(1)

  The Managing Director shall be entitled and obligated to represent the Company in compliance with the laws, the Articles of Association, and — if available — the Management’s Rules of Procedure. The Managing Director shall not be exempted from

the restrictions of Section 181 of the German Civil Code (§ 181 Bürgerliches Gesetzbuch). The Company has the right to appoint a further Managing Director.

(2)

Within the framework of his management and representation, the Managing Director shall observe the resolutions of the shareholders´ meeting.

(3)

The Managing Director shall be obligated to manage the Company’s affairs in accordance with the principles of a prudent businessman.

(4)

The Managing Director shall be obligated to arrange for preparation of the Company’s balance sheet within the Data I/O Corporation (“DATA I/O”) reporting schedule after the end of the respective business year and to perform all acts and make all declarations which are necessary therefor.

The Managing Director shall be obligated, promptly after submission of the balance sheet, to send the same together with the notice of a shareholders’ meeting to the Company by registered letter with return receipt.

(5)

The Managing Director shall report to the Vice President, Worldwide Sales and Service of DATA  I/O or other appropriate official as designated by the Company or the shareholders meeting. The Managing Director shall at all times keep the shareholders promptly and fully informed of the business affairs of the Company in compliance with the group’s general policy and shall provide additional information if required by the shareholders.

(6)

The Managing Director shall be obligated to perform the employer’s duties for the Company, in particular to ensure that the wage and salary tax and social security contributions are paid in due time.

(7)

The Company shall indemnify and hold the Managing Director harmless from any applicable German taxes due from the Company which have not been paid by the Company or its predecessors, successors or assigns, and from any actions occurring prior to the appointment of the Managing Director as the Managing Director of the Company.

2.1.

determination and variation of the long-term business policy of the company,

2.2.

granting of guaranties and other securities to third persons,

2.3.

acquisition and sale of business operations and parts of business operations, establishment and closure of places of plants,

2.4.

acquisition, sale and encumbrance of shares in other companies,

2.5.

conclusion, alteration or termination of contracts for the acquisition or sale of industrial property rights (patents, patent applications, trade-marks), secret processes, business secrets, know-how and equivalent rights as well as the conclusion, the alteration and the termination of license contracts,

2.6.

conclusion, alteration or termination of inter-company-agreements,

2.7.

complete or partial dislocation of development and production of products and software, which are made by the Company or its affiliates in Germany,

2.8.

execution of the power of control vis-a-vis affiliates and execution of voting-rights in affiliates, in particular appointment and revocation of managing directors, conclusion, alteration and termination of their service agreements, adoption of the annual statement of account and any decision concerning the appropriation of profits,

2.9.

the taking and granting of loans, except for loans which are necessary for the current business operations,

2.10.

the acquisition, sale and encumbrance of real property and equivalent rights,

2.11.

hiring of permanent employees exceeding the annual budget plan for the Company,

2.12.

contracts with shareholders and their relatives,

2.13.

salary-increases exceeding the annual budget plan for the Company,

2.14.

bonus payments exceeding the annual budget plan for the Company,

2.15.

disposition of goods of the Company with a book value of more than DM 100,000. — ,

2.16

the granting and revocation of "Prokura" or commercial signing rights.

(1)

The Managing Director shall devote his full working capacity to the Company. The Managing Director shall not be entitled to engage in a second occupation which interferes with the Company’s interests without the shareholders’ express approval given through shareholder resolution.

(2)

The Managing Director agrees that he will not, directly or indirectly, during his employment and for a period five (5) months from the date on which his employment with the Company terminates or this Agreement expires for any reason (the “Term”), directly or indirectly be employed by, own, manage, operate, join, control or participate in the ownership, management, operation or control of or be connected with, in any manner, any person or entity engaged in competition with Company, Data I/O or its subsidiaries with respect to any product or service sold or activity engaged in by Company, Data I/O or its subsidiaries (including without limitation, products or services used in the “IC Programmer Products Market” as defined below) up to the time of expiration or termination of this Agreement in any geographical area in which at the time of expiration or termination of this Agreement such product or service is sold or activity is engaged in. “IC Programmer Products Market” means the design, development, manufacture, sale or dis