<PAGE>

                                  CYGNUS, INC.

                           AMENDED 1991 EMPLOYEE STOCK

                                  PURCHASE PLAN

                     (AS AMENDED AND RESTATED MARCH 1, 2000)

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE

<S>                                                                                                             <C>
1.       Purpose.................................................................................................1

2.       Definitions.............................................................................................1

3.       Eligibility.............................................................................................3

4.       Offering Periods........................................................................................3

5.       Participation...........................................................................................3

6.       Payroll Deductions......................................................................................4

7.       Grant Of Purchase Right.................................................................................5

8.       Exercise Of Purchase Right..............................................................................5

9.       Delivery................................................................................................5

10.      Withdrawal; Termination Of Employment...................................................................5

11.      Interest................................................................................................6

12.      Stock...................................................................................................6

13.      Administration..........................................................................................6

14.      Designation Of Beneficiary..............................................................................6

15.      Transferability.........................................................................................7

16.      Use Of Funds............................................................................................7

17.      Reports.................................................................................................7

18.      Adjustments Upon Changes In Capitalization, Dissolution, Merger Or Asset Sale...........................7

19.      Amendment Or Termination................................................................................8

20.      Notices.................................................................................................9

21.      Conditions Upon Issuance Of Shares......................................................................9

22.      Term Of Plan............................................................................................9

23.      Automatic Transfer To Low Price Offering Period.........................................................9

24.      Execution...............................................................................................9
</TABLE>


                                      -i-
<PAGE>

                                  CYGNUS, INC.

                    AMENDED 1991 EMPLOYEE STOCK PURCHASE PLAN

                     (AS AMENDED AND RESTATED MARCH 1, 2000)

         The following constitutes the provisions of the Amended 1991 Employee
Stock Purchase Plan of Cygnus, Inc., as last amended and restated on March 1,
2000.

         1. PURPOSE. The purpose of the Plan is to provide Employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

         2. DEFINITIONS.

                  (a) "BOARD" shall mean the Board of Directors of the Company
or a Committee appointed by the Board pursuant to Section 13.

                  (b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.

                  (c) "COMMON STOCK" shall mean the common stock of the Company.

                  (d) "COMPANY" shall mean Cygnus, Inc.

                  (e) "COMPENSATION" shall mean all base straight time gross
earnings, including bonuses, but excluding payments for overtime, shift premiums
and commissions, awards, and other compensation.

                  (f) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.

                  (g) "EMPLOYEE" shall mean any individual who is a regular
employee of the Company or a Designated Subsidiary for purposes of
tax-withholding under the Code. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds 90 days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship will be
deemed to have terminated on the 91st day of such leave.

                  (h) "ENROLLMENT DATE" shall mean the first Trading Day of each
Offering Period.


                                       1.
<PAGE>

                  (i) "ENROLLMENT DATE PRICE" shall mean the Fair Market Value
of a share of Common Stock on the last Trading Day prior to the Enrollment Date.

                  (j) "EXERCISE DATE" shall mean the last Trading Day of each
Purchase Period.

                  (k) "FAIR MARKET VALUE" shall mean, as of any date, the value
of Common Stock determined as follows:

                           (1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such exchange (or the exchange with the greatest volume
of trading in Common Stock) or system on the day of such determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable, or;

                           (2) If the Common Stock is quoted on the NASDAQ
system (but not on the National Market System thereof) or is regularly quoted by
a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high and low asked prices for the
Common Stock on the day of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;

                           (3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.

                  (l) "OFFERING PERIOD" shall mean, subject to the discretion of
the Board pursuant to Section 4, a period of approximately twenty-four (24)
months, commencing on the first Trading Day on or after October 1 and
terminating on the last Trading Day in the September twenty-four (24) months
later, or commencing on the first Trading Day on or after April 1 and
terminating on the last Trading Day in the March twenty-four (24) months later.

                  (m) "PLAN" shall mean this Amended 1991 Employee Stock
Purchase Plan.

                  (n) "PARTICIPANT" shall mean an Employee who is participating
in the Plan.

                  (o) "PURCHASE PERIOD" shall mean the approximately six-month
period commencing after one Exercise Date and ending with the next following
Exercise Date, except that the first Purchase Period of any Offering Period
shall commence on the Enrollment Date and end with the next following Exercise
Date.

                  (p) "PURCHASE PRICE" shall mean an amount equal to a
designated percentage of the Enrollment Date Price or a designated percentage of
the Fair Market Value on the Exercise Date, whichever is lower. Each designated
percentage shall be 85% unless determined otherwise by the Board with respect to
any Offering Period, but shall in no event be less than 85%.


                                       2.
<PAGE>

                  (q) "RESERVES" shall mean the number of shares of Common Stock
covered by each purchase right under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under purchase right.

                  (r) "SUBSIDIARY" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.

                  (s) "TRADING DAY" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.

         3. ELIGIBILITY.

                  (a) Any Employee, as defined in Section 2(g), who shall be
employed by the Company or a Designated Subsidiary on a given Enrollment Date
shall be eligible to participate in the Plan.

                  (b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted a purchase right under the Plan
(i) if, immediately after the grant, such Employee (or any other person whose
stock would be attributed to such Employee pursuant to Section 424(d) of the
Code) would own stock and/or hold outstanding purchase rights to purchase stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Subsidiary of the Company, or
(ii) which permits his or her rights to purchase stock under all employee stock
purchase plans of the Company and its Subsidiaries to accrue at a rate which
exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such purchase right is granted) for
each calendar year in which such purchase right is outstanding at any time.

         4. OFFERING PERIODS. The Plan shall be implemented by consecutive and
overlapping Offering Periods. The Board shall have the power to change the
duration of Offering Periods with respect to future offerings without
shareholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be affected.
Absent action by the Board, each Offering Period shall be for a period of
approximately twenty-four months (24) and new Offering Periods shall commence on
the first Trading Day of April and October of each year. No Offering Period
shall exceed twenty-four (24) months in length.

         5. PARTICIPATION.

                  (a) An eligible Employee may become a Participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form provided by the Company and filing it with the Company's payroll office
prior to the applicable Enrollment Date.


                                       3.
<PAGE>

                  (b) Payroll deductions for a Participant shall commence on the
first payroll period following the Enrollment Date and shall end on the last
payroll period in the Offering Period, unless sooner terminated by the
Participant as provided in Section 10.

         6. PAYROLL DEDUCTIONS.

                  (a) At the time a Participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen percent (15%) of
the Compensation which he or she receives on each pay day during the Offering
Period, and the aggregate of such payroll deductions during the Offering Period
shall not exceed fifteen percent (15%) of the Participant's Compensation during
said Offering Period.

                  (b) All payroll deductions made for a Participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A Participant may not make any additional payments into such
account.

                  (c) A Participant may discontinue his or her participation in
the Plan as provided in Section 10, or may increase or decrease the rate of his
or her payroll deductions during the current Purchase Period by filing with the
Company a new subscription agreement authorizing such a change in the payroll
deduction rate. A reduction to a 0% rate of contribution shall be treated as a
withdrawal from the Plan effective with the following Purchase Period unless
such rate is increased prior to the following Purchase Period. The change in
rate shall be effective with the first full payroll period following such
advance notice period as the Company shall specify. A Participant's subscription
agreement shall remain in effect for successive Purchase Periods and Offering
Periods unless terminated as provided in Section 10. The Board shall be
authorized to limit the number of participation rate changes during any Offering
Period. A Participant may at any time elect to have his or her participation
agreement become irrevocable for such period of time as he or she may designate.

                  (d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) herein, a
Participant's payroll deductions may be decreased to 0% at such time during any
Purchase Period which is scheduled to end during the current calendar year (the
"Current Purchase Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal $21,250. The Company may
provide either (i) that payroll deductions shall recommence at the rate provided
in such Participant's subscription agreement at the beginning of the first
Purchase Period which is scheduled to end in the following calendar year, unless
terminated by the Participant as provided in Section 10, or (ii) that
participation shall recommence only upon filing a new enrollment form following
such waiting period as the Company shall specify.

                  (e) At the time the purchase right is exercised, in whole or
in part, or at the time some or all of the Company's Common Stock issued under
the Plan is disposed of, the Participant must make adequate provision for the
Company's federal, state, or other tax withholding


                                       4.
<PAGE>

obligations, if any, which arise upon the exercise of the purchase right or the
disposition of the Common Stock. At any time, the Company may, but will not be
obligated to, withhold from the Participant's compensation the amount necessary
for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefit attributable to sale or early disposition of Common Stock by the
Employee.

         7. GRANT OF PURCHASE RIGHT. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted a purchase right to purchase on each Exercise Date during such Offering
Period (at the applicable Purchase Price) up to a number of shares of the
Company's Common Stock determined by dividing such Employee's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided that
such purchase shall be subject to the limitations set forth in Section 3(b) and
12 hereof. Exercise of the purchase right shall occur as provided in Section 8,
unless the Participant has withdrawn pursuant to Section 10, and the purchase
right shall expire on the last day of the Offering Period.

         8. EXERCISE OF PURCHASE RIGHT. Unless a Participant withdraws from the
Plan as provided in Section 10 below, his or her purchase right for the purchase
of shares of Common Stock will be exercised automatically on each Exercise Date,
and the maximum number of full shares subject to the purchase right shall be
purchased for such Participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No fractional shares will
be purchased. Any payroll deductions accumulated in a Participant's account
which are not sufficient to purchase a full share shall be retained in the
Participant's account for the subsequent Purchase Period, subject to earlier
withdrawal by the Participant as provided in Section 10. During a Participant's
lifetime, a Participant's purchase right to purchase shares hereunder is
exercisable only by him or her.

         9. DELIVERY. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery of
purchased shares to a directed brokerage account. Certificates representing the
shares that were purchased by each Participant will remain with the brokerage
account until such time as the Participant (or beneficiary) requests that their
shares be transferred out of the brokerage account.

         10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

                  (a) A Participant may, subject to the terms of any irrevocable
participation agreement elected by the Participant, withdraw all but not less
than all the payroll deductions credited to his or her account and not yet used
to exercise his or her purchase right under the Plan at any time by giving
written notice to the Company in the form provided by the Company. All of the
Participant's payroll deductions credited to his or her account will be paid to
such Participant promptly after receipt of notice of withdrawal and such
Participant's purchase right for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of shares will be
made during the Offering Period. If a Participant withdraws from an Offering
Period, payroll deductions will not resume at the beginning of the succeeding
Offering Period unless the Participant delivers to the Company a new
subscription agreement.


                                       5.
<PAGE>

                  (b) Upon a Participant's ceasing to be an Employee for any
reason or upon termination of a Participant's employment relationship (as
described in Section 2(g)), the payroll deductions credited to such
Participant's account during the Offering Period but not yet used to exercise
the purchase right will be returned to such Participant or, in the case of his
or her death, to the person or persons entitled thereto under Section 14, and
such Participant's purchase right will be automatically terminated. The Company
may reduce the amount returned to a Participant by the amount of any outstanding
debts that the Participant owes to either the Company or a Subsidiary.

         11. INTEREST. No interest shall accrue on the payroll deductions of a
Participant in the Plan.

         12. STOCK.

                  (a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 1,975,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 18. If on a given Exercise Date the number of shares with respect to
which purchase rights are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.

                  (b) The Participant will have no interest or voting right in
shares covered by this purchase right until such purchase right has been
exercised.

                  (c) Shares to be delivered to a Participant under the Plan
will be registered in the name of the Participant or in the name of the
Participant and his or her spouse.

         13. ADMINISTRATION. The Plan shall be administered by the Board of the
Company or a committee of one or more members of the Board as appointed by the
Board. Committee members serve for the period of time specified by the Board of
Directors and can be removed from the committee by the Board at any time. The
Board or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.

         14.      DESIGNATION OF BENEFICIARY.

                  (a) A Participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's death
subsequent to an Exercise Date on which the purchase right is exercised but
prior to delivery to such Participant of such shares and cash. In addition, a
Participant may file a written designation of a beneficiary who is to receive
any cash from the Participant's account under the Plan in the event of such
Participant's death prior to exercise of the purchase right. If a Participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.


                                       6.
<PAGE>

                  (b) Such designation of beneficiary may be changed by the
Participant (and his or her spouse, if any) at any time by written notice. In
the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

         15. TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of a purchase
right or to receive shares under the Plan may be assigned, transferred, pledged
or otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10.

         16. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

         17. REPORTS. Individual accounts will be maintained for each
Participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

         18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

                  (a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the Reserves as well as the price per share
of Common Stock covered by each purchase right under the Plan which has not yet
been exercised, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to a purchase right. The Board may, if it so determines in the exercise
of its sole discretion, make provision for adjusting the Reserves, as well as
the price per share of Common Stock covered by each outstanding purchase


                                       7.
<PAGE>

right, in the event the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of shares
of its outstanding Common Stock.

                  (b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.

                  (c) MERGER OR ASSET SALE. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each purchase right under the Plan
shall be assumed or an equivalent purchase right shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, to shorten the Offering Periods then in
progress by setting a new Exercise Date (the "New Exercise Date"). If the Board
shortens the Offering Periods then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
each Participant in writing, at least ten (10) days prior to the New Exercise
Date, that the Exercise Date for his purchase right has been changed to the New
Exercise Date and that his purchase right will be exercised automatically on the
New Exercise Date, unless prior to such date he has withdrawn from the Offering
Period as provided in Section 10. For purposes of this Section, a purchase right
granted under the Plan shall be deemed to be assumed or substituted if
accomplished in accordance with Section 424 of the Code.

         19. AMENDMENT OR TERMINATION.

                  (a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 18, no
such termination can affect purchase rights previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18,
no amendment may make any change in any purchase right theretofore granted which
adversely affects the rights of any Participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423 of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.

                  (b) Without shareholder consent and without regard to whether
any Participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Purchase Periods and/or
Offering Periods (subject to Section 4), limit the frequency and/or number of
changes in the amount withheld during Purchase Periods and/or Offering Periods,
establish the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, permit payroll withholding in excess of the amount designated
by a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation,


                                       8.
<PAGE>

and establish such other limitations or procedures as the Board (or its
committee) determines in its sole discretion advisable which are consistent with
the Plan.

         20. NOTICES. All notices or other communications by a Participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

         21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to a purchase right unless the exercise of such purchase right and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

         22. TERM OF PLAN. The Plan was originally effective on August 1, 1991.
The Plan shall continue in effect through July 31, 2011 unless sooner terminated
under Section 19.

         23. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. If the Fair Market
Value of the Common Stock on any Exercise Date in an Offering Period is lower
than the Enrollment Date Price of such Offering Period, then all Participants in
such Offering Period shall be automatically withdrawn from such Offering Period
immediately after the exercise of their purchase rights on such Exercise Date
and automatically reenrolled in the immediately following Offering Period as of
the first day thereof.

         24. EXECUTION. To record the adoption of this amended and restated Plan
by the Board, the Company has caused its duly authorized officer to sign below.

                                          CYGNUS, INC.

                                          By       /s/ John C Hodgman
                                            -----------------------------------

                                          Title    Chairman, President & CEO
                                                -------------------------------


                                       9.