Exhibit 2.1
MUTUAL TERMINATION AGREEMENT
This
MUTUAL TERMINATION AGREEMENT dated February 29, 2004 (the
"Agreement") is made and entered into by
and among Krystal Digital Corporation
(formally known as ESCAgenetics
Corporation), a Delaware corporation ("Krystal")
and the former shareholders
("Shareholders") of Shecom Corporation, a Colorado
corporation ("Shecom"). Krystal, the
Shareholders and Shecom are collectively
referred to as the "Parties" and each
individually as a "Party".
WHEREAS,
on August 22, 2003, Krystal, Shecom Acquisition Corp, a
Colorado
corporation and wholly owned subsidiary of
Krystal ("Mergeco") and Shecom
entered into an Agreement and Plan of
Reorganization, as amended on September
24, 2003 (collectively, the "Merger
Agreement"); and
WHEREAS,
the Merger Agreement provided for a tax-free issuance of
securities pursuant to the provisions of
Section 368(a) of the Internal Revenue
Code, whereby Krystal acquired 100% of the
capital stock of Shecom through the
merger of Mergeco with and into Shecom (the
"Merger") pursuant to which the
separate corporate existence of Mergeco
ceased and Shecom continued unimpaired
as the surviving corporation of such Merger
as a wholly owned subsidiary of
Krystal; and
WHEREAS,
in consideration of the Merger and the receipt by Krystal of
100%
of the capital stock of Shecom, Krystal
agreed to issue to the Shareholders that
number of shares of Krystal common stock
and warrants to purchase additional
shares of Krystal common stock as
represented (assuming full exercise of
warrants held by them to purchase
additional shares of Shecom) 87.5% of the
issued and outstanding shares of common
stock of Krystal on a fully diluted
basis, after giving effect to the Merger;
and
WHEREAS,
on November 5, 2003, the effective date of the Merger (the
"Effective Date"), Krystal issued
19,823,438 shares of Krystal's common stock
and warrants to purchase an additional
2,051,619 shares of Krystal's common
stock (the "Merger Securities") to the
Shareholders in exchange for 21,257,737
shares of Shecom common stock together with
warrants to purchase an additional
2,200,000 shares of Shecom common stock for
an aggregate of 23,457,000 fully
diluted outstanding shares of Shecom common
stock which constituted 100% of the
issued and outstanding capital stock of
Shecom (the "Exchange Securities"), such
calculations not giving effect to a
subsequent one for five reverse stock split;
and
WHEREAS,
the Merger Agreement provided that after the Effective Date all
of the officers and directors of Krystal
would be replaced by persons designated
by the shareholders of Shecom; and
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WHEREAS,
on the Effective Date a Certificate of Merger by and between
Shecom and Mergeco ("Certificate of
Merger") was filed with the Colorado
Secretary of State pursuant to which the
separate legal existence of Mergeco
ceased and Shecom continued as the
surviving corporation; and
WHEREAS,
the Board of Directors of Krystal and the Shareholders have
determined that as a result of Shecom's
inability to produce audited financial
statements which has resulted in Krystal's
inability to comply with the
Securities and Exchange Commission
requirements of reporting entities, it is in
the best interests of all Parties to
rescind the Merger Agreement, for each
party to return to the other the
consideration received in connection with the
Merger and to release each other from all
duties, rights, claims, causes of
action, obligations and liabilities arising
from, in connection with or relating
to the Merger Agreement, all as provided
herein;
NOW,
THEREFORE, in consideration of the mutual covenants and
agreements
set forth in this Agreement, and for other
good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, the Parties, intending
to be legally bound, agree as follows:
1.
Agreement
to Rescind. Subject to the terms and conditions set forth
herein, the Parties agree to rescind the Merger Agreement and
the
Merger Agreement will be rescinded and of no further force and
effect as of the Closing. The Parties agree at the Closing to
exchange the Merger Securities and Exchange Securities as more
fully
set forth in Section 3, so that Krystal will divest itself of and
no
longer will have any ownership interest in Shecom and the
Shareholders will divest themselves of and no longer have any
ownership interest in Krystal and that after the Closing, the
Shareholders will own 100% of the capital stock of Shecom.
2.
Regulatory
Compliance. Krystal undertakes and agrees after to the
execution of this Agreement to (a) file a Current Report on Form
8-K
pursuant to the Securities Exchange Act of 1934 (the "Act") to
disclose this Agreement; (b) to file an Information Statement
pursuant to Section 14(c) of the Act ("Information Statement")
and
(c) to issue a press release regarding the Agreement.
3.
Closing.
The closing ("Closing") of
