Document:

EXHIBIT 10.2

                         REGISTRATION RIGHTS AGREEMENT

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EXHIBIT 10.2
                                                                  EXECUTION COPY
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                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"),  dated as of November
1, 2007, by and between XsunX,  Inc., a Colorado  corporation,  (the "Company"),
and Fusion  Capital  Fund II,  LLC  (together  with it  permitted  assigns,  the
"Buyer").  Capitalized  terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Common Stock Purchase Agreement by
and  between  the  parties  hereto,  dated as of the date  hereof  (as  amended,
restated,  supplemented  or otherwise  modified from time to time, the "Purchase
Agreement").

                                    WHEREAS:

         A. The Company has agreed, upon the terms and subject to the conditions
of the  Purchase  Agreement,  to issue to the  Buyer up to  Twenty  One  Million
Dollars  ($21,000,000)  of the Company's common stock, no par value (the "Common
Stock"); and

         B. To  induce  the  Buyer to enter  into the  Purchase  Agreement,  the
Company has agreed to provide certain  registration  rights under the Securities
Act of 1933,  as  amended,  and the rules  and  regulations  thereunder,  or any
similar successor statute  (collectively,  the "1933 Act"), and applicable state
securities laws.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the Company and the
Buyer hereby agree as follows:

         1.       DEFINITIONS.

                  As used in this Agreement,  the following terms shall have the
following meanings:

                  a.  "Investor"  means the Buyer,  any  transferee  or assignee
thereof to whom a Buyer  assigns its rights under this  Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee  thereof to whom a transferee or assignee assigns
its rights under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with Section 9.

                  b.  "Person"   means  any  person  or  entity   including  any
corporation,  a limited liability  company,  an association,  a partnership,  an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

                  c. "Register,"  "registered,"  and  "registration"  refer to a
registration   effected  by  preparing  and  filing  one  or  more  registration
statements of the Company in  compliance  with the 1933 Act and pursuant to Rule
415 under the 1933 Act or any successor rule  providing for offering  securities
on a  continuous  basis  ("Rule  415"),  and  the  declaration  or  ordering  of
effectiveness of such registration  statement(s) by the United States Securities
and Exchange Commission (the "SEC").

                  d.  "Registrable  Securities"  means 6,833,332  Initial Shares
issued or issuable to the Investor prior to  Commencement,  20,000,000  Purchase
Shares which after Commencement may from time to time be issued or issuable upon
purchases of the Available Amount under the Purchase Agreement, and in each such

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case, any shares of capital stock issued or issuable with respect to such shares
or the  Purchase  Agreement  as a result of any  stock  split,  stock  dividend,
recapitalization,  exchange or similar event or otherwise, without regard to any
limitation on purchases under the Purchase Agreement.

                  e. "Registration Statement" means the  registration  statement
of the Company covering only the sale of the Registrable Securities.

         2.       REGISTRATION.

                  a. Mandatory Registration. The Company shall within forty-five
(45) days from the date hereof file with the SEC the Registration Statement. The
Registration Statement shall register the Registrable  Securities.  The Investor
and its counsel shall have a reasonable  opportunity  to review and comment upon
such registration  statement or amendment to such registration statement and any
related  prospectus prior to its filing with the SEC. Investor shall furnish all
information  reasonably  requested  by the Company for  inclusion  therein.  The
Company  shall  use its best  efforts  to have  the  Registration  Statement  or
amendment  declared  effective by the SEC at the  earliest  possible  date.  The
Company shall use  reasonable  best efforts to keep the  Registration  Statement
effective  pursuant to Rule 415 promulgated under the 1933 Act and available for
sales of all of the Registrable Securities at all times until the earlier of (i)
the date as of which the  Investor  may sell all of the  Registrable  Securities
without  restriction  pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor  thereto) or (ii) the date on which (A) the  Investor  shall have sold
all the  Registrable  Securities  and no  Available  Amount  remains  under  the
Purchase  Agreement (the  "Registration  Period").  The  Registration  Statement
(including  any  amendments or supplements  thereto and  prospectuses  contained
therein)  shall not contain any untrue  statement of a material  fact or omit to
state 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.

                  b. Rule 424  Prospectus.  The  Company  shall,  as required by
applicable securities regulations, from time to time file with the SEC, pursuant
to Rule 424  promulgated  under  the 1933 Act,  the  prospectus  and  prospectus
supplements,  if any,  to be used in  connection  with sales of the  Registrable
Securities under the Registration Statement.  The Investor and its counsel shall
have a reasonable  opportunity to review and comment upon such prospectus  prior
to its filing with the SEC. The Investor shall use its  reasonable  best efforts
to comment  upon such  prospectus  within one (1) Business Day from the date the
Investor receives the final version of such prospectus.

                  c. Sufficient  Number of Shares  Registered.  In the event the
number of shares available under the  Registration  Statement is insufficient to
cover  all  of  the  Registrable   Securities,   the  Company  shall  amend  the
Registration Statement or file a new registration statement (a "New Registration
Statement"),  so as to  cover  all of  such  Registrable  Securities  as soon as
practicable,  but in any event not later than ten (10)  Business  Days after the
necessity  therefor arises.  The Company shall use it reasonable best efforts to
cause such amendment  and/or New  Registration  Statement to become effective as
soon as practicable following the filing thereof.

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         3.       RELATED OBLIGATIONS.

                  With respect to the  Registration  Statement  and whenever any
Registrable  Securities are to be registered  pursuant to Section 2(b) including
on any New  Registration  Statement,  the Company shall use its reasonable  best
efforts to effect the  registration of the Registrable  Securities in accordance
with the intended  method of  disposition  thereof and,  pursuant  thereto,  the
Company shall have the following obligations:

                  a.  The  Company  shall  prepare  and  file  with the SEC such
amendments  (including   post-effective   amendments)  and  supplements  to  any
registration   statement  and  the  prospectus  used  in  connection  with  such
registration  statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be  necessary  to keep the  Registration
Statement or any New  Registration  Statement  effective at all times during the
Registration Period, and, during such period,  comply with the provisions of the
1933 Act with respect to the  disposition of all  Registrable  Securities of the
Company covered by the Registration  Statement or any New Registration Statement
until such time as all of such  Registrable  Securities shall have been disposed
of in  accordance  with the  intended  methods of  disposition  by the seller or
sellers thereof as set forth in such registration statement.

                  b. The Company shall permit the Investor to review and comment
upon  the  Registration  Statement  or any New  Registration  Statement  and all
amendments and supplements thereto at least two (2) Business Days prior to their
filing  with the SEC,  and not file  any  document  in a form to which  Investor
reasonably  objects.  The  Investor  shall use its  reasonable  best  efforts to
comment upon the Registration  Statement or any New  Registration  Statement and
any amendments or supplements thereto within two (2) Business Days from the date
the Investor  receives the final version  thereof.  The Company shall furnish to
the Investor, without charge any correspondence from the SEC or the staff of the
SEC to the Company or its representatives relating to the Registration Statement
or any New Registration Statement.

                  c. Upon request of the Investor,  the Company shall furnish to
the Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such  registration  statement  and any  amendment(s)  thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits,  (ii) upon the  effectiveness of any registration
statement,  a copy of the prospectus included in such registration statement and
all  amendments and  supplements  thereto (or such other number of copies as the
Investor  may  reasonably  request)  and (iii) such other  documents,  including
copies of any  preliminary or final  prospectus,  as the Investor may reasonably
request  from  time  to time in  order  to  facilitate  the  disposition  of the
Registrable Securities owned by the Investor.

                  d. The  Company  shall  use  reasonable  best  efforts  to (i)
register  and  qualify  the  Registrable  Securities  covered by a  registration
statement under such other  securities or "blue sky" laws of such  jurisdictions
in the United States as the Investor reasonably requests,  (ii) prepare and file
in those jurisdictions,  such amendments (including  post-effective  amendments)
and supplements to such  registrations and qualifications as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  provided,  however, that
the  Company  shall not be required in  connection  therewith  or as a condition

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thereto to (x)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(d),  (y) subject  itself
to general taxation in any such  jurisdiction,  or (z) file a general consent to
service of process in any such  jurisdiction.  The Company shall promptly notify
the Investor who holds  Registrable  Securities of the receipt by the Company of
any  notification  with  respect  to  the  suspension  of  the  registration  or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any  jurisdiction  in the United  States or its receipt of
actual  notice of the  initiation  or  threatening  of any  proceeding  for such
purpose.

                  e. As promptly as  practicable  after  becoming  aware of such
event or facts,  the  Company  shall  notify  the  Investor  in  writing  of the
happening  of any  event or  existence  of such  facts as a result  of which the
prospectus included in any registration  statement,  as then in effect, includes
an  untrue  statement  of a  material  fact or omits to  state a  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under  which they were made,  not  misleading,  and
promptly  prepare a supplement  or amendment to such  registration  statement to
correct such untrue statement or omission, and deliver a copy of such supplement
or amendment to the Investor (or such other number of copies as the Investor may
reasonably  request).  The Company  shall also  promptly  notify the Investor in
writing (i) when a prospectus or any  prospectus  supplement  or  post-effective
amendment   has  been  filed,   and  when  a   registration   statement  or  any
post-effective   amendment   has   become   effective   (notification   of  such
effectiveness shall be delivered to the Investor by facsimile on the same day of
such  effectiveness  and by overnight mail),  (ii) of any request by the SEC for
amendments or supplements to any registration statement or related prospectus or
related information,  and (iii) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be appropriate.

                  f. The  Company  shall  use its  reasonable  best  efforts  to
prevent the issuance of any stop order or other  suspension of  effectiveness of
any  registration  statement,  or the  suspension  of the  qualification  of any
Registrable  Securities  for sale in any  jurisdiction  and, if such an order or
suspension  is issued,  to obtain the  withdrawal of such order or suspension at
the earliest  possible moment and to notify the Investor of the issuance of such
order  and the  resolution  thereof  or its  receipt  of  actual  notice  of the
initiation or threat of any proceeding for such purpose.

                  g. The Company shall (i) cause all the Registrable  Securities
to be listed on each securities  exchange on which  securities of the same class
or series issued by the Company are then listed,  if any, if the listing of such
Registrable  Securities is then permitted  under the rules of such exchange,  or
(ii) secure  designation and quotation of all the Registrable  Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.

                  h. The Company shall cooperate with the Investor to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend)  representing  the Registrable  Securities to be offered pursuant to any
registration  statement and enable such certificates to be in such denominations
or amounts as the Investor may  reasonably  request and registered in such names
as the Investor may request.

                  i. The Company shall at all times provide a transfer agent and
registrar with respect to its Common Stock.

                  j. If reasonably requested by the Investor,  the Company shall
(i)  immediately  incorporate  in  a  prospectus  supplement  or  post-effective
amendment such  information as the Investor  believes should be included therein
relating to the sale and  distribution  of  Registrable  Securities,  including,
without  limitation,  information  with  respect  to the  number of  Registrable
Securities  being sold,  the  purchase  price being paid  therefor and any other

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terms of the  offering of the  Registrable  Securities;  (ii) make all  required
filings of such  prospectus  supplement or  post-effective  amendment as soon as
notified of the matters to be  incorporated  in such  prospectus  supplement  or
post-effective  amendment;  and  (iii)  supplement  or  make  amendments  to any
registration statement.

                  k. The Company shall use its reasonable  best efforts to cause
the  Registrable   Securities  covered  by  any  registration  statement  to  be
registered with or approved by such other  governmental  agencies or authorities
as  may  be  necessary  to  consummate  the  disposition  of  such   Registrable
Securities.

                  l.  Within  one  (1)  Business  Day  after  any   registration
statement which includes the Registrable  Securities is ordered effective by the
SEC, the Company shall deliver, and shall cause legal counsel for the Company to
deliver,  to the transfer agent for such Registrable  Securities (with copies to
the Investor)  confirmation that such  registration  statement has been declared
effective by the SEC in the form attached  hereto as Exhibit A.  Thereafter,  if
requested  by the Buyer at any time,  the Company  shall  require its counsel to
deliver to the Buyer a written  confirmation whether or not the effectiveness of
such  registration  statement has lapsed at any time for any reason  (including,
without  limitation,  the  issuance  of a stop  order)  and  whether  or not the
registration  statement is current and available to the Buyer for sale of all of
the Registrable Securities.

                  m.  The  Company  shall  take  all  other  reasonable  actions
necessary to expedite and facilitate  disposition by the Investor of Registrable
Securities pursuant to any registration statement.

         4.       OBLIGATIONS OF THE INVESTOR.

                  a. The  Company  shall  notify the  Investor in writing of the
information the Company reasonably requires from the Investor in connection with
any registration statement hereunder.  The Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such  documents in connection  with such  registration  as the
Company may reasonably request.

                  b. The Investor agrees to cooperate with the Company as reason
-ably requested by  the Company in connection with the preparation and filing of
any registration statement hereunder.

                  c. The Investor  agrees that,  upon receipt of any notice from
the  Company of the  happening  of any event or  existence  of facts of the kind
described  in Section  3(f) or the first  sentence of 3(e),  the  Investor  will
immediately  discontinue  disposition of Registrable  Securities pursuant to any
registration   statement(s)  covering  such  Registrable  Securities  until  the
Investor's  receipt of the  copies of the  supplemented  or  amended  prospectus
contemplated  by Section  3(f) or the first  sentence  of 3(e).  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to promptly
deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase  Agreement in connection  with any sale of Registrable
Securities  with  respect to which an Investor  has entered  into a contract for
sale  prior to the  Investor's  receipt  of a notice  from  the  Company  of the
happening  of any  event of the kind  described  in  Section  3(f) or the  first
sentence of 3(e) and for which the Investor has not yet settled.

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         5.       EXPENSES OF REGISTRATION.
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                  All  reasonable  expenses,   other  than  sales  or  brokerage
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company.

         6.       INDEMNIFICATION.

                  a. To the fullest  extent  permitted by law, the Company will,
and hereby does, indemnify,  hold harmless and defend the Investor, each Person,
if any,  who controls  the  Investor,  the  members,  the  directors,  officers,
partners, employees, agents, representatives of the Investor and each Person, if
any,  who  controls  the  Investor  within  the  meaning  of the 1933 Act or the
Securities  Exchange  Act of  1934,  as  amended  (the  "1934  Act")  (each,  an
"Indemnified  Person"),  against  any  losses,  claims,  damages,   liabilities,
judgments,  fines,  penalties,  charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several,  (collectively,  "Claims") incurred in
investigating,   preparing  or  defending  any  action,  claim,  suit,  inquiry,
proceeding,  investigation  or appeal taken from the  foregoing by or before any
court or governmental,  administrative or other regulatory  agency,  body or the
SEC,  whether pending or threatened,  whether or not an indemnified  party is or
may be a party thereto ("Indemnified  Damages"), to which any of them may become
subject insofar as such Claims (or actions or proceedings,  whether commenced or
threatened,  in respect  thereof) arise out of or are based upon: (i) any untrue
statement or alleged  untrue  statement of a material  fact in the  Registration
Statement,  any  New  Registration  Statement  or any  post-effective  amendment
thereto  or in any  filing  made in  connection  with the  qualification  of the
offering  under the securities or other "blue sky" laws of any  jurisdiction  in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged  omission  to state a material  fact  required  to be stated  therein or
necessary  to make the  statements  therein  not  misleading,  (ii)  any  untrue
statement or alleged untrue  statement of a material fact contained in the final
prospectus  (as  amended or  supplemented,  if the Company  files any  amendment
thereof or supplement  thereto with the SEC) or the omission or alleged omission
to state  therein  any  material  fact  necessary  to make the  statements  made
therein,  in light of the circumstances  under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including,  without  limitation,  any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable  Securities pursuant to the Registration Statement or
any New Registration  Statement or (iv) any material violation by the Company of
this  Agreement  (the matters in the  foregoing  clauses (i) through (iv) being,
collectively, "Violations"). The Company shall reimburse each Indemnified Person
promptly as such  expenses are  incurred and are due and payable,  for any legal
fees  or  other  reasonable   expenses  incurred  by  them  in  connection  with
investigating  or  defending  any such  Claim.  Notwithstanding  anything to the
contrary  contained  herein,  the  indemnification  agreement  contained in this
Section 6(a):  (i) shall not apply to a Claim by an  Indemnified  Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information  furnished in writing to the Company by such Indemnified Person
expressly  for  use in  connection  with  the  preparation  of the  Registration
Statement,  any New  Registration  Statement or prospectus or any such amendment
thereof or supplement  thereto,  if such prospectus was timely made available by
the Company  pursuant to Section 3(c) or Section 3(e);  (ii) with respect to any
superceded  prospectus,  shall not inure to the  benefit of any such person from
whom the person  asserting any such Claim purchased the  Registrable  Securities
that are the subject thereof (or to the benefit of any person  controlling  such
person) if the untrue  statement or omission of material  fact  contained in the
superceded  prospectus was corrected in the revised prospectus,  as then amended
or  supplemented,  if such revised  prospectus  was timely made available by the
Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was

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promptly advised in writing not to use the incorrect prospectus prior to the use
giving rise to a violation and such  Indemnified  Person,  notwithstanding  such
advice,  used it; (iii) shall not be available to the extent such Claim is based
on a  failure  of the  Investor  to  deliver  or to  cause to be  delivered  the
prospectus  made  available by the Company,  if such  prospectus was timely made
available  by the Company  pursuant to Section  3(c) or Section  3(e);  and (iv)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected  without the prior written consent of the Company,  which consent shall
not be  unreasonably  withheld.  Such  indemnity  shall remain in full force and
effect regardless of any  investigation  made by or on behalf of the Indemnified
Person and shall  survive the  transfer  of the  Registrable  Securities  by the
Investor pursuant to Section 9.

                  b. In connection  with the  Registration  Statement or any New
Registration  Statement,  the  Investor  agrees  to  severally  and not  jointly
indemnify,  hold harmless and defend,  to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement or any New Registration Statement,
each Person, if any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act  (collectively  and  together  with an  Indemnified  Person,  an
"Indemnified  Party"),  against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise,  insofar
as such  Claim  or  Indemnified  Damages  arise  out of or are  based  upon  any
Violation,  in each  case to the  extent,  and  only to the  extent,  that  such
Violation  occurs in reliance  upon and in conformity  with written  information
about the Investor set forth on Exhibit B attached  hereto and  furnished to the
Company by the Investor  expressly for use in connection with such  registration
statement;  and, subject to Section 6(d), the Investor shall promptly  reimburse
any legal or other  expenses  reasonably  incurred  by them in  connection  with
investigating or defending any such Claim; provided, however, that the indemnity
agreement  contained  in this  Section  6(b) and the  agreement  with respect to
contribution  contained  in  Section  7  shall  not  apply  to  amounts  paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the  Investor,  which  consent  shall not be  unreasonably  withheld;
provided, further, however, that the Investor shall be liable under this Section
6(b) for only that amount of a Claim or  Indemnified  Damages as does not exceed
the net  proceeds  to the  Investor  as a  result  of the  sale  of  Registrable
Securities pursuant to such registration statement.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such  Indemnified  Party and  shall  survive  the  transfer  of the  Registrable
Securities by the Investor pursuant to Section 9.

                  c.  Promptly  after  receipt  by  an  Indemnified   Person  or
Indemnified  Party  under this  Section 6 of notice of the  commencement  of any
action or proceeding (including any governmental action or proceeding) involving
a Claim,  such  Indemnified  Person or  Indemnified  Party shall,  if a Claim in
respect thereof is to be made against any indemnifying  party under this Section
6,  deliver  to the  indemnifying  party a written  notice  of the  commencement
thereof, and the indemnifying party shall have the right to participate in, and,
to the  extent  the  indemnifying  party so  desires,  jointly  with  any  other
indemnifying party similarly  noticed,  to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,  however, that an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying  party, if, in
the  reasonable  opinion of counsel  retained  by the  indemnifying  party,  the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented  by such counsel in such  proceeding.  The  Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection  with any  negotiation  or defense of any such action or claim by the

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indemnifying  party and shall furnish to the indemnifying  party all information
reasonably  available  to the  Indemnified  Party or  Indemnified  Person  which
relates  to such  action  or  claim.  The  indemnifying  party  shall  keep  the
Indemnified  Party or  Indemnified  Person fully apprised at all times as to the
status of the defense or any settlement  negotiations  with respect thereto.  No
indemnifying  party shall be liable for any  settlement of any action,  claim or
proceeding  effected without its written consent,  provided,  however,  that the
indemnifying  party shall not  unreasonably  withhold,  delay or  condition  its
consent.  No  indemnifying  party shall,  without the consent of the Indemnified
Party or Indemnified Person,  consent to entry of any judgment or enter into any
settlement or other compromise  which does not include as an unconditional  term
thereof the giving by the  claimant or plaintiff  to such  Indemnified  Party or
Indemnified  Person of a release from all  liability in respect to such claim or
litigation.   Following   indemnification   as  provided  for   hereunder,   the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified  Person with  respect to all third  parties,  firms or  corporations
relating to the matter for which  indemnification  has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified  Person or Indemnified  Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

                  d. The  indemnification  required  by this  Section 6 shall be
made by  periodic  payments  of the  amount  thereof  during  the  course of the
investigation or defense,  as and when bills are received or Indemnified Damages
are incurred.

                  e.  The  indemnity  agreements  contained  herein  shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

         7.       CONTRIBUTION.

                  To the extent any  indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable  Securities guilty of fraudulent  misrepresentation
(within  the  meaning of Section  11(f) of the 1933 Act)  shall be  entitled  to
contribution  from any seller of  Registrable  Securities  who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds  received by
such seller from the sale of such Registrable Securities.

         8.       REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

                  With a view to making  available  to the Investor the benefits
of Rule  144  promulgated  under  the  1933  Act or any  other  similar  rule or
regulation  of the  SEC  that  may at any  time  permit  the  Investor  to  sell
securities of the Company to the public without  registration  ("Rule 144"), the
Company agrees, at the Company's sole expense, to:

                  a. make and keep public information available,  as those terms
are understood and defined in Rule 144;

                  b. file with the SEC in a timely  manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as

                                       8
<PAGE>

the Company remains subject to such  requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

                  c.  furnish  to the  Investor  so  long as the  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied with the reporting and or disclosure  provisions of
Rule 144, the 1933 Act and the 1934 Act,  (ii) a copy of the most recent  annual
or quarterly report of the Company and such other reports and documents so filed
by the Company,  and (iii) such other information as may be reasonably requested
to permit the  Investor  to sell such  securities  pursuant  to Rule 144 without
registration.

                  d. take such additional action as is requested by the Investor
to enable the Investor to sell the Registrable  Securities pursuant to Rule 144,
including,  without  limitation,  delivering all such legal opinions,  consents,
certificates,  resolutions and  instructions to the Company's  Transfer Agent as
may be requested from time to time by the Investor and otherwise fully cooperate
with Investor and Investor's  broker to effect such sale of securities  pursuant
to Rule 144.

                  The Company  agrees that damages may be an  inadequate  remedy
for any breach of the terms and  provisions  of this Section 8 and that Investor
shall,  whether or not it is  pursuing  any  remedies  at law,  be  entitled  to
equitable relief in the form of a preliminary or permanent injunctions,  without
having to post any bond or other security,  upon any breach or threatened breach
of any such terms or provisions.

         9.       ASSIGNMENT OF REGISTRATION RIGHTS.

                  The Company  shall not assign this  Agreement or any rights or
obligations  hereunder  without  the  prior  written  consent  of the  Investor,
including  by merger or  consolidation.  The  Investor may not assign its rights
under this Agreement  without the written consent of the Company,  other than to
an  affiliate  of the  Investor  controlled  by  Steven  G.  Martin or Joshua B.
Scheinfeld.

         10.      AMENDMENT OF REGISTRATION RIGHTS.

                  Provisions of this Agreement may be amended and the observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and the Investor.

         11.      MISCELLANEOUS.

                  a. A Person is deemed to be a holder of Registrable Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or  more  Persons  with  respect  to the  same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the registered owner of such Registrable Securities.

                  b. Any  notices,  consents,  waivers  or other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party);  or (iii) one (1) Business Day after deposit
with a nationally  recognized  overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

                                       9
<PAGE>

                  If to the Company:
                           XsunX, Inc.
                           65 Enterprise
                           Aliso Viejo, CA 92656
                           Phone:   949-330-8060
                           Facsimile:       949-266-5823
                           Attention:       Chief Executive Officer

                  With a copy to:
                           K & L Gates LLP
                           Miami Center, 20th Floor,
                           201 South Biscayne Blvd.
                           Miami, FL 33131-2399
                           Telephone:       305-539-3300
                           Facsimile:       305-358-7095
                           Attention:       Clayton Parker

                  If to the Holder:
                           Fusion Capital Fund II, LLC
                           222 Merchandise Mart Plaza, Suite 9-112
                           Chicago, IL 60654
                           Telephone:       312-644-6644
                           Facsimile:       312-644-6244
                           Attention:       Steven G. Martin

or at such other address and/or facsimile number and/or to the attention of such
other person as the  recipient  party has  specified by written  notice given to
each other  party three (3)  Business  Days prior to the  effectiveness  of such
change.  Written  confirmation  of receipt  (A) given by the  recipient  of such
notice,   consent,   waiver  or  other   communication,   (B)   mechanically  or
electronically  generated by the sender's facsimile machine containing the time,
date,  recipient  facsimile  number  and an  image  of the  first  page  of such
transmission  or (C)  provided by a  nationally  recognized  overnight  delivery
service, shall be rebuttable evidence of personal service,  receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

                  c.  Failure of any party to exercise any right or remedy under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

                  d. The  corporate  laws of the State of Colorado  shall govern
all issues  concerning the relative rights of the Company and its  stockholders.
All other  questions  concerning the  construction,  validity,  enforcement  and
interpretation  of this Agreement  shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other  jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of  Illinois.  Each party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal courts  sitting the City of Chicago,  for
the adjudication of any dispute hereunder or in connection  herewith or with any
transaction  contemplated  hereby or discussed  herein,  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit, action or proceeding is brought in an inconvenient  forum or that the
venue of such  suit,  action  or  proceeding  is  improper.  Each  party  hereby
irrevocably  waives  personal  service of process and consents to process  being

                                       10
<PAGE>

served in any such suit,  action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any  manner  permitted  by law.  If any  provision  of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or  unenforceability  shall not affect the  validity  or  enforceability  of the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability  of any  provision of this  Agreement in any other  jurisdiction.
EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE,  AND AGREES NOT TO
REQUEST,  A JURY  TRIAL FOR THE  ADJUDICATION  OF ANY  DISPUTE  HEREUNDER  OR IN
CONNECTION  HEREWITH  OR  ARISING  OUT OF  THIS  AGREEMENT  OR  ANY  TRANSACTION
CONTEMPLATED HEREBY.

                  e. This Agreement,  and the Purchase Agreement  constitute the
entire  agreement  among the parties  hereto with respect to the subject  matter
hereof  and  thereof.  There  are  no  restrictions,   promises,  warranties  or
undertakings, other than those set forth or referred to herein and therein. This
Agreement  and  the  Purchase  Agreement  supersede  all  prior  agreements  and
understandings  among the  parties  hereto with  respect to the  subject  matter
hereof and thereof.

                  f. Subject to the  requirements  of Section 9, this  Agreement
shall inure to the benefit of and be binding upon the permitted  successors  and
assigns of each of the parties hereto.

                  g. The headings in this Agreement are for convenience of refer
-ence only and shall not limit or otherwise affect the meaning hereof.

                  h. This  Agreement may be executed in identical  counterparts,
each of which shall be deemed an original but all of which shall  constitute one
and the same  agreement.  This  Agreement,  once  executed  by a  party,  may be
delivered to the other party hereto by facsimile  transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

                  i. Each party  shall do and  perform,  or cause to be done and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                  j. The language  used in this  Agreement  will be deemed to be
the language  chosen by the parties to express  their mutual intent and no rules
of strict construction will be applied against any party.

                  k. This  Agreement  is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                                   * * * * * *

                                       11
<PAGE>

         IN WITNESS WHEREOF,  the parties have caused this  Registration  Rights
Agreement to be duly executed as of day and year first above written.

                                         THE COMPANY:

                                         XsunX, Inc.

                                         By:______________________
                                         Name:
                                         Title:

                                         BUYER:

                                         Fusion Capital Fund II, LLC
                                         By: Fusion Capital Partners, LLC
                                         BY: Rockledge Capital Corporation

                                        By:_______________________
                                        Name: Joshua B. Scheinfeld
                                        Title: President

                                       12
<PAGE>

                                    EXHIBIT A

                        TO REGISTRATION RIGHTS AGREEMENT

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

_________, 2007

[TRANSFER AGENT]
-------------------
-------------------
Attention: ___________

RE: XsunX, Inc.

Ladies and Gentlemen:

          We are counsel to XsunX, Inc., a Colorado corporation (the "Company"),
and have  represented  the Company in connection  with that certain Common Stock
Purchase  Agreement,  dated  as of  ____________,  (the  "Purchase  Agreement"),
entered  into by and between the  Company and Fusion  Capital  Fund II, LLC (the
"Buyer")  pursuant to which the Company has agreed to issue to the Buyer  shares
of the Company's Common Stock, no par value (the "Common  Stock"),  in an amount
up to Twenty One Million Dollars ($21,000,000.00),  in accordance with the terms
of the Purchase Agreement.  In connection with the transactions  contemplated by
the Purchase  Agreement,  the Company has registered with the U.S.  Securities &
Exchange Commission the following shares of Common Stock:

          (1)  _______________ shares of Common Stock to be issued upon purchase
               from the  Company by the Buyer  from time to time (the  "Purchase
               Shares.").

          (2)  6,833,332  Purchase Shares of Common Stock  previously  issued to
               the Buyer (the "Initial Shares.").

         [(3)  3,333,332  shares of Common Stock  underlying  warrants issued to
               the  Buyer to  purchase  shares  of Common  Stock  (the  "Warrant
               Shares")] [If applicable].

          Pursuant to the Purchase Agreement,  the Company also has entered into
a Registration  Rights Agreement,  dated as of ___________,  with the Buyer (the
"Registration  Rights  Agreement")  pursuant to which the Company agreed,  among
other  things,  to register  the  Purchase  Shares,  the Initial  Shares and the
Warrant Shares under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's  obligations under the Purchase  Agreement and the

<PAGE>

Registration  Rights  Agreement,  on _______,  the Company filed a  Registration
Statement  (File No.  333-_________)  (the  "Registration  Statement")  with the
Securities  and  Exchange  Commission  (the  "SEC")  relating to the sale of the
Purchase Shares, the Initial Shares and the Warrant Shares.

          In connection with the foregoing,  we advise you that: (1) a member of
the SEC's  staff has advised us by  telephone  that the SEC has entered an order
declaring the Registration  Statement effective under the 1933 Act at _____ P.M.
on __________,  2007, (2) we have no knowledge,  after  telephonic  inquiry of a
member of the SEC's staff,  that any stop order suspending its effectiveness has
been issued or that any  proceedings  for that  purpose are pending  before,  or
threatened  by,  the SEC,  (3) the  Initial  Shares and the  Warrant  Shares are
available for sale under the 1933 Act pursuant to the Registration Statement and
the  restrictive  legend on the Initial  Shares and the Warrant  Shares shall be
removed and (4) the Purchase  Shares are  available  for sale under the 1933 Act
pursuant  to  the  Registration  Statement  and  shall  be  issued  without  any
restrictive legend.

                                                     Very truly yours,

                                                     [Company Counsel]

                                                     By:____________________

CC:       Fusion Capital Fund II, LLC

<PAGE>

                                    EXHIBIT B

                        TO REGISTRATION RIGHTS AGREEMENT

     Information About The Investor Furnished To The Company By The Investor
         Expressly For Use In Connection With The Registration Statement

As of the date of the Purchase Agreement,  Fusion Capital  beneficially owned no
shares  of  common  stock  of the  Company.  Steven  G.  Martin  and  Joshua  B.
Scheinfeld, the principals of Fusion Capital, are deemed to be beneficial owners
of all of the shares of common stock owned by Fusion Capital. Messrs. Martin and
Scheinfeld have shared voting and investment power over the shares being offered
under the  prospectus  filed with the SEC in  connection  with the  transactions
contemplated  under the  Purchase  Agreement.  Fusion  Capital is not a licensed
broker dealer or an affiliate of a licensed broker dealer.EXHIBIT 10.3

                                FORM OF WARRANT

<PAGE>

EXHIBIT 10.3

                                    EXHIBIT F

                                 FORM OF WARRANT

This Warrant (this  "warranT") HAS NOT been Registered  UNDER The securities ACT
OF 1933,  AS amended  (The "AcT"),  OR ANY STATE  securities  LAW.  Neither this
warrant NOR any WARRANT Shares issuable upon exercise hereof NOR ANY interest OR
Participation  herein or  therein  may BE SOLD,  Assigned,  MORTGAGED,  Pledged,
hypothecated,  ENCUMBERED OR Otherwise Transferred EXCEPT IN Compliance WITH THE
ACT AND Applicable STATE Securities LAWS.

                                   XSUNX, INC.

                              COMMON STOCK PURCHASE
                          WARRANT FOR 1,666,666 SHARES

ORIGINAL ISSUE DATE: NOVEMBER 1, 2007            WARRANT CERTIFICATE # _________

          This Warrant is issued in connection with and pursuant to that certain
Common Stock Purchase Agreement (the "Purchase  Agreement") dated as of November
1, 2007, by and between XsunX, Inc., a Colorado  corporation (the "Company") and
FUSION  CAPITAL  FUND  II,  LLC,  an  Illinois  limited  liability  company  the
registered holder hereof, or its assigns (the "Holder").

         FOR VALUE RECEIVED, the Holder is entitled to purchase from the Company
during  the  period  specified  in  this  Warrant,   1,666,666  fully  paid  and
non-assessable  shares (subject to adjustment as hereinafter provided) of Common
Stock (the  "Warrant  Shares"),  of the Company at the purchase  price per share
provided in Section 1.2 of this  Warrant (the  "Warrant  Exercise  Price"),  all
subject to the terms and  conditions  set forth in this  Warrant.  All terms not
otherwise  defined  herein  shall  have the  meaning  set forth in the  Purchase
Agreement.

Section 1.        Period for Exercise and Exercise Price.

         1.1  Period  for  Exercise.   The  right  to  purchase  Warrant  Shares
represented by this Warrant shall be immediately  exercisable,  and shall expire
at 12:00 midnight, Chicago time, October 31, 2012 (the "Expiration Date").

         1.2  Warrant  Exercise  Price.  The  Warrant  Exercise  Price  shall be
$[0.50  and 0.75] per  Warrant  Share  (subject  to  adjustment  as  hereinafter
provided).

Section 2.        Exercise of Warrant.

         2.1 Manner of Exercise.  The Holder may exercise this Warrant, in whole
or in part, by surrendering  this Warrant to the Company at the principal office
of the Company,  accompanied by a warrant exercise notice (the "Warrant Exercise
Notice") in  substantially  the form attached hereto duly executed by the Holder
and by payment of the Warrant  Exercise  Price for the number of Warrant  Shares
for  which  this  Warrant  is then be  exercised,  either  (i) by  check or wire
transfer, (ii) by delivery of an instrument evidencing indebtedness owing by the
Company  to  the  Holder  in  the  appropriate  amount,  (iii)  subject  to  the

<PAGE>

limitations  set forth in Section  2.4  hereof,  by  authorizing  the Company to
retain shares of Common Stock which would otherwise be issuable upon exercise of
this Warrant or (iv) in a  combination  of (i),  (ii) or (iii) above,  provided,
however,  that in no event shall the Holder be entitled to exercise this Warrant
for a number of Warrant Shares in excess of that number of Warrant Shares which,
upon giving effect to such exercise,  would cause the aggregate number of shares
of Common  Stock  beneficially  owned by the  Holder to exceed  4.9% of the then
outstanding shares of the Common Stock following such exercise.  For purposes of
the  foregoing  proviso,   the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned by the Holder  shall  include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which determination
of such  proviso is being made,  but shall  exclude  the shares of Common  Stock
which would be issuable upon (i) exercise of the remaining, unexercised warrants
beneficially  owned  by the  Holder  and  (ii)  exercise  or  conversion  of the
unexercised  or  unconverted  portion  of any other  securities  of the  Company
beneficially  owned by the  Holder  subject to a  limitation  on  conversion  or
exercise  analogous to the limitation  contained herein.  Except as set forth in
the preceding  sentence,  for purposes of this paragraph,  beneficial  ownership
shall be calculated in accordance with Section 13(d) of the Securities  Exchange
Act of 1934,  as  amended.  The Holder may waive the  foregoing  4.9%  ownership
limitation  by written  notice to the  Company  upon not less than 61 days prior
written  notice (with such waiver taking effect only upon the expiration of such
sixty-one (61) day notice period).

         2.2  Holder  of  Record.  At such  time the  person  in whose  name any
certificate  for shares of Warrant  Shares shall be issuable  upon such exercise
shall be deemed for all  corporate  purposes to have become the Holder of record
of such shares,  regardless of the actual  delivery of  certificates  evidencing
such shares.

         2.3  Delivery of Stock  Certificates.  As  permitted  under  applicable
federal  securities  laws, as soon as  practicable  after  delivery of a Warrant
Exercise  Notice to the  Company,  and in any event  not  later  than  three (3)
Business  Days after any  Warrant  Exercise  Notice is deemed  delivered  to the
Company  pursuant to Section 2.5 hereof,  the Company at its expense shall issue
Warrant  Shares via credit to the  Holder's  account  with DTC for the number of
Warrant  Shares to which the Holder is entitled  upon such  exercise  or, if the
Transfer  Agent  is not  participating  in The  DTC  Fast  Automated  Securities
Transfer  Program  and DWAC  system in respect of the  Common  Stock,  issue and
surrender  to the  address  as  specified  in the  Warrant  Exercise  Notice,  a
certificate,  registered  in the name of the  Holder  or its  designee,  for the
number of shares of Common  Stock to which the Holder  shall be entitled to upon
such exercise.

         2.4 Cashless Exercise if No Registration  Statement  Available.  At any
time  for any  reason  or for no  reason,  if a  registration  statement  is not
available so that the Warrant  Shares would be issued to the Holder  without any
restrictive  transfer  legend  and  be  freely  tradable  by the  Holder  upon a
non-cashless  exercise  hereof,  in such case and only in such case,  the Holder
may, by providing  notice thereof to the Company in a Warrant  Exercise  Notice,
elect to exercise  this  Warrant,  in whole or in part,  for a number of Warrant
Shares determined in accordance with the following formula:

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

Where:
-----
X = The number of Warrant Shares to be issued to the Holder.
Y = The number of Warrant Shares  purchasable  under this Warrant as of the date
that the Warrant  Exercise Notice is deemed delivered to the Company pursuant to
Section 2.5 hereof.
A = The Fair Market  Value of one share of Common  Stock (or other  security for
which the Warrant is then exercisable).

                                       2
<PAGE>

B = Exercise Price (as adjusted under Section 3 hereof).

For purposes of this Section 2.4, the "Fair Market Value" per share shall be the
highest  Sale Price of the Common  Stock during the five (5) Business Day period
immediately prior to the date that the Warrant Exercise Notice is deemed to have
been delivered to the Company pursuant to Section 2.5 hereof.

         2.5 Deemed Delivery of the Warrant Exercise Notices. In connection with
any  exercise  of this  Warrant,  a  Warrant  Exercise  Notice  shall be  deemed
delivered to the Company:  (i) upon receipt,  when  delivered  personally by the
Holder or its  representative to an officer or employee of the Company;  or (ii)
on one Business Day after the date that the Warrant Exercise Notice is deposited
with a nationally  recognized overnight delivery or currier service addressed to
the Company at the address of the Company as set forth in Section 8.5 hereof.

         Section 3.  Adjustment  of  Purchase  Price and  Number of Shares.  The
Warrant Exercise Price and the kind of securities  issuable upon exercise of the
Warrant shall be adjusted from time to time as follows:

         3.1 Subdivision or Combination of Shares (Stock Splits). If the Company
at any time effects a subdivision or combination of the outstanding Common Stock
(through a stock  split or  otherwise),  the number of shares of Warrant  Shares
shall be  increased,  in the case of a  subdivision,  or the number of shares of
Warrant  Shares shall be decreased,  in the case of a  combination,  in the same
proportions  as the  Common  Stock  is  subdivided  or  combined,  in each  case
effective  automatically upon, and simultaneously with, the effectiveness of the
subdivision or combination which gives rise to the adjustment.

         3.2 Action Affecting Common Stock. If at any time the Company takes any
action affecting its Common Stock, other than an action described in Section 3.1
which,  in the opinion of the Board of Directors  of the Company (the  "Board"),
would have an adverse  effect  upon the  exercise  rights of the  Warrants,  the
Warrant  Exercise Price or the kind of securities  issuable upon exercise of the
Warrants,  or both,  shall be  adjusted  in such  manner and at such time as the
Board  may in  good  faith  determine  to be  equitable  in  the  circumstances;
provided,  however,  that the purpose of this  Section is to prevent the Company
from taking any action  which has the effect of diluting the number of shares of
Warrant Shares issuable upon exercise of this Warrant.

         Section 4. Reservation of Stock,  etc. The Company covenants and agrees
that it will at all times have  authorized,  reserve and keep available,  solely
for  issuance  and delivery  upon the  exercise of this  Warrant,  the number of
shares of Warrant  Shares from time to time  issuable  upon the exercise of this
Warrant.  The Company further covenants and agrees that this Warrant is, and any
Warrants  issued in  substitution  for or  replacement  of this  Warrant and all
Warrant Shares, will upon issuance be duly authorized and validly issued and, in
the case of Warrant Shares,  upon issuance will be fully paid and non-assessable
and free from all  preemptive  rights of any  stockholder,  and from all  taxes,
liens and charges with respect to the issue thereof (other than transfer  taxes)
and,  if the  Common  Stock  of the  Company  is  then  listed  on any  national
securities  exchanges  (as defined in the Exchange Act of 1934,  as amended (the
"Exchange Act")) or quoted on NASDAQ,  shall be, subject to the restrictions set
forth in Section 5, duly  listed or quoted  thereon,  as the case may be. In the
event that the number of  authorized  but  unissued  shares of such Common Stock
shall not be  sufficient  to effect the  exercise  of this entire  Warrant  into
Warrant Shares, then in addition to such other remedies as shall be available to
the Holder of this  Warrant,  the Company  shall  promptly  take such  corporate
action as may be  necessary to increase its  authorized  but unissued  shares of
such  Common  Stock to such  number of shares  as shall be  sufficient  for such
purpose.

                                       3
<PAGE>

Section 5.        Ownership, Transfer and Substitution of Warrants.

         5.1  Transfer  and  Exchange of  Warrants.  Upon the  surrender  of any
Warrant,  properly endorsed, for registration of transfer or for exchange at the
principal  office of the  Company,  the Company at its expense  will execute and
deliver to the Holder thereof,  upon the order of such Holder,  a new Warrant or
Warrants of like tenor, in the name of such Holder or as such Holder may direct,
for such  number of shares  with  respect to each such  Warrant,  the  aggregate
number of shares in any event not to exceed  the  number of shares for which the
Warrant so surrendered had not been exercised.

         5.2  Registration  Rights.  The holder of this  Warrant is  entitled to
certain  registration  rights with respect to the Warrant  Shares  issuable upon
exercise  thereof.  Said  registration  rights  are set forth in a  Registration
Rights Agreement by and between the Holder and the Company.  if the registration
statement  contemplated in the registration rights agreement is not effective at
the time of any issuance and the shares are not exempt from  registration  under
Rule 144, the Warrant Shares shall be issued in certificated form and shall bear
only the following restrictive legend:

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES  HAVE BEEN ACQUIRED FOR  INVESTMENT  AND MAY NOT BE OFFERED FOR SALE,
SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT FOR THE SECURITIES  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  OR
APPLICABLE STATE  SECURITIES  LAWS,  UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,  OR (2) AN OPINION OF HOLDER'S  COUNSEL,
IN A  CUSTOMARY  FORM,  THAT  REGISTRATION  IS NOT  REQUIRED  UNDER  SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.

         5.3  Exemption  from  Registration.  If an opinion of Holder's  counsel
provides that registration is not required for the proposed exercise or transfer
of this  Warrant or the  proposed  transfer of the  Warrant  Shares and that the
proposed  exercise or transfer in the absence of registration  would require the
Company  to take  any  action  including  executing  and  filing  forms or other
documents with the Securities and Exchange  Commission  (the "SEC") or any state
securities  agency, or delivering to the Holder any form or document in order to
establish  the right of the  Holder  to  effectuate  the  proposed  exercise  or
transfer,  the Company agrees promptly, at its expense, to take any such action;
and provided,  further,  that the Company will  reimburse the Holder in full for
any expenses  (including but not limited to the fees and  disbursements  of such
counsel, but excluding brokers'  commissions) incurred by the Holder or owner of
Warrant  Shares on his, her or its behalf in  connection  with such  exercise or
transfer of the Warrant or transfer of Warrant Shares.

Section 6. No Rights or Liabilities as  Shareholder.  Nothing  contained in this
Warrant shall be construed as conferring  upon the Holder hereof any rights as a
shareholder  of the Company or as  imposing  any  liabilities  on such holder to
purchase  any  securities  or as a  shareholder  of the  Company,  whether  such
liabilities are asserted by the Company or by creditors of the Company.

Section 7. Rule 144 Sales.  At the  request of any Holder who  proposes  to sell
securities  in  compliance  with  Rule  144 of the  SEC,  the  Company  will (i)
forthwith  furnish to such Holder a written  statement  of  compliance  with the
filing  requirements  of the SEC as set forth in Rule 144,  as such rules may be
amended from time to time and (ii) make  available to the public and such Holder
such information as will enable the Holder to make sales pursuant to Rule 144.

                                       4
<PAGE>

Section 8.        Miscellaneous.

         8.1  Amendment and Waiver.  This Warrant may be amended with,  and only
with, the written consent of the Company and the Holder. Any waiver of any term,
covenant, agreement or condition contained in this Warrant shall not be deemed a
waiver of any other term,  covenant,  agreement or condition,  and any waiver of
any default in any such term,  covenant,  agreement  or  condition  shall not be
deemed a waiver of any later  default  thereof  or of any  default  of any other
term, covenant, agreement or condition.

         8.2  Representations  and Warranties to Survive.  All  representations,
warranties  and  covenants  contained  herein shall  survive the  execution  and
delivery  of this  Warrant  and the  issuance  of any  Warrant  Shares  upon the
exercise hereof.

         8.3  Severability.  In the  event  that any  court or any  governmental
authority  or agency  declares all or any part of any Section of this Warrant to
be unlawful or  invalid,  such  unlawfulness  or  invalidity  shall not serve to
invalidate  any other  Section  of this  Warrant,  and in the event  that only a
portion  of  any  Section  is  so  declared  to be  unlawful  or  invalid,  such
unlawfulness  or invalidity  shall not serve to  invalidate  the balance of such
Section.

         8.4 Binding  Effect;  No Third Party  Beneficiaries.  All provisions of
this  Warrant  shall be binding upon and inure to the benefit of the parties and
their   respective   heirs,   legatees,   executors,    administrators,    legal
representatives,  successors,  and permitted  transferees and assigns. No person
other than the Holder of this  Warrant and the  Company  shall have any legal or
equitable right, remedy or claim under or in respect of this Warrant.

         8.5 Notices. Except for a Warrant Exercise Notice which shall be deemed
delivered  pursuant to Section 2.5 hereof,  any  notices,  consents,  waivers or
other  communications  required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been  delivered:  (i) upon
receipt,  when delivered  personally;  (ii) upon receipt, when sent by facsimile
(provided   confirmation  of  transmission  is  mechanically  or  electronically
generated  and kept on file by the sending  party);  or (iii) one  Business  Day
after deposit with a nationally  recognized  overnight delivery service, in each
case  properly  addressed to the party to receive the same.  The  addresses  and
facsimile numbers for such communications shall be:

                  If to the Company:
                           XsunX, Inc.
                           65 Enterprise
                           Aliso Viejo, CA 92656
                           Phone:           949-330-8060
                           Facsimile:       949-266-5823
                           Attention:       Chief Executive Officer

                  With a copy to:
                           K & L Gates LLP
                           Miami Center, 20th Floor,
                           201 South Biscayne Blvd.
                           Miami, FL 33131-2399
                           Telephone:       305-539-3300
                           Facsimile:       305-358-7095
Attention:        Clayton Parker

                                       5
<PAGE>

                  If to the Holder:
                           Fusion Capital Fund II, LLC
                           222 Merchandise Mart Plaza, Suite 9-112
                           Chicago, IL 60654
                           Telephone:       312-644-6644
                           Facsimile:       312-644-6244
                           Attention:       Steven G. Martin

                  If to the Transfer Agent:
                           Mountain Share Transfer
                           1625 Abilene Drive,
                           Broomfield, Colorado 80020
                           Telephone:       303-460-1149
                           Facsimile:       303-438-9243
                           Attention:       Beth Powell

         or at  such  other  address  and/or  facsimile  number  and/or  to  the
attention of such other person as the  recipient  party has specified by written
notice  given  to  each  other  party  three  (3)  Business  Days  prior  to the
effectiveness of such change.  Written  confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,   waiver  or  other  communication,   (B)
mechanically  or  electronically  generated  by the sender's  facsimile  machine
containing the time,  date, and recipient  facsimile number or (C) provided by a
nationally  recognized overnight delivery service,  shall be rebuttable evidence
of  personal  service,  receipt  by  facsimile  or  receipt  from  a  nationally
recognized  overnight  delivery  service in accordance  with clause (i), (ii) or
(iii) above, respectively.

         8.6 Governing Law; Jurisdiction;  Jury Trial. The corporate laws of the
State of Colorado shall govern all issues  concerning the relative rights of the
Company and its shareholders.  All other questions  concerning the construction,
validity,  enforcement and  interpretation  of this Warrant shall be governed by
the internal laws of the State of Illinois,  without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Illinois or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions  other than the State of Illinois.  Each party hereby  irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of Chicago,  for the adjudication of any dispute hereunder or under the
other Transaction Documents or in connection herewith or therewith,  or with any
transaction  contemplated  hereby or discussed  herein,  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit, action or proceeding is brought in an inconvenient  forum or that the
venue of such  suit,  action  or  proceeding  is  improper.  Each  party  hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any such suit,  action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner  permitted by law. EACH PARTY HEREBY  IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE,  AND AGREES NOT TO  REQUEST,  A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE  HEREUNDER OR IN CONNECTION  HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

         8.7 Loss of Warrant. Upon receipt by the Company of a written statement
of the Holder to it of the loss, theft or destruction of this Warrant,  and upon

                                       6
<PAGE>

surrender  for  cancellation  of this Warrant if  mutilated,  the Company  shall
execute and deliver a new Warrant of like tenor and date as replacement hereof.

         8.8 Entire  Agreement.  This  Warrant,  the Purchase  Agreement and the
Registration  Rights  Agreement  of even  date  herewith  represent  the  entire
agreement and  understanding  between the parties  concerning the subject matter
hereof and supercede all prior and contemporaneous  agreements,  understandings,
representations and warranties with respect thereto.

         8.9 Headings.  The headings  used herein are used for convenience  only
and are not to be considered in construing or interpreting this Warrant.

                                    COMPANY:

                                    XsunX, INC.

                                    By:______________________
                                    Name: ___________________
                                    Title: ____________________

                                       7
<PAGE>

                                     FORM OF
                             WARRANT EXERCISE NOTICE

Date:______________

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

Ladies and Gentlemen:The  undersigned,  being the holder of your Warrant for the
purchase of _________ Warrant Shares issued November 1, 2007,  accompanying this
letter, hereby irrevocably exercises such Warrant for ________ shares of Warrant
Shares (as  defined in said  Warrant),  and  herewith  delivers  ___________  as
payment  therefor in accordance with the Warrant,  and requests that such shares
of Warrant Shares be issued in the name of, and delivered to FUSION CAPITAL FUND
II, LLC, at the address shown below the signature line hereof.

If said number of shares shall not be all the shares  issuable  upon exercise of
the  attached  Warrant,  a new  Warrant  is to be  issued  in  the  name  of the
undersigned  for the balance  remaining  of such  shares less any  fraction of a
share paid in cash.

FUSION CAPITAL FUND II, LLC
BY: FUSION CAPITAL PARTNERS, LLC

By:_________________________
Name:
Title:

Fusion Capital Fund II, LLC
222 Merchandise Mart Plaza, Suite 9-112
Chicago, IL 60654

                                       8

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