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INTRODUCTION Congratulations on being selected as a member of the Competitive Engineering team! It is our hope that this will be the beginning of a long and prosperous relationship. We want people who want to work here, who value their jobs and our company. We expect nothing less than hard work, a positive constructive attitude, and a strong desire to fully contribute to ensure the success of Competitive Engineering. Quality workmanship, high productivity and continuous improvement are essential elements needed to reach our goals. We require our employees to support company policy, follow procedures, and respond positively to coaching and advice from supervisors and managers. We also stress active involvement in personal and technical learning. Finally, we want people with a “can do” attitude. The policies and procedures in this handbook are designed to serve as guidelines for management action. They are not intended to create any contract or binding agreement between Competitive Engineering Inc. (CEI) and any employee. All policies and procedures outlined in this handbook are subject to change or modification at CEI’s discretion at any time without prior notice. This handbook is provided for informational purposes only. NO provision or portion of the handbook constitutes an implied or expressed contract, guarantee, or assurance of employment or any right to an employment-related benefit or procedure. Competitive Engineering reserves the right to change, modify, eliminate, or deviate from any policy or procedure in this handbook at any time and to hire, transfer, promote, discipline, terminate, and otherwise manage its employees as it deems appropriate. If you have questions concerning these guidelines, please consult with your supervisor or the Human Resources Manager. Competitive Engineering is an “at will” employer, which means the employee may terminate his/her employment at anytime for any reason and that CEI may terminate an employee’s employment with or without cause, and with or without notice, at anytime. This “at will” employment relationship may only be modified by an express written agreement signed by the President of CEI.

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PERSONNEL INFORMATION AND PRIVACY POLICY In collecting, maintaining, and disclosing personnel information, Competitive Engineering makes every effort to protect employees’ privacy rights and interests and prevent inappropriate or unnecessary disclosures of information from any worker’s file or record. While complying with its governmental reporting and recordkeeping requirements, the company strives to ensure that it handles all personal and job-related in accordance with the principles and procedures outlined below. CONFIDENTIALITY OF PERSONNEL INFORMATION

The company treats personal information about employees as confidential and respects the need to protect each employee’s privacy by enforcing secure information handling procedures for all personnel involved in gathering, retaining, using, or releasing personal information about the organization’s employees. The company collects and retains personal information only as needed to conduct business and administer employment and benefit programs. Every effort is made to ensure that all personal and job-related information about employees is accurate, complete, and relevant for its intended purpose. SECURITY AND STORAGE OF PERSONNEL RECORDS All paper-based documents relating to the company’s personnel record systems are kept in secure locked files in the Administration Department. These files are accessible only to authorized staff, manager, and supervisors who have a valid, demonstrable need for specific information from an employee’s personnel record. Employees also are granted access to their own personnel files and records. Competitive Engineering retains documents in accordance with record retention requirements under federal and state law. After the expiration of the applicable retention period, the records are destroyed. Consequently, certain historical documents might not be available for review. The following types of documents are not part of an employee’s general personnel records and are not accessible to employees:

Pre-employment reference information, including letters, telephone notes, and memoranda secured from the employee’s prior employers or persons who are not current employees of CEI

Records relating to ongoing investigations of policy violations, prohibited conduct, or criminal offenses

Documents developed or prepared for use in grievance or court procedures

Documents related to staff planning or business planning, including management succession plans, management bonus plans, and job assignment plans.

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CONFIDENTIAL INFORMATION As an employee, you may acquire or have access to data, business information, procedures, products, customer lists, pricing data, sources of supplies, marketing, production and merchandising plans and other trade secrets or confidential matters related to the company. At no time during or following your employment at Competitive Engineering may you use such information to benefit yourself or divulge such information to any person, firm, and or corporation entity. Divulging or disclosing this information could result in serious damage to Competitive Engineering. At no time are you allowed to copy or take any company information without prior approval of the General Manager or Administration. To divulge, disclose, copy or take such information without approval will result in immediate termination.

EMPLOYEE COMMUNICATIONS POLICY The goal of our policy is to establish employee communication practices that will promote increased understanding between employees and management concerning the organization’s objectives, policies, problems, and other matters of mutual interest. MEETINGS

CEI management will hold meetings to discuss company goals, policies, progress, developments, and problems as needed. These discussions will be open to any topic relevant to the company – for example; safety, production, policy changes, or explanations of current policies. The primary goals of these meetings will be to solve problems, motivate employees, and improve morale and productivity. BULLETIN BOARDS CEI will provide bulletin boards in strategically located and accessible areas throughout the workplace. These bulletin boards are primarily for official company notices, general communications, legally required posters, and safety notices. Employee notices may be posted with prior management approval. TELEPHONE USE The telephone system is to be used primarily for business purposes, but the company realizes that some personal calls are necessary. Employees may make or receive brief personal telephone calls that are urgent or extremely

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difficult to schedule outside work hours. Whenever possible, employees should make their personal telephone calls during meal or break periods. Employees who make fraudulent, unlawful, or abusive calls are subject to discipline and possible criminal prosecution. No long distance calls of a personal nature are to be made without prior authorization. Employees should report any threatening, intimidating, or harassing telephone calls received at work to their supervisor or the Human Resources Department. E-MAIL USE

The company has provided e-mail systems to employees so they can work more productively. E-mail allows employees to exchange ideas, share files, and keep in touch with colleagues in the next room or thousands of miles away. The use of the e-mail system is reserved solely for business purposes and cannot be used for personal communications. The e-mail system, including hardware, software, and any stored data, is the property of Competitive Engineering. In addition, all messages and passwords created, composed, sent, received, or stored on the e-mail system are property of CEI and not the private property of any employee. Employees cannot use the e-mail system in ways that are disruptive or offensive to others, or harmful to workplace morale. Competitive Engineering reserves the right to review, audit, intercept, access, and disclose all messages created, received, or sent via the e-mail system for any purpose. The contents of e-mail properly obtained for legitimate business purposes can be disclosed within the company without the employee’s permission. The company reserves the right to override any password and access an employee’s e-mail files for security and monitoring purposes. Employees who use the e-mail system for improper purposes or otherwise violate the e-mail policy are subject to discipline, up to and including discharge. INTERNET/ELECTRONIC COMMUNICATIONS USE

Employees who have management approval for access to the Internet, electronic bulletin boards, and other electronic media can use these tools to meet their job responsibilities. Employees must use the Internet in an informed and responsible way, conforming to network etiquette, customs, courtesies, and corporate policy. Competitive Engineering reserves the right to access, copy, review, delete, and disclose all activities of all users of company communications systems. Employees should be aware that CEI can in the course of maintaining the system access and review users’ activities. If CEI discovers possible evidence of activity that is illegal or violates company policies or rules, it can take appropriate disciplinary action, up to and including discharge and/or disclosure of evidence to law enforcement officials or other third parties.

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COMPLAINT PROCEDURES

The health and well being of Competitive Engineering is directly affected by our ability to respond effectively to employee ideas, issues and complaints. As a member of the CEI team, everyone in the organization should have a personal goal of refraining from verbal criticism and slighting of any other team member. This includes all of us, regardless of our position or tenure within the company. When conflict occurs between employees, we have developed the following system for attempting to resolve these issues:

Employees are encouraged to handle minor conflicts and disagreements, one-on-one, as long as this can be done in an appropriate, constructive and positive manner.

If the employee is unable to resolve the situation, he/she should bring it to the attention of their immediate supervisor for resolution.

If the supervisor/manager is unable to resolve the situation, the employee should submit the complaint in writing to the Human Resources Manager.

The Human Resources Manager will seek resolution with the parties in question or elevate it to CEI Corporate Management.

If the actions taken above still have not resolved the problem, contact our company attorney, Mr. Don Awerkamp at (520) 798-5282, who specializes in employee problem resolution. He will either resolve the situation or recommend other appropriate sources of assistance in problem resolution.

EMPLOYMENT

EQUAL EMPLOYMENT OPPORTUNITY Competitive Engineering believes that every employee has the right to work in surroundings that are free from all forms on unlawful discrimination. It is our policy to hire, promote, transfer, terminate, and make all other employment-related decisions without regard to an employee’s race, color, creed, religion, age, national origin, the presence of any sensory, mental or physical disability, or any other basis prohibited by local, state, or federal law. Consult with the Human Resources Manager whenever you have concerns or questions regarding CEI’s commitment or compliance with these laws. DIRECT/IN-DIRECT EMPLOYEES

At Competitive Engineering, employees are classified into two categories: Direct and In-Direct. Direct employees are those workers that produce or manufacture products. They are Computer Numerical Control (CNC) machinists, Tool-room machinists, and Process & Assembly technicians. All other employees are classified as In-Direct or salaried employees.

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IN HOUSE RECRUITMENT Whenever possible, CEI’s preference is to fill new and/or vacant positions with someone already employed at the company. If the position(s) cannot be filled from within the company, CEI will seek outside candidates. MINIMUM TOOLING REQUIREMENT All CNC and Tool-room machinists are recommended to have the following minimum tools by the completion of their evaluation period: 6-inch min. scale Crescent wrench Dead blow hammer Allen wrenches 0-6 inch min. caliper Tool Box 0-1 inch micrometer .005 inch dial indicator Calculator To assist employees to purchase tools, CEI will purchase for employees approved tools and will then deduct the cost of the employee tool purchase from the employee’s payroll. Tool purchase minimum amount is $50 and maximum amount is $500. Payroll withholding minimum amount is $50 per pay period and total outstanding tool purchase advances may not exceed $500. Employee tools will be purchased by the Purchasing Department by submitting a Purchase Requisition Form approved by management. NEW EMPLOYEE ORIENTATION Usually on the first day of work, new CEI employees will meet with Human Resources to discuss company policies, procedures, and benefits. At a minimum, they will complete the new employee package which includes:

1. Resume (if applicable) 2. Employment Application 3. Personal Information 4. Federal and State Withholding Certificates 5. Employment Eligibility Verification 6. Eye Safety Program 7. Material Safety Data Sheets 8. Required Minimum Tools for Machinists 9. Employee Handbook Acknowledgement Form 10. Safety Handbook Acknowledgement Form

90 DAY EVALUATION Although employment at CEI is always at will, the first 90 days in any position are considered an evaluation period. This evaluation also applies to employees who have been promoted or transferred to a new position, as well as to new hires.

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Employees will receive instruction and training from their supervisors or co-workers. Employees who cannot perform at the satisfactory level before the end of the 90 day evaluation period, despite their supervisor’s efforts to correct poor work performance, may not be offered continued employment with Competitive Engineering. Promoted or transferred employees who fail to perform at the satisfactory level in their new positions will be returned to their original job, if possible. If the job has already been filled, the employee will be offered a comparable job, if possible, or a lower-rated position, if one is open. In either case, the employee must be qualified to perform the position in question. If no such jobs are open or the worker rejects the positions offered, the employee will be terminated. Supervisors/managers are responsible for counseling all employees who fail to meet job performance expectations. This counseling may be accomplished through the use of performance appraisals, job instruction, guidance, and coaching. An employee’s failure to improve work habits and productivity after counseling may lead to discharge. JOB PERFORMANCE EXPECTATIONS

Employees must perform their duties with care and attention to the customer’s needs, the organization’s quality standards, and position productivity requirements. Workers who are careless or negligent in performing job duties will be subject to progressive discipline, particularly if their carelessness or negligence results in mistakes, errors, or safety hazards. Carelessness or negligence that results in costly mistakes, physical injuries, or substantial property damage can be cause for immediate discharge. Workers who fail to respond to the employer’s efforts to correct habitual carelessness will be subject to discipline, up to and including discharge. Employees who cannot maintain satisfactory performance because of a physical, mental, or emotional problem should inform their supervisor. Such workers are expected to seek treatment for and cooperate in efforts to resolve the problem. If unsatisfactory performance is caused by a disability protected by the Americans with Disabilities Act, the organization will make every attempt to provide reasonable accommodations to enable the employee to perform essential job functions. PROMOTIONS

Competitive Engineering is committed to training and career development to help our employees prepare for advancement. We are an Equal Opportunity Employer. Discrimination in our promotion decision is prohibited. All promotions

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are awarded to the best-qualified candidate, without regard to race, religion, national origin, age, or handicap. Although we prefer to promote our own employees, management reserves the right to hire from outside the organization when outside applicants more closely meet our needs. Promotions are based on job-related criteria which may be referenced in company career path plans. Employees are evaluated for promotion based on a review of how their qualifications – including their skills, knowledge, abilities, experience, and educational backgrounds – match up with the essential requirements and functions of the job in question. Other factors considered include disciplinary records, performance evaluations, attendance, interpersonal skills, aptitudes, interests, leadership potential, and supervisor recommendations. Employees are encouraged to update their resumes regularly and keep a current copy of their resume on file in the Human Resources Department. SHIFT SCHEDULE

Competitive Engineering has three primary shift schedules Monday - Friday:

1st Shift

2nd Shift

3rd Shift Specific work start and end times will vary depending on the job classification and the type of work being done. Department managers will be responsible for establishing and ensuring employees adhere to their work schedules. SHIFT ASSIGNMENTS In order to achieve operational requirements, it may become necessary to move individuals from one shift to another. CEI Management will make such decisions as needed. Employee compliance is mandatory for continued employment at Competitive Engineering. WORK AREA

Work area, documentation, parts, and tools must be kept in a neat, clean, and orderly condition. MANDATORY SAFETY GLASSES Safety glasses shall be worn by all employees operating equipment. They are optional for personnel inside the shop area who are not operating equipment, except in designated, marked work areas. Employees who wear prescription

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lenses shall wear eye protection that can be worn over the prescription lenses without affecting the proper position of their prescription eyewear. Clip-on or slide-on shields must provide side protection. Competitive Engineering provides free non-prescription safety glasses. Prescription safety glasses will be reimbursed up to $140.00 upon completion of the 90-day evaluation period and again every two years as required. Employees must present a receipt to Administration for reimbursement. VISITORS

Visitors are prohibited from going beyond the front reception area without management authorization or an approved escort. DRESS All employees are expected to dress appropriately for their job, and to maintain at all times a neat and clean appearance. All employees on the shop floor are required to wear closed-toe shoes. LANGUAGE

Employees are asked to avoid the use of inappropriate language, as it can be offensive and detrimental to the atmosphere of open communication. MISCONDUCT CEI is an “at will” employer, which means the company may terminate employment with or without cause, and with or without notice, at anytime. The following actions are considered serious misconduct and can be grounds for immediate termination of employment:

Unsafe behavior, or failure to report such behavior to management

Theft

Dishonesty

Verbal Abuse

Careless/Poor Performance

Sexual Harassment

Insubordination

Negative Attitude

Non-Responsiveness

Lack of Respect for Team Leaders or Team Members

Fighting

Use or possessions of illegal drugs/alcohol

Intoxication from illegal drugs and/or alcohol

Possession of operational firearms

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SUBSTANCE ABUSE POLICY

Competitive Engineering Inc. believes that it is important to promote a drug-free community to maintain safe, healthy, and efficient operations, while protecting the safety and security of all employees, the facilities, and property of CEI. Drugs and alcohol pose a serious risk to the user and all those who work with the user. Substance abuse, while at work or otherwise, seriously endangers the safety of employees as well as the general public, and creates a variety of workplace problems, including increased injuries on the job, increased absenteeism, increased health care and benefit costs, increased theft, decreased morale, decreased productivity, and a decline in the quality of products and services provided by CEI. For all those reasons, Competitive Engineering has established this Substance Abuse Policy.

SCOPE

This policy applies to all CEI employees including management, administration, temporary employees, and to all applicants who have received conditional offers of employment with Competitive Engineering Inc.

DEFINITIONS

Illegal Drugs Any controlled substance, medication, or other chemical substance that (1)

is not legally obtainable; (2) is legally obtainable but is not legally obtained, is not being used legally, or is not being used for the purpose(s) for which it was prescribed or intended by the manufacturer. Thus, “illegal drugs” may include over-the-counter medications, if they are not being used for the purpose(s) for which they were intended by the manufacturer.

Legal Drugs “Legal Drug” means any prescribed or over-the-counter drugs that are legally obtained by the employee and used for the purpose(s) for which they were intended by the manufacturer. Company Property “Company property” and “Company equipment, machinery, and vehicles” means all property, equipment, machinery, and vehicles owned, leased, rented, or used by Competitive Engineering.

On Duty “On duty” means all working hours as well as meal periods and breaks periods, regardless of whether on Competitive Engineering property and all hours when an employee represents CEI in any capacity.

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SUBSTANCE ABUSE BY EMPLOYEES

Alcohol: Employees may not use, possess, sell, or transfer alcohol while on

duty, while working, while on Competitive Engineering property, or while operating CEI equipment, machinery, or vehicles.

Employees may not work or report to work with detectable levels of alcohol in their systems.

Employees who violate either of these rules will be subject to discipline, up to and including immediate discharge. Competitive Engineering may make exceptions to these rules for certain business or social functions sponsored or approved by CEI.

Illegal Drugs: Employees may not possess illegal drugs or engage in the illegal

use and or distribution of drugs while on duty, while working, while on Competitive Engineering property, or while operating CEI equipment, machinery, or vehicles.

Employees may not work or report to work with detectable levels of illegal drugs in their systems.

Employees may not manufacture, distribute, dispense, transfer, or sell illegal drugs.

Employees who violate any of these rules will be subject to discipline, up to and including immediate discharge.

Legal Drugs/Medication: Any employee who has reason to believe that the

legal use of drugs, such as a prescribed medication, may pose a safety risk to any person or interfere with the employee’s performance of his/her job must report such legal drug use to his/her supervisor. Competitive Engineering shall then determine whether any work restrictions or limitation is indicated. Failure to report the legal use of a drug that may pose a safety risk could result in disciplinary action.

INSPECTION OF PROPERTY, EQUIPMENT, AND VEHICLES All persons on Competitive Engineering property or who are performing services on a CEI project, and all property, equipment, and vehicles on Competitive Engineering property or being used in connection with the performance of work on a CEI project (including without limitation all vehicles, containers, desks, and file cabinets), are subject to unannounced inspection by CEI. You should not expect that any property or items that you bring to work with you or that you use

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at work are private. If you do not want any property or items inspected, do not bring them to work. Employees who refuse to permit inspections under this Policy or who fail to cooperate with inspections under the Policy will be subject to discipline, up to and including immediate discharge. DRUG AND ALCOHOL TESTING

Competitive engineering may require that employees and applicants provide urine, blood, breath, and/or other samples for drug and alcohol testing under any of the following circumstances: Pre-Employment Testing

All applicants who have received conditional offers of employment with CEI will be required to undergo drug testing as a condition of employment. Reasonable Suspicion Testing

CEI may require any employee to undergo drug and alcohol testing if management has a reasonable suspicion that the employee:

Has violated CEI’s Employee Handbook rules prohibiting the use, possession, sale, or transfer of alcohol and/or illegal drugs while on duty, while working, while on Competitive Engineering property, or while operating CEI equipment, machinery, or vehicles.

Is under the influence of alcohol and/or illegal drugs while on duty, while working, while on Competitive Engineering property, or while operating CEI equipment, machinery, or vehicles.

Is impaired by alcohol and/or illegal drugs

May be affected by the use of alcohol and/or illegal drugs and that the use may adversely affect job performance or the work environment.

Post-Accident/Injury Testing As a condition of our Worker’s Compensation Insurance, Competitive Engineering will require any employee to undergo drug and alcohol testing as soon as practical after a work-related accident/injury. Additional Testing

The Company also may require employees to undergo drug and alcohol testing when, in the judgment of management, such testing is appropriate for the maintenance of the safety for employees, customers, clients, or the public at

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large, or for the maintenance of productivity, quality, or security of property or information.

SPECIMEN COLLECTION AND TESTING PROCEDURES

Specimens will be collected and tested only by laboratories that are properly approved to conduct drug and alcohol testing by the National Institute of Drug Abuse, the Department of Health and Human Services, or the College of American Pathologists.

Specimens will be tested only for the presence of alcohol, illegal drugs, and their metabolites. The Company will rely on only positive initial screening test results that also have been confirmed by gas chromatography/mass spectrometry or other methods of confirmatory analysis provided for by the National Institute of Drug Abuse, the Department of Health and Human Services, or the College of American Pathologists (“confirmatory test”). Cost of Testing CEI will pay for any drug and alcohol test that it requests or requires. Test Results Reports

Any test subject may request a copy of his/her test result report. Confidentiality of Test Results CEI will not disclose test results except as authorized by the test subject or as authorized, permitted, or required by applicable law. Right to Explain Test Results Any test subject who tests positive on a confirmatory test on any drug and/or alcohol test required by Competitive Engineering may submit additional information to CEI, in a confidential setting, to try to explain the confirmed positive test result. Confirmatory retests may be requested by the employee and must be paid for by the test subject. The retest must be conducted only by laboratories that are properly approved to conduct drug and alcohol testing by the Institute of Drug Abuse, the Department of Health and Human Services, or the College of American Pathologists.

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CONSEQUENCES OF REFUSAL TO BE TESTED Applicants Any applicant who refuses to be tested will not be hired. Employees Any employee who refuses to be tested will immediately be discharged. Unemployment Compensation Benefits/Workers’ Compensations Benefits Any employee who refuses to be tested after a work related injury will be discharged and will be subject to loss of unemployment insurance benefits and Workers’ Compensations benefits. CONSEQUENCES OF CONFIRMED POSITIVE TEST RESULTS

Applicants Any applicant who tests positive on a confirmatory test on any drug and/or alcohol test required by CEI, and who does not timely and successfully refute the test results by explanation or retesting will be subject to discipline, up to and including immediate discharge. Employees

Any employee who tests positive on a confirmatory test on any drug and/or alcohol test required by CEI, and who does not timely and successfully refute the test results by explanation or retesting will be subject to discipline, up to and including immediate discharge. Unemployment Compensation Benefits/Workers’ Compensations Benefits Any employee who tests positive on a confirmatory test on any drug and/or alcohol test required by CEI, and who does not timely and successfully refute the test results by explanation or retesting and who is discharged will be subject to loss of unemployment insurance benefits and Workers’ Compensation benefits.

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SEXUAL HARASSMENT POLICY Sexual harassment includes any unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature where tolerance of such actions is made a condition of employment, interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment. CEI does not condone or tolerate any sexual harassment of its employees. All workers, including supervisors and managers, will be subject to severe discipline, up to and including discharge, for any act of sexual harassment they commit. If there is a general question of sexual harassment report it to the Human Resources Department and General Manager.

REPORTING ILLEGAL ACTS POLICY While CEI hopes that concerns employees may have about their co-workers can be resolved by employees with their co-workers, CEI wants to take appropriate action to prevent occurrences of sexual harassment or other illegal acts in the workplace. If anyone is subjected to sexual harassment or any other illegal acts, they must report it to the Human Resources Manager, to the General Manager, or to our company attorney, Mr. Don Awerkamp at (520) 798-5282 immediately or as soon as is reasonably possible.

PROGRESSIVE DISCIPLINE PROCEDURES The first step in the organization’s progressive disciplinary system is the verbal warning. In cases involving performance deficiencies, employees will be

counseled by their supervisors and informed of the areas requiring improvement. A notice of the verbal warning will be placed in the employee’s file. The second step is a written warning. This warning will describe the

unacceptable conduct or performance and specify the improvement needed. An employee receiving a written warning will be requested to sign a letter acknowledging the warning and agreeing to try to improve. Refusal to sign the letter will be grounds for discharge. A record of the written warning will be retained indefinitely in the employee’s personnel file. The third step is a suspension without pay. The length of a suspension will vary, based on such factors as the severity of the offense and the employee’s performance and disciplinary record.

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Employees can be suspended for repeated instances of minor misconduct or for a single serious offense. Supervisors/Managers must obtain approval from CEI’s General Manager before imposing any disciplinary measures more severe than written warnings. An employee receiving a suspension will be requested to sign a letter acknowledging the suspension and agreeing to try to improve. Refusal to sign the suspension letter will be grounds for discharge. A record of the suspension will be retained indefinitely in the employee’s personnel file. Employees who commit acts of violence, severe misconduct or serious safety violations can be suspended immediately, pending a management investigation and review of the matter. Workers who are cleared of charges pending against them will be reinstated with full back pay. Employees who are found guilty of the charges against them will be discharged. The final step is discharge. Employees who fail to improve their conduct or

performance after imposition of a disciplinary suspension or have been previously suspended for reasons relating to attendance, quality, or poor performance will be discharged. Before imposition of any discipline, employees will be given an opportunity to relate their version of the incident or problem at issue and provide the person imposing discipline any explanation or justification they consider relevant. APPEAL PROCEDURES Employees who think they have been disciplined unfairly, too harshly, or inappropriately can appeal the discipline within 10 working days by filing a reversal form with the Human Resources Manager who will forward it to the CEI General Manager for final disposition. TERMINATIONS

At Will Employer Competitive Engineering is an “at will” employer, which means the employee may terminate his/her employment at anytime for any reason and that CEI may terminate an employee’s employment with or without cause, and with or without notice, at anytime. Termination Notice Our employment relationship is entered into for mutual benefit. Because we are an “at will” employer, either party is free to terminate this

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relationship at anytime. We ask that employees give two weeks written notice when voluntarily terminating their employment. Consolidated Omnibus Budget Reconciliation Act (COBRA)

Terminated employees who loose company medical and dental insurance may continue these benefits for a period of time after termination. For more details about COBRA, contact Administration or Human Resources. Exit Interview

We want to retain talented, competent people. An employee leaving CEI participates in an exit interview conducted by the Human Resources Manager.

By conducting exit interviews, we hope to gain constructive insights and ideas that will benefit all employees. Final Paycheck Upon termination, the employee will receive his/her final paycheck in accordance with state and federal guidelines. This paycheck includes unused accrued vacation time and any necessary deductions where applicable.

ATTENDANCE POLICY Employees are expected to be on the job on time everyday that they are scheduled to work. Wherever possible, employees should schedule all medical and personal appointments outside of work hours. Unscheduled absences, late arrivals, and early departures are grounds for disciplinary action and will be taken into consideration during the employee’s annual performance review. NOTIFICATION PROCEDURES Employees who are unable to report to work because of an emergency must notify their manager or supervisor within 30 minutes of their regular starting time. Employees must call personally and speak directly with the supervisor. Unless an employee is physically unable to make the telephone call, notification by a friend or relative does not satisfy this notification requirement. PROGRESSIVE DISCIPLINE APPLIED TO EMPLOYEES

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Employees who do not comply with the Company policy are subject to the provisions of the Progressive Discipline Policy.

1. Verbal warning (documented in the employees’ personnel file) 2. Written warning (documented in the employees’ personnel file) 3. Suspension (approved by CEI Management and documented in the

employees’ personnel file) 4. Termination (approved by CEI Management and documented in the

employees’ personnel file) ABSENCE CATEGORIES AND DESCRIPTION

Absences from work fall into 6 categories

1. Pre-excused absence: A pre-excused absence is a prearranged absence that is supported by an approved Time-Off Request Form submitted by the employee to his/her manager or supervisor prior to the end of the employee’s shift, at least one day before the time off is to be used. The approved form must then be turned into administration at least one day in advance of the absence.

2. Pre-Excused Late: A pre-excused late is a prearranged late start time agreed upon between the employee and his/her manager or supervisor with a minimum one day notice, supported by an approved Time-Off Request Form. The approved form must be turned into administration at least one day in advance of the absence.

3. Post-excused Absence: A post-excused absence is an unarranged absence where the employee has called in to his/her manager or supervisor within 30 minutes of their regular starting time to report an emergency which prevents the employee from working the employee’s shift that is supported by an approved Time-Off Request Form subsequently submitted by employee to his/her manager or supervisor prior to the end of the employee’s shift on the first day that the employee returns to work. The approved form must then be turned into Administration that same day.

4. Post-excused Late: A post-excused late is an unarranged late start time where the employee has called in to his/her manager or supervisor within 30 minutes of their regular starting time to report an emergency which prevents the employee from arriving on time for the employee’s shift that is supported by an approved Time-Off Request Form subsequently submitted by the employee to his/her manager or supervisor prior to the end of the employee’s shift on the day of the late start. The approved form must then be turned into Administration that same day.

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5. Unexcused Absence: An unexcused absence is any absence that is not supported by an approved, signed Time-Off Request Form.

6. Unexcused Late: An unexcused late is any start time after the designated start time that is not supported by an approved, signed Time-Off Request Form.

TRAINING AND DEVELOPMENT

Competitive Engineering believes that our employees are our most important asset. We are committed to training and career development to help our employees prepare for advancement. INTERNAL TRAINING In House Training Periodically, In House training courses are conducted on company premises. The Human Resources Department works with other managers to define training needs. CEI managers will determine who will attend training sessions and ensure the training is documented. NTMA Apprenticeship Program

(Supported through Pima Community College) Competitive Engineering is a member of the Southern Arizona National Tooling and Manufacturing Association (NTMA). Together with other affiliated companies, we have established a machinist apprenticeship program, based upon NTMA guidelines, that combines extensive academic instruction with supervised on-the-job training to be completed over a 4-year period. A total of 8000 hours are required in all aspects of the manufacturing process.

Upon completion the apprentice will be classified as a journeyman machinist. To qualify for the apprenticeship program, applicants must have worked at Competitive Engineering for one year or must have received and approved waiver from the General Manager of CEI. EXTERNAL TRAINING

Seminars

Competitive Engineering is committed to continuous learning. All employees who complete their 90-day evaluation are encouraged to attend outside work related seminars.

To request leave for a seminar, complete a Time-Off Request Form with all pertinent information. Present your request along with the seminar flyer to your

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supervisor for approval. If approved, forward the information to Administration. If you attend the seminar, approved, scheduled and paid by CEI, you will receive 8 hours of pay per each day you attend, separate from overtime calculation. Expenses incurred and approved while attending the seminar will be reimbursed. Seminars requested in excess of those indicated above will be approved when special circumstances exist (i.e. one of a kind, directed by management, changes in technology etc.). College Classes CEI offers full reimbursement on all pre-approved, work-related classes. Reimbursement includes the price of books and tuition. When class time requires work schedule adjustments, complete the Time-Off Request Form with all applicable information. Management will make a sincere effort to accommodate all requests. The following guidelines must be met for reimbursement of college courses:

The employee’s supervisor/manager and the Human Resources Manager must approve the request prior to the class start date.

Course must be work-related and benefit the employee and Competitive Engineering Inc.

The final grade must be a “B” or better where a traditional grading system is used; otherwise, the attendee must “pass” the course in good standing.

PAY AND BENEFITS

Competitive Engineering places a premium on highly motivated individuals who perform exceptional work, and who continually take initiative on behalf of their own and the company’s improvement. Our philosophy is to reward these people at or above “fair market value” based on the quality of their performance. Each job position has a pay range based on specific skill standards. This range may fluctuate depending on economic conditions. The CEI pay schedule to receive wages is weekly. DIRECT DEPOSIT Competitive Engineering uses the Direct Deposit method for payroll disbursements and prefers that all employees upon accepting employment with CEI, have or will establish a bank account with either a bank or credit union to receive wages. OVERTIME HOURS FOR NON-SALARIED EMPLOYEES

The first 40 hours worked each week are considered regular hours. Any hours a non-salaried employee works over 40 will be considered and paid at a rate of

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150% of your regular base pay rate. Overtime is not paid in conjunction with scheduled vacations, seminars, holidays or jury duty. All overtime work must be authorized by the employee’s supervisor or manager in advance of being worked. NIGHT SHIFT DIFFERENTIAL

Non-salaried employees working night shift will receive night shift deferential pay. The amount of pay is subject to change. SALARIED EMPLOYEES Salaried employees’ pay is based on a forty-hour week. They are expected to work a minimum of 40 hours, with the understanding that working additional hours may be necessary in order to “get the job done” and “support the team.” TRAVEL PAY Hourly employees traveling in support of company business or related functions, other than their normal daily commute, will be paid for travel time. They will receive their normal hourly pay rate up to a maximum of 8 hours per day if travel is within North America or 16 hours per day if travel is overseas. Travel time does not contribute to overtime. Salaried employees will be paid their regular rate. REIMBURSEMENT FOR PERSONAL AUTOMOBILE USE

Employees who are required by business necessity to use their personal vehicles for company business will be reimbursed at the current per-mile rate, plus parking or toll fees. The mileage rate is determined annually by the Accounting Department and is based on the standard mileage allowance under federal tax rules. Employees who must travel from home to a site other than their assigned work location will be reimbursed for any mileage greater than their regular commute. Mileage reimbursement requests must have prior written approval from your manager together with proof of insurance submitted to accounting. Employees using their personal vehicle for company business must have a current driver’s license and vehicle liability insurance in the minimum amounts required by state law. All liability for the personal vehicle used for company purposes is assumed by the employee. 401(k) INCENTIVE PROGRAM

The 401(k) Profit Sharing Plan has been established as a means for employees to contribute toward their retirement in a tax-deferred investment account.

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Employees are eligible to participate in this program after one year of employment. Competitive Engineering may make discretionary matching contributions if certain levels of profitability are achieved. Additionally, Competitive Engineering may make a discretionary Profit Sharing Contribution. Refer to the Summary Plan Description for eligibility, vesting, and additional details surrounding the plan. EMPLOYEE LONGEVITY BONUS

As a reward for longevity as a full time employee, one week after the designated anniversary of employment with the Company, CEI will grant the following longevity bonuses. Anniversary Compensation Bonus PTO/Vacation Bonus 5 year 1 week’s pay not applicable 10 year 2 week’s pay not applicable 15 year 3 week’s pay not applicable 20 year 1 week’s pay one time PTO award of 40 hours 25 year 1 week’s pay one time PTO award of 40 hours 30 year 1 week’s pay one time PTO award of 40 hours 35 year 1 week’s pay one time PTO award of 40 hours As a reminder, total PTO accrual balances may not exceed the maximum accrual totals defined in the Personal Time Off (PTO) section of this manual. MEDICAL & DENTAL BENEFITS CEI offers excellent medical and dental benefits. See Human Resources or Administration for details. LIFE and Short Term Disability (STD) BENEFITS

CEI offers group life and Short Term Disability (STD) insurance benefits. See Human Resources or Administration for details. EMPLOYEE PERSONAL TOOL REPAIR PLAN

This plan is designed to support the use of personal tools by providing assistance for minor repair and general maintenance of personal hand tools that are required for job performance. The program is designed to be flexible. To get a tool repaired complete a standard Purchase Request Form and submit it to the Quality Department. Be sure to include the information outlined below:

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Employee Name

Employee Number

Tool Description

Required Repair (be as specific as possible) Tools that are approved will be sent to a repair facility identified on the purchase requisition. Non-approved tools will be returned with a written explanation why repair was not authorized. EMPLOYEE ADVANCES

Employee advances against future earnings are intended to be used as an emergency line of credit extended by the company to the employee. These advances will be approved at the discretion of the management and if any balance remains in the event of termination will become due in full and will be deducted from final paychecks. Refer to the Payroll Advance form for additional terms and conditions.

HOLIDAYS, VACATIONS & LEAVES Holidays Competitive Engineering observes the following holidays:

New Year’s Day

Good Friday

Memorial Day

Independence Day

Thanksgiving Day

Day after Thanksgiving

Christmas Day

4 Floating Days

To be eligible for holiday pay, employees must have worked a full day preceding and a full day following the holiday unless they are pre-scheduled vacation days, documented with a Time-Off Request Form. CEI Management will be as flexible as possible with time-off requests to accommodate individual needs as long as it does not adversely affect operations and production. PERSONAL TIME OFF (PTO)

Employees earn PTO in order to provide for paid vacation, sick and other personal time off reasons. Employees are strongly encouraged to use their PTO for a vacation each year and to maintain sufficient PTO hours for unanticipated

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paid time off for sickness or other personal reason. Eligible employees are entitled to paid PTO based on years of continuous service. Eligible employees stop accruing PTO upon reaching the Max Accrual limit but will resume accruing when the accrued PTO balance falls below the Max Accrual limit. The following is the PTO Accrual and Max Accrual schedule for all full-time employees:

Salaried employees receive an extra week of PTO. The amount of PTO time taken and PTO time remaining is posted on employee paychecks. See Administration to ascertain how the PTO accrual is calculated.

To use PTO for vacation or other personal reasons, employees are requested to give a minimum of two weeks written notice to his/her supervisor or manager. However, shorter notice may be approved on a case-by-case basis. The company will not “buy back” unused PTO hours from employees.

To request PTO for vacation paid sick or other personal reasons employees must fill out a Time-Off Request Form and obtain supervisor/manager approval. The approved Time-Off Request Form must be given to Administration to ensure payroll and attendance records are updated.

Jury Duty

CEI complies with all federal and state laws regarding jury duty. Employees called for jury duty or subpoenaed as a trial witness will be granted time off with pay. Employees must show proof of such a summons to their immediate supervisor, complete an approved Time-Off Request Form and submit it with proof to administration. Eligible employees receive a maximum of two weeks pay while serving on jury duty or as a subpoenaed witness. If the employee is a party to the action that results in the subpoena, they will not receive pay as a subpoenaed witness.

Hourly Employees Salary Employees

Years of Service Annual Accrual Max Accrual

Annual Accrual

Max Accrual

1 yr 40 hours 120 hours 80 hours 160 hours

2 yr 80 hours 160 hours 120 hours 200 hours

5 yr 120 hours 200 hours 160 hours 240 hours

10 yr 160 hours 240 hours 200 hours 280 hours

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Bereavement

In the event of the death of an immediate family member, an employee may have paid time-off of up to three days. Any additional days off will be covered by vacation time. An immediate family member is defined as Spouse, Child, Brother, Sister or Parent. Military Leave

When employees are aware that a military leave will be needed, notice must be given to his/her supervisor/manager and submit a Time-Off Request Form and a confirmation letter from the military to Administration. You may take a leave for military reserve. At the end of a military leave period, CEI will reinstate you according to federal and state laws. Family and Medical Leave Act (FMLA) The 1993 Family and Medical Leave Act allows employees with one year or 1250 hours of employment to take unpaid leave in certain situations. These situations include but are not limited to:

Employees who have a serious medical condition

Employees who need time off to care for a family member with a serious medical condition

Employees who need time off to care for a newborn or newly adopted or foster child

Since such leaves can cause serious disruptions in the Company’s normal workflow, employees should make concerted effort to notify CEI Management as soon as possible. Up to 12 weeks of time off work may be approved for medical leave. While on leave:

Individuals will draw accumulated vacation pay. When vacation pay is depleted leave will be unpaid.

The same or equivalent job position will be held up to 12 weeks.

When practical, employees who are on leave may return to work when positions are available for light-duty and/or part-time work. Pay will be commensurate with the position being filled.

Medical insurance will continue to be maintained by the company during the leave period.

The employee will provide CEI with current status of the situation at least once every 30 days.

If an employee is unavailable to return to work after 12 weeks, employment will be terminated.

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When leave exceeds 12 weeks and employment is terminated, individuals may re-apply for employment. Re-hire will be based on the current needs of Competitive Engineering.

Upon termination, health insurance will be available through COBRA.

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