Document:

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Exhibit 10.3

                      PRODUCT SUPPLY AND PURCHASE AGREEMENT

This Product Supply and Purchase Agreement ("Agreement") is entered into this
1st day of October, 2009 ("Effective Date") by and between Franklin Wireless
Corporation, a Nevada corporation, with its principal office at 5440 Morehouse
Drive, Suite 1000, San Diego, CA 92121, USA (hereinafter referred to as
"Franklin"), and Diffon Corporation, a Republic of Korea corporation, with its
principal office at Digital Tower Aston Suite 1505 505-15 Gasan, Geumcheon,
Seoul 153803, Republic of Korea (hereinafter referred to as "Diffon"). Franklin
and Diffon are referred to individually as "Party" and collectively as the
"Parties."

                                    RECITALS

      Whereas, Diffon is in the business of designing, developing, and
manufacturing wireless technologies and communication products;

      Whereas, Franklin desires to purchase the Products (as defined below) from
Diffon;

      Whereas, Diffon desires to sell the Products and provide services related
thereto to Franklin on a world-wide exclusive basis, as described in, and in
accordance with the terms and conditions of, this Agreement;

      NOW, THEREFORE, in consideration of the promises and mutual obligations
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, Diffon and Franklin agree
as follows:

ARTICLE 1 - SCOPE OF AGREEMENT; DEFINITIONS

1.1 SCOPE. This Agreement is to define the general business relationship between
the Parties relating to (i) the Products supplied by Diffon to Franklin; (ii)
the terms and conditions by which both Parties must abide; and (iii) any
purchase by Franklin of the Products.

1.2 DEFINITIONS.

(a)   "Products" means all wireless data products, including without limitation,
modems and modules designed, developed, produced, marketed and/or manufactured
by Diffon, including, but not limited to, those products specifically identified
in the attached EXHIBIT A.

(b)   "Territory" means the entire world.

ARTICLE 2 - APPOINTMENT; RESPONSIBILITIES

2.1. APPOINTMENT AND RELATIONSHIP. Subject to the terms and conditions of this
Agreement, Diffon hereby appoints Franklin as the exclusive buyer for the
Products produced by Diffon, subject to Franklin selling the Products in the
Territory according to the terms and conditions in subsection 2.2 below.

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2.2. RESPONSIBILITIES OF FRANKLIN. Franklin hereby accepts such appointment as
the exclusive buyer for the Products in the Territory and agrees that it shall
use its commercially reasonable efforts to promote sales of the Products within
the Territory.

2.3. RESPONSIBILITIES AND REPRESENTATIONS AND WARRANTIES OF DIFFON.

(a)   During the Term (as defined in Section 3 below):

      (i)   Diffon shall manufacture and supply the Products exclusively to
Franklin for the sales of Products in the Territory during the Term. Diffon
shall not manufacture, supply, sell, market, and/or distribute the Products to
any entity or individual other than Franklin or an affiliate of Franklin during
the Term; provided that, in the event that Franklin elects not to sell the
Products in a particular region or area in which it cannot effectively sell the
Products (the "Non Covered Region") Diffon may, upon receipt of written notice
by Franklin, distribute, market and sell the Products, using the Franklin
Wireless brand, only in the Non Covered Region.

      (ii)  The Products shall be branded as "Franklin Wireless," unless
otherwise agreed upon by the Parties in writing.

      (iii) Diffon shall inform Franklin in writing of all inquiries and/or
orders for the Products that Diffon receives, directly or indirectly, from
potential customers in the Territory.

      (iv)  Franklin may dispatch Franklin's buyers and/or customers to Diffon's
factory for an inspection, study, and tour.

      (v)   Diffon shall furnish to Franklin, at no cost, a reasonable quantity
of available catalogues, quotation sheets, specifications and technical data for
use in the promotion and sales of the Products in the Territory.

      (vi)  Diffon shall supply the Products according to all reasonable
requirements of Franklin.

      (vii) Diffon shall obtain Franklin's prior written approval for any OEM
business it desires to conduct with any entity or individual other than
Franklin.

(b)   Diffon represents and warrants that the following are true and accurate as
of the Effective Date of this Agreement, and will survive the execution of this
Agreement:

      (i)   Diffon has the legal power, right and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement. All
requisite action has been taken by Diffon in connection with entering into this
Agreement and the consummation of the transactions contemplated by this
Agreement. The individual executing this Agreement on behalf of Diffon has/have
the legal power, right, and actual authority to bind Diffon to the terms and
conditions of this Agreement.

      (ii)  Diffon has a staff of skilled employees or other laborers, tools,
and facilities necessary and appropriate to perform its obligations as and when
set forth in this Agreement.

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      (iii) Neither the execution and delivery of this Agreement, nor the
incurrence of the obligations set forth in this Agreement, nor the consummation
of the transactions contemplated by this Agreement, nor compliance with the
terms of this Agreement, will conflict with or result in a breach of any of the
terms, conditions or provisions of, or constitute a default under, any bond,
note or other evidence of indebtedness or any contract, indenture, loan, or
other agreement or instrument of which Diffon is a party.

ARTICLE 3 - TERM & TERMINATION

3.1   TERM. This Agreement shall commence as of the Effective Date and continue
for a period of three (5) years ("Initial Term"). Following the expiration of
the Initial Term, and unless otherwise notified by Franklin in writing, this
Agreement shall automatically, without notice, renew for three (3) year periods
(each, a "Renewal Period"). For the avoidance of doubt, each three (3) year
period following the Initial Term is considered a Renewal Period. The Initial
Term and any Renewal Period(s) shall be collectively referred to as the "Term."

3.2 TERMINATION.

(a)   Franklin may terminate this Agreement at any time upon written notice and
subject to the cure provisions set forth in clause (i) such termination will be
effective immediately upon the date set forth in the notice if Diffon: (i)
commits a material breach of any material provision of this Agreement and fails
to cure such breach within thirty (30) days after receiving written notice
describing such breach in reasonable detail from Franklin; provided, however, if
such breach is of a nature that it can not reasonably be cured within thirty
(30) days, then Diffon shall have an additional reasonable period, up to ninety
(90) days, to cure such breach, providing it immediately commences and
thereafter diligently prosecutes such cure to completion; or (ii) sells,
assigns, exchanges, transfers or otherwise disposes of (in one transaction or a
series of transactions) all or substantially all of its assets;

(b)   Franklin may terminate this Agreement at any time upon written notice, and
such termination will be effective immediately upon the date set forth in the
notice, if (i) Diffon attempts to sell, assign, delegate or transfer any of its
rights and/or obligations under this Agreement including without limitation by
merger, operation of law or otherwise without having obtained Franklin's prior
written consent thereto, or (ii) if there is any material change in the
management, ownership or control of Diffon; and

(c)   Diffon may terminate this Agreement at any time upon written notice, and
such termination will be effective immediately upon the date set forth in the
notice, if (i) C-Motech Co., Ltd acquires a majority interest in Franklin; or
(ii) during any six (6) month period Franklin does not sell any Products in the
Territory.

Notwithstanding the forgoing, Diffon's obligations under this Agreement shall
remain in full effect while any purchase order ("Purchase Order") is open and/or
unfulfilled.

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ARTICLE 4 - CERTIFICATION

4.1 PRODUCT CERTIFICATIONS. As required by all Purchase Orders issued by
Franklin to Diffon, Diffon shall ensure that the Products comply at all times
with any and all United States federal, state and municipal statutes, laws,
codes and regulations including any Federal Communications Commission ("FCC")
and CDG and GCF/PTCRB testing regulations and any other governmental
requirements of the countries in which Franklin sells and distributes the
Products that may apply to the content, composition, packaging, labeling,
shipment and operation of the Products.

4.2 PRODUCT CERTIFICATION AND TESTING COSTS. Diffon shall be responsible for the
costs of supporting all necessary testing of Products as required to approve the
Products on the carrier system. This includes, without limitation, CDG and
GCF/PTCRB, IOT tests, carrier prescribed tests, HAC, and any other industry
standard testing required by Franklin's customers. Diffon shall pay for all
certification and testing costs, including without limitation, FCC certification
and testing. Diffon shall be responsible for all costs associated with
supporting the testing, including engineering, staff, expenses, all other costs
related to the testing and approval of the Products, and the necessary testing
as described in Section 4.1 of this Agreement.

4.3 CERTIFICATION FAILURE. If any Product, in connection with this Agreement,
fails any certification that is required or requested and which is not an
elective certification, Diffon shall be responsible for and shall hold Franklin
harmless from any cost, claim or liability that arises from such failure,
including, without limitation, the retesting, reconfiguration, software,
development, and/ or any other technical or non-technical issue that arises from
the resolution of a failed certification test.

ARTICLE 5 - FORECASTS; FUTURE MANUFACTURING; PRICING AND PURCHASING

5.1 PRODUCT FORECASTS. Franklin shall work closely with Diffon to create and
communicate Product forecasts and planning efforts (each, a "Product Forecast").
Diffon shall begin the procurement process for all orders as Franklin requests.
All Product Forecasts shall be non-binding and for planning purposes only,
unless otherwise agreed in writing by both Parties. From time to time Franklin
may offer a firm Product Forecast for which the following rules apply, unless
otherwise agreed upon in writing: (a) quantities stated for the first month of
each Product Forecast must equal one hundred percent (100%) of the quantities
forecast for the second month of the immediately preceding Product Forecast; (b)
quantities stated for the second month of each Product Forecast must not be less
than seventy percent (70%), or more than one hundred thirty percent (130%), of
the quantities forecast for the third month of the immediately preceding Product
Forecast; and (c) quantities stated for the next four (4) months of each Product
Forecast shall be for planning purposes only and are non-binding.

5.2 FUTURE MANUFACTURING. All future manufacturing of the Products shall require
the prior written consent of Franklin. Diffon may use the C-Motech, Ltd.
facilities to manufacture the Products; provided that (a) the terms of
manufacturing are mutually beneficial to the Parties and (b) Franklin provides
its prior written approval, which may be conditioned, delayed or withheld in its
sole and absolute discretion.

5.3 PRICING. Pricing shall be on a Product by Product basis, as specified in
EXHIBIT B. EXHIBIT B may be amended from time to time to accommodate new
Products and or new pricing for any such Products as agreed upon by the Parties.

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5.4 PRODUCT LEAD TIME. Unless otherwise agreed upon in writing, Franklin shall
submit all Purchase Orders in writing at least forty (40) days prior to the
expected delivery date for Franklin's customer. Diffon shall provide updated and
detailed production information on all Purchase Orders which have been accepted.

5.5 PURCHASE ORDERS. All Purchase Orders shall be submitted with respect to the
lead time and shall be deemed accepted, if the Purchase Order is not rejected in
writing within twenty-four (24) hours of submission. Franklin reserves the right
to change and or modify any Purchase Order that has been submitted; provided
however, that any change and/or modification of the Purchase Order shall not
cause any monetary and/or financial burden to Diffon. In the event that Franklin
enters into an agreement with a significant customer, as determined by purchase
volume over a period of time by Franklin, Franklin shall negotiate a separate
agreement with that customer and Diffon shall be required to support Franklin in
order to meet any additional commercially reasonable terms and conditions as set
forth in any additional agreement(s) that Franklin may enter into with
individual customers.

5.6 PAYMENT. Diffon may submit an invoice to Franklin only for Products that are
delivered and received as described in this Agreement and in accordance with the
appropriate instructions contained in the applicable Purchase Order. Diffon
shall not provide an invoice for more than the Purchase Order amount.

5.7 PAYMENT TERMS. Unless otherwise agreed upon by both Parties in writing,
payment of thirty percent (30%) of the total purchase price must accompany the
Purchase Order and the remaining seventy percent (70%) will be paid within 30
days after shipment or Shipper's USANCE LC 60 days, whichever is earlier.

5.8 CURRENCY. All payments, pricing, and terms shall be calculated in US
Dollars.

ARTICLE 6 - SHIPPING AND TITLE; ACCEPTANCE

6.1 SHIPPING AND TITLE.

(a)   All Products shipped to tier 1 carriers, including, without limitation,
Sprint, Time Warner, Comcast, Cox, Verizon, T-Mobile and AT&T (each, a "Tier 1
Carrier") shall be shipped DDP, as modified below. All Products shipped to other
than a Tier 1 Carrier shall be shipped FCA Korea airport, as modified below.
Title to the Products shall be transferred upon leaving Korea, unless otherwise
specified by both Parties in writing. FCA and DDP shall have the meanings set
forth in Incoterms.

(b)   Diffon shall be responsible for proper shipping from Korea using
Franklin's preferred freight carrier (each, an "Authorized Freight Company").
Diffon shall only use an Authorized Freight Company that has been approved by
Franklin in writing. Diffon shall ship all Products in packaging and
configuration as specified by Franklin in writing. Diffon will bear and pay, and
otherwise take all responsibility for, causing the Products, and all shipments
of Products, to satisfy all customs, duty, and other laws and regulations
imposed by the United States or foreign customs authorities or other agencies,
including, without limitation, any liability for state and local sales, use or
other taxes, and will immediately indemnify Franklin and reimburse Franklin for
any amounts required to be disbursed by Franklin in connection with Diffon's
failure to perform any such obligations. Diffon will pay all expenses associated
with shipping Products, including without limitation expenses for
transportation.

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6.2 ACCEPTANCE. Franklin shall have fifteen (15) days from the time of receipt
to inspect the Products and provide written notice to Diffon of any shortages,
damaged goods, and or defective Products.

ARTICLE 7 - INVENTORY AND LAUNCH SUPPORT

7.1 NEW PRODUCT EVALUATION SAMPLES. For any new Product purchased by Franklin
for the first time, Diffon will, at no charge, provide Franklin with samples of
the new Product as it requires for any business purpose, including but not
limited to, for testing and utilization as a demonstration device.

7.2 PRODUCT LAUNCH SUPPORT. For any new Product provided by Diffon and launched
by any of Franklin's customers, Diffon will ensure that all accessories and/or
batteries that are provided as part of the original equipment configuration
ordered by Franklin's customers (i.e. contained in each fully kitted package),
are delivered to Franklin's customers prior to the Product launch date, as
required by Franklin, and at Diffon's expense. Diffon acknowledges that failure
to deliver any such accessories to Franklin or Franklin's customers prior to the
Product launch date may delay the Product launch, as determined by Franklin and/
or Franklin's customers. Diffon will reimburse and hold Franklin harmless for
and from any costs, claims or liabilities incurred by Franklin or its customers
that are associated with the delayed Product launch.

7.3 PACKAGING DESIGN. Diffon shall work with Franklin in dealing with the design
and printing specifications needed by Franklin's customers. This includes, but
is not limited to, items related to the customization of the Product, Product
gift box, and other brandable or designable items that come with the Product.

7.4 MARKETING. Except as provided herein, Franklin shall pay for any marketing
efforts in relation to the Products. Diffon shall provide service on an as
needed basis to execute certain marketing related deliverables, including
without limitation, printing and collateral tasks.

7.5 TECHNICAL SUPPORT. As required from time to time, Diffon may be required to
send technical engineering teams to Franklin's or its customer's facilities for
various reasons, including without limitation, field testing and certification
testing, training. Diffon agrees that it will use its best efforts to dispatch
any required staff as described herein on an as needed basis as requested by
Franklin.

ARTICLE 8 - INSPECTION AND WARRANTY

8.1 WARRANTY PERIOD. Unless otherwise agreed upon in writing, all Products shall
have a warranty period of not less than 15 months from the date of shipment to
Franklin's customers or end users (the "Warranty Period"). Within five (5)
business days of a warranty claim, Diffon shall repair,
replace, or refund the purchase price of any Product that has been returned to
Franklin due to failure, defects in workmanship or materials, or any other
failure resulting from the manufacture of the Product by Diffon, or other third
parties that are involved in the manufacture of the Product or that have been
engaged by Diffon to manufacture the Product (the "Warranty"), If Diffon fails
to comply with its obligations under this Section 8.1 Franklin shall have the
right to distribute, at its discretion, Safety Stock (as defined below) to
service the customer or end user.

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8.2 END OF PRODUCT LIFE SUPPORT. Diffon shall provide advance notice of at least
1 year prior to the End of Life ("EOL") of any Product supplied to Franklin.
Diffon agrees to support each Product for three (3) years after its EOL (the
"EOL Warranty Period"), by repairing, replacing or refunding the purchase price
of any Product that is identified to be defective or inoperable, due to failure,
defects in workmanship or materials, or any other failure deemed to be resulting
from the manufacture of the Product by Diffon or other third parties that are
involved in the manufacture of the Product or that have been engaged by Diffon
to manufacture the Product, so long as the Product identified is within the EOL
Warranty Period.

8.3 WARRANTY SAFETY STOCK. For each Product provided by Diffon, Diffon will make
available, free of charge, spare inventory ("Safety Stock") for any Product that
has been returned due to failure, defects in workmanship or materials, or any
other failure deemed to be resulting from the manufacture of the Product. Safety
Stock must be stored as directed by Franklin. Diffon may only charge Franklin
for the Safety Stock if it is sold to a customer, except as provided in Section
8.1, All Safety Stock will be new Products and the full Warranty will be
available on the Product. Diffon will provide Franklin with an inventory of
Safety Stock equal to two percent (2% of the number of units of each
Product sold during the previous 12 months. If there is not sufficient data to
calculate the two percent (2%) of unit sales or if demand requires, Diffon and
Franklin will work together to develop a plan to accurately forecast the Safety
Stock unit quantities.

8.4 EPIDEMIC FAILURE. A return ratio for defective Products under warranty that
exceeds two percent (2%) of the total amount of units of such Product delivered
during the previous six (6) months for the same cause shall be considered
"Epidemic Failure." Franklin shall notify Diffon in writing of any Epidemic
Failure.

8.5 RESOLVE. Upon receiving notice of an Epidemic Failure from Franklin, Diffon
must identify the cause within twenty-four (24) hours and provide a strategic
resolution within seventy-two (72) hours of identifying the cause of such
Epidemic Failure. Diffon shall work under the direction of Franklin to resolve
any Epidemic Failure that is identified by Franklin's customers or Franklin. If
Diffon is not able to provide a strategic resolution to the Epidemic Failure
which is acceptable to Franklin within the seventy-two (72) hour time period,
Diffon will reimburse and hold Franklin harmless for and from any costs, claims
or liabilities incurred by Franklin or its customers that are associated with
the Epidemic Failure, including without limitation, all expenses related to any
Product recall and shipping.

ARTICLE 9 - INDEMNIFICATION; CONFIDENTIALITY: INTELLECTUAL PROPERTY RIGHTS

9.1 INDEMNIFICATION. Notwithstanding anything to the contrary set forth in this
Agreement, Diffon agrees to indemnify, defend and hold harmless Franklin, its
officers, directors, employees, agents, shareholders, legal representatives,
successors and assigns from loss, liability, costs, damages, or expenses from
any and all claims, actions and suits instituted by Franklin or any third party,
whether groundless or otherwise, and from and against any and all such claims,
damages, losses, liabilities, judgments, expenses, and costs including, without
limitation, reasonable attorneys' fees arising from (a) the breach of this
Agreement by Diffon or its agents, employees, representatives, subcontractors,
or others acting on behalf of Diffon, (b) strict liability claims, including
without limitation, product liability claims, misrepresentations, or breach of
warranty, (c) negligence, errors or omissions on the part of Diffon or its
agents, employees, representatives, subcontractors or others acting on behalf of

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Diffon related to the design or manufacture of the Products, and (d) any claims
that any Product purchased from Diffon infringes any United States or foreign
patent, copyright or intellectual property right. In connection with Diffon's
indemnification obligations set forth in this Section 9.1 Franklin agrees to (i)
give written notice to Diffon of any such claim, action or suit, and (ii)
reasonably assist, at Diffon's expense, in such defense. Diffon shall defend
such claim, action or suit at Diffon's sole cost and expense. No settlement
negotiated by Diffon under this Section 9.1 shall be binding on Franklin without
Franklin's written consent. If Diffon fails to promptly defend or otherwise
settle or finally resolve any such claim, action, or suit, Franklin may defend
such claim, action, or suit using counsel selected by Franklin, and Diffon shall
reimburse Franklin for any resulting loss, damages, costs, charges, attorney's
fees, and other expenses and the related costs of defending such claim, action,
or suit.

9.2 Confidentiality. Each Party agrees to hold the other Party's Confidential
Information in strict confidence and not to disclose such Confidential
Information to any third parties. "Confidential Information" means all
information disclosed by one Party to the other Party that is not generally
known in such Party's trade or industry and shall include, without limitation,
(a) concepts and ideas relating to the development and distribution of content
in any medium or to the current, future and proposed products or services of a
Party or its affiliates; (b) trade secrets, drawings, inventions, know-how,
software programs, and software source documents; (c) information regarding
plans for research, development, new service offerings or products, marketing
and selling, business plans, business forecasts, budgets and unpublished
financial statements, licenses and distribution arrangements, prices and costs,
suppliers and customers; (d) existence of any business discussions, negotiations
or agreements between the parties; and (e) any information regarding the skills
and compensation of employees, contractors or other agents of a Party or its
affiliates. Confidential Information also includes proprietary or confidential
information of any third party who may disclose such information to Franklin or
Diffon in the course of Franklin's or Diffon's business. The obligations set
forth in this Section 9.2 shall not apply with respect to any portion of the
Confidential Information that a Party can document by competent proof that such
portion: (a) was in the public domain at the time it was communicated to one
Patty by the other Party; (b) entered the public domain through no fault of a
Party, subsequent to the time it was communicated to such Party; (c) was in a
Party's possession free of any obligation of confidence at the time it was
communicated to such Party; (d) was rightfully communicated to a Party free of
any obligation of confidence subsequent to the time it was communicated to such
Party; (e) was developed by employees or agents of a Party independently of and
without reference to any information communicated to such Party by the other
Part; or (f) was communicated by a Party to an unaffiliated third party free of
any obligation of confidence. In addition, a Party may disclose the other
Party's Confidential Information in response to a valid order by a court or
other governmental body, as otherwise required by law; ,provided, however, that,
to the extent reasonably practicable, the disclosing Party will provide prompt
prior written notice to the other Party and will reasonably cooperate with the
other Party if it seeks a protective order or takes other legal action to
prevent the disclosure of such Confidential Information (unless the disclosing
Party is specifically prohibited by law from so doing). The provisions of this
Section shall survive any expiration or termination of this Agreement and shall
remain in effect and be binding upon the Parties for the period of 60 months
following the date of such expiration or termination, as the case may be.

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9.3 RETURN OF CONFIDENTIAL INFORMATION AND MATERIALS. Upon request of a Party,
the other Party shall return to such Party all materials, in any medium, which
contain or reveal all or any Confidential Information of such Party. Each Party
acknowledges that a breach of this Section by it may result in irreparable harm
to the other Party, for which monetary damages would be an insufficient remedy,
and therefore that the other Party shall be entitled to seek injunctive relief
to enforce the provisions of this Section.

9.4 INTELLECTUAL PROPERTY RIGHTS. Each Party shall retain all right, tide and
interest in and to all of its intellectual property, including without
limitation trade names, trademarks, service marks, copyrights, proprietary
products and Confidential Information owned by each Party ("Intellectual
Property Rights"). Nothing in this Agreement confers any rights of ownership of
the other Party's (or any other party's) Intellectual Property Rights.

ARTICLE 10 - MISCELLANEOUS

10.1 FORCE MAJEURE.

(a)   Except for the payments due for the Products delivered by Diffon, neither
Party shall be liable for any delays in delivery or failure to perform or other
loss due directly or indirectly to unforeseen circumstances or causes beyond
such Party's reasonable control (each, individually, a "Force Majeure Event")
including, without limitation: (i) acts of God, act (including failure to act)
of any governmental authority (de jure or de facto), wars (declared or
undeclared), governmental priorities, port congestion, riots, revolutions,
strikes or other labor disputes, fires, floods, sabotage, nuclear incidents,
earthquakes, storms, epidemics; or (ii) inability to timely obtain either
necessary and/or proper labor, materials, components, facilities, production
facilities, energy, fuel, transportation, governmental authorizations or
instructions, material or information, The foregoing shall apply even though any
Force Majeure Event occurs after such Party's performance of its obligations is
delayed for other causes but only during the period of the applicable Force
Majeure Event.

(b)   The Party affected by a Force Majeure Event shall give written notice to
the other Party of the Force Majeure Event within five (5) days after the
occurrence thereof, stating therein the nature of the suspension of performance
and reasons therefore. Such Party shall use its commercially reasonable efforts
to resume performance as soon as reasonably possible. Upon restoration of the
affected Party's ability to perform its obligations hereunder, the affected
Party shall give written notice to the other Party within a reasonable time and
shall specify the time by which the performance of the obligations hereunder is
to be completed.

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10.2 INJUNCTIVE RELIEF. Each Party agrees that a breach of the terms of this
Agreement would represent substantial and irreparable harm and that monetary
damages would be inadequate. Therefore, the Parties agree that, in addition to
any other rights and/or remedies of the Parties, that the non-breaching Party
shall be entitled to injunctive relief to ensure compliance with the terms of
this Agreement.

10.3 GOVERNING LAW; VENUE. This Agreement shall be governed by and construed in
all respects in accordance with the laws of California without regard to its
conflicts of law provisions. For purposes of venue and jurisdiction, this
Agreement will be deemed made and to be performed in San Diego County,
California, Venue for all purposes will lie exclusively with the state and
federal courts located in San Diego County, California, which courts have
personal jurisdiction and venue over each of the parties to this Agreement for
the purpose of adjudicating all matters arising out of or related to this
Agreement. Each Party authorizes and accepts service of process sufficient for
personal jurisdiction in any action against it as contemplated by this Section
by registered or certified mail, return receipt requested, postage prepaid, to
its address for the giving of notices set forth in this Agreement.

10.4 COMPLIANCE WITH UNITED STATES REGULATIONS. Nothing contained in this
Agreement will require or permit Franklin or Diffon to do any act inconsistent
with the requirements of (a) the regulations of the United States Department of
Commerce, (b) the foreign assets controls or foreign transaction control
regulations of the United States Treasury Department or (c) any applicable law,
regulation or executive order as may be in effect wherever the Products are
manufactured or sold from time to time.

10.5 ASSIGNMENT. Diffon shall not assign this Agreement to any other person or
entity without Franklin's prior written consent. In the event of assignment with
the prior written consent of Franklin, Diffon shall not be relieved from its
obligations under this Agreement and shall be held responsible for its
performance. Franklin may transfer or assign all or any part of its rights and
obligations under this Agreement.

10.6 NON-WAIVER. No claim or right of either Party under this Agreement shall be
deemed to be waived or renounced in whole or in part unless the waiver or
renunciation of such claim or right its acknowledged and confirmed in writing by
such Party.

10.7 MERGER. This Agreement and the attached Exhibits contains the entire
agreement between the Parties to this Agreement with respect to the subject
matter of this Agreement, is intended as a final expression of such Parties'
agreement with respect to such terms as are included in this Agreement, is
intended as a complete and exclusive statement of the terms of such agreement,
and supersedes all negotiations, stipulations, understandings, agreements,
representations and warranties, if any, with respect to such subject matter,
which precede the execution of this Agreement.

10.8 INTERPRETATION. In the event of any ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as drafted jointly by
the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. No provision of this Agreement shall be construed against any
Party on the grounds that such Party or its counsel drafted that provision.

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10.9 SEVERABILITY. Each provision of this Agreement will be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of the provision to any person or circumstance
will, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of any provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, will not be affected
by such invalidity or =enforceability, unless the provision or its application
is essential to this Agreement. The Parties shall replace any invalid and/or
unenforceable provision with a valid and enforceable provision that most closely
meets the aims and objectives of the invalid and/or unenforceable provision.

10.10 FURTHER ASSURANCES. Each Party to this Agreement will execute all
instruments and documents and take all actions as may be reasonably required to
effectuate this Agreement upon demand.

10.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
document.

10.12 NOTICES. All notices or other communications required or permitted to be
given to a Party to this Agreement shall be in writing and shall be personally
delivered, sent by certified mail, postage prepaid, return receipt requested, or
sent by an overnight express courier service that provides written confirmation
of delivery, to such Party at the following respective address:

If to Franklin:

               Franklin Wireless Corporation
               5440 Morehouse Drive, Suite 1000
               San Diego, California 92121 USA
               Attention: President
               Facsimile: __________________________

        with a copy to (not constituting notice):

               Solomon Ward Seidenwurm & Smith LLP
               401 B Street, Suite 1200
               San Diego, California 92101
               Attention: Harry J. Proctor
               Facsimile: (619) 231-4755

If to Diffon:

               Diffon Corporation
               Digital Tower Aston Suite 1505 505-15
               Gasan, Geumcheon

                                       11

<PAGE>

               Seoul 153803 Korea
               Attention: President
               Facsimile: __________________________

Each such notice or other communication shall be deemed given, delivered and
received upon its actual receipt, except that if it is sent by mail in
accordance with this Section, then it shall be deemed given, delivered and
received three (3) days after the date such notice or other communication is
deposited with the U.S. Postal Service in accordance with this Section. Any
Party to this Agreement may give a notice of a change of its address to the
other Party to this Agreement.

10.13 AMENDMENT. Except to the extent otherwise expressly permitted by this
Agreement, no amendment of, or addition to, this Agreement shall be effective
unless reduced to a writing executed by the duly authorized representatives of
both Parties.

10.14 NO AGENCY. The relationship between Franklin and Diffon is that of a
vendor to its vendee, and nothing herein contained shall be construed as
constituting either Party the employee, agent, independent contractor, partner
or co-venturer of the other Party. Neither Party shall have any authority to
create or assume any obligation binding on the other Party.

10.15 ETHICAL STANDARDS. Diffon will comply with the United States Foreign
Corrupt Practice Act and without derogating from the generality of the
foregoing, will not have its directors, officers or employees, directly or
indirectly, offer, promise or pay any bribes or other improper payments for the
purposes of promoting and/or selling Products to any individual, corporation,
government official or agency or other entity. No gift, benefit or contribution
in any way related to Franklin or the promotion and/or sale of Products will be
made to political or public officials or candidates for public office or to
political organizations, regardless of whether such contributions are permitted
by local laws.

10.16 CONTROLLING LANGUAGE. This Agreement is in the English language only,
which will be controlling in all respects. No translation, if any, of this
Agreement into any other language will be of any force or effect in the
interpretation of this Agreement or in a determination of the intent of either
Party hereto.

10.17 EFFECTIVENESS. This Agreement shall become effective when it has been
executed by all of the Parties to this Agreement.

      IN WITNESS WHEREOF, the Parties hereto hereby execute this Agreement
effective as of the day and year first above written.

Franklin                                    Diffon

By: /s/ OC Kim                              By: /s/ Ji Ho Cho
   ------------------                          ------------------
Name:  OC Kim                               Name:  Ji Ho Cho
Title: President                            Title: CEO

                                       12

<PAGE>

                                    EXHIBIT A
                                    Products

TBD

                                       13

<PAGE>

                                    EXHIBIT B
                                     Pricing

TBD

                                       14<PAGE>

Exhibit 10.4

                               DIFFON CORPORATION
                             STOCKHOLDERS AGREEMENT

         THIS STOCKHOLDERS AGREEMENT (the "AGREEMENT") is made as of 1st
October, 2009 (the "EFFECTIVE DATE"), among Diffon Corporation, a South Korean
corporation (the "COMPANY"), Ji Ho Cho and Seok Kwon Hong (each, a "MAJOR
SHAREHOLDER" and collectively, the "MAJOR SHAREHOLDERS") and Franklin Wireless
Corporation, a Nevada corporation ("FRANKLIN"). The Major Shareholders,
Franklin, and any person or entity acquiring shares of the Company's Common
Stock after the Effective Date who executes a counterpart of this Agreement,
joinder agreement or other writing agreeing to be bound by the terms of this
Agreement are referred to as the "STOCKHOLDERS."

                                    RECITALS

         A. As of the Effective Date, the Stockholders are entering into this
Agreement with the intent to be mutually bound.

         B. This Agreement sets forth the agreement between the Company and
certain of its Stockholders regarding various matters relating to the Company,
including certain restrictions with respect to the ownership of shares of the
Company's capital stock, governance, registration rights and certain other
matters.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

         1. DEFINITIONS.

         "AFFILIATE" (or any derivative thereof) means any Person controlled by,
controlling or under common control with such Person. The term "control" means
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.

         "BOARD" means the Board of Directors of the Company, as constituted
from time to time.

         "CHANGE OF CONTROL" means (i) a consolidation, reorganization or merger
of the Company with or into one or more entities, if as a result the Company's
Stockholders immediately prior to such transaction own less than fifty percent
(50%) of the total voting power of the entity surviving or resulting from such
transaction; (ii) the sale, lease, exchange or transfer of all or substantially
all the assets of the Company, or (iii) if any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than a
Person that is a stockholder of the Company on the Effective Date, is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than fifty percent (50%) of the total
voting power of the Company's capital stock

         "COMMON STOCK" means the Company's Common Stock

         "EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended.

                                       1

<PAGE>

         "FAMILY GROUP" means a Stockholder's spouse and immediate family
members to the first degree (whether natural or adopted) ("DESCENDANTS") and any
trust solely for the benefit of such person's spouse and/or Descendants.

         "GAAP" means generally accepted accounting principles, consistently
applied.

         "NEW SECURITIES" shall mean all shares of Common Stock issued by the
Company after the Effective Date of this Agreement, other than shares of Common
Stock issued or issuable to officers, directors or employees of, or consultants
to, the Company pursuant to stock option or stock purchase plans or agreements
on terms approved by the Board.

         "PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

         "PRO RATA SHARE" shall mean the ratio of (x) the sum of the number of
shares of Common Stock then owned by a Stockholder to (3) the sum of the total
number of shares of Common Stock then issued and outstanding. For the purpose of
clarity Pro Rata Share does not include shares of Common Stock issuable pursuant
to stock option or stock purchase plans or agreements or upon exercise of
outstanding rights, options or warrants until such shares are actually issued.

         "QUALIFIED PUBLIC OFFERING" means a firm commitment underwritten public
offering of shares of the Company's common stock on a national stock exchange,
resulting in at least $10,000,000 in net proceeds.

         "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of such
registration statement.

         "REGISTRABLE SECURITIES" means any Common Stock held by Franklin. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force) or repurchased by the Company or any
subsidiary of the Company.

         "SEC" means the U.S. Securities and Exchange Commission.

         "SECURITIES ACT" means the U.S. Securities Act of 1933, as amended from
time to time.

         "SHARES" means shares of, or securities convertible into or exercisable
for any shares of, any class of capital stock of the Company.

         "STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated as
of 1st Oct, 2009 to which this Agreement is attached as EXHIBIT A.

         "STOCKHOLDER SHARES" means (i) any Common Stock held by any
Stockholder, (ii) any capital stock or other equity securities issued or
issuable directly or indirectly, with respect to the Common Stock referred to in
clause (i) above by way of stock dividend or stock split or in connection with a

                                       2

<PAGE>

combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other shares of any class or series of capital
stock of the Company held by a Stockholder, including shares issuable on
exercise of a warrant or option. As to any particular shares constituting
Stockholder Shares, such shares shall cease to be Stockholder Shares when they
have been (x) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (y) sold to the
public through a broker, dealer or market maker pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act.

         2. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents and
warrants that this Agreement has been duly authorized, executed and delivered by
such Stockholder and constitutes the valid and binding obligation of such
Stockholder, enforceable in accordance with its terms. Each Major Shareholder
represents and warrants that such Major Shareholder (i) has not granted and is
not a party to any proxy, voting trust or other agreement which is inconsistent
with, conflicts with or violates any provision of this Agreement; and (ii) shall
not grant any proxy or become party to any voting trust or other agreement which
is inconsistent with, conflicts with or violates any provision of this
Agreement.

         3. RESTRICTIONS ON TRANSFER OF STOCKHOLDER SHARES.

             3.1. RETENTION OF MAJOR SHAREHOLDER SHARES. No Major Shareholder
may sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law) any interest in his Stockholder Shares (a "TRANSFER"); provided that
nothing contained in this Article 3 shall prohibit the Transfer of Stockholder
Shares as permitted by Sections 3.2, 3.4, 3.5 and 3.6.

             3.2. PERMITTED TRANSFERS. The restrictions set forth in this
Article 3 shall not apply with respect to any Transfer of Stockholder Shares by
any Major Shareholder pursuant to applicable laws of descent and distribution or
among such Major Shareholder's Family Group (a "PERMITTED TRANSFEREE"); provided
that the restrictions contained in this Article 3 shall continue to be
applicable to the Stockholder Shares after any such Transfer and provided
further that the transferees of such Stockholder Shares shall have agreed in
writing to be bound by the provisions of this Agreement affecting the
Stockholder Shares so transferred ("PERMITTED TRANSFER").

             3.3. RIGHT OF FIRST OFFER OF SHARES ON SUBSEQUENT INVESTMENT.
Subject to the terms and conditions specified in this Section 3.3, the Company
hereby grants to Franklin a right of first offer with respect to future sales by
the Company of its New Securities. In the event the Company proposes to offer
any New Securities, the Company shall first make an offer to sell such New
Securities to Franklin in accordance with the following provisions:

             (a) The Company shall deliver a notice ("NOTICE") to Franklin
stating (i) its bona fide intention to offer such New Securities, (ii) the
number of such New Securities to be offered, and (iii) the price and terms, if
any, upon which it proposes to offer such New Securities.

             (b) Within twenty (20) calendar days after receipt of the Notice,
Franklin may elect to purchase, at the price and on the terms specified in the
Notice, some or all of the New Securities.

             (c) If Franklin does not elect to purchase all the New Securities,
the Company may, for the next ninety (90) days, offer the remaining
unsubscribed portion of such New Securities to

                                       3

<PAGE>

any Person or Persons at a price not less than, and upon terms no more favorable
to the offeree than those specified in the Notice. If the Company does not enter
into an agreement for the sale of the Shares within such ninety (90) day period,
or if such agreement is not consummated within ninety (90) days after the
execution thereof, the tight provided hereunder shall be deemed to be revived
and such New Securities shall not be offered unless first reoffered to Franklin
in accordance herewith.

             (d) The right of first offer in this Section 3.3 shall not be
applicable to the issuance of securities: (i) pursuant to the conversion or
exercise of convertible or exercisable securities, (ii) pursuant to the issuance
of incentive stock awards or other equity incentive stock plans, agreements or
arrangements, (iii) to financial institutions or lessors in connection with
commercial credit arrangements, equipment leases or financings, commercial
property lease transactions, or similar transactions approved by the Board, or
(iv) in connection with a Qualified Public Offering.

             (e) The right of first offer set forth in this Section 3.3 shall
terminate (i) as to future offerings if Franklin declines to exercise its right
of first offer in connection with an offer of New Securities that are
subsequently sold to a Person or Persons, and (ii) upon the occurrence of a
Qualified Public Offering.

         3.4. RIGHT OF FIRST REFUSAL. In the event a Major Shareholder (the
"TRANSFERRING STOCKHOLDER") receives a bona fide offer to purchase all or part
of his or its Stockholder Shares, the Transferring Stockholder shall comply with
the following provisions:

             (a) NOTICE. If a Transferring Stockholder desires to sell his
Common Stock to a third party, it will provide Franklin with written notice (the
"NOTICE OF TRANSFER") setting forth (i) his bona fide intention to sell such
Common Stock, (ii) the number of such shares of Common Stock to be sold, and
(iii) the price and terms upon which he proposes to sell such shares of Common
Stock; (iv) the name and address of the prospective transferee (the "Purchase
Offeror"); and (v) the expected closing date of the transaction.

             (b) OPTION PERIOD. For a thirty (30) day period following the
receipt of the Notice of Transfer Franklin shall have the right to purchase all
or part of the Stockholder Shares identified therein.

             (c) EXERCISE OF OPTION. Any option to purchase the Transferring
Stockholder's Stockholder Shares shall be exercised by timely delivery of
written notice to the Transferring Stockholder.

             (d) PURCHASE PRICE AND TERMS. A party electing to exercise options
pursuant to this Article shall purchase the Transferring Stockholder's Stock at
the price and terms specified in the Notice of Transfer.

             (e) FAILURE TO EXERCISE OPTIONS. If the foregoing option is not
exercised with respect to all of the Transferring Stockholder's Stockholder
Shares, the Transferring Stockholder may sell such Stockholder Shares at the
price and terms specified in the Notice of Transfer for a thirty (30) day period
which commences on the expiration of the option period specified in subsection
(b) above, provided, however, that in no event may the Transferring Stockholder
sell Stockholder. Shares to a competitor of the Company. If the transaction has
not

                                       4

<PAGE>

been completed within that thirty (30) day period, the Transferring Stockholder
may Transfer his Stockholder Shares only by again complying with the procedures
set forth in this Article.

             (f) CONTINUED APPLICABILITY. It shall be a condition to the
Transfer of the Stockholder Shares that the transferee agrees in writing to hold
such Stockholder Shares subject to and be bound by the terms and conditions of
this Agreement.

             (g) TERMINATION. The rights provided in this Section 3.4 shall
terminate upon the occurrence of a Qualified Public Offering.

The exercise or non-exercise of the rights described in this Section 3.4 shall
not adversely affect the Co-Sale rights of Stockholders described in Section
3.5.

         3.5. CO-SALE RIGHTS. Except for Permitted Transfers pursuant to Section
3.2 or transfers to Franklin pursuant to Section 3.4, no Major Shareholder shall
Transfer his Stockholder Shares (or any interest therein) in one transaction or
a series of related transactions to any Person (a "Third Party") unless the
following provisions in this Section 3.5 are complied with:

             (a) Any Major Shareholder (the "'Seller") making a Transfer of
Stockholder Shares ("CO-SALE SHARES") to a Third Party shall deliver a Notice of
Transfer to Franklin prior to making any such Transfer of his Co-Sale Shares.
The Notice of Transfer will also contain (i) a copy of the definitive
documentation pursuant to which the Co-Sale Shares will be Transferred and (ii)
confirmation that the Third Party has been informed of the provisions of this
Section 3.5 and has agreed to purchase any and all Co-Sale Shares, proposed to
be sold in accordance with the terms of this Section 3.5. A Notice of Transfer
provided pursuant to Section 3.4 will suffice as due Notice of Transfer and will
apply to Shares not acquired per Section 3.4.

             (b) Franklin may elect to participate in the Transfer contemplated
by Section 3.5(a) above by delivering a written notice (an "ELECTION NOTICE") to
the Seller within ten (10) days after receipt of such Notice of Transfer, and
Franklin may elect to Transfer in such contemplated Transfer up to that number
of shares Common Stock (collectively referred to herein as "TAG ALONG SHARES")
that is equal to the product of (a) the number of Co-Sale Shares proposed to be
sold by the Seller multiplied by (b) a fraction the numerator of which is the
total number of Shares owned by Franklin and the denominator of which is the
total number of Stockholder Shares held by the Seller and by Franklin. If
Franklin fails to deliver an Election Notice by the close of business on the
tenth (10th) day after receipt of a Notice of Transfer, Franklin shall be deemed
to have elected not to participate in the Transfer covered by such Election
Notice.

             (c) If participating in a Transfer, Franklin shall deliver to the
Third Party at a closing to be held at the offices of the Company (or such other
place as the parties agree), one or more certificates, properly endorsed for
Transfer, which represent the number of Tag Along Shares which Franklin elects
to Transfer, and may Transfer, pursuant to this Section 3.5. Such certificates
shall be transferred by the Seller to the Third Party simultaneously with the
consummation of the Transfer of the Co-Sale Shares pursuant to the terms and
conditions specified in the Notice of Transfer against receipt by Franklin of
the proceeds of the Transfer of its Tag Along Shares. If there is to be an
agreement of sale or similar instrument with respect to the proposed Transfer (a
"SALE AGREEMENT"), the Seller will furnish a copy of the Sale Agreement in its
then current form to Franklin with the Notice of Transfer. As promptly as
practicable after receipt

                                       5

<PAGE>

of an Election Notice, if the Sale Agreement has not previously been executed,
the Seller shall furnish Franklin with successive drafts of the Sale Agreement,
if any, as available.

             (d) The exercise or non exercise of the rights of Franklin to
participate in one or more Transfers of Co-Sale Shares made by a Seller shall
not adversely affect its rights to participate in subsequent Transfers of
Co-Sale Shares by the Major Shareholders (including the Seller) which meet the
conditions specified in this Section 3.5.

             (e) Any Transfer made pursuant to Section 3.5(a) shall be
consummated on the terms set forth in the Notice of Transfer. The Company shall
use reasonable efforts to aid such closing, including, but not limited to,
exchanging Franklin's certificates for new certificates in requested
denominations.

             (f) The Co-Sale rights described in this Section 3.5 shall not
apply to (i) all Permitted Transfers; or (ii) Transfers to Franklin per Section
3.4.

             (g) The covenants set forth in this Section 3.5 shall terminate and
be of no further force or effect following the date of a Qualified Public
Offering.

         3.6. NO TRANSFERS TO COMPETITORS. Notwithstanding any other provisions
of this Agreement to the contrary, no Major Shareholder nor any Permitted
Transferee may, directly or indirectly, Transfer any Stockholder Shares to a
Competitor pursuant to Sections 3.4 and 3.5 hereof, or otherwise. "COMPETITOR"
shall be defined as any Person that designs and develops wireless modem products
and/or which manufactures, licenses or distributes such products, or engages in
any business which competes with the products or services offered by the Company
at the time of the subject Transfer.

         3.7. DRAG ALONG RIGHTS; PROPOSED CHANGE OF CONTROL.

             (a) DRAG-ALONG PROVISIONS. If Franklin proposes or approves a
transaction or series of transactions with any person or entity which is not an
Affiliate of the Company or its Stockholders (collectively, a "BUYER") that will
result in a Change of Control, the Major Shareholders agree to (i) vote all
Stockholder Shares held by such Major Shareholders in favor of such Change of
Control (and in opposition of any and all proposals that are intended, or could
reasonably be expected, to delay, prevent, impair, interfere with, postpone or
adversely effect the ability of the Company to consummate such Change of
Control), (ii) sell or exchange all such Stockholder Shares then held by such
Major Shareholders pursuant to the terms and conditions of such Change of
Control transaction, (iii) refrain from exercising any dissenters' rights or
rights of appraisal under applicable law at any time with respect to such Change
of Control transaction, and (iv) execute and deliver all related documentation
and take such other action in support of the Change of Control transaction as
shall reasonably be requested by the Company.

             (b) NOTICE OF SALE; APPOINTMENT. Not less than thirty (30) days
prior to the date proposed for the closing of any transaction pursuant to
Section 3.7(a), Franklin shall give written notice to each of the Major
Shareholders, setting forth in reasonable detail the name or names of the Buyer,
the terms and conditions of the transaction, including the purchase price, and
the proposed closing date. In furtherance of the provisions of this Section 3.7,
each of the Major Shareholders hereby (i) irrevocably appoints a representative
of Franklin as his or its attorney-in-fact

                                       6

<PAGE>

(with full power of substitution) to execute all agreements, instruments and
certificates and take all actions necessary or desirable to effectuate any sale
hereunder and (ii) grants to such designated representatives a proxy (which
shall be deemed to be coupled with an interest and irrevocable) to vote the
Stockholder Shares held by such Major Shareholder and exercise any consent
tights applicable thereto in favor of any transaction hereunder; provided,
however, that such designees shall not exercise such powers-of-attorney or
proxies with respect to any Major Shareholder unless such Major Shareholder is
in breach of its obligations under this Section 3.7.

     4. REGISTRATION RIGHTS.

         4.1. REQUESTED REGISTRATION.

             (a) REQUEST FOR REGISTRATION. If, at any time after six months
after the effective date of a Qualified Public Offering the Company shall
receive from Franklin a written request that the Company effect any
registration, qualification or compliance with respect to an offering of
Registrable Securities for an aggregate offering price of at least $500,000 the
Company will as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Article 4;

                  (i) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;

                  (ii) After the Company has effected one such registration
pursuant to this Section 4.1;

         Subject to the foregoing clauses (i) and (ii) the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request of Franklin;
provided, however, that if the Company shall furnish to Franklin a certificate
signed by the Company's Chief Executive Officer or Chairman of the Board stating
that in the good faith judgment of the Board, it would be seriously detrimental
to the Company and its Stockholders for such registration statement to be filed
and it is therefore necessary to defer the filing of the registration statement,
the Company shall have the right to defer such filing for a period not in excess
of 150 days.

             4.2. EXPENSES OF REGISTRATION. All expenses incurred in connection
with any registration, qualification or compliance pursuant to this Article 4,
including all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for the Company and Franklin, and expenses of
any special audits incidental to such registration, shall be borne by the
Company.

                                       7

<PAGE>

             4.3. REGISTRATION PROCEDURES. In the case of any registration,
qualification or compliance effected by the Company pursuant to this Article 4,
the Company will keep Franklin advised in writing as to the initiation of the
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will, except as otherwise provided herein:

                  (i) keep such registration, qualification or compliance
pursuant to this Article 4, effective until the Registrable Securities are
saleable under SEC Rule 144, or Franklin has completed the distribution
described in the registration statement relating thereto, whichever first
occurs;

                  (ii) furnish such number of prospectuses and other documents
incident thereto as Franklin from time to time may reasonably request;

                  (iii) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by Franklin, provided that the Company shall not be required in
connection therewith or as a condition thereto to do business or file a general
consent to service of process in any such jurisdictions;

                  (iv) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering;

                  (v) Notify Franklin, as a holder of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;

                  (vi) Cause all such Registrable Securities registered pursuant
hereto to be listed on each securities exchange on which similar securities
issued by the Company are registered; and

                  (vii) Provide a transfer agent and registrar for all such
Registrable Securities registered pursuant hereto and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.

         4.4. INDEMNIFICATION.

             (a) The Company will indemnify Franklin, each of its officers,
directors and partners, and each person controlling Franklin, with respect to
which registration, qualification or compliance has been effected pursuant to
this Article 4 and each underwriter, if any, and each person who controls any
underwriter of the Registrable Securities held by or issuable to Franklin,
against all claims, losses, damages, costs, expenses and liabilities whatsoever
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other documents (including any
related registration, statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to

                                       8

<PAGE>

state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or any state securities law or of any rule or regulation
promulgated under the Securities Act or any state securities law applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse Franklin, each of its officers and directors, and each person
controlling Franklin, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage, cost,
expense, liability or action, provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, cost, expense, or
liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by an instrument duly executed
by Franklin or underwriter and stated to be specifically for use therein.

             (b) Franklin will, severally, if and to the extent Registrable
Securities held by or issuable to Franklin are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers who sign such
registration statement, each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
within the meaning of the Securities Act, against all claims, losses, damages,
costs, expenses and liabilities whatsoever (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other documents (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made not misleading, and will reimburse the Company, such directors, officers,
persons or underwriters for any legal or any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
cost, expense, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by Franklin
and stated to be specifically for use therein; provided, however, that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement becomes effective or the amended prospectus filed with
the SEC pursuant to Rule 424(b) (the "FINAL PROSPECTUS"), such indemnity
agreement shall not inure to the benefit of any underwriter or Franklin, if
there is no underwriter, if a copy of the Final Prospectus was furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such action is required by the Securities Act; and provided further,
the total amount for which Franklin shall be liable under this Section 4.4 shall
not in any event exceed the aggregate proceeds received by Franklin from the
sale of Registrable Securities held by Franklin in such registration.

             (c) Each party entitled to indemnification under this Section 4.4
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying

                                       9

<PAGE>

Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 4.4. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. If any such Indemnified Party shall have been
advised by counsel chosen by it that there may be one or more legal defenses
available to such Indemnified Party which are different from or additional to
those available to the Indemnifying Party, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party and will reimburse such Indemnified Party and any person controlling such
Indemnified Party for the reasonable fees and expenses of any counsel retained
by the Indemnified Party, it being understood that the Indemnifying Party shall
not, in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for such Indemnified Party or controlling person,
which firm shall be designated in writing by the Indemnified Party to the
Indemnifying Party.

                  4.5. INFORMATION BY FRANKLIN. Franklin, as the holder of
         Registrable Securities included in any registration, shall furnish to
         the Company such information regarding Franklin and the distribution
         proposed by Franklin as the Company may request in writing and as shall
         be required in connection with any registration, qualification or
         compliance referred to in this Article 4.

                  4.6. SALE WITHOUT REGISTRATION. If at the time of any Transfer
         (other than a Transfer not involving a change in beneficial ownership)
         of any Shares or Registrable Securities, such Shares or Registrable
         Securities shall not be registered under the Securities Act, the
         Company may require, as a condition of allowing such Transfer, that
         Franklin or transferee furnish to the Company (a) such information as
         is necessary in order to establish that such Transfer may be made
         without registration under the Securities Act; and (b) at the expense
         of Franklin or transferee, an opinion by legal counsel designated by
         Franklin or transferee and satisfactory to the Company, satisfactory in
         form and substance to the Company, to the effect that such Transfer may
         be made without registration under such Act; provided that nothing
         contained in this Section 4.6 shall relieve the Company from complying
         with any request for registration, qualification or compliance made
         pursuant to the other provisions of this Article 4.

                  4.7. RULE 144 REPORTING. With a view to making available to
         Franklin the benefits of certain rules and regulations of the SEC which
         may permit the sale of the Shares or Registrable Securities to the
         public without registration, following the Company's initial Public
         Offering the Company agrees to:

             (a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety days after the
effective date of the first registration statement filed by the Company which
involves a sale of securities of the Company to the general public;

                                       10

<PAGE>

             (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and

             (c) furnish to Franklin so long as Franklin owns any Registrable
Securities forthwith upon request a written statement by the Company that it has
complied with the reporting requirements of said Rule 144 (at any time after
ninety days after the effective date of said first registration statement filed
by the Company) and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably requested in availing
Franklin of any rule or regulation of the SEC permitting the selling of any such
securities without registration.

         4.8. STOP TRANSFER INSTRUCTIONS. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to the
Registrable Securities of Franklin (and the shares of securities of every other
person subject to the foregoing restriction) until the end of such period.

         4.9. EXPIRATION OF RIGHTS. All registration rights shall expire and not
apply to Franklin upon the date Franklin is eligible to sell in a three-month
period pursuant to SEC Rule 144 all Registrable Securities held by Franklin.

         4.10. ASSIGNMENT OF RIGHTS. The rights to cause the Company to register
Registrable Securities pursuant to this Section 4 may be assigned (but only with
all related obligations) by Franklin to a transferee or assignee of at least
Fifty Thousand (50,000) shares of such Registrable Securities (subject to
adjustment for stock splits, stock dividends, reclassification or the like),
provided the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; and provided, further, that such assignment shall be effective only if
the transferee agrees in writing to be bound by this Agreement and immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.

     5. COVENANTS OF THE COMPANY AND THE MAJOR SHAREHOLDERS.

         5.1. FINANCIAL STATEMENTS. The Company shall maintain true and complete
books and records of account in accordance with U.S. GAAP. The Company will
furnish or cause to be furnished to each Stockholder:

             (a) Within one hundred and twenty (120) days after the end of each
fiscal year of the Company, [audited] consolidated financial statements,
including an audited balance sheet showing the financial condition of the
Company and any subsidiaries as of the close of such fiscal year, together with
a statement of stockholder's equity as of the end of such year and statements of
income and cash flow;

             (b) As soon as reasonably possible, and in any event within
forty-five (45) days after the end of each calendar quarter, a quarterly report,
including without limitation, sales reports, profit and loss statements, an
unaudited balance sheet, a statement of income and cash

                                       11

<PAGE>

flows of the Company and its subsidiaries for and as at the end of such calendar
quarter and any other reports Franklin may request; and

             (c) As soon as practical after its approval by the Board, a copy of
the Company's operating budget for each fiscal year.

         5.2. TERMINATION OF INFORMATION COVENANTS. The covenants and
restrictions set forth in Section 5.1 shall terminate and be of no further force
or effect following the date of a Qualified Public Offering.

         5.3. REPORTS TO THE BOARD; ANNUAL BUDGET. The Major Shareholders shall
cause the Company to provide operational and financial reports to the Board at
least quarterly. The annual budget shall be submitted for approval to the Board
by the Majority Shareholders. The operational and financial reports shall
include reports of operations, reports of adverse developments and financial
reports.

         5.4. BOARD OF DIRECTORS; BOARD REPRESENTATION.

             (a) As a condition to the Closing (as defined in the Stock Purchase
Agreement), and, thereafter, at any time that members of the Board are to be
elected, whether at an annual or special meeting of the stockholders of the
Company, or by written consent, the parties agree to vote or act with respect to
their shares so as to elect two (2) members of the Board designated by Franklin,
who shall initially be OC Kim and Joon Won Jyoung so long as Franklin or its
Affiliates holds its Stockholder Shares.

             (b) NOMINATION OF NEW DIRECTORS. In the event of the resignation,
death, removal or disqualification of a director elected under Section 5.4(a)
hereof, a new director shall promptly be nominated by Franklin.

             (c) REMOVAL. A director elected under Section 5.4(a) or 5.4(b)
hereof may be removed at any time and from time to time, with or without cause
(subject to the Charter, Bylaws or other applicable governing instrument of the
Company as in effect from time to time and any requirements of law), after
written notice to each of the parties of the new nominee to replace such
director, by Franklin.

             (d) FAILURE TO DESIGNATE A BOARD MEMBER. In the absence of any
designation from the persons or groups with the right to designate a director as
specified above, the director previously designated by them and then serving
shall be reelected if still eligible to serve as provided herein.

             (e) NO REVOCATION. The voting agreements contained herein are
coupled with an interest and may not be revoked during the term of this
Agreement.

             (f) NO LIABILITY FOR ELECTION OF RECOMMENDED DIRECTORS. Neither the
Company, nor any party, nor any officer, director, stockholder, partner,
employee or agent of any such party, makes any representation or warranty as to
the fitness or competence of the designee of any party hereunder to serve on the
Board by virtue of such party's execution of this Agreement or by the act of
such party in voting for such designee pursuant to this Agreement.

                                       12

<PAGE>

         5.5. APPROVAL. The following decisions shall require prior written
approval by Franklin:

             (a) Sale, transfer, lease or exchange of all or substantially all
of the Company's assets;

             (b) Sale or licensing of all or substantially all of the Company's
intellectual property;

             (c) Dissolution of the Company or cessation of the Company's
business, in whole or in part;

             (d) The use of the Company, or any portion of the Company,
including without limitation, its future sales, assets, tangible assets or stock
as collateral;

             (e) The transfer or assignment of any of the Company's rights and
duties to any third party;

             (f) Creation of any stock option or other equity incentive stock
plan;

             (g) The grant of any stock options or stock awards to any Person,
including without limitation, shareholders employees, officers, directors, or
contractors;

             (h) Any amendments to the Company's Charter, Bylaws, or other
applicable governing instrument;

             (i) Any change in the structure or composition of the Board, or any
other material change in the management of the Company;

             (j) Creation of any board committees;

             (k) Additional investment and dilution events, including without
limitation, the issuance of convertible bonds, stock splits, or an initial
public offering of the Company's securities; or

             (1) Issuance of additional Stock to Major Shareholders or
representatives of Major Shareholders. The covenants set forth in this Section
5.5 shall terminate and be of no further force or effect following the date of a
Qualified Public Offering.

         5.6. AFFIRMATIVE COVENANTS. The Company (and the Major Shareholders, as
appropriate), shall:

             (a) Maintain adequate property and business insurance;

             (b) Comply with all applicable laws, rules, and regulations;

                                       13

<PAGE>

             (c) Preserve, protect, and maintain its existence as a corporation;
its rights, franchises and privileges; and all properties necessary or useful to
the proper conduct of its business;

             (d) To the extent permitted by applicable law, cause all officers,
employees, consultants, and as appropriate, service providers and vendors, to
execute and deliver non-competition, non-solicitation, non-hire, nondisclosure,
and assignment of invention and other intellectual property agreements for a
term of their employment or association with the Company plus two years in a
form reasonably acceptable to the Board;

             (e) Not enter into related party transactions without the consent
of the Board; and

             (f) Not to carry out any action that will materially and adversely
affect the interests of the Company.

         5.7. COVENANTS OF MAJOR SHAREHOLDERS; MILESTONES. Notwithstanding any
other provision to the contrary in this Agreement, each Major Shareholder shall,
upon the occurrence of the Company's failure to meet each of the development,
sales and net profit milestones set forth on ANNEX 1, transfer to Franklin his
Stockholder Shares according to the formulas set forth on ANNEX 1; provided that
the total number of Stockholder Shares transferred by both of the Major
Shareholders shall not exceed 109,350 Shares, with a maximum of 73,265
Stockholder Shares to be transferred by Jae Ho Cho and a maximum of 36,085
Stockholder Shares to be transferred by Seok Kwon Hong.

         5.8. SALES OF ADDITIONAL SHARES. If at any time after the Effective
Date of this Agreement, the Company sells Shares at a price per Share which is
less than the price per Share paid by Franklin pursuant to the Stock Purchase
Agreement, the Company shall immediately, via check or wire transfer, distribute
to Franklin the amount of the difference between (x) the price per Share paid by
Franklin and (y) the price per Share at which the Company sold the Shares,
multiplied by the total number of Shares purchased by Franklin pursuant to the
Stock Purchase Agreement.

     6. AFTER-ACQUIRED SHARES. Whenever any Stockholder hereafter acquires any
shares of the Company, such shares so acquired shall be subject to all of the
terms and provisions of this Agreement and shall be deemed "Shares" for all
purposes hereof. In the event of changes in the outstanding capital stock of the
Company by reason of stock dividends, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations, the merger
or consolidation of the Company, reorganizations, liquidations or the like, or
other change in the Company's capital structure, any shares of capital stock
acquired by a Stockholder on account of such event shall be subject to all of
the terms and provisions of this Agreement and shall be deemed "Shares" for all
purposes hereof.

     7. MISCELLANEOUS PROVISIONS.

         7.1. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company and Franklin. The
failure of any party to enforce any of the provisions of

                                       14

<PAGE>

this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

         7.2. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

         7.3. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein,
this Agreement and the Stock Purchase Agreement of even date herewith, embody
the complete agreement and understanding among the parties hereto with respect
to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.

         7.4. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties (including transferees of any
of the Stockholder Shares).

         7.5. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

         7.6. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, mailed first class mail
(postage prepaid), sent by reputable overnight courier service (charges
prepaid), or sent both by facsimile and the following day by a reputable
overnight courier service to the Company at the address set forth below, to a
Stockholder at the address indicated below his signature and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally or by facsimile, three days after deposit in the U.S. mail
and one day after deposit with a reputable overnight courier service.

If to the Company:    Diffon Corporation
                      Attn: President
                      Digital Tower Aston 1505
                      505-15 Gasan, Geumcheon
                      Seoul, Korea 153803

Copy to (not constituting notice):

                      ----------------------------
                      ----------------------------

                                       15

<PAGE>

                      ----------------------------
                      ----------------------------

If to Franklin:
                      Franklin Wireless
                      Corporation Attn: President
                      5440 Morehouse Drive, Suite 1000
                      San Diego, California 92121 USA

Copy to (not constituting notice):

                      Harry J. Proctor, Esq.
                      Miguel A. Smith, Esq.
                      Solomon Ward Seidenwurm & Smith LLP
                      401 B Street, Suite 1200
                      San Diego, California 92101 USA
                      (619) 231-4755 (facsimile)

         7.7. HEADINGS AND INTERPRETATION. The headings of the Sections of this
Agreement have been included only for convenience, and may not be deemed in any
manner to modify or limit any of the provisions of this Agreement, or be used in
any manner in the interpretation of this Agreement. Whenever the context so
requires in this Agreement, all words used in the singular will be construed to
have been used in the plural (and vice versa), each gender will be construed to
include any other genders, and the word "person" will be construed to include a
natural person, corporation, firm, partnership, joint venture, trust, estate, or
any other entity. Each party to this Agreement has reviewed and revised this
Agreement. Each party to this Agreement has had the opportunity to have such
party's legal counsel review and revise this Agreement. The rule of construction
that any ambiguities are to be resolved against the drafting party will not be
employed in the interpretation of this Agreement or of any amendments or
exhibits to this Agreement.

         7.8. INJUNCTIVE RELIEF. Each Party acknowledges and agrees that each
party may be irreparably damaged in the event any of the provisions of this
Agreement are not performed by the parties in accordance with their specific
terms or are otherwise breached. Accordingly, it is agreed that each of the
parties shall be entitled to seek an injunction to prevent breaches of this
Agreement.

         7.9. GOVERNING LAW. The construction, validity, interpretation and
enforceability of this Agreement and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of
California, without giving effect to any choice of law or conflict of law rules
or provisions contained therein.

         7.10. VENUE AND JURISDICTION. For purposes of venue and jurisdiction,
this Agreement will be deemed made and to be performed in San Diego County,
California. Venue for all purposes will lie exclusively with the state and
federal courts located in San Diego County, California, which courts have
personal jurisdiction and venue over each of the parties to this Agreement for
the purpose of adjudicating all matters arising out of or related to this
Agreement. Each party authorizes and accepts service of process sufficient for
personal jurisdiction in any action against it as contemplated by this Section
by registered or certified mail, return receipt requested, postage prepaid, to
its address for the giving of notices set forth in this Agreement.

                                       16

<PAGE>

                    SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

THE COMPANY:                              DIFFON CORPORATION

                                          By: /s/ Ji Ho Cho
                                              ----------------------------------
                                              Ji Ho Cho, CEO

MAJOR SHAREHOLDERS:                       /s/ Ji Ho Cho
                                          --------------------------------------
                                          Ji Ho Cho

                                          -----------------------
                                          -----------------------
                                          -----------------------

                                                    Shares of Common Stock
                                          ---------

                                          /s/ Seok Kwon Hong
                                          --------------------------------------
                                          Seok Kwon Hong

                                          -----------------------
                                          -----------------------
                                          -----------------------

                                                    Shares of Common Stock
                                          ---------

FRANKLIN:                                 FRANKLIN WIRELESS CORPORATION

                                          By: /s/ OC Kim
                                              ----------------------------------
                                             OC Kim, President

                                             N/A Shares of Common Stock

                                       17

<PAGE>

                                     ANNEX I
                                   MILESTONES

           Milestone Measurement Period: [Oct 1, 2009 to Sep 30, 20101

The maximum number of shares to be transferred to Franklin is 109,350 (the
"Transfer Shares"), with a maximum of 73,265 to he transferred by Ji Ho Cho
("Cho") and a maximum of 36,350 to be transferred by Seok Kwon Hong ("Hong").

<TABLE>
<S>              <C>
Nature           Milestone                    Overall       Maximum          Example/Formula
of Activity                                   Percentage    Number of
                                              Weight        Shares
                                                            Transferred
-------------    --------------------------   ----------   ---------------   -------------------------------------------------------
Development      Failure or 100% "Success."   60%          65,610*           If 2 models achieve Success and 1 model fails, the
                 ("Success" means the                                        Company will have achieved 66.67% (or 2/3) success for
                 production and launch of                  [60% x 109,350    the Development milestone and 33.33% (1/3) failure for
                 each model)                               = 65,610]         the Development milestone. The Major Shareholders shall
                                                                             transfer 33.33% x 60% =19,99% of the Transfer Shares
                 3 models (U150, U210 and                                    to Franklin. [19.99%x 109,350 = 21,870 shares]
                 U600)
                                                                             Success of:
                 33.3% of the total 40%                                      0 Models = 65,610 shares transferred
                 overall percentage weight                                   1 Model = 43,742 shares transferred
                 shall be attributed to each                                 2 Models = 21,870 shares transferred
                 model.                                                      3 Models = 0 shares transferred
-------------    --------------------------   ----------   ---------------   -------------------------------------------------------
Sales            $30M                         20%          21,870*           If the Company achieves sales of $20M, it will
                                                                             have achieved 66.67% (2/3) success for the Sales
                                                           [20% x 109,350    milestone and 3333% (1/3) failure for the Sales
                                                           = 21,870]         milestone. The Major Shareholders shall transfer 33.33%
                                                                             (1/3) x 20% =6.67% of the Transfer Shares to Franklin.
                                                                             [6.67% x 109,350 = 7,289 shares]

                                                                             The number of shares to be transferred shall be
                                                                             calculated as follows: (y) x 20% = the total percentage
                                                                             of Transfer Shares to be transferred to Franklin.

                                                                             y = the percentage failure of the Company for the Sales
                                                                             milestone
-------------    --------------------------   ----------   ---------------   -------------------------------------------------------
Net Profit       $4.8M                        20%          21,870*           If the Company achieves a net profit of $3M, it will
                                                                             have achieved 62.5% success for the Net Profit
                                                           [20% x 109,350    milestone and 37.5% failure for the Net Profit
                                                           = 21,870]         milestone. The Major Shareholders shall transfer 37,5%
                                                                             x 20% =7.5% of the Transfer Shares to Franklin.
                                                                             [7.5% x 109,350 = 8,201 shares]

                                                                             The number of shares to be transferred shall be
                                                                             calculated as follows: (y) x 20% = the total percentage
                                                                             of Transfer Shares to be transferred to Franklin.

                                                                             y = the percentage failure of the Company for the Net
                                                                             Profit milestone.
-------------    --------------------------   ----------   ---------------   -------------------------------------------------------

* 67% shall be Cho's Transfer Shares and 33% shall be Hong's Transfer Shares.

</TABLE>

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