"CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC."



                         U.S. MARKET RESEARCH AGREEMENT



This U.S. Market Research Agreement is made effective the 22 day of February,

2001 (the "Effective Date"), between Lifescan, Inc., a Delaware corporation,

having its principal place of business at 1000 Gibraltar Drive, Milpitas, CA

95035-6312, and Cygnus, Inc., a Delaware corporation, having its principal place

of business at 400 Penobscot Drive, Redwood City, California 94063.



WITNESSETH



WHEREAS, the parties have been engaged in discussions concerning possible

business relationships relating to Cygnus' products in the field of glucose

monitoring, including but not limited to, the Cygnus GlucoWatch(R) biographer;



WHEREAS, Lifescan desires additional information in order to assess the market

potential of the GlucoWatch(R) biographer platform prior to committing to a

definitive business arrangement;



NOW, THEREFORE, in consideration of the premises and covenants hereinafter

contained and other good and valuable consideration each to the other paid and

received, the receipt and sufficiency of which is hereby acknowledged, the

parties agree as follows.



         DEFINITIONS.



As used herein,



a.       "Collaboration Agreement" is defined as a business relationship for

         purposes set forth in Section 7 in, or including, the United States

         relating to Cygnus' products in the field of glucose monitoring,

         including but not limited to the Cygnus(TM) GlucoWatch(R) biographer,

         and involving any, but not all, of the following functions or

         combinations thereof: licensing, marketing, sales, supply,

         distribution, or customer service support for the purpose of

         commercializing Cygnus' products in the field of glucose monitoring,

         including but not limited to the Cygnus(TM) GlucoWatch(R) biographer.



b.       "Comprehensive Collaboration Agreement" is defined as a business

         relationship in, or including, the United States relating to Cygnus'

         products in the field of glucose monitoring, including but not limited

         to the Cygnus(TM) GlucoWatch(R) biographer and wherein one company

         provides all commercial functions, with the exception of research and

         development, clinical and regulatory support, and manufacturing,

         necessary to market, sell, supply, distribute, and support customers in

         exchange for a risk in return (i.e., a percentage of product sales

         revenues, gross margin, operating profit, etc.).



c.       "U.S. Market Research Agreement" is defined as the present Agreement.



                                       1

<PAGE>



               "CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC."



d.       "Initial U.S. Test Market Study" is defined as Cygnus' initial market

         research study in the United States pursuant to the study description

         set forth as Exhibit A attached hereto.



e.       "Exclusivity Period" is defined as the time period beginning on the

         Commencement Date and ending sixty (60) calendar days after the

         Commencement Date.



f.       "Commencement Date" is defined as the date upon which Cygnus provides

         Lifescan with the Data from at least 100 individuals who have

         participated in the Initial U.S. Test Market Study for ninety (90)

         calendar days.



g.       "Data" is defined as the information agreed to be provided by Cygnus to

         Lifescan from the Initial U.S. Test Market Study as set forth in the

         description attached as Exhibit D hereto, which will be collected from

         the Patient Intake Survey attached as Exhibit B hereto and the Daily

         Diary attached as Exhibit C hereto.



h.       "Negotiation Period" is defined as the time period beginning at the end

         of the Exclusivity Period and ending sixty (60) calendar days

         thereafter.



i.       "Lifescan Market Research" is defined as market research conducted by

         Lifescan independent of Cygnus' Initial U.S. Test Market Study.



         1. ACCESS TO CYGNUS' INITIAL U.S. TEST MARKET STUDY.



         Cygnus, at its sole discretion, plans to conduct an Initial U.S. Test

Market Study with Cygnus' commercially available GlucoWatch(R) biographer prior

to Cygnus' broad-scale launch of the GlucoWatch(R) biographer in the United

States. Cygnus will consider and, if Cygnus deems appropriate, will incorporate

input from Lifescan regarding the market research direction for the Initial U.S.

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