As filed with the Securities and Exchange Commission on June 18, 1996.
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
GUM TECH INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
-----------
Utah 87-0482806
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
-----------
4205 North Seventh Avenue, Suite 300
Phoenix, AZ 85013
(Address of principal executive offices) (Zip Code)
Gum Tech International, Inc. Stock Option Plan
(Full title of the plan)
John Epert, President
4205 North Seventh Avenue, Suite 300
Phoenix, AZ 85013
(Name and address of agent for service of process)
(602) 277-0606
(Telephone number including area code of agent for service)
Approximate date of commencement of proposed sale to public: From time to
time after the Registration Statement becomes effective.
--------------------------------
Exhibit Index Begins at Page II-5
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
CALCULATION OF REGISTRATION FEE
=================================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered Registered (1) Share(2) Price(2) Fee
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par value 1,500,000 $7.00 $10,500,000 $3,621(1)
==================================================================================================================
(1) This Registration Statement, pursuant to Rule 416, covers any additional shares of no par
value Common Stock ("shares") which become issuable under the Gum Tech International, Inc. Stock
Option Plan ("Plan") set forth herein by reason of any stock dividend, stock split, recapitalization
or any other similar transaction without receipt of consideration which results in an increase in
the number of shares outstanding.
(2) Estimated solely for the purpose of computing the amount of the Registration fee under Rule
457 of the Securities Act of 1933, as amended. A total of 1,500,000 shares are issuable under the
Plan at an offering price per share based upon the closing price of the Common Stock on the NASDAQ
National Market on June 13, 1996 of $7.00 per share.
ii
</TABLE>
<PAGE>
GUM TECH INTERNATIONAL, INC.
PART I
Cross Reference Sheet Required by Item 501
Item in Form S-8 Caption In Prospectus
---------------- ---------------------
1. General Plan Information............ Cover Page; Introduction;
Description of the Plan;
Tax Consequences
2. Registrant Information and
Employee Plan Annual
Information......................... Available Information; Introduction
3. Incorporation of Documents
by Reference........................ Incorporation by Reference
4. Description of Securities........... Applicable Securities Laws
Restrictions
5. Interests of Named Experts
and Counsel.......................... Legal Matters; (See also Part II,
Item 5)
6. Indemnification of
Directors and Officers............... SEC Position Regarding
Indemnification
7. Exemption from Registration
Claimed.............................. Not Applicable
8. Exhibits............................. Not Applicable (See Part II,
Item 8)
9. Undertakings......................... Not Applicable (See Part II,
Item 9)
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to the requirements of the Note to Part I of Form S-8 and Rule
428(b)(1) of the Rules under the Securities Act of 1933, as amended, the
information required by Part I of Form S-8 is included in the Reoffer Prospectus
which follows. The Reoffer Prospectus together with the documents incorporated
by reference pursuant to Item 3 of Part II of this Registration Statement
constitute the Section 10(a) Prospectus.
iii
<PAGE>
REOFFER PROSPECTUS
The material which follows, up to but not including the page beginning Part
II of this Registration Statement, constitutes a prospectus, prepared on Form
S-3, in accordance with General Instruction C to Form S-8, to be used in
connection with resales of securities acquired under the Gum Tech International,
Inc. Stock Option Plan by any affiliates of the Registrant, as defined in Rule
405 under the Securities Act of 1933, as amended.
iv
<PAGE>
1,500,000 SHARES
COMMON STOCK
(No Par Value)
GUM TECH INTERNATIONAL, INC.
---------------
STOCK OPTION PLAN
---------------
This Reoffer Prospectus ("Prospectus") relates to the offering by Gum Tech
International, Inc. (the "Company") and the Company's officers, directors,
employees and consultants of up to 1,500,000 shares (subject to adjustment in
certain circumstances) of the Company's no par value Common Stock (the
"shares"), purchasable by officers, directors, employees and consultants of the
Company pursuant to Common Stock options ("options") issued under the Gum Tech
International, Inc. Stock Option Plan (the "Plan"). As of the date hereof
790,000 options have been issued under the Plan. This Prospectus covers all
1,500,000 shares issuable under the Plan, including 60,000 shares previously
issued upon exercise of 60,000 options granted under the Plan.
---------------
This Prospectus may be used by persons who may be deemed to be "affiliates"
(as that term is defined under the Securities Act of 1933) of the Company to
effect resales of the shares. See "Selling Stockholders." The Company will
receive no part of the proceeds of any such sales.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
No person is authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made hereby, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. The delivery of this
Prospectus at any time does not imply that the information herein is correct as
of the time subsequent to the date hereof.
----------------
The date of this Prospectus is June 18, 1996.
<PAGE>
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, including Sections 14(a) and 14(c) relating to
proxy and information statements, and in accordance therewith files reports and
other information with the Securities and Exchange Commission ("Commission").
Reports and other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; 7 World Trade Center, New York, New York 10048; and
5670 Wilshire Boulevard, Los Angeles, California 90036. Copies of such material
can be obtained from the Public Reference Section of the Commission, 450 Fifth
Street N.W., Washington, D.C. 20549 at prescribed rates. The Company's Common
Stock is traded on the NASDAQ National Market ("National Market") under the
symbol "GUMM." Reports, proxy and information statements may also be inspected
at the National Market offices, 1735 K Street Northwest, Washington, D.C. 20006.
The Company furnishes annual reports to its shareholders which include
audited financial statements. The Company may furnish such other reports as may
be authorized, from time to time, by its Board of Directors.
INCORPORATION BY REFERENCE
Certain documents have been incorporated by reference into this Prospectus,
either in whole or in part. The Company will provide without charge (i) to each
person to whom a Prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference (not including exhibits to the information unless such exhibits are
specifically incorporated by reference into the information), and (ii) documents
and information required to be delivered to the Company's consultants and
employees pursuant to Rule 428(b). Requests for such information shall be
addressed to the Company at 4205 North Seventh Avenue, Suite 300, Phoenix,
Arizona 85013, telephone (602) 277-0606.
2
<PAGE>
TABLE OF CONTENTS
INTRODUCTION............................................................ 4
SELLING STOCKHOLDERS.................................................... 5
METHOD OF SALE.......................................................... 6
SEC POSITION REGARDING INDEMNIFICATION.................................. 6
DESCRIPTION OF THE PLAN................................................. 7
APPLICABLE SECURITIES LAW RESTRICTIONS.................................. 8
TAX CONSEQUENCES........................................................ 9
LEGAL MATTERS........................................................... 10
EXPERTS ............................................................... 10
3
<PAGE>
INTRODUCTION
The Company was organized in 1991 to develop, market and distribute
specialty chewing gum products under its own brand names and on a private label
basis for other chewing gum marketers. The Company's current chewing gum
products contain ingredients which it claims (i) promote weight loss (under the
"ChromaTrim" and "CitrusSlim" brand names), (ii) contribute to energy and
endurance (under the "Buzz Gum", "Power Gum" and "Love Gum" brand names), (iii)
alleviate certain premenstrual symptoms (under the "Repose" brand name) and (iv)
promote oral hygiene and breath freshness (under the "DentaHealth" brand name).
The Company also markets a chewing gum product which includes antioxidant
vitamins (under the "Vita A-C-E" brand name).
The Company contracted with others for the manufacture of all its chewing
gum products until February 1996 when it completed leasehold improvements and
began manufacture of chewing gum products in its 28,000 square foot facility in
Phoenix, Arizona. The facility employs approximately 13 workers, and is expected
by the end of 1996 to produce most of the Company's current chewing gum products
and provide the capacity to meet most of the Company's current private label
requirements.
The Company markets its chewing gum products through wholesale distributors
who distribute primarily to natural food stores and through other brokers,
marketers and distributors to convenience stores and independent grocery and
drug stores. The Company also markets to chain grocery, drug and club stores and
to larger private label customers who market under their own brand names.
Some of the Company's specialty chewing gum products are subject to
regulation by the United States Food and Drug Administration ("FDA"). If the FDA
concludes that certain chewing gum products are "drugs" under applicable FDA
regulations or if the Company commences development of OTC chewing gum products,
the FDA may restrict or remove any or all of the Company's chewing gum products
from the market if such products violate FDA rules or regulations.
The Company's executive offices are located at 4205 North 7th Avenue,
Phoenix, Arizona 85013, telephone (602) 277-0606, and its warehouse and
manufacturing facility is located at 246 East Watkins, Phoenix, Arizona 85004.
4
<PAGE>
SELLING STOCKHOLDERS
This Prospectus relates to possible sales by officers, directors and
principal stockholders of the Company of shares they acquire through exercise of
options granted under the Plan. The names of such individuals who may be Selling
Stockholders from time to time are listed in Table I below, along with the
number of shares issuable to them upon exercise of options. The total number of
shares held by each such individual and the percent of all outstanding shares
represented by such ownership are set forth in Table II below. The number of
shares which may be sold by such individuals from time to time will be updated
in supplements to this Prospectus, which will be filed with the Securities and
Exchange Commission in accordance with Rule 424(b) under the Securities Act of
1933, as amended.
TABLE I
Name of Total Number Exercise
Selling Stockholder of Options Issued Price
- ------------------- ----------------- --------
John E. Epert(1) 20,000 $1.80
Richard Ratcliff 520,000 1.50
Gary S. Kehoe 50,000 2.00
Jeffrey L. Bouchy 40,000 2.00
Woodrow C. Monte 20,000 1.80
Robert H. Wood 20,000 2.00
William Lightbody 20,000 6.62
-------
TOTAL 690,000
=======
(1) This Prospectus also covers 60,000 shares issued to Earl K. Manhold, the
Company's former President upon exercise of options under the Plan and
subsequently sold by Mr. Manhold to Mr. Epert for $2.00 per share.
TABLE II
Name of Amount of Percent of Class
Selling Stockholder Shares Owned Shares Outstanding
- ------------------- ------------ ------------------
John E. Epert(1) 128,000 2.6
Richard Ratcliff(2) 520,000 9.6
Gary S. Kehoe(3) 190,000 3.8
Jeffrey L. Bouchy(4) 40,000 .8
Woodrow C. Monte(5) 20,000 .4
Robert H. Wood(6) 175,000 3.5
William Lightbody(2) 20,000 .4
5
<PAGE>
(1) Includes options to purchase 20,000 shares of Common Stock at $1.80 per
share until April 1998.
(2) Represents options to purchase up to 520,000 shares at $1.50 per share until
March 1998.
(3) Includes Warrants to purchase 100,000 shares at $2.00 per share in
perpetuity and options to purchase 50,000 shares at $2.00 per share until June
1998.
(4) Represents options to purchase 20,000 shares at $2.00 per share until June
1998 and 20,000 shares at $2.00 per share until October 1998.
(5) Represents options to purchase 20,000 shares at $1.80 per share until April
1998.
(6) Includes warrants to purchase 140,000 shares at $2.00 per share exercisable
in perpetuity and options to purchase 20,000 shares at $2.00 per share until
April 1998.
(7) Includes option to purchase 20,000 shares at $6.62 per share until June
1999.
The address of each Selling Stockholder is the same as the Company's
address. All shares listed above for sale represent shares issued or issuable
upon exercise of options granted under the Plan. To date, 60,000 shares have
been issued upon exercise of options granted under the Plan and 730,000 shares
are issuable upon exercise of options granted under the Plan.
METHOD OF SALE
Sales of the shares offered by this Prospectus will be made on the National
Market, where the Company's Common Stock is listed for trading, in other markets
where the Company's Common Stock is traded or in negotiated transactions. Sales
will be at current prices when the sales take place and will generally involve
payment of brokers' commissions. There is no present plan of distribution.
SEC POSITION REGARDING INDEMNIFICATION
The Company's Article of Incorporation and Bylaws provide for
indemnification of officers and directors, among other things, in instances in
which they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the Company and in which, with
respect to criminal proceedings, they had no reasonable cause to believe their
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling the Company under the provisions described above, the Company has
been informed that in the opinion of the Securities and Exchange Commission that
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.
6
<PAGE>
DESCRIPTION OF THE PLAN
In March 1995, the Company adopted a stock option plan (the "Plan") which
provides for the grant of options intended to qualify as "incentive stock
options" and "nonqualified stock options" within the meaning of Section 422 of
the United States Internal Revenue Code of 1986 (the "Code"). Incentive stock
options are issuable only to eligible officers, directors, employees and
consultants of the Company.
The Plan is administered by the Compensation Committee of the Board of
Directors. At December 31, 1995, the Company had reserved 1,500,000 shares of
Common Stock for issuance under the Plan. Under the Plan, the Board of Directors
determines which individuals shall receive options, the time period during which
the options may be partially or fully exercised, the number of shares of Common
Stock that may be purchased under each option and the option price.
The per share exercise price of the Common Stock may not be less than the
fair market value of the Common Stock on the date the option is granted. No
person who owns, directly or indirectly, at the time of the granting of an
incentive stock option, more than 10% of the total combined voting power of all
classes of stock of the Company is eligible to receive incentive stock options
under the Plan unless the option price is at least 110% of the fair market value
of the Common Stock subject to the option on the date of grant.
No options may be transferred by an optionee other than by will or the laws
of descent and distribution, and during the lifetime of an optionee, the option
may only be exercisable by the optionee. Options may be exercised only during
the time the option holder is an employee of the Company or within 90 days of
termination of such employment if a Registration Statement on Form S-8 ("S-8")
covering the underlying shares was effective as of the date of termination of
employment. If an S-8 covering the underlying shares was not effective on the
date of termination, then the employee has one year following termination to
exercise the options. If an employee is terminated for cause, any unexercised
options will be cancelled as of the date of such termination. Options under the
Plan must be granted within ten years from the effective date of the Plan and
the exercise date of an option cannot be later than three years from the date of
grant. Any options that expire unexercised or that terminate upon an optionee's
ceasing to be employed by the Company become available once again for issuance.
Shares issued upon exercise of an option will rank equally with other shares
then outstanding.
Amendments to the Plan may be made by the Board of Directors, except that
no amendments may be made without the approval of the shareholders which, (i)
change the number of shares subject to the Plan, (ii) change the designation of
the class of officers, directors, employees or consultants eligible to receive
options, or (iii) decrease the price at which options may be granted. The Plan
is administered by the members of the Board of Directors, who have the full
power to interpret the Plan, determine which individuals are to be granted
options and the amount of such options.
7
<PAGE>
In the event the Company acquires, in whole or in part, the assets or
equity securities of any other entity, no adjustment will be made to the
optionee's option shares.
The provisions of the Federal Employee Retirement Income Security Act of
1974 do not apply to the Plan. Shares issuable upon exercise of options will not
be purchased in open market transactions but will be issued by the Company from
authorized shares. Payment for shares will be made in cash only. No payroll
deductions or other installment plans have been established. No reports will be
made to participating officers, directors, employees or consultants except in
the form of updated information for the Prospectus.
Shares issuable under the Plan may be sold in the open market, without
restrictions, as free trading securities, except that sales made by affiliates
until April 24, 1997 will be subject to the volume restrictions of Rule 144(e).
There are no assets administered under the Plan, and, accordingly, no investment
information is furnished herewith. No options may be assigned, transferred,
hypothecated or pledged by the option holder. No person may create a lien on any
securities under the Plan, except by operation of law.
The Plan will remain in effect until January 2005 and may be extended by
the Company's Board of Directors. Additional information concerning the Plan and
its administrators may be obtained from the Company at the address and telephone
number indicated above.
APPLICABLE SECURITIES LAW RESTRICTIONS
If the optionee is deemed to be an "affiliate" (as that term is defined
under the Securities Act of 1933, as amended), the resale of the shares
purchased upon exercise of options covered hereby will be subject to certain
restrictions and requirements. The Company's legal counsel may be called upon to
discuss these applicable restrictions and requirements with any optionee who may
be deemed to be an affiliate, prior to exercising an option.
In addition to the requirements imposed by the Securities Act of 1933, the
antifraud provisions of the Securities Exchange Act of 1934 and the rules
thereunder (including Rule 10b- 5) are applicable to any sale of shares acquired
pursuant to options.
Up to 1,500,000 shares may be issued under the Plan. The Company has
authorized 10,000,000 shares of Common Stock, of which 4,876,740 shares are
outstanding as of the date hereof. Common Stock outstanding and shares to be
issued upon exercise of options are fully paid and nonassessable, and each share
of stock is entitled to one vote at all shareholders' meetings. All shares are
equal to each other with respect to lien rights, liquidation rights and dividend
rights. There are no preemptive rights to purchase additional shares by virtue
of the fact that a person is a shareholder of the Company. Shareholders do not
have the right to cumulate their votes for the election of directors.
Persons who own at least ten percent of the Company's stock must comply
with certain reporting requirements and resale restrictions pursuant to Sections
16(a) and 16(b) of the Securities Exchange Act of 1934 and the rules thereunder
upon the receipt or disposition of any options.
8
<PAGE>
TAX CONSEQUENCES
If an option is exercised and if the optionee does not dispose of the
shares acquired pursuant to the exercise within two years of the date of the
granting of the option nor within one year from the transfer of the shares
pursuant to exercise of the options, then there will not be any federal income
tax consequences to the Company from either the exercise of the option or the
receipt of the proceeds with respect to the exercise of the option. In such
circumstances, the optionee would not be required to recognize any taxable
income upon the exercise of the option.
Furthermore, the sale of the shares received pursuant to the exercise of
the option would result in long-term capital gain or long-term capital loss to
the optionee based on the difference between the amount received with respect to
such sale and the amount paid upon the exercise of the option.
If an optionee exercised an option and sold the shares acquired pursuant to
such exercise either within two years from the date of the granting of the
option or within one year from the date of the transfer of such shares to him
pursuant to his exercise of the option, then in general the Company would be
entitled to a deduction for federal income tax purposes equal to lessor of: (1)
the fair market value of the stock on the date of exercise over the option price
of the stock; or (2) the amount realized on disposition over the adjusted basis
of the stock. The optionee would recognize income equal to the amount of the
Company's deduction. The Company's deduction would be allowed, and the
optionee's income would be taxable, in the year the optionee disposed of the
shares. However, if the disposition occurs within two years of the date of the
grant and the disposition is a sale or exchange with respect to which a loss, if
sustained, would be recognized (generally any disposition other than to a
related party), then the optionee's income and the Company's deduction would not
exceed the excess (if any) of the amount realized on such sale or exchange over
the adjusted basis of such shares. The Company expects that optionees will be
required to exercise their options within one year from the date of grant
although optionees may hold the shares issuable upon exercise of the options
indefinitely.
For options exercised after 1987, an individual generally must include in
alternative minimum taxable income the amount by which the option price paid is
exceeded by the fair market value at the time the individual's rights to the
shares are freely transferable or are not subject to a substantial risk of
forfeiture. The alternative minimum tax is payable only if the alternative
minimum tax exceeds the regular income tax liability.
The provision of Section 401(a) of the Code, relating to "qualified"
pension, profit sharing and stock bonus plans, do not apply to the options or
underlying shares covered hereby.
9
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed on
for the Company by Gary A. Agron, 5445 DTC Parkway, Suite 520, Englewood,
Colorado 80111.
EXPERTS
The financial statements of the Company for the years ended December 31,
1995 and 1994, incorporated by reference in the Company's Registration Statement
on Form SB-2 have been audited by Angell & Deering, as set forth in their report
included therein and incorporated herein by reference. The financial statements
referred to above are incorporated herein by reference in reliance upon such
report and upon the authority of such firm as experts in auditing and
accounting.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference in this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission:
(a) The Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended (Registration No. 333-870);
(b) The Registrant's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996 filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934 as amended (the "Exchange Act"); and
(c) The description of the Registrant's Common Stock that is contained in
the Company's Registration Statement on Form SB-2 (Registration No.
333-870), including any amendments or reports filed for the purpose of
updating such descriptions.
(d) All other reports and subsequent reports filed pursuant to Section
13(a) or 15(d) of the Exchange Act.
All reports and definitive proxy or information statements filed by the
Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold at the time
of such amendment will be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
II-1
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation provides that liability of
directors to the Company for monetary damages is eliminated to the full extent
provided by Utah law. Under Utah law, a director is not personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director except for liability arising from (i) a financial benefit received by
a director to which such director is not entitled, (ii) an intentional
infliction of harm on the Corporation or the shareholders, (iii) a violation of
Section 16-10a-842 of Utah Code annotated which prohibits certain distributions
by the Company of cash or property to affiliates, or (iv) an intentional
violation of criminal law.
The effect of this provision in the Certificate of Incorporation is to
eliminate the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages from a
director for breach of the fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (iv) above. This provision does not
limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care or any liability for violation of the federal
securities laws.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The following is a list of Exhibits filed as part of the Registration
Statement:
4. Gum Tech International, Inc. Stock Option Plan
4.1 Grant of Incentive Stock Option
4.2 Investment Letter (stock option)
4.3 Investment Letter (upon exercise of stock option)
4.4 First Amendment to Stock Option Plan
4.5 Second Amendment to Stock Option Plan (Including Exhibit A)
II-2
<PAGE>
4.6 Third Amendment to Stock Option Plan
5. Opinion of Gary A. Agron
24. Consent of Angell & Deering, independent certified public
accountants
Item 9. Undertakings
The Registrant hereby undertakes (1) to file, during any period in which
offers or sales are being made, a post-effective amendment to this Registration
Statement; to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (2) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement; (3) that, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (4) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the Plan.
The Registrant hereby undertakes to deliver or cause to be delivered with
the prospectus to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim financial
information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Phoenix, Arizona, on this 7th day of June, 1996.
GUM TECH INTERNATIONAL, INC.
By:
John Epert, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/S/ JOHN E. EPERT Chairman of the Board of June 7, 1996
- ------------------------ Directors and President
John E. Epert Directors and President
/S/ RICHARD RATCLIFF Chief Executive Officer June 7, 1996
- ------------------------- and Director
Richard Ratcliff
/S/ GARY S. KEHOE Chief Operating Officer June 7, 1996
- ------------------------- and Director
Gary S. Kehoe
/S/ RICHARD BERNSTEIN Vice President of Sales June 7, 1996
- ------------------------- and Director
Richard Bernstein
/S/ JEFFREY L. BOUCHY Secretary, Treasurer, Chief June 7, 1996
- ------------------------- Financial Officer and
Jeffrey L. Bouchy Principal Accounting Officer
/S/ KARL K. MANHOLD, III Director June 7, 1996
- -------------------------
Earl K. Manhold, III
/S/ GREGORY W. GOSSETT Director June 7, 1996
- -------------------------
Gregory W. Gossett
/S/ WOODROW C. MONTE Director June 7, 1996
- -------------------------
Woodrow C. Monte
/S/ WILLIAM LIGHTBODY Director June 7, 1996
- -------------------------
William Lightbody
II-4
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Page No.
- ----------- ------- --------
4 Gum Tech International, Inc. Stock Option Plan
4.1 Grant of Incentive Stock Option, as amended on
March 6, 1996
4.2 Investment Letter (stock option)
4.3 Investment Letter (upon exercise of stock option)
4.4 First Amendment to Stock Option Plan
4.5 Second Amendment to Stock Option Plan
4.6 Third Amendment to Stock Option Plan
5. Opinion of Gary A. Agron
24. Consent of Angell & Deering, independent
certified public accountants
II-5
GUM TECH INTERNATIONAL, INC.
STOCK OPTION PLAN
Section 1. Purpose and Scope
The purposes of this Plan are to encourage stock ownership by key
management employees, officers and directors of GUM TECH INTERNATIONAL, INC.
(herein called the "Company"), to provide an incentive for such individuals to
expand and improve the profits and prosperity of the Company, and to assist the
Company in attracting and retaining key personnel through the grant of options
to purchase shares of the Company's common stock.
Section 2. Definitions
Unless otherwise required by the context:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Committee" shall mean the Stock Option Plan Committee, which is
appointed by the Board, and which shall be composed of three members of the
Board.
2.3 "Company" shall mean Gum Tech International, Inc., a Utah corporation.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.5 "Option" shall mean a right to purchase Stock, granted pursuant to the
Plan.
2.6 "Option Price" shall mean the purchase price for Stock under an Option,
as determined in Section F below.
2.7 "Participant" shall mean an employee, officer or director of the
Company to whom an Option is granted under the Plan.
2.8 "Plan" shall mean this Gum Tech International, Inc. Corporation Stock
Option Plan.
2.9 "Stock" shall mean the voting common stock of the Company, no par
value.
Section 3. Stock to be Optioned
Subject to the provisions of Section 11.1 of the Plan, the maximum number
of shares of Stock that may be optioned or sold under the Plan is 1,500,000
shares. Such shares may be treasury, or authorized, but unissued, shares of
Stock of the Company.
<PAGE>
Section 4. Administration
The Plan shall be administered by the Committee. Two members of the
Committee shall constitute a quorum for the transaction of business. The
Committee shall be responsible to the Board for the operation of the Plan, and
shall make recommendations to the Board with respect to participation in the
Plan by employees, officers and directors of the Company, and with respect to
the extent of that participation. The interpretation and construction of any
provision of the Plan by the Committee shall be final, unless otherwise
determined by the Board. No member of the Board or the Committee shall be liable
for any action or determination made by him in good faith.
Section 5. Eligibility
The Board, upon recommendation of the Committee, may grant Options to any
key management employee, officer or director of the Company. Options may be
awarded by the Board at any time and from time to time to new Participants, or
to then Participants, or to a greater or lesser number of Participants, and may
include or exclude previous Participants, as the Board, upon recommendation by
the Committee shall determine. Options granted at different times need not
contain similar provisions.
Section 6. Option Price
The purchase price for Stock under each Option shall be one hundred percent
(100%) of the fair market value of the Stock at the time the Option is granted,
but in no event less than the par value of the Stock.
Section 7. Terms and Conditions of Options
Options granted pursuant to the Plan shall be authorized by the Board and
shall be evidenced by a Grant of Stock Option substantially in the form attached
hereto as Exhibit "A". In addition, the Board may, in its discretion, include in
any Option granted under the Plan a condition that the Participant shall agree
to remain in the employ of, and to render services to, the Company for a period
of time and enter into a suitable employment agreement in a form satisfactory to
the Company. No such agreement shall impose upon the Company, however, any
obligation to employ the Participant for any period of time.
Section 8. Rights in Event of Death
If a Participant dies without having fully exercised his Options, the
personal representatives, trustees, or legatees or heirs, of his estate shall
have the right to exercise such Options to the extent that such deceased
Participant was entitled to exercise the Options on the date of his death;
provided, however, that in no event shall the Options be exercisable more than
ten years from the date they were granted.
2
<PAGE>
Section 9. No Obligations to Exercise Option or Stock
Appreciation Rights
The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.
Section 10. Stock
10.1 Participant's Interest in Option Stock. Participant shall have no
interest in stock covered by his Option until such Option has been exercised.
10.2 Issuance of Stock. Stock to be delivered to a Participant under the
Plan shall be issued in the name of the Participant.
Section 11. Miscellaneous
11.1 Effect of Change in Stock Subject to the Plan
The aggregate number of shares of Stock available for Options under the
Plan, the shares subject to any Option, the price per share, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock subsequent to the effective date of the Plan resulting from (1)
a subdivision or consolidation of shares or any other capital adjustment, (2)
the payment of a stock dividend, or (3) other increase or decrease in such
shares effected without receipt of consideration by the Company. If the Company
shall be the surviving corporation in any merger or consolidation, any Option
shall pertain, apply, and relate to the securities to which a holder of the
number of shares of Stock subject to the Option would have been entitled after
the merger or consolidation. Upon dissolution or liquidation of the Company, or
upon a merger or consolidation in which the Company is not the surviving
corporation, all Options outstanding under the Plan shall terminate; provided,
however, that each Participant (and each other person entitled under Section 8
to exercise an Option) shall have the right, immediately prior to such
dissolution or liquidation, or such merger or consolidation, to exercise such
Participant's Options in whole or in part, but only to the extent that such
Options are otherwise exercisable under the terms of the Plan.
11.2 Amendment and Termination
The Board, by resolution, may terminate, amend, or revise the Plan with
respect to any shares as to which Options have not been granted. Neither the
Board nor the Committee may, without the consent of the holder of an Option,
alter or impair any Option previously granted under the Plan, except as
authorized herein. Unless sooner terminated, the Plan shall remain in effect for
a period of three (3) years from the date of the Plan's adoption by the Board.
Termination of the Plan shall not affect any Option previously granted.
3
<PAGE>
11.3 Agreement and Representation of Employees
Each Participant will be required to:
(a) Acknowledge that neither the Option nor the shares of Stock to be
delivered upon exercise of the Option (collectively, the "Securities") have been
registered under the Securities Act of 1933, as amended, or applicable Arizona
securities laws.
(b) Represent that the Options are being, and theSecurities will be,
acquired and/or purchased for investment and not with a view to their
distribution or resale. Each of the Participants shall execute and deliver to
the Company (in the form attached hereto as Exhibit "B") and on the date of each
closing (in the form attached hereto as Exhibit "C") an investment letter. Each
stock certificate evidencing any of the Common Stock shall, if and when
delivered to a Participant, bear on its face a restrictive legend substantially
in the following form:
"These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold or
otherwise disposed of in the absence of an effective
registration statement under that Act or an opinion of
counsel satisfactory to the Company that such registration
is not required."
11.4 Reservation of Shares of Stock
The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of shares of Stock that shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed necessary by counsel for the Company for the
lawful issuance and sale of its Stock hereunder shall relieve the Company of any
liability in respect of the failure to issue or sell Stock as to which the
requisite authority has not been obtained.
11.5 Effective Date of Plan
The Plan shall be effective as of January 1, 1995.
4
<PAGE>
11.6 Incorporation of Grant of Stock Option by Reference
Grant of any Option created under this Plan, shall be made by a separate
Grant of Option attached hereto as Exhibit "A". The terms of that grant are
hereby incorporated by reference, and the terms of the grant shall in all
respects be interpreted in accordance and as part of the Plan. The Committee
shall interpret and construe the plan and accompanying grant, and its
interpretations and determinations shall be conclusive and binding upon the
parties hereto and any other parties claiming any interest hereunder, with
respect to any issue arising hereunder or under the terms of the grant.
11.7 Governing Law
The validity, construction and interpretation of this instrument shall be
exclusively governed by and determined in accordance with the laws of the state
of Arizona.
IN WITNESS WHEREOF, this plan has been adopted by the Board of Directors of
the Company effective the 1st day of March, 1995.
GUM TECH INTERNATIONAL, INC.,
a Utah corporation
By:
-----------------------------------
Its:
----------------------------------
5
EXHIBIT "A"
Gum Tech International, Inc. Stock Option Plan
Grant of Incentive Stock Option
Dste of Grant --------------------, 1995
THIS GRANT, dated as of the date of grant first stated above (the "Date of
Grant" ), is delivered by Gum Tech International, Inc., a Utah corporation (the
"Company") to ------------- (the "Grantee'), who is an employee, officer or
director of Company.
WHEREAS, the Board of Directors of the Company (the "Board") effective
March 1, 1995, adopted the Gum Tech International, Inc. Stock Option Plan (the
"Plan");
WHEREAS, the Plan provides for the granting of "stock options by a
committee to be appointed by the Board (the "Committee") to directors, officers
and key employees of company to purchase, or to exeraise certain rights with
respect to, shares of the Common Stock of Company, par value per share (the
"Stock"), in accordance with the terms and provisions thereof; and
WHEREAS, the Committee oonsiders the Grantee to be a person who is eligible
for a grant of stock options under the Plan, and has determined that it would be
in the best interest of Company to grant the stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
Section 1. Grant of Option
---------------
Subject to the terms and conditions hereinafter set forth, Company, with
the approva1 and at the direction of the Committee, hereby grants to the
Grantee, as ot the Date of Grant, an option to purchase up to -------- shares of
Stock at a price of $ ------ per share, the fair market value of such shares at
the time of the grant. Such option is hereinafter referred to as the "Option"
and the shares of stock purchasable upon exercse of the Option are hereinafter
sometimes referred to as the "Option Shares."
6
<PAGE>
Section 2. Exercise of Option
------------------
Subject to such further limitations as are provided herein, the Option
shall become exercisable any time after the date of the Grant, subject to the
limitation. set forth in Section 3 below.
Section 3. Termination of Option
---------------------
3.1 The Option and all rights hereunder with respect thereto, to the extent
such rights have not been exercised, shall terminate and become null and void
after the expiration of three (~) years from the Pat(cent) of Grant (the "Option
Term").
3.2 In the event of the death of the Grantee, the Option may be exercised
by the Grantee's legal representative(s), but only to the extent that the Option
would otherwise have been exercisable by the Grantee.
3.3 Notwithstanding any other provisions set forth herein or in the Plan,
if the Grantee shall (i) commit any act of malfeasance or wrongdoing affecting
Company, (ii) breach any covenant not to compete, or employment contract, with
Company or any subsidiary of Company, or (iii) engage in conduct that would
warrant the Grantee's discharge for cause (excluding genera1 dissatisfaction
with the performance of the Grantee's duties, but including any act of
disloyalty or any conduct already tending to bring discredit upon or any
subsidiary of Company), any unexercised portion of the Option ehall immediately
terminate and be void.
Section 4. Exercise of Options
-------------------
4.1 The Grantee may exercise the Option with respect to all or any part of
the number of Option Share then exercisable hereunder by giving the Secretary of
Company written notice of intent to exercise. The notice of exercise shall
specify the number of Option Shares as to which the Option is to be exercised
and the date of exercise thereof, which date shall be at least five days after
the giving of such notice unless an earlier time shall have been mutually agreed
upon.
4.2 Full payment (in U.S. dollars} by the Grantee of the option price for
the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercse in cash, or, with the prior written consent
of the Committee, in whole or in part through the surrender o$ previously
acquired shares of Stook at their fair market value on the exercise date.
On the exercise date specified in the Grantee's notice or as soon
thereafter as practicable, Company shall cause to be delivered to the Grantee, a
certificate or certifticates. for the Option Shares then being purchased (out of
theretofore unissued Stock or reacquired Stock, as Company may elect) upon full
payment for such Option Shares. The obligations of Company to deliver Stock
7
<PAGE>
shall, however, be subject to the condition that if at any time the Commlttee
ahall determine in its discretion that the listing, registration or
qualification of the Option or the Option Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessery or desirable as a condition of, or in connection
with, the option or the issuance or purchase of Stock thereunder, the Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approva1 shall have been effected or obtained free of
any conditions not acceptable to the Committee.
4.3 If the Grantee fails to pay for any of the Option Shares specified in
such notice or fails to accept delivery thereof, the Grantee's right to purchase
such Option Shares may be terminated by Company. The date specified in the
Grantee's notice as the date of exercise shall be deemed the date of exercise of
the Option, provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
Section 5. Adjustment of and Changes in Stock of Company
---------------------------------------------
In the event of a reorganization, recapitalization, change of shares, stock
split, apin-off, stock dividend, reclassification, subdivision or oombination at
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of Company, the Committee shall
make such adjustment as it deems appropriate in the number and kind of shares of
Stock subject to the Option or in the option price; provided, however, that no
such adjustment shall give the Grantee any additional benefits under the Option.
Section 6. Fair Market Value
------------------
As used herein, the fair market value of a share of Stock shall be the
value determined by the resolution of the Board of Dlrectors of the Company.
Section 7. No Rights of Stockholders
-------------------------
Neither the Grantee nor any personal representative shall be, or shall have
any of the rights and privileges of, a stockholder of Company with respect to
any shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the option.
Section 8. Non-Transferability of Option
-----------------------------
During the Grantee's lifetime, the option hereunder shall be exercisable
only by the grantee or any personal representative, guardian, conservator or
legal representative of the Grantee, and the Option shall not be transferable
8
<PAGE>
except, in case of the death of the Grantee, by will or the laws of descent and
distribution, nor shall the Option be subject at attachment, execution or other
similar process. In no event of (a) any attempt by the Grantee to alienate,
assign, pledge, hypothecate or otherwise dispose of the Option, except as
provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, Company may terminate the
Option by notice to the Grantee and it shall thereupon become null and void.
Section 9. Employment Not Affected
-----------------------
The granting of the Option nor its exercise shall not be construed as granting
to the Grantee, if he is an employee of the Company, any right with respect to
continuance of employment of the Company. Except as may otherwise be limited by
a written agreement between the Company and the Grantee, the right of the
Company to terminate at will the Grantee's employment with it at any time
(whether by dismissal, discharge, retirement or otherwise) is specifically
reserved by Company, as the Company or on behalf of the Company (whichever the
case may be), and acknowledged by the Grantee.
Section 10. Amendment of Option
-------------------
The Option may be amended Py the Board or the Committee at any time (i) if
the Board or the Committee determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to or change in the Internal
Revenue Code of 1986 or in the regulations issued thereunder/ or any federal or
state securities law or other law or regulation, which change occurs after the
Date of Grant and by its terms applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent of the Grantee.
Section 11. Notice.
-------
Any notice to Company provided for in this instrument shall be addressed to
it in care of its Secretary at the following address:
2450 S. 2050 West
Ogden, Utah 84401
and any notice to the Grantee shall be addressed to the Grantee at the current
address shown on the payroll records of the Company. Any notice shall be deemed
to be duly given if and when properly addressed and posted by registered or
certified mail, postage prepaid.
9
<PAGE>
Section 12. Incorporation of Plan by Reference
----------------------------------
The Option is granted purauant to the terms of the Plan, the terms of which
are incorporated herein by reference, and the Option shall in all respects be
interpreted in accordance with the Plan, The Committee shall interpret and
construe the Plan and this instrument, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and any
other person claiming an interest hereunder, with respect to any issue arising
hereunder or thereunder.
Section 13. Govorning Law
-------------
The validity, construction, interpretation and effect of this instrument
shall exclusively be governed by and determined in accordance with the law of
the State of Arizona.
lN WITNESS WHEREOF, Company has caused its duly authorized officers to
execute and attest this Grant of Incentive Stock Option, and to apply the
corporate seal hereto, and the Grantee has placed his or her signature hereon,
effective as of the Date of Grant.
GUM TECH INTERNATIONAL, INC.
By:
------------------------------------
Its:
------------------------------------
ACCEPTED AND AGREED TO:
By:
-------------------------------------
Grantee
EXHIBIT "B"
INVESTMENT LETTER
-----------------
TO: GUM TECH INTERNATIONAL, INC.
In connection with the undersigned's acquisition of an Option to purchase
Stock in the Company, as those terms are defined in the Gum Tech International,
Inc. Stock Option Plan dated March 1, 1995, the undersigned acknowledges,
represents, warrants, covenants and agrees as follows:
1. The undersigned represents that:
(a) He is acquiring the Option, and will acquire the shares of Stock for
his own account, for investment and not with a view to, or for resale in
connection with, the distribution thereof and that he has no present intention
of distributing the Securities (as that term is defined in the Gum Tech
International, Inc. Stock Option Plan);
(b) He personally possesses such knowledge and experience in financial and
business matters pertaining to the type of business conducted by the Company and
otherwise, that he is capable of evaluating the merits and risks of an
investment in the Securities;
(c) He is fully familiar with the Company and its business, operations,
condition (financial and other), assets, liabilities and prospects and has had
access to any and all material information he deems necessary or appropriate to
enable him to make an investment decision in connection with the acquisition of
the Securities; and
(d) His financial situation is such that he can afford to bear the economic
risk of holding the Securities for an indefinite period of time and can afford
to suffer a complete loss of his investment in the Securities.
2. The undersigned understands and acknowledges that:
(a) Neither the Option nor the shares of Stock have been registered
pursuant to the Securities Act of 1933, as amended (the "Act"), or any state
securities laws, that he may not transfer, resell or otherwise dispose of the
Securities except pursuant to a registration statement in compliance with the
Act and any applicable state securities laws, unless exemptions from the
registration requirements of the Act and any applicable state securities laws
are available that he must, therefore, bear the economic risks of an investment
in the Securities for an indefinite period of time;
11
<PAGE>
(b) The Company is under no obligation to register the the Securities
pursuant to the Act or any state securities laws or to comply with or make
available any exemption from the registration requirements thereof;
(c) Any certificates representing the Securities will contain a legend to
the effect that the Securities cannot be transferred, resold or otherwise
disposed of except in compliance with the Act and any applicable state
securities laws; and
(d) A "stop-transfer" order will be issued with respect to the Securities
to effectuate the foregoing restrictions on transfer of the Securities and the
Company and its transfer agents shall have no obligation to effect any purported
transfer of the Securities except upon demonstration of compliance with the
foregoing restrictions.
(e) He has had the opportunity to ask questions of the Company and its
representatives and receive answers from the Company and its representatives
concerning the Company and his investment in the Securities and to obtain
additional information possessed by the Company, or obtainable without
unreasonable effort or expense, that is necessary to verify the accuracy of the
information furnished to him.
3. The undersigned covenants and agrees that he will not sell, pledge, transfer
or otherwise dispose of the Option or the Securities or any interest therein, or
make any offer to attempt to do any of the foregoing, except pursuant to a
registration statement in compliance with the Act and all applicable state
securities laws or in a transaction which, in the opinion of counsel for the
Company, is exempt from the registration requirements thereof.
4. Words used herein, regardless of number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context requires.
The undersigned understands and acknowledges that the Company will rely
upon the acknowledgments, representations, warranties, covenants and agreements
contained herein (and any supplemental information provided to the Company) for
the purpose of determining whether this transaction meets the requirements for
an exemption from the registration requirements of the Act and applicable state
securities laws. The undersigned hereby agrees to indemnify and hold harmless
the Company and its directors and officers from and against any cost, expense,
12
<PAGE>
claim, liability or damage arising out of or resulting from any breach of such
covenant and agreement including, without limitation, any liability of the
Company to any third person purchasing the Option or any capital stock of the
Company. Further the undersigned covenants and agrees that if there should be
any material change with respect to any of the representations and warranties
contained herein, after the execution of this Investment Letter and prior to the
exercise of the Option or the transfer of Securities to him the undersigned will
immediately furnish the revised or corrected information to the Company.
EXECUTED this ---------- day of -------------, 199---.
13
EXHIBIT "C"
INVESTMENT LETTER
-----------------
TO: GUM TECH INTERNATIONAL, INC.
In connection with the undersigned's acquisition of shares of Stock in the
Company pursuant to an exercise of the Option (as those terms are defined in the
Gum Tech International, Inc.Stock Option Plan dated March 1, 1995, the
undersigned acknowledges, represents, warrants, covenants and agrees as follows:
1. The undersigned represents that:
(a) He is purchasing the Stock for his own account, for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that he has no present intention of distributing any of the Stock;
(b) He personally possesses such knowledge and experience in financial and
business matters pertaining to the type of business conducted by the Company and
otherwise, that he is capable of evaluating the merits and risks of an
investment in the Stock;
(c) He is fully familiar with the Company and its business, operations,
condition (financial and other), assets, liabilities and prospects and has had
access to any and all material information he deems necessary or appropriate to
enable him to make an investment decision in connection with the purchase of the
Stock; and
(d) His financial situation is such that he can afford to bear the economic
risk of holding the Stock for an indefinite period of time and can afford to
suffer a complete loss of his investment in the Stock.
2. The undersigned understands and acknowledges that:
(a) The Stock has not been registered pursuant to the Securities Act of
1933, as amended (the "Act"), or any state securities laws, that he may not
transfer, resell or otherwise dispose of the Stock except pursuant to a
registration statement in compliance with the Act and any applicable state
securities laws, unless exemptions from the registration requirements of the Act
and any applicable state securities laws are available that he must, therefore,
bear the economic risks of an investment in the Stock for an indefinite period
of time;
(b) The Company is under no obligation to register the Stock pursuant to
the Act or any state securities laws or to comply with or make available any
exemption from the registration requirements thereof;
<PAGE>
(c) The certificates representing the Stock will contain a legend to the
effect that the Stock cannot be transferred, resold or otherwise disposed of
except in compliance with the Act and any applicable state securities laws; and
(d) A "stop-transfer" order will be issued with respect to the Stock to
effectuate the foregoing restrictions on transfer of the Stock and the Company,
or its transfer agent, shall have no obligation to effect any purported transfer
of the Stock except upon demonstration of compliance with the foregoing
restrictions.
(e) He has had the opportunity to ask questions of the Company and its
representatives and receive answers from the Company and its representatives
concerning the Company and his investment in the Stock and to obtain additional
information possessed by the Company, or obtainable without unreasonable effort
or expense, that is necessary to verify the accuracy of the information
furnished to him.
3. The undersigned covenants and agrees that he will not sell, pledge, transfer
or otherwise dispose of the Stock or any interest therein, or make any offer to
attempt to do any of the foregoing, except pursuant to a registration statement
in compliance with the Act and all applicable state securities laws or in a
transaction which, in the opinion of counsel for the Company, is exempt from the
registration requirements thereof.
4. Words used herein, regardless of number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine or neuter, as the context requires.
The undersigned understands and acknowledges that the Company will rely
upon the acknowledgements, representations, warranties, covenants and agreements
contained herein (and any supplemental information provided to the Company) for
the purpose of determining whether this transaction meets the requirements for
an exemption from the registration requirements of the Act and applicable state
securities laws. The undersigned hereby agrees to indemnify and hold harmless
the Company and its directors and officers from and against any cost, expense,
claim, liability or damage arising out of or resulting from any breach of such
covenant and agreement including, without limitation, any liability of the
Company to any third person purchasing any capital stock of the Company. Further
the undersigned covenants and agrees that if there should be any material change
with respect to any of the representations and warranties contained herein,
2
<PAGE>
after the execution of this Investment Letter and prior to the transfer of Stock
to him the undersigned will immediately furnish the revised or corrected
information to the Company.
EXECUTED this ------- day of --------------, 19----.
3
FIRST AMENDMENT TO
GUM TECH INTERNATIONAL, INC. STOCK OPTION PLAN
This First Amendment (this "Amendment") to that certain Gum Tech International,
Inc. Stock Option Plan (the "Plan") is being made this ------ day of -------- ,
1995, pursuant to Section 11.2 of Plan. The Board of Directors of Gum Tech
International, Inc. have resolved to amend and restated Section 6 of the Plan as
follows:
Section 6. Option Price
The purchase price for Stock under each Option shall be
an amount determined by the Committee but shall in no event
be less than one hundred percent (100%) of the fair market
value of the Stock at the time the Option is granted and in
no event less than the par value of the Stock.
IN WITNESS WHEREOF, this plan has been adopted by the Board of
Directors of the Company effective the ---- day of --------------- 1995.
GUM TECH INTERNATIONAL, INC.,
a Utah corporation
By: /s/ RICHARD RATCLIFF
------------------------------------------
Its: Pres.
---------------------------------------
SECOND AMENDMENT TO
GUM TECH INTERNATIONAL, INC. STOCK OPTION PLAN
This Second Amendment (this "Second Amendment") to that certain Gum Tech
International, Inc. Stock Option Plan, as amended (collectively, the "Plan") is
being made this --- day of March, 1996, pursuant to Section 11.2 of Plan. The
Board of Directors of Gum Tech International, Inc. have resolved to amend and
restate Exhibit 'A' to the Plan as set forth on the attached Exhibit 'A'.
IN WITNESS WHEREOF, this plan has been adopted by the Board of
Directors of the Company effective the 6th day of March, 1996.
GUM TECH INTERNATIONAL, INC.,
a Utah corporation
By: /s/ J. EPERT
-------------------------------------
Its: President
------------------------------
<PAGE>
EXHIBIT "A"
Gum Tech International, Inc. Stock Option Plan
Grant of Incentive Stock Option
Date of Grant:
THIS GRANT, dated as of the date of grant first stated above (the "Date of
Grant"), is delivered by Gum Tech International, Inc.. a Utah corporation
("Company") to ---------------- (the " Grantee"). who is an employee officer or
director of Company.
WHEREAS, the Board of Directors of Company (the "Board") effective March 1,
1995, adopted the Gum Tech International, Inc. Stock Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting of stock options by a committee
to be appointed by the Board (the "Committee") to directors, officers and key
employees of Company to purchase, or to exercise certain rights with respect to,
shares of the Common Stock of Company, par value per share (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers the Grantee to be a person who is eligible
for a grant of stock options under the Plan, and has determined that it would be
in the best interest of Company to grant the stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
Section 1. Grant of Option
----------------
Subject to the terms and conditions hereinafter set forth, Company, with
the approval and at the direction of the Committee, hereby grants to the
Grantee, as of the Date of Grant, an option to purchase up to ---------------
shares of Stock at a price of $ -------------- per share, the fair market value
of such shares at the time of the grant. Such option is hereinafter referred to
as the "Option" and the shares of stock purchasable upon exercise of the
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Option are hereinafter sometimes referred to as the "Option Shares."
Section 2. Exercise of Option
------------------
Subject to such further limitations as are provided herein, the Option
shall become exercisable any time after the date of the Grant, subject to the
limitations set forth in Section 3 below.
Section 3. Termination of Option
---------------------
3.1 The Option and all rights hereunder with respect thereto, to the extent
such rights shall not have been exercised, shall terminate and become null and
void after the expiration of three (3) years from the Date of Grant (the "Option
Term").
3.2 In the event of the death or disability of the Grantee, the Option may
be exercised by the Grantee or the Grantee's legal representative(s) at any time
within the one year anniversary date of the Grantee's death, but only to the
extent that the Option would otherwise have been exercisable by the Grantee.
3.3 In the event of that Grantee is no longer a key management employee,
officer or director of the Company, the Option may be exercised by the Grantee
or its legal representative(s) at any time within 90 days after the Grantee is
no longer a key management employee, officer or director if the Option Shares
are subject to an S-8 Registration Statement filed with the Securities Exchange
Commission and at any within one year after the Grantee is no longer a key
management employee, officer or director if the Option Shares are not subject to
an S-8 Registration Statement filed with the Securities Exchange Commission.
3.4 Notwithstanding any other pvosisions set forth herein or in the Plan,
if the Grantee shall (i) commit any act of malfeasance or wrongdoing affecting
Company, (ii) breach any covenant not to compete, or employment contract, with
the Company or any subsidiary of Company, or (iii) engage in conduct wthat would
warrnat the Grantee's discharge for cause (excluding general dissatisfaction
with the performance of the Grantee's duties, but including any act of
disloyalty or any conduct clearly tending to bring discredit upon or any
subsidiary of Company), any unexercised portion of the Option shall immediately
terminate and be void.
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Section 4. Exercise of Options
-------------------
4.1 The Grantee may exercise the Option with respect to all or any part of
the number of Option Shares then exercisable hereunder by giving the Secretary
of Company written notice of intent to exercise. The notice of exercise shall
specify the number of Option Shares as to which the Option is to be exercised
and the date of exercise thereof, which date shall be at least five days after
the giving of such notice unless an earlier time shall have been mutually agreed
upon.
4.2 Full payment (in U.S. dollars) by the Grantee of the option price for
the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise in cash, or, with the prior written consent
of the Committee, in whole or in part through the surrender of previously
acquired shares of Stock at their fair market value on the exercise date
On the exercise date specified in the Grantee's notice or as soon
thereafter as is practicable, Company shall cause to be delivered to the
Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as Company may
elect) upon full payment for such Option Stock. The obligations of Company to
deliver Stock shall, however, be subject to the condition that if at any time
the Committee shall determine in its discretion that the listing, registration
or qualification of the Option or the Option Shares upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the Option or the issuance or purchase of Stock thereunder, the
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
4.3 If the Grantee fails to pay for any of the Option Shares specified in
such notice or fails to accept delivery thereof, the Grantee's right to purchase
such Option Shares may be terminated by Company. The date specified in the
grantee's notice as the date of exercise shall be deemed the date of exercise of
the Option, provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
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Section 5. Adjustment of and Changes in Stock of Company
----------------------------------------------
In the event of a reorganization, recapitalization, change of shares, stock
split, spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of Company, the Committee shall
make such adjustment as it deems appropriate in the number and kind of shares of
Stock subject to the Option or in the option price; provided, however, that no
such adjustment shall give the Grantee any additional benefits under the Option.
Section 6. Fair Market Value
-----------------
As used herein, the fair market value of a share of Stock shall be the
value determined by the resolution of the Board of Directors of the Company.
Section 7. No Right of Stockholders
------------------------
Neither the Grantee nor any personal representative shall be, or shall have
any of the rights and privileges of, a stockholder of Company with respect to
any shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
Section 8. Non-Transferability of Option
------------------------------
During the Grantee's lifetime, the Option hereunder shall be exercisable
only by the Grantee or any personal representative, guardian, conservator or
legal representative of the Grantee, and the Option shall not be transferable
except, in case of the death of the Grantee, by will or the laws of descent and
distribution, nor shall the Option be subject OT attachment, execution or other
similar process. In no event of (a) any attempt by the Grantee to alienate,
assign, pledge, hypothecate or otherwise dispose of the Option, except as
provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, Company may terminate the
Option by notice to the Grantee and it shall thereupon become null and void.
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<PAGE>
Section 9. Employment Not Affected
------------------------
The granting of the Option nor its exercise shall not be construed as
granting to the Grantee, if he is an employee of the Company, any right with
respect to continuance of employment of the Company. Except as may otherwise be
limited by a written agreement between the Company and the Grantee, the right of
the Company to terminate at will the Grantee's employment with it at any time
(whether by dismissal, discharge, retirement or otherwise) is specifically
reserved by Company, as the Company or on behalf of the Company (whichever the
case may be), and acknowledged by the Grantee.
Section l0. Amendment of Option
--------------------
The Option may be amended by the Board or the Committee at any time (I) if
the Board or the Committee determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to or change in the Internal
Revenue Code of 1986 or in the regulations issued thereunder, or any federal or
state securities law or other law or regulation, which change occurs after the
Date of Grant and by its terms applies to the Option; or (ii) other than in the
circumstances described in clause (I), with the consent of the Grantee.
Section 11. Notice
------
Any notice to Company provided for in this instrument shall be addressed to
it in care of its Secretary at the following address:
Gum Tech International, Inc.
4205 North Seventh Avenue
Suite 300
Phoenix, Arizona 85013
and any notice to the Grantee shall be addressed to the Grantee at the current
address shown on the payroll records of the Company. Any notice shall be deemed
to be duly given if and when properly addressed and posted by registered or
certified mail, postage prepaid.
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<PAGE>
Section 12. Incorporation of Plan by Reference
----------------------------------
The Option is granted pursuant to the terms of the Plan, the terms of which
are incorporated herein by reference, and the Option shall in all respects be
interpreted in accordance with the Plan. The Committee shall interpret and
construe the Plan and this instrument, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and any
other person claiming an interest hereunder, with respect to any issue arising
hereunder or thereunder.
Section 13. Governing Law
-------------
The validity, construction, interpretation and effect of this instrument
shall exclusively be governed by and determined in accordance with the law of
the State of Arizona.
IN WITNESS WHEREOF, Company has caused its duly authorized officers to
execute and attest this Grant of Incentive Stock Option, and to apply the
corporate seal hereto, and the Grantee has placed his or her signature hereon,
effective as of the Date of Grant.
GUM TECH INTERNATIONAL, INC.
By:
Its:
ACCEPTED AND AGREED TO:
By:
Grantee
THIRD AMENDMENT TO
GUM TECH INTERNATIONAL, INC. STOCK OPTION PLAN
This Third Amendment (this "Amendment") to that certain Gum Tech International,
Inc. Stock Option Plan (the "Plan") is being, made this 31 st day of May, 1996,
pursuant to Section 11.2 of Plan.
The Board of Directors of Gum Tech International, Inc. have resolved to amend
and restate Section 3 of the Plan as follows:
Section 3. Stock to be Optioned
---------- --------------------
Subject to the provisions of Section 11.1 of the Plan, the
maximum number of shares of Stock that may be optioned or sold
under the Plan is } ,500,000 shares. Such shares may be treasury,
or authorized, but unissued, shares of Stock of the Company.
The Board of Directors of Gum Tech International, Inc. have resolved to
amend and restate Section 11.2 of the Plan as follows:
Section 11.2 Amendment and Termination
- ------------ -------------------------
The Board, by resolution, may terminate, amend, or revise
the Plan with respect to any shares as to which Options have not
been granted. Neither the Board nor the Committee may, without
the consent of the holder of an Option, alter or impair any
Option previously granted under the Plan, except as authorized
herein. Unless sooner terminated, the Plan shall remain in effect
until January 1, 2005. Termination of the Plan shall not affect
any Option previously granted.
IN WITNESS WHEREOF, this plan has been adopted by the Board of Directors of
the Company effective the 31 st day of MAY, 1996.
GUM TECH International, INC.,
a Utah corporation
By:
-------------------------------------
John Epert, President
June 14, 1996
Gum Tech International, Inc.
4205 North Seventh Avenue, Suite 300
Phoenix, AZ 85013
Re: Opinion and Consent
Gum Tech International, Inc. Stock Option Plan
Gentlemen:
We have assisted in the preparation and filing by Gum Tech International,
Inc. (the "Company") of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission, relating to 1,500,000
shares of no par value Common Stock (the "Option Shares"), of the Company
issuable upon exercise of options granted under the Gum Tech International, Inc.
Stock Option Plan (the "Plan").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinions set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing we are of the opinion that the
Option Shares have been duly authorized and reserved for issuance and such
Option Shares, when issued in accordance with the terms of the Plan against
payment therefor, will be duly and validly issued, fully paid and nonassessable.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act of 1933, as amended, and applicable state
laws relating to the offer and sales of securities.
We consent to the filing of a copy of this option in the Registration
Statement and the use of our opinion in connection therewith.
Very truly yours,
/S/ GARY A. AGRON
-------------------
Gary A. Agron
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statement on Form S-8 of Gum Tech International,
Inc. ("Registration Statement") of our report dated January 18, 1996, except for
Note 9 and Note 12 as to which the date is March 4, 1996, included in the
Company's Registration Statement on Form SB-2, relating to the financial
statements of Gum Tech International, Inc. for the years ended December 31, 1995
and 1994, and to all references to our firm included in this Registration
Statement.
ANGELL & DEERING
Certified Public Accountants
Denver, Colorado
June 14, 1996
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