CELLEGY PHARMACEUTICALS INC
RETENTION AND SERVICE PLAN
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>p17056-ex10.txt
<DESCRIPTION>RETENTION AND SERVICE PLAN
<TEXT>

                                                                   Exhibit 10.01

                          CELLEGY PHARMACEUTICALS, INC.
                          RETENTION AND SEVERANCE PLAN
                                 FOR EXECUTIVES


1.       GENERAL

         1.1      Purpose.  The  purpose  of this Plan is to  provide  specified
                  compensation  and  benefits  to  Executives  in the event of a
                  "Termination  Upon  Change of Control"  or a  "Termination  in
                  Absence of Change of Control" as defined under this Plan.

         1.2      No  Employment  Agreement.  This  Plan does not  obligate  the
                  Company to continue to employ an  Executive  for any  specific
                  period  of  time,  or  in  any  specific  role  or  geographic
                  location.  Subject  to the  terms  of any  applicable  written
                  employment agreement between the Company and an Executive, the
                  Executive's employment is on an at-will basis, the Company may
                  assign an Executive to other  duties,  and either an Executive
                  or the Company may terminate an Executive's  employment at any
                  time for any reason.

         1.3      Defined Terms.  Capitalized terms used in this Plan shall have
                  the  meanings  set forth in  Section  5,  unless  the  context
                  clearly requires a different meaning.

         1.4      Federal and State  Withholding.  The Company may withhold from
                  any and all  payments  of cash or  other  consideration  to an
                  Executive  under this Plan, or from an  Executive's  salary or
                  other compensation  payments, any amounts that are required to
                  be withheld under applicable  federal,  state and local tax or
                  employment laws (including without limitation  withholding and
                  employment  taxes),  and  descriptions  of all amounts payable
                  under this Plan shall be net of (and subject to reduction  by)
                  such withholdings.

2.       TERMINATION UPON CHANGE OF CONTROL

         2.1      Prior Obligations.  In the event of an Executive's Termination
                  Upon Change of Control, the Executive shall be entitled to the
                  basic severance compensation described below.

                  2.1.1    Accrued  Salary and Vacation.  All salary and accrued
                           vacation  earned through the date of the  Executive's
                           termination   of   employment   shall  be  paid  upon
                           termination of employment.

                  2.1.2    Accrued Bonus Payment.  The Executive shall receive a
                           lump sum  payment of his or her target  bonus for the
                           Company's  prior  fiscal  year to the extent that any
                           such  bonus was  earned  and is unpaid on the date of
                           termination of employment.

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                  2.1.3    Expense  Reimbursement.   Within  ten  (10)  days  of
                           submission   of  proper   expense   reports   by  the
                           Executive,  the Company shall  reimburse an Executive
                           for  all   expenses   incurred   by  the   Executive,
                           consistent  with past  practices,  in connection with
                           the  business of the Company  before the  Executive's
                           termination of employment.

                  2.1.4    Employee  Benefits.  The Executive  shall receive the
                           benefits, if any, under any 401(k) plan, nonqualified
                           deferred  compensation plan,  employee stock purchase
                           plan and  other  Company  benefit  plan to which  the
                           Executive  may be  entitled  pursuant to the terms of
                           such plans.

         2.2      Executive  Cash  Severance  Benefits.   In  the  event  of  an
                  Executive's  Termination Upon Change of Control,  an Executive
                  shall  be  entitled  to  the  additional  executive  severance
                  benefits described below.

                  2.2.1    Cash Severance  Payment.  The Executive shall receive
                           an amount  equal to twelve (12) months of Base Salary
                           and the annual target bonus at the 100% level for the
                           year in which  such  termination  occurred  paid in a
                           lump sum within thirty (30) days of Termination  Upon
                           Change of Control. If the Executive should die before
                           all  amounts  payable  to him or her have been  paid,
                           such unpaid amounts shall be paid to the  Executive's
                           designated  beneficiary,  if living,  or otherwise to
                           the  personal   representative   of  the  Executive's
                           estate.

         2.3      Stock Option or Restricted Stock Acceleration;  Period of Time
                  After Termination To Exercise Options.

                  2.3.1    Exercisability of Options Following  Termination Upon
                           Change of Control.  All outstanding stock options and
                           any restricted stock awarded by the Company under the
                           Company's 1995 Equity Incentive Plan to the Executive
                           prior to the  Change  of  Control  shall  have  their
                           vesting and exercisability  accelerated in full to be
                           100%  vested  and  exercisable  from the date of such
                           termination.  The  Executive  will have  twelve  (12)
                           months after the date of  termination to exercise any
                           outstanding stock options following  Termination Upon
                           a Change of  Control,  but in no event  more than ten
                           (10) years from the initial  grant date of such stock
                           options.

                  2.3.2    Acceleration Following  Non-assumption Upon Change of
                           Control.  If there is a Change of Control transaction
                           in  which   outstanding  stock  options  granted  (or
                           restricted  stock  awards  made) under the  Company's
                           1995 Equity Incentive Plan before the transaction are
                           not fully assumed by, or replaced by fully equivalent
                           substitute   options  or  restricted  stock  of,  the
                           Successor,  then (1) all such  unvested  options  and
                           restricted  stock  shall  have  their  vesting  fully
                           accelerated   to  be  100%  vested  and   exercisable
                           immediately prior to the effective date of the Change
                           of  Control  and  (2)  the  Company   shall   provide
                           reasonable  prior written  notice to the Executive of
                           (a) the date such unexercised  options will terminate
                           and (b) the period  during  which the  Executive  may
                           exercise the fully vested options.

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          2.4     Extended Insurance  Benefits;  Coverage Under Another Plan. An
                  Executive who elects  coverage under the  Consolidated  Budget
                  Reconciliation  Act of 1985 ("COBRA") shall receive,  by means
                  of  payment  on  behalf  of the  Executive  of the  applicable
                  premiums,  continued provision of the Company's health related
                  and other  standard  employee  insurance  coverages  as are in
                  effect  immediately  prior to an Executive's  Termination Upon
                  Change of Control for a period of twelve (12) months following
                  such  Termination  Upon Change of Control  (with the Executive
                  remaining  responsible  for such  percentage of payments under
                  such   insurance  as  the   Executive  was   responsible   for
                  contributing  immediately before the employment  termination).
                  The date of the  "qualifying  event" for the Executive and any
                  dependents shall be the date of employment  termination of the
                  Executive.  Notwithstanding  the preceding  provisions of this
                  subsection 2.4, in the event an Executive becomes covered as a
                  primary  insured  (that  is,  not  as a  beneficiary  under  a
                  spouse's or partner's  plan) under  another  employer's  group
                  health  plan  during  the  period  provided  for  herein,  the
                  Executive  promptly  shall  inform the Company and the Company
                  shall cease provision of continued group health  insurance for
                  the Executive and any dependents.

3.       TERMINATION IN ABSENCE OF CHANGE OF CONTROL

         3.1      Prior Obligations.  In the event of an Executive's Termination
                  in  Absence  of  Change  of  Control,  an  Executive  shall be
                  entitled to the basic severance compensation described below.

                  3.1.1    Accrued  Salary and Vacation.  All salary and accrued
                           vacation  earned through the date of the  Executive's
                           termination   of   employment   shall  be  paid  upon
                           termination of employment.

                  3.1.2    Accrued Bonus Payment.  The Executive shall receive a
                           lump sum  payment of his or her target  bonus for the
                           Company's  prior  fiscal  year to the extent that any
                           such  bonus was  earned  and is unpaid on the date of
                           termination of employment.

                  3.1.3    Expense  Reimbursement.   Within  ten  (10)  days  of
                           submission   of  proper   expense   reports   by  the
                           Executive,  the Company shall reimburse the Executive
                           for  all   expenses   incurred   by  the   Executive,
                           consistent  with past  practices,  in connection with
                           the  business of the Company  before the  Executive's
                           termination of employment.

                  3.1.4    Employee  Benefits.  The Executive  shall receive the
                           benefits, if any, under any 401(k) plan, nonqualified
                           deferred  compensation plan,  employee stock purchase
                           plan and  other  Company  benefit  plan to which  the
                           Executive  may be  entitled  pursuant to the terms of
                           such plans.


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         3.2      Continuation  of Base Salary.  In the event of the Executive's
                  Termination  in Absence of Change of  Control,  the  Executive
                  shall be entitled to receive the Executive's Base Salary for a
                  period of six (6) months,  payable over such six-month  period
                  in accordance with the Company's normal payroll practices (the
                  "Continuation  Payment").  If, at any time  during  the period
                  that  Continuation  Payments are made,  the Executive  accepts
                  employment  with, or is otherwise  engaged to provide services
                  to, or receives compensation from, any other person, entity or
                  organization,  whether as an employee,  consultant, advisor or
                  similar capacity, then the amount of the Continuation Payments
                  shall be reduced by the amount of  compensation  earned by the
                  Executive in such  capacity  during such time.  The  Executive
                  shall  immediately  notify  the  Company  of  any  employment,
                  engagement   or   compensation   described  in  the  preceding
                  sentence.

         3.3      Exercisability of Options Following  Termination in Absence of
                  Change of Control.  All outstanding and unvested stock options
                  and any restricted  stock awarded  granted under the Company's
                  1995 Equity  Incentive  Plan by the  Company to the  Executive
                  prior to an  Executive's  Termination  in Absence of Change of
                  Control  shall  cease  vesting as of the date of  termination,
                  but, in the case of stock  options,  shall  continue to remain
                  exercisable  (but in no event  shall be  exercisable  for more
                  than ten (10) years from the initial  grant date of such stock
                  options)  for a  period  of six (6)  months  from  the date of
                  employment termination.

         3.4      Extended Insurance Benefits.

                  3.4.1    Benefit   Continuation.   An  Executive   who  elects
                           coverage  under  COBRA  shall  receive,  by  means of
                           payment on behalf of the Executive of the  applicable
                           premiums, continued provision of the Company's health
                           related  and  other   standard   employee   insurance
                           coverages as are in effect  immediately  prior to the
                           Executive's  Termination  in  Absence  of  Change  of
                           Control for a period of six (6) months following such
                           Termination in Absence of Change of Control (with the
                           Executive  remaining  responsible for such percentage
                           of payments under such insurance as the Executive was
                           responsible for contributing  immediately  before the
                           employment termination).  The date of the "qualifying
                           event" for an Executive and any  dependents  shall be
                           the date of employment termination of the Executive.

                  3.4.2    Coverage  Under  Another  Plan.  Notwithstanding  the
                           preceding  provisions of this  subsection 3.4, in the
                           event  an  Executive  becomes  covered  as a  primary
                           insured  (that  is,  not  as a  beneficiary  under  a
                           spouse's or partner's plan) under another  employer's
                           group  health  plan  during the period  provided  for
                           herein,  the  Executive  promptly  shall  inform  the
                           Company and the  Company  shall  cease  provision  of
                           continued  group health  insurance  for the Executive
                           and any dependents.


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4.       FEDERAL EXCISE TAX UNDER SECTION 280G

         4.1      Reimbursement  of Excise Tax. If (1) any amounts payable to an
                  Executive  under  this  Plan  are   characterized   as  excess
                  parachute  payments  pursuant to Section  4999 of the Internal
                  Revenue  Code of 1986,  as amended  (the  "Code"),  and (2) an
                  Executive  thereby  would  be  subject  to any  United  States
                  federal  excise  tax due to that  characterization,  then  the
                  Executive may elect, in the Executive's  sole  discretion,  to
                  reduce  the  amounts  payable  under  this Plan or to have any
                  portion of applicable  options or restricted stock not vest in
                  order to avoid any "excess  parachute  payment"  under Section
                  280G(b)(1) of the Code.

4.2               Determination by Independent  Public  Accountants.  Unless the
                  Company  and an  Executive  otherwise  agree in  writing,  any
                  determination  required  under this Section 4 shall be made in
                  writing by  independent  public  accountants  agreed to by the
                  Company   and  an   Executive   (the   "Accountants"),   whose
                  determination   shall  be  conclusive  and  binding  upon  the
                  Executive  and the Company for all  purposes.  For purposes of
                  making  the  calculations  required  by this  Section  4,  the
                  Accountants may rely on reasonable, good faith interpretations
                  concerning  the  application  of Sections 280G and 4999 of the
                  Code.  The  Company  and the  Executive  shall  furnish to the
                  Accountants  such information and documents as the Accountants
                  may   reasonably   request  in  order  to  make  the  required
                  determinations.  The Company  shall bear all fees and expenses
                  the Accountants  may reasonably  charge in connection with the
                  services contemplated by this Section 4.

5.       DEFINITIONS

         5.1      Capitalized Terms Defined. Capitalized terms used in this Plan
                  shall have the  meanings  set forth in this  Section 5, unless
                  the context clearly requires a different meaning.

         5.2      "Base   Salary"   means  the  base  salary  of  an   Executive
                  immediately preceding any Change of Control, or in the absence
                  of Change of Control,  immediately  preceding  an  Executive's
                  termination of employment.

         5.3      "Cause" means:

                  (a)      Executive's  willful  and  deliberate  failure  or  a
                           refusal (not  resulting from  Executive's  incapacity
                           due to physical  or mental  illness) to comply in any
                           material respect with the legal or ethical  policies,
                           standards or  regulations  of the Company  (including
                           without  limitation  the  Company's  insider  trading
                           policy),  or willful and deliberate failure to follow
                           the lawful written  directions of the Chief Executive
                           Officer  or the  Board of  Directors,  provided  that
                           written notice in reasonable detail as to the alleged
                           failure or refusal has been given to the Executive by
                           the  Chief   Executive   Officer  or  his  authorized
                           designate and, if the failure is capable of cure, the
                           Executive  has had a reasonable  opportunity  to cure
                           such failure;


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<PAGE>

                  (b)      the  Executive's   misconduct   which  is  materially
                           detrimental to the Company, or willful and deliberate
                           failure  or  a  refusal  (not   resulting   from  the
                           Executive's  incapacity  due to  physical  or  mental
                           illness)  in  any  material  respect   faithfully  or
                           diligently,  to perform Executive's legal and ethical
                           duties,  determined by the Company in accordance with
                           any written  agreement  between the Executive and the
                           Company or the  customary  duties of the  Executive's
                           employment;   provided   that  written   notice,   in
                           reasonable  detail  as  to  the  alleged  failure  or
                           refusal, has been given to the Executive by the Chief
                           Executive Officer or his authorized designate and, if
                           the failure is capable of cure, the Executive has had
                           a reasonable opportunity to cure such failure;

                  (c)      the Executive's deliberate concealment from the Board
                           of any  action by the  Company  in  violation  of any
                           legal or ethical  policy,  standard or regulation set
                           by the Company;

                  (d)      the  Executive's  deliberate  failure to obtain Board
                           approval   for  any  Company  act   requiring   Board
                           approval;

                  (e)      any  unprofessional,  unethical or fraudulent conduct
                           that  is   demonstrably   injurious  and   materially
                           discredits  the Company or is materially  detrimental
                           to  the  reputation,  character  or  standing  of the
                           Company;

                  (f)      dishonest conduct or deliberate  attempt to do injury
                           to the Company;

                  (g)      the  Executive's   material  breach  of  any  written
                           employment  agreement  or  invention  assignment  and
                           confidentiality  agreement  between the Executive and
                           the Company; or

                  (h)      commission of an unlawful or criminal act (serious in
                           nature)  which  the Board of  Directors  or the Chief
                           Executive Officer reasonably  concludes would reflect
                           adversely   on  the  Company,   or  the   Executive's
                           conviction  of a  felony  or  other  crime  involving
                           embezzlement,  fraud  or any  offense  involving  the
                           money or property of the Company.

         5.4      "Change of Control" means:

                  (a)      any "person" (as such term is used in Sections  13(d)
                           and 14(d) of the Securities  Exchange Act of 1934, as
                           amended (the "Exchange  Act")),  other than a trustee
                           or other fiduciary holding  securities of the Company
                           under  an  employee  benefit  plan  of  the  Company,
                           becomes  the  "beneficial  owner" (as defined in Rule
                           13d-3 promulgated  under the Exchange Act),  directly
                           or   indirectly,   of   securities   of  the  Company
                           representing  50%  or  more  of (A)  the  outstanding
                           shares  of  common  stock of the  Company  or (B) the
                           combined    voting    power    of    the    Company's
                           then-outstanding securities;


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<PAGE>

                  (b)      the Company is party to a merger or consolidation, or
                           series of related transactions,  which results in the
                           voting   securities   of  the   Company   outstanding
                           immediately  prior  thereto  failing to  continue  to
                           represent  (either  by  remaining  outstanding  or by
                           being   converted  into  voting   securities  of  the
                           surviving entity) at least fifty (50%) percent of the
                           combined voting power of the voting securities of the
                           Company   or  such   surviving   entity   outstanding
                           immediately after such merger or consolidation;

                  (c)      the sale or disposition of all or  substantially  all
                           of  the  Company's  assets  (or  consummation  of any
                           transaction,   or  series  of  related  transactions,
                           having similar effect);

                  (d)      the   dissolution  or  liquidation  of  the  Company;
                           provided,    however,   that   the   dissolution   or
                           liquidation  of the  Company  shall be deemed to be a
                           Change of Control only if the Company has  sufficient
                           cash to pay all amounts it is obligated to pay to any
                           federal,  state or local  taxing or other  authority,
                           all of its creditors  and all amounts  required to be
                           paid to  employees  in  respect  of  compensation  or
                           benefits,  and  only  if the  Board  determines  that
                           treatment  of such  event as a Change of  Control  is
                           consistent with its fiduciary duties; or

                  (e)      any  transaction  or series of  related  transactions
                           that has the substantial effect of any one or more of
                           the foregoing.

         5.5      "Company"  shall  mean  Cellegy  Pharmaceuticals,  Inc.,  and,
                  following a Change of Control, any Successor.

         5.6      "Executive"  shall mean an  executive  of the Company whom the
                  Company  determines to be eligible to  participate in the Plan
                  and who has executed an Agreement of Plan Participation in the
                  form set forth in Exhibit A hereto.

         5.7      "Good  Reason"  means,  upon or following a Change of Control,
                  the occurrence of any of the following conditions,  without an
                  Executive's written consent:

                  (a)      assignment  to  an  Executive  of a  title  position,
                           responsibilities  or duties that are materially  less
                           than the title position,  responsibilities and duties
                           which the Executive  occupied  immediately  preceding
                           any termination of employment,  except that following
                           a Change of Control,  a reduction in title  position,
                           responsibilities  or  duties  solely by virtue of the
                           Company  being  acquired  and  made  part of a larger
                           entity  or  operated  as  a   subsidiary   shall  not
                           constitute Good Reason;

                  (b)      a material  reduction in an Executive's  Base Salary,
                           other than  reductions  made for all  officers of the
                           Company,  a  material  reduction  in the  Executive's
                           target bonus  opportunity  after the  occurrence of a
                           Change  of  Control  compared  to the  amount  of the
                           target  bonus   opportunity   in  effect  before  the
                           occurrence  of the Change of  Control,  or a material
                           reduction in employee benefits other than a reduction
                           applicable to employees generally;


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<PAGE>

                  (c)      the  Company's  requiring an Executive to be based at
                           any  office or  location  more than 40 miles from the
                           office where the Executive  was employed  immediately
                           preceding the Change of Control; or

                  (d)      any  material  breach by the  Company of the terms of
                           any written employment  agreement between the Company
                           and the Executive or of the terms of this Plan, which
                           breach is not cured within twenty (20) days following
                           written  notice by the  Executive  to the  Company of
                           such breach, including but not limited to the failure
                           by the Company to require a Successor (whether direct
                           or indirect,  by purchase,  merger,  consolidation or
                           otherwise)  to  all  or  substantially   all  of  the
                           business  and/or  assets  of the  Company  to  assume
                           expressly and agree to perform the  Company's  Change
                           of Control obligations,  as if no such succession had
                           taken place.

         5.8      "Disability" means that:

                  (a)      an Executive has been incapacitated by bodily injury,
                           illness or disease so as to be prevented thereby from
                           engaging in the performance of an Executive's duties;

                  (b)      such  total  incapacity  shall have  continued  for a
                           period of four consecutive months; and

                  (c)      such  incapacity  will, in the opinion of a qualified
                           physician,  be permanent  and  continuous  during the
                           remainder of an Executive's life.

         5.9      "Successor"  means  the  Company  as  defined  above  and  any
                  successor  or  assign  to  substantially  all of its  business
                  and/or assets.

         5.10     "Termination  in  Absence  of  Change  of  Control"  means any
                  termination  of  employment  of an  Executive  by the  Company
                  without  Cause  (i) that  occurs  prior  to the date  that the
                  Company first  publicly  announces it has reached a definitive
                  agreement that would result in a Change of Control,  (ii) that
                  occurs after the Company  announces that it has terminated any
                  such definitive  agreement and does not thereafter  enter into
                  discussions that lead to such a definitive agreement, or (iii)
                  that occurs more than twelve (12) months following a Change of
                  Control.  Notwithstanding the foregoing, the term "Termination
                  in  Absence  of  Change of  Control"  shall  not  include  any
                  termination  of  the  employment  of an  Executive  (1) by the
                  Company  for  Cause;  (2) by the  Company  as a result  of the
                  Disability  of an  Executive;  (3) as a result of the death of
                  the Executive; or (4) as a result of the voluntary termination
                  of employment by the Executive.


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<PAGE>

         5.11     "Termination Upon Change of Control" means:

                  (a)      any  termination of the employment of an Executive by
                           the   Company   without   Cause   during  the  period
                           commencing  on or  after  the date  that the  Company
                           first publicly announces a definitive  agreement that
                           would  result in a Change  of  Control  (even  though
                           still   subject   to   approval   by  the   Company's
                           shareholders and other conditions and  contingencies)
                           and  ending on the date which is twelve  (12)  months
                           following a Change of Control; or

                  (b)      any resignation by an Executive for Good Reason where
                           (i)  such  Good  Reason   occurs  during  the  period
                           commencing  on or  after  the date  that the  Company
                           first publicly announces a definitive  agreement that
                           would  result in a Change  of  Control  (even  though
                           still   subject   to   approval   by  the   Company's
                           shareholders and other conditions and  contingencies)
                           and  ending on the date which is twelve  (12)  months
                           following  the  Change  of  Control,  and  (ii)  such
                           resignation  occurs  within six (6) months  following
                           the occurrence of such Good Reason.

         Notwithstanding  the foregoing,  the term  "Termination  Upon Change of
         Control"  shall not include any  termination  of the  employment  of an
         Executive (1) by the Company for Cause;  (2) by the Company as a result
         of the Disability of the Executive; (3) as a result of the death of the
         Executive;  or  (4)  as  a  result  of  the  voluntary  termination  of
         employment by the Executive for reasons other than Good Reason.

6.       EXCLUSIVE REMEDY

         6.1      No Other Benefits  Payable.  An Executive shall be entitled to
                  no other  compensation,  benefits,  or other payments from the
                  Company  as a result of any  termination  of  employment  with
                  respect to which the  payments  and/or  benefits  described in
                  Sections  2,  3 and 4 have  been  provided  to the  Executive,
                  except as expressly set forth in this Plan or,  subject to the
                  provisions of Sections 11 and 15, in a duly executed agreement
                  between Company and the Executive  entered into after the date
                  of adoption of this Plan.

         6.2      Release of Claims.  The Company may  condition  payment of the
                  cash  severance  in  Sections  2, 3 and 4 of this Plan and the
                  stock option acceleration  described in Sections 2, 3 and 4 of
                  this  Plan  upon the  delivery  by the  Executive  of a signed
                  general release of claims in a form reasonably satisfactory to
                  the  Company  and  covering  the  Company,   its  parents  and
                  subsidiary entities,  and its directors,  officers and agents;
                  provided,  however, that an Executive shall not be required to
                  release any rights an Executive may have to be  indemnified by
                  the Company.

7.       PROPRIETARY AND CONFIDENTIAL INFORMATION

         The Company  shall  condition  payment of the cash  severance  benefits
         described in this Plan upon an Executive's acknowledgment of his or her
         continuing  obligation to continue to abide by the terms and conditions
         of the Company's  confidentiality  and/or  proprietary rights agreement
         between the Executive and the Company.


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<PAGE>

8.       NON-SOLICITATION; NON-COMPETITION

         8.1      Agreement Not to Solicit.  If Company performs its obligations
                  to deliver the  severance  benefits set forth in Sections 2, 3
                  and 4 of the Plan,  then for a period of one (1) year after an
                  Executive's termination of employment,  the Executive will not
                  solicit, induce, or attempt to solicit or induce, the services
                  or  business  of any  employee  (other  than  the  Executive's
                  administrative      assistant),      distributor,      vendor,
                  representative,   business  partner,  customer,   distributor,
                  licensee,   manufacturer,   or  customer  of  the  Company  to
                  discontinue that person's or entity's  relationship with or to
                  the Company.

         8.2      Transition  Services.  If Company  performs its obligations to
                  deliver the  severance  benefits set forth in Sections 3 and 4
                  of the Plan, then for a period of (i) one (1) year in the case
                  of a  Termination  Upon a Change of Control,  and (ii) six (6)
                  months in the case of a Termination in the Absence of a Change
                  of Control,  after Executive's  termination of employment:  to
                  the maximum  extent  enforceable  by law, the  Executive  will
                  provide  reasonable  transition  services as  requested by the
                  Company.

         8.3      Non-Competition. The Executive agrees that, in connection with
                  a Change of Control  transaction,  to the extent  permitted by
                  applicable law, for a period of one year after the date of the
                  Change of  Control  transaction,  without  the  consent of the
                  Board of  Directors  of the Company  (or, if  applicable,  the
                  acquiring of surviving  corporation  in such Change of Control
                  transaction),   which  consent   shall  not  be   unreasonably
                  withheld, the Executive shall not engage in (as defined below)
                  or  provide  services  to any  business  that is  directly  or
                  indirectly  competitive with the then-present or then-actively
                  contemplated  business of the Company,  in any county,  state,
                  country  or  other   jurisdiction  in  which  the  Company  is
                  then-doing  business or is then-planning to do business.  Each
                  of the following  activities  shall,  without  limitation,  be
                  deemed to constitute  engaging in business  within the meaning
                  of this Section:  to engage in, work with, have an interest or
                  concern  in,  advise,  lend money to,  guarantee  the debts or
                  obligations of, or permit one's name or any part thereof to be
                  used in connection  with,  an  enterprise or endeavor,  either
                  individually,  in  partnership,  or in  conjunction  with  any
                  person  or  persons,   firms,   associations,   companies,  or
                  corporations,  whether  as a  principal,  agent,  shareholder,
                  employee,  officer,  director,  partner,  consultant or in any
                  other manner whatsoever; provided, however, that the Executive
                  shall  retain  the right to invest in or have an  interest  in
                  entities  traded  on  any  public  market  or  offered  by any
                  national brokerage house, provided that said interest does not
                  exceed  five  percent  (5.0%) of the  voting  control  of said
                  entity.   In  addition,   the   Executive   may  make  passive
                  investments  in privately held entities that are determined by
                  the Board of Directors of the Company not to be competitors of
                  Company.


                                       10
<PAGE>


9.       ARBITRATION

         9.1      Disputes  Subject  to  Arbitration.   Any  claim,  dispute  or
                  controversy  arising  out of this  Plan,  the  interpretation,
                  validity or  enforceability of this Plan or the alleged breach
                  thereof   shall  be   submitted  by  the  parties  to  binding
                  arbitration by the American Arbitration Association; provided,
                  however,  that (1) the  arbitrator  shall have no authority to
                  make any ruling or judgment  that would confer any rights with
                  respect to the trade  secrets,  confidential  and  proprietary
                  information or other intellectual property of the Company upon
                  an  Executive  or any third  party;  and (2) this  arbitration
                  provision  shall not preclude  the Company from seeking  legal
                  and equitable relief from any court having  jurisdiction  with
                  respect to any  disputes or claims  relating to or arising out
                  of  the   misuse   or   misappropriation   of  the   Company's
                  intellectual property. Judgment may be entered on the award of
                  the arbitrator in any court having jurisdiction.

         9.2      Site of Arbitration.  The site of the  arbitration  proceeding
                  shall be in San Francisco, California.

10.      INTERPRETATION

         This   Executive  and  the  Company  agree  that  this  Plan  shall  be
         interpreted in accordance with and governed by the laws of the State of
         California  as applied to  contracts  entered  into and  entirely to be
         performed within that state.

11.      CONFLICT IN BENEFITS; NONCUMULATION OF BENEFITS

         11.1     No Limitation of Regular Benefit Plans.  Except as provided in
                  Section 11.2 below, this Plan is not intended to and shall not
                  affect,   limit  or   terminate   any  plans,   programs,   or
                  arrangements  of the Company that are regularly made available
                  to a  significant  number  of  employees  or  officers  of the
                  Company,  including  without  limitation  the Company's  stock
                  option  plans;  and this Plan is not intended to and shall not
                  affect, limit or terminate any provisions contained in written
                  option  agreements  entered  into  between the Company and the
                  Executive before the date of adoption of this Plan.

         11.2     Noncumulation of Cash Benefits.  An Executive may not cumulate
                  cash severance  payments,  stock options and restricted  stock
                  vesting under both this Plan and another plan or policy of the
                  Company  (except  for such  provisions,  if any,  relating  to
                  options or restricted  stock under the  Company's  1995 Equity
                  Incentive Plan). If an Executive has any other binding written
                  agreement  with the Company which  provides that upon a Change
                  of Control or termination  of employment  the Executive  shall
                  receive  Change of Control or  termination  benefits,  then no
                  benefits  shall be received by the  Executive  under this Plan
                  unless  the  Executive  agrees in  writing to waive his or her
                  rights  to such  benefits,  in  which  case  this  Plan  shall
                  supercede  any such  written  agreement  with  respect to such
                  benefits.


                                       11
<PAGE>

12.      SUCCESSORS AND ASSIGNS

         12.1     Successors  of the  Company.  The  Company  will  require  any
                  successor or assign (whether direct or indirect,  by purchase,
                  merger,  consolidation  or otherwise) to all or  substantially
                  all of the business  and/or assets of the Company,  expressly,
                  to assume  and agree to perform  this Plan in the same  manner
                  and to the same extent  that the Company  would be required to
                  perform  it if no such  succession  or  assignment  had  taken
                  place.  Failure of the Company to obtain such agreement  shall
                  be a material breach of this Plan.

         12.2     No Assignment of Rights.  The interest of an Executive in this
                  Plan or in any distribution to be made under this Plan may not
                  be assigned,  pledged,  alienated,  anticipated,  or otherwise
                  encumbered  (either  at law or in  equity)  and  shall  not be
                  subject  to   attachment,   bankruptcy,   garnishment,   levy,
                  execution,  or other legal or  equitable  process.  Any act in
                  violation of this Section 12.2 shall be void.

         12.3     Heirs and  Representatives  of an  Executive.  This Plan shall
                  inure to the benefit of and be  enforceable  by an Executive's
                  personal and legal representatives, executors, administrators,
                  successors, heirs, distributees, devises and legatees.

13.      NOTICES

         For  purposes  of  this  Plan,  notices  and all  other  communications
         provided  for in the Plan  shall be in  writing  and shall be deemed to
         have  been duly  given  (i) when  delivered  if  delivered  by means of
         personal delivery, (ii) one business day after deposit with a reputable
         national courier service for overnight  delivery,  with confirmation of
         receipt,  (iii) one business day after  transmission by telecopier with
         confirmation of receipt (and a copy delivered by mail),  and (iv) three
         business  days after deposit in the mail, if delivered by United States
         registered mail, return receipt requested, postage prepaid, as follows:

         If to the Company:        Cellegy Pharmaceuticals, Inc.
                                   349 Oyster Point Boulevard, Suite 200
                                   South San Francisco, CA Sunnyvale, CA  94080
         Attention:                Chief Executive Officer

         and if to an Executive at the address specified by the Executive or, if
         no address is specified, to the last known address for the Executive as
         reflected in the Company's  business records.  Either party may provide
         the other with  notices of change of address,  which shall be effective
         upon receipt.

14.      NO REPRESENTATIONS

         An  Executive  acknowledges  that  in  entering  into  this  Plan,  the
         Executive   is  not  relying  and  has  not  relied  on  any   promise,
         representation  or statement  made by or on behalf of the Company which
         is not set forth in this Plan.


                                       12
<PAGE>

15.      MODIFICATION AND AMENDMENT

         At any time after the Effective Date of this Plan and prior to the date
         thirty  (30) days  before the  earlier of (1) the date that the Company
         first  publicly  announces it is conducting  negotiations  leading to a
         Change of  Control,  or (2) the date  that the  Company  enters  into a
         definitive  agreement  that would  result in a Change of Control  (even
         though  still  subject to approval by the  Company's  stockholders  and
         other  conditions  and  contingencies),  the Board of  Directors of the
         Company shall have the right to amend,  suspend or terminate  this Plan
         at any time and for any reason. Notwithstanding the preceding sentence,
         however,  no  amendment  or  termination  of this Plan shall  reduce an
         Executive's  rights or benefits  under this Plan if the  Executive  was
         employed by the  Company  before the date the  amendment  is adopted or
         this Plan is terminated, as appropriate.

16.      VALIDITY

         16.1     Invalid  Provisions.  If any one or more of the provisions (or
                  any part thereof) of this Plan shall be held invalid,  illegal
                  or  unenforceable in any respect,  the validity,  legality and
                  enforceability  of  the  remaining  provisions  (or  any  part
                  thereof) shall not in any way be affected or impaired thereby.

         16.2     Execution by Company Executive Officer or Director.  This Plan
                  and any modifications or amendments shall require the approval
                  of the Board of Directors of the Company.

17.      EFFECTIVE DATE; TERM OF PLAN

         17.1     Effective  Date.  The Effective  Date of this Plan is the date
                  this Plan is adopted by the Board of Directors.

         17.2     Term of  Plan.  The  term of the  Plan  shall  continue  until
                  December 31, 2006.


                                       13
<PAGE>

                                                                       Exhibit A


                          CELLEGY PHARMACEUTICALS, INC.
                          RETENTION AND SEVERANCE PLAN
                         AGREEMENT OF PLAN PARTICIPATION

         This Agreement of Plan Participation  ("Agreement") is made and entered
into as of __________,  2003, by and between  Cellegy  Pharmaceuticals,  Inc., a
California  corporation  (the  "Company"),  and the  executive  named below (the
"Executive").  Each capitalized term herein not otherwise defined shall have the
meaning  ascribed  to it in the  Cellegy  Pharmaceuticals,  Inc.  Retention  and
Severance Plan For Executives, as amended (the "Plan").

                                    RECITALS

         A. The Company has adopted the Plan to provide  certain  retention  and
severance  benefits to certain executives of the Company under the circumstances
provided in the Plan.

         B. The Company has  determined  that it is in the best interests of the
Company to enter into this Agreement with Executive.

                                    AGREEMENT

         THE PARTIES HEREBY AGREE AS FOLLOWS:

         1. Participation in the Plan.  Executive shall participate in the Plan,
as amended,  and receive the rights and  benefits  provided in the Plan and this
Agreement pursuant to the terms and conditions thereof.

         2. Termination Upon a Change of Control. As described in greater detail
in the Plan, upon a Termination  Upon Change of Control,  Executive will receive
(a) twelve (12) months Base Salary and the annual target bonus at the 100% level
for the year in which the Termination Upon Change of Control  occurred,  payable
in one lump sum amount  under  Section  2.2.1 of the Plan,  and (b) twelve  (12)
months  (or,  if  earlier,  until  the  Executive  becomes  covered  by  another
employer's  health plan,  as described in Section 2.4 of the Plan) of paid COBRA
coverage;  and all  outstanding  options and restricted  stock held by Executive
shall vest in full under  Section 2.3.1 of the Plan,  and  Executive  shall have
twelve (12) months from the date of  termination  of employment  within which to
exercise such options.

         3. Termination In Absence of Change of Control. As described in greater
detail  in the Plan,  upon a  Termination  in  Absence  of  Change  of  Control,
Executive  will  receive  (a) six (6) months of Base Salary  continuation  under
Section 3.2 (subject to  reduction as provided in Section 3.2 of the Plan),  (b)
six (6)  months  after  the  date of  employment  termination  to  exercise  any
outstanding  stock options  granted under the  Company's  1995 Equity  Incentive
Plan, to the extent such options were vested and  exercisable  as of the date of
termination, and (c) six (6) months (or, if earlier, until the Executive becomes
covered by another  employer's  health plan,  as described in Section 3.4 of the
Plan) of paid COBRA coverage.

<PAGE>

         4. No Other Benefits. Executive agrees that by executing this Agreement
and participating in the Plan, Executive waives and terminates his or her rights
to any cash severance or option or restricted  stock  acceleration  or continued
vesting under any agreement with the Company other than this Agreement  (whether
written or oral) or as provided in the Plan, that provides that upon a change of
control or termination of employment  Executive would be entitled to receive any
cash severance or acceleration or continued vesting of options.

         5.  Release of Claims.  As provided in the Plan,  Executive's  right to
receive the severance and other benefits  described in this Agreement and in the
Plan are  conditioned  on Executive  executing  and  delivering to the Company a
release of claims,  substantially  in the form of Appendix A attached  hereto or
such other form as the Company may reasonably require.

         6. General;  Miscellaneous.  The other terms and provisions of the Plan
are  hereby  incorporated  by  referenced  as if set forth  fully  herein.  This
Agreement  may be  executed  in one or more  counterparts,  each of which  shall
constitute an original but all of which taking together shall constitute one and
the same agreement.  Executive has read and understands,  and agrees to be bound
by, the terms and conditions of the Plan, as amended,  and this Agreement.  This
Agreement  (including the Plan) contains the entire  understanding and agreement
between the parties  with  respect to the subject  matter of the  Agreement  and
supersedes any and all prior  agreements,  negotiations and discussions  between
the Company and the Executive with respect to the subject matter hereof. Nothing
in this Agreement or the Plan will be construed to limit or otherwise  affect in
any manner whatsoever the right or power of the Company to terminate Executive's
employment or other relationship with the Company at any time, for any reason or
no reason,  with or without cause. No amendment or termination of the Plan shall
reduce any of Executive's rights or benefits under the Plan or this Agreement.



                [Remainder of this page intentionally left blank]


                                       2

<PAGE>
                                                                  FOR EXECUTIVES


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement of
Plan Participation set forth above.

CELLEGY PHARMACEUTICALS, INC.               EXECUTIVE:



By:
    ----------------------------------      -----------------------------------
    Name:                                   Name:
    Title:                                  Date:




                                       3

</TEXT>
</DOCUMENT>
