Exhibit 10.3

 

Agreement

 

This Agreement is made and entered as of September 29, 2017, by and between 1)
Telcon Holdings Inc. (Hereinafter referred to as “Telcon Holdings”), 2) Telcon
Inc. (Hereinafter referred to as “Telcon”) and 3) Emmaus Life Sciences
(Hereinafter referred to as “Emmaus”) located in USA.

 

Telcon Holdings, Telcon and Emmaus (Hereinafter referred to as “The Parties”)
hereby agree as follows

 

Article 1 [Objective]

 

This Agreement shall be concluded for the smooth execution of the matters
stipulated in “Management Control Acquisition Agreement” and in order to agree
on matters related to the management of TELCON in the future, executed by the
parties on May 27, 2017.

 

Article 2 [Sale of Emmaus Shares held by Hanil Vacuum and KPM Tech to Telcon]

 

(1) The parties agree to sell total 4,444,445 shares (hereinafter referred to as
“Target Shares”) of 666,667 shares of Emmaus held by Hanil Vacuum Co., Ltd.
(Hanil Vacuum”) and 3,777,778 shares of Emmaus held by KPM Tech to Telkon at a
price of USD. 6.6 per share. The contract shall be concluded on the date to be
submitted the relevant external evaluation report and on October 31, 2017,
whichever comes first.

 

(2) The parties shall cooperate in the external evaluation of the external
evaluation agency to evaluate the adequacy on the sale price of target shares
actively. If the external evaluation agency is reasonably necessary for external
evaluation and the data can be prepared, Emmaus shall endeavor to ensure that
target shares shall be sold as soon as possible by providing the data in a
timely manner.

 

(3) Telcon shall pay the purchase price of target shares to Hanil Vacuum and KPM
Tech as follows. The price of purchase and sale (the Issuing Price of
Convertible Bond) for each shall be calculated as the Korean Won-Dollar exchange
rate of the transaction day (Basic rate calculated of sale for the first time
announced on Foreign Exchange Brokerage on the same day).

 

i ) New convertible bonds issued by Telcon, which make the amount of currency
calculated in the above exchange rate as total amount of par value (Provided, it
can be appropriately adjusted in consideration of the par value of one bond)
shall be paid to Hanil Vacuum.

 

ii) New convertible bonds issued by Telconr which make the amount of currency
calculated in the above exchange rate as total amount of par value (Provided, it
can be appropriately adjusted in consideration of the par value of one bond)
shall be paid to KPM Tech.

 

(4) Telcon shall not sell, offer or otherwise dispose target shares purchased
from Hanil Vacuum and KPM Tech according to this Article for 1 year from the
acquisition date (Hereinafter referred to as “Mandatory Holding Period”) without
the prior written consent of Emmaus.

 

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(5) Emmaus has a Preferred Purchase Rights if Telcon wants to dispose target
shares after mandatory holding period has elapsed. Telcon shall notify Emmaus in
written form if Emmaus intends to exercise the Preferred Purchase Rights after
mandatory holding period has elapsed, and Emmaus shall notify Telcon in written
form within 15 business days from the date of receipt of the notice of whether
Preferred Purchase Rights shall be exercised by Telcon (hereinafter, “Prior
Notice Period of Preferred Purchase Rights”). Telcon may sell target shares
freely if it does not receive notification for the exercise of Preferred
Purchase Rights within the Prior Notice Period of Preferred Purchase Rights.

 

(6) If Emmaus is listed on the NASDAQ within 1 year after the conclusion of this
agreement, Telcon may dispose of target shares even before mandatory holding
period stipulated in paragraph 4 of this article. In such case, Preferred
Purchase Rights of Emmaus stipulated in paragraph 4 of this article shall be
maintained.

 

Article 3 [Payment of Asian Copyright for Diverticular Disease Treatment]

 

(1) Emmaus and Telcon entered a Copyright Agreement related to a copyright in
Korea, Japan and China for a total amount of $ 10,000,000 among the Asian
copyright for Diverticular Disease Treatment, USD. 5,000,000 were paid on
June 19, 2017 as a down payment, and a balance of USD.5,000,000 not paid to
Emmaus shall be paid by December 31, 2017.

 

(2) The parties agree that they shall execute a valuation on the Copyright
Agreement to be entered between Emmaus and Telcon related to a copyright in
Australia for Diverticular Disease Treatment, conclude the Copyright Agreement
related to a copyright in Australia as soon as possible after December 27, 2017.
And Telcon agrees to pay Emmaus USD. 5,000,000 by December 31, 2017. However, if
the amount of the external evaluation is less than USD.5,000,000 the parties
shall conclude the agreement with mutual consultation by calculating the value
within the external evaluation amount limit.

 

(3) Telcon Holdings or Any person designated by Telcon Holdings (hereinafter
referred to as “Lender”) shall lend Emmaus USD. 3,500,000 (hereinafter referred
to as “Loan”) after the resignation of Yutaka Niihara, Internal Director and
Willis Lee, Internal Director in accordance with resolution of extraordinary
general meeting of shareholders held by Article 4 (2) in this Agreement related
to paragraphs 1 and 2 of this Article on September 29, 2017, and after the
submission of the written resignation of BAXON KIM, Representative Director and
YOUNGDON SON, External Director. However, in case of a request from Emmaus
Korea, the lender shall cooperate with the Emmaus to return the loan to Emmaus
Korea while the lender processes the foreign exchange report. If the loan is
remitted to Emmaus within the term of the loan, Emmaus shall repay the loan
immediately upon receipt from Telcon of the full amount of the Asian copyright
for: Diverticular Disease Treatment in accordance with Paragraphs 1 and 2 of
this Article.

 

(4) Emmaus shall provide the Lender the balance of USD. bond as the security for
the loan stipulated in paragraph 3 of this Article for the Asian copyright for
Diverticular Disease Treatment that will be paid from Telcon in accordance with
Paragraph 1 of this Article. In addition, 6,643,559 shares of Talon held by
Emmaus and 3,777,778 shares of KPM Tech held by Emmaus are pledged as
subordinated bonds, and a Letter of Commitment shall be submitted to the Lender.

 

(5) Emmaus shall submit an Application for Diverticular Disease Clinical (IND)
within the first quarter of 2018 and shall do its best to get the final approval
soon.

 

(6) Telcon Holdings, hereby shall exempt the performance of the Agreement on the
Fund Raising Obligation for the management support to Telcon stipulated in
Article 6 (9) of “Management Control Acquisition Agreement” entered on May 26,
2017 in order for Telcon to pay USD. 10,000,000 in total amount related to the
Asian Copyright for Diverticular Disease Treatment in accordance with paragraphs
1 and 2 of this Article. In addition, , Telcon Holdings does its best to ensure
that Telcon finances and manages its operations by supporting the operating
funds necessary for the management of Telcon.

 

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Article 4 [Modification of Telcon Board of Directors and holding of
extraordinary General Meeting of Shareholders]

 

(1) The parties agree to hold an extraordinary General Meeting of Shareholders
in order to change the composition of the Board of Directors of Telcon and to
appoint a new executive member under the assumption that they will faithfully
fulfill the consent in this Agreement, and entrust Telcon Holdings with voting
rights regarding the shares of Telcon held by Emmaus in order to be elected as a
new executive member at this extraordinary General Meeting of Shareholders.

 

(2) The parties will hold the Telcon Board of Directors on September 29, 2017,
assuming compliance with the provisions of Articles 2 and 3 of this Agreement
(Including the completion of Emmaus Korea loan equivalent amount of the loan of
Article 3 (3)). In addition, the Representative Director of Telcorn will be
changed from previous Representative Director, BAXON KIM to a new Director
appointed by Telcon Holdings, and will convene and hold an extraordinary General
Meeting of Shareholders for the election of new Board of Directors.

 

(3) Under the assumption that they will faithfully fulfill the consent in this
Agreement, Emmaus shall ensure that Internal Director, Yutaka Niihara and
Internal Director, Willis Lee resign from the Telcon Board of Directors by
September 29, 2017 and submit the required documents for resignation as soon as
possible. Representative Director, BAXON KIM and Outside Director, YOUNGDON SOHN
shall resign immediately after the Board of Directors, and decided not to object
to the change from previous Representative Director, BAXON KIM to a new Director
appointed by Telcon Holdings.

 

(4) Telcon shall pay the annual allowance equivalent to one year allowance to
the Representative Director, BAXON KIM as retirement allowance or retirement
bonus within 30 days from the date of submission of the resignation, and Telcon
Holdings shall provide necessary funding so that Telcon can fulfill its
obligations.

 

(5) Telcon Holdings shall appoint SANGGON HAN, Auditor of Telcon, as a
non-registered president of Telcon with a condition to guarantee the term for
one year from the resignation date.

 

Article 5 [[Effectiveness]

 

This Agreement shall become effective from the date on which the parties seal or
sign.

 

Article 6 [Penalty]

 

If either Telcon Holdings or Emmaus does not comply with or fails to comply with
any of the provisions in this Agreement (Including cases where either Telcon
Holdings or Emmaus fails to fulfill the obligations of the Telcon in violation
of this Agreement), the offending party shall pay a penalty of five billion
Korean Won to the other party.

 

Article 7 [Others]

 

(1) This Agreement shall be construed and enforced in accordance with the laws
of the Republic of Korea.

 

(2) Any dispute arising from or relating to this Agreement or the Parties’
relationship shall be adjudicated at Seoul Central District Court as the first
court of competent jurisdiction.

 

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IN WITNESS THEREOF, this Agreement shall be prepared in three copies and one
each to each party, the Parties to this Agreement shall seal and sign below
through their authorized representatives, and Certificate of Registered Seal
shall be attached herein.

 

September 29, 2017

 

Telcon Holdings, Inc.

Address : 5th Floor, 25, Teheran-ro 108-gil, Gangnam-gu, Seoul (Daechidong,
Daechi bldg.)

Representative Director : JI HOON KIM (Sealed)

 

Telcon Inc.

Address: 684, Dongtangiheung-ro, Giheung-gu, Yongin-si, Gyeonggi-do

Representative Director: BAXON KIM (Sealed)

 

Emmaus Life Sciences Inc. USA

Address: 21250 Hawthorne Blvd. Suite 800 Torrance, CA 90503

CEO: Mr. Yutaka Niihara (Signed)

 

 

Translated by Song, Young Sun

 

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