CYGNUS, INC.

Charter for the
Audit Committee
of the Board of Directors

(As Adopted by the Board of Directors on February 9, 2004)

Organization

This Charter governs the operations of the Audit Committee. The Committee shall review and reassess the Charter at least annually and obtain the approval of the Board of Directors for the adoption of the Charter and any amendments thereto. The Committee shall be appointed by the Board and shall comprise at least three directors, each of whom is independent of management and the Company. Members of the Committee shall be considered independent if they have no relationship that may interfere with the exercise of their independence from management and the Company, unless they would not be considered independent under applicable laws, rules or regulations as in effect from time to time. All Committee members shall be financially literate, and at least one member shall have such accounting or related financial management expertise as is necessary to qualify as an “Audit Committee Financial Expert” as defined in the Securities Exchange Act of 1934, as amended, and the rules thereunder.

Statement of Policy

The Charter and the reports of the Audit Committee must be read and its activities considered with the understanding that the financial statements are the responsibility of the Company’s management. The Audit Committee shall provide assistance to the Board in fulfilling their oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the annual independent audit of the Company’s financial statements, and legal compliance and ethics programs as established by management and the Board. In so doing, it is the responsibility of the Committee to maintain free and open communication among the Committee, independent auditors, and management of the Company. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the power to retain outside counsel or other experts for this purpose.

Responsibilities and Processes The primary responsibility of the Audit Committee is to oversee the Company’s financial reporting process on behalf of the Board and report the results of its activities to the Board. In addition, the Audit Committee shall prepare the report required by the rules of the Securities and Exchange Commission for inclusion in the Company’s annual proxy statement. Management is responsible for preparing the Company’s financial statements, and the independent auditors are responsible for auditing those financial statements. The Committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee should take the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk practices, and ethical behavior.

The following shall be the principal recurring processes of the Audit Committee in carrying out its oversight responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate.

The Audit Committee’s job, with the responsibilities and powers set forth in this Charter, is truly one of oversight. The Company’s management is responsible for preparing the financial statements. The Company’s independent accountants are responsible for auditing the financial statements. The activities of the Committee are in no way designed to supersede or alter these traditional responsibilities. The Committee’s role does not provide any special assurances with regard to the Company’s financial statements, nor does it involve a professional evaluation of the quality of the audits performed by the independent accountants. Nor is it the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditors or to ensure compliance with laws and regulations, and legal and ethics conduct programs.