Document:

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                 July ___, 2005

Mountain Share Transfer
1625 Abilene Drive
Broomfield, CO 80020-1147

         RE:      XSUNX, INC.

Ladies and Gentlemen:

      Reference  is made to that  certain  Securities  Purchase  Agreement  (the
"Securities  Purchase  Agreement")  of even date herewith by and between  XsunX,
Inc.,  a  Colorado  corporation  (the  "Company"),  and the  Buyers set forth on
Schedule I attached thereto  (collectively the "Buyers") and that certain Pledge
and Escrow  Agreement  (the "Pledge  Agreement") of even date herewith among the
Company,  the Buyers and David Gonzalez,  as escrow agent (the "Escrow  Agent").
Pursuant to the  Securities  Purchase  Agreement,  the Company shall sell to the
Buyers,  an the Buyers shall purchase from the Company,  convertible  debentures
(collectively,  the  "Debentures")  in the aggregate  principal  amount of Eight
Hundred Fifty Thousand  Dollars  ($850,000),  plus accrued  interest,  which are
convertible  into shares of the Company's  common stock,  no par value per share
(the "Common Stock"),  at the Buyers discretion.  The Company has also issued to
the Buyer warrants to purchase up to ___________  shares of Common Stock, at the
Buyer discretion (the  "Warrant").  These  instructions  relate to the following
stock or proposed stock issuances or transfers:

      1.    The  Company  has agreed to issue to the  Buyers up to  ____________
            shares  of  the  Company's  Common  Stock  upon  conversion  of  the
            Debentures  ("Conversion Shares") plus the shares of Common Stock to
            be issued to the Buyers  upon  conversion  of accrued  interest  and
            liquidated damages into Common Stock (the "Interest Shares").

      2.    The  Company   has   prepared  a  stock   certificate   representing
            ____________  shares  and  ________[Officer]  has  prepared  a stock
            certificate representing _______ shares (collectively, the "Escrowed
            Shares") of the Common Stock, that have been delivered to the Escrow
            Agent  pursuant  to the  Pledge  Agreement  and the  Officer  Pledge
            Agreement.

<PAGE>

      3.    Up to  ____________  shares  of Common  Stock to be issued  upon the
            exercise of the Warrant ("Warrant Shares").

This letter  shall  serve as our  irrevocable  authorization  and  direction  to
Mountain Share Transfer (the "Transfer Agent") to do the following:

1. Conversion Shares.

      a.  Instructions  Applicable  to  Transfer  Agent.  With  respect  to  the
      Conversion Shares and the Interest Shares,  the Transfer Agent shall issue
      the Conversion  Shares and the Interest  Shares to the Buyers from time to
      time upon delivery to the Transfer Agent of a properly  completed and duly
      executed Conversion Notice (the "Conversion Notice"), in the form attached
      hereto as Exhibit I,  delivered  on behalf of the Company to the  Transfer
      Agent by the Escrow  Agent.  Upon  receipt  of a  Conversion  Notice,  the
      Transfer  Agent shall within three (3) Trading Days  thereafter  (i) issue
      and surrender to a common carrier for overnight delivery to the address as
      specified in the Conversion Notice, a certificate,  registered in the name
      of the Buyers or their designees, for the number of shares of Common Stock
      to which the  Buyers  shall be  entitled  as set  forth in the  Conversion
      Notice or (ii) provided Transfer Agent are participating in The Depository
      Trust Company ("DTC") Fast Automated Securities Transfer Program, upon the
      request of the Buyers,  credit such  aggregate  number of shares of Common
      Stock to which  the  Buyers  shall be  entitled  to the  Buyers'  or their
      designees'  balance  account  with DTC through its Deposit  Withdrawal  At
      Custodian ("DWAC") system provided the Buyers causes its bank or broker to
      initiate the DWAC  transaction.  For purposes  hereof  "Trading Day" shall
      mean any day on which the Nasdaq Market is open for customary trading.

      b. The Company  hereby  confirms to the Transfer Agent and the Buyers that
      certificates  representing the Conversion Shares shall not bear any legend
      restricting  transfer  and  should  not be  subject  to any  stop-transfer
      restrictions  and shall otherwise be freely  transferable on the books and
      records of the Company;  provided that counsel to the Company delivers (i)
      the Notice of  Effectiveness  set forth in Exhibit II attached  hereto and
      (ii) an opinion of counsel in the form set forth in Exhibit  III  attached
      hereto,  and that if the Conversion Shares and the Interest Shares are not
      registered for sale under the Securities Act of 1933, as amended, then the
      certificates for the Conversion  Shares and Interest Shares shall bear the
      following legend:

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

                                       2
<PAGE>

      c. In the event that counsel to the Company  fails or refuses to render an
      opinion as required to issue the Conversion  Shares in accordance with the
      preceding  paragraph  (either  with or  without  restrictive  legends,  as
      applicable), then the Company irrevocably and expressly authorizes counsel
      to the Buyers to render such opinion.  The Transfer Agent shall accept and
      be  entitled  to rely on such  opinion  for the  purposes  of issuing  the
      Conversion Shares.

      d.  Instructions  Applicable  to Escrow  Agent.  Upon the  Escrow  Agent's
      receipt of a properly  completed  conversion  notice  substantially in the
      form  attached as an exhibit to the  Debentures,  the Escrow  Agent shall,
      within  one (1)  Trading  Day  thereafter,  send to the  Transfer  Agent a
      Conversion  Notice in the form  attached  hereto as Exhibit I, which shall
      constitute an  irrevocable  instruction  to the Transfer  Agent to process
      such Conversion Notice in accordance with the terms of these instructions.

2. Escrowed Shares.

      a. With  respect to the Escrowed  Shares,  upon an event of default as set
      forth in the Pledge Agreement,  the Escrow Agent shall send written notice
      to the Transfer Agent ("Escrow  Notice") to transfer such number of Escrow
      Shares as set forth in the Escrow Notice to the Buyers. Upon receipt of an
      Escrow Notice,  the Transfer Agent shall promptly  transfer such number of
      Escrow  Shares to the  Buyers as shall be set forth in the  Escrow  Notice
      delivered to the Transfer Agent by the Escrow Agent. Further, the Transfer
      Agent  shall  promptly  transfer  such  shares  from  the  Buyers  to  any
      subsequent  transferee  promptly  upon receipt of written  notice from the
      Buyers or their counsel.  If the Escrow Shares are not registered for sale
      under the Securities Act of 1933, as amended,  then the  certificates  for
      the Escrow Shares shall bear the legend set forth in Section 1b.

      b. In the event that counsel to the Company  fails or refuses to render an
      opinion as may be required by the  Transfer  Agent to affect a transfer of
      the  Escrow  Shares  (either  with  or  without  restrictive  legends,  as
      applicable), then the Company irrevocably and expressly authorizes counsel
      to the Buyers to render such opinion.  The Transfer Agent shall accept and
      be entitles to rely on such  opinion for the purpose of  transferring  the
      Escrow Shares.

3. Warrant Shares.

      a. Instructions  Applicable to Transfer Agent. With respect to the Warrant
      Shares,  the  Transfer  Agent shall issue the Warrant  Shares to the Buyer
      from  time to time  upon  delivery  to the  Transfer  Agent of a  properly
      completed and duly executed notice of the Buyer's election to exercise the
      Warrant (the "Exercise  Notice"),  in the form attached  hereto as Exhibit
      IV,  specifying  the number of Warrant  Shares to be issued,  delivered on
      behalf of the Company to the Transfer Agent by the David  Gonzalez,  Esq.,
      as escrow agent (the "Escrow Agent").  Upon receipt of an Exercise Notice,
      the Transfer  Agent shall use its best efforts to within three (3) Trading
      Days  thereafter (i) issue and surrender to a common carrier for overnight
      delivery  to  the  address  as  specified  in  the  Exercise   Notice,   a
      certificate, registered in the name of the the Buyer or its designees, for
      the number of shares of Common  Stock to which the Buyer shall be entitled
      as set forth in the Exercise  Notice or (ii) provided  Transfer  Agent are
      participating  in The  Depository  Trust  Company  ("DTC") Fast  Automated
      Securities  Transfer Program,  upon the request of the Buyer,  credit such
      aggregate  number of shares  of Common  Stock to which the Buyer  shall be
      entitled to the Buyer's or its designees' balance account with DTC through
      its Deposit  Withdrawal At Custodian  ("DWAC")  system  provided the Buyer
      causes its bank or broker to initiate the DWAC  transaction.  For purposes
      hereof "Trading Day" shall mean any day on which the Nasdaq Market is open
      for customary trading.

                                       3
<PAGE>

      The  Company  hereby  confirms  to the  Transfer  Agent and  Cornell  that
      certificates  representing  the Warrant  Shares  shall not bear any legend
      restricting  transfer  and  should  not be  subject  to any  stop-transfer
      restrictions  and shall otherwise be freely  transferable on the books and
      records of the Company;  provided that counsel to the Company delivers (i)
      the Notice of  Effectiveness  set forth in Exhibit II attached  hereto and
      (ii) an opinion of counsel in the form set forth in Exhibit  III  attached
      hereto,  and that if the Warrant  Shares are not registered for sale under
      the  Securities  Act of 1933, as amended,  then the  certificates  for the
      Warrant  Shares  shall bear the  restrictive  legend  referenced  above in
      Section 1b.

      b. In the event that counsel to the Company  fails or refuses to render an
      opinion as  required to issue the Warrant  Shares in  accordance  with the
      preceding  paragraph  (either  with or  without  restrictive  legends,  as
      applicable), then the Company irrevocably and expressly authorizes counsel
      to the Buyer to render such opinion.  The Transfer  Agent shall accept and
      be  entitled  to rely on such  opinion  for the  purposes  of issuing  the
      Warrant Shares.

      c.  Instructions  Applicable  to Escrow  Agent.  Upon the  Escrow  Agent's
      receipt of a properly completed exercise notice  substantially in the form
      attached as an exhibit to the Warrant and the Aggregate Exercise Price (as
      defined in the  Warrant),  the Escrow Agent shall,  within one (1) Trading
      Day thereafter,  send to the Transfer Agent an Exercise Notice in the form
      attached  hereto as Exhibit  I,  which  shall  constitute  an  irrevocable
      instruction  to the  Transfer  Agent to process  such  Exercise  Notice in
      accordance with the terms of these instructions.

                                       4
<PAGE>

4. All Shares.

      a. The  Transfer  Agent  shall  reserve  for  issuance  to the  Buyers the
      Conversion  Shares,  the Escrowed Shares, and the Warrant Shares. All such
      shares shall  remain in reserve  with the Transfer  Agent until the Buyers
      provides the Transfer  Agent  instructions  that the shares or any part of
      them shall be taken out of  reserve  and shall no longer be subject to the
      terms of these instructions.

      b. The Transfer Agent shall rely exclusively on the Conversion Notice, the
      Escrow  Notice,  or the Exercise  Notice and shall have no  liability  for
      relying on such  instructions.  Any Conversion  Notice,  Escrow Notice, or
      Exercise  Notice  delivered  hereunder  shall  constitute  an  irrevocable
      instruction  to the  Transfer  Agent to process  such notice or notices in
      accordance  with  the  terms  thereof.  Such  notice  or  notices  may  be
      transmitted  to the  Transfer  Agent  by  facsimile  or  any  commercially
      reasonable method.

      c. The Company  hereby  confirms to the Transfer Agent and the Buyers that
      no  instructions  other  than as  contemplated  herein  will be  given  to
      Transfer  Agent by the  Company  with  respect to the  matters  referenced
      herein. The Company hereby authorizes the Transfer Agent, and the Transfer
      Agent shall be obligated,  to disregard any contrary instructions received
      by or on behalf of the Company.

      Certain  Notice  Regarding the Escrow Agent.  The Company and the Transfer
Agent hereby acknowledge that the Escrow Agent is general counsel to the Buyers,
a partner of the  general  partner  of the  Buyers and  counsel to the Buyers in
connection with the transactions  contemplated and referred herein.  The Company
and the  Transfer  Agent  agree  that in the  event of any  dispute  arising  in
connection  with this Agreement or otherwise in connection  with any transaction
or  agreement  contemplated  and  referred  herein,  the Escrow  Agent  shall be
permitted  to continue to  represent  the Buyers and neither the Company nor the
Transfer Agent will seek to disqualify such counsel.

      The Company  hereby agrees that it shall not replace the Transfer Agent as
the Company's transfer agent without the prior written consent of the Buyers.

      Any attempt by Transfer  Agent to resign as the Company's  transfer  agent
hereunder shall not be effective until such time as the Company  provides to the
Transfer Agent written notice that a suitable replacement has agreed to serve as
transfer agent and to be bound by the terms and conditions of these  Irrevocable
Transfer Agent Instructions.

      The Company herby confirms and the Transfer Agent  acknowledges that while
any portion of the Debenture  remains unpaid and unconverted  with the exception
Common Stock issuable to Cornell  Capital  Partners,  LP pursuant to the Standby
Equity  Distribution  Agreement,  the Company and the Transfer  Agent shall not,
without the prior consent of the Buyers, (i) issue any Common Stock or Preferred
Stock without  consideration or for a consideration per share less than its fair
market  value  determined  immediately  prior to its  issuance,  (ii)  issue any
Preferred Stock, warrant,  option, right,  contract,  call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration  or for a  consideration  per share less than such Common  Stock's
fair market value determined immediately prior to its issuance,  (iii) issue any
S-8 shares of the Company's Common Stock.

                                       5
<PAGE>

      The Company and the  Transfer  Agent hereby  acknowledge  and confirm that
complying  with the terms of this  Agreement does not and shall not prohibit the
Transfer Agent from satisfying any and all fiduciary responsibilities and duties
it may owe to the Company.

      The Company and the Transfer Agent  acknowledge that the Buyers is relying
on the  representations and covenants made by the Company and the Transfer Agent
hereunder  and are a material  inducement to the Buyers  purchasing  convertible
debentures under the Securities Purchase Agreement. The Company and the Transfer
Agent further acknowledge that without such representations and covenants of the
Company and the Transfer Agent made hereunder, the Buyers would not purchase the
Debentures.

      Each party hereto  specifically  acknowledges and agrees that in the event
of a breach or threatened breach by a party hereto of any provision hereof,  the
Buyers  will  be  irreparably  damaged  and  that  damages  at law  would  be an
inadequate  remedy if these  Irrevocable  Transfer Agent  Instructions  were not
specifically enforced.  Therefore, in the event of a breach or threatened breach
by a party hereto, including,  without limitation,  the attempted termination of
the  agency  relationship  created  by this  instrument,  the  Buyers  shall  be
entitled,  in  addition  to all  other  rights  or  remedies,  to an  injunction
restraining such breach,  without being required to show any actual damage or to
post any bond or other security,  and/or to a decree for specific performance of
the provisions of these Irrevocable Transfer Agent Instructions.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>

      IN  WITNESS  WHEREOF,  the  parties  have  caused  this  letter  agreement
regarding  Irrevocable  Transfer  Agent  Instructions  to be duly  executed  and
delivered as of the date first written above.

                                         COMPANY:

                                         XSUNX, INC.

                                         By:
                                            ------------------------------------
                                         Name:    Tom Djokovich
                                         Title:   Chief Executive Officer

                                         ---------------------------------------
                                         David Gonzalez, Esq.

MOUNTAIN SHARE TRANSFER

By:
      ------------------------------------
Name:
      ------------------------------------
Title:
      ------------------------------------

                                       7
<PAGE>

                                   SCHEDULE I
                               SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
                                                                         ADDRESS/FACSIMILE
NAME                               SIGNATURE                             NUMBER OF BUYERS
----------------------------       --------------------------------      --------------------------------
<S>                                <C>                                   <C>
Cornell Capital Partners, LP       By:    Yorkville Advisors, LLC        101 Hudson Street - Suite 3700
                                   Its:   General Partner                Jersey City, NJ  07303
                                                                         Facsimile: (201) 985-8266

                                   By:
                                      ----------------------------
                                   Name:  Mark Angelo
                                   Its:   Portfolio Manager
</TABLE>

                                  SCHEDULE I-1
<PAGE>

                                    EXHIBIT I

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                            FORM OF CONVERSION NOTICE

      Reference is made to the Securities  Purchase  Agreement (the  "Securities
Purchase  Agreement")  between XsunX, Inc., (the "Company"),  and the Buyers set
forth on Schedule I attached  thereto dated July ____ 2005.  In accordance  with
and pursuant to the Securities Purchase Agreement, the undersigned hereby elects
to convert convertible  debentures into shares of common stock, no par value per
share (the "Common Stock"),  of the Company for the amount indicated below as of
the date specified below.

Conversion Date:
                                                      --------------------------
Amount to be converted:                               $
                                                      --------------------------
Conversion Price:                                     $
                                                      --------------------------
Shares of Common Stock Issuable:
                                                      --------------------------
Amount of Debenture unconverted:                      $
                                                      --------------------------
Amount of Interest Converted:                         $
                                                      --------------------------
Conversion Price of Interest:                         $
                                                      --------------------------
Shares of Common Stock Issuable:
                                                      --------------------------
Amount of Liquidated Damages:                         $
                                                      --------------------------
Conversion Price of Liquidated Damages:               $
                                                      --------------------------
Shares of Common Stock Issuable:
                                                      --------------------------
Total Number of shares of Common Stock to be issued:
                                                      --------------------------

                                       EXHIBIT I-1
<PAGE>

Please  issue  the  shares  of  Common  Stock in the  following  name and to the
following address:

Issue to:
                                                      --------------------------
Authorized Signature:
                                                      --------------------------
Name:
                                                      --------------------------
Title:
                                                      --------------------------
Phone #:
                                                      --------------------------
Broker DTC Participant Code:
                                                      --------------------------
Account Number*:
                                                      --------------------------

     * NOTE THAT RECEIVING BROKER MUST INITIATE TRANSACTION ON DWAC SYSTEM.

                                   EXHIBIT I-2
<PAGE>

                                   EXHIBIT II

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

_________, 2005

_________

Attention:

RE:      XSUNX, INC.

Ladies and Gentlemen:

      We are counsel to XsunX,  Inc., (the "Company"),  and have represented the
Company in connection with that certain Securities Purchase Agreement,  dated as
of July __, 2005 (the  "Securities  Purchase  Agreement"),  entered  into by and
among the  Company  and the  Buyers set forth on  Schedule  I  attached  thereto
(collectively the "Buyers")  pursuant to which the Company has agreed to sell to
the Buyers up to Eight  Hundred  Fifty  Thousand  Dollars  ($850,000) of secured
convertible debentures,  which shall be convertible into shares (the "Conversion
Shares") of the  Company's  common  stock,  no par value per share (the  "Common
Stock"),  in accordance  with the terms of the  Securities  Purchase  Agreement.
Pursuant to the Securities Purchase Agreement, the Company also has entered into
a Registration  Rights  Agreement,  dated as of June ___, 2005,  with the Buyers
(the "Investor  Registration  Rights  Agreement")  pursuant to which the Company
agreed,  among  other  things,  to  register  the  Conversion  Shares  under the
Securities  Act of 1933,  as amended (the "1933 Act").  In  connection  with the
Company's   obligations  under  the  Securities   Purchase   Agreement  and  the
Registration   Rights  Agreement,   on  _______,   2005,  the  Company  filed  a
Registration  Statement (File No. ___-_________) (the "Registration  Statement")
with the Securities and Exchange  Commission (the "SEC") relating to the sale of
the Conversion Shares.

      In  connection  with the  foregoing,  we advise the Transfer  Agent that a
member of the SEC's staff has advised us by  telephone  that the SEC has entered
an order declaring the  Registration  Statement  effective under the 1933 Act at
____ P.M. on __________, 2005 and we have no knowledge, after telephonic inquiry
of a member of the SEC's staff, that any stop order suspending its effectiveness
has been issued or that any proceedings for that purpose are pending before,  or
threatened  by, the SEC and the  Conversion  Shares are available for sale under
the 1933 Act pursuant to the Registration Statement.

                                  EXHIBIT II-1
<PAGE>

      The Buyers has  confirmed  it shall  comply with all  securities  laws and
regulations   applicable  to  it  including   applicable   prospectus   delivery
requirements upon sale of the Conversion Shares.

                                         Very truly yours,

                                         By:
                                            ------------------------------------

                                  EXHIBIT II-2
<PAGE>

                                   EXHIBIT III

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                 FORM OF OPINION

________________, 2005

VIA FACSIMILE AND REGULAR MAIL

________________

Attention:

         RE:      XSUNX, INC.

Ladies and Gentlemen:

      We have  acted as special  counsel  to XsunX,  Inc.  (the  "Company"),  in
connection  with the  registration  of  ___________shares  (the "Shares") of its
common stock with the Securities and Exchange  Commission  (the "SEC").  We have
not acted as your  counsel.  This  opinion is given at the  request and with the
consent of the Company.

      In rendering  this opinion we have relied on the accuracy of the Company's
Registration Statement on Form SB-2, as amended (the "Registration  Statement"),
filed by the Company with the SEC on _________  ___, 2005. The Company filed the
Registration  Statement on behalf of certain selling  stockholders (the "Selling
Stockholders").  This opinion relates solely to the Selling  Shareholders listed
on Exhibit  "A" hereto and  number of Shares  set forth  opposite  such  Selling
Stockholders'  names. The SEC declared the Registration  Statement  effective on
__________ ___, 2005.

      We  understand  that the  Selling  Stockholders  acquired  the Shares in a
private offering exempt from  registration  under the Securities Act of 1933, as
amended. Information regarding the Shares to be sold by the Selling Shareholders
is  contained  under the  heading  "Selling  Stockholders"  in the  Registration
Statement,  which information is incorporated herein by reference.  This opinion
does not relate to the issuance of the Shares to the Selling  Stockholders.  The
opinions set forth herein  relate  solely to the sale or transfer by the Selling
Stockholders  pursuant to the  Registration  Statement under the Federal laws of
the United States of America.  We do not express any opinion  concerning any law
of any state or other jurisdiction.

                                   EXHIBIT III-1
<PAGE>

      In  rendering  this  opinion  we have  relied  upon  the  accuracy  of the
foregoing statements.

      Based on the  foregoing,  it is our  opinion  that the  Shares  have  been
registered with the Securities and Exchange  Commission under the Securities Act
of 1933,  as  amended,  and that  ________  may remove the  restrictive  legends
contained on the Shares. This opinion relates solely to the number of Shares set
forth opposite the Selling Stockholders listed on Exhibit "A" hereto.

      This opinion is furnished to Transfer  Agent  specifically  in  connection
with the issuance of the Shares,  and solely for your  information  and benefit.
This letter may not be relied upon by  Transfer  Agent in any other  connection,
and it may not be relied  upon by any other  person  or entity  for any  purpose
without our prior written consent.  This opinion may not be assigned,  quoted or
used  without our prior  written  consent.  The  opinions  set forth  herein are
rendered  as of the date hereof and we will not  supplement  this  opinion  with
respect to changes in the law or factual matters subsequent to the date hereof.

Very truly yours,

                                  EXHIBIT III-2
<PAGE>

                                   EXHIBIT IV

                   TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                         FORM OF WARRANT EXERCISE NOTICE

                                 TO BE EXECUTED
                BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

                                   XSUNX, INC.

      The   undersigned   holder   hereby   exercises   the  right  to  purchase
______________ of the shares of Common Stock ("Warrant  Shares") of XsunX, Inc.,
a Colorado  corporation (the "Company"),  evidenced by the attached Warrant (the
"Warrant").  Capitalized  terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.

Specify Method of exercise by check mark:

      1.    ___ Cash Exercise

            (a)  Payment of Warrant  Exercise  Price.  The holder  shall pay the
            Aggregate  Exercise  Price  of  $______________  to the  Company  in
            accordance with the terms of the Warrant.

            (b) Delivery of Warrant  Shares.  The Company  shall  deliver to the
            holder _________  Warrant Shares in accordance with the terms of the
            Warrant.

      2.    ___ Cashless Exercise

            (a) Payment of Warrant  Exercise Price. In lieu of making payment of
            the Aggregate Exercise Price, the holder elects to receive upon such
            exercise  the Net  Number of shares of Common  Stock  determined  in
            accordance with the terms of the Warrant.

            (b) Delivery of Warrant  Shares.  The Company  shall  deliver to the
            holder _________  Warrant Shares in accordance with the terms of the
            Warrant.

Date: _______________ __, ______

Name of Registered Holder

By:
       --------------------------------------
Name:
       --------------------------------------
Title:
       --------------------------------------

                                   EXHIBIT IV
<PAGE>

                                   EXHIBIT "A"

                         (LIST OF SELLING STOCKHOLDERS)

NAME:                                              NO. OF SHARES:
-----------------------------------------------    -----------------------------

                                    EXHIBIT AESCROW AGREEMENT

      THIS ESCROW  AGREEMENT  (this  "Agreement") is made and entered into as of
October  ___,  2005 by XSUNX,  INC.,  a Delaware  corporation  (the  "Company");
CORNELL CAPITAL PARTNERS,  LP, a Delaware limited  partnership (the "Investor");
and BAXTER, BAKER, SIDLE, CONN & JONES, P.A. (the "Escrow Agent").

                                   BACKGROUND

      WHEREAS,  the Company and the Investor have entered into a Standby  Equity
Distribution Agreement (the "Standby Equity Distribution  Agreement") dated July
14, 2005,  pursuant to which the Investor will purchase common stock,  par value
$0.001 per share of the Company (the "Common Stock"), at a price per share equal
to  the  Purchase  Price,  as  that  term  is  defined  in  the  Standby  Equity
Distribution  Agreement,  for an  aggregate  price of up to Ten Million  Dollars
($10,000,000).  The Standby Equity Distribution  Agreement provides that on each
Advance  Date the  Investor,  as that  term is  defined  in the  Standby  Equity
Distribution Agreement, shall deposit the Advance pursuant to the Advance Notice
in an  escrow  account  to be held by the  Escrow  Agent and the  Company  shall
deposit  shares of the Company's  Common Stock,  which shall be purchased by the
Investor as set forth in the Standby  Equity  Distribution  Agreement,  with the
Escrow  Agent,  in order to  effectuate  a  disbursement  to the  Company of the
Advance by the Escrow Agent and a disbursement  to the Investor of the shares of
the Company's  Common Stock by Escrow Agent at a closing to be held as set forth
in the Standby Equity Distribution  Agreement (the "Closing").  (All capitalized
terms not otherwise  defined  herein shall have the meaning  assigned to them in
the Standby Equity Distribution Agreement.)

      WHEREAS, the Company, the Investor, and David Gonzalez,  Esq. entered into
an escrow agreement  ("Initial  Escrow  Agreement") on July 14, 2005 pursuant to
which David  Gonzalez,  Esq. was to serve as escrow agent in connection with the
Standby Equity Distribution  Agreement.  On the date hereof, the Company and the
Investor  entered into an agreement  pursuant to which David Gonzalez,  Esq. was
removed as the escrow agent and the Initial Escrow Agreement was terminated.

      WHEREAS,  Escrow Agent has agreed to accept,  hold, and disburse the funds
and the shares of the  Company's  Common Stock  deposited  with it in accordance
with the terms of this Agreement.

      WHEREAS,  in order to  establish  the escrow of funds and shares to effect
the provisions of the Standby Equity Distribution Agreement,  the parties hereto
have entered into this Agreement.

      NOW THEREFORE,  in consideration of the foregoing,  it is hereby agreed as
follows:

      1. Definitions. The following terms shall have the following meanings when
used herein:

<PAGE>

            a. "Escrow  Funds" shall mean the Advance funds  deposited  with the
Escrow Agent pursuant to this Agreement.

            b. "Joint Written Direction" shall mean a written direction executed
by the  Investor  and the Company  directing  Escrow  Agent to disburse all or a
portion  of the  Escrow  Funds or to take or  refrain  from  taking  any  action
pursuant to this Agreement.

            c.  "Common  Stock  Joint  Written  Direction"  shall mean a written
direction executed by the Investor and the Company directing the Escrow Agent to
disburse  all or a portion of the shares of the Common  Stock or to refrain from
taking any action pursuant to this Agreement.

      2. Appointment of and Acceptance by Escrow Agent.

            a. The Investor and the Company  hereby  appoint the Escrow Agent to
serve  as  Escrow  Agent  hereunder.   The  Escrow  Agent  hereby  accepts  such
appointment and, upon receipt by wire transfer of the Escrow Funds in accordance
with Section 3 below, agrees to hold and disburse the Escrow Funds in accordance
with this Agreement.

            b. The Investor and the Company  hereby  appoint the Escrow Agent to
serve as the holder of the shares of the Common  Stock which shall be  purchased
by the  Investor  pursuant to the Standby  Equity  Distribution  Agreement.  The
Escrow Agent hereby  accepts such  appointment  and, upon receipt via D.W.A.C or
the  certificates  representing  of the shares of the Common Stock in accordance
with Section 3 below, agrees to hold and disburse the shares of the Common Stock
in accordance with this Agreement.

      3. Creation of Escrow Account/Common Stock Account.

            a. On or prior to the date of this  Agreement the Escrow Agent shall
establish an escrow  account for the deposit of the Escrow  Funds.  The Investor
will wire funds to the account of the Escrow Agent as follows:

BANK:               Mercantile Safe Deposit & Trust Company
ROUTING #:          052000618
ACCOUNT #:          6498841
NAME ON ACCOUNT:    Baxter, Baker, Sidle, Conn & Jones, P.A. Escrow Account

                                       2
<PAGE>

            b. On or prior to the date of this  Agreement the Escrow Agent shall
establish an account for the D.W.A.C. of the shares of Common Stock. The Company
will  D.W.A.C.  shares of the Common Stock to the account of the Escrow Agent as
follows:

BROKERAGE FIRM:     Sloan Securities Corp.
CLEARING HOUSE:     Fiserv
ACCOUNT #:          68047138
DTC #:              0632
NAME ON ACCOUNT:    Baxter, Baker, Sidle, Conn & Jones, P.A. Escrow Account

      4. Deposits  into the Escrow  Account.  The Investor  agrees that it shall
promptly  deliver all monies for the  payment of the Common  Stock to the Escrow
Agent for deposit in the Escrow Account.

      5. Disbursements from the Escrow Account.

            a.  At  such  time as  Escrow  Agent  has  collected  and  deposited
instruments  of payment in the total amount of the Advance and has received such
shares of Common  Stock via D.W.A.C  from the Company  which are to be issued to
the Investor pursuant to the Standby Equity Distribution  Agreement,  the Escrow
Agent shall notify the Company and the Investor.  The Escrow Agent will continue
to hold such funds until the  Investor  and Company  execute and deliver a Joint
Written  Direction  directing the Escrow Agent to disburse the Escrow Funds,  at
which  time the Escrow  Agent  shall wire the  Escrow  Funds  pursuant  to Joint
Written  Direction.  In disbursing such funds, the Escrow Agent is authorized to
rely upon such Joint Written Direction from Company and may accept any signatory
from  the  Company  listed  on the  signature  page  to this  Agreement  and any
signatory  from the Investor  listed on the  signature  page to this  Agreement.
Simultaneous with delivery of the executed Joint Written Direction to the Escrow
Agent the  Investor and Company  shall  execute and deliver a Common Stock Joint
Written  Direction to the Escrow Agent directing the Escrow Agent to release via
D.W.A.C to the Investor the shares of the Company's  Common Stock.  In releasing
such shares of Common  Stock the Escrow  Agent is  authorized  to rely upon such
Common Stock Joint Written  Direction  from Company and may accept any signatory
from  the  Company  listed  on the  signature  page  to this  Agreement  and any
signatory from the Investor listed on the signature page to this Agreement.

      In the event the Escrow  Agent does not  receive the amount of the Advance
from the  Investor or the shares of Common Stock to be purchased by the Investor
from the Company, the Escrow Agent shall notify the Company and the Investor.

      In the event that the Escrow Agent has not received the Common Stock to be
purchased by the Investor from the Company, in no event will the Escrow Funds be
released to the Company until such shares are received by the Escrow Agent.  For
purposes of this  Agreement,  the term "Common  Stock  certificates"  shall mean
Common Stock  certificates  to be purchased  pursuant to the respective  Advance
Notice pursuant to the Standby Equity Distribution Agreement.

                                       3
<PAGE>

      6. Deposit of Funds. The Escrow Agent is hereby  authorized to deposit the
wire transfer proceeds in the Escrow Account.

      7. Suspension of Performance: Disbursement Into Court.

            a.  Escrow  Agent.  If at any time,  there  shall  exist any dispute
between the Company and the Investor with respect to holding or  disposition  of
any portion of the Escrow Funds or the Common Stock or any other  obligations of
Escrow  Agent  hereunder,  or if at any time Escrow Agent is unable to determine
the proper  disposition  of any  portion of the Escrow  Funds or Escrow  Agent's
proper actions with respect to its obligations hereunder, or if the parties have
not within  thirty (30) days of the  furnishing  by Escrow  Agent of a notice of
resignation pursuant to Section 9 hereof,  appointed a successor Escrow Agent to
act  hereunder,  then Escrow  Agent  shall take either or both of the  following
actions:

                  i.  Suspend  the   performance  of  any  of  its   obligations
(including  without  limitation any disbursement  obligations) under this Escrow
Agreement  until  the  Escrow  Agent is  notified  by both the  Company  and the
Investor in writing  that such dispute has been  resolved,  or until a successor
Escrow Agent shall be appointed (as the case may be); provided  however,  Escrow
Agent shall  continue to invest the Escrow  Funds in  accordance  with Section 8
hereof; and/or

                  ii. Petition (by means of an interpleader  action or any other
appropriate method) any court of competent  jurisdiction in any venue convenient
to Escrow Agent, for  instructions  with respect to such dispute or uncertainty,
and to the  extent  required  by law,  pay into  such  court,  for  holding  and
disposition in accordance with the instructions of such court, all funds held by
it in the Escrow Funds,  after deduction and payment to Escrow Agent of all fees
and expenses  (including  court costs and attorneys'  fees) payable to, incurred
by,  or  expected  to be  incurred  by  the  Escrow  Agent  in  connection  with
performance of its duties and the exercise of its rights hereunder.

                  iii.  The Escrow Agent shall have no liability to the Company,
the Investor,  or any person with respect to any such  suspension of performance
or  disbursement  into court,  specifically  including  any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the  disbursement of funds held in the Escrow Funds or any delay in
with respect to any other action required or requested of Escrow Agent.

      8.  Investment of Escrow Funds.  The Escrow Agent shall deposit the Escrow
Funds in a non-interest bearing money market account.

      If the Escrow Agent has not received a Joint Written  Direction within ten
(10) days of receipt of funds,  it may in its  discretion  establish  a separate
interest bearing Escrow Fund.

                                       4
<PAGE>

      9.  Resignation and Removal of Escrow Agent.  Escrow Agent may resign from
the performance of its duties  hereunder at any time by giving thirty (30) days'
prior written notice to the parties or may be removed, with or without cause, by
the parties,  acting jointly,  by furnishing a Joint Written Direction to Escrow
Agent,  at any time by the  giving of ten (10)  days'  prior  written  notice to
Escrow Agent as provided  herein below.  Upon any such notice of  resignation or
removal,  the  representatives  of the  Investor and the Company  identified  in
Sections 13a.(iv) and 13b.(iv),  below, jointly shall appoint a successor Escrow
Agent  hereunder,  which  shall be a  commercial  bank,  trust  company or other
financial  institution  with  a  combined  capital  and  surplus  in  excess  of
$10,000,000.00.  Upon the  acceptance  in writing of any  appointment  of Escrow
Agent hereunder by a successor  Escrow Agent,  such successor Escrow Agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring Escrow Agent,  and the retiring Escrow Agent shall be
discharged  from its duties and  obligations  under this Escrow  Agreement,  but
shall not be  discharged  from any  liability  for actions taken as Escrow Agent
hereunder  prior  to  such   succession.   After  any  retiring  Escrow  Agent's
resignation or removal,  the provisions of this Escrow  Agreement shall inure to
its  benefit as to any  actions  taken or omitted to be taken by it while it was
Escrow  Agent under this  Escrow  Agreement.  The  retiring  Escrow  Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent,  after making copies of
such records as the retiring  Escrow Agent deems  advisable and after  deduction
and payment to the retiring  Escrow  Agent of all fees and  expenses  (including
court costs and  attorneys'  fees)  payable to,  incurred  by, or expected to be
incurred by the retiring  Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.

      10. Liability of Escrow Agent.

            a. Escrow Agent shall have no liability or  obligation  with respect
to the Escrow  Funds  except  for Escrow  Agent's  willful  misconduct  or gross
negligence.  Escrow Agent's sole  responsibility  shall be for the  safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of
this  Agreement.  Escrow Agent shall have no implied duties or  obligations  and
shall not be charged with  knowledge or notice or any fact or  circumstance  not
specifically  set forth herein.  Escrow Agent may rely upon any instrument,  not
only as to its due  execution,  validity and  effectiveness,  but also as to the
truth and  accuracy of any  information  contained  therein,  which Escrow Agent
shall in good faith  believe to be genuine,  to have been signed or presented by
the person or parties  purporting to sign the same and conform to the provisions
of this  Agreement.  In no event shall  Escrow  Agent be liable for  incidental,
indirect, special, and consequential or punitive damages. Escrow Agent shall not
be obligated to take any legal action or commence any  proceeding  in connection
with the Escrow  Funds,  any account in which Escrow Funds are  deposited,  this
Agreement  or the  Standby  Equity  Distribution  Agreement,  or to  appear  in,
prosecute  or defend  any such  legal  action or  proceeding.  Escrow  Agent may
consult legal counsel  selected by it in the event of any dispute or question as
to construction of any of the provisions hereof or of any other agreement or its
duties  hereunder,  or relating to any dispute  involving any party hereto,  and
shall  incur no  liability  and shall be fully  indemnified  from any  liability
whatsoever  in acting in  accordance  with the opinion or  instructions  of such
counsel.  The Company and the Investor jointly and severally shall promptly pay,
upon  demand,  the  reasonable  fees and expenses of any such counsel and Escrow
Agent is hereby  authorized  to pay such fees and  expenses  from  funds held in
escrow.

            b. The Escrow Agent is hereby authorized, in its sole discretion, to
comply with orders  issued or process  entered by any court with  respect to the
Escrow  Funds,  without  determination  by the  Escrow  Agent  of  such  court's
jurisdiction  in the matter.  If any portion of the Escrow  Funds is at any time
attached,  garnished  or  levied  upon  under any  court  order,  or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order,  or in any case any order  judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel  selected by it,  binding upon it,  without
the need for appeal or other action;  and if the Escrow Agent  complies with any
such  order,  writ,  judgment  or  decree,  it shall not be liable to any of the
parties  hereto  or to any other  person or entity by reason of such  compliance
even though such order,  writ judgment or decree may be  subsequently  reversed,
modified, annulled, set aside or vacated.

                                       5
<PAGE>

      11.  Indemnification of Escrow Agent. From and at all times after the date
of this  Agreement,  the parties  jointly and severally,  shall,  to the fullest
extent  permitted by law and to the extent provided  herein,  indemnify and hold
harmless Escrow Agent and each director, officer, employee,  attorney, agent and
affiliate of Escrow Agent (collectively,  the "Indemnified Parties") against any
and all actions,  claims (whether or not valid), losses,  damages,  liabilities,
costs  and  expenses  of  any  kind  or  nature  whatsoever  (including  without
limitation  reasonable  attorney's  fees,  costs and  expenses)  incurred  by or
asserted against any of the Indemnified  Parties from and after the date hereof,
whether direct, indirect or consequential,  as a result of or arising from or in
any way relating to any claim,  demand,  suit, action, or proceeding  (including
any inquiry or  investigation) by any person,  including without  limitation the
parties to this Agreement,  whether  threatened or initiated,  asserting a claim
for any legal or  equitable  remedy  against  any  person  under any  statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or  equitable  cause or  otherwise,  arising  from or in
connection with the negotiation,  preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
or not any such  Indemnified  Party is a party to any such action or proceeding,
suit or the target of any such inquiry or investigation; provided, however, that
no  Indemnified  Party  shall  have the right to be  indemnified  hereunder  for
liability finally determined by a court of competent jurisdiction, subject to no
further  appeal,  to have resulted  solely from the gross  negligence or willful
misconduct  of such  Indemnified  Party.  If any such  action or claim  shall be
brought or asserted against any Indemnified  Party, such Indemnified Party shall
promptly  notify the  Company and the  Investor  hereunder  in writing,  and the
Investor  and the  Company  shall  assume the  defense  thereof,  including  the
employment of counsel and the payment of all expenses.  Such  Indemnified  Party
shall, in its sole  discretion,  have the right to employ separate  counsel (who
may be selected by such  Indemnified  Party in its sole  discretion) in any such
action and to participate  and to participate  in the defense  thereof,  and the
fees and  expenses  of such  counsel  shall be paid by such  Indemnified  Party,
except that the Investor  and/or the Company  shall be required to pay such fees
and  expense  if (a) the  Investor  or the  Company  agree to pay such  fees and
expenses,  or (b) the  Investor  and/or  the  Company  shall  fail to assume the
defense of such action or proceeding  or shall fail,  in the sole  discretion of
such  Indemnified  Party,  to  employ  counsel  reasonably  satisfactory  to the
Indemnified  Party in any such action or  proceeding,  (c) the  Investor and the
Company are the  plaintiff in any such action or  proceeding or (d) the named or
potential  parties to any such action or proceeding  (including any  potentially
impleaded  parties)  include  both  Indemnified  Party the  Company  and/or  the
Investor and Indemnified Party shall have been advised by counsel that there may
be one or more  legal  defenses  available  to it which  are  different  from or
additional to those  available to the Company or the Investor.  The Investor and
the Company  shall be jointly and  severally  liable to pay fees and expenses of
counsel  pursuant to the preceding  sentence,  except that any obligation to pay
under  clause (a) shall apply only to the party so  agreeing.  All such fees and
expenses  payable by the Company  and/or the Investor  pursuant to the foregoing
sentence  shall be paid from time to time as  incurred,  both in  advance of and
after the final  disposition  of such action or claim.  The  obligations  of the
parties under this section shall survive any termination of this Agreement,  and
resignation  or  removal  of  the  Escrow  Agent  shall  be  independent  of any
obligation of the Escrow Agent.

                                       6
<PAGE>

      12.  Expenses  of Escrow  Agent.  Except as set  forth in  Section  11 the
Company shall reimburse the Escrow Agent for all of its reasonable out-of-pocket
expenses,  including  attorneys' fees, travel expenses,  telephone and facsimile
transmission  costs,  postage  (including  express mail and  overnight  delivery
charges), and copying charges, and shall pay the Escrow Agent compensation equal
to Three  Hundred  Fifty  Dollars  ($350) for each  Advance  directly out of the
proceeds of such Advance. All of the compensation and reimbursement  obligations
set forth in this Section  shall be payable by the  Company,  upon demand by the
Escrow Agent.  The  obligations  of the Company under this Section shall survive
any  termination of this Agreement and the  resignation or removal of the Escrow
Agent.

      13. Warranties.

            a. The Investor makes the following  representations  and warranties
to the Escrow Agent:

                  i. The  Investor  has full power and  authority to execute and
deliver this Agreement and to perform its obligations hereunder.

                  ii. This  Agreement  has been duly  approved by all  necessary
action of the Investor,  including any necessary approval of the limited partner
of the Investor, has been executed by duly authorized officers of the Investor's
general partner, enforceable in accordance with its terms.

                  iii. The execution,  delivery, and performance of the Investor
of this Agreement will not violate,  conflict with, or cause a default under the
agreement  of  limited  partnership  of  the  Investor,  any  applicable  law or
regulation,  any  court  order or  administrative  ruling or degree to which the
Investor  is a  party  or any of its  property  is  subject,  or any  agreement,
contract, indenture, or other binding arrangement.

                  iv.  Mark A.  Angelo  has been  duly  appointed  to act as the
representative  of  Investor  hereunder  and has full  power  and  authority  to
execute,  deliver, and perform this Agreement,  to execute and deliver any Joint
Written Direction,  Common Stock Joint Written Direction,  to amend,  modify, or
waive any provision of this Agreement,  and to take any and all other actions as
the Investor's  representative under this Agreement, all without further consent
or direction form, or notice to, the Investor or any other party.

                  v. No party other than the parties hereto have, or shall have,
any lien, claim or security interest in the Escrow Funds or any part thereof. No
financing  statement  under  the  Uniform  Commercial  Code  is on  file  in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Escrow Funds or any part thereof.

                                       7
<PAGE>

                  vi. All of the  representations and warranties of the Investor
contained  herein are true and  complete  as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.

            b. The Company makes the following representations and warranties to
Escrow Agent and the Investor:

                  i.  The  Company  is a  corporation  duly  organized,  validly
existing,  and in good standing under the laws of the State of Delaware, and has
full power and  authority to execute and deliver this  Agreement  and to perform
its obligations hereunder.

                  ii. This  Agreement  has been duly  approved by all  necessary
corporate action of the Company,  including any necessary  shareholder approval,
has been executed by duly  authorized  officers of the Company,  enforceable  in
accordance with its terms.

                  iii. The execution,  delivery,  and performance by the Company
of this Escrow  Agreement is in accordance with the Standby Equity  Distribution
Agreement  and will not violate,  conflict  with,  or cause a default  under the
articles  of  incorporation  or bylaws of the  Company,  any  applicable  law or
regulation,  any  court  order or  administrative  ruling or decree to which the
Company  is a  party  or any of  its  property  is  subject,  or any  agreement,
contract, indenture, or other binding arrangement.

                  iv.  Walter K.  Weisel has been duly  appointed  to act as the
representative  of the Company  hereunder  and has full power and  authority  to
execute,  deliver, and perform this Agreement,  to execute and deliver any Joint
Written  Direction,  Common Stock Joint Written Direction,  to amend,  modify or
waive any  provision  of this  Agreement  and to take all other  actions  as the
Company's  representative  under this Agreement,  all without further consent or
direction from, or notice to, the Company or any other party.

                  v. No party other than the  parties  hereto  shall  have,  any
lien,  claim or security  interest in the Escrow Funds or any part  thereof.  No
financing  statement  under  the  Uniform  Commercial  Code  is on  file  in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Escrow Funds or any part thereof.

                  vi. All of the  representations  and warranties of the Company
contained  herein are true and  complete  as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.

      14. Consent to Jurisdiction  and Venue. In the event that any party hereto
commences  a  lawsuit  or other  proceeding  relating  to or  arising  from this
Agreement,  the parties  hereto agree that the United States  District Court for
the District of New Jersey shall have the sole and exclusive  jurisdiction  over
any  such   proceeding.   If  all  such  courts  lack  federal   subject  matter
jurisdiction,  the parties agree that the Superior Court Division of New Jersey,
Chancery  Division of Hudson County shall have sole and exclusive  jurisdiction.
Any of these  courts  shall be proper  venue for any such  lawsuit  or  judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the  jurisdiction  of any of the courts
specified  herein  and agree to accept the  service of process to vest  personal
jurisdiction over them in any of these courts.

                                       8
<PAGE>

      15. Notice.  All notices and other  communications  hereunder  shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mail, by certified  mail with return
receipt requested and postage prepaid,  when delivered  personally,  one (1) day
delivery to any overnight courier, or when transmitted by facsimile transmission
and addressed to the party to be notified as follows:

If to Investor, to:             Cornell Capital Partners, LP
                                101 Hudson Street - Suite 3700
                                Jersey City, New Jersey 07302
                                Attention:        Mark Angelo
                                Facsimile:        (201) 985-8266

If to Escrow Agent, to:         Baxter, Baker, Sidle, Conn & Jones, P.A.
                                120 E. Baltimore Street, Suite 2100
                                Baltimore, MD 21202
                                Attention:        James E. Baker, Jr., Esq.
                                Facsimile:        (410) 230-3801

If to Company, to:              Innova Holdings, Inc.
                                17105 San Carlos Boulevard
                                Suite A6151
                                Fort Myers, FL 33931
                                Attention:        Walter Weisel
                                Telephone:        (239) 466-0488
                                Facsimile:        (239) 466-7270

With a copy to:                 XsunX, Inc.
                                65 Enterprise
                                Aliso Viejo, CA 93117

                                Attention:        Tom Djokovich
                                Telephone:        (949) 330-8060
                                Facsimile:        (949) 266-5823

      Or to such other  address as each party may  designate  for itself by like
notice.

      16.  Amendments  or  Waiver.  This  Agreement  may  be  changed,   waived,
discharged  or  terminated  only by a  writing  signed  by the  parties  to this
Agreement.  No delay or  omission  by any party in  exercising  any  right  with
respect  hereto shall operate as waiver.  A waiver on any one occasion shall not
be  construed  as a bar to, or  waiver  of,  any  right or remedy on any  future
occasion.

      17.  Severability.  To the  extent  any  provision  of this  Agreement  is
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  to  the  extent  of  such  prohibition,   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

                                       9
<PAGE>

      18.  Governing Law. This Agreement  shall be construed and  interpreted in
accordance  with the  internal  laws of the State of New Jersey  without  giving
effect to the conflict of laws principles thereof.

      19. Entire  Agreement.  This Agreement  constitutes  the entire  Agreement
between the parties relating to the holding, investment, and disbursement of the
Escrow Funds and sets forth in their entirety the  obligations and duties of the
Escrow Agent with respect to the Escrow Funds.

      20. Binding Effect.  All of the terms of this  Agreement,  as amended from
time to time,  shall be binding upon, inure to the benefit of and be enforceable
by the respective heirs, successors and assigns of the Investor, the Company, or
the Escrow Agent.

      21.  Execution  of  Counterparts.  This  Agreement  and any Joint  Written
Direction  may be  executed  in  counter  parts,  which when so  executed  shall
constitute one and same agreement or direction.

      22. Termination. Upon the first to occur of the termination of the Standby
Equity  Distribution  Agreement dated the date hereof or the disbursement of all
amounts in the Escrow  Funds and Common  Stock into court  pursuant to Section 7
hereof,  this Agreement  shall  terminate and Escrow Agent shall have no further
obligation or liability  whatsoever with respect to this Agreement or the Escrow
Funds or Common Stock.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       10
<PAGE>

      IN WITNESS WHEREOF the parties to this Escrow  Agreement have hereunto set
their hands and seals the day and year above set forth.

                                        XSUNX, INC.

                                        By:
                                           ------------------------------------
                                        Name:    Tom Djokovich
                                        Title:   Chief Executive Officer

                                        CORNELL CAPITAL PARTNERS, LP

                                        BY:      YORKVILLE ADVISORS, LLC
                                        ITS:     GENERAL PARTNER

                                        By:
                                           ------------------------------------
                                        Name:
                                        Title:

                                        BAXTER, BAKER, SIDLE, CONN & JONES, P.A.

                                        By:
                                           ------------------------------------
                                        Name:    James E. Baker, Jr., Esq.

                                       11

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