EMPLOYMENT AGREEMENT

     This Employment  Agreement  ("Agreement")  is effective as of April 1,
1996  between  Interlink  Electronics  ("Employer")  and  William  A. Yates
("Executive").

                                  Recitals

     A.  Executive is and has been  employed by Employer as its Senior Vice
President of Sales and Marketing.  Through such experience, he has acquired
background  in and  knowledge  of  Employer's  business and the industry in
which it is engaged.

     B.  Employer  desires  assurance  of  the  continued  association  and
services of Executive in order to retain his experience, skills, abilities,
background,  and knowledge, and is therefore willing to engage his services
on the terms and conditions set forth below.

     C.  Executive  desires to continue  in the employ of  Employer  and is
willing to do so on those terms and conditions.

     NOW,  THEREFORE,  in  consideration  of the above  recitals and of the
mutual promises and conditions in this Agreement, it is agreed as follows:

                                 Agreement

     1. Executive's  Duties and Authority.  Employer shall employ Executive
as Senior Vice President, Sales and Marketing.

     2.  Reasonable  Time  and  Effort  Required.  During  his  employment,
Executive shall devote such time,  interest,  and effort to the performance
of this Agreement as may be fairly and reasonably necessary.

     3.  Covenant  Not  to  Compete  During  Employment  Term.  During  the
employment term, Executive shall not, directly or indirectly,  whether as a
partner, owner, employee,  creditor,  shareholder,  or otherwise,  promote,
participate,  or engage  directly or  indirectly  in any  activity or other
business competitive with Employer's business.

     4.  Nonsolicitation of Customers.  In order to protect Employees trade
secrets  and  confidential   information   following  termination  of  this
Agreement,  Executive agrees not to directly or indirectly solicit,  divert
for any  reason  or take  away any  customers,  business  or  patronage  of
Employer by using,  disclosing or communicating  directly or indirectly any
of Employer's trade secrets and confidential information, as described more
fully in Section 13 of this Agreement.


                                Page 1 of 6

<PAGE>


     5. Term of Employment.  Subject to earlier  termination as provided in
this  Agreement,  Executive  shall  be  employed  for a term  of two  years
beginning on April 1, 1996.

     6. Executive's Compensation.

          6.1.  Salary.  Employer  shall pay a Basic Salary to Executive at
the rate of $115,560 per year, payable in equal semi-monthly  installments.
The Basic Salary payable to Executive  under this section may be subject to
increase by an annual  inflation  adjustment  as determined by the Board of
Directors.

          6.2.  Incentive  Compensation.  In addition  to the Basic  Salary
provided  for  above,   Executive  shall  be  entitled  to  participate  in
Employer's management incentive  compensation program as set out in Exhibit
A hereto.

          6.3. Stock Options. Executive shall be eligible to participate in
the 1988 Stock Option Plan and the 1993 Stock Incentive Plan, in accordance
with the  provisions  of those  Plans,  and any  awards  currently  held by
Executive  under either or both of such Plans shall  continue in full force
and effect.

          6.4.  Benefits.  During the employment  term,  Executive shall be
entitled to receive all other benefits of employment generally available to
Employer's other executive and managerial  employees when and as he becomes
eligible for them,  including group health and life insurance  benefits and
an annual vacation of four weeks.

     7. Expenses.  During the  employment  term,  Employer shall  reimburse
Executive for reasonable out-of-pocket expenses incurred in connection with
Employer's business,  including,  travel expenses, food, lodging while away
from home,  telephone expenses,  and automobile  expenses,  subject to such
policies as Employer  may from time to time  reasonably  establish  for its
employees.  Executive  shall submit  written proof of any expense for which
reimbursement is claimed as Employer may require.

     8. Indemnification by Employer.  Employer shall, to the maximum extent
permitted by law,  indemnify and hold Executive  harmless against expenses,
including reasonable  attorney's fees judgments,  fines,  settlements,  and
other  amounts  actually and  reasonably  incurred in  connection  with any
proceeding  arising  by  reason  of  Executive's  employment  by  Employer.
Employer  shall advance to Executive any expense  incurred in defending any
such proceeding to the maximum extent permitted by law.

     9. Termination.

          9.1.  Involuntary   Termination.   Employer  may  terminate  this
Agreement for any reason on nine months' written notice.


                                Page 2 of 6

<PAGE>

          9.2. Termination for Cause. Employer may terminate this Agreement
at any time if Executive fails to perform his  responsibilities  under this
Agreement  in any material  respect and does not cure such  failure  within
thirty (30) days after  receipt of written  notice  thereof,  breaches  any
provision of this  Agreement,  commits any material act of  dishonesty,  is
convicted of or pleads nolo contendere to a crime,  discloses  confidential
information,  engages in the use, possession, purchase, sale or transfer of
any  drug  that is not  legally  obtainable,  or any drug  that is  legally
obtainable  but has been obtained  illegally,  or is under the influence of
alcohol at any time while on Employer's business or premises,  is guilty of
gross  carelessness  or misconduct,  or  unjustifiably  neglects his duties
under this  Agreement,  or acts in any way that has a direct,  substantial,
and adverse effect on Employer's business or reputation.

          Executive  may terminate  this  Agreement at any time if Employer
materially  breaches  this  Agreement  and fails to cure such breach within
thirty (30) days after receipt of written notice thereof.

          9.3.  Termination  on  Resignation.  Executive may terminate this
Agreement by giving Employer three months' written notice of resignation.

          9.4.   Termination  on  Retirement.   This  Agreement   shall  be
terminated by Executive's voluntary  retirement,  which retirement shall be
effective  on the last day of any  fiscal  year,  provided  that day occurs
after Executive's 60th birthday,  and provided three months,  prior written
notice of the retirement shall have been given by Executive to Employer.

          9.5.  Termination on Disability or Death.  If Executive is unable
due to mental or  physical  illness  or injury  to  perform  the  essential
functions of his job with or without reasonable  accommodations  under this
Agreement, this Agreement shall be then terminated. Also, if Executive dies
during the initial term or during any renewal term of this Agreement,  this
Agreement shall be terminated.

     10.   Disability   Insurance.   Employer  shall  obtain  and  maintain
disability  insurance covering  Executive,  to the extent such insurance is
available at reasonable cost, during the term of this Agreement.

     11.  Agreement  Survives  Employees  Combination or Dissolution.  This
Agreement  shall not be terminated by Employer's  voluntary or  involuntary
dissolution  or by any merger in which  Employer  is not the  surviving  or
resulting  corporation,  or on any transfer of all or substantially  all of
Employer's  assets.  In the event of any such merger or transfer of assets,
the  provisions  of this  Agreement  shall be  binding  on and inure to the
benefit of the surviving  business  entity or the business  entity to which
such assets shall be transferred.

     12. Rights and Obligations  After Notice of Termination.  If Executive
gives notice of termination  of this Agreement  under Section 9.3, or if it
becomes known that Executive's employment will otherwise terminate,  during
the three-month period prior to the termination date,  Employer may, in its
sole discretion and subject to its other obligations under this Agreement,

                                Page 3 of 6

<PAGE>



relieve  Executive of his duties under this Agreement and assign  Executive
other  reasonable  duties and  responsibilities  to be performed  until the
termination becomes effective.

     13.   Disclosure  of   Confidential   Information  and  Trade  Secrets
Prohibited. Executive acknowledges that in the course of his employment, he
will have access to confidential  information and trade secrets relating to
Employer's business. Confidential information and trade secrets include but
are not limited to inventions, processes, designs, improvements,  programs,
specifications,  techniques,  data  relating to creation,  manufacture  and
marketing  of any  product or product  concept,  customer  and  prospective
customer  names and addresses,  sales records,  vendor names and addresses,
financial  data,  information  provided by third  parties that  Employer is
required to keep  confidential,  and any other  proprietary  information of
Employer.  Except as required in the course of his  employment by Employer,
Executive will not, without Employer's prior written consent, either during
his  employment  by  Employer  or  after  termination  of that  employment,
directly  or  indirectly   disclose  to  any  person  or  entity  any  such
confidential  information or trade secrets, except that marketing and sales
information,  such as customer  names and  addresses,  will not  constitute
confidential  information and trade secrets five years after termination of
Executive's employment.  Executive agrees to exercise the highest degree of
care in  safeguarding  confidential  information  and trade secrets against
loss,  theft or  inadvertent  disclosure  and to comply with all Employer's
policies and procedures  related to protection of confidential  information
and trade secrets.

     14. Ownership of Inventions and Improvements.

          14.1 Employer  Ownership.  Executive  agrees that all inventions,
discoveries,  improvements,  trade secrets, formulae, techniques, processes
and  know-how,  whether or not  patentable,  and  whether or not reduced to
practice,  that are conceived or developed during Executive's employment by
Employer,  either alone or jointly with others,  shall be owned exclusively
by Employer,  and  Executive  hereby  assigns to Employer  all  Executive's
right, title and interest in all such intellectual  property, and Executive
agrees that  Employer  shall be the sole owner of all  domestic and foreign
patents or other rights pertaining  thereto,  and further agrees to execute
all  documents  that  Employer  reasonably  determines  to be  necessary or
convenient for use in applying for, prosecuting,  perfecting,  or enforcing
patents  or  other   intellectual   property  rights,   including   without
limitations the execution of any assignments, patent applications, or other
documents that may be requested by Employer.  This provision is intended to
apply only to the extent permitted by applicable law.

          14.2 Statutory  Limitation on Assignment.  Executive  understands
that  Employer is hereby  advising  Executive  that any  provision  in this
Agreement  requiring  Executive to assign rights in any invention  does not
apply to an invention which qualifies fully under the provisions of Section
2870 of the California Labor Code. That section provides as follows:

          "(a) Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign,  any of his or her rights in-
an invention to his or her employer shall

                                Page 4 of 6


<PAGE>



not apply to an invention that an employee developed entirely on his or her
own time without using the employer's equipment,  supplies,  facilities, or
trade secret information, except for those inventions that either:

          "(1) Relate at the time of conception or reduction to practice of
the  invention  to the  employer's  business,  or  actual  or  demonstrably
anticipated research or development of the employer; or

          "(2)  Result  from any work  performed  by the  employee  for the
employer.

          "(b)  To  the  extent  a  provision  in an  employment  agreement
purports to require an employee to assign an invention  otherwise  excluded
from being required to be assigned under  subdivision (a), the provision is
against the public policy of this state and is unenforceable."

By signing this Agreement, Executive acknowledges that this paragraph shall
constitute written notice of the provisions of Section 2870.

     15. Integration.  This Agreement contains the entire Agreement between
the  parties  and  supersedes  all  prior  oral  and  written   agreements,
understandings,  commitments,  and practices between the parties, including
all  prior  employment  agreements,  whether  or  not  fully  performed  by
Executive  before  the  date  of  this  Agreement.  No  amendments  to this
Agreement may be made except by a writing signed by both parties.

     16.  Choice  of Law  and  Forum.  The  construction,  performance  and
enforcement  of this  Agreement  shall be construed in accordance  with the
laws of  California.  Any proceeding to interpret or enforce this Agreement
shall be conducted in Ventura County, California.

     17. Notices.  Any notice to Employer  required or permitted under this
Agreement shall be given in writing to Employer, either by personal service
or by  registered  or certified  mail,  postage  prepaid,  addressed to the
president of Employer at its then  principal  place of  business.  Any such
notice to Executive  shall be given in a like manner and, if mailed,  shall
be addressed  to  Executive  at his home  address then shown in  Employer's
files.  For the purpose of  determining  compliance  with any time limit in
this Agreement, a notice shall be deemed to have been duly given (a) on the
date of service,  if served personally on the party to whom notice is to be
given,  or (b) on the second  business day after mailing,  if mailed to the
party to whom the  notice  is to be given in the  manner  provided  in this
section.

     18.  Severability.  If any provision of this Agreement is held invalid
or unenforceable, the remainder of this Agreement shall nevertheless remain
in full force and effect. If any provision is held invalid or unenforceable
with respect to particular  circumstances,  it shall nevertheless remain in
full force and effect in all other circumstances.

     19. Arbitration. Any claim or controversy arising out of or-related to
this Agreement shall be determined by final, binding arbitration in Ventura
County,  California  pursuant  to the  expedited  commercial  rules  of the
American Arbitration  Association,  or as Employer and Executive may agree.
The costs of the arbitration shall be borne initially one- half by Employer

                                Page 5 of 6


<PAGE>


and one-half by  Executive.  The  arbitrator is authorized to determine the
prevailing party and to award the prevailing  party  reasonable  attorneys'
fees and reimbursement  for all other costs of arbitration  incurred by the
prevailing party

INTERLINK ELECTRONICS


By:  E. MICHAEL THOBEN, III
   -------------------------------

Title: President/CEO/Chairman
      ----------------------------
(Employer)


WILLIAM A. YATES
----------------------------------
William A. Yates
(Executive)

                                Page 6 of 6