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EXHIBIT 10.12
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* Terms denoted with an asterisk have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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CONFIDENTIAL TREATMENT REQUESTED
RESEARCH AND DEVELOPMENT AGREEMENT
This Agreement is entered into on 27-Feb-89 by and between LANTRONIX
("Client"), having its office at 26072 Merit Circle, Suite 113, Laguna Hills,
California 92653 and Gordian, a California Corporation ("Contractor"), having
its office at 3187 Redhill, Suite 150, Costa Mesa, California 92626.
RECITALS
The time period covered by this agreement is divided and defined in the
following manner:
1. Product Development: Commences from the beginning of development of
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the product and ends with sale of the first unit.
2. Support and Consultation: Commences from sale of the first unit of the
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product being developed and ends with sale of the last piece (also called "sales
life of the product or product life").
3. Warranty: Commences from the delivery to the Client of the first unit
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of the product being developed and which is described in this agreement, and
ends ninety (90) days from that date.
4. Royalty: Commences from receipt of payment from sale of the first unit
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of the product being developed and ends with sale of the last piece (also called
"sales life of the product or product life").
AGREEMENT
In consideration of the mutual promises given, the parties agree as
follows:
Term of the Agreement
This agreement shall be in effect from 27-Feb-89, which is the beginning
date of product development, and will terminate at the end of the sales life of
the product as defined in the recitals unless terminated sooner as specified
below.
Work and Services by Contractor
Contractor will assist Client by providing work and services in developing
the product as set forth in Exhibit "A."
Responsibility of Client
Client agrees to be responsible for providing the following elements as set
forth in Exhibit "B."
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CONFIDENTIAL TREATMENT REQUESTED
Compensation
As full compensation for the work and services provided by Contractor as
indicated on Exhibit "A," Client agrees to pay to Contractor as follows:
Time and Materials. Client agrees to pay for the time required on a "Man
day" basis at the billing rates on the schedule attached as Exhibit "C." Client
also agrees to pay for costs of materials, parts, and outside expenses to
produce the product which may include prototype units. Contractor will submit
an accounting on a monthly basis and Client agrees to pay the amount due to
Contractor for those services on or before the tenth (10th) day of the following
month. These compensation terms apply to the product and development and
support and consultation periods as defined in the recitals.
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CONFIDENTIAL TREATMENT REQUESTED
Royalty Payments
Royalty shall be paid as follows:
* percent (*%) of net invoice price of each unit sold during the royalty
period or sales life of the product as defined in the recitals.
Client agrees to make royalty payments on the first of each month until the
term of the royalty period ends as defined in the recitals.
Market Area Exclusivity and Retained Ownership
In return for the royalty payments set forth above, Contractor agrees to
provide Client with ("Market Area Exclusive Use") whereby Contractor will not
develop a product for another party which will directly compete with a product
Contractor has developed for the Client unless Client gives written
authorization to Contractor to do so. However, Contractor makes the distinction
between the product and the technology involved in the creation of the product,
and it is agreed between Client and Contractor that Contractor will retain
ownership of the technology involved.
Consulting Services
Contractor will supply support and consultation services during the support
and consultation period as defined in the recitals at Contractor's normal
billing rate from schedules provided to Client.
Limited Warranty
Contractor warrants that the product unit delivered to Client under this
agreement shall be free from defects in design, workmanship and materials under
normal use for a period of ninety (90) days after delivery of the product unit
to Client. No other express warranty is given.
Warranty Disclaimer
THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF
MERCHANTABILITY.
Termination of the Agreement
1. This agreement shall terminate at the end of the Royalty period or
sales life of the product as defined in the recitals, unless otherwise specified
in this agreement.
2. This agreement may be terminated with thirty (30) days prior written
notice of termination by either Party with or without cause. However, if the
agreement is terminated by Client
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CONFIDENTIAL TREATMENT REQUESTED
after the sale of the first unit by the Client, then the royalty payment
agreement will not be terminated. In the event that Client sells no units after
terminating this contract with timely written notice, then the royalty payment
agreement is terminated.
3. This agreement shall terminate upon default or breach of the contract.
4. This agreement shall terminate in the event of failure to pay on due
date if the failure to pay is not remedied within thirty (30) days.
Restrictions on Use of Trade Secrets and Records
During the term of this agreement, Client and Contractor may have access to
and become acquainted with various trade secrets, consisting of formulas,
patterns, devices, secret inventions,
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CONFIDENTIAL TREATMENT REQUESTED
processing, and compilations of information, records, and specifications
owned by either Contractor or Client and regularly used in the operation of each
party's business.
Contractor and Client agree that neither party shall misuse,
misappropriate, or disclose any of the trade secrets described in the above
paragraph, directly or indirectly, or use them in any way, either during the
term of this agreement or at any time thereafter, except as required in the
course of the agreement.
Entire Agreement, Modification, and Partial Invalidity
This represents the entire agreement between the parties and any
modification shall be in writing and signed by both parties. If any provision
in this agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, that part may be omitted but the rest of the contract
shall be given full force and effect.
Attorneys' Fees and Costs and Arbitration
In the event of litigation over the agreement, the prevailing party will be
reimbursed its attorneys' fees and costs.
Any controversy between the parties involving the construction or
application of any of the terms, covenants, or conditions of this agreement,
will by written request of one party served upon the other party be submitted to
arbitration utilizing the rules of the American Arbitration Association or the
services of an arbitrator mutually chosen by the parties.
Governing Law
This agreement is to be governed by and interpreted in accordance with the
laws of California.
Assignments
Neither this Agreement nor any duties or obligations under this agreement
may be assigned by either party without the prior written consent of the other
party.
LANTRONIX
By: /s/ Brad Freeburg Dated: August 13, 1989
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President
Gordian
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CONFIDENTIAL TREATMENT REQUESTED
By: /s/ Gregg Bone Dated: 13-Aug-89
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President
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CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT "A"
Work and Services by Contractor
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Design 8 channel RS-423 to IEEE 802.3/Ethernet terminal server for use in the
DEC LAT and Unix Telnet markets.
Produce schematics, assembly drawings, fab drawings, PCB artwork, film, drilling
information, and specifications.
Build 10 prototypes.
Manage Case design and tooling.
Write manuals for unpacking, installation, uses, and troubleshooting.
Deliverable in source form (MacIntosh files) and as camera ready art.
Choose and interface to assembly house. Technology transfer. Manage first
production run.
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CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT "B"
Responsibility of Client
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Translate manuals into other languages.
Set up distribution and inventory. Place orders with assembler.
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CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT "C"
Gordian Rates Schedule
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May 20, 1988
<TABLE>
<CAPTION>
PROJECTS WITH ROYALTY CONTRACTS
<S> <C>
Contract: One Year or Longer................... $* per person, per day.
Contract: Six Months to One Year............... $* per person, per day.
Purchase Order: Short Term..................... $* per person, per day.
(fewer than six months' duration)
PROJECTS WITHOUT ROYALTY CONTRACTS
Regardless of Duration.......................... $* per person, per day.
Rates Effective June 1st, 1988
Subject to change without notice.
</TABLE>
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