Safety

Integrity

Quality-Value-Profit

Aim & Purpose

Values

Our Credo with Guidelines

Leadership

Culture

Order of Importance

Strategy

Tactics

Methods and Goals

Policy

Procedures

Our Metrics

Incentives

Innovation

Partnerships

Last Major Rrvision:  August 23, 2000

AIM - To increase employee ownership and commitment.

It is fair for those who contribute their energies to the company to have an opportunity to buy and own it and benefit from its success.

Employees who have an ownership interest are motivated to:

• Deliver a better product to our customers
• Participate in, and positively influence, the company's direction
• Insist on an ethical work environment
• Work together as teammates
• Grow the company financially

Employee-owned companies are driven by the broad common interests of employees, shareholders, and managers, rather than by the narrow financial interest of uninvolved outside owners.

CleanAir Stock Ownership Ideals

Stock incentives are used to attract, retain and motivate competent and energetic staff.

All employees should have an opportunity to participate in ownership.

Stock acquisition plans should be flexible and tailored to meet varied employee requirements.

Stock ownership should be an attractive financial investment.

Employee-owners should have a reliable method to sell stock.

Clean Air Engineering stock does not trade on any public exchange. The company's Board of Directors determines the fair market value of the stock with the assistance of a nationally recognized independent appraisal firm. The Board uses a formula that takes into account net income, stockholders' equity, number of shares outstanding, and a market factor that is adjusted by the Board to reflect the condition of the market for publicly traded securities of comparable companies and recent acquisitions.

New Structural Requirements

Our sub S corporate election limits us to 75 shareholders and also prevents our French employees from being owners. We will therefore need to revert to a C corporation within the next several years. In the interim we see no problem with the option holders being French citizens. We will monitor the shareholders to insure we do not exceed the limit of 75.CleanAirmay elect to provide phantom certificates, which will mirrorCleanAirstock price to non-USA citizens.

Stock Acquisition Methods
To encourage employees to accept the responsibilities and rewards of ownership, the company has established several stock acquisition methods.

Employees may:

Purchase stock directly.

• Be awarded stock through bonuses and stock options as recognition of outstanding performance.
• Purchase stock throughCleanAir's Employee Stock Purchase Plan (ESPP) at a 10% discount through after-tax payroll deductions. These funds will accumulate in an account held byCleanAirand converted toCleanAirwhole shares during each window. We will not sell fractional shares.

Option Ideals

Stock options should reflect an individual's contribution toCleanAir.

Stock options should encourage and reward entrepreneurial risk taking.

Plan Details

STOCK RULES

Rule 1. - OnlyCleanAiremployees may buyCleanAirstock.

Rule 2. - New stockholders must sign a statement agreeing to the stock ownership rules as stated in the Stockholder Agreement section of the Clean Air Engineering bylaws.

OPTION RULES

Rule 1. -The purpose of Options will be only to create Equity, Retain Employees and if we are public create Market Cap Growth.

Rule 2. - Individuals receiving options will be only those who have clearly demonstrated to most observers;

• the ability to achieve extraordinary profit growth;
• who took exceptional risks and succeeded;
• who went well beyond normal expectations to benefitCleanAir?

Rule 3. - The number of options to be granted each calendar year shall not exceed 5% of the number of shares ofCleanAirstock owned by all shareholders on January 1 of that year.

Rule 4. - Approximately 60% of the options granted in any 12-month period will be distributed to the group or teams based on fully burdened profit contribution. Each group or team must have a 3-person team representing business, sales and technology to recommend the candidates Optionee(s).

Rule 4. - Approximately 30% of the options granted in any 12-month period will be granted at the board's discretion.

Rule 5. - Approximately 10% of the available options in any 12-month period will be granted to the overhead team candidates. Each overhead team will recommend their candidate Optionee(s).

Rule 6. - Options shall be proportioned as follows:

• Innovation Drivers 20-40%
• Rainmakers 20-40%
• Inventors and new idea advocates 20-40%

Rule 7 -TheCleanAiroptions will meet all the requirements of SEC Rule 701

http://www.sec.gov/smbus/forms/701.htm

as amended by:

http://www.sec.gov/rules/final/33-7645.htm

to meet the SEC requirements for Incentive Stock Options (ISO) the following apply:

• Option price cannot be less than 100% of fair market value on grant date
• Aggregate face value of options that may become exercisable by any one individual in any one year is limited to $100,000 as determined by the stock price on the date of the option grant
• For shareholders owning 10% of more of voting stock, option price may not be less than 110% of fair market value
• Optionee must hold shares acquired through the ISO option plan until 2 years after the option grant date and one year after the exercise date
• This ISO plan must be approved by the shareholders before initial options are granted
• The total number of shares available under this is 75,000 shares, which is roughly the difference between authorized shares and the shares issued to date.
• The class ofCleanAiremployees eligible under this plan is ALL.
• Options can not be issued to non-employees including outside consultants and outside directors
• The option term for shareholders can not exceed 5 years
• Options can not be transferred
• Options can only be exercised by an employee of CleanAir

1. In January, May and September the board of directors will announce the approximate number of options available for each team or group . At that time the board will call for recommendations for candidates for option awards.
2. The board will collect the team recommendations of candidates for options and will have total authority for allocating of options to candidates.
3. The board reviews these recommendations without names and assigns a percent of available awards to the most deserving. The awarded options are based on their contribution to the team or the company.
4. At least 25% of those receiving options must be to employees who have not received options in last 24 months.
5. Option winners shall be announced using Hot Air andCleanAirIntranet. . The minimum number of options awarded to one individual and the total awarded shall be announced.
6. Then at the end of each 4-month period the company board of directors decides how many options to award based on overall results. The maximum is 5%, per annual year, of outstanding issued stock.
7. The options are to purchase stock at the share price on date of issue, which will be based on the accounting data for the end of the previous month.
8. The options are vested over 4 years.  After each of the first 3 years an additional 20% is vested with the remaining 40% becoming vested after the 4th year.
9. The options expire 5 years after issue date or when the employee leavesCleanAiremployment, which ever occurs first.
10. The stock price is set after each February, June and October by theCleanAirboard.

Trading

Trading is only allowed for a one-week trading window in the month following each February, June and October.

Orders to buy and sell shares are place the week before the trading window, theCleanAirAccounting and Finance Team manages the trading.

Requests may also be make for a sale or purchase of stock with anotherCleanAiremployee or stockholder.CleanAirmay attempt to match buyers and sellers so shares can be traded between employees.

Latest Price Calculation

The following Table links to the current stock price calculation spreadsheet and will be updated from time to time.

Footnotes

For a copy of the following reference documents please see theCleanAirlibrary, Bill Walker, Frank Kilvinger or otherCleanAirstockholder.