SETTLEMENT AGREEMENT AND RELEASE


     This  Settlement  Agreement and Release  ("Agreement")  is entered into the
10th day of  February,  1998,  by and  between  GERALD  KERN,  a married  person
("KERN"), and GUMTECH INTERNATIONAL INC., ("GUMTECH")

                                    RECITALS
                                    --------

     A. KERN was an employee of GUMTECH from August 14, 1996 until  February 10,
1998, when he resigned from his employment as Chief Executive Officer,  Chairman
of the Board, President, and member of the Board.


     B. KERN has been represented by legal counsel throughout the Litigation and
the  negotiations  that  resulted  in this  Agreement,  and he enters  into this
Agreement freely,  voluntarily and with a full and complete understanding of the
rights that he is forever  surrendering,  releasing,  discharging  and  settling
under this Agreement.

     C. Both  parties  desire to settle any and all claims  that either may have
against the other except as specifically excluded.

                                    AGREEMENT
                                    ---------


     NOW,  THEREFORE,  in consideration  of the mutual promises,  covenants' and
relinquishment of rights agreed to herein, as well as other  consideration,  the
receipt and sufficiency of which is hereby acknowledged,  KERN and GUMTECH agree
as follows:

          1. Payment to KERN. Upon the full execution of this Agreement  GUMTECH
shall issue a check,  payable to KERN and  Schleier Law  Offices,  P.C.,  in the
amount of ONE HUNDRED FIFTY THOUSAND  DOLLARS  ($150,000).  An additional  FIFTY
THOUSAND DOLLARS  ($50,000) from which all necessary  withholdings will be taken
for all amounts attributed to wages will be issued to KERN. The remainder of the
FIFTY THOUSAND DOLLARS ($50,000) will be deposited in the trust account of Cheri
L.  McCracken,  Esq. for 120 days from the date of this  agreement to be paid to
KERN at that time if KERN has not disparaged GUMTECH,  its Directors,  officers,
or employees.  In the event GUMTECH believes KERN has disparaged  GUMTECH within
the 120 day period from the date of this Agreement,  the notification procedures
set forth in paragraph 8 shall be utilized.  KERN shall be paid his full pay and
allowances  up to and  including  February  10,  1998.  The  parties  agree that
two-thirds  (2/3) of the total of TWO HUNDRED  THOUSAND  DOLLARS  ($200,000)  is
attributable  to  the  settlement  of  tort  claims,  including  defamation  and
intentional interference asserted by KERN.


          KERN's  stock  options  shall be Amended and  Restated or Reissued for
100,000 shares of GUMTECH  International Inc. common stock at the price of $5.81




<PAGE>


an option.  The option  shares  shall be exactly  like those he now holds.  This
option  will  expire one year from the date of this  Agreement.  A  cancellation
agreement  will be executed for the options KERN now holds above 100,000 and for
the option on shares held by Ratcliff.  GUMTECH will act promptly and reasonably
to enable KERN to exercise his options.


          GUMTECH  International  Inc.  shall  forgive any salary  advances  and
interest  thereon  owed  to it by  KERN.  The  debt  owed  by  KERN  to  GUMTECH
International  Inc. of SIXTY-SIX  THOUSAND (  $66,000.00)  DOLLARS plus interest
which will become  compensation  on November  1, 1999,  will be  unconditionally
forgiven on November 1, 1999.

     2.  Release.  By  executing  this  Agreement,  KERN,  for  himself  and his
successors,  heirs,  assigns,  agents and representatives,  hereby knowingly and
voluntarily  forever  releases,  discharges and forgives  GUMTECH and all of its
directors, officers, shareholders, employees, agents, administrators, divisions,
and related  corporations  and entities,  from and against any and all legal and
equitable claims,  liabilities,  causes of action,  debts, damages and rights to
payment or  performance  of any nature  whatsoever,  whether  known or  unknown,
vested or contingent,  liquidated or unliquidated  asserted or not yet asserted,
arising from or in any way related to or associated  with (i) KERN's  employment
with GUMTECH,  (ii) the resignation of said employment,  (iii) any aspect of any
other relationship  between KERN and GUMTECH, and (iv) any other event occurring
or transaction entered into at any time up to and including the date of February
10, 1998,  including without limitation any matters that were or could have been
alleged by KERN.  Without in any way limiting the  generality of the  foregoing,
KERN  acknowledges  by his  execution of this Agreement that he has been paid in
full for all vacation  pay,  wages,  leave,  and other  benefits to which he was
entitled as an employee of GUMTECH,  other than the consideration  given to- him
under this Agreement.

     3. By executing this Agreement,  GUMTECH,  hereby knowingly and voluntarily
forever  releases,  discharges and forgives KERN for himself and his successors,
heirs,  assigns,  agents and representatives  from and against any and all legal
and equitable claims,  liabilities,  causes of action, debts, damages and rights
to payment or  performance,  whether  known or  unknown,  vested or  contingent,
liquidated or unliquidated, asserted or not yet asserted, arising from or in any
way related to or associated with (i) KERN's  employment with GUMTECH,  (ii) the
resignation  of said  employment,  (iii) any  aspect  of any other  relationship
between KERN and  GUMTECH,  and (iv) any other event  occurring  or  transaction
entered into at any time up to and including February 10, 1998.  Notwithstanding
the foregoing,  GUMTECH does not for itself,  its  shareholders,  employees,  or
agents  release  KERN of any actions that  violate  State or Federal  regulatory


                                        2



<PAGE>



statutes or  regulations  or any  fraudulent  action and cannot.  Further,  KERN
acknowledges  by his execution of this  Agreement  that he has been paid in full
for all vacation pay, wages,  leave, and other benefits to which he was entitled
as an employee of GUMTECH,  other than the consideration given to him under this
Agreement.

     4. Waiver of  Reinstatement.  Without in any way limiting the generality of
Section 3 of this  Agreement,  KERN hereby  knowingly  and  voluntarily  forever
releases,  discharges,  and  forgives  GUMTECH from and against any claim he may
have  or  have  had  for  reinstatement  to the  position  he  held  before  the
resignation of his employment with GUMTECH. KERN further promises, covenants and
agrees that, from and after the execution of this Agreement, he will never apply
for  employment  with  GUMTECH or any  corporation  or other  entity  related to
GUMTECH in any way,  and,  further,  that if he does apply for such  employment,
GUMTECH or its related  corporation or entity, as the case may be, may refuse to
employ KERN for any reason or no reason,  notwithstanding any contrary provision
of any law,  statute,  regulation  or  agreement  otherwise  applicable  to such
application.

     5. Employment Status and References.  For all purposes, GUMTECH shall treat
the resignation of KERN's employment with GUMTECH as a voluntary resignation. If
any third party requests any  information  regarding such  resignation,  GUMTECH
shall  indicate  to such  third  party  that  the  resignation  was a  voluntary
resignation.  If any third party requests a reference  regarding  KERN,  GUMTECH
shall provide only the foregoing  information,  together with KERN's name, dates
of employment and last position held, and will indicate to such third party that
the  provision  of only  such  information  is  GUMTECH's  normal  and  standard
reference policy.

     6. Life  Insurance.  KERN shall be assigned the ownership of life insurance
policy on his life that GUMTECH International Inc. has purchased on him, and the
beneficiary shall be changed to the Gerald Kern and Cynthia Kern Living Trust.

     7.  Insurance   Indemnification.   KERN  will  be  indemnified  by  GUMTECH
International  Inc.  for his  deductible  on any  matter  that is covered by the
errors and omissions insurance policy.

     8.  Non-Disparagement.  Both  parties,  including  GUMTECH's  officers  and
directors,  agree not to engage in any conduct or make any statement  that would
disparage the other or their respective  business  interests in any way. GUMTECH
and KERN  agree  and  understand  that  non-disparagement  of the  other  party,
including GUMTECH's officers and Directors, is a material term of this Agreement
and that  violation of such term would cause great harm to the other part](.  If
either  party  believes  that the other party has breached  the  obligation  and


                                        3



<PAGE>


commitments on non-disparagement, the non-breaching party shall give the alleged
breaching  party  reasonable  notice,  in writing,  of the alleged  breach,  the
factual basis for such alleged  breach,  and an  opportunity to respond within 7
days of the receipt of the notice of said alleged breach.  After such 7 day time
frame has passed, the non-breaching party may commence  arbitration as described
in Paragraph 7.4 of the  Employment  Agreement  previously  executed by KERN and
GUMTECH.


               If the  existence  of a breach is disputed  and  arbitrated,  the
losing  party  with  respect  to that  issue  will  pay the  prevailing  party's
reasonable attorneys' fees and costs incurred in arbitrating the alleged breach.
The  parties  agree  that  the losing  party  shall  pay  the  prevailing  party
liquidated damages  in the amount of Two Hundred Thousand  ($200,000.00) Dollars
as the harm that would be caused by a breach of the non-disparagement obligation
is difficult if not impossible to accurately estimate momentarily.  However, the
noted  sum  is  deemed  by the  parties  to be a  reasonable  forecast  of  just
compensation  for the harm that would be caused by a breach of the obligation of
non-disparagement.


          9. Tax Consequences and  Indemnification.  KERN will indemnify GUMTECH
International  Inc. against all tax consequences that might arise because of the
allocation of the damages.


               The  parties  agree  that  should  any   governmental   authority
determine that all or any part of the payment under paragraph is taxable income,
KERN will be solely  responsible for the payment of all such taxes.  KERN agrees
to  indemnify  and hold GUMTECH  harmless if any  governmental  authority  seeks
payment  of  taxes,  costs,  assessments,  penalties,  damages,  fees  interest,
withholding,  or other losses,  including losses, if a claim or determination is
made that all or part of this damage payment should have been treated as taxable
income.  KERN further  agrees  that,  if the  aforementioned  sum or any portion
thereof, is treated as taxable income, KERN will promptly execute and deliver to
GUMTECH the applicable  federal and state tax forms stating that he has paid the
taxes, costs, interest,  withholding,  assessments,  penalties, damages or other
losses, if any. In addition, KERN understand and agrees that GUMTECH has no duty
to defend against any claim or assertion that all or part of this damage payment
should be treated as taxable  income,  and KERN agrees to assume  responsibility
for  contesting  any such claim or  assertion,  and to  cooperated  fully in the
defense of any such claim or claims  regarding the  taxability of such sum which
is brought against GUMTECH.

     10.  Mutual Press  Release.  KERN and the GUMTECH  International  Inc. have
issued a mutual press release.

                                        4



<PAGE>



     11.  Return  All  Company  Equipment,  Property.  and  Documents.  KERN has
resigned  all  positions  with  GUMTECH  International  Inc. and will return all
company equipment,  property, and documents. He has returned all credit cards he
has in his personal possession.  Two phone accounts will be switched to KERN, to
be his  accounts.  He will be  responsible  for all charges on the account as of
February 10, 1998.

     12. No Assignment.  KERN represents and warrants to GUMTECH that he has not
sold,  assigned,  conveyed or otherwise  transferred,  in whole or in part,  any
claim, cause of action, debt, damage, or right to payment or performance against
GUMTECH and that no other  person owns or claims any  interest in or to any such
claim, cause of action,  debt, damage or right to payment or performance of KERN
against GUMTECH

     13. No Admissions.  By entering into this Agreement and by performing their
respective obligations hereunder, neither KERN nor GUMTECH admit any wrongdoing.

     14.  Voluntary  and Knowing  Agreement.  KERN and GUMTECH each hereby state
that  they  have  read  this  Agreement,  have  consulted  with (or have had the
opportunity  to  consult  with)  legal  counsel  of its or his own  choosing  in
connection with the decision to enter into this Agreement, and have entered into
this  Agreement  knowingly,  freely  and  voluntarily,  with  full and  complete
knowledge of the meaning and significance of the terms of this Agreement.


     15.  Settlement  Costs.  KERN AND GUMTECH  shall bear their  own respective
costs,  expenses and attorneys'  fees incurred in  negotiating  the terms of the
Agreement.

     16.  Entire  Agreement  This  Agreement  constitutes  the entire  agreement
between KERN and GUMTECH pertaining to the subject matter of this Agreement.  No
covenants,  promises,  representations or warranties have been made or are being
relied upon by either  party  except as expressly  set forth  herein.  Any prior
negotiations,  discussions  or  positions  by and between the parties are hereby
merged into this  Agreement,  and shall not operate or be construed to alter the
terms or affect the  interpretation  of this  Agreement.  This  Agreement may be
amended  only by a  writing  signed by both KERN and  GUMTECH;  no such  written
modification exists as of the execution of this Agreement.

     17.  Severability.  If any  provision  of this  Agreement  is  deemed to be
unenforceable,  for whatever reason, by a court of competent jurisdiction,  such
court shall have the authority to modify such  provisions to the minimum  extent
necessary,  consistent  with the intent of the parties,  to make such  provision
fully  enforceable,  or,  if such  provision  cannot be so  modified,  then such
provision  shall be  severed  from  this  Agreement  and the  remainder  of this
Agreement shall continue in full force and effect,  as if the Agreement had been
executed with the  unenforceable  provision so modified or severed,  as the case
may be.

                                       5

<PAGE>


     18. Counterparts.  This Agreement may be executed in counterparts, and when
all required  signatures  have been  obtained on such  counterpart  pages,  this
Agreement  will be deemed to have been fully executed and to be fully binding on
all parties  hereto as though all parties had signed a single  Agreement  rather
than counterpart originals thereof.


     IN WITNESS WHEREOF, the undersigned have executed this Settlement Agreement
and Release as of the date and year first above written.



GUMTECH INTERNATIONAL INC.

By                                            /s/  GERALD KERN
  -----------------------------               ---------------------------------
                                              GERALD KERN

Its
   ----------------------------

STATE OF ARIZONA      )
                      )  ss.
County of Maricopa    )

     On this,  the 2nd day of March,  1998,  before me, the  undersigned  Notary
Public,  personally  appeared  GERALD  KERN,  known  to me or  proved  to be the
individual   whose  name  is  subscribed  to  the  foregoing   instrument,   and
acknowledged  that  he  executed  the  same  for  the  purposes  stated  in  the
instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal.


                                             /s/  Mary H. Portillo
                                             -----------------------------------


My Commission Expires:

(Seal Omitted)


                                       6


<PAGE>



STATE OF ARIZONA     )
                     )   ss.
County of Maricopa   )

     On this, the ................. day of ...................  1998, before me,
the undersigned Notary Public, personally appeared ............................,
known to me or proved  to be the  individual  whose  name is  subscribed  to the
foregoing  instrument,  and acknowledged  that he executed the same on behalf of
GUMTECH International Inc. for the purposes stated in the instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal.




                                                  ------------------------------
                                                   Notary Public

My Commission Expires:

---------------------

                                        7



<PAGE>


                             Cancellation Agreement

This  Cancellation  Agreement (this  "Agreement") is entered into as of February
10, 1998, by and between Gum Tech International,  Inc., a Utah corporation ("Gum
Tech"), and Gerald Kern (Kern").

Whereas,  Gum Tech granted to Kern incentive  stock options  pursuant to the Gum
Tech  International,  Inc.  Stock  Option  Plan,  as  amended,  as follows  (the
"Options"):  (i) Grant of  Incentive  Stock Option dated August 14, 1996 for the
right to purchase  50,000 shares of voting,  common  stock,  no par value of Gum
Tech ("Common  Stock");  (ii) Grant of Incentive Stock Option dated December 30,
1996 for the right to  purchase  250,000  shares  Common  Stock;  (iii) Grant of
Incentive  Stock  Option  dated  September  23,  1997 for the right to  purchase
156,500 shares of Common Stock;

Whereas,  for good and valuable  consideration,  the receipt and  sufficiency of
which are hereby acknowledged,  Gum Tech and Kern desire to cancel and terminate
the Options;

Now,  therefore,  Gum Tech and Kern hereby  irrevocably cancel and terminate the
Options and any other  rights to acquire  shares of Common  Stock from Gum Tech,
excluding the option to purchase  100,000  shares of Common Stock  pursuant to a
Grant of Incentive Stock Option dated February 10, 1998.

This Agreement  shall be construed in accordance  with and goverened by the laws
of the State of Arizona.  The  parties  agree that any action  interpreting  the
Agreement  shall be  brought  in the  superior  Court in and for the  County  of
Maricopa,  Arizona  and they  consent  to the  jurisdiction  and venue of such a
court. This agreement shall be binding upon the heirs, successors and assigns of
the parties hereto.

Gum Tech International, Inc., a Utah
corporation

By:  /s/  Gary Kehoe
    --------------------------------            --------------------------------
    Gary Kehoe, President                       GERALD KERN


<PAGE>



     IN WITNESS WHEREOF,  the 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.,
                                      a Utah corporation

                                      By: /s/  Gary Kehoe
                                          --------------------------------------
                                          Gary Kehoe, President



                                       ACCEPTED AND AGREED TO:


                                       -----------------------------------------
                                      GERALD KERN