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                                                                    EXHIBIT 10.7







                   EXCLUSIVE LICENSE AND DISTRIBUTOR AGREEMENT

                                     Between

                              INTERLINK ELECTRONICS

                                       and

                      INTERLINK ELECTRONICS EUROPE S.a r.l.

                              Amended and Restated
                             as of September 7, 1994

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                   EXCLUSIVE LICENSE AND DISTRIBUTOR AGREEMENT

         This Exclusive License and Distributor Agreement (this "Agreement")
dated as of September 7, 1994 by and between Interlink Electronics, a California
corporation ("Licensor"), and Interlink Electronics Europe S.a r.l., a
Luxembourg private limited liability corporation ("Licensee") is an amendment
and restatement of the Exclusive License and Distributor Agreement between
Licensor and Licensee dated as of November 7, 1989 (the "1989 License
Agreement").

                                    Recitals

         WHEREAS, Licensor, Licensee, InvestAR S.a r.l., a Luxembourg private
limited liability corporation, and IEE Finance S.a r.l., a Luxembourg private
limited liability corporation, have entered into a restructuring agreement of
even date herewith (the "Restructuring Agreement");

         WHEREAS, the purpose of the Restructuring Agreement is to restructure
previous agreements between and among the parties, including amending and
restating the 1989 License Agreement;

         WHEREAS, Licensor is the owner of certain patents, trade secrets,
technological know-how and other proprietary information relating to force
sensing resistors ("FSRs");

         WHEREAS, as contemplated by the Restructuring Agreement, Licensor
desires to continue the grant to Licensee, and Licensee desires to continue to
receive from Licensor, certain rights in the Core Technology, the Product and
the Applications (all as hereinafter defined) pursuant to the terms and
conditions of this Agreement;

         NOW, THEREFORE, in consideration of the above recitals and the premises
and mutual covenants and agreements herein contained, the parties hereby agree
as follows:

                              TERMS AND CONDITIONS

         1. DEFINITIONS.

         1.1 "Application" means a use of FSR technology to address a specific
category of needs, e.g., passenger seat sensors constitute one Application, horn
door sensors constitute one Application, etc.

         1.2 "Automotive" means only automobiles, trucks, vans and buses.

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         1.3 "Automotive Safety Applications" means Automotive Applications of
the Product pertaining to safety and security, including but not limited to seat
sensors and strip sensors.

         1.4 "Automotive Horn and Horn Door Applications" means Automotive
Applications of the Product pertaining to horn and horn door sensors.

         1.5 "Core Technology" means (a) the patents and patent applications
owned by Licensor listed on Exhibit 1.5 hereto, any continuations,
continuations-in-part, divisionals, reexaminations and reissues of such patents
and patent applications and any patents and patent applications owned or
acquired by Licensor in the future relating to the Product (as hereinafter
defined) and any Applications; (b) all trade secrets, processes, formulae,
know-how and technical information relating to the manufacture of the Product
(as hereinafter defined) and any Applications manufactured by Licensor,
including those trade secrets, processes, formulae, know-how and technical
information utilized in the manufacture of the ink used in the production
process to manufacture the Product; and (c) all Licensor Improvements (as
hereinafter defined). "Core Technology" does not include the "VersaPoint
Technology" (as hereinafter defined).

         1.6 "Improvements" means any modification or enhancement of the Core
Technology which affects the Product or the Applications in one or more of the
following ways: (a) reduces production costs, (b) improves performance, (c)
increases service life, (d) broadens applicability or (e) increases
marketability. If an Improvement is substantially made by or caused to be made
by Licensee at its expense and without any involvement of Licensor, it is
referred to herein as "Licensee Improvements." All other Improvements shall be
"Licensor Improvements." "Improvements" do not include the "VersaPoint
Technology" (as hereinafter defined).

         1.7 . "Product" means, those FSRs covered by one or more valid claims
under patents or patent applications listed on Exhibit 1.5 hereto. A FSR is
described scientifically as a polymer thick film device that exhibits decreasing
electrical resistance with increasing force applied to the device surface. FSR
sensors consist of two or more layers of plastic film, one or more layers
supporting interdigitating electrodes (conductor patterns) and one or more
layers supporting the proprietary, semiconductive polymer. The two types of
substrate layers are arranged in opposition, and the surface contact between
them creates an electrical connection. "Product" does not include the
"VersaPoint Technology" (as hereinafter defined).

         1.8 "Territory" means, depending on the Product or Applications, as
applicable, the geographical areas described on Exhibit 1.8.

         1.9 "Trademarks" means any and all trademarks, tradenames, and service
marks associated with the Product and/or the Applications, including but not
limited to "FSR," "Force Sensing Resistors," and "TuffPad," and, until
Licensee's name is changed pursuant to

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Section 2.6 of the Restructuring Agreement, "Interlink" and the six dot
design registered as a trademark by Licensor, but expressly excluding any
trademarks, tradenames, and service marks relating to the VersaPoint
Technology (as hereinafter defined).

         1.10 "Unit" means each and every time one or more Products or
Applications are (as hereinafter defined) in single component or.device.
Consequently, a single "Unit" may contain several FSRs.

         1.11 "Used" shall mean actually, installed in, or included or bundled
as an integral portion of, a final assembly or subassembly.

         1.12 "VersaPoint Technology" means the "Purchased Rights" as such term
is defined in Section 1 of the Technology Purchase Agreement entered-"into
between the parties hereto dated as of December 6, 1993 (the "Technology
Purchase Agreement"). VersaPoint Technology specifically excludes those rights
retained by Licensee pursuant to Section 2 of the Technology Purchase Agreement.

         2. GRANT OF LICENSE.

         2.1 Subject to the terms and conditons of this Agreement, Licensor
hereby grants to Licensee a non-transferable right within the Territory, as
applicable, depending on Product or Applications as described on Exhibit 1.8
attached hereto, on an exclusive or non-exclusive basis as described on such
Exhibit 1.8, (a) to use the Core Technology to manufacture the Product and all
Applications thereof as described on Exhibit 1.8, (b) to market and distribute
the Product and the Applications to (i) Licensee's end-user customers that are
located in, and that receive shipments in, the Territory, pursuant to an
agreement between Licensee and such end-user customers and (ii) original
equipment manufacturers ("OEMs") or value added resellers ("VARs") that are
located in the Territory and that enter into an OEM or VAR agreement with
Licensee, and (c) subject to Section 5.2 hereof, to improve the Core Technology,
the Product and the Applications.

         2.2 Licensor hereby grants to Licensee the exclusive or non-exclusive,
as applicable based on Exhibit 1.8, rights within the Territory (except as
otherwise contemplated by Section 2.1 above) to use the Trademarks in connection
with the promotion, marketing, licensing, distribution and use of the Product
and the Applications, including, in each case, any Licensor Improvements, in the
Territory. To the extent deemed appropriate by Licensor, Licensee may use such
Trademarks in advertising, in consumer and trade collateral material and in
press material relating to the Product and the Applications. Neither Licensee
nor any Licensee or agent of Licensee shall remove or alter any legends
contained in or on the Product or the Applications. Upon the termination of this
Agreement, Licensee will discontinue use of the Trademarks in any marketing,
advertising, business or other material and thereafter will not use, either
directly or indirectly, such Trademarks or any other name, title or expression
so

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nearly resembling the same as would be likely to lead to confusion or
uncertainty or to deceive the public.

         2.3 Licensee shall not enter into any agreement with an OEM or a VAR
for the marketing, selling or distribution of the Product or the. Applications
except with' respect to the Territory in which Licensee has been granted the
right to market, sell and distribute as stated on Exhibit 1.8 hereto. (Nothing
herein, however, shall restrict any such OEM or VAR from selling any of their
products outside the applicable Territory which products incorporate a Product
or Application as a component thereof).

         2.4 Nothing in this Agreement shall in any way limit Licensor's rights
to license or market the Product or the Applications outside of the Territories
in which Licensee has an exclusive right as described on Exhibit 1.8. The
exclusive license within the Territory granted in Section 2.1 above is subject
only to the right of Licensor's OEMs and VARs to distribute their products
(which may incorporate Licensor's products) anywhere throughout the world,
except Territories in which Licensee has an exclusive right as described on
Exhibit 1.8, and to that certain non-exclusive license granted to Toshiba
Silicone Co., Ltd., a Japanese corporation ("Toshiba"), pursuant to that certain
license agreement effective as of July 1, 1988 between Licensor and Toshiba.

         3. LICENSEE'S OBLIGATIONS.

         3.1 Licensee agrees to use its best efforts, in good faith, to
manufacture, introduce, promote, market and distribute the Product and the
Applications in the Territory.

         3.2 Subject to the terms and conditions in this Agreement, Licensee
agrees, as a condition of the rights granted hereunder and except as otherwise
expressly authorized hereunder, (i) not to create or attempt to create, by
reverse engineering or otherwise, the Product, the Licensor Improvements or the
Applications developed or manufactured by Licensor or in any other fashion
attempt to ascertain Licensor's trade secrets, (ii) not to modify, enhance, or
alter or attempt to modify, enhance or alter the Product, the Licenser
Improvements or the Applications developed or manufactured by Licensor, and
(iii) prior to disposing of any media or apparatus to destroy completely any
Proprietary Information (as hereinafter defined) contained therein..

         3.3 Licensee will represent to its customers only such facts about the
Product, the Licensor Improvements and the Applications developed or
manufactured by Licensor as Licensor states in its Product, Licensor
Improvements and Application descriptions, advertising and promo Tonal materials
or as may be stated in other nonconfidential written material furnished by
Licensor expressly for this purpose Prior to going to print with final versions
of its technical and sales materials for public use, Licensee will provide L
censor with review copies thereof which will be deemed acceptable to Licensor if
Licensor fails to respond in writing to Licensee within three business days of
receipt of such review copies.

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         3.4 During the term of this Agreement, Licensee will not engage in the
promotion, marketing, distribution, sale or licensing of, or act as a sales
agent, representative or distributor of, any product which competes with the
Product, the Applications developed or manufactured by Licensor or the Licensor
Improvements, or authorize any other person or organization to engage in any
such acts.

         3.5 With respect to Lice sec's manufacture, sale or distribution (or
Licensee's VARs' or OEMs' manufacture, sale or distribution) of the Product and
Applicant's Used outside of Expanded Europe, as define on Exhibit 1.8, Licensee
shall pay Licensor royalties as follows: (a) For Product and each Application
manufactured in Expanded Europe, on a cumulative, sliding scale basis, 8% of the
gross sales price for each of the first 200,000 Units sold, 6% of the gross
sales price for each of the next 200,000 Units sold, and 4% of the gross sales
price for all other Units sold: (b) For Product and each Application
manufactured outside of Expanded Europe as permitted under Section 1.8 hereof,
on a cumulative, sliding scale basis for each plant, 5% of the gross sales price
for each of the first 300,000 Units sold, 4% of the gross sales price for each
of the next 300,000 Units sold, and 30 of the gross sales price for all other
Units sold. It is understood that all plants within 300 miles of each other
shall be considered one plant for the purposes of this Section 3.5. Licensee
shall pay to Licensor accrued royalties, net of any withholding taxes ,
quarterly. The parties recognize that there will be occasions were it shall be
desirable to reduce the royalty on a mutually agreeable basis to take advantage
of specific opportunities. Licensee shall use its best efforts to assist
Licensor in obtaining any refunds of withholding or value added taxes that
Licensor is lawfully entitled to.

         3.6 Licensor shall be afforded a reasonable opportunity, upon at least
one weeks notice, at its own expense and during regular business hours, to
conduct an audit of Licensee's pertinent books and records as to its compliance
with the provisions of Section 3.5.

         4. LICENSOR'S OBLIGATIONS.

         4.1 Licensor will work with Licensee to promote the Product and the
Applications by providing Licensee with technical, marketing, and sales support
as reasonably requested by Licensee to support Licensee's efforts to market and
license the Product and the Applications.

         4.2 During the term of this Agreement, Licensor will not, in the
Territories in which Licensee has exclusive rights as described on Exhibit 1.8
hereto, (a) engage in the distribution, sale or licensing of, or act as a sales
agent or distributor for, (i) the Product, the Applications or the Improvements,
except as contemplated by Section 2.1 hereof or (ii) any product which directly
or indirectly competes with the Product, or directly or indirectly authorize any
other person to engage in such acts in the Territories in which Licensee has
exclusive rights as described on Exhibit 1.8 hereto, or (b) license to any
person any rights granted to Licensee on an exclusive basis hereunder and, in
this regard, Licensor shall include

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as a contractual provision in all agreements entered into by it and parties
who intend to manufacture Product in other than the Territories in which
Licensee has exclusive rights as described on Exhibit 1.8 hereto, the
requirement that such parties not distribute Product in the Territories in
which Licensee has exclusive rights as described on Exhibit 1.8 hereto.
Nothing contained in this Section 4.2 is intended, or shall be construed as
in any way limiting, Licensor's exclusive and absolute right to manufacture,
distribute, appoint distributors, and agents for, sell, license, sublicense
or otherwise use or transfer the right to use the VersaPoint Technology on a
worldwide basis.

         5. ONGOING RELATIONSHIP AND COOPERATION.

         5.1 The parties hereby agree that all orders or direct or indirect
inquiries received by Licensor respecting the sale of the Product, Applications
or Improvements in the Territories in which Licensee has exclusive rights as
described on Exhibit 1.8 hereto will be referred to Licensee, and all orders or
direct or indirect inquiries received by Licensee respecting the sale of the
Product, Applications or Improvements in the Territories in which Licensor has
exclusive rights as described on Exhibit 1.8 hereto will be referred by Licensee
to Licensor.

         5.2 To the extent the Licensee makes any Licensee Improvements, the
Licensee shall be deemed to have automatically granted to the Licensor an
exclusive, royalty-free, transferable, sublicensable license to use, manufacture
and distribute the Licensee Improvements outside the Territories in which
Licensee has exclusive rights as described on Exhibit 1.8 hereto. Licensee
agrees to provide such Licensee Improvements to Licensor from time to time to
the extent any such Licensee Improvements are made.

         5.3 Licensor shall provide to Licensee any market information about the
Territories in which Licensee has exclusive or non-exclusive rights as described
on Exhibit 1.8 hereto which it, in its reasonable judgment, deems relevant to
Licensee's marketing, sale and distribution of the Product, Applications and
Improvements. Licensee shall provide to Licensor any market information about
the Territories in which Licensee does not have exclusive rights as described on
Exhibit 1.8 which it, in its reasonable judgment, deems relevant to Licensor's
licensing, marketing, sale and distribution of the Product, Applications and
Improvements. Licensee and Licensor shall from time to time consult with each
other in an effort to determine the most beneficial practices to follow in
addressing market areas outside of Territories in which Licensee has exclusive
or non-exclusive rights as described on Exhibit 1.8 hereto, although Licensor
shall be free to address such markets in any manner that it elects in its sole
discretion.

         5.4 The parties agree to coordinate all public announcements and
information disclosure of their relationship to maximize their mutual benefit.
All information regarding the terms of this Agreement shall be treated as highly
confidential and will not be disclosed to any third parties by Licensee or
Licensor except as may be required by law, or by generally accepted accounting
principles.

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         5.5 Business conditions permitting, including the capability to respond
effectively, Licensor and Licensee will each consider the requests of the other
that it act as an exclusive or non-exclusive distributor, second source
supplier, or agent for the marketing and/or distribution for some or all of the
requestor's products under such terms and conditions as shall at that time be
mutually agreed upon by Licensor and Licensee.

         5.6 With respect to any development of new pressure sensitive devices,
i.e. devices not covered by the definition of "Product" as stated in Section
1.7, which either party makes, it may ask the other party to share the cost of
these developments. If the other party agrees to share the development cost,
then both parties will enter into a formal research and development project
accompanied by a financing agreement in accordance with a written, budgeted plan
to be agreed upon by the parties at the time the project is commenced. The
outcome of any such mutually funded project will be available on a royalty free
basis to both parties. If the other party does not agree to participate in the
project and the requesting party decides to continue the project without the
financial support of the other party, then the other party may nevertheless
acquire the outcome of the development at a later stage on conditions to be
agreed upon at that time. However, concerning the development of new pressure
sensitive devices which could compete with the other party's products based on
FSRs as defined in Section 1.7, both parties agree that the party having carried
out said development will not use said development, nor sell, license,
sublicense or otherwise use or transfer the right to use said development to a
third party, with the purpose of competing with the other party's products in
the other party's Territory as defined in Exhibit 1.8.

         6. CONFIDENTIALITY; PROPRIETARY RIGHTS; LICENSE AGREEMENT ENFORCEMENTS.

         6.1 Both parties acknowledge that, during the negotiations and
performance of this Agreement, either party may acquire knowledge of information
considered by the other to be confidential and proprietary. Each party agrees to
hold in confidence for the other and to use only for the purposes contemplated
hereby, all the technology, algorithms, processes, formulae and know-how
disclosed to the other in connection with the transactions contemplated hereby,
including, without limitation, the Core Technology, confidential information
respecting the Product or the Applications, and all marketing, product
development, financial, business and other proprietary information of the
disclosing party (collectively the "Proprietary Information") and not to
disclose any Proprietary Information to any person except employees and
contractors who have agreed in writing to hold such information in confidence
and to use it only for authorized purposes and to whom disclosure is necessary
or appropriate to further the purposes of this Agreement. A party's Proprietary
Information shall not include information either party can document (a) at the
date hereof has entered or later enters the public domain as a result of no act
or omission of such party or its employees, its distributors or agents; (b) is
lawfully received from third parties without restrictions and without breach of
any duty of non-disclosure by any such third party; or (c) has been
independently developed by such party

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without use of the Proprietary Information of the other. Each party shall
protect the Proprietary Information against unauthorized use or disclosure
with at least the same degree of care as that party exercises to protect its
own information of like character and importance.

         6.2 Licensor shall at all times retain exclusive title to and ownership
of and, except as expressly licensed herein, all rights to, the Core Technology,
any Improvements (except Licensee Improvements), the Product and the
Applications, including, without limitation, all intellectual property rights,
including, without limitation, trademark, tradename, copyright, patent rights,
trade secret and other proprietary rights, if any, relating to the foregoing.
Licensee will use all reasonable efforts to insure that all entities physically
handling, having access to or possessing the Core Technology, the Product, the
Applications or the Licensor Improvements respect Licensor's proprietary rights
and will notify Licensor of the infringements that come to Licensee's attention
and cooperate with Licensor in any prosecutions that Licensor may undertake.
Licensee will reproduce and will not remove, destroy, obfuscate or conceal any
proprietary markings or legends placed upon or contained within the Product or
the Applications. Licensee will immediately advise Licensor of any legal notices
served on Licensee that might affect Licensor or its proprietary rights.

         6.3 Licensee shall fully cooperate with Licensor's enforcement of the
end-use and OEM-VAR license agreements for the benefit of Licensor. Such
agreements shall specifically state I that Licensor is an intended third party
beneficiary of such agreements. Licensee shall promptly, upon becoming aware of
any licensee breach of such agreements, notify Licensor of any such breach.

         6.4 Licensor shall use its best efforts (within the limits of yeas able
business judgment) to preserve its rights in the Core Technology, the Product,
the Applications, the Licensor Improvements and the Trademarks ("Licensor's
Intellectual Property Rights"). Licensor will not take any action or allow any
action to occur, which will materially adversely affect Licensor's Intellectual
Property Rights. Before permitting or allowing any of Licensor's Intellectual
Property Rights to expire, go abandoned or otherwise lapse, Licensor shall
notify Licensee in writing in advance and permit Licensee a reasonable
opportunity to prevent any such expiration, abandonment or lapse.

         7. EXPORT AND RELOCATION RESTRICTIONS.

         7.1 This Agreement, the Core Technology, the Product, the Applications,
the Improvements relating thereto and the rights granted hereunder are subject
to, and no relocations may be made outside of the United States without
compliance by Licensee with any and all laws, regulations, orders or other
restrictions relative to export, reexport or redistribution of the Core
Technology, the Product or the Applications that may now or in the future be
imposed by the government of the United States or any agency thereof.

         8. TERMINATION.

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         8.1 This Agreement shall continue in perpetuity unless earlier
terminated pursuant to the provisions of Section 8.2 below.

         8.2 This Agreement shall terminate upon occurrence of any of the
following events: (a) the failure or neglect of either party to observe, keep or
perform any of the other material covenants, terms and conditions of this
Agreement including, but not limited to, the payment of any royalties, where
such non-performance is not fully remedied by such party within thirty (30) days
after written notice of intent to terminate by the other party. provided,
however, that with respect to Section 7.1 hereof, this Agreement shall not
terminate pursuant to this subsection 8.2(a) notwithstanding the fact that any
non-performance is not fully remedied within such thirty (30) days so long as
Licensee is attempting in good faith to remedy such non-performance; (b) the
commencement by Licensee of a voluntary case or proceeding under an applicable
foreign, federal or state bankruptcy, insolvency, reorganization or other
similar law to be adjudicated a bankruptcy or insolvent, or the consent by
Licensee to the entry of a decree or order for relief in respect of Licensee in
an involuntary case or proceeding under applicable foreign, federal or state
bankruptcy, insolvency, reorganization or similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against Licensee, or the entry
by a court of competent jurisdiction of a decree or order adjudging Licensee
bankrupt or insolvent in an involuntary case or proceeding under applicable
foreign, federal or state bankruptcy, insolvency or similar laws, appointment of
or taking possession by a custodian, receiver, liquidator, assignee or trustee
of any substantial part of Licensee's property, or the making by Licensee of an
assignment for the benefit of creditors (effective immediately upon occurrence)
or (c) the dissolution, liquidation, winding up, merger or consolidation of
Licensee or the sale by Licensee of all or substantially all of its assets
(effective immediately upon occurrence). Termination of this Agreement under
this Section 8.2 shall be made in addition to, and not a waiver of, any remedy
at law or in equity available to either party arising from the other party's
breach of this Agreement.

         8.3 Notwithstanding the foregoing, the provisions of Sections 3.3, 5.4,
6, 8.4, 8.5, 9, 10 and 11 shall survive the termination of this Agreement. In
addition, any licenses of Licensee Improvements granted to Licensor pursuant to
Section 5.2 hereof shall not be affected by the termination of this Agreement
but shall remain in effect, unless such termination is a result of Licensor's
failure or nonperformance as set forth in Section 8.2(a) hereof.

         8.4 In the event of termination of this Agreement pursuant to Section
8.2, the license and all other rights to Licensee granted hereunder shall
immediately cease and Licensee shall promptly return all Proprietary
Information, including the Core Technology, but excluding any Licensee
Improvements then in its possession or control; provided, however, that Licensee
shall return any Licensee Improvements if all applicable patents relating to the
Product and/or the Applications have not expired, been abandoned, or lapsed as
of the termination date of this Agreement. Licensor shall immediately return any
of Licensee's Propriety Information. Licensee shall make a full and complete
report to Licensor of the then

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currents status of its activities. Licensee shall also forward to Licensor
all inquiries, mail and other communications directed to Licensee as a
distributor of the Product and the Applications.

         8.5 Upon the termination of this Agreement pursuant to Section 8.2, all
of the then existing license agreements for the Product and the Applications in
the Territory between Licensee and its customers shall be automatically assigned
upon such termination from Licensee to Licensor or to Licensor's designee, such
assignment to be effective as of the date of such termination. Licensee hereby
consents to such assignment and agrees that it shall not be necessary for
Licensor to obtain any further consent, agreement or other written instrument
from Licensee in order to effectuate such assignment. Immediately upon the
termination of this Agreement, Licensor may notify all of Licensee's customers
under all existing license agreements for the Product and the Applications in
the Territory of the assignment of the license agreements to Licensor or to
Licensor's designee and may furnish to such customers such other information as
may be necessary to effect an orderly change of the license agreements to
Licensor or to Licensor's designee. Licensee shall, upon request by Licensor, do
all things necessary or proper in order to more fully effectuate such assignment
or such orderly change.

         8.6 If either party requests arbitration pursuant to Section 11.13,
notwithstanding the provisions of Section 8.2(a) hereof, this Agreement shall
not terminate pursuant to such Section until such arbitration proceeding has
been concluded.

         9. WARRANTIES AND INDEMNIFICATION.

         9.1 NO WARRANTIES. LICENSOR DOES NOT MAKE ANY EXPRESS, IMPLIED OR
STATUTORY WARRANTIES, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR ARISING FROM A COURSE
OF DEALING, TRADE USAGE OR TRADE PRACTICE WITH RESPECT TO THE CORE TECHNOLOGY,
THE PRODUCT OR THE APPLICATIONS OR RELATING TO THE DELIVERY, INSTALLATION, USE,
REPAIR, MAINTENANCE OR PERFORMANCE THEREOF. NO REPRESENTATION OR OTHER
AFFIRMATION OF FACT, INCLUDING BUT NOT LIMITED TO, STATEMENTS REGARDING
CAPACITY, SUITABILITY FOR USE OR PERFORMANCE OF PRODUCT, WHETHER MADE BY
LICENSOR EMPLOYEES OR OTHERWISE, WHICH IS NOT CONTAINED IN THIS AGREEMENT, SHALL
BE DEEMED TO BE A WARRANTY BY LICENSOR FOR ANY PURPOSE, OR GIVE RISE TO ANY
LIABILITY OF LICENSOR WHATSOEVER.

         9.2 INDEMNIFICATION BY LICENSEE. In addition to all other rights under
this Agreement or at law, to the fullest extent permitted by law, Licensee
agrees to defend, indemnify and hold harmless Licensor and its affiliates and
their respective officers, directors, partners, employees and agents against all
costs, expenses and damages, including, without limitation, reasonable
attorneys' fees, arising from or in connection with any suit, claim or
proceeding brought

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against Licensor, its affiliates or their respective officers, directors,
partners, employees and agents insofar as such suit, claim or proceeding is
based on a claim arising out of or related to Licensee's obligations under
this Agreement, including, but not limited to, (i) claims pertaining to any
defect in the Licensee Improvements; (ii) Licensee's manufacture, marketing
and distribution of the Product, the Applications or the Improvements; (iii)
use of the Product or the Applications in combination with Licensee products
or equipment not supplied by Licensor to Licensee or with modifications made
by the Licensee; (iv) improper installation, support, maintenance or other
acts performed by Licensee to or for the Product or the Applications; or (v)
claims pertaining to assurances or representations made by the Licensee with
respect to the Product, the Applications or the Improvements unless such
assurances or representations have been made in compliance with Section 3.4
hereof.

         9.3 INDEMNIFICATION BY LICENSOR. Licensor shall defend, indemnify and
hold harmless Licensee and its affiliates and their respective officers,
directors, partners, employees and agents against all costs, expenses and
damages, including, without limitation, reasonable attorneys' fees, arising from
or in connection with any suit, claim or proceeding brought against Licensee,
its affiliates or their respective officers, directors, partners, employees and
agents insofar as such suit, claim or proceeding is based on a claim arising out
of or related to Licensor's obligations under this Agreement, including, but not
limited to, (i) claims pertaining to any defect in the Product, Core Technology
or Licensor Improvements; (ii) Licensor's manufacture, marketing and
distribution of the Product, the Applications or the Improvements under this
Agreements (iii) claims pertaining to assurances or representations made by
Licensor with respect to the Product, the Applications or the Licensor
Improvements; or (iv) a claim that the Core Technology infringes any third
party's patent, copyright or trade secret under the laws of the United States;
provided, however, that if such infringement claim is asserted, or if Licensor
believes one likely, Licensor will have the right, but no obligation, to procure
a license from the person claiming or likely to claim infringement or to modify
the Product to avoid the claim of infringement.

         9.4 NOTICE OF LIABILITY. Each party seeking to obtain indemnification
under Section 9.2 or 9.3 above (an "Indemnified Party" shall), with reasonable
promptness, provide the other party with prompt written notice of any such suit,
claim or proceeding brought against it of which such Indemnified Party is aware
and shall otherwise make available to the other party all relevant information
material to the defense of any such suit, claim or proceeding. The Indemnified
Party shall have the sole right to defend against any such suit, claim or
proceeding asserted against it and to make all decisions in its discretion
regarding the defense, settlement or compromise of such suit, claim or
proceeding; provided, however, that the Indemnified Party shall not settle or
compromise the same without the consent of the other party (which consent shall
not be unreasonably withheld). An Indemnified Party's failure to give prompt
notice of or to provide copies of documents or to furnish relevant data in
connection with any suit, claim or proceeding shall not constitute a defense to
any such suit, claim or proceeding by the Indemnified Party against such other
party, except and only to the extent that such failure

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by such Indemnified Party shall result in any material and irreparable
prejudice to the other party.

         10. LIMITATION OF LIABILITY.

         10.1 LIMITATION ON DAMAGES. EXCEPT WITH RESPECT TO SECTION 6 HEREOF, IN
NO EVENT WILL LICENSOR BE LIABLE FOR ANY LOSS OF OR DAMAGE TO REVENUES, PROFITS,
OTHER ECONOMIC LOSS OR GOODWILL OR OTHER SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES OF ANY KIND, RESULTING FROM ITS PERFORMANCE OR FAILURE TO
PERFORM PURSUANT TO THE TERMS OF THIS AGREEMENT OR ANY OF THE ATTACHMENTS
HERETO, OR RESULTING FROM THE FURNISHING, PERFORMANCE, DELIVERY, POSSESSION,
OPERATION, USE OR LOSS OF USE OF THE CORE TECHNOLOGY, THE PRODUCT, THE
APPLICATIONS, THE LICENSOR IMPROVEMENTS OR ANY OTHER MATERIALS DELIVERED
HEREUNDER, WHETHER RESULTING FROM BREACH OF CONTRACT, BREACH OF WARRANTY,
NEGLIGENCE, STRICT LIABILITY, TORT OR OTHER LEGAL THEORY EVEN IF LICENSOR HAS
BEEN ADVISED, KNEW, OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT WITH RESPECT TO SECTION 6 HEREOF, IN NO EVENT WILL LICENSEE BE LIABLE FOR
ANY LOSS OF OR DAMAGE TO REVENUES, PROFITS, OTHER ECONOMIC LOSS OR GOODWILL OR
OTHER SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND,
RESULTING FROM ITS PERFORMANCE OR FAILURE TO PERFORM PURSUANT TO THE TERMS OF
THIS AGREEMENT OR ANY OF THE ATTACHMENTS HERETO, OR RESULTING FROM THE
FURNISHING, PERFORMANCE, DELIVERY, POSSESSION, OPERATION, USE OR LOSS OF USE OF
THE LICENSEE IMPROVEMENTS OR ANY OTHER MATERIALS DELIVERED HEREUNDER TO LICENSOR
WHETHER RESULTING FROM BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE,
STRICT LIABILITY, TORT OR OTHER LEGAL THEORY EVEN IF LICENSEE HAS BEEN ADVISED,
KNEW, OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.

         10.2 Licensee acknowledges and agrees that the foregoing disclaimers,
limitations and exclusions are unrelated, independent allocations of risk.

         11. MISCELLANEOUS.

         11.1 NOTICES. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be given or made by personal delivery, by telecopy (with follow-up copy
sent via first class mail, postage prepaid) or by a nationally recognized
courier service for overnight delivery, and properly addressed as follows: -

<PAGE>

         Licensor:                  Interlink Electronics
                                    546 Flynn Road
                                    Camarillo, California 93012
                                    U.S.A.
                                    FAX No. (805) 484-8989
                                    Attn: President

         Licensee:                  Interlink Electronics
                                    Europe S.a r.l.
                                    Zone Industrielle
                                    L6468
                                    Echternach, Luxembourg
                                    FAX No: (352) 728-262
                                    Attn: Corporate Secretary

With copies to:

                                    InvestAR S.a r.l.
                                    19 rue de la Liberte
                                    Luxembourg, Luxembourg
                                    FAX No. (352) 4792-2023
                                    Attn: Managing Director

or at such other place as the party to whom such notice or communication is to
be addressed may have designated to the other parties by notice conforming to
this Section 11.1. Notices shall be deemed effective and received (i) on the
actual receipt in the case of hand delivery, (ii) upon receipt of written
confirmation in the case of telecopy, or (iii) on the third business day after
deposit in the case of notices by nationally recognized overnight courier
services.

         11.2 GOVERNING LAW; APPLICABLE LANGUAGE. The validity, construction and
performance of this Agreement shall be governed by the substantive law of the
State of California, USA as applied to agreements among California residents
entered into and to be performed entirely within California. This Agreement
shall be interpreted and construed in English, irrespective of any other
translations.

         11.3 SEVERABILITY; EFFECTIVENESS. If any provision of this Agreement
shall be held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the remaining provisions of the Agreement shall
remain in full force and effect. The parties agree to negotiate in good faith
substitute enforceable provisions which most nearly effect the parties' intent
in entering into this Agreement. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidating the

<PAGE>

remaining provisions hereof or effecting the validity or enforceability of such
provision in any other jurisdiction.

         11.4 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any rights or
obligations under this Agreement, in whole or in part, shall be assignable or
otherwise transferable and any attempt to assign or transfer this Agreement or
any rights or obligations under this Agreement shall be null and void; provided,
however, that Licensee may assign this Agreement or the license granted pursuant
to Section 2 hereof to any of its wholly-owned subsidiaries if such subsidiaries
agree to be bound by the terms and conditions of this Agreement; provided,
however, that if such assignee ceases to be a wholly-owned subsidiary of
Licensee, then said assignment shall thereupon automatically terminate. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided by this Agreement.

         11.5 NO AGENCY RELATIONSHIP. Each party shall conduct its business as a
principal for its own account and at its own expense and risk. Neither party is
a legal representative, joint venturer, partner or agent of or employed in any
by the other party. This Agreement does not in any way create the relationship
of principal and agent, or any similar relationship, between Licensee and
Licensor. Each party covenants and warrants that it will ont attempt to create
any obligation, or make any representations on behalf of or in the name of each
party.

         11.6 WAIVER. No term or provision shall be deemed waived and no breach
excused unless such waiver or consent shall be in writing and signed by the
party claimed to have waived or consented.

         11.7 ENTIRE AGREEMENT: MODIFICATION. This agreement and any exhibits
hereto constitutes the entire agreement between the parties concerning the
subject matter hereof. There are no other agreements, understandings or
commitments relating to the subject matter hereof, and this agreement supersedes
any proposal, communication, quotation, demonstration or prior agreement, oral
or written, and any other agreement on behalf of both parties. It is expressly
understood and agreed that: (i) no employee, agent or other representative of
either party has any authority to bind such party with regard to any statement,
representation, promise, warranty or other expression unless same is
specifically included within the express terms of this Agreement or as an
Exhibit hereto; (ii) no usage of trade, performance, practice or other method of
dealing by either party with any other party or between Licensee and Licensor
shall be used to modify, interpret, supplement or alter in any manner the
express terms of this Agreement or any part hereof. Any modification of this
Agreement must be in writing signed by both parties.

         11.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

<PAGE>

         11.9 FURTHER ASSURANCES. Subsequent to the execution of this Agreement,
each of the parties agrees to act in good faith to execute and deliver such
instruments and take such other actions as shall be reasonably necessary,
advisable or requested by the other party to implement the intent of this
Agreement, including, without limitation, the execution of further or additional
instruments of assignment, transfer or registration under intellectual property
laws. In no event will either party enter into any agreement with any third
party or take or omit to take any action which would contradict, frustrate, or
compete with this Agreement, or the relationship anticipated hereunder.

         11.10 TAX MATTERS. Each party shall be responsible for and shall pay
any and all taxes incurred by or levied or assessed on it in connection with
this Agreement and the consummation of the transactions contemplated hereby.
Nothing contained herein shall transfer to one party or be construed as
obligating that party to pay any tax liabilities of the other party incurred or
assessed or to be incurred or assessed on account of activities by the other
party prior to the date hereof.

         11.11 EQUITABLE RELIEF. Each party acknowledges that any breach of its
obligations hereunder will cause the other party hereto immediate and
irreparable injury for which there are inadequate remedies at law and,
therefore, agrees that such other party shall be entitled to equitable relief in
addition to all other remedies provided by this Agreement or available at law.

         11.12 ATTORNEYS' FEES. In any litigation, arbitration or court
proceeding between the parties, the prevailing party shall be entitled to
recover, in addition to any other amounts rewarded, reasonable attorneys' fees
and all costs of proceedings incurred in enforcing this Agreement.

         11.13 ARBITRATION. In the event of any dispute or difference arising
out of or relating to this Agreement or the breach thereof, the parties hereto
shall use their best endeavors to settle such disputes or differences. To this
effect, they shall consult and negotiate with each other, in good faith and
understanding of their mutual interests, to reach a just and equitable solution
satisfactory to both parties. If they do not reach such solution within a period
of 30 (thirty) days, then the disputes or differences shall be finally settled
by arbitration in accordance with the Rules of Conciliation and Arbitration of
the International Chamber of Commerce.

         The Arbitration Tribunal shall be formed of 3 (three) arbitrators, one
to be appointed by each party and the third to be appointed by the first two or,
in the event of failure to agree within 30 (thirty) days, by the President of
the Court of Arbitration of the International Chamber of Commerce in Paris. At
least two of the arbitrators shall be familiar with the commercial and
manufacturing practices of the sensor industry.

         The arbitration shall take place in New York, New York, USA. The
arbitration award shall be final, binding on the parties, not subject to any
appeal, and shall deal with the question of costs of arbitration and all matters
related thereto. The arbitration award shall be written in

<PAGE>

English. Judgment upon the award rendered may be entered into any court
having jurisdiction, or application may be made to such court for a judicial
recognition of the award or an order of enforcement thereof, as the case may
be.

         Licensor represents that an arbitration award rendered pursuant to this
Section with respect to any dispute or difference arising out of or relating to
this Agreement is enforceable under the laws of the State of California USA.
Licensee represents that an . arbitration award rendered pursuant to this
Section is enforceable under the laws of Luxembourg.

         11.14 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original and which together shall constitute
one and the same Agreement.

         IN WITNESS WHEREOF, the parties have caused this Exclusive License and
Distributor Agreement as amended and restated to be executed by their
undersigned duly authorized representatives as of the date set forth above.

INTERLINK ELECTRONICS                       INTERLINK ELECTRONICS
                                            EUROPE S.a r.l.

By                                          By
    --------------------------------            --------------------------------

                                                      Pierre Thein
    --------------------------------            --------------------------------
     Printed or Typed Name                         Printed or typed Name

                                                  Director
    --------------------------------            --------------------------------
    Title                                          Title

                                            By
                                                --------------------------------

                                                  George Bollig
                                                -------------------------------
                                                         Printed or Typed Name

                                                     Director
                                                --------------------------------
                                                   Title