California Transparency in Supply Chains Act of 2010 Disclosure Statement

Effective January 1, 2012, the California Transparency in Supply Chains Act of 2010 requires retailers and manufacturers doing business in California to disclose efforts to eradicate slavery and human trafficking from its direct supply chain.

Our efforts to verify and evaluate our supply chains for the existence of or issues relating to human trafficking and slavery within such supply chain, to audit our suppliers with respect thereto, to require certification from our suppliers with respect thereto, to maintain internal accountability standards and procedures regarding supply chain slavery and tech trafficking, and to provide training on human trafficking and slavery, consist of the following:

1. We have adopted a corporate policy to terminate as quickly as possible suppliers found to be engaged in human trafficking or slavery [to the extent we are permitted to do so under binding pre-existing contracts] [unless such supplier promptly takes all necessary efforts to terminate such practices].

2.All existing employees are periodically advised of this policy and new employees are advised of the policy upon inception of their employment. Employees are requested to immediately bring any claims or other information suggesting that any of our suppliers are engaged in human trafficking or slavery to the attention of senior management. Employees are notified that failure to adhere to company standards regarding these matters is grounds for discipline or termination.

3.On all new supply chain contracts [entered into after February 28, 2012], we include substantially the following provision:

Supplier hereby represents and warrants to K&N Engineering that Supplier is not engaged in and shall not engage in during the term of this Agreement any form of human trafficking or slavery, and that Supplier complies with all laws regarding slavery and human trafficking of the countries in which Supplier does business. (See California Civil Code §1714.43.) Notwithstanding any other provision of this Agreement, any violation of the foregoing representation and warranty shall be grounds for immediate termination of this Agreement, in addition to the recovery of any damages occasioned thereby.

If K&N becomes aware that a supplier has failed to comply with the provisions of K&N’s Supplier Agreement, K&N will terminate its business relationship with such supplier unless such supplier takes immediate action to cure its non-compliance with K&N’s Terms and Conditions Agreement.

4.We provide company employees and management with direct responsibility for supply chain management with training on human trafficking and slavery, including mitigation risks within the supply chain, based upon relevant training to all employees who deal with suppliers. This is in addition to our requirement that all employees acknowledge and adhere to our Code and Supporting Policies. Further, K&N provides in-house training in accordance with the principles outlined in the Department of Homeland Securities, Blue Campaign, specifically, “Human Trafficking Training” and “Human Trafficking Indicators”.

We are not currently aware of any of our suppliers engaged in any form of human trafficking or slavery. If you have any reason to believe that any of our suppliers are so engaged, please send all applicable information to:

Edward Concialdi

We do not utilize any third party services to assist us in verifying the absence of human trafficking or slavery practices on the part of businesses within our supply chain. We do not conduct special audits of our suppliers for human trafficking or slavery practices, but our personnel are instructed to remain alert to any indications that such practices might exist when visiting suppliers' offices or plants and in other dealings with suppliers.

K&N Engineering, Inc. is committed to conducting business in an ethical manner and in compliance with the laws of the jurisdictions in which we do business.

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