Document:

Exhibit 10.5

    
      
        

      

      Exhibit
        10.5

    

    THIRD
      AMENDMENT TO THE 

    SENIOR
      MANAGEMENT VOLUNTARY DEFERRED COMPENSATION PLAN

    

    

    WHEREAS,
      Insituform Technologies, Inc. maintains a deferred compensation plan known
      as
      the Senior Management Voluntary Deferred Compensation Plan (“Plan”);
      and

    

    WHEREAS,
      the Plan may be amended pursuant to Section 9.1 of the Plan; and

     

    WHEREAS
      , it is deemed necessary and desirable to amend the Plan.

    

    NOW
      THEREFORE, THE PLAN is hereby amended as follows:

    

    1.                
      By
      deleting Section 2.4 in its entirety and substituting the following
      therefor:

    

    2.4     Change
      in Control.  A
      “Change in Control” shall occur if:

    

    a)      
      Any
      one
      person or group (as determined under Proposed Treasury Regulation
§1.401A-3(g)(5)(v)(B)), acquires ownership of stock of the Company that,
      together with stock held by such person or group, constitutes more than fifty
      percent (50%) of the total fair market value or total voting power of the stock
      of the Company, or

    

    b)      
      Notwithstanding
      that the Company has not undergone a Change in Control as described in 2.4(a),
      a
      Change in Control of the Company occurs only on the date that
      either:

    

    (i)        
      Any
      one
      person, or more than one person acting as a group (as determined under Proposed
      Treasury Regulation §1.401A-3(g)(5)(v)(B)), acquires or has acquired during the
      12-month period ending on the date of the most recent acquisition by such person
      or persons ownership of stock of the Company possessing thirty-five percent
      (35%) or more of the total voting power of the stock of such corporation;
      or

    

    (ii)        A
      majority of members of the Company’s Board is replaced during any 12-month
      period by directors whose appointment or election is not endorsed by a majority
      of the members of the Company’s Board prior to the date of the appointment or
      election; or

    

    c)      
      Any
      one
      person or group (as determined under Proposed Treasury Regulation
§1.401A-3(g)(5)(v)(B)), acquires or has

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    acquired
      during the 12-month period ending on the date of the most recent acquisition
      by
      such person or persons assets from the Company that have a total gross fair
      market value equal to or more than forty percent (40%) of all the assets of
      the
      Company immediately prior to such acquisition or acquisitions. For this purpose,
      gross fair market value means the value of the assets of the Company, or the
      value of the assets being disposed of, determined without regard to any
      liabilities associated with such assets.

    

    2.                
      By
      deleting Section 2.5 in its entirety and substituting the following
      therefor:

    

    
      	 	
              2.5

            	
              Committee.
                The
                Committee shall consist of the Chief Financial Officer (“CFO”), the
                Vice-President of Human Resources, the General Counsel, and such
                other
                person as the Committee may from time to time
                appoint.

            

    

    

    3.                
      By
      deleting Section 2.8 in its entirety and substituting the following
      therefor:

    

    
      	 	
              2.8

            	
              Deferral
                Commitment.
                “Deferral
                Commitment” means a commitment made by a Participant to defer a portion of
                Compensation as set forth in Article III. The Deferral commitment
                shall
                apply to salary and/or bonus payable to a Participant, and shall
                specify
                the Account or Accounts to which the Compensation deferred shall
                be
                allocated. Such deferral commitment shall be made in whole percentages
                and
                shall be made in a form acceptable to the Committee.
                

            

    

    

    4.                
      By
      deleting Section 2.11 in its entirety and substituting the following
      therefor:

    

    2.11   Disability.
      “Disability”
      means 

    

    a)
      the
      Participant is unable to engage in any substantial gainful activity by reason
      of
      medically determinable physical or mental impairment that can be expected to
      result in death or can be expected to last for a continuous period of not less
      than twelve (12) months; or 

    

    b)
      the
      Participant is, by reason of any medically determinable physical or mental
      impairment that can be expected to result in death or can be expected to last
      for a continuous period of not less than twelve (12) months, receiving income
      replacement benefits for a period of not less than three (3) months under a
      long-term disability plan covering employees of Insituform Technologies, Inc.
      

    

    5.               
      By
      deleting Section 2.21 in its entirety and substituting the following
      therefor:

    
      
        
        

      

      
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              2.21

            	
              Valuation
                Funds.
                “Valuation
                Funds” means one or more of the independently established funds or indices
                that are identified and listed by the Committee. These Valuation
                Funds are
                used solely to calculate the Interest that is credited to each
                Participant’s Account(s) in accordance with Article IV, below, and do not
                represent, nor should it be interpreted to convey any beneficial
                interest
                on the part of the Participant in any asset or other property of
                the
                Company. The Committee shall select the various Valuation Funds available
                to the Participants with respect to this Plan and shall set forth
                a list
                of these Valuation Funds attached hereto as Exhibit A, which may
                be
                amended from time to time at the discretion of the
                Committee.

            

    

    

    6.                
      By
      deleting Section 3.1 in its entirety and substituting the following
      therefor:

    

    3.1     Eligibility
      and Participation

    

    a) Eligibility. Eligibility
      to participate in the Plan shall be limited to those select senior management
      employees of the Company whose base salary for the calendar year immediately
      prior to their first year of eligibility to participate in this Plan is at
      least
      equal to the amount ($95,000 for 2005) provided for such year under Code Section
      414(q). 

    

    b) New
      Participants.
      An
      employee’s participation in the Plan shall begin on the first day of the
      calendar quarter immediately following notification to such employee by the
      Committee of eligibility to participate in the Plan (“Initial Participation
      Date”).

    

    c) Election
      Procedure.
      Except with respect to the Year in which an employee first becomes a
      Participant, an election by a Participant to defer compensation for services
      performed in a particular year must be made before the close of the year next
      preceding the year in which the services with respect to which such compensation
      is earned are performed. In the case of the first year in which an employee
      becomes a Participant, a Participant may submit a Deferral Commitment at any
      time after he is notified of eligibility to participate in the Plan and before
      his initial participation date. Any such Deferral Commitment shall only be
      effective for compensation which is paid for services to be performed in such
      Year subsequent to the election. In the event a new Participant does not submit
      a Deferral Commitment prior to this initial participation date, he shall first
      be entitled to submit such forms with respect to compensation for services
      performed in the year immediately following the year in which he first becomes
      a

    
      
        
        

      

      
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    Participant
      pursuant to the first sentence of this paragraph (c) of Section
      3.1.

    

    7.                
      By
      deleting Section 3.2 in its entirety and substituting the following
      therefor:

    

    3.2      Form
      of Deferral.
      A
      Participant may elect a Deferral Commitment as follows:

    

    a) Form
      of Deferral Commitment.
      Except as provided in paragraph (c) of Section 3.1, a Deferral Commitment shall
      be made with respect to salary and/or bonus payable by the Company to a
      Participant during the immediately succeeding Deferral Period, and shall
      designate the portion of each deferral that shall be allocated among the various
      Accounts. The Participant shall set forth the amount to be deferred as a full
      percentage of salary and/or bonus (the Participant may designate a different
      percentage of salary and bonus that is to be deferred under this plan). In
      addition, the Deferral Commitment shall specify the Participant’s initial
      allocation of the amounts deferred into each Account among the various available
      Valuation funds.

    

    b) Period
      of Commitment.
      A
      separate Deferral Election must be made with respect to each Deferral
      Period.

    

    8.                
      By
      deleting Section 3.3 a) in its entirety and substituting the following
      therefor:

    

    3.3     
      ...

    

    
      	 	
              a)

            	
              Maximum.
                The
                maximum amount of base salary that may be deferred under this Plan
                shall
                be fifteen percent (15%) of base salary, and the maximum amount of
                bonus
                or incentive compensation that may be deferred under this Plan shall
                be
                fifty percent (50%) of bonus or incentive
                compensation.

            

    

    

    9.                
      By
      deleting Section 3.3 b) in its entirety and substituting the following
      therefor:

    

    
      	 	
              b)

            	
              Minimum.
                The
                minimum amount of base salary that may be deferred shall be one percent
                (1%) of base pay, and the minimum amount of bonus or incentive
                compensation that may be deferred shall be one percent (1%) of the
                bonus
                or incentive compensation.

            

    

    

    10.              
      By
      deleting Section 3.6 in its entirety and substituting the following
      therefor:

    

    3.6       
      Change
      in Employment Status.
      If
      the Committee determines that a Participant’s employment performance is no
      longer at a level that

    
      
        
        

      

      
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    warrants
      reward through participation in this Plan, but does not terminate the
      Participant’s employment with the Company, the Participant’s existing Deferral
      Commitment shall terminate at the end of the Deferral Period in which such
      determination is made, and no new Deferral Commitment may be made by such
      Participant after notice of such determination is given by the Committee, unless
      the Participant later satisfies the requirements of §3.1, above and has
      Committee approval. If the Committee, in its sole discretion, determines that
      the Participant no longer qualifies as a member of a select group of management
      or highly compensated employees, as determined in accordance with the Employee
      Retirement Income Security Act of 1974, as amended, the Participant’s existing
      Deferral Commitment shall terminate at the end of the Deferral Period in which
      such determination is made, and no new Deferral Commitment may be made by such
      Participant after notice of such determination is given by the
      Committee.

    

    11.              
      By
      deleting Section 4.2 in its entirety and substituting the following
      therefor:

    

    4.2       
      Timing
      of Credits:  A
      Participant’s deferred Compensation and any Matching Contributions relating to
      such deferred Compensation shall be credited to each account designated by
      the
      Participant on the last day of the month during which the Compensation deferred
      would have otherwise been payable to the Participant. Any Discretionary
      Contributions shall be credited to the Retirement Account as provided by the
      Committee. Any withholding of taxes or other amounts with respect to deferred
      Compensation that is required by local, state or federal law shall be withheld
      from the Participant’s corresponding non-deferred portion of the Compensation to
      the maximum extent possible. The portion of any remaining amount which is
      attributable to the Federal Insurance Contributions Act (FICA) tax imposed
      under
      Section 3101, Section 3121(a) and 3121(v)(2) of the Internal Revenue Code,
      with
      respect to such deferred compensation, or which is attributable to the income
      tax at source on wages imposed under section 3401 or the corresponding
      withholding provisions of applicable state, local or foreign tax laws as a
      result of the payment of the FICA Amount or the additional income tax at source
      on wages attributable to the pyramiding section 3401 wages and taxes shall
      reduce the amount credited to the Participant’s Account in a manner specified by
      the Committee; provided, however, the total amount by which the amount credited
      to a Participant’s Account is reduced must not exceed the aggregate of the FICA
      Amount, and the income tax withholding related to such FICA
      Amount.

    
      
        
        

      

      
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    12.              
      By
      deleting Section 4.4 in its entirety and substituting the following
      therefor:

    

    4.4      
      Matching
      Contributions. Company
      shall credit a Matching Contribution to the Participant’s Retirement Account
      with respect to the Compensation deferred by the Participant under this Plan
      during a Deferral Period. Such Matching Contribution shall be equal to one
      hundred percent (100%) of the first three percent (3%) of the Participant’s
      Compensation before such deferrals, plus fifty percent (50%) of the next two
      percent (2%) of the Participant’s Compensation before such deferrals. For
      purposes of this Plan only, base Compensation shall not include compensation
      of
      any participant that is in excess of two hundred and ten thousand dollars
      ($210,000) in 2005, or such amount as may be provided from time to time under
      Code Section 401(a)(17), in any year or such other sum as the Committee shall
      determine from time to time. The Matching Contribution to this Plan shall be
      reduced by any Matching Contributions credited on behalf of the Participant
      to
      the 401(k) Plan to the extent such amount exceeds the total Matching
      Contribution allowed under this Section 4.4. The Matching Contribution shall
      be
      credited to the Retirement Account in the same proportion as set forth in
      section 4.1 above.

    

    13.               By
      deleting Section 5.1 in its entirety and substituting the following
      therefor:

    

    5.1       Retirement
      Account.
      The
      vested portion of a Participant’s Retirement Account shall be distributed to the
      Participant upon the earlier of termination of employment with the Company
      or
      the date of the Participant’s Disability. With respect to key employees as
      defined in Section 416(i) without regard to Section 416(i)(5), benefits under
      this section shall be payable on or after the first day of the seventh
      (7th)
      month
      after termination of employment. With respect to non-key employees, benefits
      under this section shall be paid as soon as practicable. The form of benefit
      payment shall be that form selected by the Participant pursuant to Section
      5.4,
      below, unless the Participant terminates employment prior to Retirement, in
      which event, the Retirement Account shall be paid in the form of a lump sum
      payment.

    

    14.               By
      deleting Section 5.2 in its entirety and substituting the following
      therefor:

    

    5.2       
      In-Service
      Account.

    

    a) General.
      Subject to paragraph (c) of this Section 5.2, the vested portion of a
      Participant’s In-Service Account shall be distributed to the Participant upon
      the earlier of the date chosen by the Participant in the first Deferral
      Commitment which designated a

    
      
        
        

      

      
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    portion
      of the Compensation deferred be allocated to the In-Service Account, provided
      that the date specified shall not be prior to the fifth anniversary of the
      first
      Deferral Commitment electing an In-Service distribution or the Participant’s
      Disability.

     

    b)    
      Form
      of Payment for In-Service Account.
      The
      permitted forms of payment for the In-Service Account are:

     

    (i)  A
      lump sum amount which is equal to the vested Account balance; and

     

    (ii)
      Annual installments for a period of five (5) years where the annual payment
      shall be equal to the balance of the Account or sub-account immediately prior
      to
      the payment, multiplied by a fraction, the numerator of which is one (1) and
      the
      denominator of which commences with five (5) and is reduced by one (1) in each
      succeeding year, unless the total amount in the Participant’s In-Service Account
      as of the date chosen by the Participant for payment is less than $5,000, the
      In-Service Account shall be paid in a lump sum, notwithstanding any election
      by
      the Participant to the contrary. Interest on the unpaid balance shall be based
      on the most recent allocation among the available Valuation Funds chosen by
      the
      Participant, made in accordance with Section 4.3, above.

     

    c)  
      Change
      of First Deferral Commitment.
      A
      Participant may change the date chosen in his first Deferral Commitment or
      any
      previously filed Deferral Commitment for the payment of his In-Service Account
      and further defer the payment of his In-Service Account by submitting to the
      Committee a revised Deferral Commitment; provided, however, any such revised
      Deferral Commitment (i) may not be made less than 12 months prior to the date
      the payment is scheduled to be made pursuant to the first Deferral Commitment
      or
      the most recently filed Deferral Commitment (or if the installment option had
      been previously chosen, 12 months prior to the date the first amount was
      scheduled to be paid), and (ii) payment of the In-Service Account is deferred
      for a period of not less than 5 years from the date such payment would have
      been
      paid pursuant to the first Deferral Commitment or the most recently filed
      Deferral Commitment (or if the installment option had been chosen, 5 years
      from
      the date the first amount was scheduled to be paid).

    

    d)    Termination
      of Employment.
      Notwithstanding anything to the contrary in this section, if the Participant
      terminates employment with the Company prior to the date so chosen by
      the

    
      
        
        

      

      
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    Participant,
      the vested portion of the In-Service Account shall be added to the Retirement
      Account as of the date of termination of service and shall be paid in accordance
      with the provisions of Section 5.1, above.

    

    15.               By
      deleting Section 5.3 and substituting the following therefor:

    

    5.3       Death
      Benefit.
      Upon
      the death of a Participant prior to the commencement of benefits under this
      Plan
      from any Account, Company shall pay to the Participant’s beneficiary an amount
      equal to the vested Account balance in that Account in the form chosen by the
      Participant in the Deferral Commitment on file with the Committee and in effect
      at the date of his death. A Participant may change his death benefit form of
      payment at any time by filing a revised Deferral Commitment with the Committee;
      provided, however, any such revised Deferral Commitment shall not take effect
      until at least 12 months after the date on which such form is submitted to
      the
      Committee. If the Participant fails to select a form of payment with respect
      to
      the death benefit on the Deferral Commitment, the death benefit amount shall
      be
      paid in a single lump sum within ninety (90) days of Participant’s death. In the
      event of the death of the Participant after the commencement of benefits under
      this Plan from any Account, the benefits from such Account shall be paid to
      the
      Participant’s designated Beneficiary at the same time and in the same manner as
      if the Participant had survived.

    

    16.               
      By
      deleting Section 5.4 in its entirety and substituting the following
      therefor:

    

    5.4       
      Form
      of Payment.
      Unless otherwise specified in this Plan, the benefits payable from any
      particular Account under this Plan shall be paid in the form as specified by
      the
      Participant with respect to such Account in the Deferral Commitment. A
      Participant may change the form of payment prior to his termination an unlimited
      number of times by submitting to the Committee a revised Deferral Commitment;
      provided, however, any such revised form (i) shall not take effect until at
      least 12 months after the date on which such form is submitted to the Committee,
      (ii) may not be made less than 12 months prior to the date the payment with
      respect to which the revised Deferral Commitment is being submitted is scheduled
      to be made (or if the installment option had been chosen, 12 months prior to
      the
      date the first amount was scheduled to be paid), and (iii) the payment of any
      amount with respect to which such revised Deferral Commitment is being made
      is
      deferred for a period of not less than 5 years from the date such payment would
      have been paid by

    
      
        
        

      

      
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    virtue
      of the Participant also filing a revised Deferral Commitment which effects
      such
      deferral.

    

    17.               
      A
      new
      Section 5.9 shall be added as follows:

    

    5.9     Installment
      Option Treated as Single Payment.
      For
      purposes of determining the time and form of any payment of benefits under
      the
      Plan, or any change with respect thereto, all payments pursuant to any
      installment option which is selected hereunder shall be treated as a single
      payment.

    

    18.               By
      deleting Section 6.2 in its entirety and substituting the following
      therefor:

    

    6.2    
      Changing
      Beneficiary. Any
      Beneficiary designation may be changed by an unmarried Participant without
      the
      consent of the previously named Beneficiary by the filing of a new Beneficiary
      designation with the Committee. A married Participant’s Beneficiary designation
      may be changed by a Participant with the consent of the Participant’s spouse as
      provided for in Section 6.1 above, by the filing of a new designation which
      shall cancel all designations previously filed. 

    

    19.               By
      deleting Section 6.4 in its entirety and substituting the following
      therefor:

    

    6.4     No
      Beneficiary Designation.
      If
      any Participant fails to designate a Beneficiary in the manner provided above,
      if the designation is void, or if the Beneficiary designated by a deceased
      Participant dies before the Participant or before complete distribution of
      the
      Participant’s benefits, the Participant’s Beneficiary shall be the person in the
      first of the following classes in which there is a survivor:

    

    a) The
      Participant’s surviving spouse;

    

    b) The
      Participant’s children in equal shares, except that if any of the children
      predeceases the Participant or Participant’s spouse but leaves surviving issue,
      then such issue shall take by right of representation, in equal shares, the
      share the deceased child would have taken if then living; provided, however,
      that if there is no surviving issue of the deceased child, the remaining
      children of the Participant shall share equally;

    

    c) The
      Participant’s estate.

    

    20.                By
      deleting Section 7.1 in its entirety and substituting the following
      therefor:

    
      
        
        

      

      
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    7.1    
      Committee;
      Duties.
      This
      Plan shall be administered by the Committee except after a Change in Control
      as
      provided in Section 7.5 below. The Committee shall have the authority to make,
      amend, interpret and enforce all appropriate rules and regulations for the
      administration of the Plan and decide or resolve any and all questions,
      including interpretations of the Plan, as may arise in such administration.
      A
      majority vote of the Committee members shall control any decision. Members
      of
      the Committee may be Participants under this Plan.

    

    21.              
      A
      new
      Section 9.1(c) shall be added as follows:

    

    c)        Section
      409A Restrictions.
      Notwithstanding anything contained herein to the contrary, no amendment shall
      be
      adopted to the extent that such amendment will cause the Plan to violate Code
      Section 409A or the regulations promulgated thereunder.

    

    22.              
      By
      deleting Section 9.2 in its entirety and substituting the following
      therefor:

    

    
      	 	
              9.2

            	
              Termination
                of Plan.
                The
                Plan shall terminate upon the earlier of
                :

            

    

     

    a)      
      The
      Board’s decision to terminate the Plan within twelve (12) months of the
      Company’s dissolution taxed under Code Section 331, or with the approval of a
      bankruptcy court pursuant to Chapter 11 U.S.C. §503(b)(1)(A), provided that the
      amounts deferred under the plan are included in the Participants’ gross incomes
      in the latest of:

    

    (i)   
      The
      calendar year in which the Plan termination occurs;

    

    (ii)  
      The
      calendar year in which the amount is no longer subject to a substantial risk
      of
      forfeiture; or

    

    (iii)  The
      first calendar year in which the payment is administratively practicable; OR
      

    

    b)      The
      decision of the Board to terminate the Plan may be exercised in its sole and
      absolute discretion at any time. In the event the Plan is terminated under
      this
      Section 9.2(b), each Participant shall be entitled to receive any deferred
      compensation earned hereunder if the following conditions are
      satisfied:

    

    (i)  
      All
      arrangements sponsored by the Company that would be aggregated with any
      terminated arrangement under Proposed Treasury Regulation Section
      1.409A-1(c)

    
      
        
        

      

      
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    (assuming
      for this purpose that the Participant participated in all terminated
      arrangements) are terminated;

    

    (ii) 
      No
      payments, other than payments that would be payable under the terms of all
      such
      terminated arrangements if the termination had not occurred, are made within
      twelve (12) months of the termination of the terminated arrangements;

    

    (iii)  
      All
      payments are made within twenty-four (24) months of the terminated arrangements;
      and

    

    (iv)
      The
      Company does not adopt a new arrangement that would be aggregated with any
      terminated arrangements under Proposed Treasury Regulation Section 1.409A-1(c)
      (assuming for this purpose that Participant participated in both the terminated
      arrangement and the new arrangement), at any time within five (5) years
      following the date of termination of this Plan; OR

    

    c)     
      A
      Change in Control under Section 2.4 above. If the Plan is terminated due to
      a
      Change in Control, then the amount of deferred compensation due hereunder shall
      be payable one hundred percent (100%) in cash within the times specified in
      Section 9.2 b)(ii) and (iii) above. 

    

    23.              
      By
      deleting Section 10.1 in its entirety and substituting the following
      therefor:

    

    10.1  
      Unfunded
      Plan.
      This
      Plan is an unfunded plan maintained primarily to provide deferred compensation
      benefits for a select group of “management or highly compensated employees”
within the meaning of Sections 201, 301, and 401 of the Employee Retirement
      Income Security Act of 1974, as amended (“ERISA”), and therefore is exempt from
      the provision of Parts 2, 3 and 4 of Title 1 of ERISA. Accordingly, subject
      to
      Section 9.2 b) above, the Board may terminate the Plan and make no further
      benefit payments or remove certain employees as Participants if it is determined
      by the United States Department of Labor, a court of competent jurisdiction,
      or
      an opinion of counsel that the Plan constitutes an employee pension benefit
      plan
      within the meaning of Section 3(2) of ERISA (as currently in effect or hereafter
      amended) which is not so exempt.

    

    24.              
      By
      deleting Section 10.7 in its entirety and substituting the following
      therefor:

    
      
        
        

      

      
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    10.7    Protective
      Provisions. A
      Participant will cooperate with Company by furnishing any and all information
      requested by Company, in order to facilitate the payment of benefits hereunder,
      and by taking such physical examinations as Company may deem necessary and
      taking such other action as may be requested by Company. 

    

    25.               
      By
      deleting Exhibit A in its entirety and substituting the following
      therefor;

    

    EXHIBIT
      A: VALUATION FUNDS

    

    Retirement
      Goal 2010 Fund

    

    Oppenheimer
      Global (Class A)

    

    Dryden
      S&P 500 Index Fund

    

    Large
      Cap Value/Barrow Hanley

    

    Guaranteed
      Income Fund

    

    Small
      Cap Value/Perkins, Wolf, McDonnell Fund - This fund is through January 31,
      2006,
      and will be replaced by Delaware Small Cap Value Fund 

    

    This
      amendment shall be known as the Third Amendment to Senior Management Voluntary
      Deferral Compensation Plan (“Third Amendment”) and shall be effective as of
      January 1, 2006.

    

    IN
      WITNESS WHEREOF, the undersigned has caused this Third Amendment to be executed
      in the name of and on behalf of Insituform Technologies, Inc. this 5th
      day of
      January, 2006.

    

    

    

    
      	 	
              INSITUFORM
                TECHNOLOGIES, INC.

               

               

              By:
                /s/ David F.
                Morris                                           
                

              David
                F. Morris 

               

              Title: Vice
                President and General Counsel

            

    

    

    

     

     

    12EXHIBIT 10.1

THE INTEREST IN THE SECURITIES  CONTEMPLATED IN THIS EXPANDED  AGREEMENT WILL BE
ACQUIRED,  IF AT ALL, FOR  INVESTMENT  AND NOT WITH A VIEW TO, OR IN  CONNECTION
WITH,  THE SALE OR  DISTRIBUTION  THEREOF.  NO SUCH SALE OR  DISPOSITION  MAY BE
AFFECTED  WITHOUT AN  EFFECTIVE  REGISTRATION  STATEMENT  RELATED  THERETO OR AN
OPINION OF COUNSEL  SATISFACTORY  TO THE ISSUER  THAT SUCH  REGISTRATION  IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

                         EXPANDED USE LICENSE AGREEMENT

     THIS  EXPANDED  USE  LICENSE  AGREEMENT  ("Expanded   Agreement")  is  made
effective as of 12th day of October, 2005 by and between XsunX, Inc., a Colorado
Corporation ("XsunX"),  and MVSystems,  Inc., a Colorado Corporation ("MVS") and
Arun Madan, an individual ("Dr. Madan"). XsunX, MVS, and Dr. Madan are sometimes
herein referred to individually as a "party" and collectively as the "parties."

                                 R E C I T A L S

         A. WHEREAS,  MVS, Dr. Madan and XsunX have previously entered into that
certain  Technology  Sharing  and License  Agreement  dated  September  17, 2004
("Technology  Sharing  and  License  Agreement"),  for  the  purposes  described
therein,  and the  parties  now wish to expand  and  define the scope and use of
technology  to include  the  development  of opaque  solar cell  structures  and
manufacturing methods; and

         B. WHEREAS,  MVS and Dr. Madan desire to expand and/or  further  define
the use of licensed  technology,  know-how,  and patents to XsunX for use in the
development of opaque photovoltaic technologies and manufacturing methods; and

         C. WHEREAS, the parties  desire to enter into this  Expanded  Agreement
for the development and  commercialization of opaque photovoltaic  technologies;
and

         NOW,  THEREFORE,  in  consideration  of the mutual  promises  contained
herein, and other good and valuable  consideration,  the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto agree as follows:

        1.    DEFINITIONS

1.1.  "Act" means the  Securities  Act of 1933  promulgated by the United States
Securities and Exchange Commission.

1.2. "Expanded  Agreement" means this Expanded Use License Agreement,  including
the schedules and exhibits attached hereto,  which are incorporated by reference
herein.

                                       1
<PAGE>

1.3.  "Commercial,"  "Commercialize,"  or  "Commercialization  of the 4 Terminal
Patent"  means  the  development  of  process  related  thereto  to the point of
obtaining  a  marketable  product  consisting  of the core solar cell  structure
design  and  the  manufacturing   techniques   deliverable  in  the  form  of  a
commercially  scalable   manufacturing   process,  and  the  actual  realization
thereupon of Ten Million Dollars ($10,000,000)  cumulative revenue for the sales
and licensure of such technologies and  manufacturing  process by five (5) years
from the effective date of completion of such development.

1.4.  "Derivative  Works"  mean  works of the  parties,  including  products  or
processes, associated with any subsequent research by any party, development, or
combination of technologies of the parties after the  Commencement  Date,  which
are useful or specific to XsunX Expanded  Field of Use or the Expanded  Business
of XsunX or which may otherwise  become  subject to the terms of the  provisions
set forth in this  Expanded  Agreement  or those of the  Technology  Sharing and
License Agreement.

1.5.  "Expanded Use License" means that certain license set forth in Section 2.1
of this Expanded Agreement.

1.6.  "Expanded  Use License  Stock  Warrant"  means that certain  stock warrant
contemplated at Section 4 of this Expanded Agreement.

1.7.  "Expanded  Use License  Stock  Warrant  Shares" mean those shares of XsunX
obtained upon the exercise of the License Stock Warrant, as set forth at Section
4 of this Expanded Agreement.

1.8.  "XsunX  Expanded Field of Use" The XsunX Expanded Field of Use pertains to
the business of developing and commercializing semi-transparent and opaque solar
cells  and  photovoltaic  technologies,   solar  cell  panels,  and  methods  of
manufacture.

1.9.  "Expanded  Business  of XsunX"  XsunX is in the  business  of  developing,
manufacturing,  and  marketing  semi-transparent  and  opaque  solar  cells  and
photovoltaic technologies, solar cell panels, and methods of manufacture.

1.10.  "Joint  Licensing  and  Equipment  Revenue  Fees" means the fixed  costs,
percentages,  mark-ups,  and/or revenue sharing  specifications  as set forth in
this Expanded Agreement.

1.11. "Opaque Solar Cell Development" means the development of opaque solar cell
structures and manufacturing  methods employing the techniques  proposed within,
but not limited to, U.S. Provisional Patent Application serial number 60/536,151
- three terminal and four terminal solar cells, solar cell panels, and method of
manufacture,  and  other  technology,  as set fort  therein,  a copy of which is
attached  hereto  as  Exhibit  "H" and  incorporated  herein,  the ("4  Terminal
Patent").  The completed development and refinement of the 4 Terminal Patent, or
any derivative works there from, and any other acquired or licensed technologies
are intended to produced  commercially  marketable  products  and  manufacturing
processes of opaque solar cell devices. The development of the 4 Terminal Patent

                                       2
<PAGE>

will  exclude the use of  Copper-Indium-Gallium-Selenium  ("CIGS")  materials in
solar cell structures so long as it pertains to services provided by MVS and the
use of the MVS  reel-to-reel  cassette  manufacturing  system  by  XsunX  in the
Expanded Business of XsunX.

1.12.  "Technology  Sharing and License Agreement" means that certain Technology
Sharing and License Agreement dated September 17, 2004, entered into by MVS, Dr.
Madan and XsunX.

1.13.  All other terms used herein which are not otherwise  defined herein shall
have the meaning set forth in the Technology Sharing and License Agreement.

        2.   LICENSE PROVISIONS

2.1. Grant of Expanded Use License.  Subject to the terms and conditions of this
Expanded  Agreement,  and subject to the terms and  conditions of the Technology
Sharing and License Agreement,  and in exchange for the considerations set forth
herein, MVS and Dr. Madan, jointly and severally,  hereby grant to XsunX for the
term of this Expanded  Agreement,  and XsunX accepts, an expanded use license of
and to the Licensed  Patents and  Technology,  with the right to sublicense,  to
import,  make,  have made,  use, sell,  offer for sale, have sold, and otherwise
commercially  exploit the Licensed  subject  matter of the Licensed  Patents and
Technology  within the XsunX  Expanded Field of Use,  provided  however that Dr.
Madan  and MVS  retain  the right to use the  Licensed  Patents  and  Technology
themselves  and to lend or transfer them to a university or non-profit  research
organization,  and to  commercially  license  or  transfer  the use of US Patent
6,488,777 B2, and US Patent 6,258,408 B1- Semiconductor vacuum deposition system
and method having a reel-to reel substrate cassette,  the ("Cassette Patent") so
long as such use or transfer of any of the above does not defeat or diminish the
economic benefit and commercial  ability of such Licensed Patents and Technology
that may be derived  by XsunX  within  the XsunX  Field of Use and the  Expanded
Business of XsunX.

2.2.  Retained  Rights.  Notwithstanding  the grant of the  Expanded Use License
herein,  and  pursuant to the  provisions  of this  Expanded  Agreement  and the
Technology  Sharing and License  Agreement,  MVS and Dr.  Madan shall retain the
right  to use  the  Licensed  Patents  and  technology  in the  Business  of MVS
including the right to manufacture its machines and the reel-to reel technology,
provided  such use  does  not  defeat  or  diminish  the  economic  benefit  and
commercial  ability  of the  technology  transfer  that may be  derived by XsunX
within the Xsunx  Expanded Field of Use and the Expanded  Business of XsunX.  In
addition XsunX is not licensed to provide this technology to any third party for
uses outside of the Expanded Business of XsunX.

                                       3
<PAGE>

2.3. Expiration of Expanded Use License. The Expanded Use License granted herein
shall,   subject  to  expiration   as  set  forth   herein,   be  perpetual  and
self-renewing.  Notwithstanding the foregoing,  in the event that XsunX fails to
Commercialize  the 4 Terminal  Patent  within five (5) years from the  effective
date of completion of the development of the 4 Terminal Patent, the Expanded Use
License  granted  above shall expire as to that  technology or part thereof that
was not Commercialized.

2.4. Intent and Scope of Expanded Use License.  The Expanded Use License granted
herein is intended to eliminate the five percent (5%)  transmisivity  limitation
as  specified  within the  Technology  Sharing and License  Agreement  effective
September 17, 2004 between the parties, and to allow the use of all technologies
licensed,  including  any  derivative  works there from, to be utilized by XsunX
within the XsunX  Expanded  Field of Use and in the  development of the Expanded
Business of XsunX as defined herein.

2.5.  Derivative  Works.  All  Derivative  Works of the parties  resulting  from
research or work  funded by, or  Confidential  Information  provided  by,  XsunX
associated  with  any  subsequent  research  by  any  party,   development,   or
combination of technologies of the parties after the  Commencement  Date,  which
are  useful or  specific  to the  XsunX  Expanded  Field of Use or the  Expanded
Business of XsunX,  shall become the property of XsunX,  subject to the terms of
separate joint licensing  agreements between the parties intended to provide MVS
use of such  technology in  applications  not in direct or indirect  competition
with or adverse to XsunX in light of the XsunX Expanded Field of Use.

        3.      JOINT LICENSING AND EQUIPMENT REVENUE FEES

3.1.  Obligations  of MVS.  MVS and Dr.  Madan  shall,  subject to the  specific
provisions  of any  development  proposal  then  approved by XsunX,  MVS and Dr.
Madan,  and  subject  to the  confidentiality  provisions  set forth  within the
Technology Sharing and License Agreement, share the technology referenced herein
and  therein  with  XsunX  and  provide  research,  development,   consultation,
materials, tools, instruments, and facility Services for the benefit of XsunX at
Cost for the development of technologies  pertinent to the Expanded  Business of
XsunX  and for  performance  under  this  Expanded  Agreement.  Approval  of any
development proposal shall not be unreasonably withheld by MVS and Dr. Madan.

3.2.  Joint  Licensing  and  Equipment  Revenue  Fees.  The parties agree to the
provisioning of fixed costs and the sharing of revenues to and from the sale and
licensure of equipment and technology  resulting from the  commercialization  of
the  Licensed  Patents and  Technology  under this  Expanded Use License and the
Technology Sharing and License Agreement as follows:

     3.2.1.  Opaque Solar Cell  Technology  License  Revenue  Sharing.  Upon the
successful  completion of the  development  of the 4 Terminal  Patent,  which is
intended to produce  commercially  marketable  opaque solar cell  structures and
manufacturing  methods,  XsunX shall begin  licensing  efforts of the  developed
opaque  technologies.  If  after  twelve  (12)  months  from  the  date of first

                                       4
<PAGE>

licensure  to a third  party in a bona fide  arms-length  commercial  setting or
relationship,  the common  stock of XsunX (the "Quoted  Stock"),  as quoted on a
nationally  recognized  quotation  system  such as the NASDAQ:  OTCBB  quotation
system,  has not been  quoted at a price of at least Four  Dollars  ($4.00)  per
share over a five (5) day trading period at any time during the preceding twelve
(12) months then MVS shall be entitled to a twenty  percent (20%) net of the net
proceeds  associated with the licensing revenues generated from the licensure of
the developed opaque technologies until such time that the Quoted Stock achieves
a Four Dollar  ($4.00) per share  quoted  price over a five day trading  period.
Thereafter MVS shall not be entitled to proceeds  associated  with the licensing
revenues.

     3.2.2.  General  Equipment  and  Processing  Systems  Manufacture,   Sales,
Licensure,  and Services. XsunX and MVS shall each share a joint license for the
sale and/or licensure of equipment and manufacturing  systems,  (the "Machines")
associated  with the  delivery  of  technologies  and  processes  related to the
patents and products derived from the  commercialization  of technologies  under
this Expanded Use License and the Technology  Sharing and License  Agreement and
shall each be entitled to the benefits of costs and revenue sharing as follows:

        a)     In the event that XsunX completes a sale or licensure of Machines
               or services,  and places an order with MVS for the manufacture of
               said  Machines or the  delivery  of  services  such as design and
               consultation  related to the  manufacture  of Machines  and their
               delivery and  incorporation  into a manufacturing  line or system
               incorporating  the  services  and/or  equipment  of  third  party
               technologies,  MVS shall be entitled to fees equaling  Costs plus
               Ten  Percent  (10%).  MVS shall  continue to be entitled to Costs
               plus 10% for any additional  Machine or service orders related to
               the  addition  to,  expansion  of, or new orders  from or for the
               benefit of previous or existing  customers and marketing contacts
               generated by XsunX.

        b)     Under the Phase 3 and 4  development  programs  the parties  have
               planned to build a first run  production  Machine for the purpose
               of proofing and  demonstrating  the technology,  and selling this
               first  Machine.  The  parties  agree to a 50/50  split of the net
               proceeds of the sale of this Machine  excluding  production Costs
               and reasonable marketing expenses.

        c)     In the event that MVS licenses,  subject to XsunX  approval,  the
               design  criteria for the  manufacture  of Machines to third party
               manufacturers  then MVS shall be  entitled  to charge up to a ten
               percent (10%) royalty for such licensure on the wholesale cost of
               the Machines as determined by such third parties manufacturers or
               as  determined  in good  faith  between  MVS and the third  party
               manufacturer.  MVS shall provide XsunX with twenty  percent (20%)
               of any fees  collected  under any such third party  manufacturing
               agreements.  XsunX shall not unreasonably  withhold any approvals
               necessary  for the above  licensing to occur and will be entitled

                                       5
<PAGE>

               to review such  licensing  agreements to ensure that the Expanded
               Business  of XsunX will not be diluted or  diminished  subject to
               MVS licensure of technology and Machine design.

        d)     If XsunX refers a potential client to MVS for services other than
               those  related to the  technology  sharing and  commercialization
               efforts of the licensed  patents and technology  then XsunX shall
               be entitled to a royalty fee of three percent (3%) net of the net
               proceeds of the recognized revenue resulting from such referral.

        4.     WARRANT FOR PURCHASE OF SHARES

4.1.  Expanded Use License Stock Warrant.  As consideration for the grant of the
Expanded Use License,  XsunX shall,  grant MVS a warrant  ("Expanded Use License
Stock  Warrant") for the purchase of up to Seven Million  (7,000,000)  shares of
common stock of XsunX (the  "Expanded Use License Stock  Warrant  Shares").  The
Expanded  Use  License  Stock  Warrant  shall be in the form of that  Warrant to
Purchase Common Stock of XsunX, Inc.  instrument  attached hereto as Exhibit "I"
and  incorporated  herein by this  reference.  The  Expanded  Use License  Stock
Warrant shall have a five (5) year  exercise term and be subject to  conditional
vesting in accordance with the following provisions:

     4.1.1.  The Expanded Use License Stock Warrant shall become  exercisable in
the  amount  of  1,000,000  shares  upon  the  effective  date of this  Expanded
Agreement.

     4.1.2.  The Expanded Use License Stock Warrant shall become  exercisable in
the amount of 1,000,000 shares upon the satisfactory completion of Phase 4 under
the MVS  phase  4  development  proposal  attached  hereto  as  Exhibit  "J" and
incorporated herein by this reference.

     4.1.3.  The Expanded Use License Stock Warrant shall become  exercisable in
the  amount  of  5,000,000  shares  upon the date of  first  licensure  of the 4
Terminal Patent, as defined within this Expanded Agreement,  to a third party in
a bona fide arms-length commercial setting or relationship.

        5.    CONFIDENTIAL INFORMATION

5.1. Use in Products. Notwithstanding anything contained herein to the contrary,
XsunX may incorporate  technology and principles  derived from or related to the
Licensed Patents and Technology, including the technology and principles derived
from or  related  to the  Expanded  Use  License,  in its  commercial  and other
products,  within the XsunX  Expanded  Field of Use and the  development  of the
Expanded  Business of XsunX and the same shall not be deemed a violation of this
Expanded   Agreement  the  Technology  Sharing  and  License  Agreement  or  the
confidentiality provisions contained therein.

                                       6
<PAGE>

        6.     SECURTIES COMPLIANCE

6.1. No Offer or Sale.  This  Expanded  Agreement is not intended to be an offer
for the sale or issuance of securities,  whether  pertaining to stock,  options,
warrants,  or  otherwise,  unless  the  same is  exempt  from  registration  and
qualification  pursuant to an  applicable  exemption.  The issuance of stock and
warrants  is  expressly  subject  to  compliance  with  all  state  and  federal
securities  laws,  rules and  regulations  by the parties.  While XsunX does not
consider  this  Expanded  Agreement  itself to be a  securities  or offer of any
securities,  whether pertaining to stock, options, warrants or otherwise, in the
event that this letter is construed to be an offer, the parties  acknowledge the
following  disclosure  in  accordance  with Section  25102(a) of the  California
Corporations Code:

                  The  sale of the  securities  which  are the  subject  of this
                  expanded   agreement   has  not   been   qualified   with  the
                  Commissioner of Corporation of the State of California and the
                  issuance of such  securities  or the payment or receipt of any
                  part   of  the   consideration   therefore   prior   to   such
                  qualification  is unlawful,  unless the sale of  securities is
                  exempt from the  qualification  by Section  25100,  25102,  or
                  25105 of the California  Corporations  Code. The rights of all
                  parties to this expanded  agreement  are expressly  conditions
                  upon such  qualification  being obtained unless the sale is so
                  exempt.

6.2. General Securities Compliance.  Notwithstanding  anything contained in this
Expanded  Agreement to the  contrary,  this  Expanded  Agreement,  and the stock
warrants  discussed herein,  shall be, and are, expressly subject to all SEC and
securities,  laws, rules, regulations and reporting and disclosure requirements,
to the extent applicable to XsunX as a reporting company, the shares, and\or any
party  hereto,  including,  but not  limited  to,  shareholder  voting and proxy
solicitation rules. All issuances,  sales,  transfers,  or other dispositions of
shares of XsunX shall be made in compliance with all applicable securities laws,
rules and  regulations,  and pursuant to  registration  of securities  under the
Securities Act of 1933 ("Act") (and qualification  under General Corporation Law
of California) or pursuant to an exemption from registration  under the Act (and
qualification under General Corporation Law of California).  Notwithstanding the
foregoing,  nothing in this  Expanded  Agreement  shall  obligate  XsunX to seek
registration or qualification of any of its shares,  and, to the extent that any
obligation  hereunder cannot be performed without  registration or qualification
of any of its shares,  such obligation  shall be excused on the part of XsunX to
the extent that XsunX provides other adequate consideration therefore.

6.3. Rule 144. MVS and Dr. Madan each  acknowledge  that the shares of XsunX may
be subject to the  restrictions  on transfer  set forth in Rule 144 of the Rules
promulgated  under  the  Act.  Any and all  offers,  sales,  transfer  or  other
dispositions  of shares of XsunX shall be made only in compliance with Rule 144.
MVS and Dr. Madan shall each comply with all policies and procedures established
by the APC with regard to Rule 144 matters.  MVS and Dr. Madan each acknowledged
that XsunX or its attorneys or transfer  agent may require a restrictive  legend

                                       7
<PAGE>

on the  certificate  or  certificates  representing  the shares  pursuant to the
restrictions on transfer of the shares imposed by Rule 144.

        7.     MISCELLANEOUS.

7.1.  Parties in  Interest.  Nothing in this  Expanded  Agreement,  or any other
agreement or document (including, without limitation, the Technology Sharing and
License Agreement), whether express or implied, is intended to confer any rights
or remedies  under or by reason of this Expanded  Agreement on any persons other
than the  parties to it and their  respective  successors  and  assigns,  nor is
anything  in this  Expanded  Agreement  intended  to  relieve or  discharge  the
obligation or liability of any third party to this Expanded Agreement, nor shall
any  provision  give any third  person any right of  subrogation  or action over
against any party to this Expanded Agreement.

7.2.  Expenses.  Each of the  parties  hereto  shall,  subject  to the terms and
conditions of this Expanded  Agreement,  be responsible for and pay that party's
own expenses  incident to the  preparation  of this  Expanded  Agreement  and/or
incurred by any party in the  performance  and  consummation  of the transaction
contemplated hereby.

7.3. Survival.  All representations and warranties contained herein shall remain
in full force and effect,  regardless of any  investigation  made by a party and
shall survive the  completion  of an Offering and the  expiration of the term of
this Expanded Agreement.

7.4.  Entire  Agreement.  This  Expanded  Agreement,  along with the  Technology
Sharing and  License  Agreement,  including  all  exhibits  to such  agreements,
comprises the entire  agreement  between the parties and supersedes all prior or
contemporaneous  understandings  and agreements between the parties with respect
to the subject  matter  hereof.  This  Expanded  Agreement may not be amended or
modified  except  in a  writing  signed  by both  MVS and  XsunX  as to  matters
involving only MVS and XsunX and in a writing signed by both Dr. Madan and XsunX
as to matters involving only Dr. Madan and XsunX.

7.5.  Coordination.  This Expanded  Agreement is entered into pursuant to and in
light of the Technology Sharing Agreement,  and unless specifically addressed or
further  defined  herein,  it is the intent of the parties that the terms of the
Technology  Sharing and  License  Agreement  shall  control  over this  Expanded
Agreement. This Expanded Agreement is intended to constitute an amendment of the
Technology  Sharing and License Agreement as to the subject matter contained and
addressed herein. Notwithstanding anything contained herein or in the Technology
Sharing Agreement to the contrary, any breach of or under the Technology Sharing
and  License  Agreement  shall  constitute  a breach of and under this  Expanded
Agreement and any breach of or under this Expanded  Agreement shall constitute a
breach of and under the Technology Sharing and License Agreement.  The terms and

                                       8
<PAGE>

conditions of the  Technology  Sharing and License  Agreement  are  specifically
incorporated  herein  by this  reference  to the  extent  that  the  same do not
conflict  with the terms  and  conditions  of this  Expanded  Agreement  and the
Technology  Sharing and License Agreement is amended and modified to include the
matters addressed herein.

7.6. Notices. Any and all notices,  demands,  requests,  or other communications
required or  permitted  by this  Expanded  Agreement  or by law to be served on,
given to, or delivered  to any party hereto by any other party to this  Expanded
Agreement  shall be in  writing  and  shall be deemed  duly  served,  given,  or
delivered when  personally  received by the party or to an officer of the party,
or in lieu of such  personal  delivery,  when  received by United  States  mail,
first-class postage prepaid addressed to the parties hereto at such addresses as
may be provided by the parties hereto from time to time for such purposes.

7.7. Authorization.  The parties hereto represent and warrant that they are duly
authorized  to execute this  Expanded  Agreement on behalf of such party and the
persons  executing  this  Expanded  Agreement  represent  and warrant  that such
persons are duly  authorized by the entity that they are signing on behalf of to
execute and deliver this Expanded Agreement on behalf of such party.

7.8. Subject  Headings.  The subject headings of the paragraphs of this Expanded
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.

7.9.  Assignment.  This Expanded  Agreement is personal in nature and may not be
assigned by any party without the express  prior  written  consent of all of the
parties.  Upon the express prior  written  consent to assignment by all parties,
this Expanded  Agreement shall be binding upon and shall inure to the benefit of
the parties to it and their respective heirs, legal representatives, successors,
and assigns.

7.10. Attorneys' Fees and Costs. If any legal action or any arbitration or other
proceeding is brought by either party for the enforcement or  interpretation  of
this Expanded Agreement,  or because of an alleged dispute,  breach, default, or
misrepresentation  in  connection  with any of the  provisions  of this Expanded
Agreement,   or  because   of  an   alleged   dispute,   breach,   default,   or
misrepresentation  in  connection  with any of the  provisions  of this Expanded
Agreement,  the  successful or prevailing  party or parties shall be entitled to
recover  reasonable  attorneys'  fees and other costs incurred in that action or
proceeding,  in addition to any other relief to which it or they may be entitled
pursuant to such legal action.

7.11.  Further  Acts.  The parties  hereto shall  cooperate  with each other and
acknowledge, execute, deliver, and file such additional documents or instruments
and perform  such  further  acts as may be  reasonably  necessary  to affect the
purpose and intent of the Agreement,  including,  but not limited to, the making
of filings with the United States Patent and Trademark Office.

7.12. Severability. The provisions of this Expanded Agreement are severable and,
if any clause or provision shall be held invalid or unenforceable in whole or in
part, in any jurisdiction, then such invalidity or unenforceability shall effect
only such clause or provision,  or part thereof,  in such jurisdiction and shall
not in any manner effect such clause or  provisions  in any other  jurisdiction,
and in  respect  of the  jurisdictions  in which  such  clause or  provision  is

                                       9
<PAGE>

effected,  the parties  agree to  substitute  therefore  a provision  which most
closely  approximates  the  relative  rights  and  obligations  intended  by the
parties.

7.13.  Counterparts.  This Expanded Agreement may be signed in counterparts with
the same  effect as if the  signatories  hereto and  thereto  were upon the same
instrument.

7.14. Time of Essence. Time is of the essence of this Expanded Agreement.

7.15.  Governing Law. This Expanded  Agreement  shall be governed by the laws of
the State of Colorado, without reference to its choice-of-law or conflict of law
rules.

         THIS  EXPANDED  AGREEMENT  is made  effective  as of the date set forth
above.

                                     XSUNX:

                                     XsunX, Inc., a Colorado corporation

                                     By:  /s/ Tom M. Djokovich
                                          --------------------------------
                                            Tom M. Djokovich, President

                                      MVS:

                                      MVSystems, Inc., a Colorado corporation

                                      By:  /s/ Dr. Arun Madan
                                           ---------------------------------
                                             Dr. Arun Madan, President

<PAGE>

                                    EXHIBIT H

                            FORM OF 4 TERMINAL PATENT

<PAGE>

                                    EXHIBIT I

                   FORM OF EXPANDED USE LICENSE STOCK WARRANT

<PAGE>

                                    EXHIBIT J

                    FORM OF MVS PHASE 4 DEVELOPMENT PROPOSAL

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