Document:

Separation
        Agreement and Mutual Release

       

      This
        Separation Agreement and Mutual Release ("Agreement") is made this 30 day
        of
        May, 2008 (“Effective Date”), by and between XsunX, Inc., a Colorado corporation
        (“XsX”), on the one hand, and MVSystems, Inc., a Colorado corporation (“MVS”)
        and Dr. Arun Madan (“Madan”), on the other hand. XsX, MVS and Madan are
        collectively referred to herein as the “Parties.” Each of XsX, MVS and Madan is
        individually referred to herein as a “Party.”

       

      Recitals

       

      WHEREAS,
        prior to the date hereof the Parties entered into certain written agreements
        and
        understandings relating to the licensing and development of certain technology,
        including without limitation a “Phase 2” development proposal dated June 1,
        2004, a Technology Sharing and License Agreement dated September 17, 2004,
        a
        Consulting and Advisory Agreement dated September 17, 2004, a “Phase 3”
development proposal dated February 22, 2005, a “Phase 4 Four Terminal
        Development” agreement dated December 22, 2005, as amended by an Addendum dated
        December 22, 2005, a “Phase 4 Base Line Production” agreement dated December 2,
        2005, and an Expanded Use License Agreement dated October 12, 2005, and any
        attachments, amendments or revisions thereto (together, the “Contracts”);
        and

       

      WHEREAS,
        in connection with certain of the Contracts XsX granted to MVS and Madan
        certain
        warrants to purchase common stock of XsX, pursuant to the terms of a Technology
        Sharing Warrant, and License Agreement Warrant, a Consultancy and Advisory
        Warrant and an Expanded Use License Stock Warrant (together, the “Warrant
        Agreements”) in exchange for MVS’s and Madan’s performance under the Contracts;
        and 

       

      WHEREAS,
        the Parties have determined that it is mutually beneficial to terminate their
        business relationship, together with the joint development projects undertaken
        pursuant to the Contracts and Warrant Agreements, and to mutually release
        each
        other, and the Parties further wish to have no obligations whatsoever between
        or
        among them arising from or relating in any manner to the Contracts or Warrant
        Agreements upon execution of this Agreement;

       

      NOW
        THEREFORE, the parties enter into this Agreement on the terms set forth
        below.

       

      Agreement

       

      In
        consideration of the foregoing recitals, the covenants and provisions contained
        herein, and other good and valuable consideration, the receipt and adequacy
        of
        which are acknowledged by the Parties, the Parties agree as
        follows:

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      1. Terms.
        

       

      1.1 Non-exclusive
        License and Cross-License Agreement.
        Contemporaneously herewith, and in consideration of the mutual obligations
        set
        forth herein, XsX, MVS and Madan agree to execute, and have executed, the
        Non-Exclusive License and Cross-License Agreement attached hereto as Ex.
        A
        (“License”).

       

      1.2 Sublease.
        Contemporaneously
        herewith, and in consideration of the mutual obligations set forth herein,
        XsX
        and MVS agree to execute, and have executed, the Sublease Agreement attached
        hereto as Ex. B (“Sublease”).

       

      1.3 Sale
        of x4-bpl machine to third party or Reimbursement Option by mvs or
        madan.
        

       

      1.3.1 Machine
        Sale Deadline. For
        purposes of this Section 1.3, “Machine Sale Deadline” means May 1,
        2009.

       

      1.3.2 Sale
        of Machine to third party/Sale Agreement.
        Subject
        to the terms set forth in this Agreement and the Sublease, including this
        Section 1.3, from the date hereof through the Machine Sale Deadline, MVS
        or
        Madan shall have the right to sell to any third party the X4-BPL machine
        (“Machine”) currently located in the Suite J facility at 500 Corporate Circle,
        Golden, Colorado, 80401 (“Facility”) upon such terms as MVS or Madan shall
        determine so long as MVS and Madan use commercially reasonable efforts to
        sell
        the Machine. Such sale shall be subject to a written sales agreement (“Sale
        Agreement”) approved in advance by XsX, which approval will not be unreasonably
        withheld; provided, however, that the foregoing approval requirement is limited
        to the terms of the Sale Agreement concerning: (a) net sale proceeds payable
        to
        XsX, including amount and disbursement schedule, if and only to the extent
        the
        net sale proceeds distributable to XsX pursuant to Section 1.3.3 are less
        than
        $1,412,000.00; and (b) any obligation or liability of XsunX, including without
        limitation any representation or warranty relating to the Machine. To the
        extent
        that XsX wishes to withhold its approval, XsX must provide its written
        objection, if any, to the Sale Agreement to MVS within five (5) business
        days of
        receipt of the Sale Agreement or XsX shall be deemed to have no objection
        to the
        Sale Agreement and approved of same. 

       

      In
        the
        event of a sale of the Machine by MVS or Madan to a third party, MVS shall
        be
        responsible to collect and remit to the appropriate government authority(ies)
        any sales tax or import duty. Such sales tax or import duty shall be in addition
        to the purchase price and payable by the third party purchaser upon closing
        of
        the Machine sale.  

       

      1.3.3 Distribution
        of proceeds from sale of machine to third party.
        In
        the
        event of a sale of the Machine by MVS or Madan to a third party as set forth
        in
        Section 1.3.2, the proceeds of such sale shall be distributed alternatively
        as
        follows: (a) if the sale proceeds are greater than or equal to $1,765,000.00,
        exclusive of sales tax, import duties and packaging and shipping costs, such
        proceeds will be allocated and disbursed 50% to XsX and 50% to MVS from such
        amount as may be left after payment, in the following order and to the extent
        sale proceeds remain available, of $1,412,000 to XsX, $353,000 to MVS, MVS’s
        Costs of Sale (defined hereafter), and one-half (1/2) of XsX’s rental payments
        made pursuant to the Master Lease during the term of the Sublease (“XsX Rental
        Payments”); (b) if the sale proceeds are less than $1,765,000.00, exclusive of
        sales tax, import duties and packaging and shipping costs, such proceeds
        will be
        allocated and disbursed 80% to XsX and 20% to MVS from such amount as may
        be
        left after payment of MVS’s Costs of Sale. 

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      

       

      “MVS’s
        Costs of Sale” for purposes of this Section 1.3.3 shall mean expenses incurred
        by MVS to effectuate a sale of the Machine to a third party hereunder and
        consisting of: (i) payments for Utilities and Insurance made by or due from
        MVS
        as defined in the Sublease; (ii) marketing, maintenance and closing costs
        for
        such sale not to exceed the sum of $20,000.00. 

       

      1.3.4 Machine
        Reimbursement Option of MVS and Madan. From
        the
        date hereof through the Machine Sale Deadline, MVS or Madan shall have the
        option, but not the obligation, to reimburse XsX for the payments XsX has
        previously made to MVS for the Machine ($1,412,000.00) plus one-half (1/2)
        of
        XsX’s Rental Payments (“Reimbursement Option”); provided, however, that if
        within six (6) months following written notice to XsX of the exercise of
        the
        Reimbursement Option, MVS or Madan enters into an agreement for sale of the
        Machine to a third party, then the proceeds of such sale shall be distributed
        in
        accordance with Section 1.3.3 less the sum of $1,412,000 already paid by
        MVS or
        Madan to XsX upon exercise of the Reimbursement Option. In the event that
        MVS or
        Madan exercises such Reimbursement Option, XsX shall have no warranty or
        other
        obligation whatsoever with respect to sale or delivery of the Machine and
        except
        as set forth in this Section 1.3.4 MVS shall own the Machine free and clear
        of
        any claim or right of any person including XsX and including any right of
        such
        person to sell or purchase the Machine.

       

      1.3.5 Notice
        of Machine Sale or Exercise of Reimbursement Option. On
        or
        before the Machine Sale Deadline, MVS and Madan shall either: (a) notify
        XsX of
        the sale, if any, of the Machine to a third party pursuant to Section 1.3.2,
        by
        providing to XsX a copy of the Sale Agreement; or (b) notify XsX in writing
        of
        any exercise, if any, by MVS or Madan of the Reimbursement Option set forth
        in
        Section 1.3.4.

       

      1.3.6 Sale/Option
        exercise closing date and Machine delivery. In
        the
        event that the Machine is sold by MVS or Madan to a third party pursuant
        to
        Sections 1.3.2, the closing of such sale, including payment in full by the
        purchaser, shall be completed on or before May 31, 2009 (“Closing Date”). The
        Machine shall be delivered to the purchaser, at purchaser’s expense, at a
        location other than the Facility, on or before the Closing Date. 

       

      In
        the
        event that MVS or Madan exercise the Machine Reimbursement Option pursuant
        to
        Sections 1.3.4, the closing of such option exercise, including payment in
        full
        by MVS or Madan, shall be completed on or before May 31, 2009 (“Closing Date”).
        The Machine shall be delivered to MVS or Madan, at MVS or Madan’s expense, at a
        location other than the Facility on or before the Closing Date.

       

      
        
           

        

        
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      1.3.7 Property
        Taxes and Delivery of Operational Documents.
        XsX
        shall be responsible to pay any applicable property, sales or other tax that
        may
        apply or may become due with respect to the Machine. In the event that the
        Machine is not sold to a third party by MVS or Madan by the Machine Sale
        Deadline pursuant to Section 1.3.2, and MVS or Madan chose not to exercise
        the
        Reimbursement Option set forth in Section 1.3.4 by the Machine Sale Deadline,
        then as of the Machine Sale Deadline: (a) XsX shall own the Machine free
        and
        clear of any claim or right of any person including MVS or Madan and including
        any right of such person to sell or purchase the Machine; (b) MVS and Madan
        shall deliver to XsX all such documents reasonably necessary to operate the
        Machine, including hardware and software documentation, manuals and passwords;
        (c) the Machine will be delivered to XsX at the Subleased Premises (as that
        term
        is defined in the Sublease) in the substantially same condition as it is
        as of
        the Effective Date, with no further warranties or obligations owed by MVS
        or
        Madan as to the Machine; and (d) XsX shall pay all applicable property, sales
        tax or other tax or duty that may apply or may become due.

       

      1.4 Warrant
        agreement termination 

       

      1.4.1 Warrants
        Ownership. MVS
        and
        Madan together represent that as of the date hereof, MVS and Madan together
        own
        and control, pursuant to the Warrant Agreements, unexercised warrants to
        purchase 12,650,000 shares of XsX common stock (the “Retained Warrants”). MVS
        and Madan together represent that warrants to purchase an additional 1,350,000
        shares of common stock, pursuant to the Warrant Agreements, have been assigned
        by MVS or Madan as of the date hereof to certain third parties (“Assigned
        Warrants”), with the prior written consent of XsX, subject to the terms of the
        Contracts, the Warrant Agreements and the assignment agreements. MVS and
        Madan
        represent and warrant that the Retained Warrants have not been assigned,
        transferred, pledged, hypothecated or otherwise conveyed to any third party.
        

       

      1.4.2 Warrant
        Agreements Termination. The
        Warrant Agreements shall be, and hereby are, terminated, together with the
        warrants issued thereunder, notwithstanding any term therein relating to
        vesting, notice, termination with or without cause or any other provision,
        with
        no surviving duties or obligations thereunder. MVS and Madan agree that the
        Retained Warrants are hereby cancelled. MVS and Madan take no position as
        to the
        effect of the foregoing Warrant Agreements termination on the Assigned Warrants,
        and covenant and agree not to assert any such position hereafter.

       

      1.5 Termination
        of the contracts and Discharge of Duties

       

      1.5.1 Termination
        of the Contracts. Each
        of
        the Contracts shall be, and hereby is, terminated, notwithstanding any term
        therein relating to notice, termination with or without cause or any other
        provision, with no surviving duties or obligations thereunder surviving this
        termination. Such termination shall have no effect upon the duties and
        obligations of the Parties arising under this Agreement, the Cross-License
        or
        the Sublease.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

       

      1.5.2 Discharge
        of XsX.
        The
        Parties agree that from the date hereof, XsX shall have no duty to perform
        or
        other obligation of any kind to MVS or Madan, express or implied, arising
        under
        the Contracts or Warrant Agreements and all such duties and obligations shall
        be
        deemed fully discharged. Such discharge is exclusive of duties and obligations
        expressly set forth in this Agreement, the License and Sublease. 

       

      1.5.3 Discharge
        of MVS and Madan.
        The
        Parties agree that from the date hereof, MVS and Madan shall have no duty
        to
        perform or other obligation of any kind to XsX, express or implied, arising
        under the Contracts or Warrant Agreements and all such duties and obligations
        shall be deemed fully discharged. Such discharge is exclusive of duties and
        obligations expressly set forth in this Agreement, the License and
        Sublease.

       

      1.6 X4-LCT
        Chamber.
        Upon
        execution of this Agreement, MVS and Madan shall deliver, within three (3)
        weeks
        to XsX, at the Retained Premises (as that term is defined in the Sublease),
        the
        X4-LCT chamber currently located at the Facility together with any operating
        and
        component manuals available for and specifically relating to the X4-LCT chamber.
        Upon delivery MVS and Madan shall have no further warranties or obligations
        as
        to, nor ownership or other interest in, the X4-LCT chamber.

       

      2. XsX’s
        Release.

       

      2.1 XsX’s
        Representations and Warranties.
        XsX
        represents and warrants that it has full authority to enter into this Agreement,
        and it has not assigned or transferred in any way any claims against MVS
        or
        Madan or any XsX Releasee (as defined in Section 2.2).

       

      2.2 General
        Release.
        With the
        exception of any claims arising under this Agreement, the License and the
        Sublease, XsX hereby fully releases, discharges, and acquits MVS, Madan and
        their subsidiaries, parent corporations, affiliates, and their respective
        past
        and present officers, directors, shareholders, employees, contractors, agents,
        predecessors, successors, assigns, guarantors, indemnitors, sureties, insurers,
        subrogors, accountants, auditors and attorneys (each, a “XsX Releasee”), from
        any claims, causes of action, or liabilities which XsX now has, may have,
        may
        have had, or claims to have had, whether directly or indirectly, whether
        accrued
        in the past, present, or future, whether known or unknown, whether for damages
        or equitable relief of any sort including, without limitation, economic damages,
        lost profits, exemplary damages, treble damages, consequential damages, and
        attorneys' fees, in any way arising prior to the date hereof and related
        or
        unrelated to the course of dealing among the Parties and the relationships,
        facts, circumstances, events, and agreements which gave rise to or which
        are
        related to the Contracts or the Warrant Agreements. The Parties intend for
        this
        to be a general release by XsX, which said release shall survive any termination
        of this Agreement, the License and/or Sublease.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      

       

      3. Mvs
        and Madan Release.

       

      3.1 Mvs
        and madan Representations and Warranties.
        MVS
        and
        Madan represent and warrant that each has full authority to enter into this
        Agreement, and that neither has assigned or transferred in any way any claims
        against XsX or any MVS Releasee (as defined in Section 3.2).

       

      3.2 General
        Release.
        With the
        exception of any claims arising under this Agreement, the License and the
        Sublease, each of MVS and Madan hereby fully releases, discharges, and acquits
        XsX and its subsidiaries, parent corporations, affiliates, and their respective
        past and present officers, directors, shareholders, employees, contractors,
        agents, predecessors, successors, assigns, guarantors, indemnitors, sureties,
        insurers, subrogors, accountants, auditors and attorneys (each, an “MVS
        Releasee”), from any claims, causes of action, or liabilities which MVS or Madan
        now has, may have, may have had, or claims to have had, whether directly
        or
        indirectly, whether accrued in the past, present, or future, whether known
        or
        unknown, whether for damages or equitable relief of any sort including, without
        limitation, economic damages, lost profits, exemplary damages, treble damages,
        consequential damages, and attorneys' fees, in any way arising prior to the
        date
        hereof and related or unrelated to the course of dealing among the Parties
        and
        the relationships, facts, circumstances, events, and agreements which gave
        rise
        to or which are related to the Contracts or the Warrant Agreements. The Parties
        intend for this to be a general release by MVS and Madan, which said release
        shall survive any termination of this Agreement, the License and/or Sublease.
        

       

      4. Integration.
        This
        Agreement and all exhibits thereto contain the entire understanding between
        the
        Parties with respect to the matters set forth herein. Any modification, change,
        or termination of this Agreement (or any part thereof) must be agreed to
        in
        writing by the Parties. The terms of this Agreement are intended to be
        contractual.

       

      5. Default
        and Termination. A
        default
        shall occur under this Agreement in the event of a material default by any
        of
        the Parties under the terms of this Agreement, the License or the Sublease.
        In
        the event of such default, the non-defaulting party shall given written notice
        to the Party in default that a default has occurred. If such default is not
        cured by the Party in default within thirty (30) days of such notice, a Material
        Default will result. In the event of a Material Default, the non-defaulting
        Party shall be entitled to terminate the Agreement, the License or Sublease
        and
        exercise any remedy otherwise available by law to the non-defaulting Party.
        

       

      6. Notice.
        All
        notices and other communications required under this Agreement shall be in
        writing and shall be given by United States first class mail, postage prepaid,
        registered or certified, return receipt requested, facsimile or by hand delivery
        (including by means of a professional messenger service) addressed as
        follows:

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

       

      If
        to
        XsX:                                              
XsunX,
        Inc.

      65
        Enterprise

      Aliso
        Viejo, CA 92656   

      Attn:
        Tom
        Djokovich

      (Tel)
        (949) 330-8060

      (Fax)
        (949) 330-8061

      

      With
        copy
        to:                      
Tobin
        D.
        Kern, Esq.

      Sherman
        & Howard, LLC

      633
        17th
        Street, Suite 3000

      Denver,
        Colorado 80202

      (Tel)
        (303) 299-8384

      (Fax)
        (303) 298-0940

      

      If
        to MVS
        or Madan:          
MVSystems,
        Inc.

      500
        Corporate Circle, Unit L

      Golden,
        Colorado 80401

      Attn:
        Dr.
        Arun Madan

      (Tel)
        (303) 271-9907

      (Fax)
        (303) 526-1408

      

      With
        copy
        to:                      
Lee
        F.
        Johnston, Esq.

      Holland
        & Hart LLP

      555
        17th
        Street, Suite 3200

      Denver,
        Colorado 80218

      (Tel)
        (303) 295-8562

      (Fax)
        (303) 295-8261

      

       

      7. Enforcement.
        The
        Parties agree that all obligations, representations, and covenants in this
        Agreement are uniquely beneficial to the Party to which they run and shall
        be
        specifically enforceable, including through an action for injunctive
        relief.

       

      8. Governing
        Law. Colorado
        substantive law, excluding Colorado’s choice of law rules, governs the validity,
        effect, and interpretation of this Agreement.

       

      9. Execution
        in Counterparts. This
        Agreement may be executed in counterparts by facsimile to be followed by
        originally executed counterparts, each one of which shall be deemed an original
        and all of which together shall constitute one and the same
        agreement.

       

      10. Counsel.
        Each
        Party hereby expressly acknowledges that the effect and import of this
        Agreement, including all rights and obligations arising under the Agreement,
        have been fully explained to it by its respective counsel, and that it fully
        understands this Agreement.

       

      11. Joint
        Authorship. This
        Agreement is the product of the negotiation of all of the Parties. For
        convenience, this Agreement has been drafted initially in substantial part
        by
        legal counsel for certain of the Parties, but by agreement of the Parties,
        this
        Agreement shall be deemed to have been drafted by all Parties jointly, and
        any
        ambiguity herein shall not be construed for or against any Party by virtue
        of
        the identity of the any drafter, initial or otherwise.

       

      
        
          
             

          

          
            7

            
              

            

          

          
             

          

        

       

      12. Headings.
        The
        headings used in this Agreement are not intended by the Parties to have
        independent meaning or to modify in any way the terms of this
        Agreement. 

       

       

      
        
           

        

        
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      [Remainder
        of page intentionally left blank]

      This
        Agreement has been executed effective as of the date written on page
        1.

      

      XsunX,
        Inc.

      

      

      

      By:________________________________

      Name:______________________________

      Title:_______________________________

      

      

      

      MVSystems,
        Inc.

      

      

      

      By:________________________________

      Name:______________________________

      Title:_______________________________

      

      

      Arun
        Madan

      

      

      

      ________________________________ 

      

 

      
        
           

        

        
          9NON-EXCLUSIVE
      LICENSE AND CROSS-LICENSE AGREEMENT

     

    This
      Non-Exclusive License and Cross-License Agreement (the “License”)
      is
      made and entered into effective as of May
      30,
      2008
      (“Effective
      Date”)
      by and
      between the XsunX, Inc., a Colorado Corporation ("XsunX"),
      MVSystems, Inc., a Colorado Corporation (“MVSI”),
      and
      Arun Madan (“Dr.
      Madan”),
      an
      individual (collectively, the “MVS
      Parties”).
      XsunX
      and the MVS Parties hereinafter may be referred to individually as a
“party”
and
      collectively as the “parties.”
      

     

    RECITALS

     

    A.       WHEREAS,
      XsunX and the
      MVS
      Parties are
      parties to that certain Technology Sharing and License Agreement dated September
      17, 2004, as amended (“Technology
      Sharing and License Agreement”),
      under
      which the MVS Parties licensed certain technologies to XsunX, in accordance
      with
      the terms set forth therein, including, without limitation, the Licensed Patents
      (as defined below).

     

    B.       WHEREAS,
      XsunX and the MVS Parties are parties to that certain Expanded Use License
      Agreement dated October 12, 2005 (“Expanded
      Use License Agreement”),
      under
      which the Technology Sharing and License Agreement was amended to expand the
      scope and use of certain technology, all in accordance with the terms set forth
      therein. The Technology Sharing and License Agreement and the Expanded Use
      License Agreement hereinafter are collectively referred to as the “Original
      License Agreements.”
      

     

    C.       WHEREAS,
      XsunX and MVSI are parties to those certain Phase
      Agreements,
      as
      defined below, pursuant which MVSI agreed to undertake certain research and
      development activities on a no-profit basis, all in accordance with the terms
      set forth in the applicable Phase Agreement and in accordance with the terms
      and
      conditions set forth in the Original License Agreements.

     

    D.
             WHEREAS, the parties have determined
      to terminate their business relationship and wish to have no obligation to
      one
      another after the date hereof, whether arising under the Original License
      Agreements, the Phase Agreements or any other agreement between or among the
      parties existing prior to the Effective Date, and to mutually release each
      other, and, in furtherance of such goal, have contemporaneously herewith entered
      into that certain Separation
      Agreement and Mutual Release effective
      as of May
      30, 2008
      (the
“Agreement”)
      under
      which Agreement any and all prior agreements between the parties, including
      without limitation, the Original License Agreements (including all attachments
      and agreements appended thereto, and all amendments, purported or otherwise)
      and
      the Phase Agreements (including all attachments thereto, and all amendments,
      purported or otherwise) are being completely terminated with no surviving
      obligations or duties, and pursuant to which Agreement, the parties desire
      to
      execute this License whereby (i) the MVS Parties shall license the Licensed
      Patents to XsunX, and (ii) XsunX shall license the Derivative Works (as defined
      below) to MVSI. 

     

           NOW
      THEREFORE, in consideration of the foregoing Recitals, which are made a part
      of
      this License, the mutual covenants, agreements, representations, and warranties
      contained in this License, and other good and valuable consideration, the
      adequacy and receipt of which are hereby acknowledged, the parties agree as
      follows:

     

    AGREEMENT

     

    1.       DEFINITIONS.
      

     

    In
      addition to the terms defined elsewhere in this License and in any attached
      exhibits or schedules, the following terms shall have the meanings set forth
      below:

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    1.1.       “Commercial
      Development”
      means
      development, manufacturing, marketing, sale, offer(s) to sell, lease, licensing,
      installation, application, service, training, use, import, export or other
      promotional or market activities of any kind. 

     

    1.2.       “Derivative
      Works” shall
      mean any product or process, including research or development related to such
      product or process, whether in complete or incomplete form, developed by the
      parties between September 17, 2004 and the Effective Date pursuant to the
      Original License Agreements or the Phase Agreements and delivered to the parties
      in connection therewith.

     

    1.3.       “IP
      Rights”
      means
      all
      forms of intellectual property rights or industrial property rights and
      protections throughout the world, whether currently existing or hereafter
      developed or acquired and whether now known or hereafter recognized, and whether
      arising under United States (state or federal) or foreign common or statutory
      law, granted by contract, license, or otherwise and including, without
      limitation, all: (a) inventions and discoveries (whether patentable or
      unpatentable and whether or not reduced to practice), utility models, and all
      related patents, patent applications and patent disclosures, together with
      all
      reissuances, continuations, continuations-in-part, revisions, extensions and
      reexaminations thereof; (b) trademarks, service marks, trade dress, slogans,
      logos, together with all goodwill associated therewith, and all applications,
      registrations and renewals in connection therewith; (c) copyrightable works,
      all
      copyrights and all applications, registrations and renewals in connection
      therewith; (d) know-how, software programs (in object code and source code
      form), modules, components, utilities, subsets, objects, program listings,
      rights in databases, rights to confidential or other proprietary information
      and
      equivalent rights; (e) rights relating to substrate glazing agents and reagents,
      disposables, chemical compounds and like materials; (f) any other proprietary
      and/or intellectual property rights; (g) copies, personal property and tangible
      embodiments of any of the foregoing (in whatever form or medium); and (h) any
      improvements, modifications, enhancements and/or derivatives of the
      foregoing.

     

    1.4.       “Licensed
      Patents” means
      the
      following patents and patent application and any reissues, re-examinations,
      divisionals, continuations and extensions thereof: (a)
      U.S.
      Patent No. 6,488,777 B2; (b) U.S. Patent No. 6,258,408 B1; and (c) U.S. Patent
      Appl. No. 10/905,545 (Pub. No. US 2005/0150542 A1).  

     

    1.5.       “MVS Improvement”
means
      any innovation, variation, enhancement, modification, improvement, change
      relating to, or derivative work of, the Licensed Patents or Derivative Works
      which the MVS Parties, their Related Persons, sub-licensees or any of their
      employees or agents or any other party engaged by the MVS Parties, make, author,
      invent, discover, originate, conceive or reduce to practice solely or in
      conjunction with others not a party to this License following the Effective
      Date
      of this License. 

     

    1.6.       “Phase
      Agreements”
means
      the Phase 2 Development Agreement, Phase 3 Development Agreement, Phase 4
      Development Agreement, and Phase 4 X4-Base Line Production
      Agreement.

     

    1.7.       “Phase
      2 Development Agreement”
means
      that certain written agreement between XsunX and MVSI effective June 1, 2004,
      as
      amended.

     

    1.8.       “Phase
      3 Development Agreement”
means
      that certain written agreement between XsunX and MVSI effective February 22,
      2005, as amended.

     

    1.9.       “Phase
      4 Development Agreement”
means
      that certain written agreement between XsunX and MVSI entitled “Four Terminal
      Development” dated December 22, 2005, as amended, together with the “Addendum to
      Phase 4 proposal” between XsunX and MVSI dated December 22, 2005.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    1.10.       “Phase
      4 X4-Base Line Production Agreement”
means
      that certain written agreement between XsunX and MVSI for work memorialized
      in
      proposals effective December 2, 2005.

     

    1.11.       “Related
      Person”
      means
      any
      person or entity directly, or indirectly through one or more intermediaries,
      controlling, controlled by, or under common control with, a party to this
      License, as the case may be and as context requires. For purposes of this
      definition, “control” means the possession, directly or indirectly, of the power
      to direct or cause the direction of the management and policies of a person
      or
      entity, whether through ownership of voting securities or otherwise; provided,
      that a person or entity shall no longer be a Related Person when through loss,
      divestment, dilution or other reduction of ownership or management or
      operational responsibility, the requisite control no longer exists.

     

    1.12.       “Reserved
      Fields of Use”
means
      all
      fields of use other than the XsunX Field of Use.

     

    1.13.       “XsunX
      Field of Use”
      means
      Commercial Development by XsunX of commercial-grade (i.e.,
      web
      width 30 cms or more and nominal output exceeding 1 megawatt/year based on
      1
      shift operation) semi-transparent (greater than 5% transparency) and opaque
      solar cells, photovoltaic technologies, solar cell panels and methods of
      manufacture.

     

    1.14.       “XsunX Improvement”
means
      any innovation, variation, enhancement, modification, improvement, change
      relating to, or derivative work of, the Licensed Patents or Derivative Works,
      which XsunX, its Related Persons, sub-licensees or any of their employees or
      agents or any other party engaged by XsunX, make, author, invent, discover,
      originate, conceive or reduce to practice solely or in conjunction with others
      not a party to this License following the Effective Date of this
      License.

     

    2.       GRANT
      AND SCOPE OF RIGHTS.

     

    2.1.       Grant
      and Scope of License.
      

     

    
      	 	
              a)

            	
              During
                the term of this License and subject to the terms and conditions
                hereof,
                the MVS Parties grant to XsunX a worldwide, non-exclusive, royalty-free,
                irrevocable, fully-paid up right and license, with
                the right to sublicense under the terms of Section 2.2
                (Sublicenses), to
                use
                and practice the Licensed Patents solely
                in the XsunX Field of Use. For
                the avoidance of doubt, the foregoing license grant to XsunX expressly
                excludes the use, transfer and/or Commercial Development of the Licensed
                Patents in the Reserved Fields of Use;
                provided, however, that XsunX or its sub-licensee shall be permitted
                to
                develop non-commercial grade semi-transparent and opaque solar cells
                solely for internal research and development of XsunX or its sub-licensee
                and not for any use or sale or other transfer by XsunX or its sub-licensee
                to a third party.
                 

            

    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              b)

            	
              During
                the term of this License and subject to the terms and conditions
                hereof,
                XsunX hereby grants to MVSI a worldwide, non-exclusive, royalty-free,
                irrevocable, fully-paid up right and license, with
                the right to sublicense under the terms of Section 2.2
                (Sublicenses), to
                use,
                practice, modify, adapt, distribute, sell, transfer, and/or commercialize
                the Derivative Works.
                

            

    

     

    2.2.Sublicenses.

     

    
      	 	
              a)

            	
              During
                the term of this License and subject to the terms and conditions
                hereof,
                the MVS Parties grant to XsunX the right to grant
                limited, non-transferable, revocable sublicenses
                to third parties, without further right to sublicense, to use or
                practice
                the Licensed Patents solely
                in the XsunX Field of Use and otherwise in
                accordance with the rights, restrictions and obligations of XsunX
                under
                this License. Unless prohibited by law, XsunX shall ensure that the
                terms
                of any sub1icense granted by it prohibits its sub-licensees from
                granting
                to any other person a license of the rights granted to such sub-licensee
                by XsunX . 

            

    

     

    
      	 	
              b)

            	
              During
                the term of this License and subject to the terms and conditions
                hereof,
                XsunX grants to MVSI the right to grant
                limited, non-transferable, revocable sublicenses
                to third parties, without further right to sublicense, to use, import,
                sell and offer to sell the
                Derivative Works in
                accordance with the rights, restrictions and obligations of MVSI
                under this License. Unless prohibited by law, MVSI
                shall ensure that the terms of any sublicense granted by it prohibits
                its
                sub-licensees from granting to any other person a license of the
                rights
                granted to such sub-licensee by MVSI. 

            

    

     

    
      	 	
              c)

            	
              Sublicenses
                granted under this Section shall be in writing signed by each sub-licensee
                and shall contain all of the material terms, conditions, restrictions
                and
                reservations of this License and shall preserve the rights and
                reservations of each party existing under this License. Notwithstanding
                anything herein to the contrary, any
                breach of such terms or conditions of this License by any sub-licensee
                shall be deemed to be a breach of this License by the party granting
                such
                sub-license. Without limiting any rights or remedies of either party
                hereunder, provided herein or otherwise available at law or in equity,
                each party hereby appoints and designates the other party as a third
                party
                beneficiary of each sublicense granted by such party; the party granting
                the sublicense shall include in each sublicense a stipulation that
                the
                other party shall retain third party beneficiary rights to enforce
                (in
                such other party’s name, if required by law) such other party’s rights and
                remedies in connection therewith.

            

    

     

    
      	 	
              d)

            	
              Termination
                of this License by either party shall automatically operate as a
                termination of any sublicense granted by the non-terminating party
                pursuant to the Section 2 and an assignment by such non-terminating
                party
                to the terminating party of all of the non-terminating party’s right,
                title and interest in and to such sublicense.

            

    

     

    
      	 	
              e)

            	
              Each
                party shall be free to determine the royalties or pricing at which
                it
                enters into a permitted
                sub-license.

            

    

     

    3.       TERM,
      DEFAULT AND TERMINATION.

     

    3.1.       Term.
      This
      License shall be effective upon the Effective Date and,
      unless
      sooner terminated by operation of law or pursuant to Section 3.3 of this
      License,
      shall
      continue in force and effect from
      the
      Effective Date until the expiration of the last to expire of the patents
      included within the Licensed Patents.  

     

    3.2.       Default.
      

     

    A
      default
      shall occur under this License in the event of: (a) any breach of a material
      term of this License which is not cured (if curable) by the defaulting party
      within thirty (30) business days after receiving written notice of default
      from
      the non-defaulting party; or (b)       the
      filing by a Party of a voluntary petition in bankruptcy or under any similar
      insolvency law, or an assignment for the benefit of creditors, or the filing
      of
      an involuntary petition in bankruptcy or under any similar insolvency law which
      remains undismissed thirty (30) days after such filing, or a levy or attachment
      against all or substantially all of a Party’s assets, or if a Party ceases to
      function as a going concern or ceases to conduct its operations in the normal
      course of business or is wound up or dissolved or declared insolvent.

     

    (c)       A
      default by any one of the MVS Parties shall be deemed a default of the other
      of
      the MVS Parties.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    3.3.       Termination.
      In
      the
      event of a default under Section 3.2(a), 3.2(b) or 3.2(c), the non-defaulting
      party may elect to terminate this License. Except as otherwise expressly
      provided in this License, in the event of such termination, no residual rights
      will remain with the parties and within fifteen (15) calendar days of such
      termination: (a) MVSI shall cease all use of the Derivative Works and shall
      notify any sublicensee of the Derivative Works that the sublicense is terminated
      pursuant to this License and provide a copy of such notification to XsunX;
      and
      (b) XsunX shall cease all use of the Licensed Patents and shall notify any
      sublicensee of the Licensed Patents that the sublicense is terminated pursuant
      to this License and provide a copy of such notification to the MVS
      Parties.

     

    3.4.       Other
      Remedies; Preservation of Rights Under Section 365(n) of Bankruptcy
      Code.
      Subject
      to the terms of this License, in the event of a default of this License, the
      non-defaulting Party(ies)’s right to terminate this License pursuant to Section
      3.3 shall be non-exclusive, and the non-defaulting Party(ies) shall be entitled
      to pursue any additional or other remedy available by law. Without limiting
      the
      foregoing, nothing in this License shall be deemed a waiver with respect to
      the
      rights of any Party arising under Section 365(n) of the United States Bankruptcy
      Code, 11 U.S.C. § 365(n), or any other remedy available by law. 

     

    3.5.       Survival.
      The
      rights and obligations of the parties which by their nature are intended to
      survive any such termination, shall survive the termination of this License
      and
      continue in force.

     

    4.       PROPRIETARY
      RIGHTS.

     

    4.1.       Ownership
      of Licensed Patents and/or Derivative Works.
      

     

    
      	 	
              a)

            	
              Subject
                to the license granted to XsunX in Article 2 (Grant and Scope of
                Rights)
                and except for the Derivative Works, XsunX
                acknowledges that, as between the
                MVS Parties
                and XsunX, the
                MVS Parties
                are
                and shall remain the exclusive owner of all right, title and interest
                in
                and to the Licensed Patents. Except for the Derivative Works, if
                XsunX or
                any third party engaged by XsunX is deemed to have any ownership
                interest
                or rights in any of the Licensed Patents, then XsunX shall assign
                and/or
                cause such third party to assign, and XsunX does hereby irrevocably
                and
                royalty-free assign, all of such ownership interest and rights to
                the
                MVS Parties.

            

    

     

    
      	 	
              b)

            	
              Subject
                to the license granted to MVSI
                in
                Article 2 (Grant and Scope of Rights) and except for the Licensed
                Patents,
                the
                MVS Parties
                acknowledge that, as between the
                MVS Parties
                and XsunX, XsunX is and shall remain the exclusive owner of all right,
                title and interest in and to the Derivative Works. Except for the
                Licensed
                Patents, if MVSI
                or
                any third party engaged by the
                MVSI is
                deemed to have any ownership interest or rights in any of the Derivative
                Works, then the
                MVSI
                shall assign and/or cause such third party to assign, and MVSI
                hereby
                does irrevocably and royalty-free assign, all of such ownership interest
                and rights to XsunX. 

            

    

     

    4.2.       Ownership
      of Improvements.

     

    
      	 	
              a)

            	
              As
                between the
                MVS Parties
                and XsunX, any and all MVS Improvements, and all IP Rights therein,
                shall
                be the sole and exclusive property of the MVS Parties and are expressly
                excluded from this License. 

            

    

     

    
      	 	
              b)

            	
              As
                between the
                MVS Parties
                and XsunX, any and all XsunX Improvements, and all IP Rights therein,
                shall be the sole and exclusive property of XsunX and are expressly
                excluded from this License.

            

    

     

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    4.3.       IP
      Rights and Patent Prosecution; Maintenance; Disclaimer.

     

    
      	 	
              a)

            	
              The
                MVS Parties shall have the sole right to file and maintain IP Rights
                protections, perfections or registrations with respect to the Licensed
                Patents and any the MVS Improvements and the issuance of such applications
                or registrations shall be in the MVS Parties’ or their designee’s name.
                Any IP Rights protections, perfections or registrations with respect
                to
                the Licensed Patents and/or MVS Improvements shall be prosecuted
                to
                issuance or final rejection or abandonment by the MVS Parties in
                their
                sole and absolute discretion; provided
                however,
                that the MVS Parties shall use commercially reasonable efforts to
                prosecute U.S. Patent Appl. No. 10/905,545 (Pub. No. US 2005/0150542
                A1)
                (“Application”) to issuance or final rejection or abandonment and shall
                provide to XsunX copies of all correspondence with the United States
                Patent and Trademark Office regarding the Application within fifteen
                (15)
                days of delivery or receipt. If the MVS Parties determine to abandon
                the
                Application, the MVS Parties will provide timely notice to XsunX
                and shall
                provide to XsunX reasonable opportunity to continue to prosecute
                or
                maintain such Application, at XsunX’s sole cost and
                expense.

            

    

     

    
      	 	
              b)

            	
              Notwithstanding
                anything to the contrary contained in Section 4.3(a), XsunX acknowledges
                and agrees that the prosecution of patent applications is uncertain
                and
                that certain claims therein may not be allowed or may receive narrower
                breadth of scope than when originally filed and that patent applications
                within the Licensed Patents may not issue as a U.S.
                patent.
                Therefore, the MVS Parties provide no representation or warranty
                that any
                of the Licensed Patents, including without limitation U.S. Patent
                Appl.
                No.10/905,545
                (Pub.
                No. US
                2005/0150542 A1),
                will issue as U.S.
                Patents
                or that the scope of claims coverage of any resulting patent issuing
                thereon will have the same scope of claims coverage as when filed
                by
                the
                MVS Parties. 

            

    

     

    
      	 	
              c)

            	
              XsunX
                shall have the sole right and obligation to file IP Rights
                protections, perfections or registrations with respect to the Derivative
                Works and any XsunX Improvements and the issuance of such applications
                or
                registrations shall be in XsunX’s or its designee’s name.
                XsunX shall be solely responsible for filing, prosecution and maintenance
                of any and all such IP Rights protections,
                perfections or registrations
                and for the maintenance and other management of the same.
                

            

    

     

    4.4.       Markings;
      Use of Names, Trade Names and Trademarks.
      Each
      party agrees that it will not use the name, trademark or other identifier of
      the
      other party for any advertising, promotion, or other commercially related
      purpose without the express prior written consent of the other party, which
      may
      be withheld at such party’s sole discretion. Except as permitted by Section
      8.10, nothing contained in this License shall be construed as conferring any
      right to use in advertising, publicity or other promotional activities any
      name,
      trade name, trademark or other designation of a party hereto including any
      contraction, abbreviation or simulation of any of the foregoing, unless the
      express written permission of the other party has been obtained, provided that
      each party may state the existence of this License and the fact that all of
      the
      parties entered into it. 

     

    5.       NO
      ONGOING OBLIGATIONS. 

     

    5.1.       No
      Technology Sharing; Consulting, Audit Rights.
      The
      parties hereby acknowledge and agree that with respect to this License, as
      of
      the Effective Date, there are no obligations between the parties to share or
      collaborate with, deliver and/or disclose to the other party any further
      information, whether oral and/or written, concerning the Licensed Patents,
      the
      Derivative Works and/or any processes related thereto, or any other information
      or data pertaining to the licenses granted herein, and neither party shall
      have
      any such ongoing or future obligation in connection therewith. The parties
      further acknowledge and agree that under this License, neither party has the
      right to inspect or view each others’ books and records, and nothing in this
      License is intended to confer or does confer on either party any such
      right.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    5.2.       Infringement/Indemnifications.
      

     

    
      	 	
              a)

            	
              In
                the case of a third party claim of infringement against a party (“accused
                party”), the other party shall have no obligation to defend against such
                claim nor to indemnify or hold harmless the accused party against
                such
                claim or procure the right for the accused party, or the accused
                party’s
                Related Persons or any of its sub-licensees, representatives, successors
                or assigns to continue using the Licensed Patents and/or the Derivative
                Works. Notwithstanding
                the foregoing, in no event shall either party enter into a settlement
                or
                compromise of any claim of infringement if such settlement or compromise
                would adversely affect the Licensed Patents or Derivative
                Works.

            

    

     

    
      	 	
              b)

            	
              In
                the case of a third party’s alleged infringement of the Licensed Patents
                or the Derivative Works, the parties’ only obligation with respect to
                third party infringement
                shall be to promptly inform the other party of (i) any alleged
                infringement of the Licensed Patents or the Derivative Works by a
                third
                party of which such party is aware and (ii) any actions or possible
                actions by third parties which may affect the ownership or validity
                of the
                Licensed Patents or the Derivative
                Works.

            

    

     

    
      	 	
              c)

            	
              If
                a party elects to bring or defend against a legal action, such
                action shall be at the sole expense of the party initiating or defending
                such legal action and all
                damages, awards, settlement proceeds or other recovery or special
                or
                punitive damages shall
                belong solely and exclusively to such
                party.

            

    

     

    6.       REPRESENTATIONS,
      WARRANTIES AND DISCLAIMER.

     

    6.1.       By
      the
      MVS Parties.
      The MVS
      Parties represent, warrant and covenant to XsunX that (a) the execution of
      this
      License and performance of the transactions contemplated by this License have
      been approved by the MVS Parties and will not conflict with or result in any
      breach of any of the terms, conditions or provisions of, or constitute a default
      under, any agreement to which MVSI or Dr. Madan is a party or by which MVSI
      or
      Dr. Madan is bound, (b) the MVS Parties own or have licensed and sub-licensable
      interest in the Licensed Patents and have the right to grant to XsunX the
      license set forth herein, (c) this License, when duly executed and delivered,
      shall constitute a legal and binding obligation of the MVS Parties enforceable
      against the MVS Parties in accordance with its terms; (d) the Licensed Patents
      are not subject to any lien, encumbrance or other interest of a third party;
      (e)
      as of the Effective Date, the MVS Parties are not aware of any infringement
      of
      the Licensed Patents by a third party; and (f) as of the Effective Date, MVSI
      has delivered to XsunX all technical data, documentation and reports relating
      to
      its research, development or other work performed pursuant to the Original
      License Agreements or the Phase Agreements. 

     

    6.2.       By
      XsunX.
      XsunX
      represents, warrants and covenants to the MVS Parties that (a)
      the
      execution of this License and performance of the transactions contemplated
      by
      this License have been approved by XsunX and will not conflict with or result
      in
      any breach of any of the terms, conditions or provisions of, or constitute
      a
      default under, any agreement to which XsunX is a party or by which XsunX is
      bound; (b) XsunX owns or has a licensed and sub-licensable interest in the
      Derivative Works and has the right to grant to MVSI the license set forth
      herein; (c) this License, when duly executed and delivered, shall constitute
      a
      legal and binding obligation of XsunX enforceable against XsunX in accordance
      with its terms; (d) the Derivative Works are not subject to any lien,
      encumbrance or other interest of a third party; (e) as of the Effective Date,
      XsunX is not aware of any infringement of the Derivative Works by a third party,
      and (f) as of the Effective Date, XsunX has delivered to MVSI all technical
      data, documentation and reports relating to the Derivative Works.  

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    6.3.       Disclaimer.
      

     

    (a)       The
      express representations and warranties set forth in this Section 6 are the
      sole
      representations and warranties made by each party with respect to this License
      and the transactions contemplated herein. Without limiting the generality of
      the
      foregoing, nothing
      in
      this License shall be construed as:

     

    (1)
      a
      warranty or representation by the
      MVS
      Parties
      as to
      the validity or scope of the Licensed Patents, or a warranty or representation
      by XsunX
      as
      to the
      validity or scope of the Derivative Works;

     

    (2)
      an
      obligation of either party to bring or prosecute actions or suits against third
      parties for infringement;

     

    (3)
      an
      obligation by MVSI or Dr. Madan or XsunX to furnish any technical or other
      assistance.

     

    (b)       THE
      LICENSED PATENTS ARE PROVIDED “AS IS,” AND THE MVS PARTIES MAKE NO
      REPRESENTATIONS OR WARRANTIES, CONDITIONS OR GUARANTEES, WHETHER EXPRESS,
      IMPLIED, STATUTORY, ORAL OR IN WRITING OR OTHERWISE, INCLUDING, WITHOUT
      LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
      PURPOSE, TITLE,
      NONINFRINGEMENT OF THIRD PARTY RIGHTS, OR WARRANTIES ARISING FROM A COURSE
      OF
      DEALING, USAGE OR TRADE PRACTICE, AND THE SAME ARE HEREBY EXPRESSLY DISCLAIMED
      TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW.
      WITHOUT
      LIMITING THE GENERALITY OF THE FOREGOING, THE MVS PARTIES DO NOT MAKE ANY
      REPRESENTATION OR WARRANTY AS TO THE VALIDITY OR SCOPE OF THE LICENSED PATENTS
      OR THE ACCURACY OR COMPLETENESS OF ANY INFORMATION DISCLOSED TO XSUNX IN
      CONNECTION WITH THIS LICENSE. THE MVS PARTIES MAKE NO REPRESENTATION OR WARRANTY
      THAT THE LICENSED PATENTS WILL MEET XSUNX’S REQUIREMENTS OR
      EXPECTATIONS
      OR THAT
      THE EXERCISE OF THE RIGHTS GRANTED TO XSUNX WITH RESPECT TO THE LICENSED PATENTS
      WILL NOT INFRINGE THE IP RIGHTS OF ANY THIRD PARTY. THE
      MVS
      PARTIES WILL NOT INDEMNIFY XSUNX, ITS EMPLOYEES, AGENTS, REPRESENTATIVES,
      RELATED PERSONS OR ANY THIRD PARTY FOR ANY LOSSES, COSTS, LIABILITIES, DAMAGES,
      FEES, OR EXPENSES WITH RESPECT TO THE LICENSED PATENTS, INCLUDING WITHOUT
      LIMITATION, ANY CLAIMS THAT THE LICENSED PATENTS THEREIN INFRINGE THE IP RIGHTS
      OF ANY THIRD PARTY. NO
      ADVICE
      OR INFORMATION, WHETHER ORAL OR WRITTEN, OBTAINED BY XSUNX FROM THE MVS PARTIES
      OR THEIR
      RELATED
      PERSONS SHALL CREATE ANY WARRANTY, REPRESENTATION, OR GUARANTEE NOT EXPRESSLY
      STATED IN THIS LICENSE.

     

    (c)       THE
      DERIVATIVE WORKS ARE PROVIDED “AS IS,” AND XSUNX MAKES NO REPRESENTATIONS OR
      WARRANTIES, CONDITIONS OR GUARANTEES, WHETHER EXPRESS, IMPLIED, STATUTORY,
      ORAL
      OR IN WRITING OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
      WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE,
      NONINFRINGEMENT OF THIRD PARTY RIGHTS, OR WARRANTIES ARISING FROM A COURSE
      OF
      DEALING, USAGE OR TRADE PRACTICE, AND THE SAME ARE HEREBY EXPRESSLY DISCLAIMED
      TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW. WITHOUT LIMITING THE
      GENERALITY OF THE FOREGOING, XSUNX DOES NOT MAKE ANY REPRESENTATION OR WARRANTY
      AS TO THE VALIDITY OR SCOPE OF THE DERIVATIVE WORKS OR THE ACCURACY OR
      COMPLETENESS OF ANY INFORMATION DISCLOSED TO MVSI IN CONNECTION WITH THIS
      LICENSE. XSUNX MAKES NO REPRESENTATION OR WARRANTY THAT THE DERIVATIVE WORKS
      WILL MEET MVSI’S REQUIREMENTS OR EXPECTATIONS OR THAT THE EXERCISE OF THE RIGHTS
      GRANTED TO MVSI WITH RESPECT TO THE DERIVATIVE WORKS WILL NOT INFRINGE THE
      IP
      RIGHTS OF ANY THIRD PARTY. XSUNX WILL NOT INDEMNIFY MVSI, ITS EMPLOYEES, AGENTS,
      REPRESENTATIVES, RELATED PERSONS OR ANY THIRD PARTY FOR ANY LOSSES, COSTS,
      LIABILITIES, DAMAGES, FEES, OR EXPENSES WITH RESPECT TO THE DERIVATIVE WORKS,
      INCLUDING WITHOUT LIMITATION, ANY CLAIMS THAT THE DERIVATIVE WORKS INFRINGE
      THE
      IP RIGHTS OF ANY THIRD PARTY. NO ADVICE OR INFORMATION, WHETHER ORAL OR WRITTEN,
      OBTAINED BY MVSI FROM XSUNX, OR ITS
      RELATED
      PERSONS SHALL CREATE ANY WARRANTY, REPRESENTATION, OR GUARANTEE NOT EXPRESSLY
      STATED IN THIS LICENSE.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    7.       LIMITATION
      OF LIABILITY.
      

     

    7.1.       EXCEPT
      AS
      EXPRESSLY PROVIDED IN THIS SECTION, NEITHER PARTY OR ITS RESPECTIVE RELATED
      PERSONS SHALL BE LIABLE TO THE OTHER PARTY FOR
      ANY
      INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS), PUNITIVE, INDIRECT, SPECIAL,
      OR EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THIS LICENSE OR THE
      TRANSACTIONS CONTEMPLATED HEREIN, WHETHER BASED ON BREACH OF CONTRACT, TORT
      (INCLUDING NEGLIGENCE), IP RIGHTS INFRINGEMENT, PRODUCT LIABILITY OR
      OTHERWISE,
      EVEN IF
      THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
      NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIMITATIONS SET FORTH
      IN
      THIS SECTION SHALL HAVE NO EFFECT UPON, AND SHALL NOT LIMIT LIABILITY FOR ANY
      DAMAGES RESULTING FROM GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

     

    8.       MISCELLANEOUS.

     

    8.1.       Assignment.
      This
      License may be assigned or transferred, in whole or in part, whether by
      operation of law or otherwise, by either party without the prior written consent
      of the other party, provided the assigning party provides the other party with
      contemporaneous written notice of such assignment or transfer.
       

     

    8.2.       Notices.
      Any
      notice, request, approval, authorization, consent, demand or other communication
      required or permitted to be given or made pursuant to this License shall be
      in
      writing and shall be deemed given on the earliest of (a) actual receipt,
      irrespective of the method of delivery, (b) on the delivery day following
      dispatch if sent by express mail (or similar next day air courier service),
      or
      (c) on the sixth (6th) day after mailing by registered or certified United
      States mail, return receipt requested, postage prepaid and addressed as
      follows:

     

     

    
      	
              If
                to the MVS Parties:

            	
              MVSystems,
                Inc.
                
                500
                  Corporate Circle, Unit L

                Golden,
                  CO 80401

                Attention:
                  Dr. Arun Madan 

                Telephone
                  No.:(303) 271-9907 or (303) 526-9016

                Facsimile
                  No.: (303) 526-1408

              

            

    

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      

    
      	
              with
                a copy to:

            	
              Holland
                & Hart LLP

            
	 	
              555
                17th Street, Ste. 3200

            
	 	
              Denver,
                CO 80201-8749

            
	 	
              Phone:
                (303) 295-8562 

            
	 	
              Fax:
                (303) 295-8261

            
	 	
              Attention:
                Lee F. Johnston, Esq.

            
	 	 
	
              If
                to XsunX: 

            	
              XsunX,
                Inc.

            
	 	
              65
                Enterprise

            
	 	
              Aliso
                Viejo, CA 92656

            
	 	
              Attn:
                Tom Djokovich

            
	 	
              (Tel)
                (949) 330-8060

            
	 	
              (Fax)
                (949) 330-8061

            
	 	 
	
              with
                copy to:

            	
              Tobin
                D. Kern, Esq.

            
	 	
              Sherman
                & Howard, LLC

            
	 	
              633
                17th Street, Suite 3000

            
	 	
              Denver,
                Colorado 80202

            
	 	
              (Tel)
                (303) 299-8384

            
	 	
              (Fax)
                (303) 298-0940

            

    

     

    or
      to
      such substitute addresses and persons as either party may designate to the
      other
      from time to time by written notice in accordance with this Section.

    

    8.3.       Choice
      of Law; Dispute Resolution.
      This
      License shall be governed by and construed in accordance with the laws of the
      State of Colorado, other than such laws, rules, regulations and case law that
      would result in the application of the laws of a jurisdiction other than the
      State of Colorado. Any suit to enforce any provision of this License, or arising
      out of or based upon this License, shall be brought exclusively in the United
      States District Court for the District of Colorado or the District Court in
      and
      for the City and County of Denver, State of Colorado. Each party hereby agrees
      that such courts shall have in personam
      jurisdiction and venue with respect to such party, and each party hereby submits
      to the in personam
      jurisdiction and venue of such courts and waives any objection based on
      inconvenient forum. Process
      in any action or proceeding referred to in this Section may be served on any
      party anywhere in the world. The United Nations Convention on Contracts for
      the
      International Sale of Goods is hereby excluded from application to this License.
      

     

    8.4.       Counterparts.
      This
      License may be executed in two or more counterparts, each of which will be
      deemed to be an original copy of this License and all of which, when taken
      together, will be deemed to constitute one and the same agreement. Facsimile
      signatures shall be effective as original signatures. 

     

    8.5.       Headings;
      Construction.
      For
      all
      purposes of this License, except as otherwise expressly provided or unless
      the
      context otherwise requires: (a) the terms defined herein include the plural
      as
      well as the singular and vice-versa; (b) words importing gender include all
      genders; (c) all references to this License and the words “herein”, “hereof”,
“hereto” and “hereunder” and other words of similar import refer to this License
      as a whole and not to any particular Article, Section, or other subdivision;
      (d)
      all Article and Section headings are for convenience only and shall not affect
      the interpretation or construction of this License, (e) the words “including,”
“included” and “includes” mean inclusion without limitation; and (f) in the
      event of any conflict between the terms in the body of the Agreement and the
      terms in this License, the terms of this License shall prevail to the extent
      that there is such a conflict.
      This
      License is executed in the English language and that version of the Agreement
      shall control despite any other version prepared in any other language, whether
      or not executed. This
      License has been drafted jointly by the parties and in the event of any
      ambiguities in the language hereof, there shall be no inference drawn in favor
      of or against either party.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    8.6.       Binding
      Effect.
      This
      License shall be binding upon and inure to the benefit of the parties and their
      respective permitted successors and assigns. 

     

    8.7.       Entire
      Agreement; Amendment. This
      License constitutes the entire and exclusive statement of the parties’ agreement
      with respect to its subject matter and supersedes any and all prior or
      contemporaneous oral or written representations, understandings, or agreements
      relating thereto. This License may be modified, supplemented or changed only
      by
      an agreement in writing which makes specific reference to this License and
      which
      is signed by the parties.

     

    8.8.       Waiver.
      The
      rights and remedies of the parties to this License are cumulative and not
      alternative. Neither the failure nor any delay by any party in exercising any
      right, power, or privilege under this License or the documents referred to
      in
      this License will operate as a waiver of such right, power, or privilege, and
      no
      single or partial exercise of any such right, power, or privilege will preclude
      any other or further exercise of such right, power, or privilege or the exercise
      of any other right, power, or privilege. To the maximum extent permitted by
      applicable law, (a) no claim or right arising out of this License or the
      documents referred to in this License can be discharged by one party, in whole
      or in part, by a waiver or renunciation of the claim or right unless in writing
      signed by the other party; (b) no waiver that may be given by a party will
      be
      applicable except in the specific instance for which it is given; and (c) no
      notice to or demand on one party will be deemed to be a waiver of any obligation
      of such party or of the right of the party giving such notice or demand to
      take
      further action without notice or demand as provided in this License or the
      documents referred to in this License.

     

    8.9.       Severability.
      In the
      event that any one or more of the provisions contained in this License shall,
      for any reason, be held to be invalid, illegal or unenforceable in any respect,
      such invalidity, illegality or unenforceability shall not affect any other
      provision of this License, and all other provisions shall remain in full force
      and effect. If any of the provisions of this License is held to be excessively
      broad or invalid, illegal or unenforceable in any jurisdiction, it shall be
      reformed and construed by limiting and reducing it so as to be enforceable
      to
      the maximum extent permitted by law in conformance with its original
      intent.

     

    8.10.       Publicity.
      Except
      as necessary for a Party to comply with its legal or financial reporting and
      disclosure obligations, including filings by XsunX with the U.S. Securities
      and
      Exchange Commission and financial reporting by XsunX in conformity with
      Generally Accepted Accounting Principles (GAAP), none of the Parties, nor any
      of
      their Related Persons, shall originate any publicity, news release or other
      public announcement (“Announcements”),
      written or oral, relating to this License or the existence of an arrangement
      between the parties, without the prior written approval of the other party,
      which approval shall not be unreasonably withheld. 

     

    8.11.       No
      Agency.
      The
      relationship of XsunX, on the one hand, and the
      MVS
      Parties
      and
      their respective successors in interest, on the other hand, is that of licensee
      and licensor, and not one of principal and agent, joint venture or partnership.
      Neither XsunX, on the one hand, nor MVS or Dr. Madan, on the other hand, shall
      have any authority to create or assume, in the name or on behalf of the other
      party, any obligation, express or implied, nor to act or purport to act as
      the
      agent or the legally empowered representative of the other party for any purpose
      whatsoever. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    8.12.       No
      Individual Liability for Dr. Madan.
      Except
      as to Sections 4.3(a) and 6.1, the Parties agree that no individual duties,
      obligations or liabilities shall be deemed to arise under this License with
      respect to Dr. Madan. 

     

    8.13.       Force
      Majeure.
      Neither
      the MVS Parties nor XsunX shall be liable to the other for failure or delay
      in
      the performance of a required obligation, other than the payment of monies
      due
      and owing, if such failure or delay is caused by strike, riot, fire, flood,
      natural disaster, or other similar cause beyond such party’s control, provided
      that such party gives prompt written notice of such condition and resumes its
      performance as soon as possible, and provided further that the other party
      may
      terminate the Agreement if such condition continues for an uninterrupted period
      of ninety (90) days from the initial occurrence of such condition. Neither
      the
      MVS
      Parties nor XsunX
      is
      entitled to relief under this Section to the extent that any event otherwise
      constituting such event of force majeure results from the negligence or fault
      of
      the applicable party or its Related Persons.

     

    8.14.       No
      Third-Party Beneficiaries.
      Except
      as provided in Section 2.2 (Sublicenses), nothing in this License, expressed
      or
      implied, is intended or shall be construed to confer upon any entity, other
      than
the
      MVS
      Parties
      and
      XsunX (and the parties’ and respective Related Persons, and permitted successors
      and assigns), any remedy or claim by reason of this License, and any such
      remedies or claims shall be for the exclusive benefit of the MVS Parties and
      XsunX.
      

     

    8.15.       Expenses.
      Each of
      the parties shall pay its own costs and expenses associated with the execution
      and performance of this License.

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this License to be effective as of the Effective
      Date. The persons signing below warrant their authority to sign the Agreement
      on
      behalf of the MVS Parties and XsunX, respectively.

     

    
      	
              MVSystems,
                Inc.

            	
              XsunX,
                Inc. 

            
	 	 	 	 
	
              By

            	
               

            	
              By:

            	
               

            
	 	
              Signature

            	 	
              Signature

            
	 	 	 	 
	 	
              Printed
                Name

            	 	
              Printed
                Name

            
	 	 	 	 
	 	
              Title

            	 	
              Title

            
	 	 	 	 
	 	
              Date

            	 	
              Date

            
	 	 	 	 
	 	 	 	 
	
              Dr.
                Arun Madan

            	 	 	 
	
               

            	 	 	 
	
              By:

            	
               

            	 	 
	 	
              Signature

            	 	
               

            
	 	
               

            	 	 
	 	
              Printed
                Name

            	 	
               

            
	 	
               

            	 	
               

            
	 	
              Date

            	 	
               

            

    

    

    

    
      
         

      

      
        12

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