Document:

EXHIBIT 10.1

                       CONSULTING AND ADVISORY AGREEMENT

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EXHIBIT 10.1

                     2007 CONSULTING AND ADVISORY AGREEMENT

         THIS CONSULTING AGREEMENT ("2007 Agreement"),  made effective as of the
22nd day of  February  2007,  is entered  into by and  between  Xsunx,  Inc.,  a
Colorado   corporation   ("Company"),   and  Dr.   Edward   Yu,  an   individual
("Consultant").  The Company and  Consultant  are sometimes  herein  referred to
individually as a "party" and collectively as the "parties".

                                 R E C I T A L S

         WHEREAS, Consultant has developed an expertise in the areas of advanced
semiconductor  materials and device  structures,  novel approaches to electronic
and optoelectronic device design,  nanoscale materials analysis and applications
of nanostructures in photovoltaic  devices,  design and fabrication of materials
and  device for  photovoltaic  applications,  and  thin-film  amorphous  silicon
structures and other technology  related to amorphous silicon and related alloys
which is of interest to the Company;

         WHEREAS,  Consultant  currently  holds the  position  of  Professor  of
Electrical and Computer Engineering at the University of California, San Diego.

         WHEREAS,  the Company  desires to obtain the services of Consultant and
Consultant desires to provide the Company with consultancy and advisory services
as contemplated pursuant to the terms and conditions contained herein; and

         WHEREAS, the  undersigned parties  desire to formalize such consultancy
relationship;

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

         1.       Definitions

         1.1  "XsunX  Field  of  Use"  means  the  business  of  developing  and
commercializing   semi-transparent  and  opaque  solar  cells  and  photovoltaic
technologies, solar cell panels, and methods of manufacture.

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

         2. Engagement of Services.  The Company hereby engages Consultant as an
independent  contractor to provide consulting and advisory services as set forth
herein.  All such  consulting and services shall be performed in accordance with
the  terms and  conditions  contained  herein.  Consultant  shall  report to the
Chairman  of the  Scientific  Advisory  Board,  or in  his  absence,  the  Chief
Executive  Officer of the Company.  Consultant hereby accepts such engagement in
accordance with such terms and conditions.

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         3. Services of Consultant.  Consultant  shall provide  consultancy  and
advisory  services as a member of the XsunX Scientific  Advisory Board under the
title of Member of the  Advisory  Board.  Notwithstanding  the  foregoing  title
Consultant shall remain an independent contractor. Consultant shall provide such
services  incident  thereto as may be necessary from time to time which services
shall include,  without limitation,  providing the Company with his best efforts
in  providing  technical  expertise  in  advising  the  Company  in the areas of
research & development, process development, planning, third party technical and
resource  requirements,  analysis  of research  and  development  data,  and the
management of  intellectual  assets  pertaining to the Business of XsunX and the
XsunX Field of Use.  Consultant is not a corporate  officer or director of XsunX
and will not be represented as such.

         3.1.  Consultant  shall provide such other  related  services as may be
requested  of  Consultant  by the Company and as are not  inconsistent  with the
provisions of this  Agreement.  Consultant  agrees to devote  Consultant's  best
efforts,  skills, and technical  expertise to the business of the Company, to do
Consultant's  utmost to further enhance and develop the interests and welfare of
the Company,  and to devote  necessary time and attention to the business of the
Company,  while recognizing  Consultant's  duties as Professor of Electrical and
Computer Engineering at the University of California, San Diego.

         3.2.  Consultant  shall  truthfully and accurately  make,  maintain and
preserve  all  records  and reports  that the  Company  may,  from time to time,
request or require, and shall fully account for all money,  records,  equipment,
materials or other  property  belonging to the Company of which  Consultant  may
have custody and shall pay over and deliver same  promptly  whenever and however
Consultant may be directed to do so.

         3.3.  Consultant  shall  make  available  to the  Company  any  and all
information of which  Consultant has knowledge that is relevant to the Company's
business,  but is  not  otherwise  prohibited  from  disclosing,  and  make  all
suggestions and recommendations  which Consultant believes will be of benefit to
the Company.

         3.4.  Consultant  shall,  at his own cost,  prepare for and attend such
meetings as may be reasonably requested by the Company, provided,  however, that
the Company shall pay for the  reasonable  travel and lodging costs  incurred by
Consultant in regard to the foregoing.  In addition to incidental  communication
of data,  questions,  and progress  updates provided to Consultant via email for
comment by  Consultant,  the  Company  may  request at least one  teleconference
review  meeting  per month and one meeting  requiring  attendance  per  calendar
quarter for the purpose of planning,  analysis, and collaborative  discussion of
the development matters referenced hereinabove,  and the conformance or variance
of the foregoing to or with the Business of XsunX.

         4. Duty to University of California,  San Diego. The parties  recognize
that  Consultant is and shall remain  employed by University of California,  San
Diego,  and  that  as an  employee  of  University  of  California,  San  Diego,
Consultant  shall  devote  time and  effort to the  business  of  University  of
California,  San  Diego.  Notwithstanding  the same,  Consultant  shall  conform

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Consultants' conduct to the fiduciary duties of confidentiality and loyalty owed
to the  Company.  In that  regard,  Consultant  shall  inform the Company at the
earliest  opportunity  at such  time as  Consultant  may  perceive  a  potential
conflict  of  interest  with  regard to  Consultant's  duties to  University  of
California,  San Diego and Consultant's duties to the Company.  Consultant shall
not  make  any  unauthorized  disclosure  of  the  confidential  information  of
University of California,  San Diego to the Company.  Consultant  shall not make
any unauthorized  disclosure of the  confidential  information of the Company to
University of California, San Diego (or any other party not permitted to receive
such information).

         5. Compensation. For and in consideration of the performance by Consult
-ant of the services, terms, conditions,  covenants and promises herein recited,
the Company  agrees and  promises to pay to  Consultant  at the times and in the
manner herein stated and as set forth below:

         5.1. As the principal  consideration of the services to be performed by
Consultant hereunder during the term of this Agreement, Consultant shall receive
from the Company One Thousand Dollars ($1,000) monthly,  and an initial grant of
a  Consultancy  and  Advisory  Warrant  for the  purchase  of up to One  Hundred
Thousand  (100,000)  shares of common voting stock of the Company.  Such warrant
will  vest  in  accordance  with  the  vesting  provisions  set  for  within  an
appropriate warrant agreement ("Warrant Instrument"). Except as may otherwise be
set forth herein,  the cash  compensation and warrant grant shall constitute the
sole  compensation of Consultant  hereunder.  Such compensation may sometimes be
herein referred to as Consultant's "Base Compensation".

          5.2. The Company shall reimburse  Consultant,  from time to time, upon
Consultant's  submission of expense account and supporting  documents on Company
approved  format,  and as  required by the  Internal  Revenue  Service,  for all
reasonable  out of town travel,  and other  ordinary,  reasonable  and necessary
business  expenses  incurred by Consultant as part of and in connection with the
direct performance of duties specified herein.

          6.      Relationship of the Parties

          6.1 Legal Status. Consultant shall be an independent contractor of the
Company in accordance  with the  provisions  of Sections  2750.5 and 3353 of the
California Labor Code, or any other  corresponding  provision of the Colorado or
Canadian  Statutes,  and not an  employee,  agent,  or partner.  It is expressly
declared  that  such  independent  contractor  status  is  bona  fide  and not a
subterfuge  to avoid  employee  status.  This  Agreement  shall  not  create  an
employer-employee  relationship and shall not constitute a hiring of such nature
by either party.

          6.2. Items Furnished to Consultant. Unless expressly agreed in writing
otherwise by the parties,  the Company shall not provide any telephone equipment
or  services,  office  equipment,  stationery,  secretarial  or  office  support

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services or other items or services  for the benefit of  Consultant.  Consultant
shall,  at its own  expense,  provide and make  arrangement  for all  equipment,
stationery, secretarial and office support services.

          6.3.  Consent of Company.  Consultant shall have no right or authority
at any time to make any  contract or binding  promise of any nature on behalf of
the Company,  whether oral or written, without the express prior written consent
of the Company.

          6.4.  Manner of  Performing  Services.  Consultant  shall  retain  all
discretion  and  judgment in regard to the manner and means of carrying  out its
duties hereunder subject,  however,  to the reasonable  requests of the Company.
Consultant  shall have the right to control and  discretion  as to the manner of
performance of its services hereunder in that the result of the work and not the
means by which it is  accomplished  shall be the  primary  factor  for which the
parties have bargained  hereunder in accordance with Sections 2750.5 and 3353 of
the  California  Labor Code or any  corresponding  provision  in the Colorado or
Canadian  Statutes.   Consultant's   obligations  for  performance  of  services
hereunder  shall be limited to the completion of the  consultation  and services
described  above in accordance with the Business of XsunX and the XsunX Field of
Use. Consultant shall have no obligation to work any particular hours or days or
any  particular  number of hours or days.  The  Company  shall  have no right to
control or direct the details,  manner or means by which Consultant accomplishes
the results of the services performed hereunder.

          6.5.  Payment of Taxes.  Consultant  shall be responsible  for and pay
Consultant's own  self-employment  taxes,  estimated tax  liabilities,  business
equipment or personal  property  taxes and other  similar  obligations,  whether
federal,  state or local.  The Company shall not pay or withhold any FICA,  SDI,
federal  or state  income  tax or  unemployment  insurance  or tax or any  other
amounts  because  the  relationship  of  the  parties  hereto  is  not  that  of
employer-employee,  but  that of  independent  contractor.  Consultant  shall be
solely responsible for the payment of all taxes,  withholdings and other amounts
due in regard to Consultant's own employees.

          6.6.    Employees of  Consultant.  Consultant  may   subcontract  with
and/or employ such parties upon such terms and  conditions as it may deem proper
or necessary.

          7.      Warranties and Indemnification

          7.1. Warranties.  Consultant warrants and represents that the services
of  Consultant's   subcontractors  or  employees  shall  be  performed  in  full
compliance  with the terms  and  conditions  of this  Agreement,  and,  that all
services performed  hereunder shall be performed in accordance with all federal,
state and local laws, rules or regulations.

          7.2. Indemnification by Consultant. Consultant shall indemnify, defend
and hold the Company and the property of the Company, free and harmless from any
and all claims,  losses,  damages,  injuries,  and  liabilities,  including  the
Company's  reasonable  attorney  fees and costs (the  Company may choose its own
counsel when defended hereunder),  arising from or in any way connected with the
performance  of services  under this  Agreement  or any other act or omission by
Consultant, its agents, subcontractors, or employees.

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          7.3.  Indemnification  by the Company.  The Company  shall  indemnify,
defend and hold  Consultant  and the property of  Consultant,  free and harmless
from any and all claims, losses, damages,  injuries, and liabilities,  including
Consultant's  reasonable  attorney  fees and costs,  arising  from or in any way
connected with any act or omission on the part of the Company,  its  constituent
partners, agents, subcontractors, or employees.

         8. Term.  Consultant's  engagement  pursuant to this Agreement shall be
for a period  of two (2) years and  shall  commence  upon the date of  execution
hereof (the  "Commencement  Date") and shall continue to and including  February
22, 2009 (the "Termination  Date") unless earlier  terminated in accordance with
the provisions of Section 9 of this Agreement; provided further that the term of
this Agreement may be extended by the mutual agreement of the parties hereto.

         9. Termination.  Notwithstanding  any other provision of this Agreement
to the  contrary,  either party may  terminate  this  Agreement at any time upon
ninety (90) days prior written  notice to the other.  This Agreement may also be
terminated  by the Company,  at its option,  at any time during the term of this
Agreement  without  notice,  for good  cause.  Termination  for good cause shall
include, but not be limited to, any of the following:

         9.1.     The commission by  Consultant of  an act of fraud or other act
materially evidencing bad faith or dishonesty;

         9.2.     The misappropriation by Consultant of any funds or property or
other rights of the Company;

         9.3.     The  suspension or removal or termination  of Consultant by or
at the request or requirement of any governmental  authority having jurisdiction
over the Company;

         9.4.     The breach by  Consultant of any material terms of this Agree-
ment or any other agreement between  Consultant on the one hand and the Company,
or any affiliate of the Company, on the other hand,  including,  but not limited
to, the Technology Agreement;

         9.5.     Upon the death of the Consultant;

         9.6.     The failure by Consultant to reasonably  achieve the goals and
purpose of the consultant relationship within the time frame assigned.

         10. Confidentiality.  All information derived or provided to Consultant
under the terms and specific to the  performance  of this  Agreement,  including
lists and  databases,  and any part of such lists,  databases,  or  information,
pertaining to customers,  merchants,  salespersons,  financial records, computer
software programs, strategic plans, contracts, agreements,  literature, manuals,
brochures, books, records,  correspondence,  computer programs, software, source
codes, computations,  data files, algorithms,  techniques,  processes,  designs,

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specifications,  drawings,  charts, plans, schematics,  computer disks, magnetic
tapes, books,  files,  records,  reports,  documents,  Instruments,  agreements,
contracts,  correspondence,  letters, memoranda,  financial,  accounting, sales,
purchase  and  consultant  data,   capital  structure   information,   corporate
organizational   information,   identities,   names  and  address  of,  and  any
information  pertaining  to,  shareholders,  directors,  officers,  consultants,
contractors,  vendors,  suppliers,  customers,  clients, lenders,  financing and
business participants,  and all persons associated with the Company, information
pertaining to business  models,  business  plans,  projections,  assumptions and
analyses,  particular  projects,  and all other data and information and similar
items relating to the business of the Company and all other data and information
and similar items relating to the Company of whatever kind or nature and whether
or not prepared or compiled by the Company and all other materials  furnished or
made  available  to  Consultant  by the  Company  or any of its  affiliates  (as
hereinafter   defined)  relating  to  the  business  conducted  by  the  Company
("Confidential  Information"),  is and are proprietary and  confidential and are
and shall  remain the sole  property of the  Company.  Affiliate as used in this
section  shall mean the  Company,  any entity in which  Company  owns a majority
ownership  (directly  or  indirectly),  or any  entity  which  owns  a  majority
ownership of Company (directly or indirectly).  Consultant acknowledges that the
Confidential   Information  derives   independent   economic  value,  actual  or
potential,  from not being generally known to the public or to other persons who
can  obtain   economic   value  from  its   disclosure  or  use  and  that  this
confidentiality  provision  constitutes  efforts that are  reasonable  under the
circumstances to maintain the secrecy thereof.  Consultant further  acknowledges
that  the  Confidential   Information  constitutes  trade  secrets  pursuant  to
California Civil Code ss.3426.1.  Consultant shall not,  directly or indirectly,
at any time during or after  termination of consultant  use or reveal,  divulge,
disclose, disseminate,  distribute, license, sell, transfer, assign or otherwise
make known, directly or indirectly,  the Confidential  Information to any person
or entity not expressly  authorized by the Company to receive such  Confidential
Information.

         10.1  Consultant   shall  exercise  the  highest  degree  of  care  and
discretion  in  accordance  with the duty of  Consultant  hereunder  to  prevent
improper use or disclosure of the  Confidential  Information and will retain all
such Confidential  Information in trust in a fiduciary capacity unless: (i) such
use or  disclosure  has been  authorized  in writing by the  Company  through an
officer or  director,  or (ii) is  required to be  disclosed  by law, a court of
competent  jurisdiction  or  a  governmental  or  regulatory  agency.   Further,
Consultant  shall return and deliver all such  materials,  including all copies,
remnants,  or  derivatives  thereof  to the  Company  upon  the  termination  of
consultant with the Company or at any other time upon request by the Company.

         11.   Patents  and   Inventions.   Any  interest  in  patents,   patent
applications,  inventions,  technological innovations, copyrights, copyrightable
works,  developments,  discoveries,  designs, and processes ("Inventions") which
Consultant may develop under the scope of the  Consulting  agreement and without
the use or  involvement  of any  University of California  resources,  including
facilities, funds, employees and students, or University proprietary information
that has not been published and is not available to the public,  shall belong to
the Company.  As soon as  Consultant  owns,  conceives  of, or develops any such

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Invention,  Consultant agrees immediately to communicate such fact in writing to
the  Secretary  of the Company,  and without  further  compensation,  but at the
Company's  expense,  immediately  upon request of the Company,  Consultant shall
execute all such  assignments and other documents  (including  applications  for
patents,  copyrights,  trademarks,  and assignments thereof) and perform any and
all acts as the  Company  may  reasonably  request  in order  (a) to vest in the
Company all Consultant's  right,  title, and interest in and to such Inventions,
free and clear of liens, mortgages,  security interests,  pledges,  charges, and
encumbrances  arising  from the acts of  Consultant  and (b), if  patentable  or
copyrightable,  to  obtain  patents  or  copyrights  (including  extensions  and
renewals)  therefore in any and all  countries in such name as the Company shall
determine.  Upon 30 days prior  notice to the Company  such  Inventions  must be
disclosed  to the  University  of  California.  The  University  requirement  to
disclose all inventions  does not imply that the University  will claim title to
all inventions.  Notwithstanding the foregoing,  pursuant to Section 2872 of the
California  Labor Code,  this Agreement  shall not apply to any Invention  which
qualifies  fully under the  provisions of Section 2870 of the  California  Labor
Code. Consultant  acknowledges receipt of a copy of 2870 of the California Labor
Code.

         12.    Assignment.  The obligations of Consultant  under this Agreement
are unique and may not be assigned.

         13.  Securities  Compliance.  No Offer or Sale.  This  Agreement is not
intended  to be an  offer  for  the  sale or  issuance  of  securities,  whether
pertaining  to stock,  options,  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 the Company
does not  consider  this  Agreement  itself to be a  securities  or offer of any
securities,  whether pertaining to stock,  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
                  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   agreement   are   expressly    conditions   upon   such
                  qualification being obtained unless the sale is so exempt.

         13.1 General Securities Compliance.  Notwithstanding anything contained
in this  Agreement  to the  contrary,  this  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 the  Company as a reporting  company,  the shares,
and\or any party hereto,  including,  but not limited to, shareholder voting and

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proxy solicitation rules. All issuances, sales, transfers, or other dispositions
of  shares  of the  Company  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  Agreement  shall
obligate the Company 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 the Company to the extent that the Company provides other
adequate consideration therefore.

         14. Rule 144.  Consultant  acknowledges  that the shares of the Company
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 the Company shall be made only in compliance with Rule
144. Consultant agrees to comply with all policies and procedures established by
the Company with regard to Rule 144 matters.  Consultant  acknowledges  that the
Company or its attorneys or transfer  agent may require a restrictive  legend on
the  certificate  or  certificates  representing  the  shares  pursuant  to  the
restrictions on transfer of the shares imposed by Rule 144.

     15.  Amendments.  This Agreement may be amended only in writing executed by
Consultant and Company and approved in writing by the majority vote of the Board
of Directors of the Company.

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

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

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

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

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     20. Time of Essence.  Time shall be of the essence in all things pertaining
to the performance of this Agreement unless waived in writing by the undersigned
parties.

         21. Authority. The parties to this Agreement warrant and represent that
they have the power and  authority  to enter into this  Agreement  in the names,
titles and capacitates  herein stated and on behalf of any entities,  persons or
firms represented or purported to be represented by each respective party.

         22. Waiver. A Waiver by either party of any of the terms and conditions
of this  Agreement in any instance  shall not be deemed or construed to a waiver
of such terms of condition for the future,  or of any subsequent breach thereof,
or of any other term and condition of this  Agreement.  All waivers must be made
in writing executed by the waiving party.

         23. Entire Agreement.  This Agreement  constitutes the entire agreement
between  the parties  respecting  the subject  matter  hereof,  and there are no
representations,  warranties,  agreements  or  commitments  between  the parties
hereto  except as set forth  herein;  provided  that the terms of any  Option or
Award may be set forth in a Grant Instrument, which shall be read in conjunction
with this Agreement. This Agreement shall control over any and all provisions or
guidelines  contained in any Consultant  Manual,  Consultant  Handbook,  Company
Policy Manual or other similar document.  Consultant expressly acknowledges that
no  Consultant  Manual,  Consultant  Handbook,  Company  Policy  Manual or other
similar  document  is or  shall  become  a  contract  between  the  Company  and
Consultant.

         24.  Notices.  Any  notice,  request,  demand  or  other  communication
permitted  to be given  hereunder  shall be in writing and shall be deemed to be
duly given when personally  delivered to an Consultant officer of the Company or
to Consultant,  as the case may be, or when deposited in the United States mail,
by certified or registered mail, return receipt requested,  postage prepaid,  at
the respective addresses of the Company and Consultant as shown on the signature
page hereto.  Either party may change by notice the address to which notices are
to be sent.

     25. Severability. If any provision of this Agreement shall, for any reason,
be held  unenforceable,  such provision shall be severed from the contract.  The
invalidity  of  such  specific   provision,   however,   shall  not  affect  the
enforceability of any other provision herein, and the remaining  provision shall
remain in full force and effect.

         26.  Choice of Law and Venue.  This  Agreement  shall,  to the  fullest
extent allowed by law, be construed, interpreted and enforced in accordance with
the laws of the State of Colorado,  without regard to or application of conflict
of law rules, and the venue in regard to any disputes  arising  hereunder shall,
to the fullest extent allowed by law, be in Orange County, California.

         27.  Press  Releases.  Any  press  release,   company  disclosures  and
advertisement made by the Company relating to Consultant shall be subject to the
approval of Consultant prior to public release. Consultant will not unreasonably

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withhold  such  approval  and agrees to respond to such  requests  for  approval
within two (2) business days.

IN WITNESS  WHEREOF,  this  Agreement is made  effective by  Consultant  and the
Company on the date set first forth above.

COMPANY:                                    CONSULTANT:

Xsunx, Inc.,                                Dr.  Edward Yu
a Colorado corporation

By:_________________________                By: ____________________________
Tom M. Djokovich, as CEO                    Dr.  Edward Yu, as Consultant

                                       10EXHIBIT 10.2

                             STOCK OPTION AGREEMENT

<PAGE>

EXHIBIT 10.2

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

                             STOCK OPTION AGREEMENT

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

Optionee:         Dr. Edward Yu

Social Security Number:

Address:

Total Option Shares:       100,000

Exercise Price Per Share: $0.53

Date of Grant: February 22, 2007

First Vesting Date:        May 23, 2007

Expiration Date for Exercise of Options:    February 22, 2012

Stock Option Number: 07-019

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

<PAGE>

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

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

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

         (i)      Vesting:

                (a) The Option shall become  exercisable in the amount of 12,500
                    shares upon the First Vesting Date.  Thereafter,  the Option
                    shall vest become  exercisable  at the rate of 12,500 Shares
                    per calendar  quarter,  or any  apportioned  amount thereof,
                    during  the  term  of  engagement  by  XsunX,  Inc.  of  the
                    Optionee.

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

                (c) In the  event  of  Optionee's  death,  disability  or  other
                    termination of employment,  the exercisability of the Option
                    is governed  by  Sections  7, 8 and 9 below,  subject to the
                    limitations contained in subsection 3(i) (d) below.

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

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

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<PAGE>

               shares of Common Stock as may be required by the Company pursuant
               to the  provisions  of the Plan.  Such  written  notice  shall be
               signed  by  Optionee  and  shall be  delivered  in  person  or by
               certified  mail to the  President,  Secretary or Chief  Financial
               Officer of the Company.  The written  notice shall be accompanied
               by payment of the exercise price.

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

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

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

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

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

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

         (iv)  Optionee understands that the securities have not been registered
               under the  Securities  Act of 1933,  as  amended  (the  "Act") in
               reliance  upon one or more specific  exemptions  contained in the

                                    3 of 17

<PAGE>

               Act, which may include reliance on Rule 701 promulgated under the
               Act, if available,  or which may depend upon: (a) Optionee's bona
               fide  investment  intention in acquiring  these  securities;  (b)
               Optionee's  intention to hold these securities in compliance with
               federal and state securities laws; (c) Optionee having no present
               intention   of  selling   or   transferring   any  part   thereof
               (recognizing that the Option is not transferable) in violation of
               applicable federal and state securities laws; and (d) there being
               certain  restrictions  on transfer  of the Shares  subject to the
               Option;

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

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

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

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

7.  Termination  of  Status  as an  Employee  or  Consultant.  In the  event  of
termination of Optionee's  continuous  status as an Employee or  Consultant,  as
such  status  may be  determined  and  construed  by  the  Company  in its  sole
discretion ("Continuous Status"), for any reason other than death or disability,
Optionee  may,  but  only  within  thirty  (30)  days  after  the  date  of such
termination  (but in no event later than the date of  expiration  of the term of
the Option as set forth in Section 11 below),  exercise the Option to the extent
that  Optionee was entitled to exercise it at the date of such  termination.  To
the extent that  Optionee was not entitled to exercise the Option at the date of
such  termination,  or if Optionee  does not exercise the Option within the time
specified herein, the Option shall terminate.

8. Disability of Optionee.  In the event of termination of Optionee's Continuous
Status  as an  Employee  or  Consultant  as a result of  Optionee's  disability,

                                    4 of 17

<PAGE>

Optionee  may,  but only within six (6) months from the date of  termination  of
employment  or consulting  relationship  (but in no event later than the date of
expiration of the term of the Option as set forth in Section 11 below), exercise
the Option to the extent  Optionee  was  entitled  to exercise it at the date of
such  termination;  provided,  however that if the  disability  is not total and
permanent  (as  defined  in  Section  22(e)(3)  of the  Code)  and the  Optionee
exercises the option within the period provided above but more than three months
after the date of termination,  the Option shall automatically be deemed to be a
Nonstatutory  Stock  Option and not an Incentive  Stock  Option;  and  provided,
further,  that if the  disability  is total and permanent (as defined in Section
22(e)(3) of the Code),  then the Optionee may, but only within one (1) year from
the date of  termination  of employment or  consulting  relationship  (but in no
event later than the date of  expiration  of the term of the Option as set forth
in Section 11 below), exercise the Option to the extent Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination,  or if Optionee does
not exercise  such Option (which  Optionee was entitled to exercise)  within the
time periods specified herein, the Option shall terminate.

9.       Death of Optionee. In the event of the death of Optionee:

         (i)   During the term of the Option while an Employee or  Consultant of
               the Company and having been in  Continuous  Status as an Employee
               or Consultant  since the date of grant of the Option,  the Option
               may be exercised,  at any time within one (1) year  following the
               date of death (but, in the case of an Incentive Stock Option,  in
               no event  later  than the date of  expiration  of the term of the
               Option as set forth in Section 11 below), by Optionee's estate or
               by a person  who  acquired  the right to  exercise  the Option by
               bequest  or  inheritance,  but only to the extent of the right to
               exercise  that had accrued at the time of death of the  Optionee.
               To the extent that such Employee or  Consultant  was not entitled
               to exercise the Option at the date of death, or if such Employee,
               Consultant,  estate or other person does not exercise such Option
               (which such Employee,  Consultant,  estate or person was entitled
               to  exercise)  within  the one (1)  year  time  period  specified
               herein, the Option shall terminate; or,

         (ii)  During the thirty (30) day period  specified  in Section 7 or the
               one (1) year period specified in Section 8, after the termination
               of Optionee's Continuous Status as an Employee or Consultant, the
               Option  may be  exercised,  at  any  time  within  one  (1)  year
               following  the date of death  (but,  in the case of an  Incentive
               Stock  Option,  in no event later than the date of  expiration of
               the term of the  Option as set forth in  Section  11  below),  by
               Optionee's  estate  or by a  person  who  acquired  the  right to
               exercise  the Option by bequest or  inheritance,  but only to the
               extent of the right to  exercise  that had accrued at the date of
               termination.  To the extent that such Employee or Consultant  was
               not entitled to exercise  the Option at the date of death,  or if
               such  Employee,  Consultant,  estate  or  other  person  does not
               exercise such Option (which such Employee,  Consultant, estate or
               person was  entitled  to  exercise)  within the one (1) year time
               period specified herein, the Option shall terminate.

10.  Non-Transferability  of Option.  The Option may not be  transferred  in any
manner  otherwise than by will or by the laws of descent or distribution and may

                                    5 of 17

<PAGE>

be exercised during the lifetime of Optionee, only by Optionee. The terms of the
Option shall be binding upon the executors,  administrators,  heirs,  successors
and assigns of Optionee.

11.  Term of Option.  The Option may not be  exercised  more than five (5) years
from the date of grant of the Option, and may be exercised during such term only
in accordance with the Plan and terms of the Option; provided, however, that the
term of this option, if it is a Nonstatutory  Stock Option,  may be extended for
the period set forth in Section 9(i) or Section 9(ii) in the  circumstances  set
forth in such Sections.

12. Early Disposition of Stock; Taxation Upon Exercise of Option. If Optionee is
an Employee and the Option qualifies as an ISO,  Optionee  understands  that, if
Optionee  disposes of any Shares  received under the Option within two (2) years
after the date of this  Agreement  or within one (1) year after such Shares were
transferred to Optionee, Optionee may be treated for federal income tax purposes
as having received ordinary income at the time of such disposition in any amount
generally  measured as the difference  between the price paid for the Shares and
the lower of the fair market  value of the Shares at the date of exercise or the
fair market value of the Shares at the of  disposition.  Any gain  recognized on
such  premature  sale of the Shares in excess of the amount  treated as ordinary
income may be  characterized  as capital gain.  Optionee hereby agrees to notify
the  Company  in  writing  within  thirty  (30) days  after the date of any such
disposition.  Optionee  understands that if Optionee  disposes of such Shares at
any time after the expiration of such two-year and one-year holding periods, any
gain on such sale may be  treated  as  long-term  capital  gain laws  subject to
meeting  various  qualifications.  If  Optionee  is a  Consultant  or  this is a
Nonstatutory  Stock  Option,  Optionee  understands  that,  upon exercise of the
Option, Optionee may recognize income for tax purposes in an amount equal to the
excess of the then fair market value of the Shares over the exercise price. Upon
a resale of such shares by the Optionee,  any difference  between the sale price
and the fair  market  value of the Shares on the date of  exercise of the Option
may be treated as capital gain or loss.  Optionee  understands  that the Company
may be required to withhold tax from Optionee's current  compensation in some of
the  circumstances  described  above  (and  Optionee  hereby so  authorizes  the
Company);  to the extent that Optionee's current compensation is insufficient to
satisfy the withholding  tax liability,  the Company may require the Optionee to
make a cash  payment to cover such  liability  as a condition to exercise of the
Option.

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

14. Net Issue Exercise.  Notwithstanding  any provisions herein to the contrary,
if the fair market value of one share of the  Company's  Common Stock is greater
than the Per  Share  Exercise  Price  (at the date of  calculation  as set forth
below),  in lieu of  exercising  the Option for cash,  the Optionee may elect to

                                    6 of 17

<PAGE>

receive  shares equal to the value (as  determined  below) of the Option (or the
portion  thereof  being  canceled) by  surrender of the Option at the  principal
office of the Company together with the properly endorsed Notice of Exercise and
Subscription  Form and notice of such election,  in which event the Company will
issue to the  Optionee  a number of shares of Common  Stock  computed  using the
following formula:

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

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

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

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

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

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

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

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

17.  Restrictions.  Notwithstanding  anything  herein to the contrary,  Optionee
understands  and agrees  that  Optionee  shall not dispose of any of the Shares,
whether  by  sale,  exchange,  assignment,   transfer,  gift,  devise,  bequest,
mortgage, pledge, encumbrance or otherwise,  except in accordance with the terms
and conditions of this Agreement, and Optionee shall not take or omit any action
which will impair the absolute and  unrestricted  right,  power,  authority  and
capacity of Optionee to sell Shares in accordance  with the terms and conditions
hereof.

                                    7 of 17

<PAGE>

Any purported transfer of Shares by Optionee that violates any provision of this
Section 17 shall be wholly void and ineffectual and shall give to the Company or
its  designee the right to purchase  from  Optionee all but not less than all of
the Shares then owned by Optionee for a period of ninety (90) days from the date
the Company first learns of the purported transfer at the Agreement Price and on
the Agreement  Terms (as those terms are defined in subsections  (vi) and (vii),
respectively,  of this  Section  17).  If the  Shares are not  purchased  by the
Company or its designee,  the purported  transfer  thereof shall remain void and
ineffectual and they shall continue to be subject to this Agreement.

The Company  shall not cause or permit the  transfer of any Shares to be made on
its books except in accordance with the terms hereof.

         (i)      Permitted Transfers.

                (a) Optionee may sell, assign or transfer any Shares held by the
                    Optionee  but  only by  complying  with  the  provisions  of
                    subsection (iv) of this Section 17.

                (b) Optionee may sell, assign or transfer any Shares held by the
                    Optionee without complying with the provisions of subsection
                    (iv) by obtaining the prior written consent of the Company's
                    shareholders  owning 50% of the then issued and  outstanding
                    shares of the Company's Common Stock  (determined on a fully
                    diluted  basis) or a majority of the members of the Board of
                    Directors  of the  Company,  provided  that  the  transferee
                    agrees  in  writing  to be  bound by the  provisions  of the
                    Option and the transfer is made in accordance with any other
                    restrictions or conditions  contained in the written consent
                    and  in  accordance  with   applicable   federal  and  state
                    securities laws.

                (c) Upon the death of Optionee,  Shares held by the Optionee may
                    be  transferred  to  the  personal   representative  of  the
                    Optionee's  estate without  complying with the provisions of
                    subsection (iv).  Shares so transferred  shall be subject to
                    the other provisions of the Option, including in particular,
                    and without limitation, subsection (v).

         (ii)     No Pledge.  Unless a majority  of the  members of the Board of
                  Directors  consent,  Shares may not be pledged,  mortgaged  or
                  otherwise encumbered to secure indebtedness for money borrowed
                  or any other obligation for which the Optionee is primarily or
                  secondarily liable.

         (iii)    Stock  Certificate  Legend.  Each stock certificate for Shares
                  issued  to the  Optionee  shall  have  conspicuously  written,
                  printed,  typed or stamped upon the face thereof,  or upon the
                  reverse  thereof  with a  conspicuous  reference  on the  face
                  thereof, one or both of the following legends:

                  THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE BEEN ISSUED
                  WITHOUT  REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS
                  AMENDED,  AND  MAY  NOT  BE  TRANSFERRED  IN  THE  ABSENCE  OF
                  REGISTRATION  THEREUNDER OR AN APPLICABLE  EXEMPTION  FROM THE
                  REGISTRATION  REQUIREMENTS OF SUCH ACT. SUCH SHARES MAY NOT BE

                                    8 of 17

<PAGE>

                  SOLD, ASSIGNED,  TRANSFERRED,  OR OTHERWISE DISPOSED OF IN ANY
                  MANNER EXCEPT IN  ACCORDANCE  WITH AND SUBJECT TO THE TERMS OF
                  THE STOCK OPTION AGREEMENT,  A COPY OF WHICH IS ON FILE AT THE
                  PRINCIPAL  OFFICE OF THE  COMPANY.  UNLESS A  MAJORITY  OF THE
                  MEMBERS OF THE BOARD OF DIRECTORS  CONSENT,  SUCH STOCK OPTION
                  AGREEMENT PROHIBITS ANY PLEDGE,  MORTGAGE OR OTHER ENCUMBRANCE
                  OF SUCH SHARES TO SECURE ANY  OBLIGATION OF THE HOLDER HEREOF.
                  EVERY  CREDITOR OF THE HOLDER HEREOF AND ANY PERSON  ACQUIRING
                  OR PURPORTING TO ACQUIRE THIS CERTIFICATE OR THE SHARES HEREBY
                  EVIDENCED  OR ANY INTEREST  THEREIN IS HEREBY  NOTIFIED OF THE
                  EXISTENCE OF SUCH STOCK OPTION AGREEMENT,  AND ANY ACQUISITION
                  OR PURPORTED  ACQUISITION  OF THIS  CERTIFICATE  OR THE SHARES
                  HEREBY  EVIDENCED OR ANY INTEREST  THEREIN SHALL BE SUBJECT TO
                  ALL RIGHTS AND OBLIGATIONS OF THE PARTIES TO SUCH STOCK OPTION
                  AGREEMENT AS THEREIN SET FORTH.

                  IT IS  UNLAWFUL  TO  CONSUMMATE  A SALE  OR  TRANSFER  OF THIS
                  SECURITY,   OR  ANY  INTEREST  THEREIN,   OR  TO  RECEIVE  ANY
                  CONSIDERATION  THEREFOR,  WITHOUT THE PRIOR WRITTEN CONSENT OF
                  THE  COMMISSIONER  OF CORPORATIONS OF THE STATE OF CALIFORNIA,
                  EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

         (iv)     Sales of Shares.

                (a) Company's  Right of First  Refusal.  In the  event  that the
                    Optionee shall desire to sell, assign or transfer any Shares
                    held by the  Optionee  to any  other  person  (the  "Offered
                    Shares")  and shall be in  receipt  of a bona fide  offer to
                    purchase  the  Offered  Shares   ("Offer"),   the  following
                    procedure  shall  apply.  The  Optionee  shall  give  to the
                    Company  written notice  containing the terms and conditions
                    of the Offer,  including,  but not limited to (a) the number
                    of Offered Shares;  (b) the price per Share;  (c) the method
                    of   payment;   and  (d)  the   name(s)   of  the   proposed
                    purchaser(s).

                (b) An offer shall not be deemed  bona fide unless the  Optionee
                    has informed  the  prospective  purchaser of the  Optionee's
                    obligation  under the Option and the  prospective  purchaser
                    has  agreed  to  become  a party  hereunder  and to be bound
                    hereby.  The  Company is  entitled  to take such steps as it
                    reasonably  may deem necessary to determine the validity and
                    bona fide nature of the Offer.

                (c) Until  thirty  (30) days  after  such  notice is given,  the
                    Company or its designee shall have the right to purchase all

                                    9 of 17

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                    of  the  Offered   Shares  at  the  price   offered  by  the
                    prospective  purchaser  and  specified in such notice.  Such
                    purchase  shall be on the  Agreement  Terms,  as  defined in
                    subsection (vi).

                (d) Failure of  Company  or its  Designee  to  Purchase  Offered
                    Shares.  If all of the Offered  Shares are not  purchased by
                    the Company  and/or its designee  within the thirty (30) day
                    period  granted  for  such  purchases,  then  any  remaining
                    Offered Shares may be sold, assigned or transferred pursuant
                    to the  Offer;  provided,  that the  Offered  Shares  are so
                    transferred  within 30 days of the  expiration of the thirty
                    (30) day period to the person or persons named in, and under
                    the terms and conditions  of, the bona fide Offer  described
                    in the notice to the  Company;  and provided  further,  that
                    such  persons  agree to execute and deliver to the Company a
                    written agreement,  in form and content  satisfactory to the
                    Company, agreeing to be bound by the terms and conditions of
                    the Option.

         (v)      Manner of Exercise.  Any right to purchase  hereunder shall be
                  exercised  by  giving   written  notice  of  election  to  the
                  Optionee, the Optionee's personal  representative or any other
                  selling person, as the case may be, prior to the expiration of
                  such right to purchase.

         (vi)     Agreement Price. The "Agreement  Price" shall be the higher of
                  (a) the  fair  market  value  of the  Shares  to be  purchased
                  determined  in good  faith by the  Board of  Directors  of the
                  Company and (b) the original  exercise  price of the Shares to
                  be purchased.

         (vii)    Agreement Terms. "Agreement Terms"  shall mean and include the
                  following:

                (a) Delivery of Shares and Closing  Date.  At the  closing,  the
                    Optionee,  the Optionee's  personal  representative  or such
                    other  selling  person,  as the case may be,  shall  deliver
                    certificates  representing the Shares, properly endorsed for
                    transfer,  and with the necessary  documentary  and transfer
                    tax  stamps,  if  any,  affixed,  to the  purchaser  of such
                    Shares.  Payment  of  the  purchase  price  therefore  shall
                    concurrently  be  made  to  the  Optionee,   the  Optionee's
                    personal  representative  or such other selling  person,  as
                    provided in subsection (b) of this  subsection  (vii).  Such
                    delivery and payment shall be made at the  principal  office
                    of the  Company  or at  such  other  place  as  the  parties
                    mutually agree.

                (b) Payment  of  Purchase  Price.  The  Company  shall  pay  the
                    purchase price to the Optionee at the closing.

         (viii)   Right to Purchase Upon Certain  Other  Events.  The Company or
                  its  designee  shall have the right to purchase  all,  but not
                  less than  all,  of the  Shares  held by the  Optionee  at the
                  Agreement  Price  and on the  Agreement  Terms for a period of
                  ninety (90) days after any of the following events:

                                    10 of 17

<PAGE>

                (a) An  attempt  by a  creditor  to levy upon or sell any of the
                    Optionee's Shares;

                (b) The  filing of a  petition  by the  Optionee  under the U.S.
                    Bankruptcy Code or any insolvency laws;

                (c) The  filing  of  a  petition   against  Optionee  under  any
                    insolvency  or  bankruptcy  laws  by  any  creditor  of  the
                    Optionee if such  petition is not  dismissed  within  thirty
                    (30) days of filing;

                (d) The entry of a decree of divorce  between the  Optionee  and
                    the Optionee's spouse; or,

                (e) The  termination  of  Optionee's  services as an employee or
                    consultant with the Company.

                    The Optionee shall provide the Company written notice of the
                    occurrence of any such event within 30 days of such event.

         (ix)     Termination. The provisions of this Section 17 shall terminate
                  and all rights of each such party hereunder shall cease except
                  for  those  which  shall  have  theretofore  accrued  upon the
                  occurrence of any of the following events:

                (a) Cessation of the Company's business;

                (b) Bankruptcy, receivership or dissolution of the Company;

                (c) Ownership of all of the issued and outstanding shares of the
                    Company by a single shareholder of the Company;

                (d) Written  consent or  agreement  of the  shareholders  of the
                    Company  holding  Fifty Percent (50%) of the then issued and
                    outstanding  shares of the  Company  (determined  on a fully
                    diluted basis);

                (e) Consent or  agreement  of a majority  of the  members of the
                    Board of Directors of the Company; or,

                (f) Registration  of  any  class  of  equity  securities  of the
                    Company  pursuant to Section 12 of the  Securities  Exchange
                    Act of 1934, as amended.

         (x)      Amendment. This Section 17 may be modified or amended in whole
                  or in part by a written  instrument  signed by shareholders of
                  the Company  holding 50% of the  outstanding  shares of Common
                  Stock  (determined  on a fully diluted basis) or a majority of
                  the members of the Board of Directors of the Company.

                                    11 of 17

<PAGE>

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

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

20. No Distribution. Notwithstanding anything in this Agreement to the contrary,
Optionee acknowledges that: (i) the Option, and the Shares upon exercise, is and
are being acquired in a private  transaction which is not part of a distribution
of the Option or Shares; (ii) the Optionee intends to hold the Option and Shares
for the account of the Optionee and does not intend to sell the Option or Shares
as a part of a distribution or otherwise; and (iii) neither the Optionee nor the
Company is an  underwriter  with regard to the Option or the Shares for purposes
of Rule 144.

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

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

23. Privileges of Stock Ownership.  Optionee shall not have any of the rights of
a shareholder with respect to any Shares until Optionee exercises the Option and
pays the  Exercise  Price,  Shares are issued and  delivered  to  Optionee,  and

                                    12 of 17

<PAGE>

Optionee  is shown as a  shareholder  of record on the books and  records of the
Company.

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

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

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

27. Counterparts.  This Agreement may be executed  simultaneously in one or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall  constitute one and the same  instrument.  The exhibits  attached
hereto and  initialed  by the parties  are made a part  hereof and  incorporated
herein by this reference.

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

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

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

                                    13 of 17

<PAGE>

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

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

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

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

35. Consultancy,  Advisory and Technology Sharing and License  Agreements.  This
Option is issued  pursuant to that certain  Consultancy  and Advisory  Agreement
effective February 22, 2007. The terms of the Consultancy and Advisory Agreement
shall control over any  conflicting  terms in this Option.  Any breach under the
Consultancy and Advisory  Agreement shall  constitute a breach under this Option
and allows the Company to terminate this Option in whole or in part.

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

                                        Company:

                                        XSUNX, INC, a Colorado Corporation

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

                                    14 of 17

<PAGE>

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

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

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

                                    OPTIONEE

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

                                    15 of 17

<PAGE>

CONSENT OF SPOUSE

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

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

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

                                    16 of 17

<PAGE>

                                EXHIBIT TO OPTION

                    SUBSCRIPTION FORM AND NOTICE OF EXERCISE

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

Ladies and Gentlemen:

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

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

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

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

                                         Very truly yours,

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

                                         By: _________________________________

                                         Title: ______________________________

                                    17 of 17

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