Document:

<PAGE>

                                                                   Exhibit 10.22

  PATENT LICENSE AGREEMENT FOR THE USE OF AC-3 TECHNOLOGY IN THE MANUFACTURE
  --------------------------------------------------------------------------
                                 OF DVD DISCS
                                 ------------

This Agreement having an effective date of October 1, 1999 by and between U.S.
PHILIPS CORPORATION, having its principal office at 580 White Plains Road,
Tarrytown, New York 10591 (hereinafter referred to as "Philips")

and

Future Media Productions, Inc., having its principal office at 25136 Anza Drive,
Valencia, California 91355 (hereinafter referred to as "Licensee")

WHEREAS, Licensee is engaged in the manufacture of DVD-Video and DVD-ROM Discs
(together hereinafter referred to as "DVD Discs") and, in the process of such
manufacture, is making use of the technology developed by Dolby Laboratories and
known as AC-3;

WHEREAS, Koninklijke Philips Electronics N.V. (hereinafter referred to as
"Philips"), Institut fur Rundfunk Technik G.m.b.H. of Munchen, Germany, (IRT)
and the Centre Commun d'Etudes Telediffusion et Telecommunications of Cesson-
Sevigne, France (CCETT) own certain patents rights relating to the AC-3
technology, these patent rights (hereinafter referred to as "Licensed Patents")
are listed in Annex 1 hereto;

WHEREAS, USPC has been authorized by Philips, IRT and CCETT to grant licenses
for the use of the Licensed Patents in connection with the use of the AC-3
technology.

WHEREAS, Licensee wishes to be licensed under the Licensed Patents in
connection with the manufacture of DVD-Discs making use of AC-3 and Philips is
willing to grant such license in accordance with the provisions hereof;

IT IS HEREBY AGREED AS FOLLOWS:

                            Article 1 - Definitions
                            -----------------------

1.01  "Disc": a non-recordable reflective disc-shaped information carrier
      comprising any kind of information such as, but not limited to, audio,-
      video-, text- and/or data-related information, which is irreversibly
      stored in one or more layers during and as an integral part of the
      manufacturing process of the disc in a form which is optically readable by
      play-back devices.

1.02  "Player": a playback device for optically reading information stored on a
      Disc and converting such information into electrical signals for
      reproduction purposes.

1.03  "DVD-Video Disc/DVD-ROM Disc": a replicated Disc comprising any kind of
      information such as, but not limited to, audio,- video,- text,- and/or
      data-related information,
<PAGE>

                                      2

      encoded in digital form, which is optically readable by a DVD-Video Player
      or a DVD-ROM Player.

1.04  "DVD-Video Player/DVD-ROM Player": a Player which is designed and
      manufactured specifically for the reproduction of information stored on a
      DVD Disc and the conversion of such information, which is bit-encoded
      according to the DVD-Video and DVD-ROM Standard Specifications, into
      electrical signals by means prescribed in the DVD-Video and DVD-ROM
      Standard Specifications, which electrical signals are directly capable and
      intended to be used for visual reproduction through standard television
      receivers and/or television monitors, or for reproduction of video, text
      and data related information through data handling and/or data processing
      equipment, (the DVD-Video Player and DVD-ROM Player together referred to
      as "DVD Player").

1.05  "Licensed Product(s)": DVD Discs incorporating AC-3 technology.

1.06  "Licensed Patents": The patents as listed in Annex I hereto.

      The word "essential" as used in relation to patent rights in this
      Agreement shall refer to patent rights, the use of which is necessary (as
      a practical matter) for the use of the AC-3 technology in connection with
      the Licensed Products.

1.07  "Associated Company": any business entity, in which Philips, IRT, CCETT or
      Licensee controls, directly or indirectly, more than fifty percent (50%)
      of the shares entitled to vote for the election of directors, but any such
      business entity shall be deemed an Associated Company only for as long as
      such control exists.

1.08  "Territory"; the geographic area known as the United States of America,
      its territories and possessions.

                         Article 2 -- Grant of rights
                         ----------------------------

2.01  For the term of this Agreement and subject to the provisions hereof, USPC
      hereby grants to Licensee and its Associated Companies a non-exclusive,
      non-transferable license under the Licensed Patents to use the AC-3
      technology in the manufacture of Licensed Products within the Territory
      and to use, sell or otherwise dispose of Licensed Products so manufactured
      in all countries of the world.

2.02  In consideration of the undertakings set forth in Articles 2.01, Licensee
      agrees to grant to Philips, IRT, CCETT and their respective Associated
      Companies, for a period of ten years from the Effective Date (as
      hereinafter defined), non-exclusive, non-transferable licenses, on
      reasonable, non-discriminatory conditions comparable to those set forth
      herein, to use the AC-3 technology in the manufacture of DVD Discs and to
      use, sell or otherwise dispose of DVD Discs so manufactured in all
      countries of the world, under any and all present and future patent
      rights, for which Licensee or its Associated Companies may now have or may
      hereafter acquire the right to grant licenses and which are essential to
      the use of AC-3
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                                      3

      technology in the manufacture of DVD Discs and the subsequent use, sale or
      other disposal thereof, and which patent rights were first filed in any
      country of the world up to the date of termination of this Agreement.

                  Article 3 - Roya1ties, Reports and Payments
                  -------------------------------------------

3.01  In consideration of the rights granted hereunder by USPC to Licensee,
      Licensee agrees to pay to USPC, a royalty of US$0.003 (three tenths of a
      US dollar cent) on each Licensed Product sold by Licensee or any of its
      Associated Companies, in which any one or more Licensed Patent(s) is (are)
      used, irrespective of whether such licensed Patent(s) is (are) used in the
      country of manufacture, use, sale or other disposal.

      A Licensed Product shall be considered sold when invoiced or, if not
      invoiced, when delivered by any party or otherwise disposed of to a party
      other than Licensee or an Associated Company of Licensee.

      For the avoidance of doubt, in the event that none of the Licensed Patents
      would be infringed by the manufacture of Licensed Products within the
      Territory, Licensee shall have no obligation to pay the royalties due on
      the basis of this Agreement in respect of Licensed Products manufactured
      within the Territory and which are directly exported for final use to a
      country in which no Licensed Patents subsist.

3.02  Within thirty (30) days following 31 March, 30 June, 30 September and 31
      December of each year during the term of this Agreement, Licensee shall
      submit to USPC (even in the event that no sales have been made) a written
      statement, signed by a duly authorized officer on behalf of Licensee,
      setting forth with respect to the preceding quarterly period:

      (1) the quantities of Licensed Products manufactured and sold by Licensee
          and its Associated Companies:

      (2) a computation of the royalties due under this Agreement.

      Licensee shall submit to USPC, once per calendar year, a written statement
      by its external auditors, who shall be independent certified accountants,
      confirming that the quarterly royalty statements as submitted by Licensee
      to USPC for the last four quarterly periods, were true, complete and
      accurate in every respect.

      Licensee shall pay the royalties due to USPC concurrently with the
      submission of the aforementioned written statement.

3.03  Within 30 days following the expiration or termination of this Agreement,
      Licensee shall submit to USPC a certified report on the number of Licensed
      Products in stock at the time of expiration or termination of this
      Agreement. Royalties shall be due and payable on all Licensed Products
      manufactured prior to, but remaining in stock with Licensee and/or its
      Associated Companies at the date of expiration or termination of this
      Agreement. For the
<PAGE>

                                       4

      purpose of royalty computation, all Licensed Products in stock will be
      deemed to have been sold or otherwise disposed of in the same countries
      and in proportionally the same quantities as in the last two full
      reporting quarters during the term of this Agreement. For the avoidance of
      doubt, this Article 3.03 shall be without prejudice to the provisions
      of Article 5.05.

3.04  Any payments which are not made on the dates specified herein, shall
      accrue interest at the rate of two percent (2%) per month or the maximum
      amount permitted by law, whichever is lower.

3.05  All payments to USPC under this Agreement shall be made by transfer in
      such currency, convertible in the sense of Articles VIII and XIX of the
      Articles of Agreement of the International Monetary Fund, as designated by
      USPC. The rate of exchange for converting the currency of the Territory
      shall be the telegraphic transfer selling rate of the designated currency
      (or other convertible currency as the case may be) in terms of the
      currency officially quoted in the Territory by the officially authorized
      foreign exchange bank for payment of currency transactions on the day that
      the amount is due and payable.

3.06  All costs, stamp duties, taxes and other similar levies arising from or in
      connection with the conclusion of this Agreement shall be borne by
      Licensee. However, in the event that the government of a country imposes
      any income taxes on payments made by Licensee to USPC hereunder and
      requires Licensee to withhold such tax from such payments, Licensee may
      deduct such tax from such payments. In such event, Licensee shall promptly
      provide USPC with tax receipts issued by the relevant tax authorities so
      as to enable USPC to support a claim for credit against income taxes which
      may be payable by USPC.

3.07  Licensee shall maintain complete and accurate books and records covering
      all sales or other disposals of Licensed Products by Licensee and/or its
      Associated Companies, for a period of three (3) years following such sales
      or other disposals.

      In order to verify the accuracy of the royalty statements mentioned in
      Article 3.02, USPC shall have the right to inspect such books and records
      of Licensee and/or its Associated Companies from time to time, but not
      more than once per calendar year, by an independent certified accountant
      appointed by USPC. Such inspection shall be conducted at USPC's own
      expense provided that if any discrepancy or error exceeding three percent
      (3%) of the monies actually due is established, the cost of such
      inspection shall be borne by Licensee, without prejudice to any other
      claims that USPC may have under this Agreement or under applicable law.

3.08  Without prejudice to the provisions of Article 3.07, Licensee shall
      provide relevant additional information as USPC may reasonably request
      from time to time to enable USPC to ascertain which products manufactured,
      sold or otherwise disposed of by Licensee and/or its Associated Companies
      are subject to the payment of royalties to USPC hereunder, the patent
      rights which have been used in connection with such products, and the
      amount of royalties payable.

<PAGE>

                                       5

3.09  Within thirty (30) days after execution of this Agreement, Licensee shall
      pay to USPC a royalty, calculated in accordance with the provisions of
      Article 3.01, on products which would have been Licensed Products under
      this Agreement and were manufactured, used, sold or otherwise disposed of
      by Licensee and/or its Associated Companies before the Effective Date of
      this Agreement and shall submit to USPC concurrently with this royalty, as
      calculated herein, a royalty statement in respect of such products, in
      accordance with Article 3.02. Upon the payment of this royalty, as
      calculated herein, such products shall become Licensed Products.

                  Article 4 - No Warranty and Indemnification
                  -------------------------------------------

4.01  It is acknowledged by the parties hereto that third parties may own
      industrial and/or intellectual property rights in the field of AC-3 and
      Licensee acknowledges and agrees that USPC, Philips, IRT and CCETT and
      their respective Associated Companies make no warranty whatsoever that the
      use of the AC-3 technology or the manufacture, use, sale or other disposal
      of any Licensed Product will be free from infringement of any industrial
      and/or intellectual property rights other than the Licensed Patents.

                       Article 5 - Term and Termination
                       --------------------------------

5.01  This Agreement shall enter into force on the "Effective Date", being the
      date first written above, or, in the case validation of this Agreement is
      required by the competent governmental authorities, the date of such
      validation. This Agreement shall remain in force for a period of ten (10)
      years from the Effective Date, unless terminated earlier in accordance
      with the provisions of this Article 5.

5.02  Without prejudice to the provisions of Article 5.03 through 5.05, each
      party may terminate this Agreement at any time by means of written notice
      to the other party in the event that the other party fails to comply with
      any material obligation under this Agreement and, such failure is not
      remedied within thirty (30) days after receipt of a notice specifying the
      nature of such failure and requiring it to be remedied. Such right of
      termination shall not be exclusive of any other remedies or means of
      redress to which the non-defaulting party may be lawfully entitled and all
      such remedies shall be cumulative. Any such termination shall not affect
      any royalties or other payment obligations under this Agreement accrued
      prior to such termination.

5.03  USPC may terminate this Agreement forthwith by means of notice in writing
      to Licensee in the event that a creditor or other claimant takes
      possession of, or a receiver, administrator or similar officer is
      appointed over any of the assets of Licensee or in the event that Licensee
      makes any voluntary arrangement with its creditors or becomes subject to
      any court or administration order pursuant to any bankruptcy or insolvency
      law.

5.04  USPC shall have the right to terminate this Agreement forthwith or to
      revoke the license granted under any of USPC's, Philips', IRT's or CCETT's
      respective patent rights in the
<PAGE>

                                       6

      event that Licensee or any of its Associated Companies brings a lawsuit or
      other proceeding for infringement of any of its patents essential for the
      use of the AC-3 technology in the manufacture of DVD Discs and/or the
      use, sale or other disposal thereof against USPC, Philips, IRT or CCETT
      and/or any of their respective Associated Companies respectively and
      Licensee refuses to grant licenses under such patents on fair and
      reasonable terms to USPC, Philips, IRT and CCETT respectively.

5.05  Upon the termination by USPC for any reason pursuant to Article 5.02
      through 5.04, Licensee shall immediately cease the manufacture, sale or
      other means of disposal of Licensed Products in which the Licensed
      Patents are used. Further, upon such termination, any and all amounts
      outstanding hereunder shall become immediately due and payable.

                          Article 6 - Miscellaneous
                          -------------------------

6.01  Any notice or request required or permitted to be given under or in
      connection with this Agreement or the subject matter hereof shall be in
      writing and shall be deemed to have been sufficiently given when, if given
      to Licensee,

      it is addressed to:

      Future Media Productions, Inc.
      25136 Anza Drive
      Valencia, California 91355

      in respect of USPC, to:

      U.S. Philips Corporation
      580 White Plains Road
      Tarrytown, New York 10591
      Fax. No.: 914-332-0615

      and sent in each case by telecopy and Registered Mail, postage prepaid.
      The date of mailing shall be deemed to be the date on which such notice of
      request has been given. Either party may give written notice of change of
      address and, after notice of such change has been received, any notice or
      request required to be given shall thereafter be given to such party at
      such changed address in the manner as provided above.

6.02  This Agreement sets forth the entire understanding and agreement between
      the parties as to the subject matter hereof and supersedes and replaces
      all prior arrangements, discussions and understandings between the
      parties specifically relating thereto. Neither party shall be bound by any
      obligation, warranty, waiver, release or representation, except as
      expressly provided herein, or as may subsequently be agreed in writing
      between the parties.

6.03  Nothing contained in this Agreement shall be construed:
<PAGE>

                                       7

      (a)  as imposing on either party any obligation to instigate any suit or
           action for infringement of any of the patent rights licensed
           hereunder or to defend any suit or action brought by a third party
           which challenges or relates to the validity of any of such patent
           rights. Licensee shall have no right to instigate any such suit or
           action for infringement of any of the patent rights licensed by USPC
           hereunder, nor the right to defend any such suit or action which
           challenges or relates to the validity of any such patent right
           licensed by USPC hereunder;

      (b)  as imposing any obligation to file any patent application or to
           secure any patent or to maintain any patent in force;

      (c)  as conferring any license or right to copy or imitate the appearance
           and/or design of any product;

      (d)  as conferring any license under the patent rights licensed pursuant
           to Article 2 hereof, to manufacture, use, sell or otherwise dispose
           of any product or device other than a Licensed Product.

6.04  Neither the failure nor delay of either party to enforce any provisions of
      this Agreement shall constitute a waiver of such provision or of the right
      of either party to enforce each and every provision of this Agreement.

6.05  Should any provision of this Agreement be finally determined void or
      unenforceable in any judicial proceeding, such determination shall not
      affect the operation of the remaining provisions hereof.

6.06  This Agreement and all disputes, claims or controversies arising out of or
      in any way relating to, this Agreement ("Dispute") shall be governed by
      and construed, and any claim or controversy arising with respect thereto
      shall be determined, in accordance with the laws and in the competent
      courts of the State of New York. The parties hereto consent to the
      personal jurisdiction of the competent courts of the State of New York for
      the purpose of prosecuting or resolving any such Dispute.

AS WITNESS, the parties hereto have caused this Agreement to be signed on the
date first written above.

U.S. PHILIPS CORPORATION                   FUTURE MEDIA PRODUCTIONS, INC.

/s/ Algy Tamoshunas                        /s/ Louis Weiss
---------------------------------          --------------------------------
Algy Tamoshunas                            Name: Louis Weiss

Title: VP                                  Title  CFO
      ---------------------------                --------------------------

Date:  2/8/00                              Date:  1/21/00
      ---------------------------                --------------------------
<PAGE>

                     DVD - Video/ROM Disc Patent List AC3

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Licensor's          Priority DOC/       Title                                         US Patent PS             JP Patent PS
Ref. No.            Priority Date                                                     Appln. No/Exp. date      Publ.PPU/Exp. date
---------------------------------------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>                                           <C>                      <C>
IRT-2               DE 3,639,753        Method for transfer of digital audio signals    PS 4,972,484             PS 1.501.435
                    21.11.1986                                                          20.11.2007               20,11,2007
---------------------------------------------------------------------------------------------------------------------------------
IRT-3               DE3.440.613         Method for digitally transferring a broadcast
                    07.11.1984          program signal
---------------------------------------------------------------------------------------------------------------------------------
N 13.241            NL 89.01402         Universal subband coder format                 PS 5, 323,396           PPU 91-24834
                    02.06.1989                                                         21.06.2011              01.06.2010
                    NL 90.00338                                                        PS 5,606,618
                    13.02.1990                                                         23.07.2013
                                                                                       PS 5,777,992
                                                                                       21.06.2011
                                                                                       PS 5,539,829
                                                                                       23,07.2013
                                                                                       A 08/488,536
                                                                                       PS 5,530,655
                                                                                       25.06.2013
---------------------------------------------------------------------------------------------------------------------------------
Q 93.002            08/032915           Matrixing of bit rate reduced signals          PS 5,481,643
                    18.03.1993                                                         18.03.2013
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

All corresponding patent applications, patents, divisions, continuations and
reissues based upon any of the patent applications or patents considered to be
concluded as an integral part of this list.
<PAGE>

                     MPEG-2 AUDIO PATENT LICENSE AGREEMENT
                     -------------------------------------

This Agreement is entered into this 1st day of October, 1999 by and between

U.S. PHILIPS CORPORATION., having its principal office at 580 White Plains Road,
Tarrytown, New York 10591, (hereinafter referred to as "USPC")

and

FUTURE MEDIA PRODUCTIONS, INC., having its principal office at 25136 Anza Drive,
Valencia, California 91355 (hereinafter referred to as "Licensee")

WHEREAS the parties hereto have entered into a DVD Video Disc and DVD ROM Disc
Patent License Agreement (hereinafter referred to as the "DVD Agreement"),
whereby USPC has granted to Licensee the right to use certain patent rights
owned by Koninklijke Philips Electronics N.V., Sony Corporation and Pioneer
Electronic Corporation, respectively in connection with the manufacture and sale
of Licensed Products (as defined in the DVD Agreement);

WHEREAS Philips, together with the Institut fur Rundfunk Technik G.m.b.H. of
Munchen (Germany) and the Centre Commun d'Etudes Telediffusion et
Telecommunications of CessonSevigne (France) own certain patents rights
relating to the MPEG-2 Audio technology, which are being used in connection with
the manufacture of Licensed Products (as defined in the DVD Agreement); these
patent rights (hereinafter referred to as "the MPEG-2 Audio Patents") are listed
in Annex I hereto;

It is hereby agreed as follows:

USPC hereby grants to Licensee and its Associated Companies and Licensee hereby
accepts the right to use the MPEG-2 Audio Patents solely for the decoding of
digital audio signals in accordance with the ISO/IEC 13818-3 MPEG-2 Audio
Standard in connection with the manufacture of Licensed Products (as defined in
the DVD Agreement), for no additional royalty consideration and for the duration
of the DVD Agreement, provided that Licensee fully complies with all its
obligations under the DVD Agreement.

Further, Licensee and its Associated Companies shall have the right to use the
MPEG-2 Audio logo on Licensed Products manufactured by it (them) in accordance
with the provisions of this Agreement and the DVD Agreement.
<PAGE>

                                       2

In addition to the reporting of Licensed Products in accordance with Article
4.03 of the DVD Agreement, Licensee shall also report the quantities of Licensed
Products making use of the above-mentioned MPEG-2 Audio Standard.

The relevant provisions of the DVD Agreement shall apply, mutatis mutandis, to
this Agreement.

Signed for and on behalf of:

U.S. PHILIPS CORPORATION                     FUTURE MEDIA PRODUCTIONS, INC.

/s/ Algy Tamoshunas                          /s/ Louis Weiss
--------------------------------             --------------------------------
Algy Tamoshunas

Title:  VP                                   Title:  CFO
       -------------------------                    -------------------------

Date:  2/8/00                                Date:  01/21/00
      --------------------------                   --------------------------
<PAGE>

                 DVD - Video/ROM Disc Patent List MPEG 2 Audio
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
 Licensor's       Priority DOC/      Title                               US Patent PS             JP Patent PS
 Ref. No.         Priority Date
                                                                         Appln. No/Exp. date      Publ. PPU/Exp. date
---------------------------------------------------------------------------------------------------------------------------
<S>               <C>                <C>                                 <C>                      <C>
 PCT-IRT          DE 36 39 753/      Method for transfer of digital      PS 4,972,484/           A 01-501.435/
                  21.11.1986         audio signals.
                                                                         20.11.2007               .......2007
---------------------------------------------------------------------------------------------------------------------------
 IRT-1            DE 41.02.324/      Method for transfer of digital      WO-92.13396/            WO-92.13396/
                  26.01.1991         subband coded audio signals by
                                     use of scaling factors.             ........                 27.06.2011
---------------------------------------------------------------------------------------------------------------------------
 IRT-2            DE 41.24.493/      Method for transfer of digital bit  WO-93.02508/             WO-93.02508/
                  24.07.1991         rate reduced audio signals using
                                     an overall monitoring threshold.    ........                 21.07.2012
---------------------------------------------------------------------------------------------------------------------------
 IRT-3            DE 34.40.613/      Method for digitally transferring          -                           -
                  07.11.1984         a broadcast program signal.
---------------------------------------------------------------------------------------------------------------------------
 IRT-4            DE 42.29.372/      Method for transfer of the bitrate         -                           -
                  03.09.1992         allocation information in a digital
                                     bit rate reduced audio coding
                                     method.
---------------------------------------------------------------------------------------------------------------------------
 F 85.506         FR 85-01429/       Digital analysis/synthesis
                                     filter bank.                               -                           -
                  01.02.1985
---------------------------------------------------------------------------------------------------------------------------
 Q 89.018         EP 89.201.408/     Digital transmission system using   PS 5,214,678/            PPU 91-82,233/
                  02.06.1989         subband coding of digital signals.
                                                                         25.05.2010               02.06.2010
--------------------------------------------------------------------------------------------------------------------------       -
</TABLE>

All corresponding patent applications, patents, divisions, continuations and
reissues based upon any of the patent applications or patents of this considered
to be concluded as an integral part of this list.
<PAGE>

                                       2

                DVD - Video/ROM Disc Patent List MPEG 2 Audio
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
 Licensor's       Priority DOC/      Title                                  US Patent PS             JP Patent PS
 Ref. No.         Priority Date
                                                                            Appln. No/Exp. date      Publ. PPU/Exp. date
----------------------------------------------------------------------------------------------------------------------------
<S>              <C>                 <C>                                    <C>                      <C>
 N 12.967        NL 89.01402/        Universal subband coder format.        PS 5,323,396/            PPU 91-24,834/
                 02.06.1989                                                 21.06.2011               01.06.2010
 N 13.241        NL 90.00338/                                               PS 5,777,992/
                 12.02.1990                                                 .....
                                                                            PS 5,539,829/
                                                                            23.07.2013
                                                                            A 08-488,536/
                                                                            .....
                                                                            PS 5,530,655/
                                                                            25.06.2013
----------------------------------------------------------------------------------------------------------------------------

 N 14.361        EP 93.200156.3/     Three channel transmission of L-,      PS 5,610,985/            PPU 94-318,922/
                                     R- and Centre
                 22.01.1993                                                 21.01.2014               21.01.2014
----------------------------------------------------------------------------------------------------------------------------

 N 14.615        EP 93.203.000.0/    SB splitting prior to multiplexing     PS 5,544,247/            A 95-5l2,501/
                 27.03.1993          signals L, R, C.                       25.10.2014
                                                                            PS 5,818,943/            18.10.2014
                                                                            25.10.2014
                                                                            ......
                                                                            25.10.2014
----------------------------------------------------------------------------------------------------------------------------
 Q 93.002         US A08-032915/      Matrixing of bitrate reduces           PS 5,481,643/               -
                  18.03.1993          signals
                                                                            18.03.2013
----------------------------------------------------------------------------------------------------------------------------
 N 15.812        EP 96.201.261.3/    Audio frequency scalability            A 08-852,761/            A 97-539,685/
                                     on DVD
                 08.05.1996
                                                                            07.05.2017               30.04.2017
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

All corresponding patent applications, patents, divisions, continuations and
reissues based upon any of the patent applications or patents of this
considered to be concluded as an integral part of this list.
<PAGE>

                                       3

              DVD - Video/ROM Disc Patent List MPEG 2 Audio
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
 Licensor's       Priority DOC/      Title                                   US Patent PS              JP Patent PS
 Ref. No.         Priority Date
                                                                             Appln. No/Exp. date       Publ. PPU/Exp. date
----------------------------------------------------------------------------------------------------------------------------
<S>               <C>                <C>                                      <C>                      <C>
 N 15.808         EP 96.201.259.7/   Selection of Masked thresholds           A08-826,919/             A97-536,003/
                  08.05.1996
                                                                              09.04.2017               02.04.2017
----------------------------------------------------------------------------------------------------------------------------
 N 15.787         EP 96.201216.7/    N channel transmission compatible
                  02.05.1996         with 2- and 1-channel transmission.      A 08-795,120/            A97-528,333/
                                                                              07.02.2017               31.01.2017
----------------------------------------------------------------------------------------------------------------------------
 N 15.760         EP 96.200.937.9/   Multi channel encoding                   A 08-826,916/            A97-536,00l/
                  10.04.1996
                                                                              09.04.2017               01.04.2017
----------------------------------------------------------------------------------------------------------------------------
 N 15.678         EP 96.200.274.7/   7-channel backwards compatible           PS 5,850,456/            A97-528,329/
                  08.02.1996         encoding.
                                                                              06.02.2017               24.01.2017
----------------------------------------------------------------------------------------------------------------------------
 N 14.834         EP 94.201.214.7/   Intensity stereo coding on subband       PS 5,850,418/            PPU 97-512,971/
                  02.05.1994         signals.
                                                                              01.05.2015               25.04.2015
----------------------------------------------------------------------------------------------------------------------------
 N 15.653         EP 96.200.063.4/   Change bitpool to obtain constant
                  12.01.1996         bitrate output.                          A 08-768,353/            A97-525,026/

                                                                              17.12.2016               11.12.2016
----------------------------------------------------------------------------------------------------------------------------
 N 15.516         EP 95.202866.0/    Repeated coding/decoding with
                  24.10.1995         variable delay.                          A 08-738,990/            PPU 98-512,131/

                                                                              24.10.2016               18.10.2016
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

All corresponding patent applications, patents, divisions, continuations and
reissues based upon any of the patent applications or patents of this considered
to be concluded as an integral part of this list.TERMINATION OF EXCLUSIVE LICENSING AGREEMENT

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

                                       2
<PAGE>

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

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

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

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

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

                                       3
<PAGE>

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

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

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

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

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

                                       4
<PAGE>

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

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

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

All notices to GW shall be addressed as follows:

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

All notices to Cellegy shall be addressed as follows:

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

                                       5
<PAGE>

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

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

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

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

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

                                       6
<PAGE>

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

GLAXO WELLCOME INC.                     CELLEGY PHARMACEUTICALS, INC.

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

                                       7

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