Document:

Form of Non-Statutory Stock Option Agreement

 Exhibit 10.3 
  
 INTERLINK ELECTRONICS, INC. 
 NON-STATUTORY STOCK OPTION AGREEMENT 
 1996 STOCK INCENTIVE PLAN 
  
 This NON-STATUTORY STOCK OPTION AGREEMENT is made between INTERLINK
ELECTRONICS, INC., a Delaware corporation (the “Company”), and                      (the “Optionee”), pursuant to the
Company’s 1996 Stock Incentive Plan, as amended (the “Plan”). The Company and the Optionee agree as follows: 
  
 1. Option Grant: The Company hereby grants to the Optionee on the terms and conditions of this Agreement the right and the option (the
“Option”) to purchase all or any of                     
(            ) of the Company’s Common Stock (the “Grant Shares”) at a purchase price of
$             per share. The terms and conditions applicable to grants of options of the Company’s Common Stock, as set forth in the Plan, are incorporated into and made part of
this Agreement. The Option will not be treated as an Incentive Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and is therefore a Non-Statutory Stock Option. 
  
 2. Time of Exercise of Option: The grant date of this Option is
                    ,              (the “Grant Date”). Subject to
the terms and conditions set forth herein and until the Option expires or is terminated as provided in the Plan, this Option may be exercised from time to time to purchase the Grant Shares as follows: 
  
 The Option shall become exercisable for 1/3rd of the Grant
Shares at the end of each one-year period, so that the Option will be fully exercisable on the third anniversary of the Grant Date. 
  
 3. Expiration: The Option shall continue in effect until the earlier of the date ten years after the Grant Date, or the date thirty days after the
Optionee’s service with the Company terminates (other than by reason of death or disability), unless earlier terminated as provided in the Plan. 
  

							
	                                 ,
                    
	 	 	 	 
		
	 INTERLINK ELECTRONICS, INC.
	 	OPTIONEE
				
	 By:
	 	  

	 	By:Third Amendment to Lease dated October 14, 2004

 Exhibit 10.4 
  
 THIRD AMENDMENT TO LEASE 
  
 This Third Amendment to Lease (“Third Amendment”) is entered into as of October 14, 2004 by and between Mobile Park Investment, Inc. (“Lessor”) and
Interlink Electronics, Inc. (“Lessee”) and amends that certain Lease Agreement-NNN dated August 12, 1998, First Amendment to Lease dated July 23, 2003 and Second Amendment to Lease dated January 23, 2004 for the Premises commonly known as
546 Flynn Road, Camarillo, California, (“Premises”), as more particularly described therein. 
  
 Lessee wishes to lease additional space and to extend the term of the Lease. Accordingly, the parties agree to amend the Lease as follows which will supercede Sections 1, 2, 3, 4, 5, 7, 8, 10, 11 of the Second
Amendment to Lease. 
  

			
	 1.      New Premises:
	  	Approximately 7,000 square feet at 3601 Calle Tecate will be added to the Existing Premises of approximately 35,333 square feet, for a total New Premises of approximately 42,333 square feet. See
attached Exhibit.
		
	 2.      Effective Date:
	  	November 1, 2004.
		
	 3.      New Lease Term:
	  	Five (5) years commencing November 1, 2004 and terminating on October 31, 2009.
		
	 4.      Basic Monthly Rent:
	  	 As of the Effective Date, the basic monthly rent for the New Premises will be $27,939.78, NNN ($.66/s.f.).
 [ $23,319.78 until new space is occupied. /s/ PDM ]

		
	 5.      Rent Abatement:
	  	Basic Monthly Rent for the Expansion Premises ($4,620.00) will be abated for the period from November 1, 2004 through March 31, 2005.
		
	 6.      Escalations to Basic Monthly Rent:
	  	There will be a fixed three percent (3%) annual increase to the monthly rent effective November 1, 2005; November 1, 2006; November 1, 2007; and November 1, 2008, such that the monthly rent
payable during the year starting at each effective date will be 3% higher than the monthly rent payable during the year prior to each effective date.
		
	 7.      Building Square Footage:
	  	Approximately 106,986 square feet.
		
	 8.      Lessee’s Share of Building Operating Expenses (NNN Costs):
	  	39.57%.
		
	 9.      Lease Cancellation:
	  	 Lessee shall have a one-time right to cancel this Lease effective at the end of the thirty-sixth (36th) month of the Lease Term with the following
conditions:
  
 a)      Lessee provides at least six (6) months prior written notice to Lessor of its election to cancel the Lease;
  
 b)      Lessee pays to Lessor, prior to the cancellation date, an amount equal to the unamortized
cost of Tenant improvements and brokerage commissions.

			
	 10.    Tenant Improvements:
	  	 Lessor, at its sole cost and expense, shall provide the following:
  
 •      Demise Expansion Premises as shown on the attached floor
plan;
  
 •      Complete re-carpeting and remodeling of Existing Premises per mutually approved plans using building standard materials quantities, and specification. In no event will the costs of re-carpeting and
remodeling exceed the original cost allocation of Lessor under the Second Amendment to Lease;
  
 •      All plumbing, electrical and mechanical systems shall be in proper working order and
utility metering will be modified as required for the Expansion Premises:
  
 •      Lessor, at a future date as required, will secure ceiling access to the Expansion
Premises “Future” area by installation of hard lid or suspended acoustic ceiling.

		
	 11.    Unreserved Parking Spaces:
	  	117.
		
	 12.    Monument Signage:
	  	Lessor shall coordinate with Lessee to design, plan and obtain governmental approvals as required for a single panel or multiple panel monument type sign to be located near the corner of Flynn
Road and Calle Tecate adjacent to the Building. The costs of the sign, its fabrication, installation, and maintenance shall be the responsibility of Lessee if a single panel (Interlink Electronics) monument sign is utilized, or shall be shared by
Lessee and Lessor on a 50/50 basis if a multiple panel monument sign is utilized. The monument sign, its location, size, shape, and colors, shall be approved by Lessor, which approval shall not be unreasonably withheld, and by the City of Camarillo,
as required.
		
	 13.    Option to Extend:
	  	(See attached A.I.R Option to Extend Standard Lease Addendum).
		
	 14.    Force and Effect:
	  	To the extent that any terms or provisions of this Amendment are inconsistent with any terms or provisions of the Lease or prior Amendments, the terms and provisions of this Amendment shall
prevail and control for all purposes.

  

							
	LESSOR:	 	LESSEE:
		
	Mobile Park Investment, Inc.	 	Interlink Electronics, Inc.
				
	By:	  	 /s/ (illegible)

	 	By:	 	 /s/ Paul D. Meyer

	By:	  	 /s/ Pres.

	 	By:	 	 /s/ CFO

	Date:	  	 /s/ 10/18/04

	 	Date:	 	 /s/ 10/18/04

  

 2 

 OPTION(S) TO EXTEND 
 STANDARD LEASE ADDENDUM 
  
 Dated
October 14, 2004 
  
 By and Between (Lessor) Mobile Park
Investment, Inc. 
  
 By and Between (Lessee) Interlink Electronics,
Inc. 
  
 Address of Premises: 546 Flynn Road/3601 Calle Tecate,
Camarillo, CA 
  
 Paragraph 13 
  
 A. OPTION(S) TO EXTEND: 
  
 Lessor hereby grants to Lessee the option to extend the term of this Lease for One (1) additional Sixty (60) month period(s)
commencing when the prior term expires upon each and all of the following terms and conditions: 
  
 (i) In order to exercise an option to extend, Lessee must give written notice of such election to Lessor and Lessor must receive the same at least
6 but not more than 9 months prior to the date that the option period would commence, time being of the essence. If proper notification of the exercise of an option is not given and/or received, such option shall automatically expire.
Options (if there are more than one) may only be exercised consecutively. 
  
 (ii) The provisions of paragraph 39, including those relating to Lessee’s Default set forth in paragraph 39.4 of this Lease, are conditions of this Option. 
  
 (iii) Except for the provisions of this Lease granting an option or options
to extend the term, all of the terms and conditions of this Lease except where specifically modified by this option shall apply. 
  
 (iv) This Option is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the Premises and without the intention of thereafter assigning or subletting. 
  
 (v) The monthly rent for each month of the option period shall be calculated as follows, using the method(s) indicated below: 
  
 (Check  Method(s) to be Used and Fill in Appropriately) 
  

			
	 ̈	  	I. Cost of Living Adjustment(s) (COLA)

 a. On (Fill in COLA Dates):
                                       
                                        
                                        
                                         
                                       
                                        
                                        
                                        
                                        
                  the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in the Consumer Price Index of the Bureau of Labor
Statistics of the U.S. Department of Labor for (select one):  ̈ CPI W (Urban Wage Earners and Clerical Workers) or  ̈ CPI U (All Urban Consumers), for (Fill in Urban Area):
                                        
                                        
                                        
    
                                       
                                        
                                        
                                        
                                        
                  
 All Items (1982-1984 = 100), herein referred to
as “CPI”. 

					
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 b. The monthly rent payable in accordance with paragraph A.I.a. of this Addendum shall be calculated as
follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the numerator of which shall be the CPI of the calendar month 2 months prior to the month(s) specified in paragraph A.I.a. above during which
the adjustment is to take effect, and the denominator of which shall be the CPI of the calendar month which is 2 months prior to (select one):  ̈
the first month of the term of this Lease as set forth in paragraph 1.3 (“Base Month”) or  ̈ (Fill in Other “Base Month”):
                                       
                         
                                       
                                        
                                        
                                        
                                        
                  
 The sum so calculated shall constitute the new
monthly rent hereunder, but in no event, shall any such new monthly rent be less than the rent payable for the month immediately preceding the rent adjustment. 
  

c. In the event the compilation and/or publication of the CPI shall be transferred to any other governmental department or bureau or agency or shall be
discontinued, then the index most nearly the same as the CPI shall be used to make such calculation. In the event that the Parties cannot agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration
Association in accordance with the then rules of said Association and the decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall be paid equally by the Parties. 
  

			
	x	  	II. Market Rental Value Adjustment(s) (MRV)

  
 a. On (Fill in MRV
Adjustment Date(s)) November 1, 2009 the Base Rent shall be adjusted to the “Market Rental Value” of the property as follows: 
  
 1) Four months prior to each Market Rental Value Adjustment Date described above, the Parties shall attempt to agree upon what the new MRV will be on the
adjustment date. If agreement cannot be reached, within thirty days, then: 
  
 (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to establish the new MRV within the next 30 days. Any associated costs will be split equally between the Parties, or

  
 (b) Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing, to arbitration in accordance with the following provisions: 
  
 (i) Within 15 days thereafter, Lessor and Lessee shall each select an  ̈ appraiser or  ̈ broker (“Consultant” - check one) of their choice to act as an arbitrator. The two
arbitrators so appointed shall immediately select a third mutually acceptable Consultant to act as a third arbitrator. 
  
 (ii) The 3 arbitrators shall within 30 days of the appointment of the third arbitrator reach a decision as to what the actual MRV for the Premises is,
and whether Lessor’s or Lessee’s submitted MRV is the closest thereto. The decision of a majority of the arbitrators shall be binding on the Parties. The submitted MRV which is determined to be the closest to the actual MRV shall
thereafter be used by the Parties. 
  

					
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 (iii) If either of the Parties fails to appoint an arbitrator within the specified 15 days, the
arbitrator timely appointed by one of them shall reach a decision on his or her own, and said decision shall be binding on the Parties. 
  
 (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is not selected, ie. the one that is NOT the closest to the
actual MRV. 
  
 2) Notwithstanding the foregoing, the new MRV
shall not be less than the rent payable for the month immediately preceding the rent adjustment. 
  
 b. Upon the establishment of each New Market Rental Value: 
  
 1) the new MRV will become the new “Base Rent” for the purpose of calculating any further Adjustments, and 
  
 2) the first month of each Market Rental Value term shall become the new
“Base Month” for the purpose of calculating any further Adjustments. 
  

			
	 ̈	  	III. Fixed Rental Adjustment(s) (FRA)

 The Base Rent shall be increased to the following amounts on the dates set forth below: 
  

			
	On (Fill in FRA Adjustment Date(s)):	 	The New Base Rent shall be:
	
	 	

	
	 	

	
	 	

	
	 	

	
	 	

	
	 	

	
	 	

	
	 	

	
	 	

	
	 	

  
 B. NOTICE: 
  
 Unless specified otherwise herein, notice of any rental adjustments, other
than Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the Lease. 
  
 C. BROKER’S FEE: 
  
 The Brokers shall be paid a
Brokerage Fee for each adjustment specified above in accordance with paragraph 15 of the Lease. 

					
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 EXHIBIT A 
  

(Diagram of lease premises omitted.)

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