchase Price in accordance with the terms of this Agreement, including but not
limited to duly  executed  certificates  relating to the issuance of the Cellegy
Shares and the Warrant.

10. Registration

         10.1     Definitions.  For purposes of this Section 10:

                  (a) Act. The term "Act" means the United States Securities Act
of 1933, as amended.

                  (b) Form S-3.  The term  "Form  S-3" means such form under the
Act as is in effect on the date hereof or any successor  registration form under
the Act  subsequently  adopted by the  Commission  which  permits  inclusion  or
incorporation  of substantial  information by reference to other documents filed
by Cellegy with the Commission.

                  (c)  Holder.  The term "Holders" means Sellers.

                  (d)  Registration.  The terms  "register,"  "registered,"  and
"registration"  refer to a  registration  effected  by  preparing  and  filing a
registration  statement in compliance with the  requirements of the Act relating
to the form of such registration  statement,  and the declaration or ordering of
effectiveness of such registration statement.

                  (e) Registrable Securities.  The term "Registrable Securities"
means:  (1) all of the Cellegy Shares and Warrant Shares,  and (2) any shares of
Common Stock of Cellegy issued as a dividend or other  distribution with respect
to, or in  exchange  for or in  replacement  of,  any of the  Cellegy  Shares or
Warrant Shares; provided,  however, that the term "Registrable Securities" shall
exclude in all events (and such  securities  shall not  constitute  "Registrable
Securities") (i) any Registrable  Securities sold or transferred to a person who
is not a Holder as defined  above,  (ii) any  Registrable  Securities  sold in a
public offering  pursuant to a registration  statement filed with the Commission
or sold pursuant to Rule 144 promulgated  under the Act ("Rule 144") or (iii) as
to any  Holder,  any  Registrable  Securities  held by such  Holder  that can be
publicly sold without volume restriction within a three-month period pursuant to
Rule 144 or another applicable exemption.

                  (f)  Prospectus:   The  term   "Prospectus"   shall  mean  the
prospectus  included in any Shelf  Registration  Statement  (including,  without
limitation,  a prospectus that discloses  information  previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule  430A  promulgated  under the  Act),  as  amended  or  supplemented  by any
prospectus supplement (including,  without limitation, any prospectus supplement
with  respect to the terms of the  offering  of any  portion of the  Registrable
Securities  covered  by  such  Shelf  Registration  Statement),  and  all  other
amendments  and   supplements  to  the  Prospectus,

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including post-effective  amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

                  (g) Shelf Registration Statement.  See Section 10.2(a).

         10.2 Form S-3 Shelf Registration.

                  (a) Registration. Within a reasonable period of time after the
Closing,  Cellegy  shall  prepare and file with the  Commission  a  registration
statement on Form S-3 (or, if Cellegy is not then eligible to use Form S-3, then
another  appropriate form) providing for the resale by the Holders of all of the
Registrable   Securities  (such   registration   statement  and  any  additional
registration  statements  that  may be  filed  pursuant  to the  next  sentence,
referred  to as the  "Shelf  Registration  Statement").  The Shelf  Registration
Statement may include securities other than those held by Holders.  Cellegy will
use all reasonable efforts to cause the Shelf  Registration  Statement to become
effective  before six  months  after the  Closing  Date.  Cellegy  shall use all
reasonable  efforts  to  keep  the  Shelf  Registration  Statement  continuously
effective,  pursuant  to the Act  and  the  Rules  and  Regulations  promulgated
thereunder,  until (i) the date when such  Registrable  Securities cease to meet
the  above  definition  of  Registrable  Securities,  (ii)  if  all  Registrable
Securities have been registered and sold, or (iii) two years after the effective
date of such Shelf Registration Statement; provided, however:

                  (i) that the  Holders  will  sell the  Registrable  Securities
pursuant  to such  registration  only  during a  "Permitted  Window" (as defined
below);

                  (ii) if a "Notice  of  Resale"  (as  defined  below)  has been
given,  then if Cellegy  furnishes  to the Holders a  certificate  signed by the
President or Chief Executive  Officer of Cellegy stating that, in the good faith
judgment of the Board of Directors of Cellegy, it would be seriously detrimental
to Cellegy and its  shareholders  for the  Permitted  Window to commence at such
time) due to (A) the existence of a material  development or potential  material
development  involving  Cellegy  which Cellegy would be obligated to disclose in
the Prospectus contained in the Shelf Registration  Statement,  which disclosure
would in the good  faith  judgment  of the  Board of  Directors  of  Cellegy  be
premature or otherwise inadvisable at such time or (B) concurrent public filings
with the Commission of other registration statements, then Cellegy will have the
right (the "Deferral  Right") to defer the  commencement of the Permitted Window
for a period of not more than 30 days after receipt of the Notice of Resale; and

                  (iii) that  Cellegy  will not be  required  to effect any such
registration,  qualification  or compliance under applicable state blue sky laws
in any  particular  jurisdiction  in which  Cellegy would thereby be required to
qualify to do business or to execute a general consent to service of process.

                  In the event that the Shelf Registration Statement shall cease
to be effective,  Cellegy  shall  promptly  prepare and file a new  registration
statement covering the Registrable  Securities and shall use its best efforts to
have such registration  statement  declared  effective as soon as possible.  Any
such registration statement shall be considered a "Shelf Registration Statement"
hereunder.

                                      -20-
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                  (b) Permitted  Window.For  the purposes of this  Agreement,  a
"Permitted  Window"  with  respect  to a Holder  is a period  of 30  consecutive
calendar  days  commencing  upon  delivery  to the Holder of  Cellegy's  written
notification to the Holder in response to a Notice of Resale that the Prospectus
contained in the Shelf Registration  Statement is available for resale. In order
to cause a Permitted Window to commence, a Holder must first give written notice
to  Cellegy  of its  present  intention  to sell part or all of the  Registrable
Securities pursuant to such registration (a "Notice of Resale"). Upon receipt of
such Notice of Resale,  Cellegy will give written  notice to the Holders as soon
as  practicable,  but in no event not more than three  business  days after such
receipt,  that (A) the Permitted Window will commence on the date such notice is
received by the  Holder,  (B) it is  necessary  for  Cellegy to  supplement  the
Prospectus or make an  appropriate  filing under the Exchange Act so as to cause
the Prospectus to become current (unless a certificate of the President or Chief
Executive  Officer is delivered as provided  above),  or (C) Cellegy is required
under  the Act and the  Rules  and  Regulations  thereunder  to amend  the Shelf
Registration  Statement in order to cause the Prospectus to be current (unless a
certificate of the President or Chief Executive Officer is delivered as provided
above). If Cellegy determines that a supplement to the Prospectus, the filing of
a report pursuant to the Exchange Act or an amendment to the Shelf  Registration
Statement required under the Act, as provided above, is necessary,  it will take
such actions as soon as reasonably practicable (subject to paragraph (c) below),
and Cellegy will notify the Holder of the filing of such  supplement,  report or
amendment,  and, in the case of an amendment, the effectiveness thereof, and the
Permitted Window will then commence.

                  (c) Closing of Permitted Window. During a Permitted Window and
in the event (i) of the  happening of any event of the kind  described  above or
(ii) that, in the judgment of Cellegy's  Board of Directors,  it is advisable to
suspend use of the Prospectus  for a discrete  period of time due to undisclosed
pending  corporate  developments  or pending  public filings with the Commission
(which need not be described in detail),  Cellegy shall deliver a certificate in
writing to the Holder to the effect of the  foregoing  and, upon receipt of such
certificate,  the Permitted Window shall  terminate.  The Permitted Window shall
resume  upon the  Holder's  receipt  of copies of the  supplemented  or  amended
Prospectus,  or at such time as the Holder is advised in writing by Cellegy that
the Prospectus  may be used, and at such time as the Holder has received  copies
of any  additional  or  supplemental  filings  that are  incorporated  or deemed
incorporated  by  reference  in such  Prospectus  and which are  required  to be
delivered as part of the Prospectus.  In any event,  the Permitted  Window shall
resume  no later  than 30 days  after it has been  terminated  pursuant  to this
Section,  and if the  Permitted  Window has been  closed,  then once resumed the
number of days during which such Permitted Window remains open shall be extended
by the number of days that the  Permitted  Window  was  closed.  If Cellegy  has
previously  terminated a Permitted Window pursuant to this subsection  within 90
days of the date  that it  delivers  another  notice  pursuant  this  subsection
terminating  another  Permitted  Window,  then the time  period set forth in the
preceding  sentence shall be shortened so that the Permitted Window shall resume
no later  than 10 days  after it has been  terminated  pursuant  to such  second
notice.

                  (d) Expenses.  The registration  fees and expenses incurred by
Cellegy in connection with each Shelf  Registration  Statement and actions taken
by Cellegy in connection  with each Permitted  Window shall be borne by Cellegy.
Holder  shall be  responsible  for any fees and expenses of its counsel or other
advisers.

                                      -21-
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                                                                    Confidential

         10.3   Obligations  of  Cellegy.   Whenever   required  to  effect  the
registration of any Registrable Securities under this Agreement,  Cellegy shall,
as expeditiously as reasonably possible:

                  (a)  Furnish  to  the  Holder  such  number  of  copies  of  a
Prospectus,   including  a  preliminary  Prospectus,   in  conformity  with  the
requirements of the Act, and such other  documents as it may reasonably  request
in order to facilitate the disposition of the Registrable Securities owned by it
that are included in such registration.

                  (b) Use all  reasonable  efforts to  register  and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such  jurisdictions  as shall be  reasonably  requested  by the
Holder,  provided that Cellegy shall not be required in connection  therewith or
as a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

                  (c)  Notify  the  Holder  promptly  (i) of any  request by the
Commission  or any other  federal  or state  governmental  authority  during the
period  of  effectiveness   of  a  registration   statement  for  amendments  or
supplements  to  such  registration  statement  or  related  prospectus  or  for
additional  information,  (ii) of the  issuance by the  Commission  or any other
federal  or state  governmental  authority  of any  stop  order  suspending  the
effectiveness  of a registration  statement or the initiation of any proceedings
for that  purpose and (iii) of the receipt by Cellegy of any  notification  with
respect to the suspension of the  qualification or exemption from  qualification
of any  of the  Registrable  Securities  for  sale  in any  jurisdiction  or the
initiation or threatening of any proceeding for such purpose.

                  (d) Make every  reasonable  effort to obtain the withdrawal of
any order suspending the  effectiveness of the Shelf  Registration  Statement at
the earliest possible time.

                  (e)  Use  all  reasonable  efforts  to  list  the  Registrable
Securities  for  trading on Nasdaq or other stock  exchange  on which  Cellegy's
Common Stock is then traded.

         10.4  Furnish  Information.  It shall be a condition  precedent  to the
obligations of Cellegy to take any action pursuant to Section 10 that the Holder
shall  furnish  to  Cellegy  such  information  regarding  it,  the  Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be  required  to timely  effect  the  registration  of its  Registrable
Securities.

         10.5  Termination  of  Cellegy's  Obligations.  Cellegy  shall  have no
obligations  to  register,  or  maintain,  a  registration  statement  governing
Registrable  Securities,  (i) if all Registrable Securities have been registered
and sold pursuant to  registrations  effected  pursuant to this Agreement,  (ii)
with  respect  to any  particular  Holder,  at  such  time  as  all  Registrable
Securities  held by such Holder may be sold within a three  month  period  under
Rule 144, as it may be amended from time to time,  including  but not limited to
amendments  that reduce that period of time that  securities must be held before
such  securities  may be sold  pursuant  to such  rule,  or  another  applicable
exemption,  or (iii) two years from the effective date of the Shelf Registration
Statement.

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11. Survival of Representations and Warranties; Termination; Indemnity.

         11.1  Survival.  The obligation of the parties under this Section shall
survive the Closing.

         11.2 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time before the Closing:

                  (a) by mutual consent of each of the parties hereto;

                  (b) by either  Cellegy or Sellers  (i) if the  Closing has not
occurred  by the end of  business  (in  California)  on the End Date;  provided,
however, that the right to terminate this Agreement under this Section shall not
be  available  to any party whose  action or failure to act has been a principal
cause of or  resulted in the failure of the  transactions  contemplated  by this
Agreement  to occur on or before  such date where such  action or failure to act
constitutes  a breach of this  Agreement;  (ii) if there  shall be an order of a
court in effect preventing consummation of the transactions contemplated by this
Agreement;  or (iii)  there  shall be any  statute,  rule,  regulation  or order
enacted,  promulgated  or  issued  or  deemed  applicable  to  the  transactions
contemplated  by this  Agreement  by any  governmental  entity  that  would make
consummation of the transactions contemplated by this Agreement illegal;

                  (c) by Cellegy if there shall be any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the transactions
contemplated by this Agreement by any governmental  entity, which would prohibit
Cellegy's ownership or operation of any portion of the Product,  Acquired Assets
or Business;

                  (d) by Cellegy,  upon a material breach of any representation,
warranty,  covenant  or  agreement  on the part of any  Seller set forth in this
Agreement,  or if any representation or warranty of any Seller shall have become
untrue; provided that if such inaccuracy in any such representation and warranty
or breach by any Seller is curable by Seller  through  the  exercise of Sellers'
commercially  reasonable efforts,  then Cellegy may not terminate this Agreement
under this  subsection  before  End Date,  provided  that  Sellers  continue  to
exercise  commercially   reasonable  efforts  to  cure  such  breach  (it  being
understood  that  Cellegy  may not  terminate  this  Agreement  pursuant to this
subsection if Cellegy shall have  materially  breached this Agreement or if such
breach by Sellers is cured before the End Date); or

                  (e) by Sellers,  upon a material breach of any representation,
warranty,  covenant  or  agreement  on the  part of  Cellegy  set  forth in this
Agreement,  or if any  representation  or warranty of Cellegy  shall have become
untrue; provided that if such inaccuracy in any such representation and warranty
or breach by Cellegy is curable by Cellegy  through the  exercise  of  Cellegy's
commercially  reasonable efforts,  then Sellers may not terminate this Agreement
under this subsection  before the End Date,  provided that Cellegy  continues to
exercise  commercially   reasonable  efforts  to  cure  such  breach  (it  being
understood  that  Sellers  may not  terminate  this  Agreement  pursuant to this
subsection if Sellers shall have  materially  breached this Agreement or if such
breach by Cellegy is cured before the End Date).

                                      -23-
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                                                                    Confidential

         11.3  Indemnity by  Warrantors/Sellers.  Warrantors  and Sellers  shall
jointly and  severally  indemnify  and hold  harmless  Cellegy,  its  directors,
officers,  shareholders,  employees and agents from any Loss arising from out of
or  relating  to (A)  breach of any  covenant  or  inaccuracy  or  untruth  of a
representation  or  warranty  of any  Warrantor  in this  Agreement,  (B) taxes,
assessments or other governmental  charges arising from the Business through the
Closing  Date,  (C) any  claim  alleging  liability  against  Seller or Newco or
Purchaser for any act,  omission of any Seller or their  directors,  officers or
employees or circumstance  relating to the business of any Seller arising before
the Closing  Date,  (D) other than relating to matters  previously  disclosed by
Sellers to Cellegy before the date hereof (whether verbally or in writing),  any
claim of  infringement  or violation of the  intellectual  property  rights of a
third party relating to the Product or Acquired  Assets or the failure of Seller
to be the owner of the intellectual property included in the Product or Acquired
Assets or  otherwise to have good title to the Product or Acquired  Assets,  (E)
any  claim or cause of  action  by or on  behalf  of a  creditor  of any  Seller
asserting  liability  against  Newco as  purchaser of the  Acquired  Assets,  or
Cellegy as a  shareholder  of Newco,  or seeking to impose any lien or any other
encumbrance upon any of the Acquired Assets,  for obligations of Seller, (F) any
pilot,  pre-clinical,  clinical  or other  studies or trials or other use by any
person of the Product or Acquired  Assets  authorized by or conducted by, for or
at the  request of any Seller  relating  to the  Product or any of the  Acquired
Assets,  in each case based on acts or  omissions  occurring  before the Closing
Date,  and (G) any  expenses in excess of $5,000 that are incurred by Cellegy or
Newco to obtain  consents  of third  parties to  assignment  or  transfer of the
Product or  Acquired  Assets.  Except with  respect to claims  based on fraud or
intentional   misrepresentation,   the  indemnity  obligations  of  the  Sellers
hereunder and the liability of the Sellers and the  Warrantors  collectively  in
relation  to any claim  which may be brought  against  any of them by Cellegy in
connection with this Agreement,  whether in respect of the indemnity obligations
or otherwise, shall in no event exceed the amounts paid to Sellers under Section
2.2 and 2.3 (with respect to the Cellegy Shares, valued on the date on which the
Cellegy Shares are received by Sellers (i.e.,  the Closing Date) or, if less, on
the date on which  the  Cellegy  Shares  cease to be  subject  to the six  month
restriction  set forth in  Section  6.3),  plus any  amounts  that are  withheld
pursuant to Section 11.5 below.

         11.4 Cellegy Indemnification. Cellegy shall indemnify and hold harmless
each Seller, its directors,  officers,  shareholders or unitholders (as the case
may be),  employees  and agents from or relating to any Loss arising from any of
the  following:  (A) any breach of a covenant  or  inaccuracy  or untruth of any
representation or warranty of Cellegy in this Agreement;  and (B) any claim by a
third party against Sellers, their respective directors, officers,  shareholders
or  unitholders  (as the case may be),  employees  or  agents,  relating  to the
Product or Acquired  Assets to the extent caused by acts or omissions of Cellegy
or its directors,  officers, employees or agents after the Closing Date relating
to the Product or Acquired Assets.

         11.5 Offset of Contingent  Payments.  Cellegy may recover the amount of
any Loss from any  contingent  payment  amounts  otherwise  payable  pursuant to
Section 2.3 of this Agreement.

         11.6  Basket.  No  claim  for  indemnification  may be paid  until  the
aggregate of such claims exceeds $20,000.

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                                                                    Confidential

         11.7 Procedures for  Indemnification.  An indemnified party asserting a
claim must first notify the indemnifying  parties.  If the indemnifying  parties
dispute the claim,  they shall  deliver a notice of dispute  within  thirty (30)
days of the date on which the notice of Loss was  delivered.  Any such  disputes
shall be resolved (if  possible) by mediation  pursuant to Section 13 below.  If
any action,  suit or proceeding shall be commenced by a third party against,  or
any claim or demand be asserted by a third party against, any Seller or Cellegy,
as the case may be, in respect of which any  Seller or  Cellegy is  entitled  to
demand  indemnification  under  this  Section,  then  as a  condition  precedent
thereto, the party seeking indemnification  ("Indemnitee") shall promptly notify
the other party  ("Indemnitor")  in writing to that  effect and with  reasonable
particularity.  The Indemnitor shall have the right to assume the control of the
defense,  compromise or settlement  of such action,  suit,  proceeding or claim,
including  the selection of counsel,  subject to the right of the  Indemnitee to
participate  (at its own expense and with counsel of its choice) in the defense,
compromise or settlement of such action, suit, proceeding,  claim or demand, and
in connection  therewith the Indemnitee  shall  cooperate  fully in all respects
with  the  Indemnitor  in  any  such  defense,  compromise  or  settlement.  The
Indemnitor  will not  compromise  or settle any such action,  suit,  proceeding,
claim or demand  without  the prior  written  consent of the  Indemnitee,  which
consent will not be unreasonably  withheld or delayed. So long as the Indemnitor
is defending in good faith any such action,  suit,  proceeding,  claim or demand
asserted  by a third party  against the  Indemnitee,  the  Indemnitee  shall not
settle or compromise such action, suit, proceeding,  claim or demand without the
prior written consent of the Indemnitor,  which consent will not be unreasonably
withheld or delayed.  The  Indemnitee  shall make available to the Indemnitor or
its  agents all  records  and other  materials  in the  Indemnitee's  possession
reasonably  required  for  contesting  any third party  claim or demand.  If the
Indemnitor  elects not to defend any such  action,  suit,  proceeding,  claim or
demand  or fails to  promptly  and  adequately  defend  any such  action,  suit,
proceeding,  claim or demand,  or if there is an inherent  conflict  between the
legal or factual positions of Indemnitor and Indemnitee, then the Indemnitee may
defend,  through  counsel of its own choosing,  such action,  suit,  proceeding,
claim or demand and (so long as  Indemnitee  gives the  Indemnitor  at least ten
(10) days'  notice of the terms of the proposed  settlement  thereof and permits
the  Indemnitor to then undertake the defense  thereof if Indemnitor  objects to
the proposed  settlement)  to settle such  action,  suit,  proceeding,  claim or
demand (provided that the Indemnitee uses all reasonable efforts to minimize the
extent of such Losses and  consults  with and  cooperates  fully in all respects
with the  Indemnitor  in any such  defense,  compromise  or  settlement)  and to
recover  from the  Indemnitor  the  amount of such  Losses.  If  Cellegy  is the
Indemnitee,  then in addition to exercising any other rights or remedies Cellegy
may have  under this  Agreement,  at law or in  equity,  Cellegy  shall have the
right, at any time, at Cellegy's sole option after Cellegy gives Sellers written
notice of Cellegy's  intent to do so, to offset and/or  withhold all or any part
of any amounts payable by Cellegy to Seller that Cellegy considers  necessary to
satisfy any claim of which Cellegy becomes aware prior to the date such payments
are made and for which Cellegy is entitled to be indemnified hereunder.

12.  Confidentiality;   Disclosure.  The  parties  have  separately  executed  a
confidentiality  agreement,  which  shall  remain  in  full  force  and  effect.
Notwithstanding that agreement,  the parties understand that Cellegy may issue a
press release upon the execution of this Agreement and/or the Closing,  with the
form and  content  of such  release  subject  to the prior  written  consent  of
Lubowski which consent shall not be unreasonably withheld. In addition,  Cellegy
will not publicly  disclose on its web site any details  concerning the purchase
price  (including  the number

                                      -25-
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                                                                    Confidential

of shares of  Cellegy  stock or  warrants  issued to  Sellers)  or the amount of
contingent  payments  until  such  information  is  disclosed  by Cellegy in SEC
filings or  otherwise.  Without  limiting  the  foregoing,  Cellegy  may include
information concerning Seller, the "Product",  the transactions  contemplated by
the  Agreement  and related  matters in filings that Cellegy makes with the U.S.
Securities  and  Exchange  Commission  or other  federal  and  state  regulatory
authorities. Sellers agree to cooperate with Cellegy to provide such information
(including without limitation any financial information) that may be required.

13. Governing Law; Mediation.  This Agreement and any disputes arising out of or
relating to this  Agreement,  shall be governed by the laws of New South  Wales.
The parties  agree that the parties  shall first  attempt to resolve any dispute
arising out of or relating to this  Agreement by mediation to be held in Sydney,
Australia by a mediator  appointed by the parties and a filing  agreement,  by a
mediator nominated by the President for the time being of The Law Society of New
South Wales.  Each party shall  select one  mediator,  and the two  mediators so
selected shall appoint the third  mediator.  The parties shall each pay one-half
of the  costs of the  mediators.  The  mediation  shall be  resolved  as soon as
reasonably possible.  The parties irrevocably and unconditionally  submit to the
jurisdiction  of the  courts  of New  South  Wales  and any  courts  which  have
jurisdiction  to hear  appeals  from any of those  courts and waive any right to
object to any proceedings being brought in those courts for any reason.

14. Miscellaneous

         14.1 Notices. Every notice,  consent and other communications  required
or permitted to be given hereunder shall be in writing and shall be deemed given
if  delivered  personally  or by  commercial  messenger  service,  by  reputable
overnight mail or similar  courier  services,  mailed by registered or certified
mail (return receipt  requested) or sent via facsimile (with  acknowledgment  of
complete  transmission)  to the parties at the  following  addresses (or at such
other  address  for a party as shall be  specified  by like  notice),  provided,
however,  that  notices  sent by  ordinary  mail will not be  deemed  guaranteed
received:

                           if to Purchaser, to:

                           Cellegy Pharmaceuticals, Inc.
                           349 Oyster Point Boulevard, Suite 200
                           South San Francisco, California  94080
                           Attention:  President
                           Telephone No.:   (650) 616-2200
                           Facsimile No.:   (650) 616-2222

                           with a copy to:

                           Fenwick & West LLP
                           Two Palo Alto Square
                           Palo Alto, California  94306

                           Attention:  C. Kevin Kelso, Esq.
                           Telephone No.:   (650) 858-7600
                           Facsimile No.:   (650) 494-1417

                                      -26-
<PAGE>
                                                                    Confidential

                  if to Sellers, to:

                           4 Cranbrook Rd., Rose Bay, NSW
                           Australia 2029
                           Attention:  Mr. David Lubowski
                           Telephone No.:   (02) 9587 8309
                           Facsimile No.:   (02) 9362 0367

                           with a copy to:

                           8/21 Thornton St, Darling Point, NSW
                           Australia 2027

                           Attention:  Mr. Michael Kloster
                           Telephone No.:  9363 3316
                           Facsimile No.:  9363 5526

         Notices shall be deemed delivered upon receipt if delivered  personally
or by messenger  service,  two (2) business days after delivery with a reputable
courier  service for delivery as soon as possible to the other party,  seven (7)
days after deposit in the mail if sent by registered or certified  mail, and one
business day after transmission by facsimile.

         14.2  Interpretation.  The words "include,"  "includes" and "including"
when  used  herein  shall be deemed  in each  case to be  followed  by the words
"without limitation." The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.

         14.3  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and  delivered  to the other  party,  it being  understood  that all
parties need not sign the same counterpart.

         14.4 Entire Agreement; Assignment. This Agreement, and the Exhibits and
Schedules  hereto (a)  constitute  the entire  agreement  among the parties with
respect to the subject  matter  hereof and supersede  all prior  agreements  and
understandings  both  written and oral,  among the parties  with  respect to the
subject matter hereof;  (b) are not intended to confer upon any other person any
rights or remedies  hereunder;  and (c) may not be assigned  unless agreed to by
the other parties hereto, except that Cellegy may assign its rights and delegate
its obligations  hereunder to  majority-owned  subsidiaries of Cellegy  provided
that Cellegy remains contingently liable.

         14.5 Severability. In the event that any provision of this Agreement or
the  application  thereof,  becomes  or is  declared  by a  court  of  competent
jurisdiction  to be  illegal,  void  or  unenforceable,  the  remainder  of this
Agreement  will  continue in full force and effect and the  application  of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such  void or  unenforceable  provision  of  this  Agreement  with a  valid  and
enforceable  provision that will

                                      -27-
<PAGE>

                                                                    Confidential

achieve,  to the extent possible,  the economic,  business and other purposes of
such void or unenforceable provision.

         14.6 Other Remedies.  Except as otherwise  provided herein, any and all
remedies herein expressly  conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party,  and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

         14.7 Rules of  Construction.  The parties  hereto  agree that they have
been  represented  by  counsel  during the  negotiation  and  execution  of this
Agreement and, therefore, waive the application of any law, regulation,  holding
or rule of  construction  providing  that  ambiguities  in an agreement or other
document  will be  construed  against  the  party  drafting  such  agreement  or
document.

         14.8 Expenses;  Attorneys  Fees. Each party will be responsible for its
own fees and  expenses in  connection  with the  proposed  transaction.  Sellers
acknowledge  that they have not  entered  into,  and will not  enter  into,  any
agreement  that would  result in a broker's or finder's  fee  pertaining  to the
proposed transaction.

         14.9  Further  Assurances.   Each  party  shall  promptly  execute  all
documents  and do all things that any other  party from time to time  reasonably
requires of it to effect,  perfect or complete the  provisions of this Agreement
and any transaction contemplated by it.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -28-
<PAGE>

                                                                    Confidential

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

CELLEGY PHARMACEUTICALS, INC.                  CELLEGY AUSTRALIA PTY LTD

By: /s/ K. Michael Forrest                     By: /s/ Michael Kloster
   --------------------------------               ------------------------------

                                               By:
Its: President & CEO                              ------------------------------
    -------------------------------
                                               Its: Directors
RICHCONE PTY LTD                               QUAY PHARMACEUTICALS PTY. LTD.

By: /s/ David Zachary Lubowski                  By: /s/ Michael Kloster
   --------------------------------               ------------------------------

By: /s/ David Zachary Lubowski                  By:
   --------------------------------               ------------------------------

Its: Directors                                 Its: Directors

OTHER PARTIES:
/s/ David Zachary Lubowski
----------------------------------
David Lubowski

                                      -29-
<PAGE>
                                                                    Confidential

                                    EXHIBIT A

Acquired Assets

Australian Patent Application No. 708694 (74545/94)
Australian Patent Application No. 88330/98
Republic of South Africa Patent No. 95/0511

Australian Trade Mark: Rectogesic   No. 776161
Australian Trade Mark: Xemrol       No. 745752
Australian Trade Mark: Anogesic     No. 777250
South African Trade Mark Application (pending): Rectogesic  No. 99/03101
South African Trade Mark Application (pending): Anogesic    No. 099/02620

Australian TGA Registration: Rectogesic    ARTG Registration No.  AUST R 66382

South African  Registration  package (to be  submitted),  Volumes 1&2, dated Jan
2000

Closing inventory

Agreements:

FH Faulding Ltd & Quay Pharmaceuticals Ltd, 22 Feb 1999
Publicis Wellcare (Mojo Advertising) & Quay Pharmaceuticals Ltd, 2 June 1999
Intercity Business Centre & Quay Pharmaceuticals Ltd, 1 Oct 1998
Clear Sales & Quay Pharmaceuticals Ltd, 14 Dec 1998

Assumed obligations:

None.

Excluded obligations:

Assets

         1. Debtors
         2. Cash on hand

Liabilities

         1. Bank overdraft
         2. Loans from Koren Laboratories
         3. Accrued expenses
         4. Payables

                                      -30-Exhibit 4.6

THE SECURITIES  REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE  SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE  SECURITIES  LAWS AND
MAY NOT BE SOLD, EXCHANGED,  PLEDGED,  HYPOTHECATED OR TRANSFERRED IN ANY MANNER
(A "TRANSFER") EXCEPT IN COMPLIANCE WITH THE TERMS OF THIS WARRANT,  THE ACT AND
ANY  APPLICABLE  STATE  SECURITIES  LAWS OR THE  COMPANY  RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THE COMPANY,  STATING
THAT SUCH  TRANSFER  IS EXEMPT FROM THE  REGISTRATION  AND  PROSPECTUS  DELIVERY
REQUIREMENTS OF THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS.

                                                     Warrant Certificate No. 411

                               WARRANT TO PURCHASE
                             SHARES OF COMMON STOCK
                          CELLEGY PHARMACEUTICALS, INC.

THIS WARRANT (the  "Warrant")  is dated as of February 25, 2000 and is issued by
Cellegy Pharmaceuticals, Inc., a California corporation (the "Company"), to Marc
Parham, Ph.D.  ("Warrantholder"),  in the amount of up to 3,500 Warrants, with a
warrant term of two years.

         Section 1.  Definitions

                  1.1 Definitions.  For purposes of this Warrant,  the following
terms shall have the following meanings.

                  "Act" shall mean the Securities Act of 1933, as amended.

                  "Common Stock" means the Company's Common Stock, no par value.

                  "Exercise Price" has the meaning given to that term in Section
2.2.

                  "Merger or Sale" shall have the meaning  given to that term in
Section 7.3.

                  "Shares"  shall  mean the  shares of Common  Stock that can be
acquired upon exercise of the Warrant.

<PAGE>

                  "Termination Date" shall mean the date on which the Warrant is
no longer exercisable, which date shall be February 25, 2002.

                  "Transfer  Agent"  shall  mean  the  Company's  registrar  and
transfer agent, if any, for the Warrant.

                  "Warrant" shall mean this Warrant to purchase shares of Common
Stock.  The term "Warrant" shall include any Warrant  evidenced by a certificate
or  certificates  issued  upon  division,  exchange,  substitution  or  transfer
pursuant to the terms of this Warrant.

         Section 2.  Issuance of Warrant; Form of Warrant.

                  2.1 Issuance. In consideration of the Warrantholder's services
on  behalf  of the  Company,  the  Company  hereby  issues  the  Warrant  to the
Warrantholder to purchase 3,500 shares of Common Stock.

                  2.2  Exercise  Price and  Exercise  Conditions.  The price per
share at which 3,500 shares shall be  purchasable  upon  exercise of the Warrant
(the  "Exercise  Price") is $6.8125  per share  which was the  closing  price of
Cellegy's common stock on February 25, 2000.

                  2.3  Registration.  The Warrant shall be numbered and shall be
registered on the books of the Company.

                  2.4 Transfer.  The Warrant may not be  transferred,  except to
members of the Warrantholder's immediate family or trusts for the benefit of the
Warrantholder or one or more members of the Warrantholder's immediate family. To
the extent that the Warrant is  transferable,  the Warrant shall be transferable
only on the books of the Company maintained at its principal office in South San
Francisco,  California  or, if the  Company  has a Transfer  Agent,  then at the
offices of the  Transfer  Agent,  upon  delivery  thereof  duly  endorsed by the
Warrantholder or by its duly authorized attorney or representative,  accompanied
by proper evidence of succession,  assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver a new Warrant to
the person entitled thereto.

                  2.5 Certificates. The Warrant may be divided or combined, upon
request to the Company by the Warrantholder,  into a certificate or certificates
representing the right to purchase the same aggregate  number of Shares.  Unless
the context  indicates  otherwise,  the term  "Warrantholder"  shall include any
transferee or transferees of the Warrant.

                  2.6 Signatures. The number of Shares issuable upon exercise of
the Warrant is subject to adjustment upon the occurrence of certain events,  all
as hereinafter provided.  The Warrant shall be executed on behalf of the Company
by its  President or by a Vice  President and attested to by its Secretary or an
Assistant Secretary. A Warrant bearing the signature of an individual who was at
any  time  the  proper   officer  of  the  Company   shall  bind  the   Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the  delivery of such Warrant or did not hold such office on the date of this
Warrant.

                                      -2-
<PAGE>

                  2.7 Legends on Certificate.  Each certificate representing the
Warrant,  and for Shares  initially  issued upon exercise of the Warrant,  shall
bear the following  legends,  unless,  at the time of exercise,  such Shares are
subject to a currently effective Registration Statement under the Act:

                           (a)  THE  SECURITIES   REPRESENTED  BY  THIS  WARRANT
CERTIFICATE  HAVE NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933 (THE
"ACT") OR ANY STATE  SECURITIES  LAWS AND MAY NOT BE SOLD,  EXCHANGED,  PLEDGED,
HYPOTHECATED  OR TRANSFERRED  IN ANY MANNER (A "TRANSFER")  EXCEPT IN COMPLIANCE
WITH THE TERMS OF THIS WARRANT, THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY  TO THE  COMPANY,  STATING  THAT SUCH  TRANSFER  IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS  DELIVERY  REQUIREMENTS OF THE ACT AND COMPLIES WITH
APPLICABLE STATE SECURITIES LAWS.

                           (b)  Any  legend   required   by   applicable   state
securities laws.

                  Any certificate issued at any time in exchange or substitution
for any certificate  bearing such legends (except a new certificate  issued upon
completion of a public distribution  pursuant to a registration  statement under
the Act of the securities represented thereby) shall also bear the above legends
unless,  in the opinion of the Company's  counsel,  the  securities  represented
thereby need no longer be subject to such restrictions.

                  2.8 Exchange of Warrant  Certificate.  Any Warrant certificate
may  be  exchanged  for  another  certificate  or  certificates   entitling  the
Warrantholder  to purchase a like aggregate  number of Shares as the certificate
or certificates  surrendered then entitled such  Warrantholder to purchase.  Any
Warrantholder desiring to exchange a Warrant certificate shall make such request
in writing  delivered to the Company,  and shall surrender,  properly  endorsed,
with  signatures   guaranteed  if  required  by  the  Company,  the  certificate
evidencing the Warrant to be so exchanged.  Thereupon, the Company shall execute
and  deliver to the person  entitled  thereto a new  Warrant  certificate  as so
requested.

         Section 3. Term of Warrant; Exercise of Warrant.

                  3.1  Term.   Subject  to  the  terms  of  this  Warrant,   the
Warrantholder  shall have the right,  at any time after the date of this Warrant
and ending at 5:00 p.m.,  California  Time, on the Termination  Date to purchase
from the  Company  up to the number of fully  paid and  nonassessable  Shares to
which the Warrantholder may at the time be entitled to purchase pursuant to this
Warrant,  upon  surrender  to the  Company,  at  its  principal  office,  of the
certificate  evidencing the Warrant to be exercised,  together with the purchase
form, duly filled in and signed,  with signatures  guaranteed if required by the
Company or its Transfer  Agent,  and upon payment to the Company of the Exercise
Price  for the  number  of  Shares  in  respect  of which  the  Warrant  is then
exercised,  but in no event  for less  than 100  Shares

                                      -3-
<PAGE>

(unless fewer than an aggregate of 100 Shares are then  purchasable  pursuant to
the Warrant).  Notwithstanding the foregoing, the Company shall not be obligated
to  deliver  any  Shares  pursuant  to the  exercise  of the  Warrant,  and  the
Warrantholder  shall  not have the  right to  exercise  the  Warrant,  if in the
Company's  opinion the delivery of Shares upon exercise of the Warrant would not
comply  with any  applicable  federal  or state  securities  laws;  and  without
limiting  the  foregoing,  the Warrant may not be  exercised  by, or  securities
issued  to,  any  Warrantholder  in any state in which  such  exercise  would be
unlawful.

                  3.2  Payment  of  Exercise  Price.  Payment  of the  aggregate
Exercise Price shall be made in cash or by check, or any combination thereof.

                  3.3  Issuance  of  Certificate.  Upon  such  surrender  of the
Warrant and payment of such Exercise Price, the Company shall issue and cause to
be delivered to the Warrantholder and in the Warrantholder's name, a certificate
or certificates  for the number of full Shares so purchased upon the exercise of
the  Warrant,  together  with  cash,  as  provided  herein,  in  respect  of any
fractional  Share otherwise  issuable upon such surrender.  Such  certificate or
certificates shall be deemed to have been issued and any person so designated to
be named  therein  shall be  deemed  to have  become a holder  of record of such
securities  as of the  date of  surrender  of the  Warrant  and  payment  of the
Exercise   Price,  as  aforesaid,   notwithstanding   that  the  certificate  or
certificates   representing   such  securities  shall  not  actually  have  been
delivered.   The  Warrant  shall  be   exercisable,   at  the  election  of  the
Warrantholder,  either in full or from  time to time in part  and,  in the event
that a certificate  evidencing  the Warrant is exercised in respect of less than
all of the Shares specified therein at any time prior to the Termination Date, a
new certificate  evidencing the remaining  portion of the Warrant will be issued
by the Company.

         Section 4.  Payment of Taxes.

         The Company will pay all documentary stamp taxes, if any,  attributable
to the initial issuance of the Warrant or the securities  comprising the Shares;
provided, however, the Company shall not be required to pay any tax which may be
payable in respect of any transfer of the Warrant or the  securities  comprising
the Shares.

         Section 5.  Mutilated or Missing Warrants.

         In case the certificate or certificates evidencing the Warrant shall be
mutilated,  lost, stolen or destroyed,  the Company shall, at the request of the
Warrantholder,  issue and  deliver in  exchange  and  substitution  for and upon
cancellation  of the mutilated  certificate or  certificates,  or in lieu of and
substitution for the certificate or certificates  lost,  stolen or destroyed,  a
new  Warrant  certificate  or  certificates  of like tenor and  representing  an
equivalent right or interest,  but only upon receipt of evidence satisfactory to
the Company of such loss,  theft or  destruction  of such  Warrant and a bond of
indemnity,  if  requested,   also  satisfactory  in  form  and  amount,  at  the
applicant's cost.  Applicants for such substitute Warrant certificate shall also
comply  with such other  reasonable  regulations  and pay such other  reasonable
charges as the Company may prescribe.

                                      -4-
<PAGE>

         Section 6.  Reservation of Shares.

         There  has been  reserved,  and the  Company  shall at all  times  keep
reserved so long as the Warrant remains  outstanding,  out of its authorized and
unissued Common Stock, such number of shares of Common Stock as shall be subject
to purchase under the Warrant.

         Section 7.  Adjustment of Number of Shares.

         The number and kind of securities  purchasable upon the exercise of the
Warrant and the Exercise Price shall be subject to adjustment  from time to time
upon the happening of certain events, as follows:

                  7.1  Adjustments.  The number of Shares  purchasable  upon the
exercise of the Warrant shall be subject to adjustment as follows:

                           (a)  Stock  Splits;  Stock  Dividends.  In  case  the
Company shall (i) pay a dividend in Common Stock, (ii) subdivide its outstanding
Common Stock,  (iii) combine its outstanding  Common Stock into a smaller number
of shares of Common Stock,  including without  limitation any combination of its
outstanding  Common Stock that may occur after October 1, 1997, or (iv) issue by
reclassification  of its Common Stock other securities of the Company,  then the
number of Shares  purchasable  upon  exercise of the Warrant  immediately  prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
upon  exercise of the Warrant the kind and number of Shares or other  securities
of the Company  which it would have owned or would have been entitled to receive
immediately  after the happening of any of the events  described  above, had the
Warrant been exercised  immediately  prior to the happening of such event or any
record  date  with  respect  thereto.  Any  adjustment  made  pursuant  to  this
subsection shall become effective  immediately  after the effective date of such
event, retroactive to the record date, if any, for such event.

                           (b) De Minimis  Changes.  No adjustment in the number
of Shares  purchasable  pursuant  to the Warrant  shall be required  unless such
adjustment  would require an increase or decrease of at least one percent in the
number of Shares then purchasable upon the exercise of all Commitment  Warrants;
provided,  however,  that any adjustments which by reason of this subsection are
not  required  to be made  immediately  shall be carried  forward and taken into
account in any subsequent adjustment.

                           (c)  Corresponding   Adjustment  of  Exercise  Price.
Whenever  the number of Shares  purchasable  upon the exercise of the Warrant is
adjusted,  as herein  provided,  the Exercise Price payable upon exercise of the
Warrant shall be adjusted by multiplying such Exercise Price  immediately  prior
to such adjustment by a fraction,  the numerator of which shall be the number of
Shares  purchasable upon the exercise of the Warrant  immediately  prior to such
adjustment,  and the  denominator  of which  shall be the  number  of  Shares so
purchasable immediately thereafter.

                                      -5-
<PAGE>

                           (d)  Notice of  Adjustment.  Whenever  the  number of
Shares  purchasable  upon the  exercise  of the  Warrant is  adjusted  as herein
provided,  the Company  shall cause to be mailed to the  Warrantholder  within a
reasonable time thereafter notice of such adjustment setting forth the number of
Shares  purchasable  upon the exercise of the Warrant after such  adjustment,  a
brief  statement of the facts  requiring such  adjustment and the computation by
which such adjustment was made.

                  7.2  No  Adjustment  for  Dividends.  Except  as  provided  in
subsection  7.1(a),  no adjustment in respect of any dividends or  distributions
out of  earnings  shall  be made  during  the  term of the  Warrant  or upon the
exercise of the Warrant.

                  7.3  Preservation  of Purchase  Rights upon  Reclassification,
Consolidation, etc.

                           (a) Subject to paragraph (b) of this Section, in case
of any  consolidation  of the Company with or merger of the Company into another
corporation where the Company will not be the surviving corporation,  or in case
of any sale or conveyance  to another  corporation  of the  property,  assets or
business of the Company as an entirety or substantially as an entirety (any such
event  referred  to as a "Merger or Sale"),  the  Company or such  successor  or
purchasing  corporation,  as the case may be, shall agree that the Warrantholder
shall have the right  thereafter  upon payment of the  Exercise  Price in effect
immediately prior to such action to purchase,  upon exercise of the Warrant, the
kind and amount of shares and other  securities and property which it would have
owned or have been  entitled to receive  after the  happening  of such Merger or
Sale had the Warrant been exercised  immediately prior to such action.  Any such
agreements  referred to in this subsection shall provide for adjustments,  which
shall be as nearly equivalent as may be practicable to the adjustments  provided
for in this Section.  The provisions of this subsection shall similarly apply to
successive Mergers or Sales.

                           (b) Notwithstanding the foregoing provisions,  if the
surviving,  successor or purchasing corporation does not agree to the provisions
set forth in  paragraph  (a) above,  or if the Board of Directors of the Company
determines that the Warrants should not be outstanding following consummation of
such  Merger  or  Sale,  then  the  Company  shall  deliver  a  notice  to  each
Warrantholder  at least 20 days before the  consummation of such Merger or Sale,
the  Warrantholder  may exercise the Warrant at any time before the consummation
of such  Merger or Sale  (and  such  exercise  may be made  contingent  upon the
consummation  of such Merger or Sale),  and any portion of the Warrant  that has
not been exercised  before  consummation  of such Merger or Sale shall terminate
and expire, and shall no longer be outstanding.

                  7.4 Independent Public  Accountants.  The Company may retain a
firm of independent  public  accountants of recognized  national standing (which
may be any such firm regularly  employed by the Company) to make any computation
required  under this  Section,  and a  certificate  signed by such firm shall be
conclusive  evidence  of the  correctness  of any  computation  made  under this
Section.

                  7.5  Statement on Warrant  Certificates.  Irrespective  of any
adjustments  in the number of securities  issuable upon exercise of the Warrant,
the  Warrant  certificates

                                      -6-
<PAGE>

theretofore  or  thereafter  issued may  continue  to express the same number of
securities as are stated in the similar Warrant  certificate  initially  issued.
However,  the Company  may, at any time in its sole  discretion  (which shall be
conclusive), make any change in the form of Warrant certificate that it may deem
appropriate  and that does not affect the  substance  thereof;  and any  Warrant
certificate  thereafter issued,  whether upon registration of transfer of, or in
exchange or substitution for, an outstanding Warrant certificate,  may be in the
form so changed.

         Section 8. Fractional Interests.

         The Company  shall not be required  to issue  fractional  Shares on the
exercise  of the  Warrant.  If any  fraction  of a Share  would,  except for the
provisions  of this  Section,  be  issuable  on the  exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then fair market value of a share of Common Stock (as  determined  in good faith
by the Board of Directors of the Company) multiplied by such fraction.

         Section 9. No Rights as Shareholder; Notices to Warrantholder.

         Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or its transferees any rights as a shareholder of the Company,
including the right to vote, receive dividends,  consent or receive notices as a
shareholder  in  respect of any  meeting of  shareholders  for the  election  of
directors of the Company or any other matter.

         Section 10. Restrictions on Transfer.

         The  Warrantholder  agrees  that  prior to making  any sale,  transfer,
pledge, assignment,  hypothecation, or other disposition (each, a "Transfer") of
the  Warrant or Shares,  the  Warrantholder  shall  give  written  notice to the
Company  describing the manner in which any such proposed Transfer is to be made
and providing such additional  information regarding the Transfer as the Company
reasonably requests. If the Company so requests,  the Warrantholder shall at its
expense  provide the Company with an opinion of counsel  (which  counsel must be
reasonably  satisfactory  to the Company) to the holder,  in form and  substance
satisfactory to the Company, that the proposed Transfer complies with applicable
federal and state  securities  laws.  The Company  shall have no  obligation  to
Transfer  any  Securities  unless  the  holder  thereof  has  complied  with the
foregoing provisions, and any such attempted Transfer shall be null and void.

         Section 11. Certain Representations and Warranties of Warrantholder.

         Warrantholder represents and warrants to, and agrees with, the Company,
that:

                                      -7-
<PAGE>

                  (a) Purchase for Own Account.  This Warrant and the Shares are
being acquired for investment for Warrantholder's own account,  not as a nominee
or  agent,  and not with a view to the  public  resale or  distribution  thereof
within the meaning of the Act, and such  Warrantholder  has no present intention
of selling, granting any participation in, or otherwise distributing the same.

                  (b) Disclosure of Information.  Warrantholder  has received or
has had full access to all the information it considers necessary or appropriate
to  make  an  informed   investment   decision  with  respect  to  the  Warrant.
Warrantholder  has had an opportunity to ask questions and receive  answers from
the Company regarding the terms and conditions of the Warrant and the Shares and
to obtain additional  information  necessary to verify any information furnished
to Warrantholder or to which Warrantholder had access.

                  (c) Investment Experience.  Warrantholder understands that the
receipt of the Warrants and the purchase of the Shares involve substantial risk.
Warrantholder:  (i) has  experience as an investor in securities of companies in
the development stage and acknowledges  that it is able to fend for itself,  can
bear the  economic  risk of such  investment  in the Warrants and Shares and has
such   knowledge  and   experience   in  financial  or  business   matters  that
Warrantholder  is capable of evaluating the merits and risks of this  investment
in the Warrants and Shares and protecting his or her own interests in connection
with  this  investment  and/or  (ii)  has a  preexisting  personal  or  business
relationship  with  the  Company  and  certain  of its  officers,  directors  or
controlling  persons of a nature and duration that enables  Warrantholder  to be
aware of the  character,  business  acumen and financial  circumstances  of such
persons.

                  (d) Restricted Securities.  Warrantholder understands that the
Warrants and the Shares are  characterized as "restricted  securities" under the
Act inasmuch as they are being  acquired from the Company in a  transaction  not
involving a public  offering and that under the Act and  applicable  regulations
thereunder such securities may be resold without registration under the Act only
in certain limited circumstances.  In this connection,  Warrantholder represents
that  Warrantholder  is familiar  with Rule 144 of the  Securities  and Exchange
Commission,  as  presently in effect,  and  understands  the resale  limitations
imposed thereby and by the Securities Act.  Warrantholder  understands  that the
Company is under no obligation to register any of the securities  sold hereunder
except as provided in Section 12 below.

                  (e) Further  Limitations  on  Disposition.  Without in any way
limiting the representations set forth above,  Warrantholder  further agrees not
to make any  disposition  of the  Warrant  or all or any  portion  of the Shares
unless and until:

                           (i) there is then in effect a registration  statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or

                           (ii)  (A)  Warrantholder   shall  have  notified  the
Company of the proposed  disposition and shall have furnished the Company with a
statement of the circumstances  surrounding the proposed  disposition,  and (ii)
Warrantholder  shall have furnished the Company, at the expense of Warrantholder
or its transferee,  with an opinion of

                                      -8-
<PAGE>

counsel,  reasonably satisfactory to the Company, that such disposition will not
require registration of such securities under the Act.

Notwithstanding  the  provisions  of  paragraphs  (i) and  (ii)  above,  no such
registration  statement  or opinion of counsel  shall be  required:  (1) for any
transfer of any Shares in  compliance  with SEC Rule 144 or (2) for the transfer
by gift, will or intestate  succession by  Warrantholder to his or her spouse or
lineal descendants or ancestors or any trust for any of the foregoing;  provided
that in each of the  foregoing  cases the  transferee  agrees in  writing  to be
subject to the terms of this Section 11 to the same extent as if the  transferee
were the original Warrantholder.

                  (f) Legends. It is understood that the certificates evidencing
the Warrant Shares will bear the legends set forth below:

                           (i)  THE  SECURITIES   REPRESENTED  BY  THIS  WARRANT
CERTIFICATE  HAVE NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933 (THE
"ACT") OR ANY STATE  SECURITIES  LAWS AND MAY NOT BE SOLD,  EXCHANGED,  PLEDGED,
HYPOTHECATED  OR TRANSFERRED  IN ANY MANNER (A "TRANSFER")  EXCEPT IN COMPLIANCE
WITH THE TERMS OF THIS WARRANT, THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY  TO THE  COMPANY,  STATING  THAT SUCH  TRANSFER  IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS  DELIVERY  REQUIREMENTS OF THE ACT AND COMPLIES WITH
APPLICABLE STATE SECURITIES LAWS.

                           (ii) Any legend  required by the laws of the State of
California:

The legend  set forth in (i) above  shall be  removed  by the  Company  from any
certificate  evidencing  Shares  upon  delivery  to the Company of an opinion by
counsel,  reasonably  satisfactory to the Company, that a registration statement
under the Act is at that time in effect with respect to the legended security or
that such  security  can be freely  transferred  in a public sale without such a
registration  statement  being  in  effect  and  that  such  transfer  will  not
jeopardize the exemption or exemptions from  registration  pursuant to which the
Company issued the Shares.

         Section 12. Registration Rights.

         The  Company  will  use  all  reasonable  efforts  to  register,  on  a
registration  statement that the Company intends to file during 2000, either the
issuance of shares of Common Stock  issuable upon exercise of the Warrant or the
resale of such shares.  The  Warrantholder  agrees to cooperate with the Company
and provide such  information as the Company  reasonably  requests in connection
with such registration.

         Section 13. Miscellaneous.

                                      -9-
<PAGE>

                  13.1  Notices.  Any  notice  pursuant  to this  Warrant by the
Company or by a  Warrantholder  or a holder of Shares  shall be in  writing  and
shall be  deemed to have been duly  given if  delivered  or mailed by  certified
mail, return receipt requested:

                  (a) If to a Warrantholder or a holder of Shares,  addressed to
the  holder's  address  on the books of the  Company or the  Company's  transfer
agent; and

                  (b)  If to  the  Company  addressed  to it  at  the  Company's
principal executive offices, Attention: President.

         Each party may from time to time change the address to which notices to
it are to be delivered or mailed  hereunder by notice in accordance  herewith to
the other party.

                  13.2  Successors.  All the  covenants  and  provisions of this
Warrant by or for the benefit of the Company, the Warrantholder,  or the holders
of Shares,  shall bind and inure to the benefit of their  respective  successors
and assigns hereunder.

                  13.3 Applicable  Law;  Consent to  Jurisdiction.  This Warrant
shall be governed by and construed in  accordance  with the laws of the State of
California,  without  giving  effect to the  choice of law or  conflict  of laws
principles thereof.  Warrantholder and the Company each consent to the exclusive
jurisdiction  and venue of the federal and state court in the  district in which
the Company's  principal  executive offices are then-located for purposes of any
action  arising out of or relating to this  Warrant,  and agrees that service of
process in any such action may be effected by means of the  procedures set forth
in Section 13.1 above for giving notices under this Warrant.

                  13.4 Benefits of this  Warrant.  Nothing in this Warrant shall
be construed to give to any person or  corporation  other than the Company,  the
Warrantholder and the holders of Shares, any legal or equitable right, remedy or
claim under this  Warrant,  and this Warrant shall be for the sole and exclusive
benefit of the Company, the Warrantholder and the holders of Shares.

                  13.5  Amendment.  Neither this Warrant nor any term hereof may
be amended, waived,  discharged or terminated other than by a written instrument
signed by the party  against whom  enforcement  of any such  amendment,  waiver,
discharge or termination is sought.

                  13.6 Entire Agreement.  This Warrant  constitutes the full and
entire  understanding  and  agreement  between  the  parties  with regard to the
subject matter hereof, and no party shall be liable or bound to any other in any
manner by any representations,  warranties,  covenants, and agreements except as
specifically set forth herein and therein. Nothing in this Warrant, expressed or
implied,  is intended to confer upon any party,  other than the parties  hereto,
and their respective successors and assigns, any rights, remedies,  obligations,
or liabilities under or by reason of this Warrant,  except as expressly provided
herein.

                  13.7 Separability.  Any invalidity,  illegality, or limitation
of the  enforceability  with  respect  to any  party  of any  one or more of the
provisions of this Warrant,

                                      -10-
<PAGE>

or any part  thereof,  whether  arising by reason of the law of any such party's
domicile or otherwise, shall in no way affect or impair the validity,  legality,
or enforceability of this Warrant with respect to all other parties. In case any
provision of this  Warrant  shall be invalid,  illegal,  or  unenforceable,  the
validity,  legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

                  13.8 Counterparts.  This Warrant may be executed in any number
of counterparts,  each of which shall be an original,  but all of which together
shall constitute one instrument.

                  [Remainder of this page intentionally left blank]

                                      -11-
<PAGE>

         IN WITNESS  WHEREOF,  the Company  has caused  this  Warrant to be duly
executed, all as of the day and year first above written.

                               CELLEGY PHARMACEUTICALS, INC.

                               By: /s/ A. Richard Juelis
                                  ----------------------------------------
                                           A. Richard Juelis
                                           Chief Financial Officer

                               Attest:

                               ------------------------------

                                      -12-
<PAGE>

                          CELLEGY PHARMACEUTICALS, INC.

                                  PURCHASE FORM

Cellegy Pharmaceuticals, Inc.
349 Oyster Point Blvd., Suite 200
South San Francisco, CA  94080

         The  undersigned  hereby  irrevocably  elects to exercise  the right of
purchase  represented  by the within  Warrant  Certificate  for, and to purchase
thereunder,  __________  share of  Common  Stock  (the  "Shares")  provided  for
therein, and requests that certificates for the Shares be issued in the name of:

                     --------------------------------------
         (Please Print or Type Name, Address and Social Security Number)
                     --------------------------------------
                     --------------------------------------

and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant  Certificate for the balance of the Shares  purchasable under
the within  Warrant  Certificate  be registered  in the name of the  undersigned
Warrantholder or the undersigned's  assignee as below indicated and delivered to
the address stated below.

Dated: _________________________________

Name of Warrantholder
or Assignee:____________________________
                  (Please Print)

Address:________________________________

        ________________________________

Signature:______________________________

Note: The above signature must correspond with the name as written upon the face
of  this  Warrant  Certificate  in  every  particular,   without  alteration  or
enlargement or any change whatever, unless these Warrants have been assigned.

Signature Guaranteed:___________________

(Signature  must be guaranteed  by a bank or trust  company  having an office or
correspondence  in  the  United  States  or by a  member  firm  of a  registered
securities exchange or the National Association of Securities Dealers, Inc.)

<PAGE>

                                   ASSIGNMENT

                 (To be signed only upon assignment of Warrants)

    FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

Name and Address of Assignee Must Be Printed or Typewritten

                     --------------------------------------
                     --------------------------------------
                     --------------------------------------

the  within   Warrants,   hereby   irrevocably   constituting   and   appointing
___________________,  Attorney  to  transfer  said  Warrants on the books of the
Company, with full power of substitution in the premises.

Dated:
       -------------------------------------------------------------------------
                         Signature of Registered Holder

Note:  The  signature on this  assignment  must  correspond  with the name as it
appears upon the face of the within  Warrant  Certificate  in every  particular,
without alteration or enlargement or any change whatever.

Signature Guaranteed:______________________

(Signature  must be guaranteed  by a bank or trust  company  having an office or
correspondence  in  the  United  States  or by a  member  firm  of a  registered
securities exchange or the National Association of Securities Dealers, Inc.)

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