<PAGE>
                                                                  Exhibit 10.1

   Portions omitted pursuant to request for confidential treatment and filed
        separately with the Commission are designated herein by ***.


                                           September 1, 2000

Interlink Electronics, Inc.
546 Flynn Road
Camarillo, CA  93012

Dear Sir:

         This letter is to confirm that Wells Fargo Bank, National Association
("Bank"), subject to all terms and conditions contained herein, has agreed to
make available to Interlink Electronics, Inc, ("Borrower") the following
described credit accommodations (each, a "Credit" and collectively, the
"Credits"):

         1. A revolving line of credit under which Bank will make advances to
Borrower from time to time up to and including June 1, 2002, not to exceed at
any time the maximum principal amount of Five Million Dollars ($5,000,000.00)
("Line of Credit"), the proceeds of which shall be used to finance Borrower's
working capital requirements. Although this letter permits Borrower to engage in
Permitted Acquisitions (as defined below), the proceeds of advances under the
Line of Credit shall not be used to finance such acquisitions.

         2. A non-revolving commitment under which Bank will make advances to
Borrower from time to time up to and including June 1, 2001, not to exceed the
aggregate principal amount of One Million Dollars ($1,000,000.00) ("Loan
Commitment"), the proceeds of which shall be used to finance Borrower's purchase
of new and/or used equipment.

I.       CREDIT TERMS:

         1.       LINE OF CREDIT:

         (a) LINE OF CREDIT NOTE. Borrower's obligation to repay advances under
the Line of Credit shall be evidenced by a promissory note substantially in the
form of Exhibit A attached hereto ("Line of Credit Note"), all terms of which
are incorporated herein by this reference.

         (b) LETTER OF CREDIT SUBFEATURE. As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof to issue standby
and/or sight commercial letters of credit for the account of Borrower to finance
the purchase of raw materials (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided however, that the form and substance of each
Letter of Credit shall be subject to approval by Bank, in its sole discretion;
and provided further, that the aggregate undrawn amount of all outstanding
Letters of Credit shall not at any time exceed Two Million Dollars
($2,000,000.00). Each Letter of Credit shall be issued for a term not to exceed
one hundred twenty (120) days, as designated by Borrower; provided however, that
no Letter of Credit shall have an expiration date subsequent to the maturity
date of the Line of Credit. The undrawn amount of all Letters of Credit shall be


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Interlink Electronics, Inc.
September 1, 2000
Page 2

reserved under the Line of Credit and shall not be available for borrowings
thereunder. Each Letter of Credit, shall be subject to the additional terms and
conditions of the Letter of Credit Agreement and related documents, if any,
required by Bank in connection with the issuance thereof. Each draft paid by
Bank under a Letter of Credit shall be deemed an advance under the Line of
Credit and shall be repaid by Borrower in accordance with the terms and
conditions of this letter applicable to such advances; provided however, that if
advances under the Line of Credit are not available, for any reason, at the time
any draft is paid by Bank, then Borrower shall immediately pay to Bank the full
amount of such draft, together with interest thereon from the date such amount
is paid by Bank to the date such amount is fully repaid by Borrower, at the rate
of interest applicable to advances under the Line of Credit. In such event
Borrower agrees that Bank, in its sole discretion, may debit any demand deposit
account maintained by Borrower with Bank for the amount of any such draft.

         (c) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. Notwithstanding the foregoing, Borrower shall maintain a zero balance on
advances under the Line of Credit for a period of at least thirty (30)
consecutive days during Line fiscal year.

         2.  LOAN COMMITMENT:

         (a) LOAN COMMITMENT NOTE. Borrower's obligation to repay advances under
the Loan Commitment shall be evidenced by a promissory note substantially in the
form of Exhibit B attached hereto ("Loan Commitment Note"), all terms of which
are incorporated herein by this reference.

         (b) LIMITATION ON BORROWINGS. Each advance under the Loan Commitment
shall be available to a maximum of ninety percent (90%) of the cost of each item
of new equipment purchased and eighty percent (80%) of the cost of each item of
used equipment purchased with the proceeds there of, as evidenced by the
seller's invoice.

         (c) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of the Loan Commitment borrow and partially or wholly repay its outstanding
borrowings, provided that amounts repaid may not be reborrowed, subject to all
the limitations, terms and conditions contained herein; provided however, that
the total outstanding borrowings under the Loan Commitment shall not exceed the
maximum principal amount available thereunder, as set forth above. The
outstanding principal balance of the Loan Commitment shall be due and payable in
full on June 1, 2001.
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Interlink Electronics, Inc.
September 1, 2000
Page 3
         (d) PREPAYMENT. Borrower may prepay principal on the Loan Commitment
solely in accordance with the provisions of the Loan Commitment Note.

         3.  COLLATERAL:

         As security for all indebtedness of Borrower to Bank subject hereto,
Borrower hereby grants to Bank security interests of first priority in all
Borrower's accounts receivable and other rights to payment, general intangibles,
deposit accounts, documents, instruments, inventory and equipment, including but
not limited to its interest in any Subsidiary (as defined below).

           All of the foregoing shall be evidenced by and subject to the terms
of such security agreements, financing statements, deeds of trust and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for
all costs and expenses incurred by Bank in connection with any of the foregoing
security, including without limitation, filing and recording fees and costs of
appraisals, audits and title insurance.

II.      INTEREST/FEES:

         1. INTEREST. The outstanding principal balances of the Line of Credit
and Loan Commitment shall bear interest at the rate of interest set forth in the
Line of Credit Note and Loan Commitment Note.

         2. COMPUTATION AND PAYMENT. Interest shall be computed on the basis
of a 360-day year, actual days elapsed. Interest shall be payable at the times
and place set forth in the Line of Credit Note and Term Note (collectively, "the
Notes").

         3. UNUSED COMMITMENT FEE. Borrower shall pay to Bank a fee equal to
one-quarter percent (0.25%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the Line of Credit,
which fee shall be calculated on a quarterly basis by Bank and shall be due and
payable by Borrower in arrears an each March 31, June 30, September 30 and
December 31.

         5. LETTER OF CREDIT FEES. Borrower shall pay to Bank fees upon the
issuance of each Letter of Credit, upon the payment or negotiation by Bank of
each draft under any Letter of Credit and upon the occurrence of any other
activity with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.

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Interlink Electronics, Inc.
September 1, 2000
Page 4
         6. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
interest and fees each Credit by charging Borrower's demand deposit account
number 4796-018083 with Bank, or any other demand deposit account maintained by
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such demand deposit account to pay all such sums when due, the full
amount of such deficiency shall be immediately due and payable by Borrower.

III.     REPRESENTATIONS AND WARRANTIES:

         Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this letter
and shall continue in full force and effect until the full and final payment,
and satisfaction and discharge, of all obligations of Borrower to Bank subject
to this letter.

         1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the state of California, and is
qualified or licensed to do business in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower. Borrower
owns eighty percent (80%) of the stock of Interlink Electronics, K.K., a
Japanese company (the "Existing Japanese Subsidiary"). As used herein, the term
"Subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interests having ordinary voting
power for the election of directors or other persons performing similar
functions are owned directly or indirectly by Borrower and/or by one or more of
Borrower's Subsidiaries. As used herein, the term "Subsidiaries" shall mean each
Subsidiary. As of the date of this Agreement the only Subsidiary of Borrower is
the Existing Japanese Subsidiary. Each Subsidiary is duly organized and existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, as the case may be, and is qualified or licensed to do business (and
is in good standing as a foreign corporation, if applicable) in all
jurisdictions in which such qualification or licensing is required or in which
the failure to so qualify or to be so licensed could have a material adverse
effect on it.

          2. AUTHORIZATION AND VALIDITY. This letter, the Notes, and each
other document, contract or instrument deemed necessary by Bank to evidence any
extension of credit to Borrower pursuant to the terms and conditions hereof, or
now or at any time hereafter required by or delivered to Bank in connection with
this letter (collectively, the "Loan Documents") have been duly authorized, and
upon their execution and delivery in accordance with the provisions hereof will
constitute legal, valid and binding agreements and obligations of Borrower or
the party which executes the same, enforceable in accordance with their
respective terms.

          3. NO VIOLATION. The execution, delivery and performance by Borrower
of each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any


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Interlink Electronics, Inc.
September 1, 2000
Page 5

provision of the Articles of Incorporation or By-Laws of Borrower, or result in
a breach of or constitute a default under any contract, obligation, indenture or
other instrument to which Borrower is a party or by which Borrower may be bound.

          4. LITIGATION. There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower or any Subsidiary other than those disclosed by Borrower
to Bank in writing prior to the date hereof.

          5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of
Borrower dated March 31, 2000, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) is complete and correct and
presents fairly the financial condition of Borrower and its Subsidiary, (b)
discloses all liabilities of Borrower and its Subsidiary that are required to be
reflected or reserved against under generally accepted accounting principles,
whether liquidated or unliquidated, fixed or contingent, and (c) has been
prepared in accordance with generally accepted accounting principles
consistently applied. Since the date of such financial statement there has been
no material adverse change in the condition or operation of Borrower or its
Subsidiary, nor has Borrower or the its subsidiary mortgaged, pledged, granted a
security interest in or otherwise encumbered any of their assets or properties
except in favor of Bank or as otherwise permitted by Bank in writing or under
this letter.

          6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its or any Subsidiary's income tax payable with
respect to any year.

          7. NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this letter to any other obligation of Borrower.

          8. PERMITS, FRANCHISES. Borrower and each Subsidiary possess, and
will hereafter possess, all permits, consents, approvals, franchises and
licenses required and all rights to trademarks, trade names, patents and
fictitious names, if any, necessary to enable them to conduct the businesses in
which they are now engaged in compliance with applicable law.

          9. ERISA. Borrower and each Subsidiary are in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended or recodified from time to time
("ERISA"); neither Borrower nor any Subsidiary have not violated any provision
of any defined employee pension benefit plan (as defined in ERISA) maintained or
contributed to by Borrower or any Subsidiary (each, a "Plan"); no Reportable
Event, as defined in ERISA, has occurred and is continuing with respect to any
Plan initiated by Borrower; Borrower has met its minimum funding

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Interlink Electronics, Inc.
September 1, 2000
Page 6
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.

         10. OTHER OBLIGATIONS. Neither Borrower nor any Subsidiary is in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.

         11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower and each Subsidiary are in compliance
in all material respects with all applicable federal or state environmental,
hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of Borrower's or any
Subsidiary's operations and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
Act, as any of the same may be amended, modified or supplemented from time to
time. None of the operations of Borrower or any Subsidiary is the subject of any
federal or state investigation evaluating whether any remedial action involving
a material expenditure is needed to respond to a release of any toxic or
hazardous waste or substance into the environment. Neither borrower nor any
Subsidiary has any material contingent liability in connection with any release
of any toxic or hazardous waste or substance into the environment.

IV.      CONDITIONS:

         1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank
to grant any of the Credits is subject to fulfillment to Bank's satisfaction of
all of the following conditions:

         (a) DOCUMENTATION. Bank shall have received each of the Loan
Documents, duly executed and in form and substance satisfactory to Bank.

         (c) FINANCIAL CONDITION. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower or any Subsidiary, nor any material decline, as determined by Bank, in
the market value of any collateral required hereunder or a substantial or
material portion of the assets of Borrower or any Subsidiary.

         (d) INSURANCE. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's and each Subsidiary's property, in form,
substance, amounts, covering risks and issued by companies satisfactory to Bank,
and where required by Bank, with loss payable endorsements in favor of Bank.

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Interlink Electronics, Inc.
September 1, 2000
Page 7

         2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to
make each extension of credit requested by Borrower hereunder shall be subject
to the fulfillment to Bank's satisfaction of each of the following conditions:

         (a) COMPLIANCE. The representations and warranties contained herein
and in each of the other Loan Documents shall be true on and as of the date of
the signing of this letter and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
default hereunder, and no condition, event or act which with the giving of
notice or the passage of time or both would constitute such a default, shall
have occurred and be continuing or shall exist.

         (b) DOCUMENTATION. Bank shall have received all additional documents
which may be required in connection with such extension of credit.

V.       COVENANTS:

         Borrower covenants that so long Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

         1. PUNCTUAL PAYMENT. Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein, and immediately upon demand by Bank, the amount
by which the outstanding principal balance of any of the Credits at any time
exceeds any limitation on borrowings applicable thereto.

         2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representation of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same and inspect the
properties of Borrower and any Subsidiary.

         3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form
and detail satisfactory to Bank:

         (a) not later than 120 days after and as of the end of each fiscal
year, a 10K report filed with the Securities Exchange Commission of Borrower,
prepared by an independent certified public accountant acceptable to Bank, to
include balance sheet, income statement, statement of cash flows, management
report, auditor's report, schedules of consolidations and all supporting
schedules and footnotes;

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Interlink Electronics, Inc.
September 1, 2000
Page 8
         (b) not later than 90 days after and as of the end of each fiscal
quarter, a 10K report filed with the Securities Exchange Commission of Borrower,
prepared by an independent certified public accountant acceptable to Bank, to
include balance sheet, income statement, statement of cash flows, management
report, auditor's report, schedules of consolidations and all supporting
schedules and footnotes; and

         (c) from time to time such other information as Bank may reasonably
request pertaining to Borrower and/or any Subsidiary.

         4. COMPLIANCE. Preserve and maintain, and cause each Subsidiary to
preserve and maintain, all licenses, permits, governmental approvals, rights,
privileges and franchises necessary for the conduct of each of their businesses
and comply with the provisions of all documents pursuant to which each of them
is organized and/or which govern their continued existence and with the
requirements of all laws, rules, regulations and orders of a governmental agency
applicable to each of them and/or each of their businesses.

         5. INSURANCE. Maintain and keep in force, and cause each Subsidiary to
maintain and keep in force, insurance of the types and in amounts customarily
carried in similar lines of business, including but not limited to fire,
extended coverage, public liability, flood, property damage and workers'
compensation, with all such insurance carried with companies and in amounts
satisfactory to Bank, and deliver to Bank from time to time at Bank's request
schedules setting forth all insurance then in effect.

        6. FACILITIES. Keep all properties useful or necessary to Borrower's
and each Subsidiary's business in good repair and condition, and from time to
time make necessary repairs, renewals and replacements thereto so that such
properties shall be fully and efficiently preserved and maintained.

        7. TAXES AND OTHER LIABILITIES. Pay and discharge when due, and cause
each Subsidiary to pay and discharge when due, any and all indebtedness,
obligations, assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local property taxes and
assessments, except (a) such as they may in good faith contest or as to which a
bona fide dispute may arise, and (b) for which Borrower has made provision, to
Bank's satisfaction, for eventual payment thereof in the event Borrower or any
Subsidiary is obligated to make such payment.

        8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or any Subsidiary with a claim
in excess of $100,000.00.

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Interlink Electronics, Inc.
September 1, 2000
Page 9
        9. FINANCIAL CONDITION. Maintain Borrower's financial condition on a
consolidated basis as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein):

       (a) Tangible Net Worth not less than $18,750,000.00, determined as of
each fiscal quarter end, increasing as of each fiscal quarter end (commencing
with FQE 9/30/00) on a cumulative basis by the sum of 85% of Borrower's net
income (with no deduction for losses) and 100% of net proceeds of issuance of
stock during each such fiscal quarter, with "Tangible Net Worth" defined as the
aggregate of total stockholders' equity plus subordinated debt less any
intangible assets.

       (b) Total Liabilities divided by Tangible Net Worth not greater than
0.75 to 1.0, determined as of each fiscal quarter end, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current liabilities less
subordinated debt, and with "Tangible Net Worth" as defined above.

       (c) Quick Ratio not less than 2.0 to 1.0, determined as of each fiscal
quarter end, with "Quick Ratio" defined as the aggregate of unrestricted cash,
unrestricted marketable securities and receivables convertible into cash divided
by total current liabilities.

       (d) Net Income after taxes not less than $25,000.00 on an annual basis,
determined as of each fiscal year end; and no two (2) consecutive quarterly
losses.

       (e) EBITDA Coverage Ratio not less than 3.0 to 1.0 as of each fiscal
year end, with "EBITDA" defined as net profit before tax plus interest expense
(net of capitalized interest expense), depreciation expense and amortization
expense, and with "EBITDA Coverage Ratio" defined as EBITDA divided by the
aggregate of total interest expense plus the prior period current maturity of
long-term debt and the prior period current maturity of subordinated debt.

      10. CAPITAL EXPENDITURES. Not make any additional investment in fixed
assets in any fiscal year in excess of an aggregate of $1,500,000.00.

      11. LEASE EXPENDITURES.  Not incur operating lease expense in any fiscal
year in excess of an aggregate of $500,000.00.

      12. OTHER INDEBTEDNESS. Not create, incur, assume or permit to exist, nor
permit any Subsidiary to create, incur, assume or permit to exist, any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except for (a) the liabilities of Borrower and any Subsidiary
to Bank, (b) any other liabilities of Borrower and any Subsidiary existing as
of, and disclosed by Borrower to Bank prior to, the date hereof, (c) borrowings
hereafter by any Subsidiary from Borrower so long as outstanding borrowings by
Subsidiaries

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Interlink Electronics, Inc.
September 1, 2000
Page 10

from Borrower, whether such borrowings presently exist or arise hereafter, at no
time exceed $500,000.00 in the aggregate for all Subsidiaries combined, (d)
borrowings hereafter by Borrower or any Subsidiary from any lender other than
Bank or Borrower, including but not limited to purchase money borrowings, so
long as such outstanding borrowings which arise hereafter at no time exceed
$2,000,000.00 in the aggregate for Borrower and Subsidiaries combined.

      13. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Not merge into or
consolidate with any other entity, nor permit any Subsidiary to merge into or
consolidate with any other entity, except for the merger of any wholly-owned
Subsidiary of Borrower into Borrower (with Borrower as the survivor), the merger
of any wholly-owned Subsidiary of Borrower into any other wholly-owned
Subsidiary of Borrower, or the merger of any corporation into Borrower (with
Borrower as the survivor) or into any wholly-owned Subsidiary of Borrower (with
such Subsidiary as the survivor) as part of a Permitted Acquisition (as defined
below); nor make, nor permit any Subsidiary to make, any substantial change in
the nature of Borrower's or any Subsidiary's business as conducted as of the
date hereof; nor acquire, nor permit any Subsidiary to acquire, all or
substantially all of the assets of any other entity except for mergers which are
permitted hereunder and Permitted Acquisitions; nor sell, lease, transfer or
otherwise dispose of, nor permit any Subsidiary to sell, lease, transfer or
otherwise dispose of, all or a substantial or material portion of Borrower's or
any Subsidiary's assets except in the ordinary course of business.

         As used herein, "Permitted Acquisitions" means any acquisition by
Borrower or any wholly-owned Subsidiary of Borrower of (a) all or substantially
all of the operating assets of any person or entity, or (b) all or substantially
all of the stock of any corporation; provided, however, that all of the
following conditions are satisfied:

         (i) The assets, entity or line of business which is acquired is in a
substantially similar line of business as that of Borrower or any of its
Subsidiaries as their businesses are conducted on the date of this Agreement.

        (ii) The acquisition is consummated in compliance with applicable law.

       (iii) There is no Event of Default, nor any act, condition or event
which with the giving of notice or the passage of time or both would constitute
an Event of Default, and no such Event of Default or potential Event of Default
would result after giving effect to the acquisition.

        (iv) Borrower gives Bank with at least sixty (60) days prior notice of
the acquisition;


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Interlink Electronics, Inc.
September 1, 2000
Page 11

         (v) Borrower furnishes Bank with copies of such documents and with such
information pertaining to the acquisition as Bank may require, including without
limitation copies of any acquisition agreement and formation documents of any
acquired company.

         14. GUARANTIES. Not guarantee or become liable, nor permit any
Subsidiary to guarantee or become liable, in any way as surety, endorser (other
than as endorser of negotiable instruments for deposit or collection in the
ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate, nor permit any Subsidiary to pledge or hypothecate, any
assets as security for, any liabilities or obligations of any other person or
entity, except for (a) any of the foregoing in favor of Bank, and (b) any of the
foregoing existing as of, and disclosed by Borrower to Bank prior to, the date
hereof..

         15. LOANS, ADVANCES, INVESTMENTS. Not make any loans or advances to or
investments in any person or entity, except for (a) any of the foregoing
existing as of, and disclosed by Borrower to Bank prior to, the date hereof, (b)
loans hereafter by Borrower to any Subsidiary so long as outstanding loans by
Borrower to Subsidiaries, whether such loans presently exist or arise hereafter,
at no time exceed $500,000.00 in the aggregate for all Subsidiaries combined,
(c) investments by Borrower hereafter in cash and cash equivalents, and (d)
Permitted Acquisitions.

         16. DIVIDENDS, DISTRIBUTIONS. Not declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or hereafter outstanding.

         17. PLEDGE OF ASSETS. Not mortgage, pledge, grant or permit to exist,
nor permit any Subsidiary to mortgage, pledge, grant or permit to exist, a
security interest in, or lien upon, all or any portion of Borrower's or any
Subsidiary's assets now owned or hereafter acquired, except for (a) any of the
foregoing in favor of Bank, (b) any of the foregoing which are existing as of,
and disclosed to Bank in writing prior to, the date hereof, (b) purchase money
security interests in equipment which are granted hereafter to secure purchase
money borrowings from lenders other than Bank or Borrower so long as such
borrowings are permitted under (and within the limits of) paragraph 12 above,
(c) security interests granted hereafter by the Existing Japanese Subsidiary in
its assets to secure its borrowings from lenders other than Bank so long as such
borrowings are permitted under (and within the limits of) paragraph 12 above.


VI.      DEFAULT, REMEDIES:

         1. DEFAULT, REMEDIES. Upon the violation of any term or condition of
any of the Loan Documents, or upon the occurrence of any default or defined
event of default under any

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Interlink Electronics, Inc.
September 1, 2000
Page 12

of the loan Documents: (a) all indebtedness of Borrower under each of the Loan
Documents, any term thereof to the contrary notwithstanding, shall at Bank's
option and without notice become immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are expressly
waived by Borrower, (b) the obligation, if any, of Bank to extend any further
credit under any of the Loan Documents shall immediately cease and terminate;
and (c) Bank shall have all rights, powers and remedies available under each of
the Loan Documents, or accorded by law, including without limitation the right
to resort to any or all security for any of the Credits and to exercise any or
all of the rights of a beneficiary or secured party pursuant to applicable law.
All rights, powers and remedies of Bank may be exercised at any time by Bank and
from time to time after the occurrence of any such breach or default, are
cumulative and not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity.

         2. NO WAIVER. No delay, failure or discontinuance of Bank in exercising
any right, power or remedy under any of the Loan Documents shall affect or
operate as a waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude, waive or otherwise
affect any other or further exercise thereof or the exercise of any other right,
power or remedy. Any waiver, permit, consent or approval of any kind by Bank of
any breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.

         3. ADDITIONAL EVENTS OF DEFAULT. In addition to such "Events of
Default" as are defined in the Notes, the occurrence of any of the following
shall also constitute an "Event of Default" under the Notes:

         (a) The filing of a petition by or against any Subsidiary under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Subsidiary; any Subsidiary becomes
insolvent, makes a general assignment for the benefit of creditors or is
generally not paying its debts as they become due.

         (b) The dissolution or liquidation of any Subsidiary.

         (c) Any default in the payment or performance of any obligation, or
any defined event of default, under any provisions of any contract, instrument
or document pursuant to which any Subsidiary has incurred any obligation for
borrowed money, any purchase obligation, or any other liability of any kind to
any person or entity, including Bank.

         (d) Any financial statement provided by any Subsidiary to Bank proves
to be incorrect, false or misleading in any material respect.


<PAGE>


Interlink Electronics, Inc.
September 1, 2000
Page 13

         (e) Any sale or transfer of all or a substantial or material part of
the assets of any Subsidiary other than in the ordinary course of its business.

VII.     MISCELLANEOUS:

         1. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
letter must be in writing delivered to each party at its address first set forth
above, or to such other address as any party may designate by written notice to
all other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

         2. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
letter and the other Loan Documents, Bank's continued administration hereof and
thereof, and the preparation of amendments and waivers hereto and thereto, (b)
the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to any Borrower
or any other person or entity.

         3. SUCCESSORS, ASSIGNMENT. This letter shall be binding upon and inure
to the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interest hereunder without Bank's prior written consent.
Bank reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Bank's rights and
benefits under each of the Loan Documents. In connection therewith Bank may
disclose all documents and information which Bank now has or hereafter may
acquire relating to any of the Credits, Borrower or its business, or any
collateral required hereunder.

         4. ENTIRE AGREEMENT; AMENDMENT. This letter and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to the Credits and supersede all prior negotiations, communications, discussions
and correspondence concerning the subject matter hereof. This letter may be
amended or modified only in writing signed by each party hereto.

<PAGE>


Interlink Electronics, Inc.
September 1, 2000
Page 14
         5. NO THIRD PARTY BENEFICIARIES. This letter is made and entered into
for the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is
not a party.

         6. SEVERABILITY OF PROVISIONS. If any provision of this letter shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
letter.

         7. GOVERNING LAW. This letter shall be governed by and construed in
accordance with the laws of the State of California.

         8. ARBITRATION.

         (a) ARBITRATION. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this letter. A "Dispute" shall mean any action, dispute, claim
or controversy of any kind, whether in contract or tort, statutory or common
law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.

         (b) GOVERNING RULES. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court having

<PAGE>


Interlink Electronics, Inc.
September 1, 2000
Page 15

jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. ss.91 or any similar applicable state law.

         (c) NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.

         (d) ARBITRATION QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive law
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (I) shall resolve all Disputes in
accordance with the substantive law of the State of California, (ii) may grant
any remedy or relief that a court of the State of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedures, the California rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000.000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses ). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.

         (e) REAL PROPERTY COLLATERAL; JUDICIAL REFERENCE. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to arbitration if
the Dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section

<PAGE>

Interlink Electronics, Inc.
September 1, 2000
Page 16

638. A referee with the qualifications required herein for arbitrators shall be
selected pursuant to the AAA's selection procedures. Judgment upon the decision
rendered by a referee shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644 and
645.

        (f) MISCELLANEOUS. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.



<PAGE>

Interlink Electronics, Inc.
September 1, 2000
Page 17

         Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions. Bank's commitment to extend any credit to
Borrower pursuant to the terms of this letter shall terminate on October 1,
2000, unless this letter is acknowledged by Borrower and returned to Bank on or
before that date.

                                       Sincerely,

                                              WELLS FARGO BANK
                                               NATIONAL ASSOCIATION

                                              By:  /s/ John E. Ray
                                                 -------------------------------
                                                 John E. Ray, Vice President


Acknowledged and accepted as of: 9/1/00
                                 ------------------

INTERLINK ELECTRONICS, INC.

By:   /s/ Paul D. Meyer
   --------------------------------------

Title:  CFO
      -----------------------------------


By:   /s/ E. Michael Thoben
   --------------------------------------
Title: President/Chairman of Board
      -----------------------------------

<PAGE>

                                                                       EXHIBIT A

WELLS FARGO BANK                                   REVOLVING LINE OF CREDIT NOTE
--------------------------------------------------------------------------------


$5,000,000.00                                         WOODLAND HILLS, CALIFORNIA
                                                               SEPTEMBER 1, 2000




         FOR VALUE RECEIVED, the undersigned INTERLINK ELECTRONICS, INC.
("Borrower") promises to pay to the order of WELLS FARGO ASSOCIATION ("Bank") at
its office at WARNER RANCH RCBO, 6001 TOPANGA CYN BLVD STE 205, WOODLAND HILLS,
CA 91367, or at such other place as the holder hereof may designate, in lawful
money of the United States of America and in immediately available funds, the
principal sum of $5,000,000.00, or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

DEFINITIONS:

         As used herein, the following, terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:

         (a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in California are authorized or required by law to
close.

         (b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for 1, 2, 3, 6 OR 12 months, as designated by Borrower, during which
all or a portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that no Fixed Rate
term may be selected for a principal amount less than $100,000.00; and provided
further, that no Fixed Rate Term shall extend beyond the scheduled maturity date
hereof. If any Fixed Rate Term would end on a day which is not a Business Day,
then such Fixed Rate Term shall be extended to the next succeeding Business Day.

         (c) "LIBOR" means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) determined by dividing Base LIBOR by a percentage
equal to 100% less any LIBOR Reserve Percentage.

                  (i) "Base LIBOR" means the rate per annum for United States
dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its, discretion deems appropriate including,
but not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

                  (ii) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System for any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable Fixed Rate Term.

         (d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.


REVOLVING LINE OF CREDIT NOTE (06/00)                                    PAGE 1
02693, #3792917406

<PAGE>


INTEREST:

         (a) INTEREST. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum *** Prime Rate in effect from time
to time, or (ii) at a fixed rate per annum determined by Bank to be ***
above LIBOR in effect on the first day of the applicable Fixed Rate Term. When
interest is determined in relation to the Prime Rate, each change in the rate of
interest hereunder shall become effective on the data each Prime Rate change is
announced within Bank. With respect to each LIBOR selection option selected
hereunder, Bank is hereby authorized to note the date, principal amount,
interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank's books and records (either manually or by electronic entry)
and/or on any schedule attached to this Note, which notations shall be prima
facie evidence of the accuracy of the information noted.

         (b) SELECTION OF INTEREST RATE OPTIONS. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rata Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection, (A)
if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it's sole option
but without obligation to do so, accepts Borrower's notice and quotes a fixed
rate to Borrower. If borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time any
advance is requested hereunder or at the end of any Fixed Rate Term, Borrower
shall be deemed to have made a Prime Rate interest selection for such advance or
the principal amount to which such Fixed Rate Term applied.

         (c) TAXES AND REGULATORY COSTS. Borrower shall pay to Bank immediately
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.

         (d) PAYMENT OF INTEREST. Interest accrued on this Note shall be payable
on the 1ST day of each MONTH, commencing OCTOBER 1, 2000.

         (e) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.

***Portion omitted pursuant to request for confidential treatment and filed
separately with the Commission.

REVOLVING LINE OF CREDIT NOTE (06/00)                                    PAGE 2
02693, #3792917406
<PAGE>


BORROWING AND REPAYMENT:

         (a) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any rime shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note shall be due end
payable in full on JUNE 1, 2002.

         (b) ADVANCES. Advances hereunder, to the total amount of the principal
sum available hereunder, may be made by the holder at the oral or written
request of (i) SHARON MCCRAKEN [JAMES JACKSON] OR PAUL D. MEYER, any one acting
alone, who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received by
the holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any deposit account of any Borrower, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of each Borrower regardless of the fact that persons other
than those authorized to request advances may have authority to draw against
such account. The holder shall have no obligation to determine whether any
person requesting an advance is or has been authorized by any Borrower.

         (c) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

PREPAYMENT:

         (a) PRIME RATE. Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to the Prime Rate at any time,
in any amount and without penalty.

         (b) LIBOR. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to LIBOR at any time and in the
minimum amount of $100,000.00; provided however, that if the outstanding
principal balance of such portion of this Note is less than said amount, the
minimum prepayment amount shall be the entire outstanding principal balance
thereof. In consideration of Bank providing this prepayment option to Borrower,
or if any such portion of this Note shall become due and payable at any time
prior to the last day of the Fixed Rate Term applicable thereto by acceleration
or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is
the sum of the discounted monthly differences for each month from the month of
prepayment through the month in which such Fixed Rate Term matures, calculated
as follows for each such month:

         (i) DETERMINE the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to such amount had
it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.

        (ii) SUBTRACT from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the amount prepaid for
the remaining term of such Fixed Rate Term at LIBOR in effect on the date of
prepayment for new loans made for such term and in a principal amount equal to
the amount prepaid.

       (iii) If the result obtained in (ii) for any month is greater than
zero, discount that difference by LIBOR used in (ii) above.

***Portion omitted pursuant to request for confidential treatment and filed
separately with the Commission.

REVOLVING LINE OF CREDIT NOTE (06/00)                                    PAGE 3
02693, #3792917406

<PAGE>


Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to
pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum 2.000% above the Prime
Rare in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). Each change in the rate of interest on any such past due
prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank.

EVENTS OF DEFAULT:

         The occurrence of any of the following shall constitute an "Event of
Default" under this Note:

         (a) The failure to pay any principal, interest, fees or other charges
when due hereunder or under any contract, instrument or document executed in
connection with this Note.

         (b) The filing of a petition by or against any Borrower, any guarantor
of this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.

         (c) The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.

         (d) Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.

         (e) Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.

         (f) Any sale or transfer of all or a substantial or material part of
the assets of any Borrower or Third Party Obligor other than in the ordinary
course of its business.

         (g) Any violation or breach of any provision of, or any defined event
of default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust, mortgage or other document executed in
connection with or securing this Note.

MISCELLANEOUS:

         (a) REMEDIES. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel), expended
or incurred

REVOLVING LINE OF CREDIT NOTE (06/00)                                    PAGE 4
02693, #3792917406
<PAGE>


by the holder in connection with-the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.

         (b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several.

         (c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California.

         IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.


INTERLINK ELECTRONICS, INC.


By:    /s/ Paul D. Meyer
    ------------------------------------

Title:  CFO
      ----------------------------------


REVOLVING LINE OF CREDIT NOTE (06/00)                                    PAGE 5
02693, #3792917406



<PAGE>



                                                                       EXHIBIT B

WELLS FARGO BANK                                            LOAN COMMITMENT NOTE
--------------------------------------------------------------------------------

$1,000,000.00                                         WOODLAND HILLS, CALIFORNIA
                                                               SEPTEMBER 1, 2000



         FOR VALUE RECEIVED, the undersigned INTERLINK ELECTRONICS, INC.
("Borrower") promises to pay to the order of WELLS FARGO ASSOCIATION ("Bank") at
its office at WARNER RANCH RCBO, 6001 TOPANGA CYN BLVD STE 205, WOODLAND HILLS,
CA 91367, or at such other place as the holder hereof may designate, in lawful
money of the United States of America and in immediately available funds, the
principal sum of $1,000,000.00, or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

DEFINITIONS:

         As used herein, the following, terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:

         (a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in California are authorized or required by law to
close.

         (b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for 1, 2, 3, 6 OR 12 months, as designated by Borrower, during which
all or a portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that no Fixed Rate
term may be selected for a principal amount less than $100,000.00; and provided
further, that no Fixed Rate Term shall extend beyond the scheduled maturity date
hereof. If any Fixed Rate Term would end on a day which is not a Business Day,
then such Fixed Rate Term shall be extended to the next succeeding Business Day.

         (c) "LIBOR" means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) determined by dividing Base LIBOR by a percentage
equal to 100% less any LIBOR Reserve Percentage.

             (i) "Base LIBOR" means the rate per annum for United States
dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its, discretion deems appropriate including,
but not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

            (ii) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System for any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable Fixed Rate Term.

         (d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.


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02693, #3792917406

<PAGE>


INTEREST:

         (a) INTEREST. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum *** Prime Rate in effect from time
to time, or (ii) at a fixed rate per annum determined by Bank to be ***
above LIBOR in effect on the first day of the applicable Fixed Rate Term. When
interest is determined in relation to the Prime Rate, each change in the rate of
interest hereunder shall become effective on the data each Prime Rate change is
announced within Bank. With respect to each LIBOR selection option selected
hereunder, Bank is hereby authorized to note the date, principal amount,
interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank's books and records (either manually or by electronic entry)
and/or on any schedule attached to this Note, which notations shall be prima
facie evidence of the accuracy of the information noted.

         (b) SELECTION OF INTEREST RATE OPTIONS. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rata Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection, (A)
if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it's sole option
but without obligation to do so, accepts Borrower's notice and quotes a fixed
rate to Borrower. If borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time any
advance is requested hereunder or at the end of any Fixed Rate Term, Borrower
shall be deemed to have made a Prime Rate interest selection for such advance or
the principal amount to which such Fixed Rate Term applied.

         (c) TAXES AND REGULATORY COSTS. Borrower shall pay to Bank immediately
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.

         (d) PAYMENT OF INTEREST. Interest accrued on this Note shall be payable
on the 1ST day of each MONTH, commencing OCTOBER 1, 2000.

         (e) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.


***Portion omitted pursuant to request for confidential treatment and filed
separately with the Commission.


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02693, #3792917406
<PAGE>


BORROWING AND REPAYMENT:

         (a) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any rime shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note shall be due end
payable in full on JUNE 1, 2002.

         (b) ADVANCES. Advances hereunder, to the total amount of the principal
sum available hereunder, may be made by the holder at the oral or written
request of (i) SHARON MCCRAKEN OR PAUL D. MEYER, any one acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at
the office designated above, or (ii) any person, with respect to advances
deposited to the credit of any deposit account of any Borrower, which advances,
when so deposited, shall be conclusively presumed to have been made to or for
the benefit of each Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by any Borrower.

         (c) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

PREPAYMENT:

         (a) PRIME RATE. Borrower may prepay principal on any portion of this
Note which bears interest determined in relation to the Prime Rate at any time,
in any amount and without penalty.

         (b) LIBOR. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to LIBOR at any time and in the
minimum amount of $100,000.00; provided however, that if the outstanding
principal balance of such portion of this Note is less than said amount, the
minimum prepayment amount shall be the entire outstanding principal balance
thereof. In consideration of Bank providing this prepayment option to Borrower,
or if any such portion of this Note shall become due and payable at any time
prior to the last day of the Fixed Rate Term applicable thereto by acceleration
or otherwise, Borrower shall pay to Bank immediately upon demand a fee which is
the sum of the discounted monthly differences for each month from the month of
prepayment through the month in which such Fixed Rate Term matures, calculated
as follows for each such month:

         (i) DETERMINE the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to such amount had
it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.

         (ii) SUBTRACT from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the amount prepaid for
the remaining term of such Fixed Rate Term at LIBOR in effect on the date of
prepayment for new loans made for such term and in a principal amount equal to
the amount prepaid.

        (iii) If the result obtained in (ii) for any month is greater than zero,
discount that difference by LIBOR used in (ii) above.

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02693, #3792917406
<PAGE>

Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to
pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum 2.000% above the Prime
Rare in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). Each change in the rate of interest on any such past due
prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank.

EVENTS OF DEFAULT:

         The occurrence of any of the following shall constitute an "Event of
Default" under this Note:

         (a) The failure to pay any principal, interest, fees or other charges
when due hereunder or under any contract, instrument or document executed in
connection with this Note.

         (b) The filing of a petition by or against any Borrower, any guarantor
of this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.

         (c) The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.

         (d) Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.

         (e) Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.

         (f) Any sale or transfer of all or a substantial or material part of
the assets of any Borrower or Third Party Obligor other than in the ordinary
course of its business.

         (g) Any violation or breach of any provision of, or any defined event
of default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust, mortgage or other document executed in
connection with or securing this Note.

MISCELLANEOUS:

         (a) REMEDIES. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel), expended
or incurred


NON-REVOLVING LOAN COMMITMENT NOTE (06/00)                               PAGE 4
02693, #3792917406
<PAGE>


by the holder in connection with-the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.

         (b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several.

         (c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California.

         IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.


INTERLINK ELECTRONICS, INC.


By:  /s/ Paul D. Meyer
   --------------------------------

Title:  CFO
      -----------------------------








NON-REVOLVING LOAN COMMITMENT NOTE (06/00)                               PAGE 5
02693, #3792917406