EXHIBIT 10.1

THE SECURITY  REPRESENTED BY THIS  CERTIFICATE  HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION  MAY BE EFFECTED  WITHOUT AN EFFECTIVE  REGISTRATION
STATEMENT  RELATED THERETO OR AN OPINION OF COUNSEL  SATISFACTORY TO THE COMPANY
THAT SUCH  REGISTRATION  IS NOT REQUIRED  UNDER THE  SECURITIES  ACT OF 1933, AS
AMENDED.


                             STOCK OPTION AGREEMENT


         THIS STOCK OPTION  AGREEMENT  ("Agreement") is made effective as of the
date of grant set forth below  ("Date of Grant") by and between  XSUNX,  INC., a
Colorado corporation  ("Company"),  and the optionee named below ("Optionee") as
contemplated in the Company's 2007 Option Plan ("Plan").  Capitalized  terms not
defined herein shall have the meaning ascribed to them in the Plan.


Optionee:  Michael A. Russak

Social Security Number:

Address:

Total Option Shares:       500,000

Exercise Price Per Share: $0.36

Date of Grant: November 26, 2007

First Vesting Date:        see Section 3

Expiration Date for Exercise of Options:    November 25, 2012

Stock Option Number: 07-027


Type of Stock Option:
(Check one)          [ ] Incentive Stock Option       [ ] Statutory Stock Option




                                     1 of 12
<PAGE>


1.  Conditional  Grant of Option.  The Company  hereby  conditionally  grants to
Optionee an option  ("Option")  to purchase the total number of shares of Common
Stock of the Company set forth above  ("Shares") at the Exercise Price Per Share
set forth above ("Exercise  Price"),  subject to all of the terms and conditions
of this  Agreement  and the Plan.  If  designated  as an Incentive  Stock Option
above,  the Option is intended to qualify as an "incentive stock option" ("ISO")
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended  ("Code").  Subject to the Plan,  only  Employees  of the Company  shall
receive ISOs. This Agreement shall be deemed a Stock Option Agreement as defined
in the Plan.  The terms and  conditions of the Plan are  incorporated  herein by
this reference.  All specific terms and references,  including capitalized terms
and references, which are undefined in this Agreement, shall have the definition
and meaning ascribed to them in the Plan,  including,  without  limitation,  the
definition of the terms Employee and Consultant.

2. Exercise  Price.  The Exercise  Price, is not less than the fair market value
per share of Common  Stock on the date of grant,  as  determined  by the  Board;
provided,  however,  in  the  event  Optionee  is an  Employee  and  owns  stock
representing  more than ten percent (10%) of the total combined  voting power of
all classes of stock of the Company or of its Parent or Subsidiary  corporations
immediately  before the Option is granted,  said exercise price is not less than
one  hundred ten  percent  (110%) of the fair  market  value per share of Common
Stock on the date of grant as determined by the Board.

3. Exercise of Option.  Subject to the vesting schedule contained herein and the
other  conditions set forth in this Agreement,  all or part of the Option may be
exercised  prior to its  expiration  from the first vesting date set forth above
("First  Vesting Date") up to and including 5:00 p.m.  Pacific  Standard Time on
the expiration date set forth above ("Expiration Date") at the time or times set
forth herein in accordance with the provisions of the Plan as follows:

        (i)      Vesting:

                (a)   Beginning  November  26,  2007 the  Option  shall vest and
                      become  exercisable  at the rate of 62,500 Shares upon the
                      anniversary of each calendar quarter of continuous service
                      as a Director,  or prorated portion thereof,  for services
                      rendered as a member of the Company  Board of Directors up
                      to a total of 500,000 shares.

                (b)   This  Option  may  not  be  exercised  for a fraction of a
                      Share.

                (c)   In no event may the Option be exercised  after the date of
                      expiration  of the  term of the  Option  as set  forth  in
                      Section 8 below.

        (ii)        Method of  Exercise.  The  Option  shall be  exercisable  by
                    written  notice  which shall state the  election to exercise
                    the  Option,  the  number of Shares in  respect of which the
                    Option is being  exercised,  and such other  representations
                    and  agreements  as to the holder's  investment  intent with
                    respect to such shares of Common Stock as may be required by
                    the Company pursuant  to  the provisions of  the Plan.  Such


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<PAGE>

                    written  notice  shall be  signed by  Optionee  and shall be
                    delivered in person or by certified  mail to the  President,
                    Secretary or Chief  Financial  Officer of the  Company.  The
                    written  notice  shall  be  accompanied  by  payment  of the
                    exercise price.

        (iii)       Compliance  with Law. No Shares  will be issued  pursuant to
                    the  exercise  of an Option  unless such  issuance  and such
                    exercise  shall comply with all relevant  provisions  of law
                    and the  requirements  of any stock  exchange  or  quotation
                    medium  upon  which the Shares may then be listed or quoted.
                    Assuming such compliance, for income tax purposes the Shares
                    shall be considered  transferred to the Optionee on the date
                    on which  the  Option  is  exercised  with  respect  to such
                    Shares.

        (iv)        Adjustments, Merger, etc. The number and class of the Shares
                    and/or the exercise price  specified  above are sub- ject to
                    appropriate  adjustment  in  the  event  of  changes  in the
                    capital stock of the Company by reason of stock divi- dends,
                    stock  splits,   combination  or  recombination  of  shares,
                    reclassifications,     mergers,    consolidations,    reorg-
                    anizations or  liquidations.  Subject to any required action
                    of the stockholders of the Company,  if the Company shall be
                    the surviving  corporation in any merger or consolida- tion,
                    the Option (to the extent  that it is still  outstand-  ing)
                    shall  pertain  to and  apply to the  securities  to which a
                    holder of the same number of shares of Common Stock that are
                    then  subject to the  Option  would  have been  entitled.  A
                    dissolution or  liquidation  of the Company,  or a merger or
                    consolidation  in which  the  Company  is not the  surviving
                    corporation,  will cause the Option to terminate, unless the
                    agreement  or  merger  or   consolidation   shall  otherwise
                    provide,  provided  that the  Optionee  shall,  if the Board
                    expressly   authorizes,   in  such   event  have  the  right
                    immediately  prior to such  dissolution or  liquidation,  or
                    merger or consolidation,  to exercise the Option in whole or
                    part. To the extent that the foregoing adjustments relate to
                    stock or securities of the Company, such adjust- ments shall
                    be made by the Board,  whose  determination  in that respect
                    shall be final, binding and conclusive.

4. Optionee's  Representations.  By receipt of the Option, by its execution, and
by its  exercise in whole or in part,  Optionee  represents  to the Company that
Optionee understands that:

      (i)           Both the Option and any Shares  purchased  upon its exercise
                    are  securities,  the  issuance  by  the  Company  of  which
                    requires compliance with federal and state securities laws;

      (ii)          These  securities are made available to Optionee only on the
                    condition that Optionee makes the representations  contained
                    in this Section 4 to the Company;

      (iii)         Optionee has made a reasonable  investigation of the affairs
                    of the  Company  sufficient  to be well  informed  as to the
                    rights and the value of these securities;

      (iv)          Optionee  understands  that  the  securities  have  not been
                    registered under the Securities Act of 1933, as amended (the
                    "Act")  in  reliance  upon one or more  specific  exemptions
                    contained in the Act, which may include reliance on Rule 701
                    promulgated under the Act, if available, or which may depend
                    upon:  (a)  Optionee's  bona fide  investment  intention  in
                    acquiring these securities; (b) Optionee's intention to hold
                    these  securities  in  compliance  with  federal  and  state
                    securities laws; (c) Optionee having no present intention of
                    selling or transferring any part thereof  (recognizing  that
                    the Option is not  transferable)  in violation of applicable

                                     3 of 12
<PAGE>

                    federal  and state  securities  laws;  and (d)  there  being
                    certain  restrictions  on transfer of the Shares  subject to
                    the Option;

      (v)           Optionee  understands that the Shares subject to the Option,
                    in addition to other restrictions on transfer,  must be held
                    indefinitely unless  subsequently  registered under the Act,
                    or unless an exemption from registration is available;  that
                    Rule 144, the usual  exemption  from  registration,  is only
                    available after the  satisfaction of certain holding periods
                    and in the presence of a public market for the Shares;  that
                    there is no  certainty  that a public  market for the Shares
                    will exist, and that otherwise it will be necessary that the
                    Shares  be  sold   pursuant   to  another   exemption   from
                    registration which may be difficult to satisfy; and,

      (vi)          Optionee  understands that the certificate  representing the
                    Shares will bear a legend  prohibiting their transfer in the
                    absence of their  registration or the opinion of counsel for
                    the Company that registration is not required,  and a legend
                    prohibiting  their  transfer in compliance  with  applicable
                    state securities laws unless otherwise exempted.

5. Method of Payment.  Payment of the purchase  price may be made subject to the
terms of Section 14 herein,  or by cash, check or, in the sole discretion of the
Board at the time of exercise,  promissory notes or other Shares of Common Stock
having  a fair  market  value on the date of  surrender  equal to the  aggregate
purchase price of the Shares being purchased.

6. Restrictions on Exercise.  The Option may not be exercised if the issuance of
such Shares upon such  exercise  or the method of payment of  consideration  for
such Shares  would  constitute a violation  of any  applicable  federal or state
securities  or other law or  regulation.  As a condition  to the exercise of the
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

7.  Non-Transferability  of Option.  The Option  may not be  transferred  in any
manner  otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee, only by Optionee. The terms of the
Option shall be binding upon the executors,  administrators,  heirs,  successors
and assigns of Optionee.

8. Term of Option. The Option may not be exercised more than five (5) years from
the date of grant of the Option,  and may be exercised  during such term only in
accordance with the Plan and terms of the Option.

9. Early Disposition of Stock;  Taxation Upon Exercise of Option. If Optionee is
an Employee and the Option qualifies as an ISO,  Optionee  understands  that, if
Optionee  disposes of any Shares  received under the Option within two (2) years
after the date of this  Agreement  or within one (1) year after such Shares were
transferred to Optionee, Optionee may be treated for federal income tax purposes
as having received ordinary income at the time of such disposition in any amount
generally  measured as the difference  between the price paid for the Shares and
the lower of the fair market  value of the Shares at the date of exercise or the
fair market value of the Shares at the of  disposition.  Any gain  recognized on
such  premature  sale of the Shares in excess of the amount  treated as ordinary

                                     4 of 12
<PAGE>

income may be  characterized  as capital gain.  Optionee hereby agrees to notify
the  Company  in  writing  within  thirty  (30) days  after the date of any such
disposition.  Optionee  understands that if Optionee  disposes of such Shares at
any time after the expiration of such two-year and one-year holding periods, any
gain on such sale may be  treated  as  long-term  capital  gain laws  subject to
meeting  various  qualifications.  If  Optionee  is a  Consultant  or  this is a
Nonstatutory  Stock  Option,  Optionee  understands  that,  upon exercise of the
Option, Optionee may recognize income for tax purposes in an amount equal to the
excess of the then fair market value of the Shares over the exercise price. Upon
a resale of such shares by the Optionee,  any difference  between the sale price
and the fair  market  value of the Shares on the date of  exercise of the Option
may be treated as capital gain or loss.  Optionee  understands  that the Company
may be required to withhold tax from Optionee's current  compensation in some of
the  circumstances  described  above  (and  Optionee  hereby so  authorizes  the
Company);  to the extent that Optionee's current compensation is insufficient to
satisfy the withholding  tax liability,  the Company may require the Optionee to
make a cash  payment to cover such  liability  as a condition to exercise of the
Option.

10.  Tax  Consequences.  The  Optionee  understands  that  any of the  foregoing
references to taxation are based on federal income tax laws and  regulations now
in  effect,   and  may  not  be  applicable   to  the  Optionee   under  certain
circumstances.  The Optionee may also have adverse tax consequences  under state
or local law. The Optionee has reviewed with the Optionee's own tax advisors the
federal,   state,  local  and  foreign  tax  consequences  of  the  transactions
contemplated by this Agreement.  The Optionee is relying solely on such advisors
and  not on any  statements  or  representations  of the  Company  or any of its
agents.  The Optionee  understands that the Optionee (and not the Company) shall
be  responsible  for the Optionee's own tax liability that may arise as a result
of the transactions contemplated by this Agreement.

11. Net Issue Exercise.  Notwithstanding  any provisions herein to the contrary,
if the fair market value of one share of the  Company's  Common Stock is greater
than the Per  Share  Exercise  Price  (at the date of  calculation  as set forth
below),  in lieu of  exercising  the Option for cash,  the Optionee may elect to
receive  shares equal to the value (as  determined  below) of the Option (or the
portion  thereof  being  canceled) by  surrender of the Option at the  principal
office of the Company together with the properly endorsed Notice of Exercise and
Subscription  Form and notice of such election,  in which event the Company will
issue to the  Optionee  a number of shares of Common  Stock  computed  using the
following formula:


                  X = Y (A-B)
                      -------
                        A

          Where X = the  number of  shares  of Common  Stock to be issued to the
          Optionee

                           Y = the  number of shares of Common Stock purchasable
         under  the  Option  or,  if  only a  portion  of the  Option  is  being
         exercised,  the portion of the Option  being  canceled  (at the date of
         such calculation)


                                     5 of 12
<PAGE>

                           A = the  fair  market  value  of  one  share  of  the
         Company's Common Stock (at the date of such calculation)

                           B = Per Share Exercise Price (as adjusted to the date
         of such calculation)

         For purposes of the above  calculation,  fair market value of one share
of the  Company's  Stock  will  be the  average  of the  closing  prices  of the
Company's  shares of  Common  Stock as quoted  on the OTC  Bulletin  Board  (the
"OTCBB") (or on such other United States stock exchange or public trading market
or quotation medium on or by which the shares of the Company trade or are quoted
if, at the time of the  election,  they are not  trading or being  quoted on the
OTCBB), for the five (5) consecutive trading days immediately preceding the date
of the date the completed,  executed Notice of Exercise and Subscription Form is
received.

12.  Damages.  The parties  agree that any violation of the Option (other than a
default in the payment of money) cannot be compensated  for by damages,  and any
aggrieved  party shall have the right,  and is hereby granted the privilege,  of
obtaining  specific  performance  of  the  Option  in  any  court  of  competent
jurisdiction in the event of any breach hereunder.

13. Delay. No delay or failure on the part of the Company or the Optionee in the
exercise of any right,  power or remedy shall operate as a waiver  thereof,  nor
shall any  single or  partial  exercise  by any of them of any  right,  power or
remedy preclude other or further exercise thereof,  or the exercise of any other
right, power or remedy.

14. Market Standoff. Unless the Board of Directors otherwise consents,  Optionee
agrees hereby not to sell or otherwise  transfer any Shares or other  securities
of the Company  during the 180-day  period  following  the  effective  date of a
registration  statement of the Company filed under the Act;  provided,  however,
that such restriction shall apply only to the first two registration  statements
of the Company to become effective under the Act which includes securities to be
sold on behalf of the Company to the public in an  underwritten  public offering
under the Act. The Company may impose stop-transfer instructions with respect to
securities  subject to the foregoing  restrictions until the end of such 180-day
period.

15.  Rule 144.  Optionee  acknowledges  and  understands  that the Shares may be
subject to transfer and sale  restrictions  imposed  pursuant to SEC Rule 144 of
the  Rules  promulgated  under  the  Securities  Act of  1933  ("Act")  and  the
regulations promulgated thereunder. Optionee shall comply with Rule 144 and with
all policies and  procedures  established by the Company with regard to Rule 144
matters.  Optionee  acknowledged  that the Company or its  attorneys or transfer
agent  may  require a  restrictive  legend on the  certificate  or  certificates
representing  the Shares pursuant to the  restrictions on transfer of the Shares
imposed by Rule 144.

16. No Distribution. Notwithstanding anything in this Agreement to the contrary,
Optionee acknowledges that: (i) the Option, and the Shares upon exercise, is and
are being acquired in a private  transaction which is not part of a distribution
of the Option or Shares; (ii) the Optionee intends to hold the Option and Shares
for the account of the Optionee and does not intend to sell the Option or Shares
as a part of a distribution or otherwise; and (iii) neither the Optionee nor the


                                     6 of 12
<PAGE>

Company is an  underwriter  with regard to the Option or the Shares for purposes
of Rule 144.

17. Securities  Compliance.  Optionee understands that the Option and the Shares
may be  offered  and  sold  in  reliance  on one or  more  exemptions  from  the
registration requirements of federal and state securities laws, which exemptions
may include,  without limitation,  Regulation D promulgated under the Securities
Act,  and that the  Company  is  relying  upon the  truth  and  accuracy  of the
representations,  warranties, agreements,  acknowledgments and understandings of
Optionee  set  forth  herein in order to  determine  the  applicability  of such
exemptions and the suitability of Optionee to acquire the Option and the Shares.
The  representations,  warranties and agreements  contained  herein are true and
correct as of the date hereof and may be relied upon by the Company and Optionee
will  notify  the  Company  immediately  of  any  adverse  change  in  any  such
representations  and warranties which may occur prior to the issuance of Shares.
The  representations,  warranties  and agreements of Optionee  contained  herein
shall survive the  execution and delivery of this  Agreement and the exercise of
the Option and the issuance of the Shares.

18. Complete Agreement.  This Agreement constitutes the entire agreement between
the parties with respect to its subject  matter,  and supersedes all other prior
or contemporaneous  agreements and understandings both oral or written; subject,
however,  that in the event of any conflict between this Agreement and the Plan,
the Plan shall govern. This Agreement may only be amended in a writing signed by
the Company and the Optionee.

19. Privileges of Stock Ownership.  Optionee shall not have any of the rights of
a shareholder with respect to any Shares until Optionee exercises the Option and
pays the  Exercise  Price,  Shares are issued and  delivered  to  Optionee,  and
Optionee  is shown as a  shareholder  of record on the books and  records of the
Company.

20. Further Acts. The parties hereto shall cooperate with each other and execute
such additional documents or instruments and perform such further acts as may be
reasonably necessary to affect the purpose and intent of the Agreement.

21. Effect of Headings. The subject headings of the paragraphs and subparagraphs
of this Agreement are included for purposes of  convenience  only, and shall not
affect the construction or interpretation of any of its provisions.

22.  Notices.  Any notice required to be given or delivered to the Company under
the terms of this  Agreement  shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required
to be given or  delivered  to  Optionee  shall be in writing  and  addressed  to
Optionee at the address  indicated herein or to such other address as such party
may designate in writing from time to time to the Company.  All notices shall be
deemed to have been given or delivered upon actual personal delivery;  three (3)
days after  deposit in the United  States mail by certified or  registered  mail
(return receipt  requested);  one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after transmission by
facsimile with a corresponding facsimile transmission confirmation sheet.

23. Counterparts.  This Agreement may be executed  simultaneously in one or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which


                                     7 of 12
<PAGE>

together shall  constitute one and the same  instrument.  The exhibits  attached
hereto and  initialed  by the parties  are made a part  hereof and  incorporated
herein by this reference.

24. Parties in Interest. Nothing in this Agreement,  whether express or implied,
is  intended  to  confer  any  rights  or  remedies  under or by  reason of this
Agreement  on any  persons  other than the  parties  to it and their  respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third party to this Agreement,  nor
shall any  provision  give any third person any right of  subrogation  or action
over against any party to this Agreement.

25.  Recovery of Litigation  Costs.  If any legal action or any  arbitration  or
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute,  breach, default or misrepresentation in connection with any
of the  provisions of this  Agreement,  the  successful  or prevailing  party or
parties shall be entitled to recover as an element of their damages,  reasonable
attorneys'  fees and other  costs  incurred  in that  action or  proceeding,  in
addition to any other relief to which they may be entitled.

26.  Severability;  Construction.  In the  event  that  any  provision  in  this
Agreement shall be invalid or  unenforceable,  such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining  provisions of this Agreement.  This Agreement shall be
construed as to its fair meaning and not for or against either party.

27. Survival of Representations and Obligations. All representations, warranties
and agreements of the parties contained in this Agreement, or in any instrument,
certificate,  opinion or other  writing  provided for in it,  shall  survive the
exercise of the Option and the issuance of the Shares.

28.  Specific  Performance.  Each party's  obligations  under this Agreement are
unique. If any party should default in its obligations under this Agreement, the
parties each acknowledge that it would be extremely impracticable to measure the
resulting  damages;  accordingly,  the  nondefaulting  party, in addition to any
other available rights or remedies,  may sue in equity for specific  performance
without the necessity of posting a bond or other security,  and the parties each
expressly waive the defense that a remedy in damages will be adequate.

29.  Gender;  Number.  Whenever  the  context of this  Agreement  requires,  the
masculine gender includes the feminine or neuter gender, and the singular number
includes the plural.

30.  Governing Law and Venue.  This  Agreement will be construed and enforced in
accordance  with, and the rights of the parties will be governed by, the laws of
the State of California without regard to conflict of laws principles.  Venue in
any action arising by reason of this Agreement  shall lie  exclusively in Orange
County, California.




                                     8 of 12
<PAGE>


IN WITNESS WHEREOF, this Agreement is made effective on the date first set forth
above at Orange County, California.

                                    Company:

                                    XSUNX, INC, a Colorado Corporation




                                    By:      ________________________________
                                             Name: Tom M. Djokovich
                                             Title: CEO



                                     9 of 12
<PAGE>

OPTIONEE  ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
3 HEREOF IS EARNED ONLY BY  CONTINUING  SERVICE AS AN EMPLOYEE OR  CONSULTANT AT
THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED,  BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT THIS OPTION, THE COMPANY'S PLAN WHICH IS INCORPORATED  HEREIN BY REFERENCE,
THE  TRANSACTIONS  CONTEMPLATED  HEREUNDER  AND THE VESTING  SCHEDULE  SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED  PROMISE OF CONTINUED  ENGAGEMENT
AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD,  FOR ANY PERIOD, OR AT ALL,
AND  SHALL  NOT  INTERFERE  WITH  OPTIONEE'S  RIGHT  OR THE  COMPANY'S  RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTING  RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan, represents that Optionee is
familiar with the terms and  provisions  thereof,  and hereby accepts the Option
subject to all of the terms and  provisions  thereof.  Optionee has reviewed the
Plan and this Agreement in their entirety,  has had an opportunity to obtain the
advice of counsel prior to executing  this Agreement and fully  understands  all
provisions of the Plan and this  Agreement.  Optionee hereby agrees to accept as
binding,  conclusive and final all decisions or  interpretations of the Board or
of the Committee upon any questions arising under the Plan.

         IN WITNESS WHEREOF,  this Agreement is made effective on the date first
set forth above at Orange County, California.


                                    OPTIONEE


                                    ------------------------------
                                    Name:  Michael A. Russak




                                    10 of 12
<PAGE>

CONSENT OF SPOUSE



The undersigned  spouse of the Optionee to the foregoing Stock Option  Agreement
acknowledges  on his or her own behalf  that:  I have read the  foregoing  Stock
Option Agreement and I know its contents. I hereby consent to and approve of the
provisions of the Stock Option Agreement,  and agree that the Shares issued upon
exercise of the Option covered  thereby and my interest in them shall be subject
to the  provisions of the Stock Option  Agreement and that I will take no action
at any time to hinder  operation of the Stock Option  Agreement as to the Shares
or my interest in the Shares.

 IN WITNESS  WHEREOF,  this  Agreement  is made  effective on the date first set
forth above at Orange County, California.



                                               ---------------------------------
                                               Name:




                                    11 of 12
<PAGE>


                                EXHIBIT TO OPTION

                    SUBSCRIPTION FORM AND NOTICE OF EXERCISE

Xsunx, Inc.                                           Date:
Attn: President
65 Enterprise
Aliso Viejo, CA 92656

Ladies and Gentlemen:

                  The  undersigned,  the holder of the enclosed  Option,  hereby
irrevocably elects to exercise the purchase rights represented by the Option and
to purchase there under  __________  shares of Common Stock of XSUNX,  INC. (the
"Company"),  and herewith  encloses payment of $___________  and/or  ___________
shares of the Company's common stock,  (the "Purchase Price") in full payment of
the Purchase Price of such shares being purchased.

Exercise of the Option shall not be deemed  effective  unless and until good and
immediately  available  funds in the full amount of the Purchase Price have been
confirmed in the account of the Company.  The original Option shall be presented
with this Subscription Form and Notice of Exercise.

         The Company may, in its  discretion,  withhold a portion of some or all
of the  exercised  shares or other  amounts  for the  payment  of taxes or other
items.  Holder  represents that Holder is not subject to any backup  withholding
requirements. Holder acknowledges that the shares of stock of the Company issued
upon  exercise  will not be entitled to any  dividend  declared  upon such stock
prior to the effective date of exercise of the Option.

         Holder hereby constitutes this Subscription Form and Notice of Exercise
as an  assignment,  deposit  tender,  and transfer in blank of the Option as set
forth therein.  Holder hereby irrevocably constitutes and appoints the secretary
of the Company as Holder's attorney in fact to issue shares upon the exercise of
the Option and reflect the same on the books and records of the Company,  cancel
the Option, issue a new Option, if applicable,  and perform any necessary act on
behalf of Holder, with full power substitution.

                                           Very truly yours,


                                           _____________________________________

                                           By: _________________________________

                                           Title: ______________________________










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