AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

XFORMITY, INC.

AND

XML - GLOBAL TECHNOLOGIES, INC.

AND

XML ACQUISITION CORP.

DATED AS OF AUGUST 13, 2004

 

EXHIBITS

Exhibit 2.2	Form of Agreement and Plan of Merger
Exhibit 4.1	Statement of XFM Financial Liabilities
Exhibit 4.7	List of Promissory Notes to be Paid at Closing
Exhibit 4.8	Form of B-50 Indemnity Agreement
Exhibit 5.3	Form of XML Warrant
Exhibit 5.4	Form of Subscription Agreement
Exhibit 5.5	Form of Holdback Escrow Agreement
Exhibit 5.6	Form of Closing Escrow Agreement
Exhibit 7.2(c)(i)	Form of Employment Agreement with Mark Haugejorde
Exhibit 7.2(c)(ii)	Form of Employment Agreement with Jack Rabin
Exhibit 7.2(c)(iii)	Form of Employment Agreement with Drew Seale
Exhibit 7.2(c)(iv)	Form of Employment Agreement with Chris Ball
Exhibits 9.4 - 9.20	XFM Disclosure Schedule
Exhibits 11.4 - 11.20	XML Disclosure Schedule

AGREEMENT AND PLAN OF MERGER  

        THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered into this ___ day of August, 2004, by and among XFORMITY INC. , a Texas corporation ("XFM"); XML - GLOBAL TECHNOLOGIES, INC. , a Colorado corporation ("XML"); and XML ACQUISITION CORP. , a Colorado Subsidiary of XML ("XAC"). XFM, XML and XAC are hereinafter sometimes individually referred to as a "party" and collectively as the "parties".

WITNESETH:

        WHEREAS , XFM is engaged in the development and deployment of Quick Serve Restaurant ("QSR") business intelligence and technology solutions; and

        WHEREAS , XML is the owner in the aggregate of ten (10) shares (the "Shares") of the issued and outstanding Common Stock of XAC, $.001 par value per share, representing all the issued and outstanding shares of the capital stock of XAC;

       WHEREAS, for federal income tax purposes, the merger of XAX and XFM is intended to qualify as a tax-free reorganization pursuant to Section 368 of the Internal Revenue Code of 1986,a as amended (the "Code"); and

        WHEREAS , the parties hereto desire to set forth certain representations, warranties and covenants under which a merger of XAC and XFM will occur.

        NOW, THEREFORE , for and in consideration of the premises, the mutual representations, warranties and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

SECTION 1: GENERAL DEFINITIONS

       For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

       1.1        Affiliate . "Affiliate" of any Person shall mean any Person Controlling, Controlled by or under common Control with such Person.

       1.2        Agreement . "Agreement" shall include this Agreement and any and all documents and instruments executed in connection with the Merger (as hereinafter defined).

       1.3        Best Knowledge . "Best Knowledge" shall mean both what a Person knew as well as what the Person should have known had the Person exercised reasonable diligence. When used with respect to a Person other than a natural person, the term "Best Knowledge" shall include matters that are known to the directors and officers of the Person.

       1.4        Control . "Control" and all derivations thereof shall mean the ability to either (i) vote (or direct the vote of) 50% or more of the voting interests in any Person or (ii) direct the affairs of another, whether through voting power, contract or otherwise.

       1.5        Exchange Act . "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

       1.6        Fiscal Year . "Fiscal Year" shall mean a twelve-month period beginning January 1;

       1.7        Governmental Authority . "Governmental Authority "shall mean any and all applicable foreign, federal, state or local governments, governmental institutions, public authorities and governmental entities of any nature whatsoever, and any subdivisions or instrumentalities thereof, including, but not limited to, departments, boards, bureaus, commissions, agencies, courts, administrations and panels, and any division or instrumentalities thereof, whether permanent or ad hoc and whether now or hereafter constituted or existing.

       1.8        Governmental Requirement . "Governmental Requirement" shall mean any and all applicable laws (including, but not limited to, applicable common law principles), statutes, ordinances, codes, rules regulations, interpretations, guidelines, directions, orders, judgments, writs, injunctions, decrees, decisions or similar items or pronouncements, promulgated, issued, passed or set forth by any Governmental Authority.

       1.9        Legal Requirements . "Legal Requirements" means applicable common law and any applicable statute, ordinance, code or other laws, rule, regulation, order, technical or other standard, requirement, judgment, or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority, including, without limitation, any order, decree, award, verdict, findings of fact, conclusions of law, decision or judgment, whether or not final or appealable, of any court, arbitrator, arbitration board or administrative agency.

       1.10        Net Worth . "Net Worth" shall mean the assets of a Person minus the liabilities of the Person, as of a given date as determined in accordance with generally accepted accounting principles, consistently applied with prior periods.

       1.11        Person . "Person" shall mean any natural person, any Governmental Authority and any entity the separate existence of which is recognized by any Governmental Authority or Governmental Requirement, including, but not limited to, corporations, partnerships, joint ventures, joint stock companies, trusts, estates, companies and associations, whether organized for profit or otherwise.

       1.12        Exhibit . Unless otherwise stated herein, the term "Exhibit" when used in this Agreement shall refer to the Exhibits to this Agreement. The Exhibits to this Agreement may be attached to this Agreement or may be set forth in a separate document denoted as the Exhibits to this Agreement, or both, and such Exhibits are incorporated herein by reference for all purposes.

       1.13        Section . Unless otherwise stated herein, the term "Section" when used in this Agreement shall refer to the Sections of this Agreement.

       1.14        Securities Act . "Securities Act" shall mean the Securities Act of 1933, as amended.

       1.15        Taxes . "Tax" and "Taxes" shall mean any and all income, excise, franchise or other taxes and all other charges or fees imposed or collected by any Governmental Authority or pursuant to any Governmental Requirement, and shall also include any and all penalties, interest, deficiencies, assessments and other charges with respect thereto.

SECTION 2: THE MERGER

       2.1        The Merger . Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 2.3 herein). XAC shall be merged (the "Merger") with and into XFM upon the terms and conditions set forth herein as permitted by and in accordance with the Colorado Business Corporation Act (the "CBCA") and the Texas Business Corporation Act ("TBCA"). Thereupon, the separate existence of XAC shall cease, and XFM, as the surviving corporation in the Merger (the "Surviving Corporation"), shall continue to exist under and be governed by the TBCA, with all its purposes, objects, rights, privileges, immunities, powers and franchises continuing unaffected and unimpaired by the Merger. The name of the Surviving Corporation shall be "XFormity Technologies, Inc."

       2.2        Filing . As soon as practicable following fulfillment or waiver of the conditions specified in Sections 8.2 and 8.3 hereof, and provided that this Agreement has not been terminated pursuant to Section 12 hereof, XAC and XFM will cause a short form Agreement and Plan of Merger, in the form attached hereto as Exhibit 2.2, to be executed, acknowledged and filed with the Secretary of State of each of Colorado and Texas as provided in applicable provisions of the CBCA and TBCA and obtain a copy of the Articles of Merger, certified by the Secretaries of State of the States of Colorado and Texas.

       2.3        Effective Time of the Merger . The Merger shall become effective immediately upon the filing of the Articles of Merger with the Secretaries of State of the States of Colorado and Texas in accordance with the CBCA and TBCA. The date and time of the completion of such filings is herein sometimes referred to as the "Effective Time".

       2.4        Closing: Closing Date . Subject to the terms and conditions set forth in the Agreement, the consummation of the transactions referenced above shall take place (the "Closing") on August 10, 2004, at 10:00 a.m. Central Time at the offices of XML, 3000 North Dundee Road, Suite 105, Northbrook, Illinois 60062, or at such other time, date and place as XFM and XAC shall designate (the "Closing Date").

SECTION 3: APPROVALS AND REGULATORY MATTERS

       3.1        XML Approvals . Subject to the provisions hereof, the Board of Directors of XML shall, by written unanimous consent, approve the Merger and the transactions provided for or contemplated by this Agreement; provided, however, that such approvals shall be subject to their satisfaction that the consummation of the Merger shall be and is exempt from the registration requirements of the Securities Act, is undertaken without violation of the anti-fraud provisions of the Securities Act and has been consummated in conformity with all other applicable Legal Requirements.

       3.2        XFM Board of Directors Approval . Subject to the provisions hereof, the Board of Directors of XFM shall, by written unanimous consent, approve the Merger and the transactions provided for or contemplated by this Agreement; provided, however, that such approvals shall be subject to their satisfaction that the consummation of the Merger shall be and is exempt from the registration requirements of the Securities Act, is undertaken without violation of the anti-fraud provisions of the Securities Act and has been consummated in conformity with all other applicable Legal Requirements.

       3.3        XFM Shareholder Approval . As promptly as practicable after the date hereof, XFM shall exercise reasonable efforts to take all action necessary or appropriate to prepare an Information Statement and other documents necessary to solicit and obtain the approval of the Merger and the other transactions provided for or contemplated by this Agreement of all XFM shareholders (the "XFM Shareholders").

       3.4        Rule 14f-1 Information Statement . As promptly as practicable after the date hereof, XML shall exercise reasonable effort to prepare and file with the SEC, and mail to its shareholders of record, an information statement conforming to the requirements of Rule 14f-1 under the Exchange Act (the "14f-1 Information Statement"). It shall be a condition precedent to the obligation of the parties to consummate the Merger that the 14f-1 Information Statement be cleared by the SEC and mailed to the XML shareholders of record in conformity with Rule 14f-1 under the Exchange Act and other applicable Legal Requirements.

       3.5        Income Tax Considerations . It is the intention of the parties hereto that the Merger provided for in this Agreement will qualify for treatment as a tax-free reorganization under Section 368(a) of the Code and the parties will agree to undertake all appropriate actions necessary both before and after the Effective Date of the Merger to effect such treatment. Notwithstanding the foregoing, neither XML nor any of its affiliates shall have any liability whatsoever to XFM or the XFM shareholders for the treatment ultimately accorded the Merger by federal or state taxing and regulatory authorities; and XFM shall bear all responsibility for any tax or other assessment levied, imposed or assessed by any regulatory or governmental authority on XFM by virtue of the consummation of the Merger and the other transactions provided for in this Agreement. The XFM shareholders shall bear all responsibility for any tax or other assessment levied, imposed or assessed by any regulatory or governmental authority on the XFM shareholders by virtue of the consummation of the Merger or other transactions provided for in this Agreement.

       3.6        Compliance with Securities Laws . The Merger provided for in this Agreement shall be undertaken in reliance upon an exemption from the registration requirements contained in Section 5 of the Securities Act and set forth in Section 4(2) of the Securities Act [and Regulation D] [to discuss] thereunder. All shares issued to the XFM shareholders in connection with the Merger shall be "restricted securities" within the meaning of Rule 144 under the Securities Act.

       3.7        Restrictive Legend . Certificates representing the shares of XML common stock issued in connection with the Merger shall be "restricted securities" under the Securities Act and shall bear the following restrictive legend:

       3.8        Dissenter Rights . At all times, and as applicable, XML and XFM shall comply with applicable Legal Requirements including, without limitation, the payment of cash for dissenting shares related to the Merger. In the event that there are XFM dissenting shares related to the Merger, XML shall make the cash payment contemplated hereby and deduct the amount of such payment from the XML Common Stock held pursuant to the Closing Escrow Agreement (as hereinafter defined) as set forth in Section 5.6 hereof.

SECTION 4. ADDITIONAL AGREEMENTS

       4.1        XFM Financial Statements . Not later than 45 days following the Closing Date, XFM shall use best efforts to cause to be prepared audited balance sheets, income statements, statements of cash flows and stockholders' equity as of and for the two year period ended June 30, 2004 (the "XFM Financial Statements"). The XFM Financial Statements (including any related schedules and/or notes), will show all liabilities, direct or contingent, required at the time of preparation to be shown in accordance with U.S. generally accepted accounting principles ("GAAP") and fairly present the financial position and results of operations of XFM as of the date thereof and for the periods indicated in accordance with GAAP, consistently applied with all prior periods. Except as otherwise disclosed in the Agreement, including, without limitation, Exhibit 4.1 hereof, XFM will have no material liability or obligation of any nature (whether liquidated, unliquidated, accrued, absolute, contingent or otherwise, whether due or to become due) except those set forth on the XFM Financial Statements except liabilities incurred and current liabilities (determined in accordance with GAAP) incurred since the date of the XFM Financial Statements in the ordinary course of business consistent with past practice. The XFM Financial Statements shall conform in all respects to the requirements of Regulation SB, Item 310 under the Securities Act and shall include, at a minimum, audited balance sheets as of June 30, 2004, audited statements of operation and statements of cash flow for the two year period ended June 30, 2004, and audited statements of stockholders' equity at June 30, 2004. The Financial Statements to be prepared following the Closing shall also include pro forma financial information ("Pro Forma Financial Information") in accordance with the requirements of Regulation SB, Item 310. XFM agrees to indemnify, defend and hold harmless XML and its respective past and present officers and directors from any debt, damage, liability or obligation whatsoever arising from any failure on the part of XFM to prepare the XFM Financial Statements and Pro Forma Financial Information. All costs and expenses incurred in connection with the preparation of the XFM Financial Statements and the Pro Forma Financial Information, including fees and disbursements of the Auditor, shall be borne exclusively by XFM.

       4.2        XFM Financial Condition . At Closing, after giving effect to the retirement of the XFM Shareholder Notes (as defined in Section 4.7 below), XFM shall have no liabilities or obligations of any nature, whether liquidated, unliquidated, accrued, absolute, contingent or otherwise, whether due or to become due except for (i) the obligations and liabilities set forth herein and in Exhibit 4.1 hereof, (ii) ongoing contractual commitments (the "XFM Contracts"), including, without limitation, a commercial lease, customer agreements and maintenance and support agreements, and (iii) obligations incurred in the ordinary course of business. XFM agrees to indemnify, defend and hold harmless XML from any debt, damage, liability or obligation incurred prior to the Closing Date not specifically approved in writing by XML or otherwise disclosed in this Agreement (an "Undisclosed Liability"). If indemnity is not promptly paid for any Undisclosed Liability, then the shares to be distributed to the XFM Shareholders from the Closing Escrow shall be reduced by the value of any Undisclosed Liability as set forth in the Closing Escrow.

       4.3        Paradigm Warrant Cancellation . At or prior to the Closing, Paradigm Millennium Fund, L.P. ("Paradigm Fund") and Paradigm Group II LLC ("Paradigm Group") (hereafter Paradigm Fund and Paradigm Group may collectively be referred to as "Paradigm") shall surrender to XML for cancellation all issued and outstanding warrants having exercise prices of $.50 per share and $1.00 per share (the "Paradigm Warrants"). XML shall indemnify, defend and hold harmless the XFM shareholders from and against any and all liabilities, damages, losses, obligations and expenses incurred by such shareholders due to the failure of Paradigm to cancel, or cause to be cancelled, any and all Paradigm Warrants.

       4.4        XFM Pre-Closing Recapitalization . Prior to Closing, XFM will effect a recapitalization to provide for the following:

              a.       XFM will issue to Paradigm a number of shares of XFM common stock equal to ten percent (10%) of the total issued and outstanding shares of common stock of XFM immediately prior to the Closing.

       4.5        Name Change . Subject to and prior to or concurrently with the Closing, XML shall take, or cause to be taken, all actions necessary to change its name to "Xformity Technologies, Inc."

       4.6        Reverse Stock Split . Subject to and concurrently with the Closing, XML shall effect a 1-for-4 reverse split of all of its issued and outstanding shares of common stock as well as all options, warrants, and other outstanding securities exercisable to purchase or convertible into shares of XML common stock (the "Reverse Split").

       4.7        Retirement of XFM Shareholder Notes . Subject to and concurrently with the Closing, XML shall contribute to and XFM shall pay and retire an aggregate of up to $500,000 in outstanding and unpaid XFM promissory notes held by XFM shareholders and their affiliates (the "XFM Shareholder Notes") listed on Exhibit 4.7 hereto. In exchange for such repayment, holders of the XFM Shareholder Notes shall execute, complete and unconditional releases in favor of XFM, XML and their respective successors.

       4.8        B-50 Indemnity . Concurrently with the Closing, XFM shall execute and deliver to XML a B-50 indemnity agreement (the " B-50 Indemnity Agreement") substantially in the form of Exhibit 4.8 hereto. In accordance with the B-50 Indemnity Agreement, XFM shall agree to indemnify, defend and hold harmless XML from any debt, obligation or liability following the Closing Date arising from currently pending litigation captioned B-50.com, LLC v. Xformity, Inc., a Texas corporation in the United States District Court for the Northern District of Texas, Dallas Division; provided, however, that any liability incurred under the B-50 Indemnity Agreement shall be expressly limited to the shares held under the Holdback Escrow Agreement.

       4.9        Notification of Certain Matters . XFM shall give prompt notice to XML and XML shall give prompt notice to XFM of (i) the occurrence or non-occurrence of any event which would cause any representation or warranty made by the respective parties in this Agreement to be materially untrue or inaccurate when made and (ii) any failure of XML or XFM, as the case may be, to materially comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this section shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice and, provided further, that the failure to give such notice shall not be treated as a breach of covenant for the purposes of this Agreement unless the failure to give such notice results in material prejudice to the other party.

       4.10        Further Action . Upon the terms and subject to the conditions hereof, each of the parties hereto shall use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement, to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to otherwise satisfy or cause to be satisfied all conditions precedent to its obligations under this Agreement.

       4.11        Public Announcements . XFM and XML shall consult with each other before issuing any press release or other public statement with respect to the Merger or this Agreement and shall not issue any such press release or make any such public statement without the prior consent of the other party, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that a party may, without the prior consent of the other party, issue such press release or make such public statement as may, upon the advice of counsel, be required by law if it has used reasonable efforts to first consult with the other party.

       4.12        Cooperation in Securities Filings . XFM shall provide such information regarding XFM, its business, its officers, directors and affiliates, as is reasonably required by XML for purposes of preparing any notices, reports and other filings with the SEC. Moreover, following the Closing, the current officers and directors of XFM shall provide such information as the post-closing management of XML shall reasonably request for the purpose of preparing any notices, reports and other filings by XML with the SEC, including but not limited to, in connection with the preparation of any financial statements required to be filed under the Exchange Act or Securities Act by XML.

       4.13        Additional Documents . The parties shall deliver or cause to be delivered such documents or certificates as may be necessary, in the reasonable opinion of counsel for either of the parties, to effectuate the transactions provided for in this Agreement. If at any time the parties or any of their respective successors or assigns shall determine that any further conveyance, assignment or other document or any further action is necessary desirable to further effectuate the transactions set forth herein or contemplated hereby, the parties and their officers, directors and agents shall execute and deliver, or cause to be executed and delivered, all such documents as may be reasonably required to effectuate such transactions.

SECTION 5: CONVERSION OR CANCELLATION OF SHARES

       5.1        Conversion or Cancellation of Shares . At the Effective Time, the issued and outstanding shares of Common Stock, $.001 par value, of XFM ("XFM Common Stock") shall, by virtue of the Merger, be cancelled and converted into the right to receive shares of the capital stock of XML, as follows:

              (a)        The shares of XFM Common Stock issued and outstanding immediately prior to the Effective Time, excluding any such shares held in the treasury of XFM, shall be converted into the right to receive a number of shares of Common Stock of XML, $.0001 par value per share (the "XML Common Stock") set forth in this Section 5.1(a). Subject to the provisions of Sections 5.5 and 5.6 below, such right may be exercised by the surrender of the certificates representing such shares of XFM Common Stock in accordance with Section 5.2 hereof. The number of shares of XML Common Stock issued upon surrender shall be calculated as follows:

The aggregate number of shares of XML Common Stock so issuable in the conversion of the XFM Common Stock shall be 71,791,936. The XML Common Stock shall be allocated to the XFM Shareholders, pro rata.

              (b)       Each share of XML Common Stock, issued under paragraph (a) above shall be restricted securities pursuant to Rule 144 promulgated under the Securities Act.

              (c)        Each share of XFM Common Stock, if any, held in XFM's treasury immediately prior to the Effective Time shall be canceled and retired and no payment shall be made in respect thereof.

              (d)       At the Effective Time, all outstanding shares of XAC shall be converted into an aggregate of 100 shares of Common Stock of XFM. Each share of XAC Common Stock, if any, held in XAC's treasury immediately prior to the Effective Time shall be canceled and retired and no payment shall be made in respect thereof.

       5.2        Surrender and Payment . Subject to the provisions of Sections 5.5 and 5.6 below, after the Effective Time, each holder of a certificate representing an issued and outstanding share of XFM Common Stock shall be entitled upon surrender of such certificate along with a fully executed Subscription Agreement in the form of Exhibit 5.4, to XML, to receive the XML Common Stock as set forth in Section 5.1 above. Until so surrendered, each certificate which immediately prior to the Effective Time represented an issued and outstanding share of XFM Common Stock shall, upon and after the Effective Time, be deemed for all purposes to represent and evidence only the right to receive XML Common Stock as set forth in Section 5.1. If any exchange for shares of XFM Common Stock is to be made in a name other than that in which the certificate therefor surrendered for exchange is registered, it shall be a condition of such payment that the certificate so surrendered be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment either pay to XML any transfer or other similar taxes required by reason of the payment to a person other than the registered holder of the certificate surrendered or establish to the satisfaction of XML that such tax has been paid or is not payable.

       5.3        XML Warrants . At the Effective Time, XML shall grant and issue to the XFM Shareholders, pro rata, common stock purchase warrants exercisable to purchase until December 31, 2005 (the "Expiration Date") an aggregate of 23,478,000 shares of common stock at an exercise price of $.065 per share (the "XML Warrants"). Each of the XFM Shareholders receiving XML Warrants pursuant to the terms hereof and XML shall have delivered a fully executed Warrant substantially in the form of Exhibit 5.3 ("XML Warrant").

       5.4        Subscription Agreements . Each of the XFM Shareholders receiving XML Common Stock and XML Warrants pursuant to the terms hereof shall have delivered a fully executed Subscription Agreement substantially in the form of Exhibit 5.4.

       5.5        Holdback Escrow Agreement . At the Closing, XML shall withhold and deposit into escrow under a Holdback Escrow Agreement substantially in the form of Exhibit 5.5 hereto, a number of shares of XML Common Stock to be issued to Mark Haugejorde having a Market Value, as defined herein, of $500,000. For the purposes of the Holdback Escrow Agreement, the Market Value of the XML Common Stock shall be equal to the average closing bid price of the XML common stock on the over-the-counter market as quoted on the OTC Electronic Bulletin Board for the thirty (30) trading days immediately prior to the Closing Date. The shares deposited in escrow under the Holdback Escrow Agreement (the "Holdback Shares") shall be held in accordance with the Holdback Escrow Agreement to secure any obligation or liability of XFM under the XFM B-50 Indemnity. In the event of any claim for indemnification under the XFM B-50 Indemnity, the Holdback Shares shall be applied to payment of the indemnity claim based upon the Market Value of the shares determined as of the date of the indemnification claim. The Holdback Escrow Agreement shall terminate upon the final disposition of the B-50 litigation, whether by way of settlement, court order or final judgment from which all appeal, if any, has been exhausted.

       5.6        Closing Escrow . All shares of XML Common Stock and XML Warrants issuable to the XFM shareholders as a result of the Merger, except for the Holdback Shares, shall be delivered to and deposited into escrow with the XML acting corporate secretary, as escrow agent, pursuant to the terms of a Closing Escrow Agreement, substantially in the form of Exhibit 5.6 hereto. Under the terms of the Closing Escrow Agreement, the XML Common Stock and XML Warrants shall be held in escrow until (i) XFM shall have delivered to XML the XFM Financial Statements and Pro Forma Financial Information required pursuant to Section 4.1 of this Agreement and Form 8-K under the Exchange Act, and (ii) there has been filed with the SEC a Form 8-K containing the XFM Financial Statements and Pro Forma Financial Information in accordance with Form 8-K under the Exchange Act and other applicable Legal Requirements; provided, however, that in the event that any material liability arises in connection with the XFM Financial Statements, an amount of shares of XML Common Stock shall be held in the Closing Escrow contemplated hereby until such liability is disposed to the satisfaction of the auditors who prepared the XFM Financial Statements. If such liability can not be disposed within 75 days after delivery of the XFM Financial Statements to XML, then the shares to be distributed to the XFM Shareholders from the Closing Escrow shall be reduced by the value of the liability.

       5.7        No Further Transfers . On and after the Effective Time, no transfer of the shares of XFM Common Stock issued and outstanding immediately prior to the Effective Time shall be made on the stock transfer books of XFM.

SECTION 6: CERTAIN EFFECTS OF MERGER

       6.1        Effect of Merger . On and after the Effective Time, the separate existence of XAC shall cease and XAC shall be merged with and into XFM, which as the Surviving Corporation (herein sometimes so called) shall, consistently with its Articles of Incorporation succeed to, and without other transfer, possess all the rights, privileges, immunities, powers and franchises of public as well as private nature, and be subject to all restrictions, disabilities and duties of XAC; and all rights, privileges, immunities, powers and franchises of XAC, and all property, real, personal and mixed, causes of action and every other asset of, and all debts due to XAC on whatever account as well as stock subscriptions and all other things in action or belonging to XAC shall vest in the Surviving Corporation; and all property, rights, privileges, immunities, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the Surviving Corporation as they were of XAC, and the title to any real estate vested by deed or otherwise in XAC, and the title to any real estate vested by deed or otherwise in XAC shall not revert or be in any way impaired but all rights of creditors and all liens upon any property of XAC shall be preserved unimpaired, and all debts, liabilities and duties of XAC shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if such debts, liabilities and duties had been incurred or contracted by it. Any action or proceeding pending by or against XAC may be prosecuted to judgment, which shall bind the Surviving Corporation, or the Surviving Corporation may be proceeded against or substituted in its place.

       6.2        Further Assurances . If at any time after the Effective Time the Surviving Corporation shall consider any further deeds, assignments or assurances in law or any other action necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation the title to any property or rights of XAC acquired or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry out the intents and purposes of this Agreement, XAC and XML agree that it and its proper officers and directors shall and will execute and deliver, or cause to be executed and delivered, all such property, deeds, assignments and assurances in law and take all other action necessary, desirable or proper to vest, perfect or confirm title to such property or right in the Surviving Corporation and otherwise to carry out the purposes of this Agreement.

SECTION 7: POST-MERGER GOVERNANCE

       7.1        Articles of Incorporation and Bylaws . At the Effective Time, the Articles of Incorporation and By-Laws of XFM as in effect immediately prior to the Effective Time, shall be and continue to be the Articles of Incorporation and By-Laws of XFM, as the Surviving Corporation, until duly amended in accordance with applicable law.

       7.2        Directors. Officers and Employees .

              (a)        Directors of XML . Concurrently with the Closing, the Board of Directors of XML shall, in accordance with the Colorado Corporation Law and the Articles of Incorporation and By-Laws of XML shall be reconstituted to consist of:

			Mark Haugejorde (Chairman of the Board)
			Michael Shahsavari
			Paul Dwyer
			Sergio Nesti
			Jack Rabin
			Shawn Taylor

              (b)        Executive Officers of XML . Concurrently with the Closing, the Board of Directors of XML shall elect the following persons to serve as Executive Officers of XML in the capacities set forth below until the next regular Annual Meeting of the XML Board of Directors (as hereinafter defined) or until their successors have been duly elected and qualified in accordance with the Colorado Corporation Law, the Articles of Incorporation and Bylaws of XML, or until they have resigned:

                     Mark Haugejorde        CEO and President
                     Jack Rabin       Chief Financial Officer, Treasurer and Secretary

Any persons serving as Executive Officers of XML immediately prior to the Effective Time who will not continue in such capacity immediately after the Effective Time shall tender their resignations in accordance with applicable Legal Requirements.

              (c)        Employment Agreements of XFM . At Closing, XFM shall enter into the following written Employment Agreements, which shall be guaranteed by XML:

			(i)	a written Employment Agreement with Mark Haugejorde as CEO and President, substantially in the form of Exhibit 7.2(c)(i) hereto;
			(ii)	a written Employment Agreement with Jack Rabin as Chief Financial Officer, substantially in the form of Exhibit 7.2(c)(ii) hereto;
			(iii)	a written Employment Agreement with Drew Seale as Chief Technology Officer, substantially in the form of Exhibit 7.2(c)(iii) hereto;
			(iv)	a written Employment Agreement with Chris Ball as Chief Operating Officer, substantially in the form of Exhibit 7.2(c)(iv) hereto;

              (d)        Directors of XFM . Immediately after the Effective Time, the Board of Directors of XFM shall consist of two (2) persons: Mark Haugejorde and Jack Rabin. XML covenants and agrees that for a period of ten (10) years from the Effective Time, it will vote all of the shares of Common Stock of XFM so as to maintain a Board of Directors of XFM to consist of two (2) persons: Mark Haugejorde and Jack Rabin; provided, however, that the covenants contained in this Section 7.2(d) shall not prevent the removal for cause of Mark Haugejorde or Jack Rabin during such ten year period in accordance with the requirements of their respective Employment Agreements, the TBCA and the Articles of Incorporation and By-Laws of XFM.

              (e)        Executive Officers of XFM . Immediately after the Effective Time, the following persons shall serve as Executive Officers of XFM in the capacities set forth below in accordance with their respective Employment Agreements until the next regular Annual Meeting of the Board of Directors of XFM and until their successors have been duly elected and qualified:

			Mark Haugejorde	CEO and President
			Jack Rabin	Chief Financial Officer, Treasurer and	Secretary
			Drew Seale	Chief Technology Officer
			Chris Ball	Chief Operating Officer

SECTION 8: COVENANTS AND CONDITIONS OF CLOSING

       8.1        Covenants Regarding the Closing . The parties hereto hereby covenant and agree that they shall (i) use all commercially reasonable efforts to cause all of their respective representations and warranties set forth in this Agreement to be true on and as of the Closing Date, (ii) use all commercially reasonable efforts to cause all of their respective obligations that are to be fulfilled on or prior to the Closing Date to be so fulfilled, (iii) use all commercially reasonable efforts to cause all conditions to the Closing set forth in this Agreement to be satisfied on or prior to the Closing Date, and (iv) deliver to each other at the Closing the certificates, updated lists, opinion of counsel, notices, consents, authorizations, approvals, agreements, transfer documents, receipts and amendments contemplated by Sections 8, 9 and 11 (with such additions or exceptions to such items as are necessary to make the statements set forth in such items accurate, provided that if any such additions or exceptions cause any of the conditions to the parties' obligations hereunder as set forth in Sections 8, 9 and 11 below not to be fulfilled, such additions and exceptions shall in no way limit the rights of the parties to terminate this Agreement or refuse to consummate the transactions contemplated hereby.) All indemnifications, guarantees, covenants, agreements, representations and warranties made by the parties hereunder or pursuant hereto or in connection with the transactions contemplated hereby shall survive the Closing regardless of any investigation at any time made by or on behalf of the parties.

       8.2        Conditions to Obligation of XML and XAC . The obligation of XML and XAC to complete the Merger on the Closing date on the terms set forth in this Agreement is, at the option of XML and XAC, subject to the satisfaction or waiver by XML and XAC of each of the following conditions:

              (a)        Accuracy of Representations and Warranties . The representations and warranties made by XFM in this Agreement shall be correct in all material respects on and as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date.

              (b)        Compliance with Covenants . All covenants which XFM is required to perform or comply with on or before the Closing date shall have been fully complied with or performed in all material respects.

              (c)        Corporate Approvals . The Board of Directors and shareholders of XFM shall have approved and ratified this Agreement and shall have authorized the appropriate officers of XFM to execute same and fully perform its terms.

              (d)        Consents and Approvals . To the extent that any material lease, mortgage, deed of trust, contract or agreement to which XFM is a party shall require the consent of any person to the exchange of XFM's shares of common stock or any other transaction provided for herein, such consent shall have been obtained; provided, however, that XFM shall not make, as a condition for the obtaining of any such consent, any agreements or undertakings not approved in writing by XML and XAC to the extent that such condition otherwise has an adverse effect on XML and XAC.

              (e)        Review and Due Diligence . XML and XAC, its investment bankers, legal counsel and/or auditors shall have had the opportunity to complete, and shall have completed, a satisfactory due diligence investigation of XFM together with a satisfactory review of XFM's corporate status and the title to XFM's property.

              (f)        No Governmental Actions . No action or proceeding before any governmental authority shall have been instituted or threatened to restrain or prohibit the transactions contemplated by this Agreement, and the parties shall have delivered to each other certificates dated as of the Closing Date and executed by such parties, stating that to their Best Knowledge, no such items exist. No governmental authority shall have taken any other action as a result of which the management of XML or XAC, in its sole discretion, reasonably deems it inadvisable to proceed with the transactions contemplated by this Agreement.

              (g)        No Material Adverse Change . No material adverse change in the business, property or assets of any party hereto shall have occurred, and no loss or damage to any of the assets, whether or not covered by insurance, with respect to any party hereto has occurred, and the parties hereto shall have delivered to each other certificates dated as of the Closing Date and executed by each of the parties to all such effects.

              (h)        Update of Contracts . The parties hereto shall have delivered to each other an accurate list, as of the Closing Date, showing (i) all agreements, contracts and commitments of the type listed on Exhibits 9.17 and 11.14 entered into since the date of this Agreement; and (ii) all other agreements, contracts and commitments related to the businesses or the assets of the respective parties entered into since the date of this Agreement, together with true, complete and accurate copies of all such documents (the "New Contracts"). Each party shall have had the opportunity to review and approve the New Contracts of the other, and any of the parties shall have the right to delay the Closing for up to ten (10) days if it in its sole discretion deems such delay necessary to enable it to adequately review the New Contracts.

              (i)        Approval of Counsel . All actions, proceedings, instruments and documents required or incidental to carry out this Agreement, including all schedules and exhibits thereto, and all other related legal matters shall have been approved by Andrews Kurth, LP, counsel to XFM, and Clifford L. Neuman, P.C., counsel to XML and XAC.

              (j)        No Adverse Information . The investigations with respect to the parties, the assets and the respective businesses performed by each party's respective professional advisors and other representatives shall not have revealed any information concerning the other parties, their assets or their business that has not been made known to the discovering party, in writing prior to the date of this Agreement and that, in the opinion of such party and its advisors, materially and adversely affects the business or assets of the other party or the viability of the transaction contemplated by this Agreement.

              (k)        Ordinary Course of Business . During the period from the date of this Agreement until the Closing Date, XFM shall have carried on its business in the ordinary and usual course, and shall have delivered to XML and XAC a certificate to that effect.

              (l)        Liens . XFM shall have delivered to XML a reasonably current lien and judgment search (both state and county levels in each jurisdiction where the party is qualified to or is doing business or owns material assets) confirming the absence of any judicial liens, security interests, tax liens and similar such liens affecting any of its business or assets. Each and every lien or encumbrance of any nature, if any, relating to the assets, business, or the shares of common stock of XFM shall have been terminated and released, and proof thereof delivered to XML.

              (m)        Other Documents . The parties shall have delivered or caused to be delivered all other documents, agreements, resolutions, certificates or declarations as each respective party or its attorneys may have reasonably requested.

              (n)        Governmental and Regulatory Approvals . The parties shall have obtained evidence, in form and substance satisfactory to each of them, that there have been obtained all consents, approvals and authorizations required by this Agreement, including, without limitation, the following:

			(i)	XML and XFM Board of Directors and XFM Common Stockholder approval of all the transactions contemplated pursuant to this Agreement; and
			(ii)	All regulatory approvals necessary for XFM to conduct business in the ordinary course in each jurisdiction where such approval may be required and the failure to obtain such approval would cause a material adverse affect to the financial condition, business or operations of XFM.

              (o)        Compliance with Securities Laws . XML shall have undertaken all actions necessary or advisable to consummate the Merger in conformity with all Governmental and Legal Requirements including, without limitation, applicable federal and state securities laws.

              (p)        Appraisal Rights and/or Dissenters' Rights . At or prior to Closing, no beneficial or record owner of any outstanding shares of XFM Common Stock shall have exercised or shall have given notice to XML or XFM of their intent to exercise any rights under applicable state law, if any, to dissent from the Merger or obtain the payment of the fair market value of such shares of XFM Common Stock in lieu of participating in the Merger in accordance with the terms and subject to the conditions set forth herein.

              (q)        Financial Advisory Fees . At or prior to Closing, all obligations or commitments of XML and XFM to their respective financial advisors and investment bankers shall have been paid or otherwise satisfied upon terms satisfactory to the parties, and XML and XFM shall each have been delivered and received such written consents, approvals, estoppel certificates or other instruments or undertakings from its advisors or other third parties as each may deem reasonable, necessary or advisable.

              (r)        XFM Recapitalization and Debt Restructure . The XFM recapitalization and debt restructure provided for in Section 4.4 above shall have been successfully completed upon terms and conditions reasonably satisfactory to XML.

              (s)        Compliance with Sections 5 and 17 of the Securities Act . The Board of Directors of XML shall be satisfied that consummation of the Merger and the issuance of XML Common Stock and XML Warrants to the XFM securityholders is in compliance with the provisions of Sections 5 and 17 of the Securities Act.

              (t)        B-50 Indemnity . At Closing, XFM shall have executed and delivered the B-50 Indemnity Agreement substantially in the form of Exhibit 4.8.

              (u)        Holdback Escrow Agreement . At Closing, XFM and XML shall have executed and delivered the Holdback Escrow Agreement substantially in the form of Exhibit 5.5.

              (v)        Closing Escrow Agreement . At Closing, XFM, the XFM shareholders and XML shall have executed and delivered the Closing Escrow Agreement substantially in the form of Exhibit 5.6 hereto and shall have delivered the XML Common Stock and XML Warrants to be held in escrow in accordance with the terms and conditions thereof.

              (w)        XFM Shareholder Notes . XML shall have paid and retired the XFM Shareholder Notes and all holders of the XFM Shareholder Notes shall have executed and delivered in favor of XML full and final releases in a form satisfactory to XML.

              (y)        Employment Agreements . Employment agreements between XFM, on the one hand, and Mark Haugejorde, as President and CEO, Jack Rabin, as Chief Financial Officer, Drew Seale and Chief Technology Officer and Chris Ball as Chief Operating Officer, respectively, on the other and guaranteed by XML, shall have been executed and delivered at Closing.

              (x)        XML Warrants .       The XML Warrants shall have been executed and delivered by XML and the XFM Shareholders.

       8.3        Conditions to Obligation of XFM . The obligations of XFM to complete the Merger on the Closing date on the terms set forth in this Agreement is, at the option of XFM, subject to the satisfaction or waiver by XFM of each of the following conditions:

              (a)        Accuracy of Representations and Warranties . The representations and warranties made by XML and XAC in this Agreement shall be correct in all material respects on and as of the Closing date with the same force and effect as though such representations and warranties had been made on the Closing date.

              (b)        Compliance with Covenants . All covenants which XML and XAC is required to perform or comply with on or before the Closing date shall have been fully complied with or performed in all material respects.

              (c)        Corporate Approvals . The Board of Directors and shareholders of XML and XAC shall have approved and ratified this Agreement and shall have authorized the appropriate officers to execute same and fully perform its terms.

              (d)        Consents and Approvals . To the extent that any material lease, mortgage, deed of trust, contract or agreement to which XML and XAC is a party shall require the consent of any person to the exchange of XML and XAC's shares of common stock or any other transaction provided for herein, such consent shall have been obtained; provided, however, that XML and XAC shall not make, as a condition for the obtaining of any such consent, any agreements or undertakings not approved in writing by XFM to the extent that such condition otherwise has an effect on XFM or XML and XAC.

              (e)        Review and Due Diligence . XFM and its legal counsel and/or auditors shall have had the opportunity to complete, and shall have completed, a satisfactory due diligence investigation of XML and XAC, together with a satisfactory review of XML and XAC's corporate status, the marketability of title to XML and XAC's property, and compliance with all reporting requirements imposed by or on account of any federal or state securities laws or regulations.

              (f)        No Governmental Actions . No action or proceeding before any governmental authority shall have been instituted or threatened to restrain or prohibit the transactions contemplated by this Agreement, and the parties hereto shall have delivered to each other certificates dated as of the Closing Date and executed by such parties, staling that to their Best Knowledge, no such items exist. No governmental authority shall have taken any other action as a result of which the management of any of the parties, in its sole discretion, reasonably deems it inadvisable to proceed with the transactions contemplated by this Agreement.

              (g)        No Material Adverse Change . No material adverse change in the business, property or assets of any party hereto shall have occurred, and no loss or damage to any of the assets, whether or not covered by insurance, with respect to any party hereto has occurred, and the parties shall have delivered to each other certificates dated as of the Closing Date and executed by each of the parties to all such effects.

              (h)        Update of Contracts . The parties shall have delivered to each other an accurate list, as of the Closing Date, showing (i) all agreements, contracts and commitments of the type listed on Exhibits 9.17 and 11.14 entered into since the date of this Agreement; and (ii) all other agreements, contracts and commitments related to the businesses or the assets of the respective parties entered into since the date of this Agreement, together with true, complete and accurate copies of all such documents (the "New Contracts"). Each party shall have had the opportunity to review the New Contracts of the other, and any of the parties shall have the right to delay the Closing for up to ten (10) days if it in its sole discretion deems such delay necessary to enable it to adequately review the New Contracts.

              (i)        Approval of Counsel . All actions, proceedings, instruments and documents required or incidental to carry out this Agreement, including all schedules and exhibits thereto, and all other related legal matters shall have been approved as to substance and form by Andrews Kurth, LP, counsel to XFM, and Clifford L. Neuman, P.C., counsel to XML and XAC.

              (j)        No Adverse Information . The investigations with respect to the parties, the assets and their respective businesses performed by each party's respective professional advisors and other representatives shall not have revealed any information concerning the other panes, their assets or their business that has not been made known to the discovering party, in writing prior to the date of this Agreement and that, in the opinion of such party and its advisors, materially and adversely affects the business or assets of the other party or the viability of the transaction contemplated by this Agreement.

              (k)        Ordinary Course of Business . During the period from the date of this Agreement until the Closing Date, XML shall have carried on its business in the ordinary and usual course, and shall have delivered to XFM a certificate to that effect.

              (1)        Other Documents . The parties shall have delivered or caused to be delivered all other documents, agreements, resolutions, certificates or declarations as each respective party or its attorneys may have reasonably requested.

              (m)        Governmental and Regulatory Approvals . The parties shall have obtained evidence, in form and substance satisfactory to each of them, that there have been obtained all consents, approvals and authorizations required by this Agreement, including, without limitation, the following:

			(i)	XML and XFM Board of Directors and XFM Common Stockholder approval of all the transactions contemplated pursuant to this Agreement; and
			(ii)	All regulatory approvals necessary for XAC to conduct business in the ordinary course in each jurisdiction where such approval may be required.

              (n)        Compliance with Securities Laws . XFM shall have undertaken all actions necessary or advisable to consummate the Merger in conformity with all Governmental and Legal Requirements including, without limitation, applicable federal and state securities laws.

              (o)        Appraisal Rights and/or Dissenters' Rights . At or prior to Closing, no beneficial or record owner of any outstanding shares of XFM Common Stock shall have exercised or shall have given notice to XML or XFM of their intent to exercise any rights under applicable state law, if any, to dissent from the Merger or obtain the payment of the fair market value of such shares of XFM Common Stock in lieu of participating in the Merger in accordance with the terms and subject to the conditions set forth herein.

              (p)        Financial Advisory Fees . At or prior to Closing, all obligations or commitments of XML and XFM to their respective financial advisors and investment bankers shall have been paid or otherwise satisfied upon terms satisfactory to the parties, and XML and XFM shall each have been delivered and received such written consents, approvals, estoppel certificates or other instruments or undertakings from its advisors or other third parties as each may deem reasonable, necessary or advisable.

              (q)        XFM Recapitalization and Debt Restructure . The XFM recapitalization and debt restructure provided for in Section 4.4 above shall have been successfully completed upon terms and conditions satisfactory to XML.

              (r)        Compliance with Sections 5 and 17 of the Securities Act . The Board of Directors of XFM shall be satisfied that consummation of the Merger and the issuance of XML Common Stock and XML Warrants to the XFM securityholders is in compliance with the provisions of Sections 5 and 17 of the Securities Act.

              (s)        B-50 Indemnity . At Closing, XFM shall have executed and delivered the B-50 Indemnity Agreement substantially in the form of Exhibit 4.8.

              (t)        Holdback Escrow Agreement. At Closing, XFM and XML shall have executed and delivered the Holdback Escrow Agreement substantially in the form of Exhibit 5.5.

              (u)        Closing Escrow Agreement . At Closing, XFM, the XFM shareholders and XML shall have executed and delivered the Closing Escrow Agreement substantially in the form of Exhibit 5.6 hereto and shall have delivered the XML Common Stock and XML Warrants to be held in escrow in accordance with the terms and conditions thereof.

              (v)        XFM Shareholder Notes . XML shall have paid and retired the XFM Shareholder Notes and all holders of the XFM Shareholder Notes shall have executed and delivered in favor of XML full and final releases in a form satisfactory to XML.

              (w)        Employment Agreements . Employment agreements between XFM, on the one hand, and Mark Haugejorde, as President and CEO, Jack Rabin, as Chief Financial Officer, Drew Seale and Chief Technology Officer and Chris Ball as Chief Operating Officer of XML, respectively, on the other and guaranteed by XML, shall have been executed and delivered at Closing.

              (x)        XML Warrants . The XML Warrants shall have been executed and delivered by XML and the XFM Shareholders.

       8.4        Specific Items to be Delivered at the Closing . The parties shall deliver the following items to the appropriate party at the Closing of the transactions contemplated by this Agreement.

              (a)       To be delivered by XFM (in duplicate original):

			(i)	Copy of corporate resolutions authorizing the execution of this Agreement, and the consummation by XFM of the transactions contemplated by this Agreement.
			(ii)	A certificate of the President of XFM stating that the representations and warranties of XFM set forth in this Agreement are true and correct. Said certificate shall further verify and affirm that all consents or waivers, if any, which may be necessary to execute and deliver this Agreement have been obtained and are in full force and effect.
			(iii)	A certificate dated the Closing Date, signed by the Chief Executive Officer and the Chief Financial Officer of XFM, in form and substance reasonably satisfactory to the other party and its legal counsel, certifying that all conditions precedent set forth in this Agreement to the obligations of XFM to close, have been fulfilled, and that no event of default hereunder and no event which, with the giving of notice or passage of time, or both, would be an event of default, has occurred as of such date.
			(iv)	Certificates dated the Closing Date, signed by the Secretary of XFM, (i) certifying resolutions duly adopted by the Board of Directors and Shareholders of XFM, authorizing the execution of this Agreement and all of the other transactions to be consummated pursuant thereto; (ii) certifying the names and incumbency of the officers of XFM who are empowered to execute the foregoing documents for and on behalf of such company; (iii) certifying the authenticity of copies of the Articles of Incorporation and Bylaws of XFM; and (iv) certifying the authenticity of a reasonably current Certificate of Good Standing, from all jurisdictions in which the company is qualified to conduct business.
			(v)	The B-50 Indemnity Agreement substantially in the form of Exhibit 4.8.
			(vi)	The Holdback Escrow Agreement substantially in the form of Exhibit 5.5.
			(vii)	The Closing Escrow Agreement substantially in the form of Exhibit 5.6.
			(viii)	Articles of Merger and Certificate of Merger in proper form to be filed with the Secretaries of States of Colorado and Texas in such form as may be required to consummate the Merger as of the Effective Time.

              (b)       To be delivered by Shareholders of XFM (in duplicate original):

			(i)	Certificate or certificates representing 100% of the issued and outstanding common shares of XFM, which stock certificates shall be endorsed in favor of XML.
			(ii)	Fully executed Subscription Agreements substantially in the form of Exhibit 5.4.
			(iii)	The Closing Escrow Agreement substantially in the form of Exhibit 5.6.
			(iv)	The XML Warrants substantially in the form of Exhibit 5.3.

              (c)       To be delivered by XML and XAC (in duplicate original):

			(i)	Certificate or certificates representing 71,791,936 shares of XML Common Stock and 23,478,000 XML Warrants, which certificates shall be issued in the names of each Shareholder in the numbers set forth in Sections 5.1 and 5.3 hereof and delivered in escrow under the Closing Escrow Agreement and Holdback Escrow Agreement;
			(ii)	Copy of corporate resolution authorizing the execution of this Agreement and the consummation by XML and XAC of the transactions contemplated by this Agreement, including, but not limited to, the issuance of XML Common Stock in the amounts and manner set forth in Section 5.1 above;
			(iii)	A certificate dated the Closing Date, signed by the Chief Executive Officer and the Chief Financial Officer of XML and XAC, in form and substance reasonably satisfactory to the other party and its legal counsel, certifying that all conditions precedent set forth in this Agreement to the obligations of XML and XAC to close, have been fulfilled, and that no event of default hereunder and no event which, with the giving of notice or passage of time, or both, would be an event of default, has occurred as of such date.
			(iv)	Certificates dated the Closing Date, signed by the Secretary of XML and XAC, (i) certifying resolutions duly adopted by the Board of Directors of XML and XAC, authorizing the execution of this Agreement and all of the other transactions to be consummated pursuant thereto; (ii) certifying the names and incumbency of the officers of XML and XAC who are empowered to execute the foregoing documents for and on behalf of such company; (iii) certifying the authenticity of copies of the Articles of Incorporation and Bylaws of XML and XAC; and (iv) certifying the authenticity of a reasonably current Certificate of Good Standing, from all jurisdictions in which XML and XAC are qualified to conduct business.
			(v)	The B-50 Indemnity Agreement substantially in the form of Exhibit 4.8.
			(vi)	The Holdback Escrow Agreement substantially in the form of Exhibit 5.5.
			(vii)	The Closing Escrow Agreement substantially in the form of Exhibit 5.6.
			(viii)	Articles of Merger and Certificate of Merger in proper form to be filed with the Secretaries of States of Colorado and Texas in such form as may be required to consummate the Merger as of the Effective Time.

SECTION 9: REPRESENTATIONS AND WARRANTIES OF XFM

       As a material inducement to XML to enter into this Agreement and with the understanding and expectations that XML will be relying thereon in consummating the Merger contemplated hereunder, XFM (hereinafter XFM shall be referred to as the "Corporation" unless the context otherwise requires for the purposes of this Section 9 only) hereby represents and warrants as follows:

       9.1        Organization and Standing . The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has all requisite corporate power and authority to own its assets and properties and to carry on its business as it is now being conducted.

       9.2        Subsidiaries, Etc. The Corporation does not have any direct or indirect Ownership Interest in any corporation, partnership, joint venture, association or other business enterprise.

       9.3        Qualification . The Corporation is not qualified to engage in business as a foreign corporation in any state, and there is no other jurisdiction wherein the character of the properties presently owned by the Corporation or the nature of the activities presently conducted by the Corporation makes necessary the qualification, licensing or domestication of the Corporation as a foreign corporation.

       9.4         Corporate Authority . Except as set forth on Exhibit 9.4 hereto, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by the Corporation with any on the provisions hereof will:

              (a)       Conflict with or result in a breach of any provision of its Articles of Incorporation or By-Laws or similar documents of any Subsidiary;

              (b)       Result in a default (or give rise to any right of termination, cancellation, or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which the Corporation is a party, or by which any of its properties or assets may be bound except for such default (or right of termination, cancellation, or acceleration) as to which requisite waivers or consents shall either have been obtained by the Corporation prior to the Closing Date or the obtaining of which shall have been waived by XML; or

              (c)       Violate any order, writ, injunction, decree or, to the Corporation's Best Knowledge, any statute, rule or regulation applicable to the Corporation or any of its properties or assets. No consent or approval by any Governmental Authority is required in connection with the execution and delivery by the Corporation of this Agreement or the consummation by the Corporation of the transactions contemplated hereby, except for possible notice under plant closing laws.

       9.5         Financial Information . In connection with the investigations performed by and audit to be undertaken by XFM, XFM furnished certain financial information and data including, without limitation, tax and accounting records, financial records, statements, worksheets and other information requested by XML and its auditors necessary to undertake the complete the audited financial examinations. XFM represents and warrants that any and all such information furnished in connection with the conduct of such investigations and audits shall be true, accurate and complete in all material respects and shall not contain any material misstatements nor any material omissions of fact or information respecting the financial condition or results of operation of the business for the respective periods covered by the audits.

       9.6        Capitalization of the Corporation . The authorized capital stock of XFM consists of ____________________ shares of Common Stock, $.0001 par value per share, of which ____________________ shares are issued and outstanding and ________ shares of preferred, ___ par value, of which no shares are issued and outstanding. The names of one hundred percent (100%) of the record owners of the issued and outstanding Common Stock are set forth on Exhibit 9.6 hereto. All issued and outstanding shares of XFM Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, free and clear of any liens, encumbrances, claims of any kind and nature except restrictions against transferability without compliance with applicable federal and state securities laws. There are no other outstanding rights, options, warrants, subscriptions, calls, convertible securities or agreement of any character or nature under which the Corporation is or may become obligated to issue any shares of its capital stock of any kind, other than those shares indicated in this Section as presently outstanding. There are no voting trusts, stockholder agreements, or other voting arrangements to which the Corporation is a party or, to the Best Knowledg