**EDITORS’ ADVISORY**
REFERENCING THE TASER® TRADEMARK
Don’t Confuse Generic Stun Guns with TASER® Brand Devices

SCOTTSDALE, Ariz., November 3, 2005 -- TASER International, Inc. (Nasdaq: TASR), a
market leader in advanced electronic control devices, provided the following guidance for those
reporting incidents where a generic stun gun may have been used.
TASER® is a registered trademark of TASER International, Inc. and can only be used to identify
TASER brand electronic control devices exclusively manufactured by TASER International, Inc.
Some editors and copy writers incorrectly use the TASER trademark as a generic term to refer to
any electronic control device or stun gun, regardless of its source or functions. This use is
improper and a violation of TASER International trademark rights.
A trademark cannot be treated as an ordinary word or used as a noun. A trademark like the
“TASER” mark is not the name of a product. It is a mark indicating the product’s source and
quality, and it is trusted by the public. TASER International has invested millions of dollars in
enhancing and protecting the intellectual property rights to this trademark and this trust does not
come cheap. A trademark’s value is built though investment in product quality and advertising,
but it can be irresponsibly reduced when the mark is not properly used as a trademark. We are
legally obligated to vigorously pursue all improper and illegal uses of our trademarks to avoid
the loss of our trademark rights.
TASER International, Inc. manufactures and sells advanced electronic control devices for use in
the law enforcement, military, private security and personal defense markets. TASER devices
use proprietary technology to safely incapacitate dangerous, combative or high-risk subjects who
pose a risk to law enforcement officers, innocent citizens or themselves. A TASER device has
the ability to operate in both a contact stun mode like generic stun guns when manually pressed
against the attacker, or in a remote stun mode, firing wire-tethered darts toward an attacker.
TASER devices are distinguished by utilizing patented state-of-the-art Electro-Muscular
Disruption (EMD) technology that temporarily overrides the sensory and motor nervous system,
interfering with muscular control. This EMD technology temporarily debilitates individuals with
minimal risk of injury. Generally, the individual cannot continue voluntary movement until the
TASER device is turned off. Over 80 medical and safety studies and reports have confirmed that
the TASER device is among the safest and most effective tools available to law enforcement
today.
TASER International has also built an unprecedented level of accountability into TASER
devices. Each TASER device is equipped with an on-board computer that records the time and
date every time the trigger is pulled. TASER cartridges are serialized and registered to the
individual user through an Anti-Felon Identification (AFID) tracking program. AFIDs are tiny
pieces of confetti encoded with the serial number of the TASER cartridge from which they are
deployed. When the TASER device is used, 20-30 AFIDs are dispersed from the TASER
cartridge, providing evidence to trace the TASER device use back to the registered owner. No
other weapon in the world has this capability.

2
While the consumer market may be flooded with a wide variety of cheap, generic, electric stun
or shock devices, these must not be referred to in a story as a “taser,” “TASER,” or “TASER
weapon”. These products are not TASER devices marketed by TASER International, Inc. since
TASER brand products are marked with the TASER trademark and have unique, high quality
features absent from the ordinary stun gun. Referring to these products as a TASER device
would be a violation of our trademark rights. Only refer to a TASER device when the details of
the reporting include the unique characteristics of a TASER brand electronic control device. If
the device does not have these characteristics or distinct markings, or if you are unsure, it is very
likely not a TASER brand electronic control device so do not refer to it as a TASER device.
Only the AIR TASER 34000, TASER® X26, TASER® X26C, and the ADVANCED TASER®
M26 and M18 series can be properly referred to as TASER electronic control devices. The
trademarks and model numbers are in all capital block letters. (Note that TASER is an acronym
for Thomas A. Swift’s Electric Rifle.)
“TASER®” and “ADVANCED TASER®” are registered trademarks of TASER International,
Inc.
When referring to the company, TASER International, “TASER” is not being used as a
trademark, so no ® is appropriate.
* U.S. Department of Defense policy defines non-lethal weapons as "weapon systems that are
explicitly designed and primarily employed so as to incapacitate personnel or material, while
minimizing fatalities, permanent injury to personnel, and undesired damage to property and the
environment..."- Joint Concept for Non-lethal Weapons, United States Marine Corps
If you have any questions regarding TASER electronic control devices or the proper the use of
the trademark, please visit the Company’s website at www.TASER.com/trademark or contact
Steve Tuttle, Vice President of Communications, TASER International, at 480-444-4000 or
steve@TASER.com
# # #

- - - - - - - - - - - - - - - PROTECT LIFE - - - - - - - - - - - - - - -

17800 N. 85th St. • Scottsdale, Arizona 85255 - 9603 • www.TASER.com
Phone: 480.905.2000 • 800.978.2737 • Fax: 480.991.0791

«date»
«name»
«company»
«address»
«CityStateZip»
Sent via Federal Express
Subject: TASER International Trademark “TASER”
Dear Sir/Madam:
It has come to our attention that your «companytype» may have improperly used the
trademark “TASER” in a recent news story which ran on «article_date» entitled «title».
“TASER” is a registered trademark with the United States Patent and Trademark Office and
owned by TASER International, Inc. We are advising you of this fact to ensure that your use
of our trademark is proper and in accordance with US trademark law. TASER International
has invested millions of dollars to acquire and build the trademark “TASER” and we cannot
allow any improper use to erode our trademark rights. The requirements for using the
trademark “TASER” are as follows:
ƒ

ƒ

ƒ
ƒ

The trademark “TASER” must only be used to describe a TASER brand
electronic control device manufactured by TASER International. The
primary function of a trademark is to tell the buyer the source of the
product. The source of TASER products is TASER International.
The trademark “TASER” must be spelled as an adjective followed by the
word “brand”, a name of a product produced by TASER International, or a
generic tern. For example, the TASER X26, the ADVANCED TASER
brand non-lethal weapon, the TASER cartridge.
The first prominent use of our trademarks must be used with the registered
trademark symbol after the mark (e.g. TASER®) as well as text or
footnote suitably stating “Registered trademark of TASER International.”
The trademark “TASER” must not be used as a noun, a possessive, a
plural. For this reason, all of these are incorrect: “a police taser”, “the
citizen taser”, “armed with tasers”, “the taser’s darts”.

«name»
«date»
Page 2
ƒ

ƒ
ƒ

The proper way to describe the effect on a person of a TASER device is to
state one of the following: (a) “the person was incapacitated by a
TASER® electronic control device” or (b) “the officer deployed a
TASER® device.”
It is incorrect to use the TASER trademark as a verb (e.g., tasered,
tasering, tasing).
The TASER trademark must not be hyphenated or used as a generic
description or name. For this reason, all of these are incorrect: “taser-type
device”, “taser-shocked”, and “water gun shaped like a taser”.

Any use of the trademark TASER in the future by you or your affiliates must comply with
these use requirements. A more complete description of how to use the trademark “TASER”
is available at www.TASER.com. Thank you for your cooperation and consideration in this
matter.

Very truly yours,

Douglas E. Klint
Vice President and General Counsel
cc: «ccname»

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Richard Gaskill
602-223-4455
NASD
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bowne.edgar@bowne.com

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Description: Schedule 14A

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SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant

ã

Filed by a party other than the registrant
Check the appropriate box:
Preliminary proxy statement

ã

Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).

Definitive proxy statement.
Definitive additional materials.
Soliciting material pursuant to Rule 14a-12.

(Name of Registrant as Specified in Its Charter)
TASER INTERNATIONAL, INC.
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):

ã

No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:
(4) Date Filed:

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TASER INTERNATIONAL, INC.
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 1, 2002

To Our Stockholders:
The Annual Meeting of Stockholders of the TASER International, Inc. (the “Company”) will be held at 10:00 a.m. on Wednesday,
May 1, 2002 at the principal executive offices of the Company, 7860 East McClain Drive, Suite 2, Scottsdale, Arizona for the following
purposes:
1.

Electing four directors of the Company;

2.

Ratifying the appointment of Arthur Andersen LLP as the Company’s independent auditors for 2002; and

3.

Transacting such other business as may properly come before the meeting.

Only holders of the Company’s Common Stock at the close of business on March 15, 2002 are entitled to notice of, and to vote at,
the meeting and any adjournments or postponements thereof. Stockholders may vote in person or by proxy. A list of stockholders entitled
to vote at the meeting will be available for examination by stockholders at the time and place of the meeting and during ordinary
business hours, for a period of 10 days prior to the meeting, at the principal place of business of the Company, 7860 East McClain Drive,
Suite 2, Scottsdale, Arizona 85260.
By Order of the Board of Directors,
/s/ KATHLEEN C. HANRAHAN
Kathleen C. Hanrahan
Secretary
Scottsdale, Arizona
March 25, 2002
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON, PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.

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TASER INTERNATIONAL, INC.
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260
PROXY STATEMENT
2002 Annual Meeting of Stockholders

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of TASER International, Inc. (the
“Company”) of proxies to be voted at the 2002 Annual Meeting of Stockholders of the Company to be held at 10:00 a.m. on Wednesday,
May 1, 2002 at the principal executive offices of the Company, 7860 East McClain Drive, Suite 2, Scottsdale, Arizona, and at any
adjournments or postponements thereof. If proxies in the accompanying form are properly executed, dated and returned prior to the
voting at the meeting, the shares of Common Stock represented thereby will be voted as instructed on the proxy. If no instructions are
given on a properly executed and returned proxy, the shares of Common Stock represented thereby will be voted for election of the
directors, for ratification of the appointment of the independent auditors and in support of the recommendations of management on such
other business as may properly come before the meeting or any adjournments or postponements thereof.
Any proxy may be revoked by a stockholder prior to its exercise upon written notice to the Secretary of the Company, by delivering
a duly executed proxy bearing a later date, or by the vote of a stockholder cast in person at the meeting. The cost of soliciting proxies
will be borne by the Company. In addition to solicitation by mail, proxies may be solicited personally by the Company’s officers and
regular employees, or by telephone, facsimile or electronic transmission or express mail. The Company will reimburse brokerage houses,
banks and other custodians, nominees and fiduciaries for their reasonable expenses incurred in forwarding proxies and proxy material to
their principals. This proxy statement is first being mailed to stockholders on or about March 25, 2002.
VOTING
Holders of record of the Company’s Common Stock on March 15, 2002 will be entitled to vote at the Annual Meeting or any
adjournments or postponements thereof. As of that date, there were 2,821,378 shares of Common Stock outstanding and entitled to vote,
and a majority, or 1,410,690 of these shares, will constitute a quorum for the transaction of business. Each share of Common Stock
entitles the holder to one vote on each matter that may properly come before the meeting. Stockholders are not entitled to cumulative
voting in the election of directors. Abstentions will be counted in determining whether a quorum is present for the meeting and will be
counted as a vote against any proposal. Broker non-votes will also be counted in determining whether a quorum is present, but will not
be counted either for or against the proposal at issue.
ELECTION OF DIRECTORS
The Board of Directors is comprised of six directors. The directors are divided into three classes comprised of two directors each.
Generally, one class is elected each year for a three-year term. However, because the Company completed its initial public offering in
May of 2001 and did not hold an Annual Meeting of Stockholders in 2001 at which it elected directors, current directors Phillips W.
Smith and Bruce Culver are nominees for election as directors to serve until the Annual Meeting of Stockholders in 2004 (a two-year
term), or until their respective successors are elected and qualified. In addition, the two nominees for election as directors to serve a
regular three-year term until the Annual Meeting of Stockholders in 2005, or until their respective successors are elected and qualified,
are Patrick W. Smith and Karl F. Walter. Directors are elected by a plurality of the votes of the shares present in person or represented by
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vote on the election of directors. The four nominees for director receiving the highest number of votes will be elected to the Board of
Directors.
Unless marked otherwise, proxies received will be voted FOR the election of each of the nominees named below.
If any nominee is unable or unwilling to serve as a director at the date of the Annual Meeting or any postponement or adjournment
thereof, the proxies may be voted for a substitute nominee, designated by the proxy holders or by the present Board of Directors to fill
such vacancy, or for the other nominee named without nomination of a substitute, or the number of directors may be reduced
accordingly. The Board of Directors has no reason to believe that any of the nominees will be unwilling or unable to serve if elected a
director.
The Board of Directors recommends a vote FOR the election of Phillips W. Smith, Bruce R. Culver, Patrick W. Smith and
Karl F. Walter.
The following table sets forth certain information about each nominee for election to the Board of Directors, each continuing
director and an additional executive officer of the Company.

Name

Nominees for Election
Class A (for two-year term)
Phillips W. Smith (1)
Bruce R. Culver (1)(2)(3)
Class B (for three-year term)
Patrick W. Smith (1)
Karl F. Walter
Directors Continuing in Office
Class C
Thomas P. Smith
Matthew R. McBrady (2)(3)
Additional Executive Officer
Kathleen C. Hanrahan

Age

Positions

Director or
Officer
Since

Expiration
of Current
Term

64
56

Chairman of the Board of Directors
Director

1993
1994

2001
2001

31
55

Chief Executive Officer and Director
Executive Vice President and Director

1993
2000

2002
2002

34
31

President and Director
Director

1993
2000

2003
2003

38

Chief Financial Officer

2000

—

(1) Member of the Nominating Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
Directors and Executive Officers
Phillips W. Smith, Chairman of the Board of Directors. Dr. Smith has served as a director since 1993. Since August 1997, Dr. Smith
has served on the Board of Directors of Pentawave, Inc., a developer of cross-media publishing software. Dr. Smith was Chairman of the
Board of Pentawave from January 1999 through October 2000 and its Chief Executive Officer from January through March 1999. From
June 1990 to September 1997, Dr. Smith served as the President and Chief Executive Officer of Zycad Corporation, a developer of
engineering and manufacturing applications software. Dr. Smith holds a B.S.E. degree from West Point, an M.B.A. degree from
Michigan State University, and a Ph.D. in Business Administration from St. Louis University.
Bruce R. Culver, Director. Mr. Culver has served as a director of the Company since January 1994. Mr. Culver co-founded
Professional Staff, P.L.C., a human resource management company, and has served on its Board of Directors since April 1990. In March
1993, Mr. Culver organized and has since remained the Chief Executive Officer of Culver Distributions, Inc., doing business as
California Distribution Company,
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providing warehouse and distribution services to internet companies. Since April 1997, Mr. Culver has served on the Board of
Pentawave, Inc., becoming its Chairman in October 2000.
Patrick W. Smith, Chief Executive Officer and Director. Mr. Smith has served as Chief Executive Officer and as a director of
TASER since 1993. He is a co-founder of the Company. Mr. Smith holds a B.S. degree in Biology and Neurobiology from Harvard
University, an M.B.A. degree from the University of Chicago, and a Masters Degree in International Finance from the University of
Leuven in Leuven, Belgium.
Karl F. Walter, Executive Vice President and Director. Mr. Walter has served as Executive Vice President of Sales and Marketing
of TASER since June 2001 and as a director since January 2001. Mr. Walter was a co-founder of Glock, Inc., a subsidiary of GLOCK
GmbH, an Austrian semi-automatic pistols manufacturer. From January 1994 through February 1997, Mr. Walter worked as a director of
law enforcement sales for Sturm Ruger Co., a firearms manufacturer. Since March 1997, Mr. Walter has worked as the program manager
for AV Technology International, LLC, a builder of armored vehicles.
Thomas P. Smith, President and Director. Mr. Smith has served as President of TASER since April 1994 and as a director since
1993. He is a co-founder of the Company. Mr. Smith holds a B.S. degree in Ecology and Evolutionary Biology from the University of
Arizona and an M.B.A. degree from Northern Arizona University.
Matthew R. McBrady, Director. Mr. McBrady has served as a director of TASER since January 2001. From August 1998 though
July 1999, Mr. McBrady served as a member of the staff of President Clinton’s Council of Economic Advisers. In December 1997,
Mr. McBrady began working as a financial and analytical consultant for Avenue A, Inc., an internet marketing company, and served as
its vice president of analytics from June 1999 through October 1999. Mr. McBrady taught corporate finance courses at the University of
Southern California during the summer terms of 1997 and 1998, at Harvard University from September 1996 through May 1997, and at
Harvard Business School during the spring term of 1998. Mr. McBrady holds a B.S. in Economics from Harvard University, an M.S. in
International Economics from Oxford University, and expects to receive a Ph.D. in Corporate and International Finance from Harvard
University in June 2002.
Kathleen C. Hanrahan, Chief Financial Officer. Ms. Hanrahan is the Company’s chief financial officer, serving in that position
since November 2000. Ms. Hanrahan first joined TASER in January 1996 as an internal controls consultant and became its controller in
March 1996.
Each officer serves at the discretion of our Board of Directors. No officer is subject to an agreement that requires the officer to serve
TASER for a specified number of years.
Meetings of the Board of Directors; Board Committees
During the year ended December 31, 2001, the Board of Directors held six regular meetings.
The Company maintains a standing Audit Committee, Compensation Committee and Nominating Committee. Messrs. Culver and
McBrady are the members of the Audit and Compensation Committees.
The Audit Committee held seven meetings during the year ended December 31, 2001. Among other things, the function of the Audit
Committee is to review and make recommendations to the Board of Directors with respect to the selection of the Company’s independent
auditors and the terms of their engagement; review the policies and procedures of the Company and management with respect to
maintaining the Company’s books and records; review with the independent auditors, upon the completion of their audit, the results of
the auditing engagement and any other recommendations the auditors may have with respect to the Company’s financial, accounting or
auditing systems; and review with the independent auditors, upon the completion of their quarterly review of the Company’s financial
statements, the results of the quarterly review and any other recommendations the auditors may have in connection with their review.
The Audit Committee operates under a written charter, a copy of which is attached to this Proxy Statement as Appendix A. The report of
the Audit Committee for the year ended December 31, 2001 is included in this Proxy Statement.
The Compensation Committee held one meeting during the year ended December 31, 2001. Among other matters, the Compensation
Committee determines salaries and bonuses and considers employment
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agreements for elected officers of the Company, and prepares legally required reports on these matters; considers, reviews and grants
awards under the Company’s compensation plans and administers the plans; and considers matters of director compensation, benefits and
other forms of remuneration.
The Nominating Committee held one meeting during the year ended December 31, 2001. Patrick W. Smith, Phillips W. Smith and
Bruce R. Culver are its members. The Committee is charged with, among other matters, identifying qualified candidates for nomination
for election to the Board of Directors, obtaining the consent of the candidates to the nomination, and nominating such consenting
candidates for election; and reviewing and making recommendations to the Board of Directors concerning the composition and size of
the Board and its committees. The Committee will consider qualified candidates for nomination recommended by the Company’s
stockholders, but has not established formal procedures with respect to the submission of such recommendations.
Family Relationships
Mr. Thomas P. Smith and Mr. Patrick W. Smith are Dr. Phillips W. Smith’s sons. No other family relationships exist among the
Company’s directors and executive officers.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are officers of the Company are not separately compensated for serving on the Board of
Directors. Directors who are not officers of the Company are paid $1,250 per quarter. Directors are also reimbursed for expenses incurred
in connection with attendance at meetings.
CERTAIN TRANSACTIONS
In 1998, Mr. Bruce R. Culver, a director of TASER, loaned the Company $622,525. In March 1998, $150,000 of such amount was
converted into 20,833 shares of the Company’s Common Stock at an estimated value of $7.20 per share. In December 1998, the
Company issued Mr. Culver a promissory note for $472,525, the remaining amount due. The note carried interest at a rate of 10% per
year and was to mature July 1, 2002.
In 1999, Mr. Culver loaned the Company $1,500,000. In return, in April 1999, the Company issued him a promissory note for
$500,000 at an effective interest rate of 27.1% per year to mature October 31, 2000, and 1,666,667 shares of the Company’s Common
Stock at a price of $0.60 per share. These shares were subject to a repurchase agreement between Mr. Culver and the Company that
allowed the Company to repurchase the shares if it met certain operating performance criteria. The Company met the criteria and
repurchased the shares from Mr. Culver in July 2000 in exchange for a promissory note in the amount of $1,000,000. The Company
consolidated this note and the April 1999 note into a new note for $1,500,000 which carried interest at bank prime, which was 9.5% at
December 31, 2000, plus 1%. The Company repaid the new note in full in April 2001 with the proceeds of a loan from a commercial
bank.
In March 1999, Mr. Culver loaned the Company $100,000, and in July 1999, Mr. Culver loaned the Company $50,000. In May
2000, Mr. Culver loaned the Company an additional $200,000 at an interest rate of 10%, due July 1, 2002.
The Company used all amounts loaned to it by Mr. Culver to fund its working capital needs. In July 2001, the Company used
proceeds from a draw on an existing line of credit to prepay the total remaining amount due to Mr. Culver, $822,528, under a promissory
note carrying interest at a rate of 10%. The Company received a prepayment discount of 7.5%, or $61,690, of the outstanding principal
balance of the note at the time of the prepayment. It applied the discount to additional paid-in capital.
In July 2000, the Company issued Mr. Culver a warrant to purchase 22,727 shares of its Common Stock at a price of $3.30 per share
in connection with his provision of a $1,500,000 loan to the Company in such month. These warrants expire July 31, 2005.
4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 45069
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[B/E]

Phone: (602) 223-4455

Operator: BPX31027

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In 1998, Mr. Phillips W. Smith, the Company’s chairman, loaned it $725,691 to fund its working capital needs. In March 1998,
$150,000 was converted into 20,833 shares of Common Stock at an estimated fair value of $7.20 per share and $120,000 was repaid. In
December 1998, the Company issued a promissory note for $455,691, the remaining amount due. The note bears interest at a rate of 10%
per year and matures July 1, 2002. Further, Mr. Smith has deferred expenses in the amount of $99,794, which was formalized in a note
bearing 10% interest, which matured December 31, 2000. Under certain circumstances, Mr. Smith agreed to extend the maturity of these
notes. As of December 31, 2001, the aggregate principal amount due to Mr. Smith under these notes was $455,691. The Company repaid
Mr. Smith such amount in full in February 2002.
In April 2001, Mr. Culver established a non-revocable letter of credit in the amount of $500,000 on the Company’s behalf that it
could use to fund any shortfalls in monthly working capital requirements until it could make other financing arrangements, and provided
the Company a related letter of support. These documents expired on December 31, 2001.
In July 1999, Malcolm W. Sherman, a stockholder, loaned the Company $75,000 to acquire production equipment. The related note
carries interest at 9.18% and matures July 1, 2001. In May 2000, the Company issued Mr. Sherman an option to purchase 3,333 shares of
its Common Stock at an exercise price of $0.22 per share in connection with his continuing provision of services to the Company
following his retirement as a full-time employee and in consideration of his provision of the loan.
The Company leases a six-seat aircraft from Thomas P. Smith, the Company’s President and a director, under an Equipment Lease
which expires in August 2013. The lease requires the Company to pay Mr. Smith rent of approximately $1,556 per month ($18,672 per
year). In October 2001, the Company entered into an agreement with Mr. Smith to pay approximately $29,000 to replace the aircraft’s
engine.
It is the Company’s policy that all related party transactions will be reviewed by its Board of Directors. It is the policy of the
Company’s Board of Directors that all proposed transactions by the Company with its directors, officers, five-percent stockholders and
their affiliates, including forgiveness of any loan from the Company to any such person, be entered into or approved only if such
transactions are on terms no less favorable to the Company than it could obtain from unaffiliated parties, are reasonably expected to
benefit the Company and are approved by a majority of the disinterested, independent members of the Company’s Board of Directors.
Such independent directors are authorized to consult with independent legal counsel at the Company’s expense in determining whether to
approve any such transaction.
EXECUTIVE COMPENSATION
Cash and Non-Cash Compensation Paid To Certain Executive Officers
The following table sets forth information regarding compensation awarded to, earned by, or paid to the Company’s Chief Executive
Officer for all services rendered to the Company during 2001, 2000 and 1999. None of the Company’s other executive officers earned in
excess of $100,000 in salary and bonus in 2001.
Summary Compensation Table
Annual Compensation
Name and Principal Position

Patrick W. Smith
Chief Executive Officer

5

Year

Salary

2001
2000
1999

$96,252
$65,208
$49,161

Bonus

—
$2,500
—

Long Term
Compensation
Securities Underlying
Options(#)

60,000
—
10,000

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 47936
P66327.SUB, DocName: DEF 14A, Doc: 1, Page: 8

Phone: (602) 223-4455

Operator: BPX31027

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Option Grants in Last Fiscal Year
The following table sets forth certain information regarding options granted in 2001 to the Company’s Chief Executive Officer:
Individual Grants
Number of
Securities
Underlying Options
Granted(1)

Name

Patrick W. Smith

% of Total Options
Granted to
Employees in 2001

60,000

15.4%

Exercise or Base
Price ($/Sh)

Expiration Date

$7.21

12/31/05

(1) This option vests ratably at the end of each month for a 48-month period beginning January 1, 2001, subject to the executive’s
continuing performance of services for the Company.
Fiscal Year End Option Values
The following table sets forth information regarding the number and value of unexercised options held by the Company’s Chief
Executive Officer on December 31, 2001. He did not exercise any options to purchase common stock during 2001.
Number of Securities
Underlying Options at
Fiscal Year End(#)
Name

Patrick W. Smith

Exercisable

23,472

Value of Unexercised
In-the-Money Options at
Fiscal Year End($) (1)

Unexercisable

Exercisable

Unexercisable

46,528

$217,186

$306,114

(1) Based on the closing price on The Nasdaq Stock Market of the Common Stock of the Company on December 31, 2001 of $13.75.
Employment Agreements and Other Arrangements
In July 1998, the Company entered into an employment agreement with Patrick W. Smith pursuant to which he agreed to serve as its
Chief Executive Officer. The agreement was for an initial three-year term ended June 30, 2001, and was automatically renewed for a
two-year term on such date and will be every two years thereafter unless the Company gives Mr. Smith one-year prior notice of
termination, if the termination is without cause. The agreement provided for annual base compensation in the amount of $65,000, which
amount may be increased based on performance. In October 2001, the Company increased Mr. Smith’s annual base compensation to
$115,000. The Company may terminate this agreement with or without cause. Should it terminate the agreement without cause, upon a
change of control or upon his death or disability, the Company’s Chief Executive Officer is entitled to compensation equal to 12, 24 or
18 months of salary, respectively.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 34234
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Phone: (602) 223-4455

Operator: BPX31027

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REPORT OF THE AUDIT COMMITTEE
Board of Directors
TASER International, Inc.
The Audit Committee of the Board of Directors is established pursuant to the Company’s Bylaws, as amended, and the Audit
Committee Charter adopted by the Board of Directors on February 15, 2001. Management is responsible for the Company’s internal
controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the
Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States of America
and for issuing a report thereon. The Audit Committee’s responsibility is generally to monitor and oversee these processes, as described
in the Audit Committee Charter.
The members of the Audit Committee are Messrs. Matthew R. McBrady (Chairman) and Bruce R. Culver. Each member of the
Audit Committee is independent in the judgment of the Company’s Board of Directors and as required by the listing standards of The
Nasdaq Stock Market. Members of the Audit Committee will normally be appointed at the annual meeting of the Board of Directors in
May of each year.
With respect to the year ended December 31, 2001, in addition to its other work, the Audit Committee:
• Reviewed and discussed with the Company’s management and the independent auditors the audited financial statements of the
Company as of December 31, 2001 and for the year then ended;
• Discussed with the independent auditors the matters required to be discussed by auditing standards generally accepted in the United
States of America; and
• Received from the independent auditors written affirmation of their independence required by Independence Standards Board
Standard No. 1 and discussed with the auditors the firm’s independence.
Based upon the review and discussions summarized above, together with the Committee’s other deliberations and Item 7 of
Commission Form 10-KSB, the Committee recommended to the Board of Directors that the audited financial statements of the
Company, as of December 31, 2001 and for the year then ended, be included in the Company’s Annual Report on Form 10-KSB for the
year ended December 31, 2001 for filing with the Commission. The Committee also recommended the reappointment, subject to
stockholder approval, of the independent auditors.
March 14, 2002.
Matthew R. McBrady
Bruce R. Culver
7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 25740
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information, as of March 15, 2002 with respect to beneficial ownership of the Company’s Common
Stock (the only class of shares of outstanding voting securities of the Company) by each director or nominee for director, by each Named
Executive Officer, by all directors and officers as a group, and by each person who is known to the Company to be the beneficial owner
of more than five percent of the Company’s outstanding Common Stock.
As of such date, there were 2,821,378 shares of Common Stock outstanding. The Company believes that, except as otherwise
described below, each named beneficial owner has sole voting and investment power with respect to the shares listed.
Amount and
Nature of
Beneficial
Ownership

Name and Address of Beneficial Owner

Bruce R. Culver (2)
Patrick W. Smith (2)(3)
Phillips W. Smith (2)(3)
Thomas P. Smith (2)(3)
Karl F. Walter (2)
Matthew R. McBrady (2)
All directors and executive officers as a group (7 persons) (3)
RAB Europe Fund Limited (4)
PO Box 265 GT
Walker House, Mary Street
George Town, Grand Cayman

*

391,145
360,334
349,871
231,424
2,583
2,083
1,365,940
239,100

Percent
of Class(1)

13.9%
12.8%
12.4%
8.2%
*
*
48.3%
8.5%

less than 1%

(1) Calculated based on number of outstanding shares as of March 15, 2002 which is 2,821,378 plus the total number of shares which the
reporting person has the right to acquire beneficial ownership of within 60 days following March 15, 2002.
(2) The address of such person is c/o 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260.
(3) The shares shown as beneficially owned include 2,500 shares for Patrick W. Smith, 2,500 shares for Thomas P. Smith, and 6,354
shares for the group, which such persons and the group have the right to acquire by exercise of stock options or warrants within
60 days following March 15, 2002. The shares beneficially owned by Phillips W. Smith include 332,646 shares held of record by the
Phillips W. Smith Family Trust.
(4) This information is based upon Amendment No. 1 to Schedule 13G filed with the Securities and Exchange Commission by RAB
Europe Fund Limited on February 14, 2002.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more
than 10 percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the “Commission”). Officers, directors and greater than 10 percent beneficial owners are required
by Commission regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based solely on review
of the copies of such reports furnished to the Company and written representations from reporting persons that no other reports were
required, to the Company’s knowledge, such persons complied with all of the Section 16(a) filing requirements applicable to them with
respect to 2001.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 59163
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Phone: (602) 223-4455

Operator: BPX31027

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EDGAR 2

RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent public accountants, to audit the consolidated financial
statements of the Company for the year ending December 31, 2002. Arthur Andersen LLP has acted as independent public accountants
for the Company since 1996. A representative of Arthur Andersen LLP is expected to be present at the Annual Meeting, will have the
opportunity to make a statement and will be available to respond to appropriate questions.
Unless marked to the contrary, proxies received will be voted FOR ratification of the appointment of Arthur Andersen LLP as the
Company’s independent auditors for the 2002 year.
The Board of Directors recommends a vote FOR ratification of the appointment of Arthur Andersen LLP as the Company’s
independent auditors for the 2002 year.
Audit Fees
The aggregate fees billed by Arthur Andersen LLP for professional services rendered for the audit of the Company’s annual
financial statements for the fiscal year ended December 31, 2001 and for the review of the financial statements included in the
Company’s Quarterly Reports on Form 10-QSB for that fiscal year were $76,200.
All Other Fees
The aggregate fees billed by Arthur Andersen LLP for services rendered to the Company, other than the services described above
under “Audit Fees” for the fiscal year ended December 31, 2001 were $21,700. These services included assistance with preparation of
the Company’s 2001 income tax returns and consultation with regard to tax issues.
The Audit Committee has considered whether the provision by Arthur Andersen LLP of non-audit services is compatible with
Andersen maintaining its independence.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 7725
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Operator: BPX31027

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OTHER BUSINESS
Management knows of no other matters that will be presented for action at the Annual Meeting. However, the enclosed proxy gives
discretionary authority to the persons named in the proxy in the event that any other matters should be properly presented for action at
the meeting.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company’s proxy materials for the 2003 Annual Meeting of stockholders, a proposal intended to
be presented by a stockholder for action at that meeting must, in addition to complying with the stockholder eligibility and other
requirements of the Commission’s rules governing such proposals, be received not later than November 25, 2002 by the Secretary of the
Company at the Company’s principal executive offices, 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260.
Stockholders may bring business before an annual meeting only if the stockholder proceeds in compliance with the Company’s
Bylaws, as amended. For business to be properly brought before the 2002 Annual Meeting by a stockholder, notice of the proposed
business must be given to the Secretary of the Company in writing on or before the close of business on April 4, 2002.
The notice to the Company’s Secretary must set forth as to each matter that the stockholder proposes to bring before the meeting:
(a) the nature of the proposed business with reasonable particularity, including the exact text of any proposal to be presented for action,
and the reasons for conducting such business at the annual meeting; (b) the stockholder’s name and address as they appear on the
Company’s books, business address and telephone number, residence address and telephone number, and the class and number of shares
of the Company’s stock beneficially owned by the stockholder; (c) any interest of the stockholder in such business; (d) the name or
names of each person nominated by the stockholder to be elected or re-elected as a director, if any; and (e) with respect to any such
nominee, the nominee’s name, business address and telephone number, residence address and telephone number, the class and number of
shares of the Company’s stock, if any, beneficially owned by the nominee, all information relating to the nominee that is required to be
disclosed in solicitations of proxies for elections of directors, or is otherwise required, under Regulation 14A of the Securities Exchange
Act of 1934, as amended, or successor regulation, and a letter signed by the nominee stating the nominee’s acceptance of the nomination,
the nominee’s intention to serve as a director if elected and consenting to being named as a nominee for director in any proxy statement
relating to such election.
The presiding officer at any annual meeting shall determine whether any matter was properly brought before the meeting in
accordance with the above provisions. If the presiding officer should determine that any matter has not been properly brought before the
meeting, he or she will so declare at the meeting and any such matter will not be considered or acted upon.
A copy of the Company’s 2001 Annual Report on Form 10-KSB will be available to stockholders without charge upon request
to: Investor Relations, TASER International, Inc., 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260.
By Order of the Board of Directors,
/s/ KATHLEEN C. HANRAHAN
Kathleen C. Hanrahan
Secretary
March 25, 2002
10

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 5668
P66327.SUB, DocName: DEF 14A, Doc: 1, Page: 13

[B/E]

Phone: (602) 223-4455

Operator: BPX31027

Date: 19-MAR-2002 23:47:07.77

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*P66327/013/4*
EDGAR 2

Appendix A
TASER INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
(Effective February 15, 2001)
The Board of Directors of TASER International, Inc. (the “Company”) shall annually appoint from its members an Audit
Committee. This Charter of the Audit Committee supplements the provisions of Section 3.06 of the Company’s Bylaws and further
defines the role, authority and responsibility of the Audit Committee.
Number of Members and Appointment
The Audit Committee shall be composed of at least two members of the Board of Directors. Members of the Committee shall be
appointed annually by the Board of Directors. Vacancies shall be filled by the Board of Directors.
Qualifications of Members
Each member of the Audit Committee shall be a Director who, in the judgment of the Board of Directors, is financially literate and
possesses the ability to read and understand the fundamental financial statements of the Company and its subsidiaries, including balance
sheets, income statements and cash flow statements. At least one member of the Audit Committee shall, in the judgment of the Board of
Directors, have accounting or related financial management expertise, which may include employment experience in finance or
accounting, certification in accounting or any other comparable experience, including being, or having been, a chief executive officer or
other senior officer of a company with financial oversight responsibilities.
Independence of Members
Members of the Audit Committee shall be free from any relationship to the Company or its subsidiaries that, in the judgment of the
Board of Directors, may interfere with the exercise of their independence from management of the Company. No member of the Audit
Committee shall be an affiliate of the Company or an officer or employee of the Company or any of its subsidiaries. Appointments to the
Audit Committee shall be consistent with standards for determining independence promulgated by the Securities and Exchange
Commission and the Nasdaq Stock Market, or such other national securities market as shall be the principal market for trading of the
Company’s securities.
Meetings, Quorum, Informal Actions, Minutes
The Audit Committee shall meet on a regular basis. Special meetings may be called by the Chairman of the Audit Committee. A
majority of the members of the Audit Committee shall constitute a quorum. Concurrence of a majority of the quorum (or, in case a
quorum at the time consists of two members of the Committee, both members present) shall be required to take formal action of the
Audit Committee. Written minutes shall be kept for all formal meetings of the Committee.
A-1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 52845
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As permitted by section 141 of the Delaware General Corporation Law, the Audit Committee may act by unanimous written
consent, and may conduct meetings via conference telephone or similar communication equipment.
Members of the Audit Committee may meet informally with officers or employees of the Company and its subsidiaries and with the
Company’s independent auditors, and may conduct informal inquiries and studies without the necessity of holding a formal meeting. The
Audit Committee may delegate to its Chairman or to one or more of its members the responsibility for performing routine functions as,
for example, review of press releases announcing results of Company operations.
Responsibilities
The Company’s independent auditors are ultimately accountable to the Board of Directors and the Audit Committee. The Audit
Committee and the Board of Directors have the ultimate authority and responsibility to select, evaluate and, where appropriate, replace
the Company’s independent auditors. The Audit Committee shall, from time to time, review and make recommendations to the Board of
Directors with respect to the engagement or discharge of the independent auditors and the terms of their engagement. The Board of
Directors may, in its discretion, determine to submit to stockholders for approval or ratification the appointment of the Company’s
independent auditors.
The Audit Committee shall oversee the independence and performance of the Company’s independent auditors. The Committee
shall ensure that the independent auditors periodically submit to the Audit Committee a formal written statement delineating all
relationships between the auditors and the Company and shall engage in an active dialogue with the auditors with respect to any
disclosed relationships or services that may impact the auditor’s independence or objectivity. The Audit Committee shall make
recommendations to the Board of Directors for appropriate action in response to the auditors’ report to satisfy itself of the auditors’
independence.
The Audit Committee shall annually prepare and submit, for inclusion in management’s proxy statement to stockholders in
connection with the Company’s annual meeting of stockholders, a report in conformity with Item 306 of Securities and Exchange
Commission Regulation S-B.
Without limiting the generality of the foregoing, the Audit Committee shall:
• Review the scope of proposed audits to be performed with respect to the Company’s financial statements in the context of the
Company’s particular characteristics and requirements.
• Review with the independent auditors the results of the auditing engagement and any recommendations the auditors may have with
respect to the Company’s financial, accounting or auditing systems.
• Require a letter from the independent auditors concerning significant weaknesses or breaches of internal controls encountered
during the course of the audit.
• Inquire of management and the independent auditors whether any significant financial reporting issues were discussed during the
course of the audit and, if so, how they were resolved.
• Review with management and the independent auditors changes in accounting standards or rules proposed by Financial Accounting
Standards Board or the Securities and Exchange Commission that may effect the Company’s financial statements.
• Request an explanation from management and the independent auditors concerning the effects of significant changes in accounting
practices or policies.
• Inquire about significant contingencies or estimates that may affect the Company’s financial statements and the basis for the
Company’s presentation of such matters.
• Review the adequacy of the internal financial and operational controls of the Company with staff performing internal auditing
functions and with the independent auditors.
A-2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 45189
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• At least annually, meet privately with the independent auditors in executive session to, among other matters, help evaluate the
Company’s internal financial accounting and reporting staff and procedures.
• Receive and review a draft of the financial section of the Company’s annual report to stockholders, with accompanying notes, and
Management’s Discussion and Analysis.
• Report the Committee’s activities to the full Board of Directors on a regular basis.
• Review and assess the adequacy of this Charter on an annual basis.
Committee Resources
The Audit Committee is authorized to employ the services of such counsel, consultants, experts and personnel, including persons
already employed or engaged by the Company, as the Committee may deem reasonably necessary to enable it to fully perform its duties
and fulfill its responsibilities.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 22205
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 38748
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Operator: BPX31027

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EDGAR 2

PROXY
TASER International, Inc.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 1, 2002
Solicited on Behalf of the Board of Directors of the Company
The undersigned hereby appoints Phillips W. Smith, Patrick W. Smith and Thomas P. Smith as proxies, each with full power of
substitution, to vote all of the Common Stock that the undersigned is entitled to vote at the Annual Meeting of Stockholders of TASER
International, Inc. to be held on Wednesday, May 1, 2002 beginning at 10:00 A.M. Scottsdale time and at any adjournments or
postponements thereof:
1. ELECT FOUR DIRECTORS:

o

VOTE FOR all nominees listed (except as marked to the contrary below).
Instruction: To withhold authority to vote for an individual nominee, strike a line through the nominee’s name below.
Class A (two-year term)
Phillips W. Smith
Bruce R. Culver

o

Class B (three-year term)
Patrick W. Smith
Karl F. Walter

WITHHOLD AUTHORITY to vote for all nominees listed.

2. RATIFY APPOINTMENT OF ARTHUR ANDERSEN LLP as the Company’s independent auditors for 2002.

o FOR

o AGAINST

o ABSTAIN

(please sign on reverse side)
• PLEASE VOTE, SIGN, AND RETURN THE ABOVE PROXY •
You are cordially invited to attend the 2002 Annual Meeting of Stockholders of TASER International, Inc., which will be held at
7860 East McClain Drive, Suite 2, Scottsdale, Arizona beginning at 10:00 A.M. on Wednesday, May 1, 2002.
Whether or not you plan to attend this meeting, please sign, date, and return your proxy form above as soon as possible so that your
shares can be voted at the meeting in accordance with your instructions. If you attend the meeting, you may revoke your proxy, if you
wish, and vote personally. It is important that your stock be represented.
Kathleen C. Hanrahan, Secretary

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER INTERNATIONAL
CRC: 22804
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Date: 19-MAR-2002 23:47:07.77

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EDGAR 2

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR, FOR
APPROVAL OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY, AND
FOR THE APPLICABLE PROXIES VOTING IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
Please date and sign exactly as your name or names appear below. If more than one name appears, all should sign. Persons signing as
attorney, executor, administrator, trustee, guardian, corporate officer or in any other official or representative capacity, should also
provide full title. If a partnership, please sign in full partnership name by authorized person.
Dated:

,

Signature or Signatures
PLEASE SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
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Operator: BPX31319

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1
February 15, 2001

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
TASER International, Inc.: Registration Statement on Form SB-2
On behalf of TASER International, Inc., a Delaware corporation (the
"Company"), transmitted through the EDGAR system for filing pursuant to the
Securities Act of 1933, as amended, is the Company’s Registration Statement on
Form SB-2, including all exhibits thereto, prepared in connection with the
underwritten offering of up to 1,150,000 units of the Company (including 150,000
units to cover overallotments, if any), each unit consisting of one share of
Company common stock and one redeemable public warrant to buy one share of
Company common stock.
The filing fee in the amount of $8,649 submitted by the Company to
Mellon Bank by wire transfer has been calculated on the basis of 1,150,000 units
at a maximum offering price of $11.00 per unit, 100,000 units issuable upon
exercise of representative’s warrants at a maximum offering price of $13.20 per
unit, and 1,250,000 shares of Company common stock issuable upon exercise of
warrants (including warrants underlying the representative’s warrants) at a
maximum offering price of price of $16.50 per share.
Please telephone me at the above number if you have questions or
comments.
Very truly yours,
/s/ Tom P. Palmer
----------------Thomas P. Palmer

Ed#: 2

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Name: TASER
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Phone: (602) 223-4455

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As filed with the Securities and Exchange Commission on February 14, 2001
Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

TASER INTERNATIONAL, INC.
(Name of small business issuer in its charter)
Delaware
(State or other Jurisdiction of
Incorporation or Organization)

3699
(Primary Standard Industrial
Classification Code Number)

7860 E. McClain Drive, Suite 2
Scottsdale, Arizona 85260
(480) 991-0797
(Address and telephone number of
principal executive offices and
principal place of business)

86-0741227
(I.R.S. Employer
Identification Number)
Patrick W. Smith,
Chief Executive Officer
TASER International, Inc.
7860 E. McClain Drive, Suite 2
Scottsdale, Arizona 85260
(480) 991-0797
(Name, address and telephone
number of agent for service)

Copies to:
Thomas P. Palmer, Esq
Jeffrey S. Cronn, Esq
Tonkon Torp LLP
888 S.W. Fifth Avenue, Suite 1600
Portland, Oregon 97204
(503) 802-2018

Mark von Bergen, Esq.
Joshua E. Husbands, Esq.
Weiss Jensen Ellis & Howard
2300 U.S. Bancorp Tower
111 S.W. Fifth Avenue
Portland, Oregon 97204
(503) 243-2300

Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities
Act, check the following box and list the Securities Act registration statement number of the earlier effective

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registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act
of 1933 or until the registration statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

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CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered
Units, each consisting of(2)

Amount to be
Registered

Proposed Maximum
Offering Price Per
Security(1)

Proposed
Maximum
Aggregate
Offering Price

Amoun
Registrati

1,150,000

$11.00

$12,650,000

(i) one share of common stock, and

1,150,000

—

—

—

(ii) one warrant to purchase one share of
common stock

1,150,000

—

—

—

Representative’s warrants(3)

100,000

Units issuable upon exercise of representative’s
warrants, each consisting of

$3,16

100,000

$13.20

$ 1,320,000

(i) one share of common stock, and

100,000

—

—

—

(ii) one warrant to purchase one share of
common stock

100,000

—

—

—

1,250,000

$16.50

$20,625,000

$5,15

$34,595,000

$8,64

Common stock issuable upon exercise of warrants,
including warrants underlying representative’s
warrants(4)
Total

$ 33

(1) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(g) under the
Securities Act of 1933.
(2) Includes 150,000 units which Paulson Investment Company, Inc., the representative of the underwriters, has
the option to purchase to cover over-allotments, if any.
(3) In connection with the sale of the units, TASER International, Inc. will issue to the representative warrants to
purchase, in the aggregate, up to 100,000 units.
(4) Pursuant to Rule 416 under the Securities Act of 1933, there are also being registered such additional shares
and warrants as may be issuable pursuant to the anti-dilution provisions of the public warrants and the
representative’s warrants.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 14, 2001
PRELIMINARY PROSPECTUS

1,000,000 Units

<R>

This is an initial public offering of units by TASER International, Inc. Each unit consists of one share of
common stock and one redeemable public warrant to purchase one share of common stock. We expect that the
initial public offering price will be between $9 and $11 per unit. Prior to this offering, there has been no public
market for our securities. We have filed an application to list the units, the common stock and the public warrants
on the Nasdaq SmallCap Market under the symbols “TASRU,” “TASR” and “TASRW,” respectively.
</R>

The common stock and warrants will trade only as a unit for at least 30 days following this offering. The
representative of the underwriters will then determine when the units separate, after which the common stock and
the public warrants will trade separately.
Investing in these units involves significant risks. See “Risk Factors” beginning on page 4.
Per Unit
Initial public offering price
Underwriting discount
Proceeds to TASER International, Inc.

$
$
$

Total
$
$
$

The Securities and Exchange Commission and state securities regulators have not approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Paulson Investment Company, Inc. is the representative of the underwriters. We have granted the representative
the option for a period of 45 days to purchase up to an additional 150,000 units to cover over-allotments.

PAULSON INVESTMENT COMPANY, INC.
The date of this prospectus is

, 2001.

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[gatefold cover]
Page 1 of the gatefold: The artwork depicts below the company logo a side view of the ADVANCED TASER
M26 with certain parts labeled and a top view of the AIR TASER 34000.
Pages 2 and 3 of the gatefold: The artwork depicts a pictorial diagram illustrating the effective range of the
ADVANCED TASER M26 compared to batons and chemical sprays over distances of between zero and twenty
feet.
Below the pictorial diagram are smaller photographs of the air cartridges (ammunition), the probes, the dataport
on the ADVANCED TASER M26 and the AFID tags.
Below the smaller pictures the following captions appear:
“The ADVANCED TASER M26 fires two small metal probes with fine wires attached. When the probes make
contact, small barbs adhere to the target. Electrical signals are transmitted through the wires into the body of the
subject, impairing his ability to control his body or perform coordinated action.”
“The ADVANCED TASER M26 records the time and date of every firing. This data can be downloaded to a
computer and used to investigate potential misuse of the weapon.”
“The ADVANCED TASER M26 disperses 20-50 serial numbered identification tags upon firing. These tags
can be used to trace the registered owner of the air cartridge used.”
We have rights to the following registered trademarks: TASER® and AIR TASER®. We also have the following
unregistered trademarks: TASER Wave™, T-Wave™, AUTO TASER™, ADVANCED TASER™ and AFID™. Each
other trademark, trade name or service mark appearing in this prospectus belongs to its respective holder.

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PROSPECTUS SUMMARY
The following summary highlights selected information contained in this prospectus. This summary does not
contain all the information you should consider before investing in the units. Before making an investment decision,
you should read the entire prospectus carefully, including the “Risk Factors” section, the financial statements and
the notes to the financial statements.
Our Company
TASER International, Inc. develops, assembles and markets less-lethal, conducted energy weapons primarily for
use in the law enforcement market. Our ADVANCED TASER weapon offers improved performance over other
less-lethal force options used by law enforcement agencies. It can temporarily incapacitate virtually any individual
regardless of pain tolerance, drug use, or body size — factors that cause other less-lethal options to have decreased
effectiveness — yet has a comparable or lower injury rate and has had no reported long-term, adverse after-effects.
The ADVANCED TASER uses compressed nitrogen to shoot two small probes up to 21 feet. These barbed
probes are connected to the weapon by high-voltage insulated wires. When the probes make contact with the target,
the ADVANCED TASER transmits powerful electrical pulses along the wires and into the body of the target
through up to two inches of clothing. These electrical pulses impair voluntary muscle control so that the subject
cannot perform coordinated action.
Law enforcement agencies are increasingly adopting less-lethal weapons, including pepper sprays, rubber
bullets, and conducted energy weapons such as TASERs. Effective less-lethal weapons may increase the safety of
law enforcement officers, decrease suspect injuries, improve community relations, reduce litigation and police
department medical and liability insurance costs, and potentially save lives.
Since its introduction in December 1999, over 350 police departments in the United States have made initial
purchases of our products and 15 police departments, including San Diego, Sacramento and Albuquerque, have
purchased our products for every patrol officer. In addition, at February 1, 2001, more than 200 other police
departments were evaluating the use of the ADVANCED TASER.
The key elements of our growth strategy are:
• To expand sales in the law enforcement and corrections market, which we believe to be the opinion leader for
all other markets for less-lethal weapons;
• To expand into the related private security and military markets;
• To expand into the consumer market;
• To develop enhanced less-lethal weapons and technologies, such as longer-range TASERs and TASERs with
multiple shot capabilities; and
• To acquire related businesses that enhance our strategic position.
Our corporate headquarters is located at 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260 and our
telephone number is (480) 991-0797. Our website address is www.eTASER.com. Information contained on our
website or any other website does not constitute a part of this prospectus.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
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EDGAR 2

This Offering
Securities offered

1,000,000 units. Each unit consists of one share of common stock and one public
warrant to purchase an additional share of common stock.
The common stock and public warrants will trade only as a unit for at least
30 days following this offering. The representative of the underwriters will then
determine when the units separate, after which the common stock and the public
warrants will trade separately.

Public warrants

The public warrants included in the units will be exercisable commencing 30 days
after this offering. The exercise price of a public warrant is 150% of the initial
public offering price of the units. The public warrants expire on the fifth
anniversary of the closing of the offering.
We have the right, commencing three months after the closing of this offering, to
redeem the public warrants issued in this offering at a redemption price of $0.25
per public warrant, after providing 30 days prior written notice to the public
warrant holders, if the average closing bid price of the common stock equals or
exceeds 200% of the initial public offering price of the units for ten consecutive
trading days ending prior to the date of the notice of redemption.

Common stock outstanding after 2,510,754 shares
this offering
Use of proceeds

Repayment of debt, sales and marketing, research and development, production
tooling and working capital.

Proposed Nasdaq SmallCap
Market symbols
Common stock
TASR
Units offered in this offering TASRU
Public warrants included in
the units
TASRW
The number of shares of common stock outstanding after this offering is based on 1,510,754 shares outstanding
as of February 12, 2001. The number of shares of common stock outstanding after this offering assumes no exercise
of the representative’s over-allotment option and does not include an aggregate of 1,687,049 shares of common
stock that may become outstanding as follows:
• 434,322 shares of common stock issuable upon exercise of stock options outstanding as of February 12, 2001,
with a weighted average exercise price of $5.96;
• 52,727 shares of common stock issuable upon exercise of warrants outstanding as of February 12, 2001, with a
weighted average exercise price of $4.71;
• 1,000,000 shares of common stock issuable upon exercise of the public warrants; and
• 100,000 shares of common stock issuable upon exercise of the representative’s warrants and 100,000 shares of
common stock issuable upon exercise of the public warrants underlying the representative’s warrants.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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EDGAR 2

SUMMARY FINANCIAL INFORMATION
Years ended December 31,
1999

2000

Statements of Operations Data:
Net sales
Gross profit
Loss from operations
Basic and diluted net loss

$ 2,366,440
873,855
(1,329,478)
(1,610,299)

$3,499,758
2,062,445
(46,885)
(415,629)

Basic and diluted net loss per share of common stock

$

$

Basic and diluted shares of common stock

(0.52)

(0.17)

3,076,410

2,482,976

December 31,
1999

December 31,
2000

Balance Sheet Data:
Working capital (deficiency)
Property and equipment, net
Total assets
Total long-term debt

$(2,355,782)
256,110
605,146
94,760

$(1,011,984)
274,273
1,039,066
2,822,144

Stockholders’ deficit

$(2,194,432)

$(3,559,855)

3

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EDGAR 2

RISK FACTORS
This offering involves a high degree of risk. You should carefully consider the following risk factors and all
other information contained in this prospectus before purchasing any units. Any of the following risks could
materially harm our business, operating results and financial condition, and could result in a decrease in the
trading price of our units, common stock or public warrants, or in a complete loss of your investment.
Risks Related to Our Business
We have no history of profitable operations and may incur future losses.
Since our inception in 1993, we have incurred significant losses. Our net losses for the years ended
December 31, 1999 and 2000 were $1.6 million and $416,000, respectively. At December 31, 2000, we had an
accumulated deficit of approximately $6.7 million. In addition, we expect our operating expenses to increase
significantly as we expand our sales and marketing efforts and otherwise support our expected growth. Given these
planned expenditures, we may incur additional losses in the near future. We may never achieve or sustain
profitability.
We are materially dependent on acceptance of our products by the law enforcement and corrections market.
We have recently devoted significant resources to sales opportunities in the law enforcement and corrections
market. A substantial number of law enforcement and corrections agencies may not purchase our conducted energy,
less-lethal weapons. Despite the absence of reported long-term, adverse after-effects from the use of our products,
these agencies may be influenced by claims or perceptions that conducted energy weapons are unsafe or may be
used in an abusive manner. In addition, earlier generation conducted energy weapons may have been perceived as
ineffective. Sales of our products to these agencies may be delayed or limited by these claims or perceptions. If our
products are not widely accepted by the law enforcement and corrections market, we may not be able to expand
sales of our products in additional markets.
We have a limited operating history in the law enforcement and corrections market.
Under an agreement with another company, we were prevented from selling our products in the law
enforcement and corrections market until February 1998. We shifted our corporate focus to this market only in late
1999. Due to our limited operating history, we may not be able to attain significant sales in this market.
We substantially depend on sales of a single product line.
We derived the majority of our revenues from sales of ADVANCED TASERs and related cartridges in 2000. A
decrease in the prices of or demand for this product line, or its failure to achieve broad market acceptance, would
significantly harm our business, financial condition and operating results.
We may not be able to manage our projected growth.
We may experience growth that strains our managerial, financial and other resources. Our systems, procedures,
controls and management resources may not be adequate to support our future operations. We will need to
continually improve our operational, financial and other internal systems to manage our growth effectively. If we
are unable to manage our growth, our business, operating results and financial condition could be adversely
affected.

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confrontation or otherwise in connection with the use of our products may bring legal action against us to recover
damages on the basis of theories including personal injury, wrongful death, negligent design, dangerous product or
inadequate warning. We may also be subject to lawsuits involving allegations of misuse of our products. If
successful, personal injury, misuse and other claims could have a material adverse effect on our operating results
and financial condition. Although we carry product liability insurance, significant litigation could also result in a
diversion of management’s attention and resources, negative publicity and an award of monetary damages in excess
of our insurance coverage.
We plan to relocate our product assembly operations from Mexico to the United States by the end of the second
quarter of 2001, which may adversely affect product availability and cost.
We plan to terminate assembly operations with our turnkey supplier in Guaymas, Mexico and relocate some
production equipment from Mexico to the United States. In anticipation of moving our product assembly operations
from Mexico, we have initiated a parallel production capability in our new facility in Scottsdale, Arizona. If we
encounter delays or unforeseen problems in this move, it may significantly adversely affect our ability to produce
and ship product and generate short-term sales and cash flow. Also, assembly of our products in the United States
may result in an increase in our cost of products sold.
We are materially dependent on independent distributors for the sale of our products.
We sell our products primarily through a network of independent distributors. Our arrangements with these
distributors are generally short-term. If we do not competitively price our products, meet the requirements of our
distributors or end-users, provide adequate marketing support, or comply with the terms of our distribution
arrangements, our distributors may fail to aggressively market our products or may terminate their relationships
with us. These developments would likely have a material adverse effect on our sales.
We expend significant resources in anticipation of a sale due to our lengthy sales cycle.
Generally, law enforcement and corrections agencies consider a wide range of issues before committing to
purchase our products, including product benefits, training costs, the cost to use our products in addition to or in
place of other less-lethal products, product reliability and budget constraints. The length of our sales cycle may
range from 60 days to a year or more. We may incur substantial selling costs and expend significant effort in
connection with the evaluation of our products by potential customers before they place an order. If these potential
customers do not purchase our products, we will have expended significant resources and received no revenue in
return.
Most of our end-users are subject to budgetary and political constraints.
Most of our end-user customers are government agencies. These agencies often do not set their own budgets and
therefore have little control over the amount of money they can spend. In addition, these agencies experience
political pressure that may dictate the manner in which they spend money. As a result, even if an agency wants to
acquire our products, it may be unable to purchase them due to budgetary or political constraints. Some government
agency orders may also be canceled or substantially delayed due to budgetary, political or other scheduling delays
which frequently occur in connection with the acquisition of products by government agencies.
Government regulation of our products may adversely affect sales.
Federal regulation of sales in the United States. Our weapons are not firearms regulated by the Bureau of
Alcohol, Tobacco and Firearms, but are consumer products regulated by the United States Consumer Product Safety

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States. Consequently, we must obtain an export license from the DOC for the export of our weapons from the
United States other than to Canada. While we have a history of timely obtaining DOC export licenses for sales of
our weapons to the majority of our international customers, unforeseen changes in U.S. export regulations could
significantly and adversely affect our international sales.
State and local regulation. Our weapons are currently controlled, restricted or their use prohibited by several
state and local governments. Our weapons are banned from consumer sale or use in seven states: New York, New
Jersey, Rhode Island, Michigan, Wisconsin, Massachusetts and Hawaii. Law enforcement use of our products is also
restricted in Michigan, New Jersey, Rhode Island, Massachusetts and Hawaii. Some municipalities, including
Omaha, Nebraska and Washington, D.C., also prohibit consumer use of our products. Other jurisdictions may ban
or restrict the sale of our products and our product sales may be significantly affected by additional state, county
and city governmental regulation.
Foreign regulation. Certain foreign jurisdictions including Japan, the United Kingdom, Australia, Italy and
Hong Kong prohibit the sale of our products.
We are dependent on key personnel.
Our success depends to a significant extent upon the continued services of our executive officers and other key
management, sales and technical personnel. In particular, we rely upon Mr. Patrick W. Smith, our chief executive
officer, and Mr. Thomas P. Smith, our president. The loss of the services of any of our executive officers or other
key management, sales or technical personnel could adversely affect us. We intend to purchase key-person
insurance on the lives of Thomas and Patrick Smith following this offering.
We may not be able to adequately protect or enforce our intellectual property rights.
We have licensed or patented certain aspects of the technology incorporated in our products. The validity and
breadth of claims covered in technology patents involve complex legal and factual questions, and the resolution of
such claims may be highly uncertain, lengthy, and expensive. The scope of any patent to which we have or may
obtain rights may not prevent others from developing and selling competing products. In addition, our patents may
be held invalid upon challenge, others may claim rights in or ownership of our patents, and our products may
infringe, or be alleged to infringe, upon the intellectual property rights of others.
We may face competition from larger, more established companies.
The law enforcement and corrections market and other markets we plan to enter are highly competitive. We face
competition from numerous larger, better capitalized and more widely known companies that make other less-lethal
weapons and products. Increased competition may result in greater pricing pressure, which could adversely affect
our gross margins.
We may incur significant warranty costs if our products have manufacturing defects.
We offer a lifetime warranty on our AIR TASER and ADVANCED TASER weapons under which we will
replace any weapon that fails to operate properly for a $25 fee. We may incur significant warranty costs if our
products are defective in hardware or workmanship and fail to operate properly for these or any other reasons. In
2000, we recalled and replaced a series of ADVANCED TASERs due to a defective component.
Our revenues and operating results may fluctuate unexpectedly from quarter to quarter, which may cause our
stock price to decline.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 60195
P64567.SUB, DocName: SB-2, Doc: 2, Page: 11

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 011.00.00.00 SN: 8
Ed#: 3
*P64567/011/3*
EDGAR 2

state, and federal law enforcement agencies. As a result of these and other factors, we believe that period-to-period
comparisons of our operating results may not be meaningful in the near term and that you should not rely upon our
performance in a particular period as indicative of our performance in any future period.
We depend on third-party suppliers for key components of our weapons.
We depend on certain domestic and foreign suppliers for the delivery of raw materials used in the production of
our products. Specifically, we depend on suppliers of sub-assemblies, machined parts, injection molded parts, steel
castings, custom wire fabrications, and other miscellaneous custom parts for our products. We do not have longterm supply agreements with any of these suppliers. Although we believe that alternative supplies for these
materials and components are available, any interruption of supply for any material components of our products
could significantly delay the shipment of our products and have a material adverse effect on our business, financial
condition and operating results.
Foreign currency fluctuations may reduce our competitiveness in foreign markets.
Although our policy of exclusively entering into dollar-denominated contracts eliminates our risk of foreign
exchange losses, the relative change in currency values creates fluctuations in product pricing for potential
international customers. These changes in end-user foreign prices may result in lost orders and reduce the
competitiveness of our products in certain foreign markets. These changes may also negatively affect the financial
condition of some foreign customers and reduce or eliminate their future orders of our products.
We are parties to a lawsuit involving the rights of a former distributor of our products.
A former distributor of our products has filed a lawsuit in the state of New York asserting certain rights of
exclusive sales representation with respect to our products. The former distributor claims that he has the exclusive
right to market and sell our products to an extensive list of our current and potential customers throughout the
United States. We believe the claims are without merit.
Risks Related to This Offering
We may use the proceeds of this offering in ways that do not improve our operating results or the market value of
our common stock.
We intend to use the net proceeds from this offering for repayment of stockholder and other debt, increased
marketing efforts, research and development and general corporate purposes. Repayment of our debt will not
directly improve our operating results. Our management will retain broad discretion and significant flexibility in
applying the net proceeds from this offering. If our management does not apply the proceeds effectively, our
business will be harmed.
You will suffer immediate dilution of your investment and may experience further dilution in the future.
We anticipate that the initial public offering price of the units will be substantially higher than the net tangible
book value per share of our common stock after this offering. As a result, you will incur immediate dilution of
approximately $8.15 in net tangible book value for each share of our common stock included in the units you
purchase. If any currently outstanding options or warrants to purchase our common stock are exercised, your
investment will be further diluted.
There has been no prior market for our securities and a public market for our securities may not develop or be

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 61415
P64567.SUB, DocName: SB-2, Doc: 2, Page: 12

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 012.00.00.00 SN: 9
Ed#: 3
*P64567/012/3*
EDGAR 2

The initial public offering price of our units may not accurately reflect their future market performance.
The initial public offering price of the units has been determined based on negotiations between the
underwriters’ representative and us. The initial public offering price may not be indicative of future market
performance and may bear no relationship to the price at which our units, common stock or public warrants will
trade.
The price of our securities may be volatile.
The stock market has recently experienced significant price and volume fluctuations. The price of our securities
may fluctuate significantly in response to a number of factors, including:
• Our quarterly operating results;
• Changes in earnings estimates by analysts and whether our earnings meet or exceed such estimates;
• Announcements of technological innovations by us or our competitors;
• Additions or departures of key personnel; and
• Other events or factors that may be beyond our control.
Volatility in the market price of our securities could lead to claims against us. Defending these claims could
result in significant costs and a diversion of our management’s attention and resources.
Future sales of our common stock by our existing stockholders could decrease the trading price of our common
stock.
Sales of a large number of shares of our common stock in the public markets after this offering, or the potential
for such sales, could decrease the trading price of our common stock and could impair our ability to raise capital
through future sales of our common stock. Upon completion of this offering, there will be 2,510,754 shares of our
common stock outstanding. The 1,000,000 shares of common stock sold in this offering and the 1,000,000 shares of
common stock reserved for issuance upon exercise of the public warrants sold in this offering will be freely
tradeable without restrictions or further registration under the Securities Act of 1933, unless such shares are
purchased by our “affiliates,” as that term is defined in the Securities Act of 1933. An additional 1,687,049 shares
of common stock, including shares issuable upon exercise of the representative’s warrants, may become outstanding
upon exercise or conversion of options or warrants currently outstanding or sold in this offering, subject to various
lock-up agreements prohibiting the sale of such shares for one year following completion of this offering.
The exercise of previously issued options and warrants may dilute your investment in our shares and impair our
ability to obtain financing.
In addition to the 1,510,754 shares outstanding as of February 12, 2001, there are currently outstanding options
to purchase 434,322 shares of our common stock, 119,055 of which are currently exercisable. We have reserved an
additional 259,000 shares of our common stock for issuance pursuant to options that may be granted in the future to
key employees, and others, under our 2001 Stock Option Plan. In addition, we have issued warrants to acquire up to
52,727 shares of our common stock. During the terms of such options and warrants, the holders of such securities
have the opportunity to profit from a rise in the value or market price of our common stock, and the exercise of
these options and warrants could dilute the then book value per share of our common stock. The existence of these

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 13781
P64567.SUB, DocName: SB-2, Doc: 2, Page: 13

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 013.00.00.00 SN: 9
Ed#: 4
*P64567/013/4*
EDGAR 2

We will need to comply with federal and state securities laws to maintain the tradeability of our securities.
We must maintain in effect the registration statement filed with the Securities and Exchange Commission with
respect to the units and must also comply with the securities laws of a state for the units, common stock and public
warrants to be tradeable in that state. If we do not comply with federal or state securities laws, your ability to sell
the securities offered by this prospectus may be significantly reduced.
Certain of our directors or investors will personally benefit from the use of the proceeds of this offering.
We will use the proceeds from this offering to repay a $1.5 million loan from a director who is also a
stockholder and to retire the interest accrued through March 1, 2001, on our outstanding stockholder notes. In
addition, if the over-allotment option granted to the representative of the underwriters is exercised in full,
approximately $1.3 million in stockholder notes, including a note issued to our chairman, will be retired. This debt
matures July 1, 2002.
We may need additional financing.
If revenues are less than expected, or if expenses exceed our expectations, we may be required to find additional
sources of financing to continue or expand our operations. We could seek additional financing from a number of
sources, including, but not limited to, possible further sales of equity or debt securities and loans from banks,
affiliates of the company, or other financial institutions. We may not be able to sell any such securities, or obtain
such additional financing, on terms and conditions acceptable or favorable to the company, or at all, if and when
needed by the company.
Our existing stockholders will continue to control us.
Upon completion of this offering, existing stockholders will own approximately 60% of our outstanding
common stock. These stockholders will continue to control most matters requiring approval by our stockholders,
including the election of our directors.
We do not intend to pay cash dividends.
Any investors who have or anticipate any need for immediate income from their investment should not purchase
any of the units offered hereby.
Provisions of our charter documents and Delaware law may have anti-takeover effects that could hinder a
change in our corporate control.
Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger or
acquisition that a stockholder may consider favorable. These provisions include:
• authorizing our board of directors to issue preferred stock without stockholder approval;
• providing for a classified board of directors with staggered, three-year terms; and
• allowing written stockholder actions only by unanimous consent.
Provisions of Delaware law, including provisions that prohibit business combinations with entities holding
greater than a threshold amount of voting stock, also may discourage, delay or prevent someone from acquiring or

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 17876
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[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 014.00.00.00 SN: 9
Ed#: 4
*P64567/014/4*
EDGAR 2

“plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “our future success depends,”
“seek to continue,” or the negative of these words or phrases, or comparable words or phrases. These statements are
only predictions. Actual events or results may differ materially. In evaluating these statements, you should
specifically consider various facts, including the risks outlined under “Risk Factors.” These factors may cause our
actual results to differ materially from any forward-looking statement. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy
and completeness of these statements. We are under no duty to update any of the forward-looking statements after
the date of this prospectus to conform these statements to actual results.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 1,000,000 units that we are selling in this offering will be
approximately $8,200,000, or $9,527,500 if the representative exercises its over-allotment option in full, based on
an assumed public offering price of $10.00 per unit, and after deducting the underwriting discount, expense
allowance, and estimated offering expenses of $650,000 payable by us.
We expect to allocate the net proceeds of this offering as follows:
Approximate
Amount
Payment of stockholder note
Other debt repayment
Accrued expenses and payables
Accounts receivable and inventory
Sales and marketing programs
Research and development
Tooling and equipment
Other working capital/ general corporate purposes
Total

Approximate
Percentage

$1,500,000
1,180,000
300,000
1,000,000
1,500,000
500,000
250,000
1,970,000

18%
14%
4%
12%
18%
6%
3%
25%

$8,200,000

100%

The debt we intend to repay includes:
• a $1,500,000 note at an interest rate of bank prime (9.5% at December 31, 2000) plus 1% payable to a
stockholder;
• a $500,000 note at an interest rate of 18% payable to a private investor;
• a $189,980 note at an interest rate of 10% payable to a third party vendor;
• a $99,974 note at an interest rate of 10% payable to our chairman;
• a remaining balance of $94,000 on a note at an interest rate of 11% payable to a private investor; and
• approximately $300,000 of accrued but unpaid interest on notes to our stockholders, including our chairman
and a director.
Further, if the representative exercises its over-allotment option in full, we will repay the principal on other
outstanding stockholder notes of approximately $1.3 million. Payment of accrued expenses and payables includes

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 62992
P64567.SUB, DocName: SB-2, Doc: 2, Page: 15

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 015.00.00.00 SN: 11 Ed#: 5
*P64567/015/5*
EDGAR 2

The foregoing discussion is merely an estimate based on our current business plan. Our actual expenditures may
vary depending upon circumstances not yet known, such as the time actually required to reach a positive cash flow
or to successfully expand the market for our products.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our shares of common stock and do not anticipate paying
any cash dividends in the foreseeable future. Currently, we intend to retain any future earnings for use in the
operation and expansion of our business. Any future decision to pay cash dividends will be at the discretion of our
board of directors and will depend upon our financial condition, results of operations, capital requirements and
other factors our board of directors may deem relevant.
11

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 3381
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[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 016.00.00.00 SN: 12 Ed#: 4
*P64567/016/4*
EDGAR 2

CAPITALIZATION
The following table sets forth our capitalization at December 31, 2000 on an actual basis and on a pro forma
basis, after giving effect to our reincorporation in Delaware, our related 1-for-6 reverse stock split, and the sale of
1,000,000 units offered hereby at an estimated price of $10.00 per unit and the initial application of the estimated
net proceeds therefrom. This table should be read in conjunction with, and is qualified by, the financial statements
and notes thereto included elsewhere in this prospectus.
December 31, 2000
Actual
Current portion of note payable(1)
Current portion of notes payable to related parties
Accounts payable and accrued liabilities
Inventory financing payable
Accrued interest

$

$
Long-term notes payable to stockholders and others, and capital lease
obligations, excluding current portion
Stockholders’ equity (deficit)
Preferred stock $0.00001 par value, 25,000,000 shares authorized; no
shares issued and outstanding
Common stock $0.00001 par value, 50,000,000 shares authorized;
1,510,754 shares issued and outstanding actual, 2,510,754 shares issued
and outstanding pro forma(2)
Additional paid-in capital
Deferred compensation
Retained earnings (deficit)(3)
Total stockholders’ equity (deficit)
Total capitalization (deficiency)

Pro Forma

(dollars in thousands)
100
$ —
125
—
300
—
190
—
268
—
983

$

—

$ 2,822

$1,325

—

—

1,890
1,310
(80)
(6,680)

—
4,720
(80)
—

(3,560)

4,640

$ (738)

$5,965

(1) Subsequent to December 31, 2000, an investor advanced us $500,000, which is due to be repaid with the
proceeds from this offering upon its closing or by July 1, 2002, whichever is earlier.
(2) Does not include (i) 434,322 shares of common stock issuable upon exercise of stock options issued pursuant to
our stock option plans, which have a weighted average exercise price of $5.96 per share, (ii) an additional
52,727 shares of common stock issuable upon exercise of warrants outstanding, which have a weighted average
exercise price of $4.71, and (iii) the shares of common stock underlying the units issuable upon exercise of the
representative’s over-allotment option.
(3) Our accumulated deficit, which was $6.7 million at December 31, 2000, was reclassified into additional paid-in
capital upon the termination of our S corporation tax status in the first quarter of 2001.
12

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 61874
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[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 017.00.00.00 SN: 9
Ed#: 4
*P64567/017/4*
EDGAR 2

DILUTION
If you invest in our units, your interest will be diluted to the extent of the difference between the public offering
price per share of our common stock and the as adjusted net tangible book value per share of our common stock
after this offering. For purposes of the dilution computation and the following tables, we have allocated the full
purchase price of a unit to the share of common stock included in the unit and nothing to the warrant included in the
unit. As of December 31, 2000, our net tangible book value was a negative $3,559,855, or a deficiency of $2.36 per
share of common stock. Net tangible book value per share represents the amount of our total tangible assets reduced
by the amount of our total liabilities, divided by the total number of shares of common stock outstanding. Dilution
in net tangible book value per share represents the difference between the amount per share paid by the purchasers
of our units in this offering and the net tangible book value per share of our common stock immediately afterwards.
Without taking into effect any changes in the net tangible book value after December 31, 2000, other than to give
effect to the sale of 1,000,000 units in this offering at the assumed initial public offering price of $10.00 per unit
and the application of the net proceeds of this offering, the net tangible book value of TASER as of December 31,
2000 would have been $4,640,145, or $1.85 per share. This represents an immediate increase of $4.20 per share of
common stock to existing stockholders and an immediate dilution of $8.15 per share of common stock to the new
investors who purchase units in this offering. The following table illustrates this per share dilution:
Assumed initial public offering price
Net tangible book value (deficiency) per share before this offering
Increase in net tangible book value per share attributable to new
investors

$10.00
$(2.36)
$ 4.21

As adjusted net tangible book value per share after this offering

$ 1.85

Dilution in net tangible book value per share to new investors

$ 8.15

If the representative’s over-allotment option is exercised in full, dilution per share to new investors would be
$7.76 per share of common stock.
The following table summarizes as of December 31, 2000 the differences between the existing stockholders and
the new investors with respect to the number of shares of common stock purchased, the total consideration paid, and
the average price per share paid:
Shares Purchased
Number
Existing stockholders
New investors
Total

Total Consideration

Percent

Amount

Percent

1,510,754
1,000,000

60%
40%

$ 3,199,898
10,000,000

24%
76%

2,510,754

100%

$13,199,898

100%

Average Price
Per Share
$ 2.12
$10.00

The above computations assume no exercise of outstanding options or warrants to purchase common stock, the
representative’s over-allotment option, the public warrants included in units sold in this offering or the
representative’s warrants. To the extent that these options and warrants are exercised, there will be further dilution
to new investors.
13

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4263
P64567.SUB, DocName: SB-2, Doc: 2, Page: 18

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 018.00.00.00 SN: 7
Ed#: 4
*P64567/018/4*
EDGAR 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with
the financial statements and related notes to the financial statements included elsewhere in this prospectus. This
discussion contains forward-looking statements that relate to future events or our future financial performance.
These statements involve known and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these forward-looking statements. These risks and
other factors include, among others, those listed under “Risk Factors” and those included elsewhere in this
prospectus.
Overview
We began operations in Arizona in 1993 for the purpose of developing and manufacturing less-lethal selfdefense devices. From inception until the introduction of our first product, the AIR TASER, in 1994, we were in the
development stage and focused our efforts on product development, raising capital, hiring key employees and
developing marketing materials to promote our product line.
In 1995 and 1996, we focused our efforts on promoting retail sales and establishing marketing channels for the
AIR TASER product line. However, our marketing efforts were limited by a non-compete agreement prohibiting
the company from marketing or selling our products to the U.S. law enforcement and military markets.
Accordingly, initial sales of the AIR TASER were limited to the consumer market. While early sales in this market
were promising, by the end of 1996 we were unable to establish consistent sales channels in the consumer
marketplace, and sales declined. In late 1996, we relocated our production facilities to Mexico to reduce production
costs.
In 1997, we introduced our second product line, the AUTO TASER. The initial market response to the AUTO
TASER suggested the demand for this product would more than compensate for the declining AIR TASER sales.
Because of strong pressure from pre-production orders, we accelerated the development of the AUTO TASER. As a
result of this acceleration, production costs of the AUTO TASER far exceeded initial projections, and we
experienced a substantial amount of AUTO TASER returns due to product defects.
The non-compete agreement that had precluded sales to the law enforcement and military markets expired in
1998. During this year, we focused our development efforts on the ADVANCED TASER product line, a redesigned
and enhanced version of the AIR TASER, targeted primarily to the U.S. law enforcement and corrections market.
During 1998, in addition to $66,000 paid to outside research and development consultants, we also incurred
substantial internal unallocated expenses associated with the development of the ADVANCED TASER. Further,
end-user sales of the AUTO TASER continued to decline, and product returns remained higher than expectations.
In August 1999, the AUTO TASER product line was formally discontinued and we closed our production
facilities in Mexico. We outsourced the production of our remaining finished goods and non-proprietary
components to a third-party assembler. We shifted our focus to completion of the ADVANCED TASER
development project and introduced the first ADVANCED TASER units for sale to law enforcement customers in
December 1999. As a result of these activities and product development expenses, we had accumulated a deficit of
$6.3 million by December 31, 1999.
The first full year of the ADVANCED TASER product line sales was 2000. We spent the year focusing on
building the distribution channel for marketing the product line and developing a nationwide training campaign to

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 55377
P64567.SUB, DocName: SB-2, Doc: 2, Page: 19

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

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Ed#: 4
*P64567/019/4*
EDGAR 2

Results of Operations
For the years ended December 31, 1999 and 2000, sales by product were as follows:
Product

December 31
1999

%

December 31
2000

%

ADVANCED TASER
AIR TASER
AUTO TASER
Miscellaneous sales

$ 80,000
1,327,000
608,000
351,000

3%
56%
26%
15%

$2,152,000
1,240,000
24,000
83,000

62%
35%
1%
2%

Total sales

$2,366,000

100%

$3,500,000

100%

Net sales. Net sales increased $1.1 million, or 48%, from $2.4 million for the year ended December 31, 1999 to
$3.5 million for the year ended December 31, 2000. The increase was due almost entirely to the first full year of
sales of the ADVANCED TASER, primarily to law enforcement agencies. The increase in sales was partially offset
by the decline in AUTO TASER sales due to the discontinuation of this product line and somewhat lower sales of
the AIR TASER to consumers.
Cost of products sold. Cost of products sold decreased from $1.5 million in 1999, or 63% of net sales, to $1.4
million in 2000, or 41% of net sales. The decrease in cost of products sold as a percentage of net sales was due
primarily to the lower direct production costs associated with the AIR and ADVANCED TASERs, which averaged
33% of gross sales as compared to 55% of gross sales for the AUTO TASER, and a one-time charge related to the
phase-out of the AUTO TASER product line of approximately $355,000 in 1999.
At December 31, 2000, our principal product costs included the following:
• Direct materials: Direct materials include raw materials and sub-assemblies sold to our contract manufacturer
for insertion into the final production assemblies as well as supplies used in production. Direct materials
represent the majority of our cost of products.
• Direct labor: Direct labor represents the expenses incurred in our Scottsdale, Arizona facility for the assembly
and packaging of sub-assemblies. Once finished, these sub-assemblies are sold to our contract manufacturer for
insertion in finished product. Prior to 2000, direct labor included wages paid to employees in our Mexico
production facility.
• Shipping expense: Shipping expense includes those costs associated with shipping finished products to our
customers. This includes freight paid to ship orders, special handling charges and related transaction fees.
In 2001, we anticipate that direct labor will represent a larger portion of cost of products sold as we move final
assembly to our facility in Scottsdale.
Gross profit. Gross profit increased $1.2 million, or 136%, from $874,000 in 1999 to $2.1 million in 2000. Our
gross profit margin was 37% of net sales in 1999 compared to 59% in 2000 due to increased sales of higher margin
ADVANCED TASER products and the write offs taken in 1999 as a result of the phase out of the AUTO TASER.
Operating expenses. Operating expenses decreased $203,000, or 32%, from $634,000 in 1999 to $431,000 in
2000. Operating expenses were 27% of net sales in 1999 compared to 12% of net sales in 2000. This reduction in
operating expenses is due largely to the closure of our manufacturing facility in Mexico in August 1999, and the

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 44729
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Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

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Ed#: 4
*P64567/020/4*
EDGAR 2

expenses were 58% of net sales in 1999 compared to 44% of net sales in 2000. These costs increased to support the
sales of the ADVANCED TASER and included sales commissions and product demonstration costs. However,
sales, general and administrative expenses declined as a percentage of sales in 2000 due to the fixed nature of
certain of these costs and higher per unit sales prices attributable to the ADVANCED TASER product line.
Interest expense. Interest expense increased by $88,000, or 31%, from $281,000 in 1999 to $369,000 in 2000.
The increase reflects the cost of the higher level of related party debt in 2000 over 1999, primarily used to fund
working capital. In addition, we issued warrants and options in 2000 valued at $26,000 to certain stockholders for
loan guarantees.
Corporate tax status. Prior to our re-incorporation in Delaware in February 2001, we were an S-corporation,
which allowed all the tax attributes to flow through to the stockholders. In February 2001, we changed our tax
reporting status to that of a C-corporation. When we re-incorporated, all accumulated shareholder deficit was
converted to additional paid-in capital. As a result there are no net operating loss carry forwards available to us.
Net loss. The net loss decreased $1.2 million, or 74%, from $1.6 million in 1999 to $416,000 in 2000. Basic and
diluted net loss per common share was $0.52 in 1999 compared to $0.17 in 2000. The reduced net loss in 2000
resulted primarily from increased sales volume and increased gross margins attributable to sales of the
ADVANCED TASER line.
Liquidity and Capital Resources
Liquidity. We had a working capital deficiency of $2.4 million at December 31, 1999 and $1.0 million at
December 31, 2000. The improvement in working capital from 1999 to 2000 was largely due to the extension of
short-term related party debt to long-term debt. In both 1999 and 2000, cash was used primarily to fund operating
losses and for investment in property and equipment. We have historically addressed our working capital shortfalls
through capital investment and debt financing from related parties.
In 2000 we generated cash from operations of $66,000, primarily as a result of a significant customer deposit of
$440,000 received in December 2000. In 1999, operations consumed $705,000 in cash. Although we anticipate that
our cash flow from operations will be at least break-even in 2001, we have not historically generated sufficient cash
from operations to fund future growth or to repay our long-term debt that principally comes due July 1, 2002.
We anticipate that, after the completion of this offering, our cash resources will be adequate to meet our
liquidity needs for at least the next two years. There can also be no assurances that our working capital objectives
will be reached in the near future, if ever. If additional capital is required, it may not be available on favorable terms
or at all.
Capital resources. In the past, we have funded our operating deficits primarily through indebtedness to related
parties. Our indebtedness to stockholders and related parties totaled $2.9 million at December 31, 2000. The
majority of this indebtedness matures at the earlier of the completion of this offering or July 2002. The indebtedness
bears interest ranging from 9% to 27%. A significant portion of this indebtedness will be repaid from the proceeds
of this offering, including the representative’s over-allotment option, if exercised.
Capital commitments. At December 31, 2000, we had no material commitments for capital expenditures. Other
commitments include rental payments under operating leases for office space and equipment, and commitments
under employment contracts with our chief executive officer, president, and chief financial officer.
16

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Ed#: 4
*P64567/021/4*
EDGAR 2

BUSINESS
Company overview
We develop, assemble and market less-lethal, conducted energy weapons primarily for use in the law
enforcement and corrections market. Over 350 police departments in the United States have made initial purchases
of our products and 15 police departments, including San Diego, Sacramento, and Albuquerque, have purchased our
products for every patrol officer. As of February 1, 2001, more than 200 additional police departments were
evaluating our newest product, the ADVANCED TASER.
We sell two principal products. We introduced the AIR TASER in 1994 and targeted it primarily at the
consumer market. We designed the AIR TASER to look like a cellular telephone or other consumer electronic item,
rather than a weapon. The terms of an agreement we signed with Electronic Medical Laboratories, Inc., doing
business as Tasertron and the original licensee of a patent on certain technology used in our weapons, precluded us
from selling our products to United States law enforcement, corrections and military agencies until February 1998.
After expiration of this agreement, we introduced the ADVANCED TASER, an upgraded and redesigned version of
the AIR TASER, to appeal to the law enforcement and corrections market. It uses the same basic operating principle
as the AIR TASER but produces four times the AIR TASER’s power output. It is also pistol-shaped to make it
easier for police officers to use. The ADVANCED TASER can be sold with an integrated laser sight and a built-in
memory option to record the time and date of up to 500 firings. We believe the ADVANCED TASER will also
appeal to the security, military and consumer markets, and intend to pursue sales in these markets after further
penetrating the law enforcement and corrections market.
Industry background
The market for less-lethal weapons includes law enforcement agencies, correctional facilities, military agencies,
private security guard companies and retail consumers. We believe law enforcement officials are the opinion leaders
regarding market acceptance of new security products. In recent years, successful new security products — such as
the GLOCK handgun and the Mag-Lite flashlight — were first marketed to and accepted by police departments. We
therefore focus on the law enforcement agency segment of the market for less-lethal weapons.
Generally, each police force has a use-of-force policy that dictates the level of force its officers can use to
respond to various situations. A police officer is trained to use only the minimum force necessary to overcome the
threat of injury or violence posed by a suspect. For example, under most policies, an officer may not use lethal force
unless a subject poses a threat of significant bodily injury or fatality to the officer or other persons.
In fact, most police officers never deploy lethal force in the course of their careers. While the vast majority of
law enforcement officers around the world are armed with firearms, only a small percentage will actually ever use
them. Many police officers, however, must use less-lethal force on a regular basis. Less-lethal force can range from
a control hold to the use of a baton, chemical spray, or other means to control a subject that is actively resisting the
officer.
Police officers are often injured while trying to subdue a suspect with less-lethal force. Traditional tactics such
as using a baton or fist to control a suspect result not only in a significant risk of injury to the suspect, but also a
significant risk that the officer will be injured. If an officer can subdue a suspect from a safe distance using effective
less-lethal weapons, he greatly reduces the probability that he or the suspect, as well as bystanders, will be injured
during a confrontation.
A variety of new less-lethal weapons have been developed to address the need to temporarily incapacitate an

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require different tools for different situations. We believe that the following characteristics of less-lethal weapons
are the most important to law enforcement agencies:
• Effectiveness: temporary incapacitation of aggressive suspects
• Range: variable distance over which the weapon is effective
• Safety: low risk of injury or death
• Ease of use: simple operation, low maintenance and no contamination
• Dependability: reliability in many environments, product durability
• Accountability: tracking to reduce misuse of the weapon
• Cost: low cost per use and possible reduction of litigation expense
The ADVANCED TASER solution
All our products are designed to perform well in terms of the above characteristics. We believe the
ADVANCED TASER, however, offers the best combination of these characteristics currently available in a lesslethal weapon. This superior performance could make the ADVANCED TASER the less-lethal weapon of choice in
many situations for law enforcement agencies and other security services.
• Effectiveness
Most less-lethal weapons rely upon a pain response to be effective. A less-lethal weapon that inflicts only pain
may not stop the most dangerous and aggressive suspects. The ADVANCED TASER is designed to cause complete
yet temporary physical incapacitation, not just discomfort or distraction. In police testing and field use, the
ADVANCED TASER has incapacitated even highly focused individuals who have demonstrated the ability to fight
through other less-lethal weapons that rely only on pain.
• Range
Batons and chemical sprays can only be used from close distances, usually less than five feet. Rubber bullets,
beanbag rounds, and similar less-lethal impact weapons must be used at distances greater than 30 feet to minimize
suspects’ injuries. Therefore, we believe that other less-lethal weapons as a group are generally ineffective between
five and thirty feet. The ADVANCED TASER is designed to operate within this range. Since it is equally effective
at very close range, we believe the ADVANCED TASER represents a more versatile less-lethal weapon for
encounters taking place within 21 feet.
• Safety
In tests involving over 1,000 human volunteers and in hundreds of field applications, the ADVANCED TASER
has had no reported long-term, adverse after-effects. In field uses, our technology has been found to have a
comparable or lower risk of injury to officers and suspects than other less-lethal technologies. Further, the recovery
time from an application of the ADVANCED TASER is generally less than one minute. In contrast, recovery time
from the application of chemical sprays can range from ten minutes to one hour. Recovery time from the effect of

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• Dependability
The ADVANCED TASER operates effectively under a variety of unfavorable conditions, such as wind and
rain, that render chemical sprays less effective. The ADVANCED TASER housing is constructed of high tensilestrength polycarbonate to withstand the rigors of typical police use.
• Accountability
The ADVANCED TASER incorporates features designed to reduce inappropriate use. Our cartridges contain
numerous confetti-like Anti-Felon Identification tags, or AFIDs, which are scattered when the unit is fired. AFID
tags recovered from usage sites can thus help identify the owner of the cartridge used. The ADVANCED TASER
we market to law enforcement and corrections agencies also comes with a data port that records the exact time, date
and duration of up to 500 firings.
• Cost
The ADVANCED TASER is sold to law enforcement agencies for approximately $400 per unit. The air
cartridge ammunition is priced under $18 per shot. These prices are competitive with impact munitions and most
other specialized less-lethal weapons, with the exception of the least expensive chemical sprays. However, the
indirect costs of decontaminating buildings, vehicles, and uniforms resulting from the use of chemical sprays can
place the ADVANCED TASER at an overall cost advantage per use.
In addition, litigation costs for law enforcement agencies can be significant. Reducing the number of injuries
and fatalities caused by law enforcement officers may reduce the number of suits filed against agencies for
excessive use of force, wrongful death and injury. Further, reducing officer injuries minimizes medical claims and
lost time for work-related injuries.
As with other less-lethal weapons, these characteristics, particularly safety, may also have the benefit of
increasing goodwill between law enforcement agencies and their communities. Community relations considerations
can be particularly important at a time when almost any interaction with police can be videotaped and scrutinized by
the media and the public.
Our strategy
Key elements of our strategy for growth include the following:
• Fully exploit the expanding law enforcement and corrections market.
Our goal is to make the ADVANCED TASER the dominant less-lethal weapon for use by law enforcement and
corrections agencies. Law enforcement officials are often viewed as experts with regard to weapons and other
security products. As a result, we believe that widespread acceptance of the ADVANCED TASER in this market
will enhance its credibility and represents a necessary first step toward expanding sales of our products in additional
markets.
• Expand into private security, military, and consumer markets.
After increasing our presence in the law enforcement and corrections market, we intend to expand our
penetration in the private security, military and consumer self-defense markets. We believe the same performance
characteristics that will enable our products to succeed in the law enforcement and corrections market will also

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*P64567/024/4*
EDGAR 2

• Acquire businesses that enhance our strategic position.
We may acquire businesses that will complement our growth strategy and enhance our competitive position in
our markets. However, we have no current plans for such acquisitions.
Markets
Law enforcement and corrections
Federal, state and local law enforcement agencies in the United States currently represent the primary target
market for the ADVANCED TASER. According to United States Bureau of Justice statistics, there were nearly
19,000 of these agencies in the United States in 1996 that employed about 740,000 full-time, sworn law
enforcement officers. In 1995, the most recent year for which statistics are available, industry analysts estimated
that the total number of non-administrative correctional officers in the United States was approximately 450,000.
Acceptance of the ADVANCED TASER by United States police departments has been fairly rapid since its
introduction in December 1999. We believe it could prove equally suitable for use in correctional facilities. The
ADVANCED TASER is particularly useful in these confined and crowded settings since it provides a means of
bringing virtually any individual under control without requiring the use of lethal force. We anticipate that some of
these officers will be armed with ADVANCED TASERs, particularly as its performance attributes become more
familiar to the wider law enforcement community.
In the law enforcement market, over 350 police departments have made initial purchases of the ADVANCED
TASER for testing or deployment. In addition, 15 police departments, including San Diego, Sacramento, and
Albuquerque, purchased enough of our weapons to issue one to each of their patrol officers.
Private security firms and guard services
In 1999, it was estimated that there were over 1.7 million privately employed security guards or personnel in the
United States. They represent a broad range of individuals, including bodyguards, commercial and government
building security guards, commercial money carrier employees, and many others. We believe that security
personnel armed with ADVANCED TASERs could be as effective in many circumstances as those armed with
conventional firearms. At the same time, arming guards with ADVANCED TASERs may reduce the potential
liability of private security companies and personnel.
A number of environments can prove problematic for the use of conventional firearms. The use of conventional
firearms in airplanes, for example, poses a significant threat to the integrity of the aircraft and the safety of the
passengers. Conventional firearms may also be inappropriate in subways, buses, transit systems, banks and casinos.
In many of these crowded environments, the contamination associated with the use of chemical sprays could also
pose significant problems.
One large private security force overseas has ordered over 1,000 ADVANCED TASERs for delivery in Spring
2001. We are in the early stage of pursuing additional opportunities for sales of the ADVANCED TASER in private
security markets, and have made only limited sales to date.
Consumer/personal protection
In the late 1990s, industry sources estimated that 35 million Americans owned handguns. We believe these
handgun owners represent one segment of a potentially large consumer market for our products.

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*P64567/025/4*
EDGAR 2

Military
Military police forces may use the ADVANCED TASER for purposes similar to those of civilian police units.
Military peace-keeping forces also perform policing functions, and the ADVANCED TASER may prove an
effective tool for these operations. The ADVANCED TASER may also be used by armed forces to reduce the
possibility of civilian casualties resulting from combat operations on battlefields consisting of both civilians and
combatants. We have yet to pursue sales opportunities in the military market.
Products
Our weapons use compressed nitrogen to shoot two small electrified probes up to a maximum distance of 21
feet. The probes and compressed nitrogen are stored in a replaceable cartridge attached to the base of the weapon.
Our proprietary replacement cartridges are sold separately.
After firing, the probes discharged from our cartridges remain connected to the weapon by high-voltage
insulated wires that transmit electrical pulses into the target. These electrical pulses, which we call TASER-Waves
or T-Waves, are transmitted through the body’s nerves in a manner similar to the transmission of signals used by the
brain to communicate with the body. The T-Waves temporarily overwhelm the normal electrical signals within the
body’s nerve fibers, impairing subjects’ ability to control their bodies or perform coordinated actions. T-Waves can
penetrate up to two inches of clothing. The initial effect lasts up to five seconds and the charge can be repeated for
up to approximately ten minutes by repeatedly firing the weapon.
Since all our weapons use the same cartridges, we can support multiple platforms and still achieve economies of
scale in cartridge production. Our cartridges contain numerous colored, confetti-like tags bearing the cartridge’s
serial number. These tags, referred to as Anti-Felon Identification tags, or AFIDs, are scattered when one of our
weapons is fired. We require sellers of our products to participate in the AFID program by registering buyers of our
cartridges. In many cases, we can use AFIDs to identify the registered owner of cartridges fired.
We introduced our initial product, the AIR TASER, in 1994. We designed the AIR TASER to look like a
cellular telephone rather than a weapon to target the consumer electronics market. Currently, the AIR TASER
product line consists of the AIR TASER, a cartridge that shoots two small electrified probes up to 15 feet, an
optional laser sight, and a number of holstering accessories. We continue to target the AIR TASER line to the
consumer market.
We developed the ADVANCED TASER product line, launched in December 1999, primarily for the law
enforcement and corrections market. The ADVANCED TASER M-26 is our primary product in this market and is
sold exclusively to law enforcement and corrections agencies. The ADVANCED TASER M-26 offers the following
improvements over the AIR TASER:
• Increased effectiveness: the ADVANCED TASER has four times the power of the AIR TASER and has
proven effective in incapacitating over 99% of volunteers tested.
• Better accountability: the ADVANCED TASER’s memory system records the time, date, and duration of up
to 500 firings. By downloading this information periodically, law enforcement and corrections agencies can
track every use of the ADVANCED TASER. These agencies can use this data to investigate potential misuse.
• Ease of use: the ADVANCED TASER’s familiar pistol shape and integrated laser sight minimize the training
required for law enforcement and corrections officers and make it easier to use.

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In addition to weapons and cartridges, we sell holsters, attachments, cases and other accessories that
complement our core products. Although to date these accessories have generated limited sales, they offer
additional revenue opportunities and attractive margins.
We offer a lifetime warranty on the AIR TASER. Under this warranty, we will replace any AIR TASER that
fails to operate properly for a $25 fee. The AIR TASER is designed to disable an attacker for up to 30 seconds, and
we encourage users to leave the unit and flee after firing it. As a result, we also provide free replacement units to
consumers who follow this suggested procedure. To qualify for the replacement unit, users must file a police report
that describes the incident and confirms the use of the AIR TASER.
We offer a no-questions-asked lifetime replacement policy on the ADVANCED TASER. If the weapon fails to
operate properly for any reason, we will replace it for a fee of $25. The fee is intended to help defray the handling
and repair costs associated with product returns. This policy is attractive to our law enforcement and corrections
agency customers. In particular, it avoids disputes regarding the source or cause of any defect. Warranty costs under
both the AIR TASER and the ADVANCED TASER replacement policies have been minimal to date.
Sales and marketing
Law enforcement and corrections agencies represent our primary target market. In this market, the decision to
purchase the ADVANCED TASER is normally made by a group of people including the agency head, his training
staff, and weapons experts. The decision sometimes involves political decision-makers such as city council
members. The decision-making process can take as little as a few weeks or as long as several years.
United States distribution. With the exception of several accounts to which we sell directly, the vast majority of
our law enforcement agency sales in the United States occur through our network of more than 25 independent
regional police equipment distributors. To service these distributors and assist us in expanding sales to new ones, we
retain two manufacturer’s representatives that call on potential distributors. We compensate our manufacturer’s
representatives solely on a commission basis, calculated as a percentage of the sales they complete. Sales in the
consumer market are made through different independent distributors, dealers, and retailers. We provide our
distributors with performance-based incentive programs.
International distribution. As a result of our shift in focus to the United States law enforcement and corrections
market, our international sales efforts are currently limited to presentations and training seminars conducted by
TASER personnel. We recently began introducing the ADVANCED TASER in Europe and parts of the Middle
East, South America and Asia, but have yet to devote significant resources to these markets. Sales outside the
United States and Canada accounted for 48% and 18% of total revenues in 1999 and 2000, respectively. In 2001,
we expect international sales to account for approximately 10% of our total sales.
We have worked in the past with more than 20 foreign distributors. These foreign distributors purchase products
from us and resell them to sub-distributors, retail dealers or end users. We continue to provide most foreign
distributors with short-term exclusive contracts to sell our products in a designated region. Although many of these
relationships are inactive, we continue to ship products as ordered.
Training Programs. Most law enforcement and corrections agencies will not purchase new weapons until a
training program is in place to certify all officers in their proper use. We offer an eight-hour class that certifies law
enforcement and corrections agency trainers as instructors in the use of the ADVANCED TASER. We have
certified over 2,500 law enforcement training officers as ADVANCED TASER instructors. Our certification
program is designed to make it easier for departments to comply with these training requirements.

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not just end users within these organizations. Twenty-five of our master instructors have agreed to conduct
ADVANCED TASER training classes on a regular basis. These instructors independently organize and promote
their own training sessions, and we provide them with logistical support. They are independent professional trainers,
serve as local area TASER experts, and assist our distributors in conducting TASER demonstrations at other police
departments within their regions. Through the end of 2000, we did not charge for attendance at these classes but
now charge $195 per attendee. We pay master instructors a per-session training fee and a share of the attendance
fees collected at each session that they conduct. These training sessions have led directly to the sale of
ADVANCED TASERs to a number of police departments.
Communications. In addition to our training programs, we regularly participate in a variety of trade shows and
conferences. Our marketing efforts also benefit from significant free news coverage. Other marketing
communications include video e-mails, press releases, and conventional print advertising in law enforcement trade
publications. Our website also contains similar marketing information.
Manufacturing
After a review of our operating costs and changes in regulations pertaining to the export of the technology used
to produce our weapons, we elected to move our final assembly operations from our subcontractor in Guaymas,
Mexico to our new facility in Scottsdale, Arizona. We own all of the production equipment used for the final
assembly of our products in the Guaymas facility, and expect to reinstall it in Scottsdale no later than April 2001.
We currently assemble the compressed nitrogen containers used inside our air cartridges in our Scottsdale facility.
Our Scottsdale facility has approximately 6,000 square feet of assembly and warehouse space. We plan to
employ between 15 and 25 assembly personnel by the end of 2001. After the move, our production capabilities will
support the assembly of 2,000 ADVANCED TASERs, 1,000 AIR TASERs, and 24,000 cartridges per month on a
single shift. We can expand our production capabilities by adding additional personnel and a second shift with
negligible new investment in tooling and equipment. We expect our Scottsdale facility and tooling to be sufficient
to support our current growth projections at least through 2003.
We currently purchase finished circuit boards and injection-molded plastic components from third-party
suppliers in Phoenix. Although we currently obtain these components from single source suppliers, we own the
injection-molded component tooling used in their production. As a result, we believe we could obtain alternative
suppliers without incurring significant production delays. We acquire most of our components on a purchase order
basis and do not have long-term contracts with suppliers.
Competition
In the law enforcement and corrections market, the ADVANCED TASER competes directly with the conducted
energy weapon sold by Electronic Medical Research Laboratories, Inc., doing business as Tasertron. Tasertron is
the sole remaining manufacturer of the original TASER weapon introduced in the 1970s. The ADVANCED
TASER also competes indirectly with a variety of other less lethal alternatives. In the consumer market, the AIR
TASER competes directly with a conducted energy weapon introduced by Bestex, Inc. in 1996, called the DualDefense, and indirectly with other less-lethal alternatives.
Law enforcement and corrections market. Tasertron had an exclusive license to sell TASER products in the
North American law enforcement and corrections market until February 1998. Compared to the Tasertron unit, our
ADVANCED TASER offers reduced size, additional power, and a more convenient pistol-shaped design. We
believe agencies choosing to employ a conducted energy weapon will prefer to adopt a single weapon system. Since
its introduction, the ADVANCED TASER has competed successfully against the Tasertron unit, even in agencies

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lethal weapons to be distinct tools, each best-suited to a particular set of circumstances. Consistent with this tool kit
approach, purchasing any given tool does not preclude the purchase of one or several more. In other cases,
budgetary considerations and limited space on officers’ belts dictate that only a limited number of less-lethal
weapons will be purchased and carried. We believe the ADVANCED TASER’s versatility, effectiveness, and low
injury rate enable it to compete effectively against other less-lethal alternatives.
Consumer market. Conducted energy weapons have gained limited acceptance in the consumer market for lesslethal weapons. These weapons compete with other less-lethal weapons such as stun guns, batons and clubs, and
chemical sprays. The primary competitive factors in the consumer market include a weapon’s cost, its effectiveness,
and its ease of use. The widespread adoption of the ADVANCED TASER by law enforcement agencies may help
us overcome a perceived historic lack of consumer confidence in conducted energy weapons.
Regulation
United States regulation. The AIR TASER and ADVANCED TASER are subject to the same regulations.
Neither weapon is considered a “firearm” by the Bureau of Alcohol, Tobacco, and Firearms. There are, therefore,
no firearms-related regulations regarding the sale and distribution of our weapons within the United States. In the
1980s, however, many states introduced regulations restricting the sale and use of stun guns, inexpensive hand-held
shock devices. We believe existing stun gun regulations also apply to our weapon systems.
In many cases, the law enforcement and corrections market is subject to different regulations than the consumer
market. Where different regulations exist, we assume the regulations affecting the consumer market also apply to
the private security market. Based on a review of current regulations, we have determined the following states
regulate the sale and use of our weapon systems:
State
Connecticut
Florida
Hawaii
Illinois
Indiana
Massachusetts
Michigan
New Jersey
New York
North Carolina
North Dakota
Rhode Island
Washington
Wisconsin

Law Enforcement Use
Legal
Legal
Prohibited
Legal
Legal
Legal
Prohibited (except for evaluation)
Prohibited
Legal
Legal
Legal
Prohibited
Legal
Legal

24

Consumer Use
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Prohibited
Prohibited
Prohibited
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Legal, subject to restrictions
Prohibited

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*P64567/029/4*
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The following cities and counties also regulate our weapon systems:
City
Annapolis
Baltimore
Chicago
Howard County, MD
Lynn County, OH
New York City
Philadelphia
Washington, D.C.

Law Enforcement Use
Legal
Legal
Legal
Legal
Legal
Legal
Legal
Legal

Consumer Use
Prohibited
Prohibited
Prohibited
Prohibited
Legal, subject to restrictions
Prohibited
Prohibited
Prohibited

United States export regulation. Our weapon systems are considered a crime control product by the United
States Department of Commerce. Accordingly, the export of our weapon systems is regulated under the export
administration regulations. As a result, we must obtain export licenses from the Department of Commerce for all
shipments to foreign countries other than Canada. Most of our requests for export licenses have been granted, and
the need to obtain these licenses has not caused a material delay in our shipments. The need to obtain licenses,
however, has limited or impeded our ability to ship to certain foreign markets. In addition, export regulations
prohibit the further shipment of our products from foreign markets in which we hold an export license for the
products to foreign markets in which we do not hold an export license for the products.
In addition, in the fall of 2000, the Department of Commerce introduced new regulations restricting the export
of the technology used in our weapon systems. These regulations apply to both the technology incorporated in our
weapon systems and in the processes used to produce them. The technology export regulations do not apply to
production that takes place within the United States. After moving our final assembly to our Scottsdale facility,
these technology export regulations will no longer apply to us but will still apply to certain of our suppliers located
outside of the United States.
Foreign regulation. Foreign regulations are numerous and often unclear. We prefer to work with an exclusive
distributor who is familiar with applicable regulations in each of our foreign markets. Experience with foreign
distributors in the past indicates that restrictions may prohibit certain sales of our products in a number of countries.
The countries in which we are aware of restrictions include Belgium, Denmark, Hong Kong, Italy, Japan, New
Zealand, Norway, Sweden, Switzerland, and the United Kingdom. In Australia, Canada, and India we are also
aware that sales of our products are permitted to law enforcement and corrections agencies but prohibited to
consumers.
Intellectual property
We protect our intellectual property with a variety of patents and trademarks. In addition, we use confidentiality
agreements with employees and some suppliers to ensure the safety of our trade secrets. We hold a United States
patent on the construction of the gas cylinder used to store the compressed nitrogen in our cartridges. This patent
expires in 2015. We are the licensee of a United States patent on the process by which compressed gases launch the
probes in our cartridges. This patent expires in 2009. Using this compressed gas technology instead of gunpowder
prevents our products from being classified as firearms by the Bureau of Alcohol, Tobacco and Firearms. We also
have a broad-based patent application pending covering the wave form of the energy we developed for the
ADVANCED TASER.
We have several unregistered and federally registered trademarks. We own the AIR TASER and TASER
registered trademarks.

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and mechanical engineering design. Future development projects will focus on reducing the size, extending the
range, and improving the functionality of our weapons. Total research and development expenditures were $6,900
in 1999 and $7,100 in 2000.
Employees
As of December 31, 2000, we had 16 full-time employees. Six employees were involved in sales, marketing and
training. Two were employed in research, development and engineering. We also employed four administrative
personnel and four in production support. Our employees are not covered by any collective bargaining agreement,
and we have never experienced a work stoppage. We believe that our relations with our employees are good.
Facilities
We conduct our operations from a modern 11,800-square-foot facility located in Scottsdale, Arizona. The
monthly rent for this facility is approximately $11,000. Our lease expires on January 1, 2006. We believe this
facility will meet our needs for the next three years and that additional space will be available on reasonable terms
upon the expiration of our current lease or if we require additional space.
Legal proceedings
We are a defendant in a lawsuit filed in February 2000 by a former distributor of our products in the Supreme
Court of the State of New York for the County of New York. This former distributor claims the exclusive right to
sell our products to many of the largest law enforcement, corrections, and military agencies in the United States and
seeks monetary damages. We signed no contracts with this former distributor. We also believe that he has no
reasonable basis for claims to informal or implied contractual rights. As a result, we believe his claims are without
merit, and the litigation will have no material adverse affect on our business, operating results or financial
condition.
Corporate information
We were incorporated in Arizona in September 1993 as ICER Corporation. We changed our name to AIR
TASER, Inc. in December 1993, and to TASER International, Incorporated in April 1998. In February 2001, we
reincorporated in Delaware as TASER International, Inc.
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MANAGEMENT
Directors and executive officers
Our directors and executive officers are as follows:
Name
Phillips W. Smith
Patrick W. Smith
Thomas P. Smith
Bruce R. Culver
Matthew R. McBrady
Karl F. Walter
Kathleen C. Hanrahan

Age
63
30
33
55
30
54
37

Position
Chairman
Chief Executive Officer and Director
President and Director
Director
Director
Director
Chief Financial Officer

Phillips W. Smith is the chairman of our board of directors. Dr. Smith has served as a director since 1993.
Since January 1999, Dr. Smith has served on the board of directors of Pentawave, Inc., a developer of cross-media
publishing software. From June 1991 to September 1997, Dr. Smith served as the president and chief executive
officer of Zycad Corporation, a developer of engineering and manufacturing applications software. Dr. Smith holds
a B.S.E. degree from West Point, an M.B.A. degree from Michigan State University, and a Ph.D. in Business
Administration from St. Louis University.
Patrick W. Smith is the chief executive officer and a co-founder of TASER. Mr. Smith has served as our chief
executive officer and as a director since 1993. Mr. Smith holds a B.S. degree in Biology and Neurobiology from
Harvard University, an M.B.A. degree from the University of Chicago, and a Masters Degree in International
Finance from the University of Leuven in Leuven, Belgium.
Thomas P. Smith is the president and a co-founder of TASER. Mr. Smith has served as our president since
April 1994 and as a director since 1993. Mr. Smith holds a B.S. degree in Ecology and Evolutionary Biology from
the University of Arizona and an M.B.A. degree from Northern Arizona University.
Bruce R. Culver has served as a director of TASER since January 1994. Mr. Culver co-founded Professional
Staff, P.L.C., a human resource management company, and has served on its board of directors since April 1990. In
March 1993, Mr. Culver organized and has since remained the chief executive officer of Culver Distributions, Inc.,
doing business as California Distribution Company, providing warehouse and distribution services to internet
companies. Since April 1997, Mr. Culver has served on the board of Pentawave, Inc., becoming its chairman in
October 2000.
Matthew R. McBrady has served as a director of TASER since January 2001. From August 1998 though July
1999, Mr. McBrady served as a member of the staff of President Clinton’s Council of Economic Advisers. In
December 1997, Mr. McBrady began working as a financial and analytical consultant for Avenue A, Inc, an internet
marketing company, and served as its vice president of analytics from June 1999 through October 1999.
Mr. McBrady taught corporate finance courses at the University of Southern California during the summer terms of
1997 and 1998, at Harvard College from September 1996 through May 1997, and at Harvard Business School
during the spring term of 1998. Mr. McBrady holds a B.S. in Economics from Harvard University, an M.S. in
International Economics from Oxford University, and expects to receive a Ph.D. in Corporate and International
Finance from Harvard University in June 2001.
Karl F. Walter has served as a director of TASER since January 2001. Mr. Walter was a co-founder of Glock,

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Kathleen C. Hanrahan is our chief financial officer, serving in that position since November 2000.
Ms. Hanrahan first joined TASER in January 1996 as an internal controls consultant and became our controller in
March 1996.
Our certificate of incorporation provides that we have no less than three and no more than nine directors divided
into three classes (Class 1, Class 2, and Class 3), with members of each class serving for staggered three-year terms.
As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other
classes continuing for the remainder of their respective three-year terms. Messrs. Phillips Smith and Bruce Culver
have been designated as Class 1 directors, whose term expires at the 2001 annual meeting; Messrs. Patrick Smith
and Karl Walter have been designated as Class 2 directors, whose term expires at the 2002 annual meeting; and
Messrs. Thomas Smith and Matthew McBrady have been designated as Class 3 directors, whose term expires at the
2003 annual meeting.
Each officer serves at the discretion of our board of directors. No officer is subject to an agreement that requires
the officer to serve TASER for a specified number of years. Mr. Thomas Smith and Mr. Patrick Smith are
Dr. Phillips Smith’s sons. No other family relationships exist among our directors and executive officers.
Director compensation
Prior to 2001, directors were not compensated for their service on the board. Beginning in 2001, independent
directors will receive $1,250 per quarter. In addition, in December 2000, Messrs. McBrady and Walter each
received options to purchase 6,667 shares vesting ratably over four years at an exercise price of $3.30 per share.
Directors are also reimbursed for expenses incurred in connection with attendance at meetings.
Committees of the board of directors
Our board of directors has a Audit Committee consisting of Mr. McBrady and Mr. Walter, and a Compensation
Committee consisting of Mr. Culver and Mr. Walter. The Audit Committee meets with management and our
independent public accountants to determine the adequacy of our internal controls and other financial reporting
matters. The Compensation Committee reviews and recommends to the board of directors the compensation and
benefits of our officers, reviews general policy matters relating to compensation and benefits of our employees and
administers the issuance of stock options and discretionary cash bonuses to our officers, employees, directors and
consultants. We intend to appoint only independent directors to the Audit and Compensation Committees.
Executive compensation
The following table sets forth information regarding compensation awarded to, earned by or paid to our chief
executive officer for all services rendered to us during 1998, 1999 and 2000. None of our other executive officers
earned in excess of $100,000 in 2000.
Summary Compensation Table
Annual Compensation
Name and Principal Position
Patrick W. Smith
Chief Executive Officer

Year

Salary

Bonus

Long Term Compensation
Securities Underlying Options
(#)

2000
1999
1998

$65,208
$49,161
$43,205

$2,500
—
—

—
10,000
—

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Fiscal year end option values
The following table sets forth information regarding the number and value of unexercised options held by our
chief executive officer on December 31, 2000. He did not exercise options to purchase common stock during 2000.
Number of Securities
Underlying Options at Fiscal
Year End 2000(#)
Name
Patrick W. Smith

Value of Unexercised In-theMoney Options at Fiscal
Year End($)(1)

Exercisable

Unexercisable

Exercisable

Unexercisable

6,389

3,611

$46,895

$26,505

(1) Based on the estimated fair value of our common stock as of December 31, 2000, determined by our board of
directors to be $8.00 per share.
Stock option plans
We have two stock option plans: the 1999 stock option plan and the 2001 stock option plan.
The 1999 stock option plan is an incentive and stock option plan which authorizes us to issue options to
purchase up to 833,333 shares of our common stock. Under this plan, we have issued options to purchase 143,322
shares at $0.24 to $7.20 per share, including 10,000 options to Patrick W. Smith. We will issue no further options
under the plan. The plan is administered by our board of directors. Subject to the provisions of this plan, the board
determines who will receive options, the number of options granted, the manner of exercise and the exercise price
of the options. The term of incentive stock options granted under the plan may not exceed ten years, or five years
for options granted to an optionee owning more than 10% of our voting stock. The exercise price of an incentive
stock option granted under this plan must be equal to or greater than the fair market value of the shares of our
common stock on the date the option is granted. The exercise price of a non-qualified option granted under this plan
must be equal to or greater than 85% of the fair market value of the shares of our common stock on the date the
option is granted. An incentive stock option granted to an optionee owning more than 10% of our voting stock must
have an exercise price equal to or greater than 110% of the fair market value of our common stock on the date the
option is granted.
The 2001 stock option plan is an incentive and stock option plan which authorizes us to issue options to
purchase up to 550,000 shares of our common stock. Under this plan, we have issued options to purchase 291,000
shares at an average price of $8.33 per share, including 60,000 options to Patrick W. Smith. The plan is
administered by our board of directors. Subject to the provisions of this plan, the board determines who will receive
options, the number of options granted, the manner of exercise and the exercise price of the options. The term of
incentive stock options granted under the plan may not exceed ten years, or five years for incentive stock options
granted to an optionee owning more than 10% of our voting stock. The exercise price of an incentive stock option
granted under this plan must be equal to or greater than the fair market value of the shares of our common stock on
the date the option is granted. The exercise price of a non-qualified option granted under this plan must be equal to
or greater than 85% of the fair market value of the shares of our common stock on the date the option is granted. An
incentive Stock option granted to an optionee owning more than 10% of our voting stock must have an exercise
price equal to or greater than 110% of the fair market value of our common stock on the date the option is granted.
Employment agreements
In July 1998, we entered into an employment agreement with Patrick W. Smith pursuant to which he agreed to
serve as our chief executive officer. The agreement is for an initial three-year term ending June 30, 2001, and is
automatically renewed for a two-year term unless we give Mr. Smith one-year prior notice of termination, if the

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CERTAIN TRANSACTIONS
In 1998, Mr. Bruce R. Culver, a director of TASER, loaned us $622,525. In March 1998, $150,000 of such
amount was converted into 20,833 shares of our common stock at an estimated value of $7.20 per share. In
December 1998, we issued Mr. Culver a promissory note for $472,525, the remaining amount due. The note bears
interest at a rate of 10% per year and matures July 1, 2002. In 1999, Mr. Culver loaned an additional $150,000 to us
at an interest rate of 10%, due July 1, 2002. In 2000, Mr. Culver loaned an additional $200,000 to us at an interest
rate of 10%, due July 1, 2002. In total, outstanding notes due to Mr. Culver are $822,525 in principal plus accrued
interest of $140,794 as of December 31, 2000, due July 1, 2002.
In January 1999, Mr. Culver loaned us $1,500,000. In return, we issued him a promissory note for $500,000 at
an effective interest rate of 27.1% per year, and 1,666,667 shares of our common stock at a price of $.60 per share.
These shares were subject to a repurchase agreement between Mr. Culver and us that allowed us to repurchase the
shares if we met certain operating performance criteria. We met the criteria and repurchased the shares from
Mr. Culver in July 2000 in exchange for a promissory note in the amount of $1,000,000. We consolidated this note
and the January 1999 note for $500,000 into a new note for $1,500,000 which carries interest at bank prime (9.5%
at December 31, 2000) plus 1% and matures July 1, 2002.
In 1999, Mr. Phillips W. Smith, our chairman, worked as a full time advisor to us and was compensated solely
by an option on 16,667 shares of our common stock at a price of $0.66 per share.
In 1998, Mr. Phillips W. Smith loaned us $455,691 in the form of a stockholder note at an interest rate of 9%.
This note is currently outstanding, and the maturity has been extended to July 1, 2002 at an interest rate of 10%.
Further, Mr. Smith has deferred expenses in the amount of $99,794, which has been formalized in a note bearing
10% interest, which matures July 1, 2002. The accrued interest due Mr. Smith for these notes was $119,045 as of
December 31, 2000.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial ownership of our common stock as of
December 31, 2000, and as adjusted to reflect the sale of 1,000,000 units in this offering, by:
• each person or group of affiliated persons known to be the beneficial owner of more than 5% of our
outstanding common stock;
• each of our directors;
• our chief executive officer; and
• all of our directors and executive officers as a group.
As of such date, there were 1,510,754 shares of common stock outstanding before giving effect to the sale of
units in this offering. We believe that, except as otherwise listed below, each named beneficial owner has sole
voting and investment power with respect to the shares listed.
Shares Beneficially Owned

Name of Beneficial Owner
Phillips W. Smith(1)
Patrick W. Smith(2)
Bruce R. Culver(3)
Thomas P. Smith(4)
Malcolm W. Sherman(5)
Karl F. Walter(6)
Matthew R. McBrady(7)
All directors and executive officers as a group (7 persons)(8)

Number of
Shares
Beneficially
Owned
388,479
361,584
491,146
217,674
123,796
1,111
1,111
1,599,433

Percentage
Beneficially
Owned Before
This Offering
23.1%
21.5%
29.2%
12.9%
7.4%
*
*
95.1%

Percentage
Beneficially
Owned After
This Offering
14.5%
13.5%
18.3%
8.1%
4.6%
*
*
59.6%

The address of each person in this table is c/o 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260,
(480) 991-0797.
As of December 31, 2000, we had nine stockholders.
* less than 1%
(1) Includes 20,833 shares subject to options or warrants that are exercisable within 60 days.
(2) Includes 11,250 shares subject to options that are exercisable within 60 days.
(3) Includes 31,061 shares subject to warrants that are exercisable within 60 days.
(4) Includes 11,250 shares subject to options that are exercisable within 60 days.
(5) Includes 3,333 shares subject to options that are exercisable within 60 days.

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DESCRIPTION OF SECURITIES
Upon completion of the offering, our authorized capital stock will consist of (1) 50,000,000 shares of common
stock, $0.00001 par value, and (2) 25,000,000 shares of preferred stock, $0.00001 par value, of which there will be
2,510,754 shares of common stock and no shares of preferred stock outstanding. The following description of our
capital stock is a summary and is qualified in its entirety by the provisions of our certificate of incorporation and
our bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a
part.
Units
Each unit consists of one share of common stock and one public warrant to purchase an additional share of
common stock. The common stock and warrants will trade only as a unit for at least 30 days following this offering.
The representative of the underwriters will then determine when the units separate, after which the common stock
and the public warrants will trade separately.
Common stock
Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder
vote and may not cumulate their votes. Holders of common stock are entitled to share in all dividends that the board
of directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or
winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of
liabilities and after providing for each class of stock, if any, having preference over the common stock.
Holders of our common stock have no conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to our common stock. The rights of the holders of common stock are subject to
any rights that may be fixed for holders of preferred stock. All outstanding shares of common stock are, and the
shares underlying all options and public warrants will be, duly authorized, validly issued, fully paid and nonassessable upon our issuance of these shares.
Preferred stock
Our certificate of incorporation provides for the issuance of up to 25,000,000 shares of preferred stock. As of
the date of this prospectus, there are no outstanding shares of preferred stock. Subject to certain limitations
prescribed by law and the rights and preferences of the preferred stock, our board of directors is authorized, without
further stockholder approval, from time to time to issue up to an aggregate of 25,000,000 shares of our preferred
stock, in one or more additional series. Each new series of preferred stock may have different rights and preferences
that may be established by our board of directors.
The rights and preferences of future series of preferred stock may include:
• number of shares to be issued;
• dividend rights and dividend rates;
• right to convert the preferred stock into a different type of security;
• voting rights attributable to the preferred stock;

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summarized below. Our public warrants may be exercised at any time during the period commencing 30 days after
this offering and ending on the fifth anniversary date of the closing of this offering, which is the expiration date.
Those of our public warrants which have not previously been exercised will expire on the expiration date. A public
warrant holder will not be deemed to be a holder of the underlying common stock for any purpose until the public
warrant has been properly exercised.
Separate transferability
Our public warrants will trade only as a unit for a period of at least 30 days following this offering. The
representative of the underwriters will then determine when the units separate, after which the common stock and
the public warrants will trade separately.
Redemption
We have the right, commencing three months after the closing of this offering, to redeem the public warrants
issued in the offering at a redemption price of $0.25 per public warrant after providing 30 days prior written notice
to the public warrant holders, if the average closing bid price of the common stock equals or exceeds 200% of the
initial public offering price of the units for ten consecutive trading days ending prior to the date of the notice of
redemption. We will send the written notice of redemption by first class mail to public warrant holders at their last
known addresses appearing on the registration records maintained by the transfer agent for our public warrants. No
other form of notice or publication or otherwise will be required. If we call the public warrants for redemption, they
will be exercisable until the close of business on the business day next preceding the specified redemption date.
Exercise
A public warrant holder may exercise our public warrants only if an appropriate registration statement is then in
effect with the Securities and Exchange Commission and if the shares of common stock underlying our public
warrants are qualified for sale under the securities laws of the state in which the holder resides.
Our public warrants may be exercised by delivering to our transfer agent the applicable public warrant
certificate on or prior to the expiration date or the redemption date, as applicable, with the form on the reverse side
of the certificate executed as indicated, accompanied by payment of the full exercise price for the number of public
warrants being exercised. Fractional shares will not be issued upon exercise of our public warrants.
Adjustments of exercise price
The exercise price is subject to adjustment if we declare any stock dividend to stockholders or effect any split or
share combination with respect to our common stock. Therefore, if we effect any stock split or stock combination
with respect to our common stock, the exercise price in effect immediately prior to such stock split or combination
will be proportionately reduced or increased, as the case may be. Any adjustment of the exercise price will also
result in an adjustment of the number of shares purchasable upon exercise of a public warrant or, if we elect, an
adjustment of the number of public warrants outstanding.
Prior warrants
As of the date of this prospectus, we had issued and outstanding warrants to purchase 52,727 shares of our
common stock at a weighted average exercise price of $4.71, the forms of which have been filed as exhibits to the
registration statement of which this prospectus is a part.

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Registration rights
All holders of registration rights contained in agreements with us have waived such rights in connection with
this offering. In connection with this offering, we have granted Paulson Investment Company, Inc., representative
of the underwriters of this offering, warrants to purchase shares of our common stock. These representative’s
warrants, as well as the shares of common stock and warrants included in the units issuable upon exercise of the
representative’s warrants, are being registered on the registration statement of which this prospectus is a part. We
will cause the registration statement to remain effective until the earlier of the time that all of the representative’s
warrants have been exercised and the date which is five years after the effective date of this offering. The common
stock and warrants issued to the representative upon exercise of these warrants will be freely tradeable. We will bear
all expenses incurred in connection with the registration of the shares of common stock and warrants included in the
units issuable upon the exercise of the representative’s warrants.
Anti-takeover provisions of our charter documents
Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying
or preventing a change of control of TASER:
• Our board is divided into three classes, with each class serving a three-year staggered term, so that one-third of
the board is elected each year;
• The authorized number of our directors can be changed only by resolution of the board of directors;
• We can issue preferred stock without any vote or further action by stockholders;
• Any action required or permitted to be taken by our stockholders at an annual or a special meeting is valid only
if it is properly brought before the meeting, and written stockholder action is valid only if unanimous; and
• Our bylaws limit persons who may call a special meeting of our stockholders.
These provisions may deter hostile takeovers or delay changes in control of our management, which could depress
the market price of our securities.
Transfer agent and public warrant agent
The transfer agent for our common stock and public warrants is US Stock Transfer Corporation, Glendale,
California.
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Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 039.00.00.00 SN: 10 Ed#: 5
*P64567/039/5*
EDGAR 2

SHARES ELIGIBLE FOR FUTURE SALE
This offering
Upon completion of the offering, we expect to have 2,510,754 shares of common stock outstanding, assuming
no exercise of outstanding options or warrants, or 2,660,754 shares if the representative’s over-allotment is
exercised in full. Of these shares, the 1,000,000 shares of common stock issued as part of the units sold in this
offering will be freely tradeable without restrictions or further registration under the Securities Act of 1933, except
that any shares purchased by our “affiliates,” as that term is defined under the Securities Act, may generally only be
sold in compliance with the limitations of Rule 144 under the Securities Act. The 1,000,000 shares of common
stock underlying the public warrants issued as part of the units sold in this offering will also be freely tradeable after
exercise of the warrants, except for shares held by our affiliates.
Outstanding restricted stock
The remaining 1,510,754 outstanding shares of common stock are restricted securities within the meaning of
Rule 144 and may not be sold in the absence of registration under the Securities Act unless an exemption from
registration is available, including the exemption from registration offered by Rule 144. Holders of all of our
outstanding restricted shares of common stock have agreed not to sell or otherwise dispose of any of their shares of
common stock for a period of one year after completion of this offering, without the prior written consent of
Paulson Investment Company, Inc., subject to certain limited exceptions. Prior to the expiration of this lock-up
period, no shares of our outstanding restricted common stock may be sold in the public market pursuant to
Rule 144. After the expiration of this lock-up period, or earlier with the prior written consent of Paulson Investment
Company, Inc., all 1,510,754 of these outstanding restricted shares may be sold in the public market pursuant to
Rule 144.
In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, a person
who has beneficially owned restricted shares for at least one year, including a person who may be deemed to be our
affiliate, may sell within any three-month period a number of shares of common stock that does not exceed a
specified maximum number of shares. This maximum is equal to the greater of 1% of the then outstanding shares of
our common stock or the average weekly trading volume in the common stock during the four calendar weeks
immediately preceding the sale. Sales under Rule 144 are also subject to restrictions relating to manner of sale,
notice and availability of current public information about us. In addition, under Rule 144(k) of the Securities Act, a
person who is not our affiliate, has not been an affiliate of ours within three months prior to the sale and has
beneficially owned shares for at least two years would be entitled to sell such shares immediately without regard to
volume limitations, manner of sale provisions, notice or other requirements of Rule 144.
Preferred stock
As of December 31, 2000, we had no shares of preferred stock outstanding.
Options
Beginning 90 days after the date of this prospectus, certain shares issued or issuable upon the exercise of options
granted by us prior to the date of this prospectus will also be eligible for sale in the public market pursuant to
Rule 701 under the Securities Act of 1933, except that
of these shares are subject to the lock-up agreements
discussed above. Pursuant to Rule 701, persons who purchase shares upon exercise of options granted under a
written compensatory plan or contract may sell such shares in reliance on Rule 144 without having to comply with
the holding period requirements of Rule 144, and in the case of non-affiliates, without having to comply with the

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 12486
P64567.SUB, DocName: SB-2, Doc: 2, Page: 40

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 040.00.00.00 SN: 8
Ed#: 4
*P64567/040/4*
EDGAR 2

the future. Any shares issued upon the exercise of these options will be eligible for sale pursuant to Rule 701.
We intend to file registration statements on Form S-8 under the Securities Act to register approximately 434,322
shares of our common stock issuable under our stock option plans. These registration statements are expected to be
filed within three to six months after the completion of this offering. Shares of our common stock issued upon the
exercise of stock options after the effective date of the Form S-8 registration statements will be eligible for resale in
the public market without restriction, subject to Rule 144 limitations and the lock-up agreements discussed above.
Warrants
As of February 12, 2001, we had warrants outstanding to purchase 52,727 shares of common stock which have
not been exercised and which are currently exercisable. Any shares issued upon the exercise of these warrants will
be eligible for sale pursuant to Rule 144, except that these shares are also subject to the lock-up agreements
discussed above.
Representative’s warrants
In connection with this offering, we have agreed to issue to the representative of the underwriters warrants to
purchase 100,000 units. The representative’s warrants will be exercisable into units at any time during the four-year
period commencing one year after the effective date of this offering. We will cause the registration statement to
remain effective until the earlier of the time that all of the representative’s warrants have been exercised and the
date which is five years after the effective date of the offering. The common stock and warrants issued to the
representative upon exercise of these warrants will be freely tradeable.
36

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 34146
P64567.SUB, DocName: SB-2, Doc: 2, Page: 41

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 041.00.00.00 SN: 14 Ed#: 3
*P64567/041/3*
EDGAR 2

UNDERWRITING
Paulson Investment Company, Inc. is acting as the representative of the underwriters. We and the underwriters
named below have entered into an underwriting agreement with respect to the units being offered. In connection
with this offering and subject to certain conditions, each of the underwriters named below has severally agreed to
purchase, and we have agreed to sell, the number of units set forth opposite the name of each underwriter.
Underwriters

Number of Units

Paulson Investment Company, Inc.
Total

The underwriting agreement provides that the underwriters are obligated to purchase all of the units offered by
this prospectus, other than those covered by the over-allotment option, if any units are purchased. The underwriting
agreement also provides that the obligations of the several underwriters to pay for and accept delivery of the units
are subject to the approval of certain legal matters by counsel and certain other conditions. These conditions include
the requirements that no stop order suspending the effectiveness of the registration statement be in effect and that no
proceedings for such purpose have been instituted or threatened by the Securities and Exchange Commission.
The representative has advised us that the underwriters propose to offer our units to the public initially at the
offering price set forth on the cover page of this prospectus and to selected dealers at such price less a concession of
not more than $ per unit. The underwriters and selected dealers may reallow a concession to other dealers,
including the underwriters, of not more than $ per unit. After completion of the initial public offering of the
units, the offering price, the concessions to selected dealers and the reallowance to their dealers may be changed by
the underwriters.
The underwriters have informed us that they do not expect to confirm sales of our units offered by this
prospectus to any accounts over which they exercise discretionary authority.
Over-allotment option
Pursuant to the underwriting agreement, we have granted Paulson Investment Company, Inc. an option,
exercisable for 45 days from the date of this prospectus, to purchase up to an additional
units on the same
terms as the units being purchased by the underwriters from us. Paulson Investment Company, Inc. may exercise the
option solely to cover over-allotments, if any, in the sale of the units that the underwriters have agreed to purchase.
If the over-allotment option is exercised in full, the total public offering price, underwriting discounts and
commissions, and proceeds to us before offering expenses will be $
,$
and $
, respectively.
Stabilization
Until the distribution of the units offered by this prospectus is completed, rules of the Securities and Exchange
Commission may limit the ability of the underwriters to bid for and to purchase units. As an exception to these
rules, the underwriters may engage in transactions that stabilize the price of the units. Paulson Investment Company,
Inc., on behalf of the underwriters, may engage in over-allotment sales, stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934.
• Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short position.
• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 21914
P64567.SUB, DocName: SB-2, Doc: 2, Page: 42

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 042.00.00.00 SN: 8
Ed#: 4
*P64567/042/4*
EDGAR 2

• Syndicate covering transactions involve purchases of the common stock and public warrants in the open market
after the distribution has been completed in order to cover syndicate short positions. The underwriters may also
elect to reduce any short position by exercising all or part of the over-allotment option to purchase additional
units as described above.
• Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the units
originally sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate
short positions.
In general, the purchase of a security to stabilize or to reduce a short position could cause the price of the
security to be higher than it might be otherwise. These transactions may be effected on the Nasdaq SmallCap
Market or otherwise. Neither we nor the underwriters can predict the direction or magnitude of any effect that the
transactions described above may have on the price of the units. In addition, neither we nor the underwriters can
represent that the underwriters will engage in these types of transactions or that these types of transactions, once
commenced, will not be discontinued without notice.
Indemnification
The underwriting agreement provides for indemnification between us and the underwriters against specified
liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriters to payments
that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the
Securities and Exchange Commission, indemnification for liabilities under the Securities Act of 1933 is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Underwriters’ compensation
We have agreed to sell the units to the underwriters at the initial offering price of $
, less the
%
underwriting discount. The underwriting agreement also provides that upon the closing of the sale of the units
offered, Paulson Investment Company, Inc. will be paid a nonaccountable expense allowance equal to 2.5 percent of
the gross proceeds from the sale of the units offered by this prospectus, including the over-allotment option.
We have also agreed to issue warrants to the representative to purchase from us up to
units at an
exercise price per unit equal to 120% of the offering price per unit. These warrants are exercisable during the fouryear period beginning one year from the date of effectiveness of the registration statement. These warrants, and the
securities underlying the warrants, are not transferable for one year following the effective date of the registration,
except to an individual who is an officer or partner of an underwriter, by will or by the laws of descent and
distribution, and are not redeemable. These warrants will have registration rights. We will cause the registration
statement to remain effective until the earlier of the time that all of the representative’s warrants have been
exercised and the date which is five years after the effective date of this offering. The common stock and warrants
issued to the representative upon exercise of these warrants will be freely tradeable.
The holders of the representative’s warrants will have, in that capacity, no voting, dividend or other stockholder
rights. Any profit realized by the representative on the sale of the securities issuable upon exercise of the
representative’s warrants may be deemed to be additional underwriting compensation. The securities underlying the
representative’s warrants are being registered on the registration statement. During the term of the representative’s
warrants, the holders thereof are given the opportunity to profit from a rise in the market price of our common
stock. We may find it more difficult to raise additional equity capital while the representative’s warrants are
outstanding. At any time at which the representative’s warrants are likely to be exercised, we may be able to obtain
additional equity capital on more favorable terms.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 12541
P64567.SUB, DocName: SB-2, Doc: 2, Page: 43

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 043.00.00.00 SN: 11 Ed#: 4
*P64567/043/4*
EDGAR 2

Lock-up agreements
Our officers, directors and other stockholders have agreed that for a period of one year from the date this
registration statement becomes effective that they will not sell, contract to sell, grant any option for the sale or
otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable
for our equity securities, other than through intra-family transfers or transfers to trusts for estate planning purposes,
without the consent of Paulson Investment Company, Inc., as the representative of the underwriters, which consent
will not be unreasonably withheld.
Determination of offering price
Before this offering, there has been no public market for the units and the common stock and public warrants
contained in the units. Accordingly, the initial public offering price of the units offered by this prospectus and the
exercise price of the public warrants were determined by negotiation between us and the underwriters. Among the
factors considered in determining the initial public offering price of the units and the exercise price of the public
warrants were:
• our history and our prospects;
• the industry in which we operate;
• the status and development prospects for our proposed products and services;
• our past and present operating results;
• the previous experience of our executive officers; and
• the general condition of the securities markets at the time of this offering.
The offering price stated on the cover page of this prospectus should not be considered an indication of the
actual value of the units. That price is subject to change as a result of market conditions and other factors, and we
cannot assure you that the units, or the common stock and public warrants contained in the units, can be resold at or
above the initial public offering price.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon on our behalf by Tonkon Torp LLP,
Portland, Oregon. Certain legal matters will be passed upon for the underwriters by Weiss Jensen Ellis & Howard,
P.C., Portland, Oregon.
EXPERTS
The financial statements as of and for the years ended December 31, 1999 and 2000 included in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said firm as experts in auditing and
accounting in giving said reports.
39

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 22833
P64567.SUB, DocName: SB-2, Doc: 2, Page: 44

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 044.00.00.00 SN: 8
Ed#: 4
*P64567/044/4*
EDGAR 2

WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form SB-2 under the Securities Act with the Securities and Exchange
Commission with respect to the units offered hereby. This prospectus filed as part of the registration statement does
not contain all of the information contained in the registration statement and exhibits thereto and reference is hereby
made to such omitted information. Statements made in this registration statement are summaries of the terms of
such referenced contracts, agreements or documents and are not necessarily complete. Reference is made to each
such exhibit for a more complete description of the matters involved and such statements shall be deemed qualified
in their entirety by such reference. The registration statement and the exhibits and schedules thereto filed with the
Securities and Exchange Commission may be inspected by you at the Securities and Exchange Commission’s
principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the commissions’ regional offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 11400, Chicago, Illinois 60661. The
commission also maintains a website at http://www.sec.gov that contains reports, proxy statements and information
statements and other information regarding registrants that file electronically with the Commission. For further
information pertaining to us and the units offered by this prospectus, reference is made to the registration statement.
We intend to furnish our stockholders with annual reports containing financial statements audited by our
independent accountants.
40

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 18287
P64567.SUB, DocName: SB-2, Doc: 2, Page: 45

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 045.00.00.00 SN: 7
Ed#: 3
*P64567/045/3*
EDGAR 2

TASER INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS
Page
TASER International, Inc.:
Report of Independent Public Accountants
Balance Sheets as of December 31, 1999 and 2000
Statements of Operations for the Years Ended December 31, 1999 and
2000
Statements of Stockholders’ Deficit for the Years Ended December 31,
1999 and 2000
Statements of Cash Flows for the Years Ended December 31, 1999 and
2000
Notes to Financial Statements

F-1

F-2
F-3
F-4
F-5
F-6
F-7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 27071
P64567.SUB, DocName: SB-2, Doc: 2, Page: 46

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 046.00.00.00 SN: 7
Ed#: 3
*P64567/046/3*
EDGAR 2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
TASER International, Inc.:
We have audited the accompanying balance sheets of TASER International, Inc. (an Arizona corporation) as of
December 31, 1999 and 2000, and the related statements of operations, stockholders’ deficit and cash flows for the
years then ended. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of TASER International, Inc. as of December 31, 1999 and 2000, and the results of its operations and its
cash flows for each of the years in the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
ARTHUR ANDERSEN LLP
Phoenix, Arizona
February 12, 2001
F-2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 56259
P64567.SUB, DocName: SB-2, Doc: 2, Page: 47

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 047.00.00.00 SN: 14 Ed#: 2
*P64567/047/2*
EDGAR 2

TASER INTERNATIONAL, INC.
BALANCE SHEETS
December 31, 1999 and 2000
1999
Assets
Current Assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $48,000 in 1999 and
$55,000 in 2000
Inventory
Prepaids and other

$

Total current assets
Property and Equipment, net
Total assets

$

54,905

Total liabilities
Commitments and Contingencies
Stockholders’ Deficit:
Common stock, 0.00001 par value per share; 50 million shares
authorized; 3,177,421 and 1,510,754 shares issued and
outstanding at December 31, 1999 and 2000, stated at
Additional paid-in capital
Deferred compensation
Accumulated deficit
Total stockholders’ deficit
Total liabilities and stockholders’ deficit

$

$

312,681
221,169
24,535

349,036
256,110

764,793
274,273

605,146

$ 1,039,066

$

100,000
124,574
22,171
532,589
539,329
189,980
268,134

2,704,818
74,781
19,979

1,776,777
2,778,219
43,925

2,799,578

4,598,921

2,889,590
1,180,182
—
(6,264,204)

1,889,590
1,310,308
(79,920)
(6,679,833)

(2,194,432)

(3,559,855)

605,146

$ 1,039,066

The accompanying notes are an integral part of these balance sheets.
F-3

206,408

121,921
158,167
14,043

Liabilities and Stockholders’ Deficit
Current Liabilities:
Current portion of note payable
$ 112,000
Current portion of notes payable to related parties
1,664,774
Current portion of capital lease obligations
19,176
Accounts payable and accrued liabilities
517,629
Customer deposits
62,317
Inventory financing payable
189,980
Accrued interest
138,942
Total current liabilities
Notes Payable to Related Parties, net of current portion
Capital Lease Obligations, net of current portion

2000

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 36450
P64567.SUB, DocName: SB-2, Doc: 2, Page: 48

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 048.00.00.00 SN: 10 Ed#: 3
*P64567/048/3*
EDGAR 2

TASER INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 2000

Net Sales
Cost of Products Sold

1999

2000

$ 2,366,440
1,492,585

$3,499,758
1,437,313

873,855
633,828
1,383,185
6,867
179,453

2,062,445
430,871
1,546,519
7,137
124,803

Gross profit
Operating expenses
Sales, general and administrative expenses
Research and development expenses
Depreciation
Loss from operations
Interest Expense
Net Loss
Basic and diluted net loss per common share
Basic and diluted common shares

(1,329,478)
280,821

(46,885)
368,744

$(1,610,299)

$ (415,629)

$

$

(0.52)
3,076,410

(0.17)
2,482,976

The accompanying notes are an integral part of these financial statements.
F-4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 40525
P64567.SUB, DocName: SB-2, Doc: 2, Page: 49

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 049.00.00.00 SN: 4
Ed#: 2
*P64567/049/2*
EDGAR 2

[B/E]

TASER INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the Years Ended December 31, 1999 and 2000
Common Stock
Shares
Balance, December 31,
1998
Shares sold for cash
Issuance of common stock
Stock options granted for
payment of consulting
fees and loan guarantees
Net loss
Balance, December 31,
1999
Exchange of shares from
related party for note
payable
Stock options granted for
payment of Board fee
Stock options granted for
payment of consulting
fee
Stock options granted for
loan guarantees
Net loss
Balance, December 31,
2000

Amount

Additional
Paid-in
Capital

1,359,239 $ 1,389,590 $1,177,856
1,666,667 1,000,000
—
151,515
500,000
—

Accumulated
Deficit

Total
Stockholders’
Deficit

—
—
—

$(4,653,905)
—
—

$(2,086,459)
1,000,000
500,000

Deferred
Compensation
$

—
—

—
—

2,326
—

—
—

—
(1,610,299)

2,326
(1,610,299)

3,177,421

2,889,590

1,180,182

—

(6,264,204)

(2,194,432)

—

—

(1,666,667) (1,000,000)
—

—

79,920

(79,920)

—

—

13,917

—

—
—

—
—

36,289
—

—
—

1,510,754 $ 1,889,590 $1,310,308

$(79,920)

—
—

—

—

13,917

—
(415,629)

36,289
(415,629)

$(6,679,833)

$(3,559,855)

The accompanying notes are an integral part of these financial statements.
F-5

(1,000,000)

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 1210
P64567.SUB, DocName: SB-2, Doc: 2, Page: 50

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 050.00.00.00 SN: 5
Ed#: 3
*P64567/050/3*
EDGAR 2

TASER INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999 and 2000

Cash Flows from Operating Activities:
Net loss
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities —
Depreciation
Change in assets and liabilities:
Accounts receivable
Inventory
Prepaids and other
Accounts payable and accrued liabilities
Customer deposits
Accrued interest

1999

2000

$(1,610,299)

$ (415,629)

179,453

124,803

90,474
607,165
16,598
(152,510)
62,317
101,650

(190,760)
(63,002)
(10,492)
14,960
477,012
129,192

(705,152)

66,084

(133,760)

(99,759)

(19,195)
—
728,344
(1,329,635)
1,500,000
—
2,326

(16,266)
(12,000)
163,238
—
—
(79,920)
130,126

Net cash (used in) provided by operating activities
Cash Flows from Investing Activities:
Purchases of property and equipment, net
Cash Flows from Financing Activities:
Net payments under capital leases
Payments on note payable
Net proceeds from notes payable to related parties
Net borrowings (payments) under line of credit
Issuance of common stock
Deferred compensation
Compensatory stock options
Net cash provided by financing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, beginning of year

881,840

185,178

42,928
11,977

151,503
54,905

Cash and Cash Equivalents, end of year

$

54,905

$ 206,408

Supplemental Disclosure:
Cash paid for interest

$

179,171

$ 239,552

Noncash Investing and Financing Activities:
Acquisition of property and equipment under capital leases

$

33,635

Exchange of shares from related party for note payable

$

—

$

$1,000,000

The accompanying notes are an integral part of these financial statements.
F-6

43,207

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4041
P64567.SUB, DocName: SB-2, Doc: 2, Page: 51

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 051.00.00.00 SN: 5
Ed#: 2
*P64567/051/2*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 2000
1. The Company
a. History and Nature of Organization
TASER International, Inc. (TASER or the Company) was incorporated and began operations in Arizona in 1993
for the purpose of developing and manufacturing less-lethal, self-defense devices. From its inception until the
Company commenced production in December 1994, the Company was in the development stage. During the
period leading up to the start of production, the Company’s activities included raising capital, hiring key personnel
and obtaining the necessary licenses. All production costs during the period from inception through December 31,
1995, consisting of research and development activities and limited product manufacturing, were expensed as
incurred.
Through 1996, the Company was developing its signature product, the AIR TASER, and establishing the
marketing channels to promote retail sales. Significant nonrecurring expenditures were incurred, including research
and development costs, the development of marketing and sales materials, the purchase of the licensing rights to the
TASER technology and trademark, and the relocation of the manufacturing operations to Mexico, which resulted in
significant operating losses.
In 1997, the Company introduced a new product, the AUTO TASER. As a result of significant expenditures for
research and development, manufacturing difficulties, scrap, engineering changes and other costs associated with
the start up of this product line, the Company continued to experience operating losses in 1997, 1998 and 1999.
This product line was discontinued August 1, 1999.
In 1998, the Company formally changed its name from Air Taser, Inc. to TASER International, Inc. and began
development of its ADVANCED TASER product, which was introduced for sale in December 1999.
b. Financing
The Company has been financed primarily from bank financing, usually guaranteed by major stockholders, and
advances and investment by a number of major stockholders. Since inception, the Company has sustained
significant operating losses and has, at December 31, 2000, a deficit in working capital of approximately
$1,009,000. In addition, new capital will be required to fund further product development, market penetration,
working capital and future operations. The Company believes that additional financing will be available under terms
and conditions that are acceptable to the Company. However, there can be no assurance that additional financing
will be available. In the event the Company is unable to obtain the needed financing required, the two major
stockholders have guaranteed to fund working capital and operational cash needs through at least December 31,
2001.
c. Initial Public Offering
The Company is contemplating an initial public offering (IPO) of 1,000,000 shares of common stock at an
estimated price of $10 per unit, consisting of one share of common stock and one warrant to purchase one share of
common stock (Note 10).

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 48214
P64567.SUB, DocName: SB-2, Doc: 2, Page: 52

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 052.00.00.00 SN: 8
Ed#: 3
*P64567/052/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
2. Summary of Significant Accounting Policies
a. Cash and Cash Equivalents
Cash and cash equivalents include funds on hand and short-term investments with original maturities of three
months or less.
b. Inventory
Inventories are stated at the lower of cost or market; cost is determined using the most recent acquisition cost
method which approximates the first-in, first-out (FIFO) method. Inventories consisted of the following at
December 31:
Raw materials and work-in-process
Finished goods

1999

2000

$131,007
27,160

$153,506
67,663

$158,167

$221,169

c. Property and Equipment
Property and equipment are stated at cost. Additions and improvements are capitalized while ordinary
maintenance and repair expenditures are charged to expense as incurred. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets.
d. Customer Deposits
The Company requires certain deposits in advance of shipment for foreign customer sales orders. At
December 31, 2000, customer deposits consisted primarily of one foreign customer sales order.
e. Cost of Products Sold
During 2000, the Company outsourced the assembly of its finished goods, but continued to manufacture certain
proprietary components internally. Prior to August 1999, all finished goods were assembled internally. At
December 31, 2000, cost of products sold represents net amounts paid to a vendor to acquire finished goods sold to
customers and the manufacturing costs, including material, labor and overhead related to the proprietary
components the Company manufactures internally. Prior to August 1999, costs of products sold included the
manufacturing costs, including materials, labor and overhead related to finished goods and components. Shipping
costs incurred related to product delivery are also included in cost of products sold.
At December 31, 1999, included within cost of products sold is a one-time charge related to the phase-out of the
AUTO TASER product line of approximately $355,000.
f. Revenue Recognition

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 47840
P64567.SUB, DocName: SB-2, Doc: 2, Page: 53

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 053.00.00.00 SN: 5
Ed#: 2
*P64567/053/2*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
g. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
h. Advertising Costs
The Company expenses the production cost of advertising as incurred or the first time the advertising takes
place. The Company incurred advertising costs of $24,652 and $35,035 in 1999 and 2000, respectively. Advertising
costs are included in sales, general and administrative expenses in the statements of operations.
i. Warranty Costs
The Company warrants its products from manufacturing defects for their lives and will replace any defective
units with a new one. Included in accrued liabilities at December 31, 2000 is $50,000 to cover estimated future
warranty costs.
j. Research and Development Expenses
The Company expenses research and development costs as incurred. The Company incurred product
development expense of $6,867 and $7,137 in 1999 and 2000, respectively. Product development costs are included
in operating expenses in the statements of operations.
k. Income Taxes
The Company, since inception, has qualified as an S corporation under the Internal Revenue Code, and
accordingly, is not directly subject to income taxes. There is no provision or benefit for income taxes reflected in
the accompanying financial statements, since items of taxable income and losses are reported in the individual
returns of stockholders.
Subsequent to December 31, 2000, the Company reincorporated in the State of Delaware and elected to be taxed
as a C corporation. Net operating losses (NOLs) prior to the change to a C corporation accrued to the individual
stockholders. Accordingly, such losses are not available to reduce future taxes payable by the Company as a C
corporation.
Upon termination of the S status, the Company is required to implement Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (SFAS No. 109), which requires the calculation of existing
temporary differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Management does not expect such implementation to have a significant impact on the
Company.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 60531
P64567.SUB, DocName: SB-2, Doc: 2, Page: 54

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 054.00.00.00 SN: 5
Ed#: 2
*P64567/054/2*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
l. Concentration of Credit Risk and Major Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts
receivable, accounts payable and notes payable to related parties. Sales are typically made on credit and the
Company generally does not require collateral. The Company performs ongoing credit evaluations of its customers’
financial condition and maintains an allowance for estimated potential losses. Accounts receivable are presented net
of an allowance for doubtful accounts. Provision for bad debts was $32,250 and $72,905 at December 31, 1999 and
2000, respectively.
For the years ended December 31, 1999 and 2000, sales by product were as follows:
1999

2000

(000s omitted)
Sales by product:
AIR TASER
AUTO TASER
ADVANCED TASER
Other

Geographic:
United States
Other countries

$1,327
608
80
351

$1,241
24
2,152
83

$2,366

$3,500

52%
48

82%
18

100%

100%

m. Financial Instruments
The Company’s financial instruments include cash, accounts receivable and accounts payable. Due to the shortterm nature of these instruments, the fair value of these instruments approximates their recorded value. The
Company does not have material financial instruments with off-balance sheet risk.
The Company has notes payable to stockholders at varying terms which, based on the short-term nature of the
notes and financing obtained from outside sources, the Company believes are stated at their estimated fair market
value.
n. Segment Information
Effective January 1, 1998, the Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise
and Related Information. This statement requires disclosure of certain information about the Company’s operating
segments, products, geographic areas in which it operates and major customers. This statement also allows a
company to aggregate similar segments for reporting purposes. Management has determined that its operations can
be aggregated into one reportable segment. Therefore, no separate segment disclosures have been included in the
accompanying notes to the financial statements.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 31151
P64567.SUB, DocName: SB-2, Doc: 2, Page: 55

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 055.00.00.00 SN: 5
Ed#: 3
*P64567/055/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
p. Comprehensive Income
Effective January 1, 1998, the Company adopted SFAS No. 130, Reporting Comprehensive Income. This
statement requires that all components of comprehensive income be reported in the financial statements in the
period in which they are recognized. During the years ended December 31, 1999 and 2000, the Company did not
have any components of comprehensive income.
q. Income (Loss) Per Common Share
Income (loss) per common share is computed in accordance with SFAS No. 128, Earnings Per Share. Basic
income (loss) per common share is based upon the weighted average shares outstanding. Diluted income (loss) per
common share is based on the weighted average shares outstanding and dilutive common stock equivalents. As a
result of anti-dilutive effects, approximately 145,875 and 186,049 options and warrants were not included in the
computation of diluted earnings per share for 1999 and 2000, respectively.
r. Recent Accounting Pronouncements
Effective January 1, 2000, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. This statement requires that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. During 1999 and 2000, the Company did not have any
derivative instruments or hedging activities.
3. Property and Equipment
Property and equipment consist of the following at December 31, 1999 and 2000:
Estimated
Useful Lives
Leasehold improvements
Production equipment
Telephone and office equipment
Computer equipment
Furniture and fixtures

5 years
5 years
5 years
3-5 years
5-7 years

1999
$

—
335,050
31,535
332,460
22,767

721,812
(465,702)

Less: accumulated depreciation

$ 256,110

F-11

2000
$

5,000
380,326
31,535
383,492
57,542
857,895
(583,622)

$ 274,273

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 63105
P64567.SUB, DocName: SB-2, Doc: 2, Page: 56

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 056.00.00.00 SN: 8
Ed#: 3
*P64567/056/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
4. Commitments and Contingencies
a. Operating Leases
The Company has entered into operating leases for office space and equipment. Rent expense under these leases
for the years ended December 31, 1999 and 2000, was $147,655 and $93,241, respectively. Future minimum lease
payments under operating leases as of December 31, 2000, are as follows:
2001
2002
2003
2004
2005
Thereafter
Total

$144,481
142,643
146,362
150,193
154,139
143,156
$880,974

b. Litigation
The Company is involved in certain legal actions and claims arising in the normal course of business.
Management is of the opinion that it maintains adequate insurance and that such matters will be resolved without a
material effect on the Company’s financial position.
In February 2000, the Company was named a defendant in a suit with a former distributor in the state of New
York. The distributor alleges unfair termination of the distribution relationship and is seeking substantial damages.
The Company believes the case is without significant merit, and intends to vigorously defend itself. In the opinion
of management, this dispute will not have a material adverse effect on the Company’s financial position.
c. Employment Agreements
The Company has employment agreements with its President, Chief Executive Officer (CEO) and Chief
Financial Officer (CFO). The Company may terminate the agreements with or without cause. Should the Company
terminate the agreements without cause, upon a change of control of the Company or death of the employee, the
President, CEO and CFO are entitled to additional compensation. Under these circumstances, these officers may
receive the remaining amounts under the contract upon termination which could total $510,000.
5. Income Taxes
Concurrently with the change in tax status as discussed in Note 2, the Company will adopt the provisions of
SFAS No. 109. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4699
P64567.SUB, DocName: SB-2, Doc: 2, Page: 57

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 057.00.00.00 SN: 5
Ed#: 2
*P64567/057/2*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
would provide a full valuation reserve for the deferred tax asset because the Company has not sustained taxable net
income in any periods at sufficient levels to assure realization:
Deferred tax assets:
Nondeductible reserves for bad debts, sales returns and other
Depreciation
Valuation reserve

$ 42,171
26,646
(68,817)
$

—

6. Line of Credit
During 1999, the Company had a line of credit with a bank with a total commitment of up to $1,500,000. The
line was used to fund the Company’s working capital needs, and was personally guaranteed by two stockholders,
had an interest rate of 10% and was secured by virtually all of the assets of the Company. At December 31, 1998,
borrowings under the line were $1,329,600. The line matured and was paid in full on February 15, 1999.
7. Inventory Financing Agreement
The Company has entered into an inventory financing agreement with its warehouser and minority stockholder.
Under the agreement, the Company has the right to sell its product to the warehouser at a stated price up to
quantities totaling the lesser of $500,000 or the number of units sold in the last two months. The Company
repurchased the product once sold to a third party at the stated price plus 2% per month (24% annually). In June
1998, the agreement expired and the Company issued a $189,980 note for the amount due. The note bears interest at
10% and is paid monthly and matured March 31, 2000. As of December 31, 2000, no amounts of principal have
been paid on this note and the balance is recorded as a current payable.
8. Notes Payable
At December 31, 1999 and 2000 debt obligations were as follows:
Notes payable to stockholders, interest at varying rates of 9% to 27%,
principal and interest due July 1, 2002
Note payable to stockholder, interest at 9.18% payable monthly,
principal matures July 15, 2001
Note payable to private investor, interest at 11%, payable monthly,
principal matured June 30, 2000
Capital leases, interest at varying rates of 7% to 23%, due in monthly
installments through December 2005, secured by equipment

1999

2000

$ 1,678,010

$2,878,010

61,545

24,783

112,000

100,000

39,155

66,096

1,890,710
(1,795,950)

Less: Current portion
Total

$

94,760

3,068,889
(246,745)
$2,822,144

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 14297
P64567.SUB, DocName: SB-2, Doc: 2, Page: 58

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 058.00.00.00 SN: 8
Ed#: 4
*P64567/058/4*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
At December 31, 2000, aggregate annual maturities of long-term debt and capital leases were as follows:
2001
2002
2003
2004
2005

$ 246,745
2,809,359
5,308
3,589
3,888
$3,068,889

During 1998, a significant stockholder loaned the Company approximately $725,691. In March 1998, $150,000
was converted into 20,833 shares of common stock at an estimated fair value of $7.20 per share. In December 1998,
the Company issued a promissory note for $455,691, the remaining amounts due. The note carried interest at 9%
(increased to 10% in January 2001) and its maturity was extended to July 1, 2002.
In addition, during 1998, another stockholder loaned the Company approximately $622,525. In March 1998,
$150,000 was converted into 20,833 shares of common stock at an estimated market value of $7.20 per share. In
December 1998, the Company issued a promissory note for $472,525, the remaining amounts due. The note carried
interest at 9% (increased to 10% in January 2001) and its maturity was extended to July 1, 2002.
In January 1999, a stockholder loaned the Company $1,500,000. In return, the Company issued a promissory
note for $500,000 at an effective interest rate of 27.12% to mature October 31, 2000 and issued 1,666,667 shares of
common stock to the stockholder at a fair market value of $0.60 per share. The stock issued was subject to a
repurchase agreement which allowed the Company to repurchase the shares issued at cost if certain criteria were
met. In July 2000, the Company repurchased the 1,666,667 shares under the agreement in exchange for a
promissory note for $1,000,000. This $1,000,000 note and the $500,000 note issued in January 1999 were
consolidated into a new note for $1,500,000 which carries interest at bank prime (9.5% at December 31, 2000) plus
1% and matures July 1, 2002.
In March 1999, the Company issued a promissory note to a stockholder for $100,000 at an interest rate of 10%
which matures on July 1, 2002.
In March 1999, the Company issued a promissory note to a stockholder for $99,794 at an interest rate of 10%
which matures July 1, 2002.
In July 1999, the Company issued a promissory note to a stockholder for $50,000 to fund working capital needs
at an interest rate of 10% which matures July 1, 2002.
In May 2000, the Company issued a promissory note to a stockholder for $200,000 to fund working capital
needs at an interest rate of 10% which matures on July 1, 2002.
In January 2001, the Company issued a promissory note to a private investor to fund working capital for
$500,000 at an interest rate of 18% which matures the earlier of the close of the IPO or July 1, 2002.
9. Stockholders’ Equity

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 3383
P64567.SUB, DocName: SB-2, Doc: 2, Page: 59

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 059.00.00.00 SN: 4
Ed#: 2
*P64567/059/2*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
$0.00001 per share and authorized the Company to issue 50 million shares of common stock and 25 million shares
of preferred stock.
Additionally, effective February 2001, the Company declared a 1-for-6 reverse stock split of common stock. All
references to the number of shares, per share amounts, conversion amounts and stock option data of the Company’s
common stock have been restated to reflect this reverse stock split for all periods presented.
b. Preferred Stock
The Company is authorized to issue up to 25 million shares of preferred stock, $0.00001 par value. The power
to issue any shares of preferred stock of any class or any series of any class and designations, voting powers,
preferences, and relative participating, optional or other rights, if any, or the qualifications, limitations, or
restrictions thereof, shall be determined by the Board of Directors.
c. Warrants
At December 31, 2000, the Company has warrants outstanding to purchase 42,747 shares of common stock at
prices ranging from $0.24 to $21.00 per share with an average exercise price of $3.49 per share and a weighted
average useful life of 3.58 years. A summary of warrants outstanding and exercisable at December 31, 2000 is
presented in the table below:
Outstanding
Weighted
Average
Exercise
Price

Warrants

Expiration
Date

$21.00
0.24
3.30

3,333
16,667
22,727

7/31/05
1/1/03
7/31/05

$ 3.49

42,727

In 2000, the Company issued 22,727 warrants to a stockholder as a loan guarantee. The warrants are exercisable
at $3.30 per share and expire July 31, 2005. These warrants have been recorded at fair value as additional paid-in
capital and the related expense recorded in the accompanying financial statements.
In January 2001, the Company issued 5,000 warrants to a private investor as a loan guarantee and 5,000
warrants to its attorney related to the IPO. These warrants are exercisable at $10 per share and expire January 1,
2006.
d. Deferred Compensation
During 2000, two non-employee Board of Director members received their director fees for services relating to
2001 to 2004 through the issuance of 13,333 options at an exercisable price of $3.30. These options have been
recorded at fair value as deferred compensation in the accompanying balance sheets and will be amortized into

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 16800
P64567.SUB, DocName: SB-2, Doc: 2, Page: 60

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 060.00.00.00 SN: 9
Ed#: 4
*P64567/060/4*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
The directors of the Company adopted the Company’s 1998-1999 Stock Option Plan. The 1998-1999 Plan was
administered by the Board of Directors which determined the employees, directors or consultants which will be
granted options and the terms of the options, including the vesting provision which typically is over a three-year
period.
The 1998-1999 Plan and options previously granted were voluntarily canceled by the recipients.
The Company has a 1999 Stock Option Plan (the “1999 Plan”) that provides for officers, key employees and
consultants to receive nontransferable stock options to purchase up to 833,333 shares of the Company’s common
stock. The term of the options may not exceed ten years although most options granted had an initial expiration
period of between five and seven years. In 1998, the Company had a similar plan which was cancelled in 1999.
In 1999, the Company issued 16,667 five-year options to a stockholder at an exercise price of $0.66 per share
for consulting services, and 3,959 ten-year options to a lender at an exercise price of $7.20 per share for a loan
guarantee. In 2000, the Company issued 4,697 ten-year options to a non-employee at an exercise price of $3.30 per
share for consulting services, and 3,333 five-year options to a stockholder at an exercise price of $0.24 per share for
a loan guarantee. These options have been recorded at fair value as additional paid-in capital and the related expense
recorded in the year in which the service is provided in the accompanying financial statements. In 2000, the 1999
Plan was cancelled.
A summary of the Company’s stock options at December 31, 1999 and 2000 and for the years then ended is
presented in the table below:
1999

2000

Options

Weighted
Average
Exercise
Price

Options

Weighted
Average
Exercise
Price

Options outstanding, beginning of year
Granted
Exercised
Expired/terminated

65,334
124,791
—
(65,250)

$6.37
0.82
—
6.38

124,875
18,530
—
(83)

$0.82
3.30
—
0.24

Options outstanding, end of year

124,875

$0.82

143,322

$1.14

42,352

$1.21

84,979

$1.02

Exercisable at end of year

Stock options outstanding and exercisable at December 31, 2000 are as follows:
Outstanding

Exercisable

Average
Exercise
Price

Options

Average
Life(a)

Options

$0.24
0.60
0.66

3,333
80,833
36,667

3.50
7.52
3.00

3,333
50,718
23,426

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 10769
P64567.SUB, DocName: SB-2, Doc: 2, Page: 61

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 061.00.00.00 SN: 9
Ed#: 3
*P64567/061/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
The Company measures the compensation cost of its stock option plan using the intrinsic value based method of
accounting prescribed in Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees.
Accordingly, no compensation cost has been recognized for its stock option plan. The weighted average remaining
contractual life of those options is approximately 6.64 years. Had the Company’s compensation cost been
determined using the fair value based method of accounting prescribed by SFAS No. 123, Accounting for StockBased Compensation, the Company’s net loss and net loss per common share would have been adjusted to the
following pro forma amounts (amounts in thousands except per common share amounts):
Year Ended December 31,
Net loss available to common stockholders:
As reported
Pro forma
Basic and diluted net loss per common share:
As reported
Pro forma

1999

2000

$(1,610)
(1,633)

$ (416)
(440)

$ (0.52)
(0.53)

$(0.17)
(0.18)

In January 2001, the Company adopted the 2001 Stock Option Plan (the “2001 Plan”) that provides for officers,
key employees and consultants to receive nontransferable stock options to purchase up to 550,000 shares of the
Company’s common stock. In January 2001, the Company issued 291,000 ten year options to employees,
shareholders and consultants at exercise prices ranging from $8.00 to $8.80 per share.
10. Subsequent Event
The Company intends to file an SB-2 registration statement offering 1,000,000 units at an estimated initial
offering price of $10 per unit consisting of one share of common stock and one warrant to purchase one share of
common stock. Also, the Company intends to issue to the representative of the IPO’s underwriters warrants which
enable the representative to acquire 100,000 units for 120% of the IPO unit offering price.
F-17

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 62333
P64567.SUB, DocName: SB-2, Doc: 2, Page: 62

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 062.00.00.00 SN: 10 Ed#: 3
*P64567/062/3*
EDGAR 2

You should rely only on the information contained in this prospectus. We have not authorized anyone to
provide you with information different from the information contained in this prospectus. We are offering to
sell, and seeking offers to buy, units only in jurisdictions in which offers and sales are permitted.
Page
Prospectus Summary
Risk Factors
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Business
Management
Certain Transactions
Principal Shareholders
Description of Securities
Shares Eligible for Future Sale
Underwriting
Legal Matters
Experts
Where You Can Find More Information
Index to Consolidated Financial
Statements

1
4
10
10
11
12
13
16
26
30
31
32
35
37
39
39
40
F-1

Until
, 2001 (25 days after the date of this prospectus), all broker-dealers that effect the
transactions in these securities, whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.

1,000,000 UNITS

[TASER LOGO]
PROSPECTUS

PAULSON INVESTMENT
COMPANY, INC.
February [ ], 2001

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 40548
P64567.SUB, DocName: SB-2, Doc: 2, Page: 63

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 063.00.00.00 SN: 17 Ed#: 4
*P64567/063/4*
EDGAR 2

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Our certificate of incorporation allows and our bylaws require that we indemnify our directors and officers who
are or were a party to, or are threatened to be made a party to, any proceeding (including a derivative action if the
director or officer is not found liable to us), against all expenses reasonably incurred by a director or officer in
connection with such a proceeding (including expenses, judgments, fines and amounts paid in settlement), if the
director or officer acted in good faith, in a manner he or she believed was not opposed to our best interests, and,
with respect to a criminal proceeding, had no reason to believe that his or her conduct was unlawful.
We have entered into separate indemnification agreements with each of our directors and officers. The
agreements provide for mandatory indemnification for and limit the liability of our directors and officers in serving
us to the fullest extent permitted by the Delaware General Corporation Law. Specifically, under the agreements, our
directors and officers will not be personally liable for monetary damages for their errors or omissions, except for
liability for the breach of a director’s or officer’s duty of loyalty to us or our stockholders, for intentional
misconduct or acts not in good faith, for making any unlawful distribution, for any transaction from which the
director or officer derived an improper benefit, or for violating section 16(b) of the Securities Exchange Act of
1934, as amended, or similar laws.
Our bylaws and indemnification agreements generally require that we advance to our directors and officers
expenses incurred by them in defending a proceeding in advance of its final disposition, provided that the director
or officer agrees to reimburse us for such advances if it is ultimately found that the director or officer is not entitled
to indemnification. In addition, our bylaws permit us to purchase insurance on behalf of our directors and officers
against any liability asserted against them in such capacity. We intend to obtain such insurance.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of SEC Registration, NASD filing and Nasdaq listing fees, and all
other estimated expenses, all of which we will pay, in connection with the issuance and distribution of the securities
being registered:
Nature of Expense
SEC Registration fee
NASD Filing fees
Nasdaq Listing fee
Accounting fees and expenses
Legal fees and expenses
Directors and officers insurance expenses
Printing and related expenses
Blue sky legal fees and expenses
Transfer agent fees and expenses
Miscellaneous expenses
Total

Item 26. Recent Sales of Unregistered Securities.

Amount
$

8,649
3,960
8,000
125,000
125,000
150,000
145,000
65,000
1,250
18,131

$650,000

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 10062
P64567.SUB, DocName: SB-2, Doc: 2, Page: 64

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 064.00.00.00 SN: 9
Ed#: 4
*P64567/064/4*
EDGAR 2

(1) In March 1998, pursuant to an exemption under Section 4(2) of the Securities Act, we sold shares of our
common stock as follows: 20,833 shares at $7.20 per share for an aggregate purchase price of $150,000 to Bruce R.
Culver; and 20,833 shares at $7.20 per share for an aggregate purchase price of $150,000 to Phillips W. Smith.
(2) In January 1999, pursuant to an exemption under Section 4(2) of the Securities Act, we sold shares of our
common stock as follows: 1,666,667 shares at $0.60 per share for an aggregate purchase price of $1,000,000 to
Bruce R. Culver. These shares were subject to a repurchase option that was exercised by us in July 2000 at the same
price ($0.60 per share) for an aggregate purchase price of $1,000,000.
(3) In September 1999, pursuant to an exemption under Section 4(2) of the Securities Act, we sold shares of
our common stock as follows: 151,515 shares at $3.30 per share for an aggregate purchase price of $500,000 to
Bruce R. Culver.
Item 27. Exhibits.
Exhibit
No.
1.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
5.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14

Description
Form of Underwriting Agreement
Registrant’s Certificate of Incorporation
Registrant’s Bylaws
Reference is made to pages 1-4 of Exhibit 3.1 and pages 1-5 and 12-14 of Exhibit 3.2
Form of Common Stock Certificate*
Form of Public Warrant
Form of Unit Certificate*
Form of Warrant Agent Agreement*
Form of Representative’s Warrant*
Opinion of Tonkon Torp LLP*
Employment Agreement with Patrick W. Smith, dated July 1, 1998
Employment Agreement with Thomas P. Smith, dated November 15, 2000
Employment Agreement with Kathleen C. Hanrahan, dated November 15, 2000
Form of Indemnification Agreement between the Registrant and its directors
Form of Indemnification Agreement between the Registrant and its officers
1999 Employee Stock Option Plan
2001 Stock Option Plan*
Form of Warrant issued to Bruce Culver and Phil Smith
Licensing Agreement with respect to intellectual property dated October 15, 1993, as amended, by and between the
Registrant and John H. Cover, Jr., and related documents
Promissory Note, dated January 23, 2001 payable to Phillip Purer in the amount of $500,000 and related security
documents
Promissory Note, dated December 31, 1998, payable to B & M Distributing, Inc., in the amount of $189,980 and
related guarantee and security documents
Promissory Note dated October 24, 2000, payable to Bank of America in the amount of $60,000 and related
guarantee and security documents
Form of Promissory Notes issued to stockholders
Lease between the Registrant and Norton P. Remes and Joan A. Remes Revocable Trust, dated November 17, 2000

II-2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 24923
P64567.SUB, DocName: SB-2, Doc: 2, Page: 65

[B/E]

Exhibit
No.
23.1
23.2
24

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 065.00.00.00 SN: 13 Ed#: 5
*P64567/065/5*
EDGAR 2

Description
Consent of Tonkon, Torp LLP (included in Exhibit 5.1)
Consent of Arthur Andersen LLP, independent public accountants
Power of Attorney. Reference is made to the signature page.

* To be filed by amendment.
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of
us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in the opinion of our 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 Securities Act and will be governed by the final
adjudication of such issue.
We hereby undertake to:
(1) File, during any period in which offers or sales are being made, a post-effective amendment to this
registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
“Securities Act”);
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental
change in the information in the registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the dollar value of the securities offered would not exceed that
which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, treat each post-effective amendment as a new
registration statement of the securities offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at
the end of the offering.
(4) For purposes of determining any liability under the Securities Act, treat the information omitted from
the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 52055
P64567.SUB, DocName: SB-2, Doc: 2, Page: 66

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 066.00.00.00 SN: 12 Ed#: 6
*P64567/066/6*
EDGAR 2

registration statement, and that offering of the securities at that time as the initial bona fide offering of those
securities.
In addition, we hereby undertake to provide to the underwriters at the closing specified in the underwriting
agreement, certificates in such denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 62991
P64567.SUB, DocName: SB-2, Doc: 2, Page: 67

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 067.00.00.00 SN: 10 Ed#: 4
*P64567/067/4*
EDGAR 2

SIGNATURES
In accordance with 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 of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Scottsdale, Arizona on February 13, 2001.
TASER INTERNATIONAL, INC.
BY: /s/PATRICK W. SMITH
Patrick W. Smith, Chief Executive Officer
Know all men by these presents, that each person whose signature appears below hereby constitutes and
appoints Patrick W. Smith and Phillips W. Smith and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this registration statement, or any
registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 29568
P64567.SUB, DocName: EX-1.1, Doc: 3, Page: 25
Description: Exhibit 1.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 601.01.25.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
25
defaulting Underwriters or of the Company except to the extent provided in
Section 8 hereof. In the event of a default by any Underwriter or Underwriters,
as set forth in this Section 9, the Closing Date or Option Closing Date, as the
case may be, may be postponed for such period, not exceeding seven days, as you,
as Representative, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10.

NOTICES.

All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered or telecopied and confirmed
as follows: if to the Underwriters, to the Representative of the Underwriters,
Paulson Investment Company, Inc., 811 SW Naito Parkway, Portland, Oregon 97204,
Attention: Chester L.F. Paulson; with a copy to Weiss, Jensen, Ellis & Howard,
P.C., U.S. Bancorp Tower, Suite 2300, 111 S.W. Fifth Avenue, Portland, Oregon
97204, Attention: Mark A. von Bergen, Esq.; if to the Company, to TASER
International, Inc., 7860 East McClain Drive, Suite 2, Scottsdale, Arizona
85260, Attention: Patrick W. Smith; with a copy to Tonkon Torp LLP, 888 S.W.
Fifth Avenue, Suite 1600, Portland, Oregon 97204, Attention: Thomas P. Palmer,
Esq.
11.

Ed#: 1

*P64567/6010125/1*

TERMINATION.

This Agreement may be terminated by the Representative by notice to the
Company as follows:
(a) at any time prior to the earlier of (i) the time the Firm Units are
released to the Representative for sale by notice to the Underwriters, or (ii)
11:30 a.m. on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company, the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company, whether or not arising in the ordinary
course of business, (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
on the financial markets of the United States of such outbreak, escalation,
declaration, emergency, calamity, crisis or change would, in the
Representative’s reasonable judgment, make it impracticable to market the Units
or to enforce contracts for the sale of the Units, (iii) the Dow Jones
Industrial Average shall have fallen by 15 percent or more from its closing
price on the day immediately preceding the date that the Registration Statement
is declared effective by the Commission, (iv) suspension of trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange,
TASER International, Inc.
Underwriting Agreement
Page 24

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 12465
P64567.SUB, DocName: EX-1.1, Doc: 3, Page: 26
Description: Exhibit 1.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 601.01.26.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
26
(v) the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
the opinion of the Representative materially and adversely affects or may
materially and adversely affect the business or operations of the Company, (vi)
declaration of a banking moratorium by United States or New York State
authorities, (vii) any downgrading in the rating of the Company’s debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Exchange Act); (viii) the
suspension or halt of trading of the Units, the Common Stock or the Warrants on
the Nasdaq Stock Market or (ix) the taking of any action by any governmental
body or agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities markets in
the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12.

SUCCESSORS.

This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Units from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13.

INFORMATION PROVIDED BY UNDERWRITERS.

The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in the Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page of the
Prospectus (insofar as such information relates to the Underwriters), the
legends required by Item 502(d) of Regulation S-B under the Act and the
information under the caption "Underwriting" in the Prospectus.
14.

Ed#: 1

*P64567/6010126/1*

MISCELLANEOUS.

The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Units under
this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Oregon. All disputes relating to this Underwriting
Agreement shall be adjudicated before a court located in Multnomah County,
Oregon to the exclusion of all other courts that might have jurisdiction.
TASER International, Inc.
Underwriting Agreement
Page 25

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 19
CRC: 46601
P64567.SUB, DocName: EX-1.1, Doc: 3, Page: 27
Description: Exhibit 1.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 601.01.27.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6010127/1*

<PAGE>

27
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
TASER International, Inc.

By:________________________________
Patrick W. Smith,
Chief Executive Officer
TASER International, Inc.
Underwriting Agreement
Page 26

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 19
CRC: 64294
P64567.SUB, DocName: EX-1.1, Doc: 3, Page: 28
Description: Exhibit 1.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 601.01.28.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
28
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
As Representative of the several
Underwriters listed on Schedule I
PAULSON INVESTMENT COMPANY, INC.

By:

Ed#: 1

*P64567/6010128/1*

___________________________________
Authorized Officer
TASER International, Inc.
Underwriting Agreement
Page 27

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 20
CRC: 14642
P64567.SUB, DocName: EX-1.1, Doc: 3, Page: 29
Description: Exhibit 1.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 601.01.29.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

29
SCHEDULE I
SCHEDULE OF UNDERWRITERS

Number of Firm Units to be Purchased
Paulson Investment Company, Inc.
Total
TASER International, Inc.
Underwriting Agreement
Schedule of Underwriters
Page 1
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/6010129/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-3.1, Doc: 4

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-3.1
p64567ex3-1.txt
EX-3.1

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 4

Date: 7-MAY-2001 14:55:25.87

SN: *

*DOCHDR/4*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 45646
P64567.SUB, DocName: EX-3.1, Doc: 4, Page: 1
Description: Exhibit 3.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.01.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
TASER INTERNATIONAL, INC.

The undersigned, in order to form a corporation for the
purposes described below, under and pursuant to the General Corporation Law of
the State of Delaware (the "Law"), hereby certifies that:
1.
Inc. (the "Corporation").

The name of the corporation is TASER International,

2.
The street and the mailing address of the
Corporation’s registered office in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, City of Wilmington, County of New Castle, State of
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
3.
The purpose of the Corporation is to conduct any
lawful business, to promote any lawful purpose, and to engage in any lawful act
or activity for which corporations may be organized under the Law.
4.
(a)
The Corporation is authorized to issue a
total of 75,000,000 shares of two classes of stock: 50,000,000 shares of Common
Stock, par value $.00001 per share; and 25,000,000 shares of Preferred Stock,
par value $.00001 per share.
(b)
Holders of Common Stock are entitled to one
vote per share on any matter submitted to the stockholders. On dissolution of
the Corporation, after any preferential amount with respect to any series of
Preferred Stock has been paid or set aside, the holders of Common Stock and the
holders of any series of Preferred Stock entitled to participate in such
distribution of assets are entitled to receive the net assets of the
Corporation.
(c)
The Board of Directors is authorized,
subject to limitations prescribed by the Law and by the provisions of this
Article 4, to provide for the issuance of shares of Preferred Stock in series,
to establish from time-to-time the number of shares to be included in each
series and to determine the designations, relative rights, preferences and
limitations of the shares of each series. The authority of the Board of
Directors with respect to each series includes determination of the following:
(i)
distinguishing designation of that series;

Ed#: 2

*P64567/6030101/2*

The number of shares in and the

(ii)
Whether shares of that series will
have full, special, conditional, limited or no voting rights, except to the
extent otherwise provided by the Law;
Certificate of Incorporation
Page 1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 65204
P64567.SUB, DocName: EX-3.1, Doc: 4, Page: 2
Description: Exhibit 3.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.01.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030102/1*

2

(iii)
Whether shares of that series will
be convertible and the terms and conditions of the conversion, including
provision for adjustment of the conversion rate in circumstances determined by
the Board of Directors;
(iv)
Whether shares of that series will
be redeemable and the terms and conditions of the redemption, including the date
or dates upon or after which they will be redeemable and the amount per share
payable in case of redemption, which amount may vary under different conditions
or at different redemption dates;
(v)
The dividend rate, if any, on
shares of that series, the manner of calculating any dividends and the
preferences of any dividends;
(vi)
The rights
in the event of voluntary or involuntary dissolution of
right of priority of that series relative to the Common
series of Preferred Stock on the distribution of assets

of shares of that series
the Corporation and the
Stock and any other
on dissolution; and

(vii)
Any other rights, preferences and
limitations of that series that are permitted by the Law.
(d)
No stockholder of the Corporation shall be
entitled to any cumulative voting rights. The Board of Directors is authorized,
subject to limitations prescribed by the Law, by resolution to create, issue and
fix the terms of any preemptive or antidilution rights of any stockholder.
5.
The number, classification and terms of the Board of
Directors and the procedures to elect or remove directors and to fill vacancies
on the Board of Directors shall be as follows:
(a)
The number of directors that shall
constitute the whole Board of Directors shall from time to time be fixed
exclusively by the Board of Directors by a resolution adopted by a majority of
the whole Board of Directors serving at the time of the vote. In no event shall
the number of directors that constitute the whole Board of Directors be less
than three (3) or more than nine (9). No decrease in the number of directors
shall have the effect of shortening the term of any incumbent director.
(b)
The Board of Directors of the Corporation
shall be divided into three (3) classes designated Class A, Class B and Class C,
respectively, as nearly equal in number as possible, with each director in
office at the time of such initial classification receiving the classification
approved by a majority of the Board of Directors. The initial term of office of
directors of Class A shall expire at the annual meeting of stockholders of the
Corporation in 2001, of Class B shall expire at the annual meeting of
stockholders of the Corporation in 2002, and of Class C shall expire at the
annual meeting of stockholders of the Corporation in 2003, and in all cases a
director shall serve until the director’s successor is elected and qualified or
until the director’s earlier death, resignation or removal. At each annual
meeting of stockholders beginning
Certificate of Incorporation
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Name: TASER
Validation: Y
Lines: 55
CRC: 21011
P64567.SUB, DocName: EX-3.1, Doc: 4, Page: 3
Description: Exhibit 3.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.01.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030103/1*

<PAGE>
3
with the annual meeting of stockholders in 2001, each director elected to
succeed a director whose term is then expiring shall hold office until the third
annual meeting of stockholders after his or her election and until his or her
successor is elected and qualified or until his or her earlier death,
resignation or removal. If the number of directors that constitutes the whole
Board of Directors is changed as permitted by this Article, a majority of the
whole Board of Directors that adopts the change shall also fix and determine the
number of directors comprising each class; provided, however, that any increase
or decrease in the number of directors shall be apportioned among the classes as
equally as possible.
(c)
Vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause, and newly created directorships resulting from any
increase in the authorized number of directors, may be filled by no less than a
majority vote of the remaining directors then in office, though less than a
quorum, who are designated to represent the same class or classes of
stockholders that the vacant position, when filled, is to represent or by the
sole remaining director (but not by the stockholders except as required by the
Law); provided that, with respect to any directorship to be filled by the Board
of Directors by reason of an increase in the number of directors: (i) such
directorship shall be for a term of office continuing only until the next
election of one or more directors by the stockholders; and (ii) the Board of
Directors may not fill more than two such directorships during the period
between any two successive annual meetings of stockholders. Each director chosen
in accordance with this provision shall receive the classification of the vacant
directorship to which he or she has been appointed or, if it is a newly-created
directorship, shall receive the classification approved by a majority of the
Board of Directors and shall hold office until the first meeting of stockholders
held after his or her election for the purpose of electing directors of that
classification and until his or her successor is elected and qualified or until
his or her earlier death, resignation or removal from office.
(d)
A director may be removed from office before
the expiration date of that director’s term of office, with or without cause,
only by an affirmative vote of the holders of 75% of the voting power of the
then outstanding shares of capital stock entitled to vote thereon (the "Voting
Stock"), voting together as a single class.
(e)
Notwithstanding any other provision of this
Certificate of Incorporation or any provision of the Law that might otherwise
permit a lesser or no vote, and in addition to any affirmative vote of the
holders of any particular class or series of the capital stock of the
Corporation required by the Law or by this Certificate of Incorporation, the
affirmative vote of 75% of the Voting Stock, voting together as a single class,
shall be required to amend or repeal, or to adopt any provision inconsistent
with, this Article 5.
6.
(a)
All of the power of the Corporation, insofar
as it may be lawfully vested by this Certificate of Incorporation in the Board
of Directors, is hereby conferred upon the Board of Directors. In furtherance of
and not in limitation of that
Certificate of Incorporation
Page 3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 8368
P64567.SUB, DocName: EX-3.1, Doc: 4, Page: 4
Description: Exhibit 3.1

[E/O]

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Operator: BPX31319

JB: P64567 PN: 603.01.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030104/1*

<PAGE>
4
power or the powers conferred by the Law, a majority of directors then in office
(or such higher percentage as may be specified in the Bylaws with respect to any
provision thereof) shall have the power to adopt, alter, amend and repeal the
Bylaws of the Corporation, and notwithstanding any other provision of this
Certificate of Incorporation or any provision of the Law that might otherwise
permit a lesser or no vote, and in addition to any affirmative vote of the
holders of any particular class or series of the capital stock of the
Corporation required by the Law or by this Certificate of Incorporation, the
Bylaws of the Corporation shall not be adopted, altered, amended or repealed by
the stockholders of the Corporation except in accordance with the provisions of
the Bylaws and by the vote of the holders of not less than 75% of the Voting
Stock, voting together as a single class, or such higher vote as is set forth in
the Bylaws. Notwithstanding any other provision of this Certificate of
Incorporation or any provision of the Law that might otherwise permit a lesser
or no vote, and in addition to any affirmative vote of the holders of any
particular class or series of the capital stock of the Corporation required by
the Law or by this Certificate of Incorporation, the affirmative vote of the
holders of not less than 75% of the Voting Stock, voting together as a single
class, shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article 6.
(b)
Subject to the terms of any Preferred Stock,
any action required or permitted to be taken by the stockholders of the
Corporation must be taken at a duly called annual or special meeting of such
stockholders or by written consent of all (but not less than all) stockholders
entitled to vote in lieu of such a meeting.
7.
A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for conduct
as a director, provided that this Article does not eliminate the liability of
any director for any act or omission for which such elimination of liability is
not permitted under the Law. No amendment to the Law that further limits the
acts or omissions for which elimination of liability is permitted will affect
the liability of a director for any act or omission which occurs prior to the
effective date of the amendment.
8.
The Corporation may indemnify to the fullest extent
not prohibited by law any person (an "Indemnified Person") who is made, or
threatened to be made, a party to an action, suit or proceeding, whether civil,
criminal, administrative, investigative or other (including an action, suit or
proceeding by or in the right of the Corporation), by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation
or a fiduciary within the meaning of the Employee Retirement Income Security Act
of 1974 with respect to any employee benefit plan of the Corporation, or serves
or served at the request of the Corporation as a director, officer, employee or
agent, or as a fiduciary of an employee benefit plan, of another corporation,
partnership, joint venture, trust or other enterprise. The Corporation may, in
its sole discretion, pay for or reimburse the reasonable expenses incurred by
any Indemnified Person in any such proceeding in advance of the final
disposition of the proceeding. This Article 8 will not be deemed exclusive of
any other provisions for indemnification of or advancement of expenses to an
Indemnified Person that may be included in any statute,
Certificate of Incorporation
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 21569
P64567.SUB, DocName: EX-3.1, Doc: 4, Page: 5
Description: Exhibit 3.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.01.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
5
bylaw, agreement, general or specific action of the Board of Directors, vote of
stockholders or other document or arrangement.
9.
The election of directors need not be by written
ballot unless a stockholder demands election by written ballot before voting
begins at a meeting of stockholders.
10.
The name and mailing address of the incorporator is
Jeffrey S. Cronn, 1600 Pioneer Tower, 888 S.W. Fifth Avenue, Portland, Oregon
97204
IN WITNESS WHEREOF, the undersigned has signed this
Certificate of Incorporation on the 5th day of January, 2001.

----------------------------------Jeffrey S. Cronn, Sole Incorporator

Certificate of Incorporation
Page 5
</TEXT>
</DOCUMENT>

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*P64567/6030105/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-3.2, Doc: 5

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-3.2
p64567ex3-2.txt
EX-3.2

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 5

Date: 7-MAY-2001 14:55:25.87

SN: *

*DOCHDR/5*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 13
CRC: 356
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 1
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 3.2
BYLAWS OF TASER INTERNATIONAL, INC.,
a Delaware corporation

Adopted January 6, 2001

Ed#: 2

*P64567/6030201/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 95
CRC: 58314
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 2
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.01.01

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/603020101/1*

2
TABLE OF CONTENTS

<TABLE>
<S>
ARTICLE I: OFFICES ..........................................................

<C>
1

Section 1.01. Registered Office .......................................

1

Section 1.02. Other Offices ...........................................

1

ARTICLE II: MEETINGS OF STOCKHOLDERS ........................................

1

Section 2.01. Place of Meetings .......................................

1

Section 2.02. Time of Meetings ........................................

1

Section 2.03. Annual Meetings .........................................

1

Section 2.04. Special Meetings ........................................

2

Section 2.05. Purpose of Special Meeting ..............................

3

Section 2.06. Notice of Meetings ......................................

3

Section 2.07. Waiver of Notice ........................................

3

Section 2.08. Quorum; Adjournment .....................................

3

Section 2.09. Vote Required ...........................................

4

Section 2.10. Voting Rights ...........................................

4

Section 2.11. Proxies .................................................

4

Section 2.12. Action in Writing .......................................

4

Section 2.13. Closing of Books; Record Date ...........................

5

ARTICLE III: DIRECTORS ......................................................

5

Section 3.01. General Powers ..........................................

5

Section 3.02. Number and Qualification ................................

5

Section 3.03. Classes and Terms .......................................

5

Section 3.04. Vacancies ...............................................

6

Section 3.05. Meetings ................................................

6

Section 3.06. Committees ..............................................

8

Section 3.07. Telephone Conference Meetings ...........................

8

Section 3.08. Compensation ............................................

8

Section 3.09. Limitation of Director Liability ........................

9

Section 3.10. Resignation and Removal .................................

9

ARTICLE IV: OFFICERS ........................................................

9

Section 4.01. Selection: Qualifications ...............................

9

Section 4.02. Salaries ................................................

10

Section 4.03. Term of Office ..........................................

10

Section 4.04. Chairman of the Board ...................................

10

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 99
CRC: 19212
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 3
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 603.02.01.02-1 SN: 0

Ed#: 1

*P64567/603020102/1*

<PAGE>
3
<TABLE>
<S>
Section 5.02. Form of Certificate .....................................

<C>
12

Section 5.03. Facsimile Signatures ....................................

12

Section 5.04. Lost, Stolen, or Destroyed Certificates .................

12

Section 5.05. Transfers of Stock ......................................

13

Section 5.06. Uncertificated Shares ...................................

13

Section 5.07. Closing of Transfer Books: Record Date ..................

13

Section 5.08. Registered Stockholders .................................

14

Section 5.09. Stock Options and Agreements ............................

14

ARTICLE VI:

DIVIDENDS ......................................................

14

Section 6.01. Method of Payment .......................................

14

Section 6.02. Closing of Books: Record Date ...........................

14

Section 6.03. Reserves ................................................

15

ARTICLE VII: CHECKS .........................................................

15

ARTICLE VIII: CORPORATE SEAL ................................................

15

ARTICLE IX: FISCAL YEAR .....................................................

15

ARTICLE X: AMENDMENTS .......................................................

15

ARTICLE XI: BOOKS AND RECORDS ...............................................

15

Section 11.01. Books and Records ......................................

15

Section 11.02. Computerized Records ...................................

16

Section 11.03. Examination and Copying by Stockholders ................

16

ARTICLE XII: LOANS AND ADVANCES .............................................

16

Section 12.01. Loans, Guarantees, and Suretyship ......................

16

Section 12.02. Advances to Officers, Directors, and Employees .........

16

ARTICLE XIII: INDEMNIFICATION ...............................................

17

Section 13.01. Directors and Officers .................................

17

Section 13.02. Employees and Other Agents .............................

17

Section 13.03. Good Faith .............................................

18

Section 13.04. Advances of Expenses ...................................

18

Section 13.05. Enforcement ............................................

19

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 99
CRC: 19212
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 3
Description: Exhibit 3.2

[E/O]

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Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 603.02.01.02-2E SN: 0

ii

Ed#: 1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 46685
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 4
Description: Exhibit 3.2

[E/O]

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Operator: BPX31319

JB: P64567 PN: 603.02.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

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*P64567/6030202/1*

4
BYLAWS OF TASER INTERNATIONAL, INC.
ARTICLE I: OFFICES
Section 1.01 Registered Office.

The registered office of Taser International, Inc. (the "Corporation")
in the State of Delaware shall be that set forth in the Certificate of
Incorporation or in the most recent amendment of the Certificate of
Incorporation or in a certificate prepared by the Board of Directors and filed
with the Secretary of State of Delaware changing the registered office.
Section 1.02. Other Offices.
The Corporation may also have offices and places of business
at such other places of business both within and without the State of Delaware
as the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II: MEETINGS OF STOCKHOLDERS
Section 2.01. Place of Meetings.
All meetings of the stockholders of the Corporation shall be
held at its registered office or at such other place within or without the State
of Delaware as shall be stated by the Board of Directors in the notice of the
meeting. In the absence of designation otherwise, meetings shall be held at the
principal executive offices of the Corporation in the State of Arizona.
Section 2.02. Time of Meetings.
The Board of Directors shall designate the time and day for
each meeting. In the absence of such designation, all meetings of the
stockholders shall be held at 1:00 p.m., Mountain Time.
Section 2.03. Annual Meetings.
Section 2.03-a. Business to be Transacted. Except as otherwise
required by law or regulation, no business proposed by a stockholder to be
considered at an annual meeting of the stockholders (including the nomination of
any person to be elected as a director of the Corporation) shall be considered
by the stockholders at that meeting unless, no later than sixty (60) days before
the annual meeting of stockholders or (if later) ten (10) days after the first
public notice of that meeting is sent to stockholders, the Corporation receives
from the stockholder proposing that business a written notice that sets forth:
(1) the nature of the proposed business with reasonable particularity, including
the exact text of any proposal to be presented for adoption, and the reasons for
conducting that business at the annual meeting; (2) with respect to each such
stockholder, that stockholder’s name and address (as they appear on the records
of
Bylaws - Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 62053
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 5
Description: Exhibit 3.2

[E/O]

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Operator: BPX31319

JB: P64567 PN: 603.02.03.00

Date: 7-MAY-2001 14:55:25.87

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<PAGE>
5
the Corporation), business address and telephone number, residence address and
telephone number, and the number of shares of each class of stock of the
Corporation beneficially owned by that stockholder; (3) any interest of the
stockholder in the proposed business; (4) the name or names of each person
nominated by the stockholder to be elected or re-elected as a director, if any;
and (5) with respect to each nominee, that nominee’s name, business address and
telephone number, and residence address and telephone number, the number of
shares, if any, of each class of stock of the Corporation owned directly and
beneficially by that nominee, and all information relating to that nominee that
is required to be disclosed in solicitations of proxies for elections of
directors, or is other required, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, or any provision of law subsequently replacing
Regulation 14A, together with a duly acknowledged letter signed by the nominee
stating his or her acceptance of the nomination by that stockholder, stating his
or her intention to serve as a director if elected, and consenting to being
named as a nominee for director in any proxy statement relating to such
election. The person presiding at the annual meeting shall determine whether
business (including the nomination of any person as a director) has been
properly brought before the meeting and, if the facts so warrant, shall not
permit any business (or voting with respect to any particular nominee) to be
transacted that has not been properly brought before the meeting.
Notwithstanding any other provision of the Certificate of Incorporation or any
provision of law that might otherwise permit a lesser or no vote, and in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law or by the
Certificate of Incorporation, the affirmative vote of the holders of not less
than seventy-five percent (75%) of the voting power of the then outstanding
shares of capital stock entitled to vote thereon (the "Voting Stock"), voting
together as a single class, shall be required to amend or repeal, or to adopt a
provision inconsistent with, this Section 2.03-a.
Section 2.03-b. Date and Time. Annual meetings of stockholders
shall be held at such date and time as shall be designated by the Board of
Directors and stated in the notice of the meeting.
Section 2.03-c. Election of Directors. At each annual meeting
of stockholders beginning in 2001, the stockholders, voting as provided in the
Certificate of Incorporation or in these Bylaws, shall elect directors to
succeed directors whose terms are expiring, each such director to hold office
until the third annual meeting of stockholders after his or her election and
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal.
Section 2.04. Special Meetings.
Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may only be called and proposed by: (i) the Chairman of the
Board; (ii) the Chief Executive Officer; or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the then-authorized number of
directors. Such request shall state the purpose or purposes of the proposed
meeting.
Bylaws - Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 53
CRC: 50781
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 6
Description: Exhibit 3.2

[E/O]

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JB: P64567 PN: 603.02.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

6
Section 2.05. Purpose of Special Meeting.

Business transacted at any special meeting of the stockholders
shall be limited to the matters stated in the notice of such meeting, or other
matters necessarily incidental therefore.
Section 2.06. Notice of Meetings.
Notice of stockholder meetings shall be in writing. Such
notice shall state the place, date and time of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. A copy
of such notice shall be either delivered personally or mailed, postage prepaid,
to each stockholder of record entitled to vote at such meeting pursuant to
Section 2.13 hereof not less than ten (10) nor more than sixty (60) days before
such meeting. If mailed, it shall be directed to each stockholder at his or her
address as it appears upon the records of the Corporation, and upon such mailing
of any such notice, the service thereof shall be complete, and the time of the
notice shall begin to run from the date that such notice is deposited in the
mail for transmission to such stockholder. Personal delivery of any such notice
to a corporation, an association, or a partnership shall be accomplished by
personal delivery of such notice to any officer of a corporation or an
association or to any member of a partnership.
Section 2.07. Waiver of Notice.
Notice of any meeting of the stockholders may be waived
before, at, or after such meeting in a writing signed by the stockholder or
representative thereof entitled to vote the shares so represented. Such waiver
shall be filed with the Secretary or entered upon the records of the meeting.
Section 2.08.

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*P64567/6030204/1*

Quorum; Adjournment.

The holders of a majority of the voting power of all shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum for the transaction of all business at meetings of the stockholders,
except as may be otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the original meeting in
accordance with the notice thereof. If a quorum is present when a duly called or
held meeting is convened, the stockholders present in person or represented by
proxy may continue to transact business until adjournment notwithstanding the
withdrawal of enough stockholders originally present in person or by proxy to
leave less than a quorum, and for the purposes of voting pursuant to Section
2.09 hereof, stockholders holding a majority of the voting power of all shares
entitled to vote shall be deemed to be present in person.
Bylaws - Taser International, Inc.
Page 3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 59216
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 7
Description: Exhibit 3.2

[E/O]

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JB: P64567 PN: 603.02.05.00

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7
Section 2.09.

Vote Required.

When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the voting power of all shares entitled to
vote present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one that by express provision of
statute or of the Certificate of Incorporation or of these Bylaws requires a
different vote, in which case such express provision shall govern the vote
required.
Section 2.10.

Voting Rights.

Except as may be otherwise required by statute or the
Certificate of Incorporation or these Bylaws, every stockholder of record of the
Corporation shall be entitled at each meeting of the stockholders to one vote
for each share of stock standing in his or her name on the books of the
Corporation.
Section 2.11.

Proxies.

At any meeting of the stockholders, any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing, signed by the stockholder, and filed with the Secretary at or before
the meeting. In addition, a stockholder may cast or authorize the casting of a
vote by a proxy by transmitting to the Corporation or the Corporation’s duly
authorized agent before the meeting, an appointment of a proxy by means of a
telegram, cablegram, or any other form of electronic transmission, including
telephonic transmission, whether or not accompanied by written instructions of
the stockholder. The electronic transmission must set forth or be submitted with
information from which it can be determined that the appointment was authorized
by the stockholder. If it is determined that a telegram, cablegram, or other
electronic transmission is valid, the inspectors of election or, if there are no
inspectors, the other persons making that determination shall specify the
information upon which they relied to make that determination.
An appointment of a proxy or proxies for shares held jointly
by two or more stockholders is valid if signed by any one of them, unless and
until the Corporation receives from any one of those stockholders written notice
denying the authority of such other person or persons to appoint a proxy or
proxies or appointing a different proxy or proxies, in which case no proxy shall
be appointed unless the instrument shall otherwise provide. No proxy shall be
voted or acted upon after three (3) years from its date, unless the proxy
provides for a longer period. Subject to the above, any duly executed proxy
shall continue in full force and effect and shall not be revoked unless written
notice of its revocation or a duly executed proxy bearing a later date is filed
with the Secretary of the Corporation. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable proxy.
Section 2.12.

Ed#: 1

*P64567/6030205/1*

Action in Writing.

Subject to the terms of any preferred stock of the
Corporation, any action required or permitted to be taken by the stockholders of
the Corporation must be taken at a duly called
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 19711
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 8
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
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annual or special meeting of such stockholders or by written consent of all (but
not less than all) stockholders entitled to vote in lieu of such a meeting.
Section 2.13.

Ed#: 1

*P64567/6030206/1*

Closing of Books; Record Date.

The Board of Directors may fix, or authorize an officer to
fix, a date, not more than sixty (60) nor less than ten (10) days preceding the
date of any meeting of the stockholders of the Corporation, as a record date for
the determination of the stockholders of record on the date so fixed or their
legal representatives shall be entitled to notice of and to vote at such
meeting, notwithstanding any transfer of shares on the books of the Corporation
against the transfer of shares during the whole or any part of such period.
ARTICLE III: DIRECTORS
Section 3.01. General Powers.
The business of the Corporation shall
of Directors, which may exercise all such powers of the
such lawful acts and things as are by statute or by the
Incorporation or by these Bylaws permitted, directed or
or done by the Board of Directors.

be managed by its Board
Corporation and do all
Certificate of
required to be exercised

Section 3.02. Number and Qualification.
The number of directors that shall constitute the whole Board
of Directors shall from time to time be fixed exclusively by the Board of
Directors by a resolution adopted by a majority of the whole Board of Directors
serving at the time of that vote. In no event shall the number of directors that
constitute the whole Board of Directors be fewer than three (3), nor greater
than nine (9). No decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. Directors of the Corporation need
not be elected by written ballot. Directors need not be stockholders.
Section 3.03. Classes and Terms.
The Board of Directors of the Corporation shall be divided
into three classes designated Class A, Class B, and Class C, respectively, all
as nearly equal in number as possible, with each director then in office
receiving the classification that at least a majority of the Board of Directors
designates. The initial term of office of directors of Class A shall expire at
the annual meeting of stockholders of the Corporation in 2001, of Class B shall
expire at the annual meeting of stockholders of the Corporation in 2002, and of
Class C shall expire at the annual meeting of stockholders of the Corporation in
2003, and in all cases a director shall serve until the director’s successor is
elected and qualified or until his earlier death, resignation or removal. At
each annual meeting of stockholders beginning with the annual meeting of
stockholders in 2001, each director elected to succeed a director whose term is
then expiring shall hold office until the third annual meeting of stockholders
after his or her election and until his or her successor is elected and
qualified or until his or her earlier death, resignation or removal. If the
number of directors that constitutes the whole Board of Directors is changed as
permitted by the
Bylaws - Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 45374
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 9
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030207/1*

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9
Certificate of Incorporation or these Bylaws, the majority of the whole Board of
Directors that adopts the change shall also fix and determine the number of
directors comprising each class; provided, however, that any increase or
decrease in the number of directors shall be apportioned among the classes as
equally as possible. Notwithstanding any provision of the Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, and in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law or by
the Certificate of Incorporation, the affirmative vote of 75% of the Voting
Stock, voting together as a single class, shall be required to amend or repeal,
or to adopt any provision inconsistent with, this Section 3.03.
Section 3.04. Vacancies.
Vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office, or other cause,
and newly-created directorships resulting from any increase in the authorized
number of directors, may be filled by no less than a majority vote of the
remaining directors then in office, though less than a quorum, who are
designated to represent the same class or classes of stockholders that the
vacant position, when filled, is to represent or by the sole remaining director
(but not by the stockholders except as required by law); provided, however,
that, with respect to any directorship to be filled by the Board of Directors by
reason of an increase in the number of directors: (a) such directorship shall be
for a term of office continuing only until the next election of one or more
directors by the stockholders; and (b) the Board of Directors may not fill more
than two such directorships during the period between any two successive annual
meetings of stockholders. Each director chosen in accordance with this provision
shall receive the classification of the vacant directorship to which he or she
has been appointed or, if it is a newly-created directorship, shall receive the
classification that at least a majority of the Board of Directors designates and
shall hold office until the first meeting of stockholders held after his or her
election for the purpose of electing directors of that classification and until
his or her successor is elected and qualified or until his or her earlier death,
resignation, or removal from office. Notwithstanding any provision of the
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser or no vote, and in addition to any affirmative vote of the holders of
any particular class or series of the capital stock of the Corporation required
by law or by the Certificate of Incorporation, the affirmative vote of 75 % of
the Voting Stock, voting together as a single class, shall be required to amend
or repeal, or to adopt any provision inconsistent with, this Section 3.04.
Section 3.05. Meetings.
Section 3.05-a. Place of Meetings. The Board of
Directors may hold meetings, both regular and special, either within or without
the State of Delaware.
Section 3.05-b. Regular Meetings. As soon as
practicable after each regular election of directors, the Board of Directors
shall meet at the registered office of the Corporation, or at such other place
within or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing the officers of the Corporation and for
the transaction of such other business as shall come before the meeting. Other
regular meetings of the Board of Directors may be held without notice at such
time and place within and without the
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 30929
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 10
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030208/1*

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State of Delaware as shall from time to time be determined by resolution of the
Board of Directors.
Section 3.05-c. Special Meetings. Special meetings of
the Board of Directors may be called by the Chairman, Chief Executive Officer,
or a majority of the then directors, and shall be held at such time and place as
shall be designated in the notice thereof.
Section 3.05-d. Notice. Notice of a special meeting
shall be given to each Director at least twenty-four (24) hours before the time
of the meeting. Said notice shall be in writing and state the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called.
Whenever any provision of law, the Certificate of Incorporation, or the Bylaws
require notice to be given, any director may, in writing, either before or after
the meeting, waive notice thereof. Without notice, any director, by his or her
attendance at and participation in the action taken at the meeting, shall be
deemed to have waived notice thereof.
Section 3.05-e. Quorum: Voting Requirements:
Adjournment. A majority of the Board of Directors then in office shall
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute or by the Certificate of Incorporation or these Bylaws.
If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting to
another time or place, and no notice as to such adjourned meeting need be given
other than by announcement at the meeting at which such adjournment is taken. If
a quorum is present at the call of a meeting, the directors may continue to
transact business until adjournment notwithstanding the withdrawal of enough
directors to leave less than a quorum.
Section 3.05-f. Organization of Meetings. At all
meetings of the Board of Directors, the Chairman of the Board, or in his
absence, the Chief Executive Officer, or in his absence, any director appointed
by the Chief Executive Officer, shall preside, and the Secretary, or in his
absence, any person appointed by the Chairman, shall act as Secretary.
Section 3.05-g. Action in Writing. Except as may be
otherwise required by statute or the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors of
the Corporation or of any committee thereof may be taken by written consent in
lieu of a meeting, if all members of the Board or committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section 3.05-h. Absent Directors. A director may give
advance written consent or opposition to a proposal to be acted on at a meeting
of the Board of Directors. Such advance written consent or opposition shall be
ineffective unless the writing is delivered to the Chief Executive Officer,
Chairman or Secretary of the Corporation prior to the meeting at which such
proposal is to be considered. If the director is not present at the meeting,
consent or opposition to a proposal does not constitute presence for purposes of
determining the existence
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 10469
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 11
Description: Exhibit 3.2

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.09.00

[E/O]

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<PAGE>
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of a quorum, but such consent or opposition shall be counted as a vote in favor
of or against the proposal and shall be entered in the minutes or other record
of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected, such substantial similarity to be
determined in the sole judgment of the presiding officer at the meeting.
Section 3.06. Committees.
Section 3.06-a. Designation. The Board of Directors
may designate one or more committees, each committee to consist of one or more
of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
Section 3.06-b. Limitations on Authority. No
committees of the Corporation shall have authority as to any of the following
matters:
(a)
Approving or adopting, or
recommending to the stockholders any action or matter expressly required by law
to be submitted to stockholders for approval; or
(b)

Adopting, amending or repealing any

bylaw of the Corporation.
Section 3.06-c. Minutes of Committee Meetings.
Committees shall keep regular minutes of their proceedings and report the same
to the Board of Directors when required.
Section 3.07.

Ed#: 1

*P64567/6030209/1*

Telephone Conference Meetings.

Any Director or any member of a duly constituted committee of
the Board of Directors may participate in any meeting of the Board of Directors
or of any duly constituted committee thereof by means of a conference telephone
or other comparable communication technique whereby all persons participating in
such a meeting can hear and communicate with each other. For the purpose of
establishing a quorum and taking any action at such a meeting, the members
participating in such a meeting pursuant to this Section 3.07 shall be deemed
present in person at such meeting
Section 3.08. Compensation.
Unless otherwise provided by the Board of Directors, directors
shall be paid their expenses, if any, of attendance at each meeting of the Board
of Directors or a committee thereof. Directors who are not employees of the
Corporation shall be paid at least $500 for attendance at each meeting of the
Board of Directors, or any committee thereof, unless a different sum is fixed by
resolution of the Board of Directors. directors may also receive other
compensation, such as stock options or grants, for their service as directors or
committee members as determined by the
Bylaws - Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 52
CRC: 41410
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 12
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.10.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030210/1*

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Board of Directors. Nothing herein contained shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
Section 3.09. Limitation of Director Liability.
A director shall not be liable to the Corporation or its
stockholders for dividends illegally declared, distributions illegally made to
stockholders, or any other actions taken in good faith reliance upon financial
statements of the Corporation represented to the director to be correct by the
Chief Executive Officer of the Corporation or the officer having charge of its
books of account or certified by an independent or certified public accountant
to fairly reflect the financial condition of the Corporation; nor shall the
director be liable if in good faith in determining the amount available for
dividends or distributions the Board values the assets in a manner allowable
under applicable law.
Section 3.10. Resignation and Removal.
A director may resign at any time by giving written notice to
the Secretary or Assistant Secretary. Such resignation shall take effect on the
date of the receipt of such notice or at such later date as specified therein. A
director of any class of directors of the Corporation may be removed before the
expiration date of that director’s term of office only by an affirmative vote of
the holders of seventy-five percent (75%) of the voting power of the Voting
Stock, voting together as a single class. Notwithstanding any provision of the
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser or no vote, and in addition to any affirmative vote of the holders of
any particular class or series of the capital stock of the Corporation required
by law or by the Certificate of Incorporation, the affirmative vote of 75% of
the Voting Stock, voting together as a single class, shall be required to amend
or repeal, or to adopt any provision inconsistent with, this Section 3.10.
ARTICLE IV: OFFICERS
Section 4.01. Selection: Qualifications.
Section 4.01-a. Election: Qualifications. The Board
of Directors at its next meeting after each annual meeting of the stockholders
shall choose a Chairman of the Board, a Chief Executive Officer, a Secretary, a
Chief Financial Officer, and such other officers or agents as it deems
necessary, none of whom need be members of the Board.
Section 4.01-b. Additional Officers. The Board of
Directors may choose a President, additional Vice Presidents, Assistant
Secretaries and Assistant Treasurers and such other officers and agents as it
shall deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 52
CRC: 46644
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 13
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.11.00

Date: 7-MAY-2001 14:55:25.87

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Ed#: 1

*P64567/6030211/1*

13
Section 4.02. Salaries.

The salaries of all officers, and of the Chairman of the
Corporation, shall be fixed by the Board of Directors on an annual basis.
Section 4.03. Term of Office.
The officers of the Corporation shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
Board of Directors may be removed at any time with or without cause by the
affirmative vote of a majority of the Board of Directors. Any officer may resign
at any time by giving written notice to the Chief Executive Officer or the
Secretary of the Corporation. Any vacancy occurring in any office of the
Corporation by death, resignation, removal, or otherwise shall be filled by the
Board of Directors.
Section 4.04. Chairman of the Board.
The Chairman of the Board of Directors shall preside at all
meetings of the Board of Directors and of the stockholders and shall perform
such other duties as he or she may be directed to perform by the Board of
Directors.
Section 4.05. Chief Executive Officer.
The Chief Executive Officer of the Corporation shall have
general active management of the business of the Corporation. Unless the Board
has elected a Chairman of the Board of Directors, the Chief Executive Officer
shall preside at meetings of the stockholders of the Corporation and at meetings
of the Board of Directors. The Chief Executive Officer may execute and deliver
in the name of the Corporation any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the Corporation, except in cases in
which the authority to sign and deliver is required by law to be exercised by
another person or is expressly delegated by the Board to some other officer or
agent of the Corporation; may delegate the authority to execute and deliver
documents to other officers of the Corporation; shall maintain records of and,
whenever necessary, certify any proceedings of the stockholders and the Board;
shall perform such other duties as may from time to time be prescribed by the
Board; and, in general, shall perform all duties usually incident to the office
of the Chief Executive Officer.
Section 4.06. President.
The President of the Corporation shall have general active
management of the business of the Corporation in the absence or disability of
the Chief Executive Officer. He shall also generally assist the Chief Executive
Officer and exercise such other powers and perform such other duties as are
delegated to him by the Chief Executive Officer or Chairman, or as the Board of
Directors shall prescribe.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 8462
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 14
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.12.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030212/1*

14
Section 4.07. Vice-Presidents.

Unless otherwise determined by the Board of Directors, the
Vice Presidents, if any, shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President. They shall also
generally assist the Chief Executive Officer and the President and exercise such
other powers and perform such other duties as are delegated to them by the Chief
Executive Officer or the President or as the Board of Directors shall prescribe.
Section 4.08. Secretary and Assistant Secretary.
The Secretary or Assistant Secretary shall attend all meetings
of the stockholders and of the Board of Directors and shall record all the
proceedings of the meetings of the stockholders and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required, and shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the
Chairman or the Board of Directors, under whose supervision he shall be.
The Assistant Secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of inability or refusal to act by
the Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Chairman, or
Board of Directors, may, from time to time, prescribe.
Section 4.09. Chief Financial Officer.
Section 4.09-a. Custody of Funds and Accounting. The
Chief Financial Officer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.
Section 4.09-b. Disbursements and Reports. The Chief
Financial Officer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the Chief Executive Officer and the Board of Directors, at the
regular meetings of the Board, or when the Board of Directors so requires, an
account of all his transactions as Chief Financial Officer and of the financial
condition of the Corporation.
Section 4.09-c. Bond. If required by the Board of
Directors, the Chief Financial Officer shall give the Corporation a bond in such
sum and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration, upon the expiration of his term of office or his resignation,
retirement, or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
Bylaws - Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 51738
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 15
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.13.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6030213/2*

15
ARTICLE V. CERTIFICATES FOR SHARES
Section 5.01. Issuance of Shares and Fractional Shares.

The Board of Directors is authorized to issue shares and
fractional shares of stock of the Corporation up to the full amount authorized
by the Certificate of Incorporation in such amounts as may be determined by the
Board of Directors and as permitted by law.
Section 5.02. Form of Certificate.
The shares of the Corporation shall be represented by
certificates, provided that the Board of Directors of the Corporation may
resolve that some or all of any or all classes or series of its stock will be
uncertificated shares as provided in Section 5.06. Certificates shall be signed
by the Chairman of the Board or the President and by the Secretary or Assistant
Secretary of the Corporation, certifying the number of shares of capital stock
owned by him in the Corporation. If the Corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the
designations, preferences, and relative, participating, optional, or other
special rights of the various classes of stock or series thereof and the
qualifications, limitations, or restrictions of such rights, together with a
statement of the authority of the Board of Directors to determine the relative
rights and preferences of subsequent classes or series, shall be set forth in
full on the face or back of the certificate which the Corporation shall issue to
represent such stock, or, in lieu thereof, such certificate shall contain a
statement that the stock is, or may be, subject to certain rights, preferences,
or restrictions and that a statement of the same will be furnished without
charge by the Corporation upon request by any stockholder. Certificates
representing the shares of the capital stock of the Corporation shall be in such
form not inconsistent with law or the Certificate of Incorporation or these
Bylaws as shall be determined by the Board of Directors.
Section 5.03. Facsimile Signatures.
Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent, transfer clerk, or registrar, then a
facsimile of the signatures of the officers or agents of the Corporation may be
printed or lithographed upon such certificate in lieu of the actual signatures.
In case any officer or officers who shall have signed, or whose facsimile
signature shall have been used on, any such certificate or certificates shall
cease to be such officer or officers of the Corporation, whether because of
death, resignation, or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be signed and delivered as though
the person or persons who signed such certificate or certificates, or whose
facsimile signature or signatures shall have been used thereon, had not ceased
to be the officer or officers of the Corporation.
Section 5.04. Lost, Stolen, or Destroyed Certificates.
The Board of Directors may direct a certificate or
certificates to be issued in place of a certificate or certificates previously
issued by the Corporation alleged to have been lost,
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 62850
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 16
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.14.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 3

*P64567/6030214/3*

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stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section 5.05. Transfers of Stock.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books;
except that the Board of Directors may, by resolution duly adopted, establish
conditions upon the transfer of shares of stock to be issued by the Corporation,
and the purchasers of such shares shall be deemed to have accepted such
conditions on transfer upon the receipt of the certificate representing such
shares, provided that the restrictions shall be referred to on the certificates
or the purchaser shall have otherwise been notified thereof.
Section 5.06. Uncertificated Shares.
Unless prohibited by the Certificate of Incorporation or these
Bylaws, some or all of any or all classes and series of the Corporation’s shares
may be uncertificated shares. Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares, such uncertificated shares shall
be canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the Corporation. Within a reasonable time after the
issuance or transfer of uncertificated shares, the Corporation shall send to the
new stockholder the information required by Section 5.02 to be stated on
certificates. If this Corporation becomes a publicly held corporation which
adopts, in compliance with Section 17 of the Securities Exchange Act of 1934, a
system of issuance, recordation, and transfer of its shares by electronic or
other means not involving an issuance of certificates, this information is not
required to be sent to new stockholders.
Section 5.07. Closing of Transfer Books: Record Date.
The Board of Directors or an officer of the Corporation
authorized by the Board may close the stock transfer books of the Corporation
for a period not exceeding sixty (60) days preceding the date of any meeting of
stockholders as provided in Section 2.13 hereof or the date for payment of any
dividend as provided in Section 6.02 hereof or the date for the allotment of
rights or the date when any change or conversion or exchange of capital stock
shall go into effect. In lieu of closing the stock transfer books as aforesaid,
the Board of Directors or an officer of the Corporation authorized by the Board
may fix, in advance, a date, not exceeding sixty (60) days preceding the date
for payment of any dividend, or the date for the allotment of
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Page 13

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 47884
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 17
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.15.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 3

*P64567/6030215/3*

<PAGE>
17
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, as a record date for the determination of the stockholders
entitled to receive payment.
Section 5.08. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive
right of the persons registered on its books as the owners of shares to receive
dividends and to vote as such owners and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided in the laws of Delaware.
Section 5.09. Stock Options and Agreements.
In addition to any stock options, plans, or agreements into
which the Corporation may enter, any stockholder of the Corporation may enter
into an agreement giving any other stockholder or stockholders or any third
party an option to purchase any of his stock in the Corporation, and such shares
of stock shall thereupon be subject to such agreement and transferable only upon
proof of compliance therewith; provided, however, that a copy of such agreement
shall be filed with the Corporation and reference thereto placed upon the
certificates representing said shares of stock.
ARTICLE VI: DIVIDENDS
Section 6.01. Method of Payment.
Dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting pursuant to
law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
Section 6.02. Closing of Books: Record Date.
The Board of Directors or an officer of the Corporation
authorized by the Board may fix a date not exceeding sixty (60) days preceding
the date fixed for the payment of any dividend as the record date for the
determination of the stockholders entitled to receive payment of the dividend
and, in such case, only stockholders of record on the date so fixed shall be
entitled to receive payment of such dividend notwithstanding any transfer of
shares on the books of the Corporation after the record date. The Board of
Directors or an officer of the Corporation authorized by the Board may close the
books of the Corporation against the transfer of shares during the whole or any
part of such period. If the Board of Directors or an officer of the Corporation
authorized by the Board fails to fix such a record date, the record date shall
be the thirtieth (30th) day preceding the date of such payment.
Bylaws - Taser International, Inc.
Page 14

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 27085
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 18
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.16.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6030216/2*

18
Section 6.03. Reserves.

Before payment of any dividend, there may be set aside out of
the funds of the Corporation available for dividends such sum or sums as the
Board of Directors from time to time, in its absolute discretion, deems proper
as a reserve or reserves for meeting contingencies, or for equalizing dividends,
or for repairing or maintaining any property of the Corporation, or for such
other purpose as the Board shall think conducive to the interest of the
Corporation, and the Board may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE VII: CHECKS
All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
ARTICLE VIII: CORPORATE SEAL
The Corporation shall have no corporate seal.
ARTICLE IX: FISCAL YEAR
The fiscal year of the Corporation shall end on December 31
unless otherwise fixed by resolution of the Board of Directors.
ARTICLE X: AMENDMENTS
These Bylaws shall not be adopted, altered, amended or
repealed except in accordance with the provisions of the Certificate of
Incorporation and these Bylaws. Unless a different requirement is mandated by
the Certificate of Incorporation or these Bylaws, adoption, alteration,
amendment or repeal of these Bylaws requires the affirmative action of a
majority of the directors then in office or the vote of the holders of not less
than seventy-five percent (75%) of the Voting Stock, voting together as a single
class, at an annual meeting of the stockholders or any special meeting of the
stockholders.
ARTICLE XI: BOOKS AND RECORDS
Section 11.01. Books and Records.
The Board of Directors of the Corporation shall cause to be
kept:
Section 11.01-a. A share register not more than one
year old, giving the names and addresses of the stockholders, the number and
classes held by each, and the dates on which the certificated or uncertificated
shares were issued;
Section 11.01-b. Records of all proceedings of
stockholders and directors; and
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 32739
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 19
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.17.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030217/1*

19

Section 11.01-c. Such other records and books of
account as shall be necessary and appropriate to the conduct of the corporate
business.
Section 11.02. Computerized Records.
The records maintained by the Corporation, including its share
register, financial records, and minute books, may utilize any information
storage technique, including, for example, computer memory or microimages, even
though that makes them illegible visually, if the records can be converted, by
machine and within a reasonable time, into a form that is legible visually and
whose contents are assembled by related subject matter to permit convenient use
by persons in the normal course of business.
Section 11.03. Examination and Copying by Stockholders.
Every stockholder of record of the Corporation shall have a
right to examine, in person or by agent or attorney, at any reasonable time or
times, at the place or places where usually kept, and upon the showing of a
proper purpose, the Corporation’s stock ledger, a list of its stockholders and
its other books and records, and to make copies or extracts therefrom.
ARTICLE XII: LOANS AND ADVANCES
Section 12.01. Loans, Guarantees, and Suretyship.
The Corporation may lend money to, guarantee an obligation of,
become a surety for, or otherwise financially assist a person, if the
transaction, or a class of transactions to which the transaction belongs, is
approved by the affirmative vote of a majority of the directors present at a
lawfully convened meeting and such action: (a) is in the usual and regular
course of business of the Corporation; (b) is with, or for the benefit of, a
related corporation, an organization with which the Corporation has the power to
make donations; (c) is with, or for the benefit of, an officer or other employee
of the Corporation or a subsidiary, including an officer or employee who is a
director of the Corporation or a subsidiary, and may reasonably be expected, in
the judgment of the Board of Directors, to benefit the Corporation; or (d) has
been approved by the affirmative vote of the holders of seventy-five percent
(75%) of the Voting Stock, voting together as a single class. The loan,
guarantee, or other assistance may be with or without interest and may be
unsecured or may be secured in any manner that a majority of the Board of
Directors approves, including, without limitation, a pledge of or other security
interest in shares of the Corporation.
Section 12.02. Advances to Officers, Directors, and Employees.
The Corporation may, without a vote of the directors, advance
money to its directors, officers, or employees to cover expenses that can
reasonably be anticipated to be incurred by them in the performance of their
duties and for which they would be entitled to reimbursement in the absence of
an advance.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 40252
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 20
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.18.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

20
ARTICLE XIII: INDEMNIFICATION
Section 13.01.

Directors and Officers

Section 13.01-a. Indemnity in Third-Party
Proceedings. The Corporation shall indemnify its directors and officers in
accordance with the provisions of this Section 13.01-a if the director or
officer was or is a party to, or is threatened to be made a party to, any
proceeding (other than a proceeding by or in the right of the Corporation to
procure a judgment in its favor), against all expenses, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by the director or
officer in connection with such proceeding if the director or officer acted in
good faith and in a manner the director or officer reasonably believed was in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, the director or officer, in addition, had no
reasonable cause to believe that the director’s or officer’s conduct was
unlawful; provided, however, that the director or officer shall not be entitled
to indemnification under this Section 13.01-a: (1) in connection with any
proceeding charging improper personal benefit to the director or officer in
which the director or officer is adjudged liable on the basis that personal
benefit was improperly received by the director or officer unless and only to
the extent that the court conducting such proceeding or any other court of
competent jurisdiction determines upon application that, despite the
adjudication of liability, the director or officer is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, or (2) in
connection with any proceeding (or part thereof) initiated by such person or any
proceeding by such person against the Corporation or its directors, officers,
employees or other agents unless: (A) such indemnification is expressly required
to be made by law, (B) the proceeding was authorized by the Board of Directors,
or (C) such indemnification is provided by the Corporation, in its sole
discretion, pursuant to the powers vested in the Corporation under the Delaware
General Corporation Law.
Section 13.01-b. Indemnity in Proceedings by or in
the Right of the Corporation. The Corporation shall indemnify its directors and
officers in accordance with the provisions of this Section 13.01-b if the
director or officer was or is a party to, or is threatened to be made a party
to, any proceeding by or in the right of the Corporation to procure a judgment
in its favor, against all expenses actually and reasonably incurred by the
director or officer in connection with the defense or settlement of such
proceeding if the director or officer acted in good faith and in a manner the
director or officer reasonably believed was in or not opposed to the best
interests of the corporation; provided, however, that the director or officer
shall not be entitled to indemnification under this Section 13.01-b: (1) in
connection with any proceeding in which the director or officer has been
adjudged liable to the Corporation unless and only to the extent that the court
conducting such proceeding, or the Delaware Court of Chancery, determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnification for such expenses as such court shall deem proper,
or (2) in connection with any proceeding (or part thereof) initiated by such
person or any proceeding by such person against the Corporation or its
directors, officers, employees or other agents unless (A) such indemnification
is expressly required to be made by law, (B) the proceeding was authorized by
the Board of Directors, or (C) such indemnification is provided by the
Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the Delaware General Corporation Law.
Section 13.02.

Ed#: 2

*P64567/6030218/2*

Employees and Other Agents

The Corporation may, to the extent authorized from time to
time by the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation similar to
those conferred in this Article XIII to directors and officers of the
Corporation.
Bylaws - Taser International, Inc.
Page 17

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 25045
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 21
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.19.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

21
Section 13.03.

Good Faith.

Section 13.03-a. For purposes of any determination
under this Article XIII, a director or officer shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding to have had no reasonable cause to believe that his or her conduct
was unlawful, if his or her action is based on information, opinions, reports
and statements, including financial statements and other financial data, in each
case prepared or presented by:
1. one or more officers or employees of the
Corporation whom the director or officer believed to be reliable and competent
in the matters presented;
2. counsel, independent accountants or other
persons as to matters which the director or officer believed to be within such
person’s professional or expert competence; or
3. with respect to a director, a committee
of the Board of Directors upon which such director does not serve, as to matters
within such committee’s designated authority, which committee the director
believes to merit confidence; so long as, in each case, the director or
executive officer acts without knowledge that would cause such reliance to be
unwarranted.
Section 13.03-b. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal proceeding, that he had reasonable cause to believe that his or her
conduct was unlawful.
Section 13.03-c. The provisions of this Section 13.03
shall not be deemed to be exclusive or to limit in any way the circumstances in
which a person may be deemed to have met the applicable standard of conduct set
forth by the Delaware General Corporation Law.
Section 13.04.

Ed#: 1

*P64567/6030219/1*

Advances of Expenses

The Corporation shall pay the expenses incurred by its
directors or officers in any proceeding (other than a proceeding brought for an
accounting of profits made from the purchase and sale by the director or officer
of securities of the corporation within the meaning of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provision of any state
statutory law or common law) in advance of the final disposition of the
proceeding at the written request of the director or officer, if the director or
officer: (a) furnishes the Corporation a written affirmation of the director’s
or officer’s good faith belief that the director or officer is entitled to be
indemnified under this Article XIII, and (b) furnishes the Corporation a written
undertaking to repay the advance to the extent that it is ultimately determined
that the director or officer is not entitled to be indemnified by the
Corporation. Such undertaking shall be an unlimited general obligation of the
director or officer but need not be secured. Advances pursuant to this Section
13.04 shall be made no later than 10 days after receipt by the Corporation of
the affirmation and undertaking described in clauses (a) and (b) above, and
shall be made without regard to the director’s or officer’s ability to repay the
amount advanced and without regard to the director’s or officer’s ultimate
entitlement to indemnification under this Article XIII. The Corporation may
establish a trust, escrow account or other secured funding source for the
payment of advances
Bylaws - Taser International, Inc.
Page 18

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 50327
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 22
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.20.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030220/1*

<PAGE>
22
made and to be made pursuant to this Section 13.04 or of other liability
incurred by the director or officer in connection with any proceeding.
Section 13.05. Enforcement
Without the necessity of entering into an express contract,
all rights to indemnification and advances to directors and officers under this
Article XIII shall be deemed to be contractual rights and be effective to the
same extent and as if provided for in a contract between the Corporation and the
director or officer. Any director or officer may enforce any right to
indemnification or advances under this Article XIII in any court of competent
jurisdiction if: (a) the Corporation denies the claim for indemnification or
advances, in whole or in part, or (b) the Corporation does not dispose of such
claim within 45 days of request therefor. It shall be a defense to any such
enforcement action (other than an action brought to enforce a claim for
advancement of expenses pursuant to, and in compliance with, Section 13.01 of
this Article XIII) that the director or officer is not entitled to
indemnification under this Article XIII. However, except as provided in Section
13.12 of this Article XIII, the Corporation shall not assert any defense to an
action brought to enforce a claim for advancement of expenses pursuant to
Section 13.04 of this Article XIII if the director or officer has tendered to
the Corporation the affirmation and undertaking required thereunder. The burden
of proving by clear and convincing evidence that indemnification is not
appropriate shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors or independent legal counsel) to have made a
determination prior to the commencement of such action that indemnification is
proper in the circumstances because the director or officer has met the
applicable standard of conduct nor an actual determination by the Corporation
(including its Board of Directors or independent legal counsel) that
indemnification is improper because the director or officer has not met such
applicable standard of conduct, shall be asserted as a defense to the action or
create a presumption that the director or officer is not entitled to
indemnification under this Article XIII or otherwise. The director’s or
officer’s expenses incurred in connection with successfully establishing such
person’s right to indemnification or advances, in whole or in part, in any
proceeding shall also be paid or reimbursed by the Corporation.
Section 13.06. Non-Exclusivity of Rights
The rights conferred on any person by this Article XIII shall
not be exclusive of any other right which such person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
Bylaws, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his or her official capacity and as to action in another
capacity while holding office. The Corporation is authorized to enter into
individual contracts with any or all of its directors, officers, employees or
agents respecting indemnification and advances, to the fullest extent not
prohibited by the Delaware General Corporation Law.
Section 13.07. Survival of Rights
The rights conferred on any person by this Article XIII shall
continue as to a person who has ceased to be a director, officer, employee or
other agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 13.08. Insurance
To the fullest extent permitted by the Delaware General
Corporation Law, the Corporation, upon approval by the Board of Directors, may
purchase insurance on behalf of any person required or permitted to be
indemnified pursuant to this Article XIII.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 67
CRC: 13902
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 23
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.21.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6030221/1*

23
Section 13.09. Amendments

Any repeal or modification of this Article XIII shall only be
prospective and shall not affect the rights under this Article XIII in effect at
the time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any director, officer, employee or agent of the
Corporation.
Section 13.10. Savings Clause
If this Article XIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director and officer to the full
extent not prohibited by any applicable portion of this Article XIII that shall
not have been invalidated, or by any other applicable law.
Section 13.11. Certain Definitions
For the purposes of this Article XIII, the following
definitions shall apply:
Section 13.11-a. The term "PROCEEDING" shall include
any threatened, pending or completed action, suit or proceeding, whether brought
in the right of the Corporation or otherwise, and whether of a civil, criminal,
administrative or investigative nature, in which the director or officer may be
or may have been involved as a party, witness or otherwise, by reason of the
fact that the director or officer is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, whether or not serving in such capacity at
the time any liability or expense is incurred for which indemnification or
reimbursement can be provided under this Article XIII.
Section 13.11-b. The term "EXPENSES" includes,
without limitation thereto, expenses of investigations, judicial or
administrative proceedings or appeals, attorney, accountant and other
professional fees and disbursements and any expenses of establishing a
right to indemnification under this Article XIII, but shall not include amounts
paid in settlement by the director or officer or the amount of judgments or
fines against the director or officer.
Section 13.11-c. References to "OTHER ENTERPRISE"
include, without limitation, employee benefit plans; references to "FINES"
include, without limitation, any excise taxes assessed on a person with respect
to any employee benefit plan; references to "SERVING AT THE REQUEST OF THE
CORPORATION" include, without limitation, any service as a director, officer,
employee or agent which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants, or its beneficiaries; and a person who acted in good faith and
in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "NOT OPPOSED TO THE BEST INTERESTS OF THE CORPORATION" as
referred to in this Article XIII.
Section 13.11-d. References to "THE CORPORATION"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer or employee of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this Article XIII with respect to the resulting or
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Name: TASER
Validation: Y
Lines: 63
CRC: 11143
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 24
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.22.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
24
surviving corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
Section 13.11-e. The meaning of the phrase "TO THE
FULLEST EXTENT PERMITTED BY LAW" shall include, but not be limited to: (i) to
the fullest extent authorized or permitted by any amendments to or replacements
of the Delaware General Corporation Law adopted after the date of this Article
XIII that increase the extent to which a corporation may indemnify its directors
and officers, and (ii) to the fullest extent permitted by the provision of the
Delaware General Corporation Law that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any amendment to
or replacement of the Delaware General Corporation Law.
Section 13.12.

Ed#: 1

*P64567/6030222/1*

Notification and Defense of Claim

As a condition precedent to indemnification under this Article
XIII, not later than 30 days after receipt by the director or officer of notice
of the commencement of any proceeding the director or officer shall, if a claim
in respect of the proceeding is to be made against the Corporation under this
Article XIII, notify the Corporation in writing of the commencement of the
proceeding. The failure to properly notify the Corporation shall not relieve the
Corporation from any liability which it may have to the director or officer
otherwise than under this Article XIII. With respect to any proceeding as to
which the director or officer so notifies the Corporation of the commencement:
Section 13.12-a. The Corporation shall be entitled to
participate in the proceeding at its own expense.
Section 13.12-b. Except as otherwise provided in this
Section 13.12, the Corporation may, at its option and jointly with any other
indemnifying party similarly notified and electing to assume such defense,
assume the defense of the proceeding, with legal counsel reasonably satisfactory
to the director or officer. The director or officer shall have the right to use
separate legal counsel in the proceeding, but the Corporation shall not be
liable to the director or officer under this Article XIII for the fees and
expenses of separate legal counsel incurred after notice from the Corporation of
its assumption of the defense, unless (1) the director or officer reasonably
concludes that there may be a conflict of interest between the Corporation and
the director or officer in the conduct of the defense of the proceeding, or (2)
the Corporation does not use legal counsel to assume the defense of such
proceeding. The Corporation shall not be entitled to assume the defense of any
proceeding brought by or on behalf of the Corporation or as to which the
director or officer has made the conclusion provided for in (1) above.
Section 13.12-c. If two or more persons who may be
entitled to indemnification from the Corporation, including the director or
officer seeking indemnification, are parties to any proceeding, the Corporation
may require the director or officer to use the same legal counsel as the other
parties. The director or officer shall have the right to use separate legal
counsel in the proceeding, but the Corporation shall not be liable to the
director or officer under this Article XIII for the fees and expenses of
separate legal counsel incurred after notice from the Corporation of the
requirement to use the same legal counsel as the other parties, unless the
director or officer reasonably concludes that there may be a conflict of
interest between the director or officer and any of the other parties required
by the Corporation to be represented by the same legal counsel.
Section 13.11-d. The Corporation shall not be liable
to indemnify the director or officer under this Article XIII for any amounts
paid in settlement of any proceeding
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 41
CRC: 28968
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 25
Description: Exhibit 3.2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.23.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
25
effected without its written consent, which shall not be unreasonably withheld.
The director or officer shall permit the Corporation to settle any proceeding
that the Corporation assumes the defense of, except that the Corporation shall
not settle any action or claim in any manner that would impose any penalty or
limitation on the director or officer without such person’s written consent.
Section 13.13.

Exclusions

Notwithstanding any provision in this Article XIII, the
Corporation shall not be obligated under this Article XIII to make any
indemnification in connection with any claim made against any director or
officer: (a) for which payment is required to be made to or on behalf of the
director or officer under any insurance policy, except with respect to any
excess amount to which the director or officer is entitled under this Article
XIII beyond the amount of payment under such insurance policy; (b) if a court
having jurisdiction in the matter finally determines that such indemnification
is not lawful under any applicable statute or public policy; (c) in connection
with any proceeding (or part of any proceeding) initiated by the director or
officer, or any proceeding by the director or officer against the Corporation or
its directors, officers, employees or other persons entitled to be indemnified
by the Corporation, unless: (1) the Corporation is expressly required by law to
make the indemnification; (2) the proceeding was authorized by the Board of
Directors of the Corporation; or (3) the director or officer initiated the
proceeding pursuant to Section 13.05 of this Article XIII and the director or
officer is successful in whole or in part in such proceeding; or (d) for an
accounting of profits made from the purchase and sale by the director or officer
of securities of the Corporation within the meaning of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provision of any state
statutory law or common law.
Section 13.14.

Ed#: 1

*P64567/6030223/1*

Subrogation

In the event of payment under this Article XIII, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the director or officer. The director or officer shall
execute all documents required and shall do all acts that may be necessary to
secure such rights and to enable the Corporation effectively to bring suit to
enforce such rights.
Bylaws - Taser International, Inc.
Page 22

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 36842
P64567.SUB, DocName: EX-3.2, Doc: 5, Page: 26
Description: Exhibit 3.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.24.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

26
ARTICLE XIV: DEFINITIONS AND USAGE

Whenever the context of these Bylaws requires, the plural
shall be read to include the singular, and vice versa; and words of the
masculine gender shall refer to the feminine gender, and vice versa; and words
of the neuter gender shall refer to any gender.
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
Secretary of the Corporation, does hereby certify that the foregoing Bylaws were
duly adopted as the Bylaws of the Corporation in accordance with the Delaware
General Corporation Law on January 6, 2001.
Dated:

January 6, 2001.

------------------------------------Kathleen C. Hanrahan, Secretary

Bylaws - Taser International, Inc.
Page 23
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/6030224/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-4.3, Doc: 6

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-4.3
p64567ex4-3.txt
EX-4.3

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 6

Date: 7-MAY-2001 14:55:25.87

SN: *

*DOCHDR/6*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 53
CRC: 11356
P64567.SUB, DocName: EX-4.3, Doc: 6, Page: 1
Description: Exhibit 4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 4.3
VOID AFTER 5:00 P.M. PACIFIC TIME ON __________, 2006
WARRANTS TO PURCHASE COMMON STOCK

W-_____

Ed#: 2

*P64567/6040301/2*

_________Warrants
TASER INTERNATIONAL, INC.
CUSIP ______________
THIS CERTIFIES THAT

or registered assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from TASER International, Inc., a corporation incorporated under the
laws of the state of Delaware (the "Company"), subject to the terms and
conditions set forth hereinafter and in the Warrant Agreement hereinafter more
fully described (the "Warrant Agreement"), at any time on or before the close of
business on __________, 2006 or, if such Warrant is redeemed as provided in the
Warrant Agreement, at any time prior to the effective time of such redemption
(the "Expiration Date"), one fully paid and non-assessable share of Common Stock
of the Company (the "Common Stock") upon presentation and surrender of this
Warrant Certificate, with the instructions for the registration and delivery of
Common Stock filled in, at the stock transfer office in Glendale, California, of
U.S. Stock Transfer Corporation, Warrant Agent of the Company (the "Warrant
Agent") or of its successor warrant agent or, if there be no successor warrant
agent, at the corporate offices of the Company, and upon payment of the Exercise
Price (as defined in the Warrant Agreement) and any applicable taxes paid either
in cash, or by certified or official bank check, payable in lawful money of the
United States of America to the order of the Company. Each Warrant initially
entitles the holder to purchase one share of Common Stock initially for $ [150%
of the initial public offering price of the Units]. The number and kind of
securities or other property for which the Warrants are exercisable are subject
to further adjustment in certain events, such as mergers, splits, stock
dividends, recapitalizations and the like, to prevent dilution. After three
months following the closing of the Company’s initial public offering, the
Company may redeem any or all outstanding and unexercised Warrants at any time
if the average Daily Price equals or exceeds $_____ [200% of the initial public
offering price of the Units] for ten consecutive trading days immediately
preceding the date of notice of such redemption, upon 30 days notice, at a price
equal to $0.25 per Warrant. For the purpose of the foregoing sentence, the term
"Daily Price" shall mean, for any relevant day, the closing bid price on that
day as reported by the principal exchange or quotation system on which prices
for the Common Stock are reported. All Warrants not theretofore exercised or
redeemed will expire on _________, 2006.
This Warrant Certificate is subject to all of the terms,
provisions and conditions of the Warrant Agreement, dated as of ____________,
2001 (the "Warrant Agreement"), between

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 3951
P64567.SUB, DocName: EX-4.3, Doc: 6, Page: 2
Description: Exhibit 4.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6040302/1*

<PAGE>
2
the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is incorporated herein by reference and
made a part hereof and reference is made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Warrant Agent, the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the stock transfer office of the Warrant Agent or may be obtained upon written
request addressed to the Company at 7860 East McClain Drive, Suite 2,
Scottsdale, Arizona 85260, Attention: Chief Financial Officer.
The Company shall not be required upon the exercise of the
Warrants evidenced by this Warrant Certificate to issue fractions of Warrants,
Common Stock or other securities, but shall make adjustment therefor in cash on
the basis of the current market value of any fractional interest as provided in
the Warrant Agreement.
In certain cases, the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States,
certain states thereof or other jurisdictions. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement to continue to
be effective during the term of the Warrants with respect to such sales under
the Securities Act of 1933, as amended, and to take such action under the laws
of various states as may be required to cause the sale of securities upon
exercise to be lawful. However, the Company will not be required to honor the
exercise of Warrants if, in the opinion of the Board of Directors, upon advice
of counsel, the sale of securities upon such exercise would be unlawful. In
certain cases, the Company may, but is not required to, purchase Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Warrants.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender to the Warrant Agent, any successor warrant agent
or, in the absence of any successor warrant agent, at the corporate offices of
the Company, may be exchanged for another Warrant Certificate or Certificates
evidencing in the aggregate the same number of Warrants as the Warrant
Certificate or Certificates so surrendered. If the Warrants evidenced by this
Warrant Certificate shall be exercised in part, the holder hereof shall be
entitled to receive upon surrender hereof another Warrant Certificate or
Certificates evidencing the number of Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be
entitled to vote, receive dividends or be deemed the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose whatever, nor shall anything contained in the
Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof or give or withhold consent to any
corporate action (whether upon any matter submitted to stockholders at any
meeting thereof, or give or withhold consent to any merger, recapitalization,
issuance of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, conveyance or otherwise) or to receive
notice of meetings or

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 14443
P64567.SUB, DocName: EX-4.3, Doc: 6, Page: 3
Description: Exhibit 4.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
3
other actions affecting stockholders (except as provided in the Warrant
Agreement) or to receive dividends or subscription rights or otherwise until the
Warrants evidenced by this Warrant Certificate shall have been exercised and the
Common Stock purchasable upon the exercise thereof shall have become deliverable
as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise
within any period during which the transfer books for the Company’s Common Stock
or other class of stock purchasable upon the exercise of the Warrants evidenced
by this Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent, and with every other
holder of a Warrant Certificate that:
(a) This Warrant Certificate is transferable on the registry
books of the Warrant Agent only upon the terms and conditions set forth in the
Warrant Agreement; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name this Warrant Certificate is registered as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all purposes
whatever and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal.
Dated: ___________________, 2001

Ed#: 1

*P64567/6040303/1*

TASER International, Inc.
By: ________________________________
Patrick W. Smith,
Chief Executive Officer
Attest: ____________________________
Secretary

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 6
CRC: 21424
P64567.SUB, DocName: EX-4.3, Doc: 6, Page: 4
Description: Exhibit 4.3

[E/O]

<PAGE>
4
Countersigned
U.S. Stock Transfer Corporation
By: ________________________________
Authorized Officer

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6040304/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 46
CRC: 57789
P64567.SUB, DocName: EX-4.3, Doc: 6, Page: 5
Description: Exhibit 4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE THE
WARRANTS IN WHOLE OR IN PART)

To: TASER INTERNATIONAL, INC.
The undersigned Registered Holder

(

Ed#: 2

*P64567/6040305/2*

)

------------------------------------(Please insert Social Security or other
identification number of Registered Holder)
hereby irrevocably elects to exercise the right of purchase represented by the
within this Warrant Certificate for, and to purchase thereunder, _______________
shares of Common Stock provided for therein and tenders payment herewith to the
order of TASER INTERNATIONAL, INC. in the amount of $________________. The
undersigned requests that certificates for such shares of Common Stock be issued
as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and if said number of Warrants being exercised shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Certificate for the balance of
such Warrants as well as the shares of Common Stock represented by this Warrant
Certificate be registered in the name of, and delivered to, the Registered
Holder at the address stated below:
Address:________________________________________________________________________
Dated:_____________, _______
Signature
__________________________________________
(Signature must conform in all respects to the name of Registered Holder as
specified in the case of this Warrant Certificate in every particular, without
alteration or any change whatever.)
Signature Guaranteed:
__________________________________________
The signature should be guaranteed by an eligible institution (Banks,
Stockbrokers, Savings and Loan Association and Credit Union with membership in
an approved signature Medallion Program), pursuant to S.E.C. Rule 17Ad-15.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 47
CRC: 24621
P64567.SUB, DocName: EX-4.3, Doc: 6, Page: 6
Description: Exhibit 4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6040306/1*

6
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (

)

-----------------------(Please insert
Social Security or other
identification number of
Registered Holder)
hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print Name and Address including Zip Code)
Warrants evidenced by the within Warrant Certificate, and irrevocably
constitutes and appoints
______________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of TASER International, Inc.
with the full power of substitution in the premises.
Dated:__________________, ________
Signature:
__________________________________
(Signature must conform in all respects to the name of Registered Holder as
specified on the face of this Unit Certificate in every particular, without
alteration or any change whatsoever, and the signature must be guaranteed in the
usual manner.)
Signature Guaranteed:
__________________________________
The signature should be guaranteed by an eligible institution (Banks,
Stockbrokers, Savings and Loan Association and Credit Union with membership in
an approved signature Medallion Program), pursuant to S.E.C. Rule 17Ad-15.
</TEXT>
</DOCUMENT>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.1, Doc: 7

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.1
p64567ex10-1.txt
EX-10.1

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 7

Date: 7-MAY-2001 14:55:25.87

SN: *

*DOCHDR/7*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 37498
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 1
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this 1st day of July, 1998, to be effective as of July 1, 1998 between
TASER International, Incorporated (the "Company"), located at 7339 East Evans
Road, Scottsdale, Arizona 85260 and Patrick W. Smith (the "Executive"), residing
at 15550 North Frank Lloyd Wright #1101, Scottsdale, Arizona 85260.
RECITALS:
WHEREAS, the Company wishes to provide for the continued employment of
Executive as its President and Chief Executive Officer for the term, and on the
conditions, set forth herein; and
WHEREAS, Executive desires to be assured of certain minimum compensation
from Company for Executive’s services during the term hereof and to be
protected, and compensated, in the event of any change in the control affecting
the Company; and,
WHEREAS, Company desires reasonable protection of Company’s confidential
business and technical information which has been developed by the Company in
recent years at substantial expense.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the Company and Executive each intend to be legally bound, covenant and agree as
follows:
1. EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Company hereby employs Executive as its President and Chief Executive Officer,
and Executive accepts such employment. Except as expressly provided herein, the
termination of this Agreement by either party shall also terminate Executive’s
employment by Company.
2. DUTIES. Executive shall devote his full-time and best efforts to the Company
and shall fulfill the duties of his position which shall include such duties as
may, from time to time, be assigned to him by the Board of Directors of the
Company, provided such duties are reasonably consistent with Executive’s
education, experience and background.
3. TERM. Subject to the provisions of Sections 6 and 11 hereof, Executive’s
employment shall commence on the effective date hereof ("Employment Date") and
continue through June 30, 2001, but shall be automatically extended, unless
otherwise terminated in accordance herewith, for an additional two (2) year term
commencing on July 1, 2001 through June 30, 2003, and thereafter, shall be
automatically extended for additional consecutive two (2) year terms on each
July 1, thereafter, unless either party gives written notice to the other of
termination in accordance herewith. In any event, the Agreement shall
automatically terminate, without notice, when Executive reaches 70 years of age.
If employment is continued after the age of 70 by mutual agreement, it shall be
terminable at will by either party.
4.

COMPENSATION.

Ed#: 1

*P64567/6100101/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 32594
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 2
Description: Exhibit 10.1

[E/O]

<PAGE>

2
(a)

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1998-2000 Annual Base Salary. For services rendered under this
Agreement during the first year (July 1, 1998 through June 30, 1999)
of this Agreement, Company shall pay Executive a minimum Base Salary
("Base Salary") (Base Salary shall mean regular cash compensation
paid on a periodic basis exclusive of any and all benefits, bonuses
or other incentive payments made or obligated by Company to
Executive hereunder) at an annual rate of $65,000, payable in
accordance with existing payroll practices of the Company. On July
1, 1999, Executive’s Base Salary shall be increased at the
discretion of the Board of Directors based on performance. In
subsequent years, based upon extensions of this Agreement,
Executive’s Base Salary shall be adjusted annually based upon a
performance and compensation review conducted by the Compensation
Committee of the Company’s Board of Directors, and negotiated and
mutually agreed to, in good faith, between Executive and the
Company’s Board of Directors. Such review will be based upon both
individual and Company performance and shall be completed by August
1 of each subsequent year. The foregoing 1998-2000 minimum Base
Salary for Executive shall not prohibit Company’s Board of Directors
(or the Compensation Committee of Company’s Board of Directors ), to
set Executive’s Base Salary during such initial three (3) year term
at an annual rate greater than that prescribed above; however, in no
instance shall Executive’s Base Salary be less than that set forth
above.

(b)

Annual Year-End Cash Bonus. Executive shall also be eligible to earn
an annual year-end cash bonus which shall be determined by a review
at the discretion of the Company’s Board of Directors.

(c)

Fringe Benefits. In addition to the compensation and
incentive payments payable to Executive as provided in
Sections 4(a) and (b) above:
(i)

Vacation. Executive shall be entitled to four (4) weeks paid
vacation each calendar year. All such paid vacation shall
accumulate, so that if Executive’s full vacation is not taken
in a particular calendar year, any unused portion shall be
carried into subsequent years; however, such accumulation
shall not exceed an aggregate of four (4) calendar weeks.

(ii)

Long Term Disability. The Company shall also maintain (so long
as such insurance is available at commercially standard rates)
long-term disability policy on Executive providing for the
payment to age 65 of benefit equivalent to seventy percent
(70%) of Executive’s annual Base Salary in the event Executive
becomes permanently disabled as defined in Section 6(b)(ii).
2.

Ed#: 1

*P64567/6100102/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 62149
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 3
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

3
(iii) Other Benefits. The Executive shall be entitled to participate
in all other benefit programs offered by the Company to its
full-time executive employees, including, but not limited to,
health, medical, dental and eye care; Southwest Airlines
travel benefits; retirement benefits through the Company’s
pension and/or profit sharing plans; sick leave benefits; and
accidental death and dismemberment coverages.

5. BUSINESS EXPENSES. The Company shall, in accordance with, and to the extent
of, its policies in effect from time to time, bear all customary business
expenses (including the advancement of certain expenses) incurred by the
Executive in performing his duties as an executive of the Company, provided that
Executive accounts promptly such expenses to Company in the manner prescribed
from time to time by the Company.
6.
TERMINATION. Subject to the respective continuing obligations of
the parties pursuant to Sections 7, 8, 9, 10,11, 12 and 13, this Agreement
may be terminated prior to the expiration of its then remaining applicable
term only as follows:
(a)

(b)

By the Company. The Company may terminate this Agreement
under the following circumstances:
(i)

For "Cause". Company may terminate this Agreement on
thirty (30) days written notice to Executive for
"cause", including, fraud, misrepresentation, theft or
embezzlement of Company assets, material intentional
violations of law or Company policies, or a material
breach of the provisions of this Agreement, including
specifically the repeated failure to perform his duties
as required by Section 2 hereof after written notice of
such failure from Company; however, in the event of
termination related to Executive’s performance,
Executive’s termination shall only be effective upon the
expiration of a sixty (60) day cure period following a
lack of corrective action having been undertaken by
Executive during said cure period.

(ii)

Without "Cause". The Company may terminate this Agreement upon
twelve (12) months written notice without "cause." The Base
Salary compensation due and owing by the Company to Executive
following either of such early terminations of this Agreement
shall be paid as set forth at Section 7(a)(iv) hereof.

Death and Disability.
(i)

Death. If Executive should die during the term of this
Agreement, this Agreement shall thereupon terminate; provided,
however, that the Company shall pay to the Executive’s
beneficiary or estate the compensation provided in Section
7(a)(ii) below.
3.

Ed#: 1

*P64567/6100103/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 32504
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 4
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
(ii)

Permanent Disability. In the event the Executive should become
permanently disabled during the term of this Agreement, this
Agreement shall also terminate. For the purposes hereof, a
permanent disability shall mean that disability resulting from
injury, disease or other cause, whether mental or physical,
which incapacitates the Executive from performing his normal
duties as an employee, appears to be permanent in nature and
contemplates the continuous, necessary and substantially
complete loss of all management and professional activities
for a continuous period of six (6) months.

(iii) Partial Disability. If the Executive should become partially
disabled, he shall be entitled to his salary as provided
herein for a period of nine (9) months. At the end of said
period of time, if such Executive remains partially disabled,
the disabled Executive’s salary shall be reduced according to
the amount of time the disabled Executive is able to devote to
the Company’s business.
(iv)

7.

Temporary Disability. In the event the Executive should become
disabled, but such disability is not permanent, as defined
above, such disabled Executive shall be entitled to his salary
for a period of nine (9) months. If such temporary disability
continues longer than said period of time, then the disabled
Executive shall be deemed to have become permanently disabled
for the purposes of this Agreement at the end of said nine (9)
month period.

COMPENSATION PAYABLE FOLLOWING EARLY TERMINATION.
(a)

In the event of any termination pursuant to Section 6, Executive’s
Base Salary shall be paid as follows:
(i)

In the event of termination pursuant to Section 6(a)(i)
(for "cause"), Executive’s Base Salary shall continue to
be paid on a semi-monthly basis for sixty (60) days from
the effective date of such termination and Executive
shall also be entitled to continue to participate in
those benefit programs provided by subsections
4(e)(iv-viii) (inclusive), for twelve (12) months
following such termination, at Executive’s expense;

(ii)

In the event of termination of this Agreement by reason of
Executive’s death, Executive’s Base Salary shall terminate as
of the end of the eighteenth (18th) month following the
Executive’s death;

(iii) In the event of termination of this Agreement by reason of
disability, Executive’s Base Salary shall be terminated as of
the end the eighteenth (18th) month period following
Executive’s inability to perform his duties occurs; and
(iv)

In the event of any termination by the Company pursuant to
Section 6(a)(ii) (without "cause"), Executive’s Base Salary
shall be continued to be paid on a
4.

Ed#: 1

*P64567/6100104/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 53797
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 5
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
semi-monthly basis, but shall terminate at the end of the
twelve (12) month period following such written notice of
termination by the Company. In lieu of such continued
semi-monthly Base Salary, the Company and Executive may agree
to a lump-sum distribution to Executive pursuant to such
termination in a form, substance and manner mutually
acceptable to Company and Executive, pursuant to a written
Severance Agreement then mutually negotiated between the
Company and Executive in connection with such termination.
(b)

In the event of termination by reason of Executive’s death,
disability, termination without cause, or any Change in Control, as
defined at Section 11:
(i)

Executive shall receive a pro rata portion (prorated
through the last day Base Salary is payable pursuant to
clauses (a)(ii), (a)(iii) and (a)(iv), respectively) of
any bonus or incentive payment (for the year in which
death, disability or termination occurred), to which he
would have been entitled had he remained continuously
employed for the full fiscal year in which death,
disability or termination occurred and continued to
perform his duties in the same manner as they were
performed immediately prior to the death, disability or
termination;

(ii)

The right to exercise any unexpired and non-vested stock
options previously granted Executive shall immediately vest
and accelerate; and

(iii) Any and all payments owing to Executive arising from a
termination of this Agreement resulting from a permanent or
partial disability of Executive shall first be provided and
paid pursuant to the Company’s existing disability policy, as
then in effect, but shall be further supplemented to the
extent provided by this Agreement but all such payments due
and owing to Executive arising from such permanent or partial
disability shall not be cumulative or aggregated.
8.

CONFIDENTIAL INFORMATION.
(a)

For purposes of this Section 8, the term "Confidential Information"
means information which is not generally known and which is
proprietary to Company, including: (i) trade secret information
about Company and its services; and (ii) information relating to the
business of Company as conducted at any time within the previous two
(2) years or anticipated to be conducted by Company, and to any of
its past, current or anticipated products, including, without
limitation, information about Company’s research, development,
services, purchasing, accounting, engineering, marketing, selling,
leasing or servicing. All information which Executive has a
reasonable basis to consider Confidential Information or which is
treated by Company as being Confidential Information shall be
presumed to be Confidential Information, whether originated by
Executive, or by others, and without regard to the manner in which
Executive obtains access to such information.
5.

Ed#: 1

*P64567/6100105/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 43
CRC: 47667
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 6
Description: Exhibit 10.1

[E/O]

<PAGE>

9.

6
(b)

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Executive will not during the term of this Agreement and following
expiration or termination of this Agreement, use or disclose any
Confidential Information to any person not employed by Company
without the prior authorization of Company and will use reasonably
prudent care to safeguard, protect and to prevent the unauthorized
disclosure of, all of such Confidential Information.

INVENTIONS.
(a)

For purposes of this Section 9, the term "Inventions" means
discoveries, improvements and ideas (whether or not in writing or
reduced to practice) and works of authorship, whether or not
patentable or copyrightable: (1) which relate directly to the
business of Company, or to Company’s actual or demonstrably
anticipated research or development; (2) which result from any work
performed by Executive for Company; (3) for which equipment,
supplies, facilities or trade secret information of Company is
utilized; or (4) which were conceived or developed during the time
Executive was obligated to perform the duties described in Section
2.

(b)

Executive agrees that all Inventions made, authored or conceived by
Executive, either solely or jointly with others, during Executive’s
employment with Company (except as otherwise provided above), shall
be the sole and exclusive property of Company. Upon termination of
this Agreement, Executive shall turn over to a designated
representative of Company all property in Executive’s possession and
custody belonging to Company. Executive shall not retain any copies
or reproductions of correspondence, memoranda, reports, notebooks,
drawings, photographs or other documents relating in any way to the
affairs of Company which came into Executive’s possession at any
time during the term of this Agreement.

Executive is hereby notified that this Agreement does not apply to any
invention for which no equipment, supplies, facility, or trade secret
information of Company was used and which was developed initially on the
Executive’s own time and: (1) which does not relate: (a) directly to the
business of Company; or (b) to Company’s actual or demonstrably anticipated
research or development; or (2) which does not result from any work performed by
Executive for the Company.
6.

Ed#: 1

*P64567/6100106/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 46
CRC: 14433
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 7
Description: Exhibit 10.1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
7
10. NON-COMPETITION. Executive agrees that for a period of eighteen (18) months
following termination of this Agreement for any reason (except in the case of
termination of this Agreement pursuant to Section 11 because of a Change in
Control or any Business Combination or any termination of this Agreement without
cause), he will not directly or indirectly, alone or as a partner, officer,
director, or shareholder of any other firm or entity, engage in any commercial
activity in the United States in competition with any part of Company’s
business: (a) that was under the Executive’s management or supervision during
the last year of employment by Company; or (b) with respect to which Executive
has Confidential Information as defined in Section 8 of this Agreement.
11.

"BUSINESS COMBINATION" OR "CHANGE IN CONTROL".
(a)

Change in Control. For purposes of this Section 11, a "Business
Combination" or "Change in Control" with respect to, or concerning,
the Company shall mean the following:
(i)

the sale, lease, exchange or other transfer, directly or
indirectly of all or substantially all of the assets of the
Company (in one transaction or in a series of related
transactions) to a person or entity that is not controlled by
the Company;

(ii)

the approval by the shareholders of the Company of any
plan or proposal for the liquidation or dissolution of
the Company;

(iii) a merger or consolidation to which the Company is a party if
the shareholders of the Company immediately prior to effective
date of such merger or consolidation have "beneficial
ownership" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")),
immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation
representing: (A) more than 50%, but not more than 80%, of the
combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation
has been approved in advance by the Incumbent Directors; or
(B) 50% or less of the combined voting power of the surviving
corporation’s then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors);
7.

Ed#: 1

*P64567/6100107/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 33613
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 8
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

8
(iv)

any person becomes after the effective date of this Agreement
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of: (A) 20% or more,
but not 50% or more, of the combined voting power of the
Company’s outstanding securities ordinarily having the right
to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by
the Incumbent Directors; or (B) 50% or more of the combined
voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors
(regardless of any approval by the Incumbent Directors);

(v)

the Incumbent Directors cease, for any reason, to
constitute at least a majority of the Company’s Board; or

(vi)

a change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the
Exchange Act, whether or not the Company is then subject to
such reporting requirements.

(b)

Incumbent Directors. For purposes of this Section 11, the term
"Incumbent Directors" shall mean any individual who is a member of
the Board of the Company on the effective date of this Agreement, as
well as any individual who subsequently becomes a member of the
Board whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
then Incumbent Directors (either by specific vote or by approval of
the Proxy Statement of the Company in which such individual is named
as a nominee for director without objection to such nomination).

(c)

Executive’s Option to Terminate This Agreement. It is expressly
recognized by the parties that a Business Combination would
necessarily result in material alteration or diminishment of
Executive’s position and responsibilities. Therefore, if, during the
term of this Agreement, there shall occur, with or without the
consent of Company, any Business Combination or Change in Control,
Executive shall have an exclusive option to terminate this Agreement
on twenty (20) calendar days’ notice to the Company.

(d)

Compensation Payable to Executive Upon Termination Following a
Change in Control. It is expressly recognized that
Executive’s position with Company and agreement to be bound by
the terms of this Agreement represent a commitment in terms of
Executive’s personal and professional career which cannot be
reduced to monetary terms, and thus, necessarily constitutes a
forbearance of options now and in the future open to Executive
in Company’s areas of endeavor. Accordingly, in the event
Executive elects to terminate this Agreement in connection
with any Business Combination or Change in Control under this
Section 11:
(i) Executive shall be under no obligation whatever to seek other
employment opportunities during any period between termination of
this Agreement under this Section 11 and the expiration of
Executive’s then unexpired two (2) year term of this Agreement as it
existed at the time of termination, or twenty-four (24) months,
8.

Ed#: 1

*P64567/6100108/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 61
CRC: 31358
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 9
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.09.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

9
whichever is longer, and Executive shall not be obligated to accept
any other employment opportunity which may be offered to Executive
during such period;
(ii) During such unexpired term of this Agreement, or for
twenty-four (24) months thereafter, whichever is longer, Executive
shall continue to receive on a semimonthly basis, Executive’s Base
Salary then in effect upon the date of such notice to the Company
hereunder;
(iii) In lieu of the continued cash compensation provided in Section
11(d)(ii) above, Executive may elect, in writing, to receive from
the Company a lump sum cash settlement in an amount equal to 199% of
Executive’s then existing Base Salary (at the rate in effect
immediately prior to such Business Combination); provided, however,
Executive’s election to receive a lump sum cash settlement from the
Company, in lieu of the semi-monthly payments specified above, shall
occur and be paid within 90 days of the termination of this
Agreement arising from any such Business Combination or any Change
in Control.
(iv) Executive’s termination of this Agreement by reason of a Change
in Control described in this Section 11 and the receipt by Executive
of any amounts pursuant to subsection 11(d), shall not preclude
Executive’ continued employment with Company, or the surviving
entity in any Business Combination, on such terms as shall then be
mutually negotiated between Company (or any such surviving entity)
and Executive following such termination;
(v)
The right to exercise all unexpired and non-vested stock
options in favor of Executive shall immediately vest and
accelerate;
(vi) Executive shall be entitled to continue to participate in those
benefit programs and perquisites provided by subsection 4(c) hereof,
for twenty-four (24) months following termination, at the Company’s
expense; and
(vii) Notwithstanding any other provisions of this Agreement, or any
other agreement, contract or understanding heretofore, or hereafter,
entered into between the Company and Executive, if any "payments"
(including without limitation, any benefits or transfers of property
or the acceleration of the vesting of any benefits) and the nature
of compensation under any arrangement that is considered contingent
on a change in control for purpose of Section 2800 of the Internal
Revenue Code of 1986, as amended (the "Code"), together with any
other payments that Executive has the right to receive from the
Company, or any corporation that is a member of an "affiliated
group" (as defined in Section 1504A of the Code without regard to
Section 1504B of the Code), of which the Company is a member, would
constitute a "parachute payment" (as defined in Section 2800 of the
Code), the aggregate amount of such payments shall be reduced to
equal the largest amount as would result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of
the Code; provided however, Executive shall be entitled to designate
and select among such payments that will be reduced, and/or
eliminated, in order to comply with the forgoing provision of the
Code.
9.

Ed#: 1

*P64567/6100109/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 39272
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 10
Description: Exhibit 10.1

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.10.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
10
12. NO ADEQUATE REMEDY. The parties declare that is impossible to measure in
money the damages which will accrue to either party by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof, such
person against whom such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that such party
has an adequate remedy at law.
13.

MISCELLANEOUS.
(a)

(b)

Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of all successors and assigns of the
Company, whether by way of merger, consolidation, operation of
law, assignment, purchase or other acquisition of
substantially all of the assets or business of Company and
shall only be assignable under the foregoing circumstances and
shall be deemed to be materially breached by Company if any
such successor or assign does not absolutely and
unconditionally assume all of Company’s obligations to
Executive hereunder. Any such successor or assign shall be
included in the term "Company" as used in this Agreement.
Notices. All notices, requests and demands given to, or made,
pursuant hereto shall, except as otherwise specified herein, be in
writing and be delivered or mailed to any such party at its address
which:
(i)

In the case of Company shall be:
TASER International, Incorporated
7339 East Evans Road
Scottsdale, Arizona 85260
With a copy to:
Thomas P. Palmer, Esq.
Tonkon Torp, LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204

(ii)

In the case of the Executive shall be:
Mr. Patrick Smith
15550 North Frank Lloyd Wright, #1101
Scottsdale, Arizona 85260

Either party may, by notice hereunder, designate a change of address. Any
notice, if mailed properly addressed, postage prepaid, registered or certified
mail, shall be deemed dispatched on the registered date or that stamped on the
certified mail receipt, and shall be deemed received within the fifth business
day thereafter, or when it is actually received, whichever is sooner.
10.

Ed#: 2

*P64567/6100110/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 8829
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 11
Description: Exhibit 10.1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.11.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

11
(c) Captions. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation
of this Agreement.
(d)

Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Arizona. Any
dispute involving or affecting this agreement, or the services to be
performed shall be determined and resolved by binding arbitration in
the County of Maricopa, State of Arizona, in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association.

(e)

Construction. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or
the remaining provisions of this Agreement.

(f)

Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise
thereof or the exercise of any right or remedy granted hereby or by
any related document or by law.

(g)

Modification. This Agreement may not be, and shall not be,
modified or amended except by a written instrument signed by
both parties hereto.

(h)

No Conflicting Business. Executive agrees that he will not, during
the term of this Agreement, transact business with the Company
personally, or as an agent, owner, partner, shareholder of any other
entity; provided, however, Executive may enter into any business
transaction that is, in the opinion of the Company’s Board of
Directors, reasonable, prudent or beneficial to the Company, so long
as any such business transaction is at arms-length as though between
independent and prudent individuals and is ratified and approved by
the designated members of the Company’s Board of Directors.

(i)

Entire Agreement. This Agreement constitutes the entire Agreement
and understanding between the parties hereto in reference to all the
matters herein agreed upon; provided, however, that this Agreement
shall not deprive Executive of any other rights Executive may have
now, or in the future, pursuant to law or the provisions of Company
benefit plans.

(j)

Counterparts. This Agreement shall be executed in at least two
counterparts, each of which shall constitute an original, but both
of which, when taken together, will constitute one in the same
instrument.

(k)

Amendment. This Agreement may be modified only by written
agreement executed by both parties hereto.
11.

Ed#: 1

*P64567/6100111/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 21
CRC: 49034
P64567.SUB, DocName: EX-10.1, Doc: 7, Page: 12
Description: Exhibit 10.1

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.01.12.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>

12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered the day and year first above written.

TASER INTERNATIONAL, INCORPORATED
By:
Its:

/s/ Phil Smith
-----------------------------------Chairman

EXECUTIVE
/s/ Patrick W. Smith
-----------------------------------------Patrick W. Smith
12.
</TEXT>
</DOCUMENT>

Ed#: 2

*P64567/6100112/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.2, Doc: 8

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.2
p64567ex10-2.txt
EX-10.2

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 8

Date: 7-MAY-2001 14:55:25.87

SN: *

*DOCHDR/8*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 60
CRC: 64584
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 1
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
EXHIBIT 10.2

EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this 15th day of November, 2000, to be effective as of November 15, 1998
between TASER International, Incorporated (the "Company"), located at 7339 East
Evans Road, Scottsdale, Arizona 85260 and Thomas P. Smith (the "Executive"),
residing at 5140 East Paradise Lane; Scottsdale, Arizona 85254.
RECITALS:
WHEREAS, the Company wishes to provide for the continued employment of
Executive as its Chief Financial Officer for the term, and on the conditions,
set forth herein; and
WHEREAS, Executive desires to be assured of certain minimum compensation
from Company for Executive’s services during the term hereof and to be
protected, and compensated, in the event of any change in the control affecting
the Company; and,
WHEREAS, Company desires reasonable protection of Company’s confidential
business and technical information which has been developed by the Company in
recent years at substantial expense.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the Company and Executive each intend to be legally bound, covenant and agree as
follows:
1. EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Company hereby employs Executive as its Chief Financial Officer, and Executive
accepts such employment. Except as expressly provided herein, the termination of
this Agreement by either party shall also terminate Executive’s employment by
Company.
2. DUTIES. Executive shall devote his full-time and best efforts to the Company
and shall fulfill the duties of his position which shall include such duties as
may, from time to time, be assigned to him by the Board of Directors of the
Company, provided such duties are reasonably consistent with Executive’s
education, experience and background.
3. TERM. Subject to the provisions of Sections 6 and 11 hereof, Executive’s
employment shall commence on the effective date hereof ("Employment Date") and
continue through June 30, 2001, but shall be automatically extended, unless
otherwise terminated in accordance herewith, for an additional two (2) year term
commencing on July 1, 2001 through June 30, 2003, and thereafter, shall be
automatically extended for additional consecutive two (2) year terms on each
July 1, thereafter, unless either party gives written notice to the other of
termination in accordance herewith. In any event, the Agreement shall
automatically terminate, without notice, when Executive reaches 70 years of age.
If employment is continued after the age of 70 by mutual agreement, it shall be
terminable at will by either party.
4. COMPENSATION.

Ed#: 1

*P64567/6100201/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 64491
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 2
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

2
(a)

1998-2000 Annual Base Salary. For services rendered under this
Agreement during the first year (July 1, 1998 through June 30, 1999)
of this Agreement, Company shall pay Executive a minimum Base Salary
("Base Salary") (Base Salary shall mean regular cash compensation
paid on a periodic basis exclusive of any and all benefits, bonuses
or other incentive payments made or obligated by Company to
Executive hereunder) at an annual rate of $65,000, payable in
accordance with existing payroll practices of the Company. On July
1, 1999, Executive’s Base Salary shall be increased at the
discretion of the Board of Directors based on performance. In
subsequent years, based upon extensions of this Agreement,
Executive’s Base Salary shall be adjusted annually based upon a
performance and compensation review conducted by the Compensation
Committee of the Company’s Board of Directors, and negotiated and
mutually agreed to, in good faith, between Executive and the
Company’s Board of Directors. Such review will be based upon both
individual and Company performance and shall be completed by August
1 of each subsequent year. The foregoing 1998-2000 minimum Base
Salary for Executive shall not prohibit Company’s Board of Directors
(or the Compensation Committee of Company’s Board of Directors ), to
set Executive’s Base Salary during such initial three (3) year term
at an annual rate greater than that prescribed above; however, in no
instance shall Executive’s Base Salary be less than that set forth
above.

(b)

Annual Year-End Cash Bonus. Executive shall also be eligible to earn
an annual year-end cash bonus which shall be determined by a review
at the discretion of the Company’s Board of Directors.

(c)

Fringe Benefits. In addition to the compensation and incentive
payments payable to Executive as provided in Sections 4(a) and (b)
above:
(i)

Vacation. Executive shall be entitled to four (4) weeks paid
vacation each calendar year. All such paid vacation shall
accumulate, so that if Executive’s full vacation is not taken
in a particular calendar year, any unused portion shall be
carried into subsequent years; however, such accumulation
shall not exceed an aggregate of four (4) calendar weeks.

(ii)

Long Term Disability. The Company shall also maintain (so long
as such insurance is available at commercially standard rates)
long-term disability policy on Executive providing for the
payment to age 65 of benefit equivalent to seventy percent
(70%) of Executive’s annual Base Salary in the event Executive
becomes permanently disabled as defined in Section 6(b)(ii).
2.

Ed#: 1

*P64567/6100202/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 52258
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 3
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

3
(iii) Other Benefits. The Executive shall be entitled to participate
in all other benefit programs offered by the Company to its
full-time executive employees, including, but not limited to,
health, medical, dental and eye care; Southwest Airlines
travel benefits; retirement benefits through the Company’s
pension and/or profit sharing plans; sick leave benefits; and
accidental death and dismemberment coverages.

5. BUSINESS EXPENSES. The Company shall, in accordance with, and to the extent
of, its policies in effect from time to time, bear all customary business
expenses (including the advancement of certain expenses) incurred by the
Executive in performing his duties as an executive of the Company, provided that
Executive accounts promptly such expenses to Company in the manner prescribed
from time to time by the Company.
6. TERMINATION. Subject to the respective continuing obligations of the parties
pursuant to Sections 7, 8, 9, 10,11, 12 and 13, this Agreement may be terminated
prior to the expiration of its then remaining applicable term only as follows:
(a)

(b)

By the Company. The Company may terminate this Agreement under the
following circumstances:
(i)

For "Cause". Company may terminate this Agreement on thirty
(30) days written notice to Executive for "cause", including,
fraud, misrepresentation, theft or embezzlement of Company
assets, material intentional violations of law or Company
policies, or a material breach of the provisions of this
Agreement, including specifically the repeated failure to
perform his duties as required by Section 2 hereof after
written notice of such failure from Company; however, in the
event of termination related to Executive’s performance,
Executive’s termination shall only be effective upon the
expiration of a sixty (60) day cure period following a lack of
corrective action having been undertaken by Executive during
said cure period.

(ii)

Without "Cause". The Company may terminate this Agreement upon
twelve (12) months written notice without "cause." The Base
Salary compensation due and owing by the Company to Executive
following either of such early terminations of this Agreement
shall be paid as set forth at Section 7(a)(iv) hereof.

Death and Disability.
(i)

Death. If Executive should die during the term of this
Agreement, this Agreement shall thereupon terminate; provided,
however, that the Company shall pay to the Executive’s
beneficiary or estate the compensation provided in Section
7(a)(ii) below.
3.

Ed#: 1

*P64567/6100203/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 63344
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 4
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
(ii)

Permanent Disability. In the event the Executive should become
permanently disabled during the term of this Agreement, this
Agreement shall also terminate. For the purposes hereof, a
permanent disability shall mean that disability resulting from
injury, disease or other cause, whether mental or physical,
which incapacitates the Executive from performing his normal
duties as an employee, appears to be permanent in nature and
contemplates the continuous, necessary and substantially
complete loss of all management and professional activities
for a continuous period of six (6) months.

(iii) Partial Disability. If the Executive should become partially
disabled, he shall be entitled to his salary as provided
herein for a period of nine (9) months. At the end of said
period of time, if such Executive remains partially disabled,
the disabled Executive’s salary shall be reduced according to
the amount of time the disabled Executive is able to devote to
the Company’s business.
(iv)

Temporary Disability. In the event the Executive should become
disabled, but such disability is not permanent, as defined
above, such disabled Executive shall be entitled to his salary
for a period of nine (9) months. If such temporary disability
continues longer than said period of time, then the disabled
Executive shall be deemed to have become permanently disabled
for the purposes of this Agreement at the end of said nine (9)
month period.

7. COMPENSATION PAYABLE FOLLOWING EARLY TERMINATION.
(a)

In the event of any termination pursuant to Section 6, Executive’s
Base Salary shall be paid as follows:
(i)

In the event of termination pursuant to Section 6(a)(i) (for
"cause"), Executive’s Base Salary shall continue to be paid on
a semi-monthly basis for sixty (60) days from the effective
date of such termination and Executive shall also be entitled
to continue to participate in those benefit programs provided
by subsections 4(e)(iv-viii) (inclusive), for twelve (12)
months following such termination, at Executive’s expense;

(ii)

In the event of termination of this Agreement by reason of
Executive’s death, Executive’s Base Salary shall terminate as
of the end of the eighteenth (18th) month following the
Executive’s death;

(iii) In the event of termination of this Agreement by reason of
disability, Executive’s Base Salary shall be terminated as of
the end the eighteenth (18th) month period following
Executive’s inability to perform his duties occurs; and
(iv)

In the event of any termination by the Company pursuant to
Section 6(a)(ii) (without "cause"), Executive’s Base Salary
shall be continued to be paid on a
4.

Ed#: 1

*P64567/6100204/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 29320
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 5
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
semi-monthly basis, but shall terminate at the end of the
twelve (12) month period following such written notice of
termination by the Company. In lieu of such continued
semi-monthly Base Salary, the Company and Executive may agree
to a lump-sum distribution to Executive pursuant to such
termination in a form, substance and manner mutually
acceptable to Company and Executive, pursuant to a written
Severance Agreement then mutually negotiated between the
Company and Executive in connection with such termination.
(b)

In the event of termination by reason of Executive’s death,
disability, termination without cause, or any Change in Control, as
defined at Section 11:
(i)

Executive shall receive a pro rata portion (prorated through
the last day Base Salary is payable pursuant to clauses
(a)(ii), (a)(iii) and (a)(iv), respectively) of any bonus or
incentive payment (for the year in which death, disability or
termination occurred), to which he would have been entitled
had he remained continuously employed for the full fiscal year
in which death, disability or termination occurred and
continued to perform his duties in the same manner as they
were performed immediately prior to the death, disability or
termination;

(ii)

The right to exercise any unexpired and non-vested stock
options previously granted Executive shall immediately vest
and accelerate; and

(iii) Any and all payments owing to Executive arising from a
termination of this Agreement resulting from a permanent or
partial disability of Executive shall first be provided and
paid pursuant to the Company’s existing disability policy, as
then in effect, but shall be further supplemented to the
extent provided by this Agreement but all such payments due
and owing to Executive arising from such permanent or partial
disability shall not be cumulative or aggregated.
8. CONFIDENTIAL INFORMATION.
(a)

For purposes of this Section 8, the term "Confidential Information"
means information which is not generally known and which is
proprietary to Company, including: (i) trade secret information
about Company and its services; and (ii) information relating to the
business of Company as conducted at any time within the previous two
(2) years or anticipated to be conducted by Company, and to any of
its past, current or anticipated products, including, without
limitation, information about Company’s research, development,
services, purchasing, accounting, engineering, marketing, selling,
leasing or servicing. All information which Executive has a
reasonable basis to consider Confidential Information or which is
treated by Company as being Confidential Information shall be
presumed to be Confidential Information, whether originated by
Executive, or by others, and without regard to the manner in which
Executive obtains access to such information.
5.

Ed#: 2

*P64567/6100205/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 44
CRC: 47760
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 6
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

6
(b)

Executive will not during the term of this Agreement and following
expiration or termination of this Agreement, use or disclose any
Confidential Information to any person not employed by Company
without the prior authorization of Company and will use reasonably
prudent care to safeguard, protect and to prevent the unauthorized
disclosure of, all of such Confidential Information.

9. INVENTIONS.
(a)

For purposes of this Section 9, the term "Inventions" means
discoveries, improvements and ideas (whether or not in writing or
reduced to practice) and works of authorship, whether or not
patentable or copyrightable: (1) which relate directly to the
business of Company, or to Company’s actual or demonstrably
anticipated research or development; (2) which result from any work
performed by Executive for Company; (3) for which equipment,
supplies, facilities or trade secret information of Company is
utilized; or (4) which were conceived or developed during the time
Executive was obligated to perform the duties described in Section
2.

(b)

Executive agrees that all Inventions made, authored or conceived by
Executive, either solely or jointly with others, during Executive’s
employment with Company (except as otherwise provided above), shall
be the sole and exclusive property of Company. Upon termination of
this Agreement, Executive shall turn over to a designated
representative of Company all property in Executive’s possession and
custody belonging to Company. Executive shall not retain any copies
or reproductions of correspondence, memoranda, reports, notebooks,
drawings, photographs or other documents relating in any way to the
affairs of Company which came into Executive’s possession at any
time during the term of this Agreement.

Executive is hereby notified that this Agreement does not apply to any
invention for which no equipment, supplies, facility, or trade secret
information of Company was used and which was developed initially on the
Executive’s own time and: (1) which does not relate: (a) directly to the
business of Company; or (b) to Company’s actual or demonstrably anticipated
research or development; or (2) which does not result from any work performed by
Executive for the Company.
6.

Ed#: 1

*P64567/6100206/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 46
CRC: 46027
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 7
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

7

10. NON-COMPETITION. Executive agrees that for a period of eighteen (18) months
following termination of this Agreement for any reason (except in the case of
termination of this Agreement pursuant to Section 11 because of a Change in
Control or any Business Combination or any termination of this Agreement without
cause), he will not directly or indirectly, alone or as a partner, officer,
director, or shareholder of any other firm or entity, engage in any commercial
activity in the United States in competition with any part of Company’s
business: (a) that was under the Executive’s management or supervision during
the last year of employment by Company; or (b) with respect to which Executive
has Confidential Information as defined in Section 8 of this Agreement.
11. "BUSINESS COMBINATION" OR "CHANGE IN CONTROL".
(a)

Change in Control. For purposes of this Section 11, a "Business
Combination" or "Change in Control" with respect to, or concerning,
the Company shall mean the following:
(i)

the sale, lease, exchange or other transfer, directly or
indirectly of all or substantially all of the assets of the
Company (in one transaction or in a series of related
transactions) to a person or entity that is not controlled by
the Company;

(ii)

the approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company;

(iii) a merger or consolidation to which the Company is a party if
the shareholders of the Company immediately prior to effective
date of such merger or consolidation have "beneficial
ownership" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")),
immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation
representing: (A) more than 50%, but not more than 80%, of the
combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation
has been approved in advance by the Incumbent Directors; or
(B) 50% or less of the combined voting power of the surviving
corporation’s then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors);
7.

Ed#: 1

*P64567/6100207/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 1358
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 8
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

8
(iv)

any person becomes after the effective date of this Agreement
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of: (A) 20% or more,
but not 50% or more, of the combined voting power of the
Company’s outstanding securities ordinarily having the right
to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by
the Incumbent Directors; or (B) 50% or more of the combined
voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors
(regardless of any approval by the Incumbent Directors);

(v)

the Incumbent Directors cease, for any reason, to constitute
at least a majority of the Company’s Board; or

(vi)

a change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the
Exchange Act, whether or not the Company is then subject to
such reporting requirements.

(b)

Incumbent Directors. For purposes of this Section 11, the term
"Incumbent Directors" shall mean any individual who is a member of
the Board of the Company on the effective date of this Agreement, as
well as any individual who subsequently becomes a member of the
Board whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
then Incumbent Directors (either by specific vote or by approval of
the Proxy Statement of the Company in which such individual is named
as a nominee for director without objection to such nomination).

(c)

Executive’s Option to Terminate This Agreement. It is expressly
recognized by the parties that a Business Combination would
necessarily result in material alteration or diminishment of
Executive’s position and responsibilities. Therefore, if, during the
term of this Agreement, there shall occur, with or without the
consent of Company, any Business Combination or Change in Control,
Executive shall have an exclusive option to terminate this Agreement
on twenty (20) calendar days’ notice to the Company.

(d)

Compensation Payable to Executive Upon Termination Following a
Change in Control. It is expressly recognized that Executive’s
position with Company and agreement to be bound by the terms of this
Agreement represent a commitment in terms of Executive’s personal
and professional career which cannot be reduced to monetary terms,
and thus, necessarily constitutes a forbearance of options now and
in the future open to Executive in Company’s areas of endeavor.
Accordingly, in the event Executive elects to terminate this
Agreement in connection with any Business Combination or Change in
Control under this Section 11:
(i) Executive shall be under no obligation whatever to seek other
employment opportunities during any period between termination of
this Agreement under this Section 11 and the expiration of
Executive’s then unexpired two (2) year term of this Agreement as it
existed at the time of termination, or twenty-four (24) months,
8.

Ed#: 1

*P64567/6100208/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 61
CRC: 2928
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 9
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.09.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

9
whichever is longer, and Executive shall not be obligated to accept
any other employment opportunity which may be offered to Executive
during such period;
(ii) During such unexpired term of this Agreement, or for
twenty-four (24) months thereafter, whichever is longer, Executive
shall continue to receive on a semimonthly basis, Executive’s Base
Salary then in effect upon the date of such notice to the Company
hereunder;
(iii) In lieu of the continued cash compensation provided in Section
11(d)(ii) above, Executive may elect, in writing, to receive from
the Company a lump sum cash settlement in an amount equal to 199% of
Executive’s then existing Base Salary (at the rate in effect
immediately prior to such Business Combination); provided, however,
Executive’s election to receive a lump sum cash settlement from the
Company, in lieu of the semi-monthly payments specified above, shall
occur and be paid within 90 days of the termination of this
Agreement arising from any such Business Combination or any Change
in Control.
(iv) Executive’s termination of this Agreement by reason of a Change
in Control described in this Section 11 and the receipt by Executive
of any amounts pursuant to subsection 11(d), shall not preclude
Executive’ continued employment with Company, or the surviving
entity in any Business Combination, on such terms as shall then be
mutually negotiated between Company (or any such surviving entity)
and Executive following such termination;
(v) The right to exercise all unexpired and non-vested stock options
in favor of Executive shall immediately vest and accelerate;
(vi) Executive shall be entitled to continue to participate in those
benefit programs and perquisites provided by subsection 4(c) hereof,
for twenty-four (24) months following termination, at the Company’s
expense; and
(vii) Notwithstanding any other provisions of this Agreement, or any
other agreement, contract or understanding heretofore, or hereafter,
entered into between the Company and Executive, if any "payments"
(including without limitation, any benefits or transfers of property
or the acceleration of the vesting of any benefits) and the nature
of compensation under any arrangement that is considered contingent
on a change in control for purpose of Section 2800 of the Internal
Revenue Code of 1986, as amended (the "Code"), together with any
other payments that Executive has the right to receive from the
Company, or any corporation that is a member of an "affiliated
group" (as defined in Section 1504A of the Code without regard to
Section 1504B of the Code), of which the Company is a member, would
constitute a "parachute payment" (as defined in Section 2800 of the
Code), the aggregate amount of such payments shall be reduced to
equal the largest amount as would result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of
the Code; provided however, Executive shall be entitled to designate
and select among such payments that will be reduced, and/or
eliminated, in order to comply with the forgoing provision of the
Code.
9.

Ed#: 1

*P64567/6100209/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 54301
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 10
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.10.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

10

12. NO ADEQUATE REMEDY. The parties declare that is impossible to measure in
money the damages which will accrue to either party by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof, such
person against whom such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that such party
has an adequate remedy at law.
13. MISCELLANEOUS.
(a)

(b)

Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of all successors and assigns of the Company,
whether by way of merger, consolidation, operation of law,
assignment, purchase or other acquisition of substantially all of
the assets or business of Company and shall only be assignable under
the foregoing circumstances and shall be deemed to be materially
breached by Company if any such successor or assign does not
absolutely and unconditionally assume all of Company’s obligations
to Executive hereunder. Any such successor or assign shall be
included in the term "Company" as used in this Agreement.
Notices. All notices, requests and demands given to, or made,
pursuant hereto shall, except as otherwise specified herein, be in
writing and be delivered or mailed to any such party at its address
which:
(i)

In the case of Company shall be:
TASER International, Incorporated
7339 East Evans Road
Scottsdale, Arizona 85260
With a copy to:
Thomas P. Palmer, Esq.
Tonkon Torp, LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204

(ii)

In the case of the Executive shall be:
Thomas P. Smith
5140 East Paradise Lane
Scottsdale, Arizona 85254.

Either party may, by notice hereunder, designate a change of address. Any
notice, if mailed properly addressed, postage prepaid, registered or certified
mail, shall be deemed dispatched on the registered date or that stamped on the
certified mail receipt, and shall be deemed received within the
10.

Ed#: 2

*P64567/6100210/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 11038
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 11
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.11.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

11

fifth business day thereafter, or when it is actually received, whichever is
sooner.
(c)

Captions. The various headings or captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation
of this Agreement.

(d)

Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Arizona. Any
dispute involving or affecting this agreement, or the services to be
performed shall be determined and resolved by binding arbitration in
the County of Maricopa, State of Arizona, in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association.

(e)

Construction. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or
the remaining provisions of this Agreement.

(f)

Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise
thereof or the exercise of any right or remedy granted hereby or by
any related document or by law.

(g)

Modification. This Agreement may not be, and shall not be, modified
or amended except by a written instrument signed by both parties
hereto.

(h)

No Conflicting Business. Executive agrees that he will not, during
the term of this Agreement, transact business with the Company
personally, or as an agent, owner, partner, shareholder of any other
entity; provided, however, Executive may enter into any business
transaction that is, in the opinion of the Company’s Board of
Directors, reasonable, prudent or beneficial to the Company, so long
as any such business transaction is at arms-length as though between
independent and prudent individuals and is ratified and approved by
the designated members of the Company’s Board of Directors.

(i)

Entire Agreement. This Agreement constitutes the entire Agreement
and understanding between the parties hereto in reference to all the
matters herein agreed upon; provided, however, that this Agreement
shall not deprive Executive of any other rights Executive may have
now, or in the future, pursuant to law or the provisions of Company
benefit plans.

(j)

Counterparts. This Agreement shall be executed in at least two
counterparts, each of which shall constitute an original, but both
of which, when taken together, will constitute one in the same
instrument.

(k)

Amendment.
executed

This Agreement may be modified only by written agreement

11.

Ed#: 3

*P64567/6100211/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 24
CRC: 10356
P64567.SUB, DocName: EX-10.2, Doc: 8, Page: 12
Description: Exhibit 10.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.02.12.00

by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered the day and year first above written.

TASER INTERNATIONAL, INCORPORATED

Its:

/s/ Phil Smith
-----------------------Chairman
------------------------

EXECUTIVE
/s/ Thomas P. Smith
---------------------------------Thomas P. Smith
12.
</TEXT>
</DOCUMENT>

Ed#: 2

*P64567/6100212/2*

12

By:

Date: 7-MAY-2001 14:55:25.87

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.3, Doc: 9

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.3
p64567ex10-3.txt
EX-10.3

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 9

Date: 7-MAY-2001 14:55:25.87

SN: *

*DOCHDR/9*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 8463
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 1
Description: Ex 10.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into this 15th day of November, 2000, to be effective as of November 15,
2000 between TASER International, Incorporated (the "Company"), located at 7339
East Evans Road, Scottsdale, Arizona 85260 and Kathleen C. Hanrahan (the
"Executive"), residing at 6714 West Columbine Drive, Peoria, AZ 85381.
RECITALS:
WHEREAS, the Company wishes to provide for the continued employment of
Executive as its Chief Financial Officer for the term, and on the conditions,
set forth herein; and
WHEREAS, Executive desires to be assured of certain minimum
compensation from Company for Executive’s services during the term hereof and to
be protected, and compensated, in the event of any change in the control
affecting the Company; and,
WHEREAS, Company desires reasonable protection of Company’s
confidential business and technical information which has been developed by the
Company in recent years at substantial expense.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and Executive each intend to be legally bound, covenant and
agree as follows:
1.
EMPLOYMENT. Upon the terms and conditions set forth in this Agreement,
Company hereby employs Executive as its Chief Financial Officer, and Executive
accepts such employment. Except as expressly provided herein, the termination of
this Agreement by either party shall also terminate Executive’s employment by
Company.
2.
DUTIES. Executive shall devote her full-time and best efforts to the
Company and shall fulfill the duties of her position which shall include such
duties as may, from time to time, be assigned to him by the Board of Directors
of the Company, provided such duties are reasonably consistent with Executive’s
education, experience and background.
3.
TERM. Subject to the provisions of Sections 6 and 11 hereof,
Executive’s employment shall commence on the effective date hereof ("Employment
Date") and continue through November 14, 2002, but shall be automatically
extended, unless otherwise terminated in accordance herewith, for an additional
two (2) year term commencing on November 15, 2002 through November 15, 2004, and
thereafter, shall be automatically extended for additional consecutive two (2)
year terms on each November 15, thereafter, unless either party gives written
notice to the other of termination in accordance herewith. In any event, the
Agreement shall automatically terminate, without notice, when Executive reaches
70 years of age. If employment is continued after the age of 70 by mutual
agreement, it shall be terminable at will by either party.
4.

COMPENSATION.

Ed#: 1

*P64567/6100301/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 53151
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 2
Description: Ex 10.3

[E/O]

<PAGE>

2
(a)

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

2000-2002 Annual Base Salary. For services rendered under this
Agreement during the first year (November 15, 2000 through
November 14, 2002) of this Agreement, Company shall pay
Executive a minimum Base Salary ("Base Salary") (Base Salary
shall mean regular cash compensation paid on a periodic basis
exclusive of any and all benefits, bonuses or other incentive
payments made or obligated by Company to Executive hereunder)
at an annual rate of $75,000, payable in accordance with
existing payroll practices of the Company. On November 15,
2001, Executive’s Base Salary shall be increased at the
discretion of the Board of Directors based on performance. In
subsequent years, based upon extensions of this Agreement,
Executive’s Base Salary shall be adjusted annually based upon
a performance and compensation review conducted by the
Compensation Committee of the Company’s Board of Directors,
and negotiated and mutually agreed to, in good faith, between
Executive and the Company’s Board of Directors. Such review
will be based upon both individual and Company performance and
shall be completed by December 15 of each subsequent year. The
foregoing 2000-2002 minimum Base Salary for Executive shall
not prohibit Company’s Board of Directors (or the Compensation
Committee of Company’s Board of Directors ), to set
Executive’s Base Salary during such initial two (2) year term
at an annual rate greater than that prescribed above; however,
in no instance shall Executive’s Base Salary be less than that
set forth above.

(b)

Annual Year-End Cash Bonus. Executive shall also be eligible
to earn an annual year-end cash bonus which shall be
determined by a review at the discretion of the Company’s
Board of Directors.

(c)

Fringe Benefits. In addition to the compensation and incentive
payments payable to Executive as provided in Sections 4(a) and
(b) above:
(i)

Vacation. Executive shall be entitled to four (4)
weeks paid vacation each calendar year. All such paid
vacation shall accumulate, so that if Executive’s
full vacation is not taken in a particular calendar
year, any unused portion shall be carried into
subsequent years; however, such accumulation shall
not exceed an aggregate of four (4) calendar weeks.

(ii)

Long Term Disability. The Company shall also maintain
(so long as such insurance is available at
commercially standard rates) long-term disability
policy on Executive providing for the payment to age
65 of benefit equivalent to seventy percent (70%) of
Executive’s annual Base Salary in the event Executive
becomes permanently disabled as defined in Section
6(b)(ii).
2.

Ed#: 1

*P64567/6100302/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 22126
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 3
Description: Ex 10.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

3
(iii)

Other Benefits. The Executive shall be entitled to
participate in all other benefit programs offered by
the Company to its full-time executive employees,
including, but not limited to, health, medical,
dental and eye care; Southwest Airlines travel
benefits; retirement benefits through the Company’s
pension and/or profit sharing plans; sick leave
benefits; and accidental death and dismemberment
coverages.

5.
BUSINESS EXPENSES. The Company shall, in accordance with, and to the
extent of, its policies in effect from time to time, bear all customary business
expenses (including the advancement of certain expenses) incurred by the
Executive in performing her duties as an executive of the Company, provided that
Executive accounts promptly such expenses to Company in the manner prescribed
from time to time by the Company.
6.
TERMINATION. Subject to the respective continuing obligations of the
parties pursuant to Sections 7, 8, 9, 10,11, 12 and 13, this Agreement may be
terminated prior to the expiration of its then remaining applicable term only as
follows:
(a)

(b)

By the Company. The Company may terminate this Agreement under
the following circumstances:
(i)

For "Cause". Company may terminate this Agreement on
thirty (30) days written notice to Executive for
"cause", including, fraud, misrepresentation, theft
or embezzlement of Company assets, material
intentional violations of law or Company policies, or
a material breach of the provisions of this
Agreement, including specifically the repeated
failure to perform her duties as required by Section
2 hereof after written notice of such failure from
Company; however, in the event of termination related
to Executive’s performance, Executive’s termination
shall only be effective upon the expiration of a
sixty (60) day cure period following a lack of
corrective action having been undertaken by Executive
during said cure period.

(ii)

Without "Cause". The Company may terminate this
Agreement upon six (6) months written notice without
"cause." The Base Salary compensation due and owing
by the Company to Executive following either of such
early terminations of this Agreement shall be paid as
set forth at Section 7(a)(iv) hereof.

Death and Disability.
(i)

Death. If Executive should die during the term of
this Agreement, this Agreement shall thereupon
terminate; provided, however, that the Company shall
pay to the Executive’s beneficiary or estate the
compensation provided in Section 7(a)(ii) below.
3.

Ed#: 1

*P64567/6100303/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 66
CRC: 232
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 4
Description: Ex 10.3

[E/O]

<PAGE>

7.

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
(ii)

Permanent Disability. In the event the Executive
should become permanently disabled during the term of
this Agreement, this Agreement shall also terminate.
For the purposes hereof, a permanent disability shall
mean that disability resulting from injury, disease
or other cause, whether mental or physical, which
incapacitates the Executive from performing her
normal duties as an employee, appears to be permanent
in nature and contemplates the continuous, necessary
and substantially complete loss of all management and
professional activities for a continuous period of
six (6) months.

(iii)

Partial Disability. If the Executive should become
partially disabled, he shall be entitled to her
salary as provided herein for a period of nine (9)
months. At the end of said period of time, if such
Executive remains partially disabled, the disabled
Executive’s salary shall be reduced according to the
amount of time the disabled Executive is able to
devote to the Company’s business.

(iv)

Temporary Disability. In the event the Executive
should become disabled, but such disability is not
permanent, as defined above, such disabled Executive
shall be entitled to her salary for a period of nine
(9) months. If such temporary disability continues
longer than said period of time, then the disabled
Executive shall be deemed to have become permanently
disabled for the purposes of this Agreement at the
end of said nine (9) month period.

COMPENSATION PAYABLE FOLLOWING EARLY TERMINATION.
(a)

In the event of any termination pursuant to Section 6,
Executive’s Base Salary shall be paid as follows:
(i)

In the event of termination pursuant to Section
6(a)(i) (for "cause"), Executive’s Base Salary shall
continue to be paid on a semi-monthly basis for sixty
(60) days from the effective date of such termination
and Executive shall also be entitled to continue to
participate in those benefit programs provided by
subsections 4(e)(iv-viii) (inclusive), for twelve
(12) months following such termination, at
Executive’s expense;

(ii)

In the event of termination of this Agreement by
reason of Executive’s death, Executive’s Base Salary
shall terminate as of the end of the eighteenth
(18th) month following the Executive’s death;

(iii)

In the event of termination of this Agreement by
reason of disability, Executive’s Base Salary shall
be terminated as of the end the eighteenth (18th)
month period following Executive’s inability to
perform her duties occurs; and

(iv)

In the event of any termination by the Company
pursuant to Section 6(a)(ii) (without "cause"),
Executive’s Base Salary shall be continued to be paid
on a
4.

Ed#: 1

*P64567/6100304/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 64293
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 5
Description: Ex 10.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
semi-monthly basis, but shall terminate at the end of
the twelve (12) month period following such written
notice of termination by the Company. In lieu of such
continued semi-monthly Base Salary, the Company and
Executive may agree to a lump-sum distribution to
Executive pursuant to such termination in a form,
substance and manner mutually acceptable to Company
and Executive, pursuant to a written Severance
Agreement then mutually negotiated between the
Company and Executive in connection with such
termination.
(b)

8.

In the event of termination by reason of Executive’s death,
disability, termination without cause, or any Change in
Control, as defined at Section 11:
(i)

Executive shall receive a pro rata portion (prorated
through the last day Base Salary is payable pursuant
to clauses (a)(ii), (a)(iii) and (a)(iv),
respectively) of any bonus or incentive payment (for
the year in which death, disability or termination
occurred), to which he would have been entitled had
he remained continuously employed for the full fiscal
year in which death, disability or termination
occurred and continued to perform her duties in the
same manner as they were performed immediately prior
to the death, disability or termination;

(ii)

The right to exercise any unexpired and non-vested
stock options previously granted Executive shall
immediately vest and accelerate; and

(iii)

Any and all payments owing to Executive arising from
a termination of this Agreement resulting from a
permanent or partial disability of Executive shall
first be provided and paid pursuant to the Company’s
existing disability policy, as then in effect, but
shall be further supplemented to the extent provided
by this Agreement but all such payments due and owing
to Executive arising from such permanent or partial
disability shall not be cumulative or aggregated.

CONFIDENTIAL INFORMATION.
(a)

For purposes of this Section 8, the term "Confidential
Information" means information which is not generally known
and which is proprietary to Company, including: (i) trade
secret information about Company and its services; and (ii)
information relating to the business of Company as conducted
at any time within the previous two (2) years or anticipated
to be conducted by Company, and to any of its past, current or
anticipated products, including, without limitation,
information about Company’s research, development, services,
purchasing, accounting, engineering, marketing, selling,
leasing or servicing. All information which Executive has a
reasonable basis to consider Confidential Information or which
is treated by Company as being Confidential Information shall
be presumed to be Confidential Information, whether originated
by Executive, or by others, and without regard to the manner
in which Executive obtains access to such information.

5.

Ed#: 1

*P64567/6100305/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 47
CRC: 16745
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 6
Description: Ex 10.3

[E/O]

<PAGE>

9.

6
(b)

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Executive will not during the term of this Agreement and
following expiration or termination of this Agreement, use or
disclose any Confidential Information to any person not
employed by Company without the prior authorization of Company
and will use reasonably prudent care to safeguard, protect and
to prevent the unauthorized disclosure of, all of such
Confidential Information.

INVENTIONS.
(a)

For purposes of this Section 9, the term "Inventions" means
discoveries, improvements and ideas (whether or not in writing
or reduced to practice) and works of authorship, whether or
not patentable or copyrightable: (1) which relate directly to
the business of Company, or to Company’s actual or
demonstrably anticipated research or development; (2) which
result from any work performed by Executive for Company; (3)
for which equipment, supplies, facilities or trade secret
information of Company is utilized; or (4) which were
conceived or developed during the time Executive was obligated
to perform the duties described in Section 2.

(b)

Executive agrees that all Inventions made, authored or
conceived by Executive, either solely or jointly with others,
during Executive’s employment with Company (except as
otherwise provided above), shall be the sole and exclusive
property of Company. Upon termination of this Agreement,
Executive shall turn over to a designated representative of
Company all property in Executive’s possession and custody
belonging to Company. Executive shall not retain any copies or
reproductions of correspondence, memoranda, reports,
notebooks, drawings, photographs or other documents relating
in any way to the affairs of Company which came into
Executive’s possession at any time during the term of this
Agreement.

Executive is hereby notified that this Agreement does not apply to any
invention for which no equipment, supplies, facility, or trade secret
information of Company was used and which was developed initially on the
Executive’s own time and: (1) which does not relate: (a) directly to the
business of Company; or (b) to Company’s actual or demonstrably anticipated
research or development; or (2) which does not result from any work performed by
Executive for the Company.

6.

Ed#: 1

*P64567/6100306/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 36590
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 7
Description: Ex 10.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
7
10.
NON-COMPETITION. Executive agrees that for a period of eighteen (18)
months following termination of this Agreement for any reason (except in the
case of termination of this Agreement pursuant to Section 11 because of a Change
in Control or any Business Combination or any termination of this Agreement
without cause), he will not directly or indirectly, alone or as a partner,
officer, director, or shareholder of any other firm or entity, engage in any
commercial activity in the United States in competition with any part of
Company’s business: (a) that was under the Executive’s management or supervision
during the last year of employment by Company; or (b) with respect to which
Executive has Confidential Information as defined in Section 8 of this
Agreement.
11.

"BUSINESS COMBINATION" OR "CHANGE IN CONTROL".
(a)

Change in Control. For purposes of this Section 11, a
"Business Combination" or "Change in Control" with respect to,
or concerning, the Company shall mean the following:
(i)

the sale, lease, exchange or other transfer, directly
or indirectly of all or substantially all of the
assets of the Company (in one transaction or in a
series of related transactions) to a person or entity
that is not controlled by the Company;

(ii)

the approval by the shareholders of the Company of
any plan or proposal for the liquidation or
dissolution of the Company;

(iii)

a merger or consolidation to which the Company is a
party if the shareholders of the Company immediately
prior to effective date of such merger or
consolidation have "beneficial ownership" (as defined
in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), immediately
following the effective date of such merger or
consolidation, of securities of the surviving
corporation representing: (A) more than 50%, but not
more than 80%, of the combined voting power of the
surviving corporation’s then outstanding securities
ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has
been approved in advance by the Incumbent Directors;
or (B) 50% or less of the combined voting power of
the surviving corporation’s then outstanding
securities ordinarily having the right to vote at
elections of directors (regardless of any approval by
the Incumbent Directors);

7.

Ed#: 1

*P64567/6100307/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 66
CRC: 23424
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 8
Description: Ex 10.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

8
(iv)

any person becomes after the effective date of this
Agreement the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly,
of: (A) 20% or more, but not 50% or more, of the
combined voting power of the Company’s outstanding
securities ordinarily having the right to vote at
elections of directors, unless the transaction
resulting in such ownership has been approved in
advance by the Incumbent Directors; or (B) 50% or
more of the combined voting power of the Company’s
outstanding securities ordinarily having the right to
vote at elections of directors (regardless of any
approval by the Incumbent Directors);

(v)

the Incumbent Directors cease, for any reason, to
constitute at least a majority of the Company’s
Board; or

(vi)

a change in control of the Company of a nature that
would be required to be reported pursuant to Section
13 or 15(d) of the Exchange Act, whether or not the
Company is then subject to such reporting
requirements.

(b)

Incumbent Directors. For purposes of this Section 11, the term
"Incumbent Directors" shall mean any individual who is a
member of the Board of the Company on the effective date of
this Agreement, as well as any individual who subsequently
becomes a member of the Board whose election, or nomination
for election by the Company’s shareholders, was approved by a
vote of at least a majority of the then Incumbent Directors
(either by specific vote or by approval of the Proxy Statement
of the Company in which such individual is named as a nominee
for director without objection to such nomination).

(c)

Executive’s Option to Terminate This Agreement. It is
expressly recognized by the parties that a Business
Combination would necessarily result in material alteration or
diminishment of Executive’s position and responsibilities.
Therefore, if, during the term of this Agreement, there shall
occur, with or without the consent of Company, any Business
Combination or Change in Control, Executive shall have an
exclusive option to terminate this Agreement on twenty (20)
calendar days’ notice to the Company.

(d)

Compensation Payable to Executive Upon Termination Following a
Change in Control. It is expressly recognized that Executive’s
position with Company and agreement to be bound by the terms
of this Agreement represent a commitment in terms of
Executive’s personal and professional career which cannot be
reduced to monetary terms, and thus, necessarily constitutes a
forbearance of options now and in the future open to Executive
in Company’s areas of endeavor. Accordingly, in the event
Executive elects to terminate this Agreement in connection
with any Business Combination or Change in Control under this
Section 11:
(i)
Executive shall be under no obligation whatever to
seek other employment opportunities during any period between
termination of this Agreement under this Section 11 and the
expiration of Executive’s then unexpired two (2) year term of
this Agreement as it existed at the time of termination, or
twenty-four (24) months,
8.

Ed#: 1

*P64567/6100308/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 66
CRC: 21150
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 9
Description: Ex 10.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.09.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

9
whichever is longer, and Executive shall not be obligated to
accept any other employment opportunity which may be offered
to Executive during such period;
(ii)
During such unexpired term of this Agreement, or for
twenty-four (24) months thereafter, whichever is longer,
Executive shall continue to receive on a semimonthly basis,
Executive’s Base Salary then in effect upon the date of such
notice to the Company hereunder;
(iii)
In lieu of the continued cash compensation provided
in Section 11(d)(ii) above, Executive may elect, in writing,
to receive from the Company a lump sum cash settlement in an
amount equal to 199% of Executive’s then existing Base Salary
(at the rate in effect immediately prior to such Business
Combination); provided, however, Executive’s election to
receive a lump sum cash settlement from the Company, in lieu
of the semi-monthly payments specified above, shall occur and
be paid within 90 days of the termination of this Agreement
arising from any such Business Combination or any Change in
Control.
(iv)
Executive’s termination of this Agreement by reason
of a Change in Control described in this Section 11 and the
receipt by Executive of any amounts pursuant to subsection
11(d), shall not preclude Executive’ continued employment with
Company, or the surviving entity in any Business Combination,
on such terms as shall then be mutually negotiated between
Company (or any such surviving entity) and Executive following
such termination;
(v)
The right to exercise all unexpired and non-vested
stock options in favor of Executive shall immediately vest and
accelerate;
(vi)
Executive shall be entitled to continue to
participate in those benefit programs and perquisites provided
by subsection 4(c) hereof, for twenty-four (24) months
following termination, at the Company’s expense; and
(vii)
Notwithstanding any other provisions of this
Agreement, or any other agreement, contract or understanding
heretofore, or hereafter, entered into between the Company and
Executive, if any "payments" (including without limitation,
any benefits or transfers of property or the acceleration of
the vesting of any benefits) and the nature of compensation
under any arrangement that is considered contingent on a
change in control for purpose of Section 2800 of the Internal
Revenue Code of 1986, as amended (the "Code"), together with
any other payments that Executive has the right to receive
from the Company, or any corporation that is a member of an
"affiliated group" (as defined in Section 1504A of the Code
without regard to Section 1504B of the Code), of which the
Company is a member, would constitute a "parachute payment"
(as defined in Section 2800 of the Code), the aggregate amount
of such payments shall be reduced to equal the largest amount
as would result in no portion of such payments being subject
to the excise tax imposed by Section 4999 of the Code;
provided however, Executive shall be entitled to designate and
select among such payments that will be reduced, and/or
eliminated, in order to comply with the forgoing provision of
the Code.

9.

Ed#: 1

*P64567/6100309/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 17602
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 10
Description: Ex 10.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.10.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
10
12.
NO ADEQUATE REMEDY. The parties declare that is impossible to measure
in money the damages which will accrue to either party by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof, such
person against whom such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that such party
has an adequate remedy at law.
13.

MISCELLANEOUS.
(a)

Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of all successors and assigns of the
Company, whether by way of merger, consolidation, operation of
law, assignment, purchase or other acquisition of
substantially all of the assets or business of Company and
shall only be assignable under the foregoing circumstances and
shall be deemed to be materially breached by Company if any
such successor or assign does not absolutely and
unconditionally assume all of Company’s obligations to
Executive hereunder. Any such successor or assign shall be
included in the term "Company" as used in this Agreement.

(b)

Notices. All notices, requests and demands given to, or made,
pursuant hereto shall, except as otherwise specified herein,
be in writing and be delivered or mailed to any such party at
its address which:
(i)

In the case of Company shall be:
TASER International, Incorporated
7339 East Evans Road
Scottsdale, Arizona 85260
With a copy to:
Thomas P. Palmer, Esq.
Tonkon Torp, LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204

(ii)

In the case of the Executive shall be:
Kathleen C. Hanrahan
6714 West Columbine Drive
Peoria, AZ 85381.

Either party may, by notice hereunder, designate a change of address.
Any notice, if mailed properly addressed, postage prepaid, registered or
certified mail, shall be deemed dispatched on the registered date or that
stamped on the certified mail receipt, and shall be deemed received within the
10.

Ed#: 1

*P64567/6100310/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 50795
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 11
Description: Ex 10.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.11.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
11
fifth business day thereafter, or when it is actually received, whichever is
sooner.
(c)

Captions. The various headings or captions in this Agreement
are for convenience only and shall not affect the meaning or
interpretation of this Agreement.

(d)

Governing Law. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of
Arizona. Any dispute involving or affecting this agreement, or
the services to be performed shall be determined and resolved
by binding arbitration in the County of Maricopa, State of
Arizona, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association.

(e)

Construction. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.

(f)

Waivers. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any right
or remedy granted hereby or by any related document or by law.

(g)

Modification. This Agreement may not be, and shall not be,
modified or amended except by a written instrument signed by
both parties hereto.

(h)

No Conflicting Business. Executive agrees that he will not,
during the term of this Agreement, transact business with the
Company personally, or as an agent, owner, partner,
shareholder of any other entity; provided, however, Executive
may enter into any business transaction that is, in the
opinion of the Company’s Board of Directors, reasonable,
prudent or beneficial to the Company, so long as any such
business transaction is at arms-length as though between
independent and prudent individuals and is ratified and
approved by the designated members of the Company’s Board of
Directors.

(i)

Entire Agreement. This Agreement constitutes the entire
Agreement and understanding between the parties hereto in
reference to all the matters herein agreed upon; provided,
however, that this Agreement shall not deprive Executive of
any other rights Executive may have now, or in the future,
pursuant to law or the provisions of Company benefit plans.

(j)

Counterparts. This Agreement shall be executed in at least two
counterparts, each of which shall constitute an original, but
both of which, when taken together, will constitute one in the
same instrument.

(k)

Amendment. This Agreement may be modified only by written
agreement executed
11.

Ed#: 1

*P64567/6100311/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 29
CRC: 6921
P64567.SUB, DocName: EX-10.3, Doc: 9, Page: 12
Description: Ex 10.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.03.12.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

12
by both parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered the day and year first above written.

TASER INTERNATIONAL, INCORPORATED
By: /s/ Phil Smith
-----------------------------Its: Chairman
----------------------------EXECUTIVE
/s/ Kathleen C. Hanrahan
--------------------------------Kathleen C. Hanrahan

12.
</TEXT>
</DOCUMENT>

Ed#: 4

*P64567/6100312/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.4, Doc: 10

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.4
p64567ex10-4.txt
EX-10.4

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 10 SN: *
*DOCHDR/10*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 6274
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 1
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
EXHIBIT 10.4

TASER INTERNATIONAL, INC.
AGREEMENT CONCERNING INDEMNIFICATION AND RELATED MATTERS
(DIRECTORS)
This Agreement is made as of __________________, 2001, by and
between TASER International, Inc., a Delaware corporation (the "Corporation"),
and ____________________ (the "Director"), a director of the Corporation.
WHEREAS, it is essential to the Corporation to retain and
attract as directors of the Corporation the most capable persons available and
persons who have significant experience in business, corporate and financial
matters; and
WHEREAS, the Corporation has identified the Director as a
person possessing the background and abilities desired by the Corporation and
desires the Director to serve as a director of the Corporation; and
WHEREAS, the substantial increase in corporate litigation may,
from time to time, subject corporate directors to burdensome litigation, the
risks of which frequently far outweigh the advantages of serving in such
capacity; and
WHEREAS, in recent times the cost of liability insurance has
increased and the availability of such insurance is, from time-to-time, severely
limited; and
WHEREAS, the Corporation and the Director recognize that
serving as a director of a corporation at times calls for subjective evaluations
and judgments upon which reasonable persons may differ and that, in that
context, it is anticipated and expected that directors of corporations will and
do from time to time commit actual or alleged errors or omissions in the good
faith exercise of their corporate duties and responsibilities; and
WHEREAS, it is the express policy of the Corporation to
indemnify its directors to the fullest extent permitted by law; and
WHEREAS, the Certificate of Incorporation permits, and the
Bylaws of the Corporation require, indemnification of the directors of the
Corporation to the fullest extent permitted by law, including but not limited to
the General Corporation law of Delaware (the "DGCL"), and the DGCL expressly
provides that the indemnification provisions set forth therein are not
exclusive, and thereby contemplates that contracts may be entered into between
the Corporation and its directors with respect to indemnification; and
WHEREAS, the Corporation and the Director desire to articulate
clearly in contractual form their respective rights and obligations with regard
to the Director’s service on behalf of the Corporation as a director and with
regard to claims for loss, liability, expense or damage which, directly or
indirectly, may arise out of or relate to such service.
1

Ed#: 2

*P64567/6100401/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 50571
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 2
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

2
NOW THEREFORE, the Corporation and the Director agree as follows:
1.

Agreement to Serve.

The Director shall serve as a director of the Corporation for
so long as the Director is duly elected or until the Director tenders a
resignation in writing. This Agreement creates no obligation on either party to
continue the service of the Director for a particular term or any term.
2.

Definitions.
As used in this Agreement:

(a) The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether formal or informal,
whether brought by or in the right of the Corporation or otherwise, and whether
of a civil, criminal, administrative or investigative nature, in which the
Director may be or may have been involved as a party, witness or otherwise, by
reason of the fact that the Director is or was a director of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, whether or not serving in such capacity at
the time any liability or expense is incurred for which exculpation,
indemnification or reimbursement can be provided under this Agreement.
(b) The term "Expenses" includes, without limitation thereto,
expenses of investigations, judicial or administrative proceedings or appeals,
attorney, accountant and other professional fees and disbursements and any
expenses of establishing a right to indemnification under Section 12 of this
Agreement, but shall not include amounts paid in settlement by the Director or
the amount of judgments or fines against the Director.
(c) References to "other enterprise" include, without
limitation, employee benefit plans; references to "fines" include, without
limitation, any excise taxes assessed on a person with respect to any employee
benefit plan; references to "serving at the request of the Corporation" include,
without limitation, any service as a director, officer, employee or agent which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants, or its
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Agreement.
(d) References to the "Corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer or employee of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position
2

Ed#: 1

*P64567/6100402/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 19205
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 3
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

3

under this Agreement with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if its
separate existence had continued.
(e) For purposes of this Agreement, the meaning of the phrase
"to the fullest extent permitted by law" shall include, but not be limited to:
(i) to the fullest extent authorized or permitted by
any amendments to or replacements of the DGCL adopted after
the date of this Agreement that increase the extent to which a
corporation may indemnify or exculpate its officers or
directors; and
(ii) to the fullest extent permitted by the provision
of the DGCL that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision
of any amendment to or replacement of the DGCL.
3.

Limitation of Liability.

(a) To the fullest extent permitted by law, the Director shall
have no monetary liability of any kind or nature whatsoever in respect of the
Director’s errors or omissions (or alleged errors or omissions) in serving the
Corporation or any of its subsidiaries, their respective stockholders or any
other enterprise at the request of the Corporation, so long as such errors or
omissions (or alleged errors or omissions), if any, are not shown by clear and
convincing evidence to have involved:
(i) any breach of the Director’s duty of loyalty to
such corporations, stockholders or enterprises;
(ii) any act or omission not in good faith or which
involved intentional misconduct or a knowing violation of law;
(iii) any unlawful distribution under Section 174 of
the DGCL (including, without limitation, dividends, stock
repurchases and stock redemptions);
(iv) any transaction from which the Director derived
an improper personal benefit; or
(v) profits made from the purchase and sale by the
Director of securities of the Corporation within the meaning
of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provision of any state statutory law or
common law.
(b) Without limiting the generality of subparagraph (a) above
and to the fullest extent permitted by law, the Director shall have no personal
liability to the Corporation or any of its subsidiaries, their respective
stockholders or any other person claiming derivatively through the Corporation,
regardless of the theory or principle under which such liability may be
asserted, for:
3

Ed#: 1

*P64567/6100403/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 46840
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 4
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
(i) punitive, exemplary or consequential damages;
(ii) treble or other damages computed based upon any
multiple of damages actually and directly proved to have been
sustained;
(iii) fees of attorneys, accountants, expert
witnesses or professional consultants; or
(iv) civil fines or penalties of any kind or nature
whatsoever.
4.

Indemnity in Third-Party Proceedings.

To the fullest extent permitted by law, the Corporation shall
indemnify the Director in accordance with the provisions of this Section 4 if
the Director was or is a party to, or is threatened to be made a party to, any
Proceeding (other than a Proceeding by or in the right of the Corporation to
procure a judgment in its favor), against all Expenses, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by the Director in
connection with such Proceeding if the Director acted in good faith and in a
manner the Director reasonably believed was in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, the Director, in addition, had no reasonable cause to believe that
the Director’s conduct was unlawful. However, the Director shall not be entitled
to indemnification under this Section 4 in connection with any Proceeding
charging improper personal benefit to the Director in which the Director is
adjudged liable on the basis that personal benefit was improperly received by
the Director unless and only to the extent that the court conducting such
Proceeding or any other court of competent jurisdiction determines upon
application that, despite such adjudication of liability, the Director is fairly
and reasonably entitled to indemnification in view of all the relevant
circumstances of the case; or in connection with any Proceeding (or part
thereof) initiated by such person or any Proceeding by such person against the
Corporation or its directors, officers, employees or agents unless: (1) such
indemnification is expressly required to be made by law, (2) the Proceeding was
authorized by the Board of Directors, or (3) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the DGCL.
5.

Indemnity in Proceedings by or in the Right of the
Corporation.

To the fullest extent provided by law, the Corporation shall
indemnify the Director in accordance with the provisions of this Section 5 if
the Director was or is a party to, or is threatened to be made a party to, any
Proceeding by or in the right of the Corporation to procure a judgment in its
favor, against all Expenses actually and reasonably incurred by the Director in
connection with the defense or settlement of such Proceeding if the Director
acted in good faith and in a manner the Director reasonably believed was in or
not opposed to the best interests of the Corporation. However, the Director
shall not be entitled to indemnification under this Section 5 in connection with
any Proceeding in which the Director has been adjudged liable to the Corporation
unless and only to the extent that the court conducting such Proceeding or any
other court of competent jurisdiction determines upon application that, despite
such adjudication of liability, the Director is fairly and reasonably entitled
to indemnification for such Expenses in view of all the relevant circumstances
of the case; or in connection with any Proceeding (or part thereof) initiated
4

Ed#: 1

*P64567/6100404/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 5716
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 5
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5

by such person or any Proceeding by such person against the Corporation or its
directors, officers, employees or other agents unless (1) such indemnification
is expressly required to be made by law, (2) the Proceeding was authorized by
the Board of Directors, or (3) such indemnification is provided by the
Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the DGCL.
6.

Indemnification of Expenses of Successful Party.

Notwithstanding any other provisions of this Agreement other
than Section 9, to the extent that the Director has been successful, on the
merits or otherwise, in defense of any Proceeding or in defense of any claim,
issue or matter therein, including the dismissal of an action without prejudice,
the Corporation shall indemnify the Director against all Expenses actually and
reasonably incurred in connection therewith.
7.

Good Faith.

(a) For purposes of any determination under this Agreement,
the Director shall be deemed to have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or Proceeding, to have had
no reasonable cause to believe that his or her conduct was unlawful, if his or
her action is based on information, opinions, reports and statements, including
financial statements and other financial data, in each case prepared or
presented by:
(i) one or more directors or employees of the
Corporation whom the Director believed to be reliable and
competent in the matters presented;
(ii) counsel, independent accountants or other
persons as to matters which the Director believed to be within
such person’s professional or expert competence; or
(iii) a committee of the Board of Directors upon
which such such Director does not serve, as to matters within
such committee’s designated authority, which committee the
Director reasonably believes to merit confidence.
(b) The termination of any Proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Corporation and, with respect to any criminal
proceeding, that he or she had reasonable cause to believe that his or her
conduct was unlawful.
(c) The provisions of this Section 7 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the DGCL.
8.

Exclusions.
5

Ed#: 1

*P64567/6100405/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 10700
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 6
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

6

Notwithstanding any provision in this Agreement other than
Section 6, the Corporation shall not be obligated under this Agreement to make
any indemnification in connection with any claim made against the Director:
(a) for which
on behalf of the Director under
deductible amount, self-insured
Director is entitled under this
such insurance policy;

payment is made to or required to be made to or
any insurance policy, except with respect to any
retention or any excess amount to which the
Agreement beyond the amount of payment under

(b) if a court having jurisdiction in the matter finally
determines that such indemnification is not lawful under any applicable statute
or public policy;
(c) in connection with any Proceeding (or part of any
Proceeding) initiated by the Director, or any Proceeding by the Director against
the Corporation or its directors, officers, employees or other persons entitled
to be indemnified by the Corporation, unless:
(i) the Corporation is expressly required by law to
make the indemnification;
(ii) the Proceeding was authorized by the Board of
Directors of the Corporation; or
(iii) the Director initiated the Proceeding pursuant
to Section 12 of this Agreement and the Director is successful
in whole or in part in such Proceeding; or
(d) for an accounting of profits made from the purchase and
sale by the Director of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provision of any state statutory law or common law.
9.

Advances of Expenses.

The Corporation shall pay the Expenses incurred by the
Director in any Proceeding (other than a Proceeding brought for an accounting of
profits made from the purchase and sale by the Director of securities of the
Corporation within the meaning of Section 16(b) of the Securities Exchange Act
of 1934, as amended, or similar provision of any state statutory law or common
law) in advance of the final disposition of the Proceeding at the written
request of the Director, if the Director:
(a) furnishes the Corporation a written affirmation of the
Director’s good faith belief that the Director is entitled to be indemnified
under this Agreement; and
(b) furnishes the Corporation a written undertaking to repay
the advance to the extent that it is ultimately determined that the Director is
not entitled to be indemnified by the Corporation. Such undertaking shall be an
unlimited general obligation of the Director but need not be secured.
6

Ed#: 1

*P64567/6100406/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 53
CRC: 4601
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 7
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

7

Advances pursuant to this Section 9 shall be made no later
than 10 days after receipt by the Corporation of the affirmation and undertaking
described in subparagraphs (a) and (b) above, and shall be made without regard
to the Director’s ability to repay the amount advanced and without regard to the
Director’s ultimate entitlement to indemnification under this Agreement. The
Corporation may establish a trust, escrow account or other secured funding
source for the payment of advances made and to be made pursuant to this Section
9 or of other liability incurred by the Director in connection with any
Proceeding.
10.

Nonexclusivity and Continuity of Rights.

The indemnification, advancement of Expenses, and exculpation
from liability provided by this Agreement shall not be deemed exclusive of any
other rights to which the Director may be entitled under any other agreement,
the Certificate of Incorporation, Bylaws, vote of stockholders or directors, the
Act, or otherwise, both as to action in the Director’s official capacity and as
to action in another capacity while holding such office or occupying such
position. The indemnification under this Agreement shall continue as to the
Director even though the Director may have ceased to be a director of the
Corporation or a director, officer, employee or agent of an enterprise related
to the Corporation and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of the Director.
11.

Procedure Upon Application for Indemnification.

Any indemnification under Sections 4, 5 or 6 shall be made no
later than 45 days after receipt of the written request of the Director, unless
a determination that the Director is not entitled to indemnification under this
Agreement is made within such 45-day period by:
(a) the Board of Directors by majority vote of a quorum
consisting of directors not at the time parties to the applicable Proceeding;
(b) if such quorum cannot be obtained, majority vote of a
committee duly designated by the Board of Directors consisting solely of two or
more directors not at the time parties to the Proceeding;
(c) special legal counsel selected by the Board of Directors
or its committee in the manner prescribed in subparagraph (a) or (b) above or,
if a quorum of the Board of Directors cannot be obtained under subparagraph (a)
above and a committee cannot be designated under subparagraph (b) above, the
special legal counsel shall be selected by majority vote of the full Board of
Directors, including directors who are parties to the Proceeding; or
(d) the stockholders of the Corporation.
12.

Enforcement.
7

Ed#: 1

*P64567/6100407/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 25330
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 8
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

8

The Director may enforce any right to indemnification,
advances or exculpation provided by this Agreement in any court of competent
jurisdiction if:
(a) the Corporation denies the claim for indemnification,
advances or exculpation, in whole or in part; or
(b) the Corporation does not dispose of such claim within 45
days of request therefor.
It shall be a defense to any such enforcement action (other
than an action brought to enforce a claim for advancement of Expenses pursuant
to, and in compliance with, Section 9 of this Agreement) that the Director is
not entitled to indemnification or exculpation under this Agreement. However,
except as provided in Section 13 of this Agreement, the Corporation shall not
assert any defense to an action brought to enforce a claim for advancement of
Expenses pursuant to Section 9 of this Agreement if the Director has tendered to
the Corporation the affirmation and undertaking required thereunder. The burden
of proving by clear and convincing evidence that indemnification or exculpation
is not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or independent legal counsel) to
have made a determination prior to the commencement of such action that
indemnification or exculpation is proper in the circumstances because the
Director has met the applicable standard of conduct nor an actual determination
by the Corporation (including its Board of Directors or independent legal
counsel) that indemnification or exculpation is improper because the Director
has not met such applicable standard of conduct, shall be asserted as a defense
to the action or create a presumption that the Director is not entitled to
indemnification or exculpation under this Agreement or otherwise. The Director’s
expenses incurred in connection with successfully establishing the Director’s
right to indemnification, advances or exculpation, in whole or in part, in any
Proceeding shall also be paid or reimbursed by the Corporation.
13.

Notification and Defense of Claim.

As a condition precedent to indemnification under this
Agreement, not later than 30 days after receipt by the Director of notice of the
commencement of any Proceeding the Director shall, if a claim in respect of the
Proceeding is to be made against the Corporation under this Agreement, notify
the Corporation in writing of the commencement of the Proceeding. The failure to
properly notify the Corporation shall not relieve the Corporation from any
liability which it may have to the Director: (a) unless the Corporation shall be
shown to have suffered actual damages as a result of such failure; or (b)
otherwise than under this Agreement. With respect to any Proceeding as to which
the Director so notifies the Corporation of the commencement:
(a) The Corporation shall be entitled to participate in the
Proceeding at its own expense.
(b) Except as otherwise provided in this Section 13, the
Corporation may, at its option and jointly with any other indemnifying party
similarly notified and electing to assume such defense, assume the defense of
the Proceeding, with legal counsel reasonably satisfactory to the Director. The
Director shall have the right to use separate legal counsel in the Proceeding,
but the
8

Ed#: 1

*P64567/6100408/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 60
CRC: 60410
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 9
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.09.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

9

Corporation shall not be liable to the Director under this Agreement, including
Section 9 above, for the fees and expenses of separate legal counsel incurred
after notice from the Corporation of its assumption of the defense, unless (i)
the Director reasonably concludes that there may be a conflict of interest
between the Corporation and the Director in the conduct of the defense of the
Proceeding, or (ii) the Corporation does not use legal counsel to assume the
defense of such Proceeding. The Corporation shall not be entitled to assume the
defense of any Proceeding brought by or on behalf of the Corporation or as to
which the Director has made the conclusion provided for in (i) above.
(c) If two or more persons who may be entitled to
indemnification from the Corporation, including the Director, are parties to any
Proceeding, the Corporation may require the Director to use the same legal
counsel as the other parties. The Director shall have the right to use separate
legal counsel in the Proceeding, but the Corporation shall not be liable to the
Director under this Agreement, including Section 9 above, for the fees and
expenses of separate legal counsel incurred after notice from the Corporation of
the requirement to use the same legal counsel as the other parties, unless the
Director reasonably concludes that there may be a conflict of interest between
the Director and any of the other parties required by the Corporation to be
represented by the same legal counsel.
(d) The Corporation shall not be liable to indemnify the
Director under this Agreement for any amounts paid in settlement of any
Proceeding effected without its written consent, which shall not be unreasonably
withheld. The Director shall permit the Corporation to settle any Proceeding
that the Corporation assumes the defense of, except that the Corporation shall
not settle any action or claim in any manner that would impose any penalty,
limitation, disqualification or disenfranchisement on the Director without the
Director’s written consent.
14.

Partial Indemnification.

If the Director is entitled under any provision of this
Agreement to indemnification by the Corporation for some or a portion of the
Expenses, judgments, fines or amounts paid in settlement, actually and
reasonably incurred by the Director in connection with such Proceeding, but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify the Director for the portion of such Expenses, judgments, fines or
amounts paid in settlement to which the Director is entitled.
15.

Interpretation and Scope of Agreement.

Nothing in this Agreement shall be interpreted to constitute a
contract of service for any particular period or pursuant to any particular
terms or conditions. The Corporation retains the right, in its discretion, to
terminate the service relationship of the Director, with or without cause, or to
alter the terms and conditions of the Director’s service all without prejudice
to any rights of the Director which may have accrued or vested prior to such
action by the Corporation.
16.

Severability.

If this Agreement or any portion thereof shall be invalidated
on any ground by any court of competent jurisdiction, the remainder of this
Agreement shall continue to be valid and the
9

Ed#: 1

*P64567/6100409/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 53066
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 10
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.10.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

10

Corporation shall nevertheless indemnify the Director as to Expenses, judgments,
fines and amounts paid in settlement with respect to any Proceeding to the
fullest extent permitted by any applicable portion of this Agreement that shall
not have been invalidated.
17.

Subrogation.

In the event of payment under this Agreement, the Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Director. The Director shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
18.

Notices.

All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
upon delivery by hand to the party to whom the notice or other communication
shall have been directed, or on the third business day after the date on which
it is mailed by United States mail with first-class postage prepaid, addressed
as follows:
(a) If to the Director, to the address indicated on the
signature page of this Agreement.
(b)

If to the Corporation, to:

TASER International, Inc.
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260

With a copy to:

Thomas P. Palmer
Tonkon Torp LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, Oregon 97204-2099

or to any other address as either party may designate to the other in writing.
19.

Counterparts.

This Agreement may be executed in any number of counterparts,
each of which shall constitute the original.
20.

Applicable Law.

This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard to the
conflict of laws provisions thereof.
21.

Successors and Assigns.
10

Ed#: 1

*P64567/6100410/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 30
CRC: 19171
P64567.SUB, DocName: EX-10.4, Doc: 10, Page: 11
Description: Exhibit 10.4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.04.11.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

11

This Agreement shall be binding upon the Corporation and its
successors and assigns.
22.

Attorney Fees.

If any suit or action (including, without limitation, any
bankruptcy proceeding) is instituted to enforce or interpret any provision of
this Agreement, the prevailing party shall be entitled to recover from the party
not prevailing, in addition to other relief that may be provided by law, an
amount determined reasonable as attorney fees at trial and on any appeal of such
suit or action.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
TASER INTERNATIONAL, INC.

DIRECTOR:

By:________________________________
Title:_____________________________

Signature:__________________________
Address:____________________________

375937 V1

11
</TEXT>
</DOCUMENT>

Ed#: 2

*P64567/6100411/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.5, Doc: 11

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.5
p64567ex10-5.txt
EX-10.5

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 11 SN: *
*DOCHDR/11*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 60
CRC: 53619
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 1
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6100501/1*

1
EXHIBIT 10.5
TASER INTERNATIONAL, INC.
AGREEMENT CONCERNING INDEMNIFICATION AND RELATED MATTERS
(OFFICERS)
This Agreement is made as of __________________, 2001, by and
between TASER International, Inc., a Delaware corporation (the
"Corporation"), and ____________________ (the "Officer"), an executive
officer of the Corporation.
WHEREAS, it is essential to the Corporation to retain and
attract as executive officers of the Corporation the most capable
persons available and persons who have significant experience in
business, corporate and financial matters; and
WHEREAS, the Corporation has identified the Officer as a
person possessing the background and abilities desired by the
Corporation and desires the Officer to serve as an executive officer of
the Corporation; and
WHEREAS, the substantial increase in corporate litigation may,
from time to time, subject corporate officers to burdensome litigation,
the risks of which frequently far outweigh the advantages of serving in
such capacity; and
WHEREAS, in recent times the cost of liability insurance has
increased and the availability of such insurance is, from time-to-time,
severely limited; and
WHEREAS, the Corporation and the Officer recognize that
serving as an executive officer of a corporation at times calls for
subjective evaluations and judgments upon which reasonable persons may
differ and that, in that context, it is anticipated and expected that
officers of corporations will and do from time to time commit actual or
alleged errors or omissions in the good faith exercise of their
corporate duties and responsibilities; and
WHEREAS, it is the express policy of the Corporation to
indemnify its executive officers to the fullest extent permitted by
law; and
WHEREAS, the Certificate of Incorporation permits, and the
Bylaws of the Corporation require, indemnification of the officers of
the Corporation to the fullest extent permitted by law, including but
not limited to the General Corporation law of Delaware (the "DGCL"),
and the DGCL expressly provides that the indemnification provisions set
forth therein are not exclusive, and thereby contemplates that
contracts may be entered into between the Corporation and its officers
with respect to indemnification; and
WHEREAS, the Corporation and the Officer desire to articulate
clearly in contractual form their respective rights and obligations
with regard to the Officer’s service on behalf of the Corporation as an
officer and with regard to claims for loss, liability, expense or
damage which, directly or indirectly, may arise out of or relate to
such service.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 53899
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 2
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

2
NOW THEREFORE, the Corporation and the Officer agree as follows:
1.

Agreement to Serve.

The Officer shall serve as an officer of the Corporation for
until the Officer tenders a resignation in writing or is discharged by the
Corporation as provided in the Employment Agreement between the Officer and the
Corporation. This Agreement creates no obligation on either party to continue
the service of the Officer for a particular term or any term.
2.

Ed#: 1

*P64567/6100502/1*

Definitions.
As used in this Agreement:

(a) The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether formal or informal,
whether brought by or in the right of the Corporation or otherwise, and whether
of a civil, criminal, administrative or investigative nature, in which the
Officer may be or may have been involved as a party, witness or otherwise, by
reason of the fact that the Officer is or was an officer of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, whether or not serving in such capacity at
the time any liability or expense is incurred for which exculpation,
indemnification or reimbursement can be provided under this Agreement.
(b) The term "Expenses" includes, without limitation thereto,
expenses of investigations, judicial or administrative proceedings or appeals,
attorney, accountant and other professional fees and disbursements and any
expenses of establishing a right to indemnification under Section 13 of this
Agreement, but shall not include amounts paid in settlement by the Officer or
the amount of judgments or fines against the Officer.
(c) References to "other enterprise" include, without
limitation, employee benefit plans; references to "fines" include, without
limitation, any excise taxes assessed on a person with respect to any employee
benefit plan; references to "serving at the request of the Corporation" include,
without limitation, any service as a director, officer, employee or agent which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants, or its
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Agreement.
(d) References to the "Corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer or employee of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 59604
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 3
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

3

under this Agreement with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if its
separate existence had continued.
(e) For purposes of this Agreement, the meaning of the phrase
"to the fullest extent permitted by law" shall include, but not be limited to:
(i) to the fullest extent authorized or permitted by
any amendments to or replacements of the DGCL adopted after
the date of this Agreement that increase the extent to which a
corporation may indemnify or exculpate its officers or
directors; and
(ii) to the fullest extent permitted by the provision
of the DGCL that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision
of any amendment to or replacement of the DGCL.
3.

Ed#: 1

*P64567/6100503/1*

Limitation of Liability.

(a) To the fullest extent permitted by law, the Officer shall
have no monetary liability of any kind or nature whatsoever in respect of the
Officer’s errors or omissions (or alleged errors or omissions) in serving the
Corporation or any of its subsidiaries, their respective stockholders or any
other enterprise at the request of the Corporation, so long as such errors or
omissions (or alleged errors or omissions), if any, are not shown by clear and
convincing evidence to have involved:
(i) any breach of the Officer’s duty of loyalty to
such corporations, stockholders or enterprises;
(ii) any act or omission not in good faith or which
involved intentional misconduct or a knowing violation of law;
(iii) any unlawful distribution under Section 174 of
the DGCL (including, without limitation, dividends, stock
repurchases and stock redemptions);
(iv) any transaction from which the Officer derived
an improper personal benefit; or
(v) profits made from the purchase and sale by the
Officer of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provision of any state statutory law or
common law.
(b) Without limiting the generality of subparagraph (a) above
and to the fullest extent permitted by law, the Officer shall have no personal
liability to the Corporation or any of its subsidiaries, their respective
stockholders or any other person claiming derivatively through the Corporation,
regardless of the theory or principle under which such liability may be
asserted, for:

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 61
CRC: 58168
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 4
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
(i) punitive, exemplary or consequential damages;
(ii) treble or other damages computed based upon any
multiple of damages actually and directly proved to have been
sustained;
(iii) fees of attorneys, accountants, expert
witnesses or professional consultants; or
(iv) civil fines or penalties of any kind or nature
whatsoever.
4.

Indemnity in Third-Party Proceedings.

To the fullest extent permitted by law, the Corporation shall
indemnify the Officer in accordance with the provisions of this Section 4 if the
Officer was or is a party to, or is threatened to be made a party to, any
Proceeding (other than a Proceeding by or in the right of the Corporation to
procure a judgment in its favor), against all Expenses, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by the Officer in
connection with such Proceeding if the Officer acted in good faith and in a
manner the Officer reasonably believed was in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, the Officer, in addition, had no reasonable cause to believe that
the Officer’s conduct was unlawful. However, the Officer shall not be entitled
to indemnification under this Section 4 in connection with any Proceeding
charging improper personal benefit to the Officer in which the Officer is
adjudged liable on the basis that personal benefit was improperly received by
the Officer unless and only to the extent that the court conducting such
Proceeding or any other court of competent jurisdiction determines upon
application that, despite such adjudication of liability, the Officer is fairly
and reasonably entitled to indemnification in view of all the relevant
circumstances of the case; or in connection with any Proceeding (or part
thereof) initiated by such person or any Proceeding by such person against the
Corporation or its directors, officers, employees or agents unless: (1) such
indemnification is expressly required to be made by law, (2) the Proceeding was
authorized by the Board of Directors, or (3) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the DGCL.
5.

Ed#: 1

*P64567/6100504/1*

Indemnity in Proceedings by or in the Right of the
Corporation.

To the fullest extent provided by law, the Corporation shall
indemnify the Officer in accordance with the provisions of this Section 5 if the
Officer was or is a party to, or is threatened to be made a party to, any
Proceeding by or in the right of the Corporation to procure a judgment in its
favor, against all Expenses actually and reasonably incurred by the Officer in
connection with the defense or settlement of such Proceeding if the Officer
acted in good faith and in a manner the Officer reasonably believed was in or
not opposed to the best interests of the Corporation. However, the Officer shall
not be entitled to indemnification under this Section 5 in connection with any
Proceeding in which the Officer has been adjudged liable to the Corporation
unless and only to the extent that the court conducting such Proceeding or any
other court of competent jurisdiction determines upon application that, despite
such adjudication of liability, the Officer is fairly and reasonably entitled to
indemnification for such Expenses in view of all the relevant circumstances of
the case; or in connection with any Proceeding (or part thereof) initiated by
such person or any

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 63349
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 5
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5

Proceeding by such person against the Corporation or its directors, officers,
employees or other agents unless (1) such indemnification is expressly required
to be made by law, (2) the Proceeding was authorized by the Board of Directors,
or (3) such indemnification is provided by the Corporation, in its sole
discretion, pursuant to the powers vested in the Corporation under the DGCL.
6.

Indemnification of Expenses of Successful Party.

Notwithstanding any other provisions of this Agreement other
than Section 9, to the extent that the Officer has been successful, on the
merits or otherwise, in defense of any Proceeding or in defense of any claim,
issue or matter therein, including the dismissal of an action without prejudice,
the Corporation shall indemnify the Officer against all Expenses actually and
reasonably incurred in connection therewith.
7.

Good Faith.

(a) For purposes of any determination under this Agreement,
the Officer shall be deemed to have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or Proceeding, to have had
no reasonable cause to believe that his or her conduct was unlawful, if his or
her action is based on information, opinions, reports and statements, including
financial statements and other financial data, in each case prepared or
presented by:
(i) one or more directors or employees of the
Corporation whom the Officer believed to be reliable and
competent in the matters presented;
(ii) counsel, independent accountants or other
persons as to matters which the Officer believed to be within
such person’s professional or expert competence; or
(iii) a committee of the Board of Directors upon
which such Officer does not serve, as to matters within such
committee’s designated authority, which committee the Officer
reasonably believes to merit confidence.
(b) The termination of any Proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Corporation and, with respect to any criminal
proceeding, that he or she had reasonable cause to believe that his or her
conduct was unlawful.
(c) The provisions of this Section 7 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth by the DGCL.
8.

Exclusions.

Ed#: 1

*P64567/6100505/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 49834
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 6
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

6

Notwithstanding any provision in this Agreement other than
Section 6, the Corporation shall not be obligated under this Agreement to make
any indemnification in connection with any claim made against the Officer:
(a) for which payment is made to or required to be made to or
on behalf of the Officer under any insurance policy, except with respect to any
deductible amount, self-insured retention or any excess amount to which the
Officer is entitled under this Agreement beyond the amount of payment under such
insurance policy;
(b) if a court having jurisdiction in the matter finally
determines that such indemnification is not lawful under any applicable statute
or public policy;
(c) in connection with any Proceeding (or part of any
Proceeding) initiated by the Officer, or any Proceeding by the Officer against
the Corporation or its directors, officers, employees or other persons entitled
to be indemnified by the Corporation, unless:
(i) the Corporation is expressly required by law to
make the indemnification;
(ii) the Proceeding was authorized by the Board of
Directors of the Corporation; or
(iii) the Officer initiated the Proceeding pursuant
to Section 12 of this Agreement and the Officer is successful
in whole or in part in such Proceeding; or
(d) for an accounting of profits made from the purchase and
sale by the Officer of securities of the Corporation within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provision of any state statutory law or common law.
9.

Ed#: 1

*P64567/6100506/1*

Advances of Expenses.

The Corporation shall pay the Expenses incurred by the Officer
in any Proceeding (other than a Proceeding brought for an accounting of profits
made from the purchase and sale by the Officer of securities of the Corporation
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or similar provision of any state statutory law or common law) in
advance of the final disposition of the Proceeding at the written request of the
Officer, if the Officer:
(a) furnishes the Corporation a written affirmation of the
Officer’s good faith belief that the Officer is entitled to be indemnified under
this Agreement; and
(b) furnishes the Corporation a written undertaking to repay
the advance to the extent that it is ultimately determined that the Officer is
not entitled to be indemnified by the Corporation. Such undertaking shall be an
unlimited general obligation of the Officer but need not be secured.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 52327
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 7
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

7

Advances pursuant to this Section 9 shall be made no later
than 10 days after receipt by the Corporation of the affirmation and undertaking
described in subparagraphs (a) and (b) above, and shall be made without regard
to the Officer’s ability to repay the amount advanced and without regard to the
Officer’s ultimate entitlement to indemnification under this Agreement. The
Corporation may establish a trust, escrow account or other secured funding
source for the payment of advances made and to be made pursuant to this Section
9 or of other liability incurred by the Officer in connection with any
Proceeding.
10.

Nonexclusivity and Continuity of Rights.

The indemnification, advancement of Expenses, and exculpation
from liability provided by this Agreement shall not be deemed exclusive of any
other rights to which the Officer may be entitled under any other agreement, the
Certificate of Incorporation, Bylaws, vote of stockholders or directors, the
Act, or otherwise, both as to action in the Officer’s official capacity and as
to action in another capacity while holding such office or occupying such
position. The indemnification under this Agreement shall continue as to the
Officer even though the Officer may have ceased to be an officer of the
Corporation or a director, officer, employee or agent of an enterprise related
to the Corporation and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of the Officer.
11.

Procedure Upon Application for Indemnification.

Any indemnification under Sections 4, 5 or 6 shall be made no
later than 45 days after receipt of the written request of the Officer, unless a
determination that the Officer is not entitled to indemnification under this
Agreement is made within such 45-day period by:
(a) the Board of Directors by majority vote of a quorum
consisting of directors not at the time parties to the applicable Proceeding;
(b) if such quorum cannot be obtained, majority vote of a
committee duly designated by the Board of Directors consisting solely of two or
more directors not at the time parties to the Proceeding;
(c) special legal counsel selected by the Board of Directors
or its committee in the manner prescribed in subparagraph (a) or (b) above or,
if a quorum of the Board of Directors cannot be obtained under subparagraph (a)
above and a committee cannot be designated under subparagraph (b) above, the
special legal counsel shall be selected by majority vote of the full Board of
Directors, including directors who are parties to the Proceeding; or
(d) the stockholders of the Corporation.
12.

Enforcement.

Ed#: 1

*P64567/6100507/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 20198
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 8
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

8

The Officer may enforce any right to indemnification, advances
or exculpation provided by this Agreement in any court of competent jurisdiction
if:
(a) the Corporation denies the claim for indemnification,
advances or exculpation, in whole or in part; or
(b) the Corporation does not dispose of such claim within 45
days of request therefor.
It shall be a defense to any such enforcement action (other
than an action brought to enforce a claim for advancement of Expenses pursuant
to, and in compliance with, Section 9 of this Agreement) that the Officer is not
entitled to indemnification or exculpation under this Agreement. However, except
as provided in Section 13 of this Agreement, the Corporation shall not assert
any defense to an action brought to enforce a claim for advancement of Expenses
pursuant to Section 9 of this Agreement if the Officer has tendered to the
Corporation the affirmation and undertaking required thereunder. The burden of
proving by clear and convincing evidence that indemnification or exculpation is
not appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or independent legal counsel) to
have made a determination prior to the commencement of such action that
indemnification or exculpation is proper in the circumstances because the
Officer has met the applicable standard of conduct nor an actual determination
by the Corporation (including its Board of Directors or independent legal
counsel) that indemnification or exculpation is improper because the Officer has
not met such applicable standard of conduct, shall be asserted as a defense to
the action or create a presumption that the Officer is not entitled to
indemnification or exculpation under this Agreement or otherwise. The Officer’s
expenses incurred in connection with successfully establishing the Officer’s
right to indemnification, advances or exculpation, in whole or in part, in any
Proceeding shall also be paid or reimbursed by the Corporation.
13.

Ed#: 1

*P64567/6100508/1*

Notification and Defense of Claim.

As a condition precedent to indemnification under this
Agreement, not later than 30 days after receipt by the Officer of notice of the
commencement of any Proceeding the Officer shall, if a claim in respect of the
Proceeding is to be made against the Corporation under this Agreement, notify
the Corporation in writing of the commencement of the Proceeding. The failure to
properly notify the Corporation shall not relieve the Corporation from any
liability which it may have to the Officer: (a) unless the Corporation shall be
shown to have suffered actual damages as a result of such failure; or (b)
otherwise than under this Agreement. With respect to any Proceeding as to which
the Officer so notifies the Corporation of the commencement:
(a) The Corporation shall be entitled to participate in the
Proceeding at its own expense.
(b) Except as otherwise provided in this Section 13, the
Corporation may, at its option and jointly with any other indemnifying party
similarly notified and electing to assume such defense, assume the defense of
the Proceeding, with legal counsel reasonably satisfactory to the Officer. The
Officer shall have the right to use separate legal counsel in the Proceeding,
but the

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 35364
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 9
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.09.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

9

Corporation shall not be liable to the Officer under this Agreement, including
Section 9 above, for the fees and expenses of separate legal counsel incurred
after notice from the Corporation of its assumption of the defense, unless (i)
the Officer reasonably concludes that there may be a conflict of interest
between the Corporation and the Officer in the conduct of the defense of the
Proceeding, or (ii) the Corporation does not use legal counsel to assume the
defense of such Proceeding. The Corporation shall not be entitled to assume the
defense of any Proceeding brought by or on behalf of the Corporation or as to
which the Officer has made the conclusion provided for in (i) above.
(c) If two or more persons who may be entitled to
indemnification from the Corporation, including the Officer, are parties to any
Proceeding, the Corporation may require the Officer to use the same legal
counsel as the other parties. The Officer shall have the right to use separate
legal counsel in the Proceeding, but the Corporation shall not be liable to the
Officer under this Agreement, including Section 9 above, for the fees and
expenses of separate legal counsel incurred after notice from the Corporation of
the requirement to use the same legal counsel as the other parties, unless the
Officer reasonably concludes that there may be a conflict of interest between
the Officer and any of the other parties required by the Corporation to be
represented by the same legal counsel.
(d) The Corporation shall not be liable to indemnify the
Officer under this Agreement for any amounts paid in settlement of any
Proceeding effected without its written consent, which shall not be unreasonably
withheld. The Officer shall permit the Corporation to settle any Proceeding that
the Corporation assumes the defense of, except that the Corporation shall not
settle any action or claim in any manner that would impose any penalty,
limitation, disqualification or disenfranchisement on the Officer without the
Officer’s written consent.
14.

Partial Indemnification.

If the Officer is entitled under any provision of this
Agreement to indemnification by the Corporation for some or a portion of the
Expenses, judgments, fines or amounts paid in settlement, actually and
reasonably incurred by the Officer in connection with such Proceeding, but not,
however, for the total amount thereof, the Corporation shall nevertheless
indemnify the Officer for the portion of such Expenses, judgments, fines or
amounts paid in settlement to which the Officer is entitled.
15.

Interpretation and Scope of Agreement.

Nothing in this Agreement shall be interpreted to constitute a
contract of service for any particular period or pursuant to any particular
terms or conditions. The Corporation retains the right, in its discretion, to
terminate the service relationship of the Officer, with or without cause, or to
alter the terms and conditions of the Officer’s service all without prejudice to
any rights of the Officer which may have accrued or vested prior to such action
by the Corporation.
16.

Ed#: 1

*P64567/6100509/1*

Severability.

If this Agreement or any portion thereof shall be invalidated
on any ground by any court of competent jurisdiction, the remainder of this
Agreement shall continue to be valid and the

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 52588
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 10
Description: Exhibit 10.5

[E/O]

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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.10.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

10

Corporation shall nevertheless indemnify the Officer as to Expenses, judgments,
fines and amounts paid in settlement with respect to any Proceeding to the
fullest extent permitted by any applicable portion of this Agreement that shall
not have been invalidated.
17.

Subrogation.

In the event of payment under this Agreement, the Corporation
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Officer. The Officer shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
18.

Notices.

All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
upon delivery by hand to the party to whom the notice or other communication
shall have been directed, or on the third business day after the date on which
it is mailed by United States mail with first-class postage prepaid, addressed
as follows:
(a) If to the Officer, to the address indicated on the
signature page of this Agreement.
(b)

If to the Corporation, to:

TASER International, Inc.
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260

With a copy to:

Thomas P. Palmer
Tonkon Torp LLP
1600 Pioneer Tower
888 S.W. Fifth Avenue
Portland, Oregon 97204-2099

or to any other address as either party may designate to the other in writing.
19.

Counterparts.

This Agreement may be executed in any number of counterparts,
each of which shall constitute the original.
20.

Applicable Law.

This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard to the
conflict of laws provisions thereof.
21.

Successors and Assigns.

Ed#: 1

*P64567/6100510/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 25
CRC: 22269
P64567.SUB, DocName: EX-10.5, Doc: 11, Page: 11
Description: Exhibit 10.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.05.11.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

11

This Agreement shall be binding upon the Corporation and its
successors and assigns.
22.

Attorney Fees.

If any suit or action (including, without limitation, any
bankruptcy proceeding) is instituted to enforce or interpret any provision of
this Agreement, the prevailing party shall be entitled to recover from the party
not prevailing, in addition to other relief that may be provided by law, an
amount determined reasonable as attorney fees at trial and on any appeal of such
suit or action.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
TASER INTERNATIONAL, INC.

OFFICER:

By:________________________________
Title:_____________________________

Signature:___________________________
Address:_____________________________

375518v.1
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/6100511/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.6, Doc: 12

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.6
p64567ex10-6.txt
EX-10.6

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 12 SN: *
*DOCHDR/12*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 32728
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 1
Description: Ex 10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6100601/2*

1
EXHIBIT 10.6
TASER INTERNATIONAL, INC.
1999 STOCK OPTION PLAN
ARTICLE 1.
ESTABLISHMENT AND PURPOSE

1.1
ESTABLISHMENT. TASER International, Incorporated (the
"Company") hereby establishes a plan providing for the grant of stock options to
certain eligible individuals who have or will render services to the Company and
any Subsidiary. This plan shall be known as the TASER International,
Incorporated 1999 Stock Option Plan (the "Plan"). This Plan has been approved by
the Board of Directors and the Shareholders of the Company in contemplation of a
restatement of the Company’s Articles of Incorporation. Accordingly, this Plan
assumes the filing of the Restated Articles of Incorporation.
1.2
PURPOSE. The purpose of the Plan is to advance the interests
of the Company and its shareholders by enhancing the Company’s ability to
attract and retain qualified persons to perform services for the Company by
providing incentives to such persons to put forth maximum efforts for the
Company and by rewarding persons who contribute to the achievement of the
Company’s economic objectives.
ARTICLE 2.
DEFINITIONS
The following terms have the meanings set forth below, unless the
context otherwise requires:
2.1
"AFFILIATE" means with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by, or under common control with
such Person, (ii) any person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any officer, director, or
general partner of such Person, or (iv) any Person who is an officer, director,
general partner or holder of ten percent (10%) or more of the voting interests
of any Person described in clauses (i) through (iii) of this sentence. For
purposes of this definition, the term "controls," "is controlled by," or "is
under common control with" shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person or power to direct or cause the direction of the management and policies
of a person or entity, whether through the ownership of voting securities, by
contract or otherwise.
2.2

"BOARD" means the Board of Directors of the Company.

2.3

"CODE" means the Internal Revenue Code of 1986, as amended.

2.4
"COMMITTEE" means the group of individuals administering the
Plan, as provided in Article 3 of the Plan.
2.5
"COMMON STOCK" means the common stock of the Company, no par
value, or the number and kind of shares of stock or other securities into which
such Common Stock may be changed in accordance with Section 4.3 of the Plan.
2.6
"CONVERSION RIGHT" means the right, if granted pursuant to
Section 6.6 below, of a Participant to require the Company to convert an Option,
in whole or in part at any time after it becomes exercisable and prior to its
expiration, into shares of Common Stock without the payment of any exercise
price. If a Participant is

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 43046
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 2
Description: Ex 10.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.02.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
2
granted a Conversion Right, then upon exercise of the Option or a part thereof,
the Company shall deliver to the Participant (subject to Article 9 below) that
number of shares of Common Stock computed by multiplying (A) the number of
Option Shares underlying the Option or part thereof being exercised by (B) the
quotient obtained by dividing (x) the difference between (i) the aggregate Fair
Market Value for the Option Shares underlying the Option (or part thereof being
exercised) immediately prior to the exercise of the Conversion Right and (ii)
the aggregate exercise price for the Option (or part thereof being exercised) by
(y) the aggregate Fair Market Value for the Option Shares underlying the Option
(or part thereof being exercised) immediately prior to the exercise of the
Conversion Right.
2.7
"DISABILITY" means the permanent and total disability of the
Participant within the meaning of Section 22(e)(3) of the Code.
2.8
"ELIGIBLE RECIPIENT" means all employees (including, without
limitation, officers and directors who are also employees), directors,
consultants and independent contractors of the Company.
2.9

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as

amended.
2.10
the following:

"FAIR MARKET VALUE" means, with respect to the Common Stock,

(a) If the Common Stock is listed or admitted to unlisted
trading privileges on any national securities exchange or is not so
listed or admitted but transactions in the Common Stock are reported on
The Nasdaq National Market(R), the last sale price of the Common Stock
on such exchange or reported by The Nasdaq National Market(R) System as
of such date (or, if no shares were traded on such day, as of the next
preceding day on which there was such a trade).
(b) If the Common Stock is not so listed or admitted to
unlisted trading privileges or reported on The Nasdaq National
Market(R), and bid and asked prices therefor in the over-the-counter
market are reported by The Nasdaq SmallCap Market(SM), the Nasdaq
Bulletin Board, or the National Quotation Bureau, Inc. (or any
comparable reporting service), the mean of the closing bid and asked
prices as of such date, as so reported by the applicable Nasdaq(R)
system, or, if not so reported thereon, as reported by the National
Quotation Bureau, Inc. (or such comparable reporting service).
(c) In all other cases, such price as the Committee determines
in good faith in the exercise of its reasonable discretion.
2.11
"INCENTIVE STOCK OPTION" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Article 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.12
"NON-QUALIFIED STOCK OPTION" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Article 6 of the Plan that
does not qualify as an Incentive Stock Option.
2.13
Stock Option.

"OPTION" means an Incentive Stock Option or a Non-Qualified

2.14
"OPTION SHARES" means the shares of Common Stock issuable upon
exercise of an Option.

2

Ed#: 2

*P64567/6100602/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 61
CRC: 11072
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 3
Description: Ex 10.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.03.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>

3
2.15
"PARTICIPANT" means an Eligible Recipient who receives one or
more Options under of the Plan.
2.16
"PERSON" means any individual, corporation, partnership,
group, association, or other "person" (as such term is used in Section 14(d) of
the Exchange Act), other than the Company, a wholly-owned Subsidiary of the
Company, or any employee benefit plan sponsored by the Company or a wholly-owned
Subsidiary of the Company.
2.17
"PREVIOUSLY ACQUIRED SHARES" mean shares of Common Stock that
are already owned by the Participant.
2.18
"RETIREMENT" means the retirement of a Participant pursuant to
and in accordance with the regular or, if approved by the Board for purposes of
the Plan, any early retirement plan or practice of the Company or Subsidiary
then covering the Participant.
2.19

"SECURITIES ACT" means the Securities Act of 1933, as amended.

2.20
"SUBSIDIARY" means any subsidiary corporation of the Company
within the meaning of Section 424(f) and (g) of the Code.
ARTICLE 3.
PLAN ADMINISTRATION
3.1
THE COMMITTEE. The Plan shall be administered by the Board, or
by a committee of the Board consisting of not less than two persons; provided,
however, that from and after the date on which the Company first registers a
class of its equity securities under Section 12 of the Exchange Act, the Plan
shall be administered to the extent provided herein by a committee appointed by
the Board consisting of not less than two members of the Board. Members of such
a committee, if established, shall be appointed from time to time by the Board,
shall serve at the pleasure of the Board and may resign at any time upon written
notice to the Board. A majority of the members of such a committee shall
constitute a quorum. Such a committee shall act by majority approval of the
members, shall keep minutes of its meetings and shall provide copies of such
minutes to the Board. Action of such a committee may be taken without a meeting
if unanimous written consent is given. Copies of minutes of such a committee’s
meetings and of its actions by written consent shall be provided to the Board
and kept with the corporate records of the Company. As used in this Plan, the
term "Committee" will refer to the Board or to such a committee, if established.
3.2

AUTHORITY OF THE COMMITTEE.

(a) In accordance with and subject to the provisions of the
Plan, the Committee shall have the authority to recommend to the Board
for its consideration and approval (i) the Eligible Recipients who
shall be selected as Participants, (ii) the nature and extent of the
Options to be granted to each Participant (including the number of
shares of Common Stock to be subject to each Option, the exercise price
and the manner in which Options will vest or become exercisable), (iii)
the time or times when Options will be granted, (iv) the duration of
each Option, (v) the restrictions and other conditions to which the
exercisability or vesting of Options may be subject, and (vi) such
other provisions of the Options as the Committee may deem necessary or
desirable and as consistent with the terms of the Plan. The Committee
shall determine the form or forms of the option agreements with
Participants which shall
3

Ed#: 1

*P64567/6100603/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 55230
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 4
Description: Ex 10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
evidence the particular terms, conditions, rights, and duties of the
Company and the Participants with respect to Options granted pursuant
to the Plan, which agreements shall be consistent with the provisions
of the Plan.
(b) With the consent of the Participant affected thereby and
subject to the consideration and approval of the Board, the Committee
may amend or modify the terms of any outstanding Option in any manner,
provided that the amended or modified terms are permitted by the Plan
as then in effect. Without limiting the generality of the foregoing
sentence, the Committee may, with the consent of the Participant
affected thereby and subject to consideration and approval of the
Board, modify the exercise price, number of shares, or other terms and
conditions of an Option, extend the term of an Option, accelerate the
exercisability or vesting or otherwise terminate any restrictions
relating to an Option, accept the surrender of any outstanding Option,
or, to the extent not previously exercised or vested, authorize the
grant of new Options in substitution for surrendered Options.
(c) The Committee shall have the authority to interpret the
Plan and, subject to the provisions of the Plan, to establish, adopt,
and revise such rules and regulations relating to the Plan as it may
deem necessary or advisable for the administration of the Plan. The
Committee’s decisions and determinations under the Plan need not be
uniform and may be made selectively among Participants, whether or not
such Participants are similarly situated. Each determination,
interpretation, or other action made or taken by the Committee pursuant
to the provisions of the Plan shall be conclusive and binding for all
purposes and on all persons, including, without limitation, the Company
and its Subsidiaries, the shareholders of the Company, the Committee
and each of its members, the directors, officers, and employees of the
Company and its Subsidiaries, and the Participants and their respective
successors in interest. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan
or any Option granted under the Plan.
ARTICLE 4.
STOCK SUBJECT TO THE PLAN

4.1
NUMBER OF SHARES. Subject to adjustment as provided in Section
4.3 below, the maximum number of shares of Common Stock that shall be authorized
and reserved for issuance under the Plan shall be 5,000,000 shares of Common
Stock.
4.2
SHARES AVAILABLE FOR USE. Shares of Common Stock that may be
issued upon exercise of Options shall be applied to reduce the maximum number of
shares of Common Stock remaining available for use under the Plan. Any shares of
Common Stock that are subject to an Option (or any portion thereof) that lapses,
expires, or for any reason is terminated unexercised shall automatically again
become available for use under the Plan. Also, Previously Acquired Shares which
are tendered to the Company in satisfaction or partial satisfaction of the
Exercise Price pursuant to Section 6.6 or in satisfaction or partial
satisfaction of withholding obligations pursuant to Article 10 shall become
available for use under the Plan to the extent permitted by Rule 16b-3 of the
Exchange Act.
4.3

ADJUSTMENTS TO SHARES.

(a) In the event of a stock split, any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering,
4

Ed#: 1

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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 28
CRC: 45415
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 5
Description: Ex 10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
extraordinary dividend or divestiture (including a spin-off), or any
other change in the corporate structure or shares of the Company, the
Committee (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation)
shall make appropriate adjustment (which determination shall be
conclusive) as to the number and kind of securities subject to and
reserved under the Plan and, in order to prevent dilution or
enlargement of the rights of Participants, the number, kind, and
exercise price of securities subject to outstanding Options. Without
limiting the generality of the foregoing, in the event that any of such
transactions are effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities, or assets, including
cash, with respect to or in exchange for such Common Stock, all
Participants holding outstanding Options shall upon the exercise of
such Options receive, in lieu of any shares of Common Stock they may be
entitled to receive, such stock, securities, or assets, including cash,
as would have been issued to such Participants if their Options had
been exercised and such Participants had received Common Stock prior to
such transaction.
(b) Notwithstanding Section 4.3(a), there shall be no
adjustment to the shares authorized pursuant to this Plan for an event
described in Section 4.3(a) which occurs before or simultaneously with
the Effective Date of this Plan.

5

Ed#: 1

*P64567/6100605/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 21539
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 6
Description: Ex 10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

6
ARTICLE 5.
PARTICIPATION

Participants in the Plan shall be those Eligible Recipients who, in the
judgment of the Committee, have performed, are performing, or during the term of
an Option will perform, services in the management, operation, and development
of the Company or any Subsidiary or Affiliate thereof, and significantly
contributed, are significantly contributing, or are expected to significantly
contribute to the achievement of corporate economic objectives. Eligible
Recipients may be granted from time to time one or more Options, as may be
recommended by the Committee in its sole discretion to the Board of Directors
for its consideration and approval. The number, type, terms, and conditions of
Options granted to various Eligible Recipients need not be uniform, consistent,
or in accordance with any plan, regardless of whether such Eligible Recipients
are similarly situated. Upon determination by the Committee and consideration
and approval by the Board that an Option is to be granted to an Eligible
Recipient, written notice shall be given such person, specifying the terms,
conditions, rights and duties related thereto. Each Eligible Recipient to whom
an Option is to be granted shall enter into an agreement with the provisions of
the Plan, specifying such terms, conditions, rights and duties. Options shall be
deemed to be granted as of the date specified in the grant resolution of the
Board, and the related option agreements shall be dated as of such date.
ARTICLE 6.
STOCK OPTIONS
6.1
GRANT. An Eligible Recipient may be granted one or more
Options under the Plan and such Options shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as shall be
determined by the Committee in its sole discretion upon the consideration and
approval of the Board. The Committee may recommend to the Board whether an
Option is to be considered an Incentive Stock Option or a Non-Qualified Stock
Option; provided, however, that an Incentive Stock Option shall be granted only
to an Eligible Recipient who is an employee of the Company or a Subsidiary or
Affiliate thereof. The terms of the agreement relating to a Non-Qualified Stock
Option shall expressly provide that such Option shall not be treated as an
Incentive Stock Option. Options shall be granted for no cash consideration
unless minimal cash consideration is required by applicable law.
6.2
EXERCISE. An Option shall become exercisable at such times and
in such installments (which may be cumulative) as shall be determined by the
Committee in its sole discretion at the time the Option is granted. Upon the
completion of its exercise period, an Option, to the extent not then exercised,
shall expire.

6.3

EXERCISE PRICE.

(a) Incentive Stock Options. The per share price to be paid by
the Participant at the time an Incentive Stock Option is exercised
shall be determined by the Committee, in its discretion and upon the
consideration and approval of the Board, at the date of its grant;
provided, however, that such price shall not be less than (i) 100% of
the Fair Market Value of one share of Common Stock on the date the
Option is granted, or (ii) 110% of the Fair Market Value of one share
of Common Stock on the date the Option is granted if, at that time the
Option is granted, the Participant owns, directly or indirectly (as
determined pursuant to Section 424(d) of the Code), more than 10% of
the total combined
6

Ed#: 1

*P64567/6100606/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 400
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 7
Description: Ex 10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

7
voting power of all classes of stock of the Company or any Subsidiary
or parent corporation of the Company (within the meaning of Sections
424(f) and 424(e), respectively, of the Code).
(b) Non-Qualified Stock Options. The per share price to be
paid by the Participant at the time a Non-Qualified Stock Option is
exercised shall be determined by the Committee in its sole discretion
upon the consideration and approval of the Board at the time the Option
is granted; provided, however, that such price shall not be less than
85% of the Fair Market Value of one share of Common Stock on the date
the Option is granted.
6.4

DURATION.

(a) Incentive Stock Options. The period during which an
Incentive Stock Option may be exercised shall be fixed by the Committee
in its sole discretion upon consideration and approval of the Board at
the time such Option is granted; provided, however, that in no event
shall such period exceed ten (10) years from its date of grant or, in
the case of a Participant who owns, directly or indirectly (as
determined pursuant to Section 424(d) of the Code), more than 10% of
the total combined voting power of all classes of stock of the Company
or any Subsidiary or parent corporation of the Company (within the
meaning of Section 424(f) and 424(e), respectively, of the Code), five
(5) years from its date of grant.
(b) Non-Qualified Stock Options. The period during which a
Non-Qualified Stock Option may be exercised shall be fixed by the
Committee in its sole discretion upon consideration and approval of the
Board at its date of grant.
(c) Effect of Termination of Employment or Other Service.
Notwithstanding this Section 6.4, except as provided in Articles 7 and
8 of the Plan, all Options granted to a Participant shall terminate and
may no longer be exercised upon the termination of the Participant’s
employment or other status with the Company, its Affiliates or
Subsidiaries.
6.5
MANNER OF EXERCISE. An Option may be exercised by a
Participant in whole or in part from time to time, subject to the conditions
contained herein and in the agreement evidencing such Option, by delivery, in
person or through certified or registered mail, of written notice of exercise to
the Company at its principal executive office (Attention: Chief Executive
Officer), and by paying in full the total Option exercise price for the shares
of Common Stock purchased. Such notice shall be in a form satisfactory to the
Committee and shall specify the particular Option (or portion thereof) that is
being exercised and the number of shares with respect to which the Option is
being exercised. Subject to compliance with Section 11.1 of the Plan, the
exercise of the Option shall be deemed effective upon receipt of such notice and
payment complying with the terms of the Plan and the execution of the agreement
evidencing such Option. As soon as practicable after the effective exercise of
the Option, the Participant shall be recorded on the stock transfer books of the
Company as the owner of the shares purchased, and the Company shall deliver to
the Participant one or more duly issued stock certificates evidencing such
ownership. If a Participant exercises any Option with respect to some, but not
all, of the shares of Common Stock subject to such Option, the right to exercise
such Option with respect to the remaining shares shall continue until it expires
or terminates in accordance with its terms. An Option shall only be exercisable
with respect to whole shares.

7

Ed#: 1

*P64567/6100607/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 14540
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 8
Description: Ex 10.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.08.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>

8
6.6
PAYMENT OF EXERCISE PRICE. The total purchase price of the
shares to be purchased upon exercise of an Option shall be paid entirely in cash
(by certified check or money order) provided, however, that the Committee, in
its sole discretion upon the original grant of the Option or thereafter, and
upon the consideration and approval of the Board, may allow such payments to be
made, in whole or in part, by transfer from the Participant to the Company of
Previously Acquired Shares or by exercise of a Conversion Right. In determining
whether or upon what terms and conditions a Participant will be permitted to pay
the purchase price of an Option in a form other than cash, the Committee may
consider all relevant facts and circumstances including, without limitation, the
tax and securities law consequences to the Participant and the Company and the
financial accounting consequences to the Company. In the event the Participant
is permitted to pay the purchase price of an Option in whole or in part with
Previously Acquired Shares, the value of such shares shall be equal to their
Fair Market Value on the date of exercise of the Option. No shares of the Common
Stock shall be delivered pursuant to the exercise of any Option until payment in
full of any amount required to be paid pursuant to the Plan or the applicable
option agreement is, or is arranged to be, received by the Company.
6.7
RIGHTS AS A SHAREHOLDER. The Participant shall have no rights
as a shareholder with respect to any shares of Common Stock covered by an Option
until the Participant shall have become the holder of record of such shares, and
no adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine pursuant to Section 4.3 of the Plan.
6.8
DISPOSITION OF COMMON STOCK ACQUIRED PURSUANT TO THE EXERCISE
OF INCENTIVE STOCK OPTIONS. Prior to making a disposition (as defined in Section
424(c) of the Code) of any shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option granted under the Plan before the
expiration of two years after its date of grant or before the expiration of one
year after its date of exercise and the date on which such shares of Common
Stock were transferred to the Participant pursuant to exercise of the Option,
the Participant shall send written notice to the Company of the proposed date of
such disposition, the number of shares to be disposed of, the amount of proceeds
to be received from such disposition and any other information relating to such
disposition that the Company may reasonably request. The right of a Participant
to make any such disposition shall be conditioned on the receipt by the Company
of all amounts necessary to satisfy any federal, state, or local withholding and
employment-related tax requirements attributable to such disposition. The
Committee shall have the right, in its sole discretion, to endorse the
certificates representing such shares with a legend restricting transfer and to
cause a stop transfer order to be entered with the Company’s transfer agent
until such time as the Company receives the amounts necessary to satisfy such
withholding and employment-related tax requirements or until the later of the
expiration of two years from its date of grant or one year from its date of
exercise and the date on which such shares were transferred to the Participant
pursuant to the exercise of the Option.
6.9
AGGREGATE LIMITATION OF STOCK SUBJECT TO INCENTIVE STOCK
OPTIONS. To the extent that the aggregate Fair Market Value (determined as of
the date an Incentive Stock Option is granted) of the shares of Common Stock
with respect to which incentive stock options (within the meaning of Section 422
of the Code) are exercisable for the first time by a Participant during any
calendar year (under the Plan and any other incentive stock option plans of the
Company or any Subsidiary or any parent corporation of the Company) exceeds
$100,000 (or such other amount as may be prescribed by the Code from time to
time), such excess Options shall be treated as Non-Qualified Stock Options. The
determination shall be made by taking incentive stock options into account in
the order in which they were granted. If such excess only applies to a portion
of an
8

Ed#: 1

*P64567/6100608/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 21458
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 9
Description: Ex 10.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.09.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
9
incentive stock option, the Committee, in its discretion, shall designate which
shares shall be treated as shares to be acquired upon exercise of an incentive
stock option.
ARTICLE 7.
EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE
7.1
TERMINATION OF EMPLOYMENT OR OTHER SERVICE DUE TO DEATH,
DISABILITY, OR RETIREMENT. Except as otherwise provided in Article 8 of the Plan
or as otherwise determined by the Committee upon the consideration and approval
of the Board either at time an Option is granted or thereafter, in the event a
Participant’s employment or other service with the Company and all Subsidiaries
or Affiliates is terminated by reason of such Participant’s death, Disability,
or Retirement, all outstanding Options then held by the Participant shall become
immediately exercisable in full and remain exercisable after such termination
for a period of three months in the case of Retirement and one year in the case
of death or Disability (but in no event after the expiration date of any such
Option).
7.2
TERMINATION OF EMPLOYMENT OR OTHER SERVICE FOR REASONS OTHER
THAN DEATH, DISABILITY, OR RETIREMENT. Except as otherwise provided in Article 8
of the Plan or as otherwise determined by the Committee upon the consideration
and approval of the Board either at the time an Option is granted or thereafter,
in the event of termination of the Participant’s employment or other status with
the Company and all Subsidiaries or Affiliates in relation to which the Option
was granted for any reason other than death, Disability, or Retirement, all
rights of the Participant under the Plan shall immediately terminate without
notice of any kind, and no Options then held by the Participant shall thereafter
be exercisable; provided, however, that if such termination is due to any reason
other than termination by the Company or any Subsidiary or Affiliate for
"cause," all outstanding Options then held by such Participant shall remain
exercisable to the extent exercisable as of such termination for a period of
three months after such termination (but in no event after the expiration date
of any such Option). For purposes of this Section 7.2, "cause" shall be as
defined in any employment or other agreement or policy applicable to the
Participant or, if no such agreement or policy exists, shall mean (a)
dishonesty, fraud, misrepresentation, embezzlement, or material or deliberate
injury or attempted injury, in each case related to the Company or any
Subsidiary, (b) any unlawful or criminal activity of a serious nature, (c) any
willful breach of duty, habitual neglect of duty, or unreasonable job
performance, or (d) any material breach of a confidentiality or noncompetition
agreement entered into with the Company or any Subsidiary.
7.3
MODIFICATION OF EFFECT OF TERMINATION. Notwithstanding the
provisions of this Article 7, upon a Participant’s termination of employment or
other status with the Company and all Subsidiaries or Affiliates with respect to
which Options were granted, the Committee may, in its sole discretion upon the
consideration and approval of the Board (which may be exercised before or
following such termination) cause Options, or any portions thereof, then held by
such Participant to become exercisable and remain exercisable following such
termination in the manner determined by the Committee upon the consideration and
approval of the Board; provided, however, that no Option shall be exercisable
after the expiration date thereof and any Incentive Stock Option that remains
unexercised more than three months following employment termination by reason of
Retirement or more than one year following employment termination by reason of
death or Disability shall thereafter be deemed to be a Non-Qualified Stock
Option.
7.5
DATE OF TERMINATION. Unless the Committee shall otherwise
determine in its sole discretion, a Participant’s employment or other service
shall, for purposes of the Plan, be deemed to have terminated on the
9

Ed#: 1

*P64567/6100609/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 55630
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 10
Description: Ex 10.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.10.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
10
date such Participant ceases to perform services for the Company and all
Subsidiaries or Affiliates, as determined in good faith by the Committee.
ARTICLE 8.
CHANGE OF CONTROL
8.1
CHANGE IN CONTROL. For purposes of this Article 8, a "Change
in Control" of the Company shall mean (a) the sale, lease, exchange, or other
transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a corporation that is not
controlled by the Company, (b) the approval by the shareholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company, or
(c) a change in control of the Company of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the effective date
of the Plan, pursuant to Section 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement; provided, however,
that, without limitation, such a Change in Control shall be deemed to have
occurred at such time as (i) any Person becomes after the effective date of the
Plan the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 20% or more of the combined voting power of the
Company’s outstanding securities ordinarily having the right to vote at
elections of directors, or (ii) individuals who constitute the Board on the
effective date of the Plan cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
effective date of the Plan whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
directors comprising or deemed pursuant hereto to comprise the Board on the
effective date of the Plan (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director) shall be, for purposes of this clause (ii) and the following sentence,
considered as though such person were a member of the Board on the effective
date of the Plan. Notwithstanding anything in the foregoing to the contrary, no
Change in Control shall be deemed to have occurred for purposes of this Section
8.1 by virtue of any transaction which shall have been approved by the
affirmative vote of at least a majority of the members of the Board or by the
shareholders of the Company on the effective date of the Plan.
8.2
ACCELERATION OF VESTING. If a Change of Control of the Company
shall be about to occur or shall occur, the Committee, in its sole discretion
and upon the consideration and approval of the Board, may determine that all
outstanding Options shall become immediately exercisable in full and shall
remain exercisable during the remaining term thereof, regardless of whether the
employment or other status of the Participants with respect to which Options
have been granted shall continue with the Company or any Subsidiary.
8.3
CASH PAYMENT. If a Change in Control of the Company shall be
about to occur or shall occur, then the Committee, in its sole discretion upon
the consideration and approval of the Board and without the consent of any
Participant effected thereby, may determine that some or all Participants
holding outstanding Options shall receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options.
8.4
LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in Sections 8.2 or 8.3 above to the contrary, if, with respect to a
Participant, the acceleration of the exercisability of an Option as provided in
Section 8.2 or the payment of cash in exchange for all or part of an Option as
provided in Section
10

Ed#: 1

*P64567/6100610/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 17786
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 11
Description: Ex 10.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.11.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
11
8.3 above (which acceleration or payment could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Code), together with any other payments
which such Participant has the right to receive from the Company or any
corporation which is a member of an "affiliated group" (as defined in Section
1504(a) of the Code without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a "parachute payment" (as defined in
Section 280G(b)(2) of the Code), then the acceleration of exercisability and the
payments to such Participant pursuant to Sections 8.2 and 8.3 above shall be
reduced to the largest extent or amount as, in the sole judgment of the
Committee, will result in no portion of such payments being subject to the
excise tax imposed by Section 4999 of the Code.
ARTICLE 9.
RIGHT TO WITHHOLD; PAYMENT OF WITHHOLDING TAXES
The Company is entitled to (a) withhold and deduct from future wages of
the Participant (or from other amounts which may be due and owing to the
Participant from the Company) or make other arrangements for the collection of,
all legally required amounts necessary to satisfy any and all federal, state,
and local withholding and employment-related tax requirements (i) attributable
to the grant or exercise of an Option or to a disqualifying disposition of stock
received upon exercise of an Incentive Stock Option, or (ii) otherwise incurred
with respect to an Option, or (b) require the Participant promptly to remit the
amount of such withholding to the Company before taking any action with respect
to the exercise of an Option or the issuance of any stock certificate either to
the Participant or any transferee. The Committee, in its sole discretion, may
permit a Participant to pay all or a portion of such withholding liability
either by surrendering Previously Acquired Shares already owned by the
Participant or by electing to have the Company retain shares subject to the
Option, provided that the Committee determines that the fair market value of the
surrendered Previously Acquired Shares or the retained shares is equal to such
withholding liability.
ARTICLE 10.
RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS;
TRANSFERABILITY
10.1
EMPLOYMENT OR SERVICE. Nothing in the Plan shall interfere
with or limit in any way the right of the Company or any Subsidiary to terminate
the employment or service of any Eligible Recipient or Participant at any time,
or confer upon any Eligible Recipient or Participant any right to continue in
the employ or service of the Company or any Subsidiary.
10.2
RESTRICTIONS ON TRANSFER. Other than pursuant to a qualified
domestic relations order (as defined by the Code), no right or interest of any
Participant in an Option prior to the exercise of such Options shall be
assignable or transferrable, or subjected to any lien, during the lifetime of
the Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, divorce, or bankruptcy. In the event of a Participant’s
death, such Participant’s rights and interest in Options shall be transferrable
by testamentary will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options (to the
extent permitted pursuant to Article 7 of the Plan) may be made by, the
Participant’s legal representatives, heirs, or
11

Ed#: 1

*P64567/6100611/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 62558
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 12
Description: Ex 10.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.12.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
12
legatees. If, in the opinion of the Committee, a Participant holding an Option
is disabled from caring for his or her affairs because of mental condition,
physical condition, or age, any payments due the Participant may be made to, and
any rights of the Participant under the Plan shall be exercised by, such
Participant’s guardian, conservator, or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status.
10.3
NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to amend, modify, or rescind any previously approved compensation plans
or programs entered into by the Company. The Plan will be construed to be in
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
ARTICLE 11.
SECURITIES LAW RESTRICTIONS
11.1
SHARE ISSUANCES. Notwithstanding any other provision of the
Plan or any agreements entered into pursuant hereto, the Company shall not be
required to issue or deliver any certificate for shares of Common Stock under
this Plan, and an Option shall not be considered to be exercised notwithstanding
the tender by the Participant of any consideration therefor, unless and until
each of the following conditions has been fulfilled:
(a) (i) There shall be in effect with respect to such shares a
registration statement under the Securities Act and any applicable
state securities laws if the Committee, in its sole discretion, shall
have determined to file, cause to become effective, and maintain the
effectiveness of such registration statement; or (ii) if the Committee
has determined not to so register the shares of Common Stock to be
issued under the Plan, (A) exemptions from registration under the
Securities Act and applicable state securities laws shall be available
for such issuance (as determined by counsel to the Company) and (B)
there shall have been received from the Participant (or, in the event
of death or disability, the Participant’s heir(s) or legal
representative(s)), any representations or agreements requested by the
Company in order to permit such issuance to be made pursuant to such
exemptions; and
(b) There shall have been obtained any other consent,
approval, or permit from any state or federal governmental agency which
the Committee shall, in its sole discretion upon the advice of counsel,
deem necessary or advisable.
11.2
SHARE TRANSFERS. Shares of Common Stock issued pursuant to
Options granted under the Plan may not be sold, assigned, transferred, pledged,
encumbered, or otherwise disposed of, whether voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, except pursuant to
registration under the Securities Act and applicable state securities laws or
pursuant to exemptions from such registrations. The Company may condition the
sale, assignment, transfer, pledge, encumbrance, or other disposition of such
shares not issued pursuant to an effective and current registration statement
under the Securities Act and all applicable state securities laws on the receipt
from the party to whom the shares of Common Stock are to be so transferred of
any representations or agreements requested by the Company in order to permit
such transfer to be made pursuant to exemptions from registration under the
Securities Act and applicable state securities laws.

12

Ed#: 1

*P64567/6100612/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 12220
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 13
Description: Ex 10.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.13.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>

13
11.3
HOLDING PERIOD REQUIREMENTS. Any Options granted and any
Common Stock acquired pursuant to the exercise of Options under this Plan may be
subject to a six-month holding requirement from the grant date in order for the
transaction to be exempt from the short-swing trading profits provision of
Section 16(b) of the Exchange Act.
11.4

LEGENDS.

(a) Unless a registration statement under the Securities Act
and applicable state securities laws is in effect with respect to the
issuance or transfer of shares of Common Stock under the Plan, each
certificate representing any such shares shall be endorsed with a
legend in substantially the following form, unless counsel for the
Company is of the opinion as to any such certificate that such legend
is unnecessary:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS,
THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
(b) The Committee, in its sole discretion, may endorse
certificates representing shares issued pursuant to the exercise of
Incentive Stock Options with a legend in substantially the following
form:
THE SALE, EXCHANGE, PLEDGE, ASSIGNMENT, OR OTHER DISPOSITION
OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE TRANSFER RESTRICTIONS CONTAINED IN SECTION 7.8 OF THE
BYLAWS OF THIS CORPORATION, AND REFERENCE SHOULD BE MADE
THERETO FOR THE TERMS OF SUCH RESTRICTIONS.
13

Ed#: 1

*P64567/6100613/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 10518
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 14
Description: Ex 10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.14.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

14
ARTICLE 12.
PLAN AMENDMENT; MODIFICATION AND TERMINATION

12.1
AMENDMENT; MODIFICATION; TERMINATION. The Board may suspend or
terminate the Plan or any portion thereof at any time, and may amend the Plan
from time to time in such respects as the Board may deem advisable in order that
Options under the Plan shall conform to any change in applicable laws or
regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such amendment shall be
effective, without approval of the shareholders of the Company, if shareholder
approval of the amendment is then required to comply with or obtain exemptive
relief under any tax or regulatory requirement the Board deems desirable to
comply with or obtain exemptive relief under, including without limitation, Rule
16b-3 under the Exchange Act or any successor rule or Section 422 of the Code or
under the applicable rules or regulations of any securities exchange or the
NASD. No termination, suspension, or amendment of the Plan shall alter or impair
any outstanding Option without the consent of the Participant affected thereby;
provided, however, that this sentence shall not impair the right of the
Committee to take whatever action it deems appropriate under Section 4.3 or
Article 8 of the Plan.
ARTICLE 13.
EFFECTIVE DATE OF THE PLAN
13.1
EFFECTIVE DATE. The Plan is effective as of January 1, 1999,
the date adopted by the Board; provided, however, that no Incentive Stock
Options may be exercised until January 1, 1999, the date the Plan was adopted by
the shareholders of the Company in accordance with the requirements of the Code.
13.2
DURATION OF THE PLAN. The Plan shall terminate at midnight on
December 31, 2000, and may be terminated prior thereto by Board action, and no
Option shall be granted after such termination. Options outstanding upon
termination of the Plan may continue to be exercised in accordance with their
terms.
ARTICLE 14.
MISCELLANEOUS
14.1
CONSTRUCTION AND HEADINGS. The use of the masculine gender
shall also include within its meaning the feminine and the singular may include
the plural and the plural may include the singular, unless the context clearly
indicates to the contrary. The headings of the Articles, Sections, and subparts
of the Plan are for convenience of reading only and are not meant to be of
substantive significance and shall not add or detract from the meaning of such
Article, Section, or subpart.
14.2
GOVERNING LAW. The place of administration of the Plan shall
be conclusively deemed to be within the State of Arizona, and the rights and
obligations of any and all persons having or claiming to have had an interest
under the Plan or under any agreements evidencing Options shall be governed by
and construed exclusively and solely in accordance with the laws of the State of
Arizona without regard to the conflict of laws provisions of any jurisdictions.
All parties agree to submit to the jurisdiction of the state and federal courts
of Arizona with respect to matters relating to the Plan and agree not to raise
or assert the defense that such forum is not convenient for such party.
14.3
SUCCESSORS AND ASSIGNS. This Plan shall be binding upon and
inure to the benefit of the successors and permitted assigns of the Company,
including, without limitation, whether by way of merger,
14

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*P64567/6100614/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 33
CRC: 19517
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 15
Description: Ex 10.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.06.15.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
15
consolidation, operation of law, assignment, purchase, or other acquisition of
substantially all of the assets or business of the Company, and any and all such
successors and assigns shall absolutely and unconditionally assume all of the
Company’s obligations under the Plan.
14.4
SURVIVAL OF PROVISIONS. The rights, remedies, agreements,
obligations, and covenants contained in or made pursuant to the Plan, any
agreement evidencing an Option and any other notices or agreements in connection
therewith, including, without limitation, any notice of exercise of an Option,
shall survive the execution and delivery of such notices and agreements and the
delivery and receipt of shares of Common Stock and shall remain in full force
and effect.
IN WITNESS WHEREOF, and as evidence of the adoption of this Plan by the
Company, the Company has caused this Plan to be signed by the undersigned
officer, thereunto duly authorized pursuant to the resolutions of the Board of
Directors adopted on January 14, 1999.
TASER INTERNATIONAL, INCORPORATED
By: /s/ Patrick W. Smith
---------------------------------Patrick W. Smith
Its: Chief Executive Officer

15

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*P64567/6100615/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 45
CRC: 38556
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 16
Description: EX-10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

16

NAME
ELECTION OF STOCK OPTION PLAN
Dear Name,
Pursuant to the meeting of the Board of Directors of TASER International on
January 14, 1999, the company has elected to terminate its former 1998-1999
stock option plan and to implement a new 1999 stock option plan.
You will have the elective to either retain your options from the previous plan
(the 1998-1999 plan) or to agree to have those options cancelled and participate
in the new 1999 stock option plan. You may not participate in both plans.
Currently, you hold the following number of options under previous plans:
at a strike price of
at a strike price of

per share.
per share

Under the new plan, the company is prepared to offer you:
_______ shares at a strike price of

Ed#: 2

*P64567/7100701/2*

_________ per share.

However, the vesting schedule for your new options will start effective Jan. 1,
1999.
Please indicate whether you would like to participate in the old plan or the new
plan by initialing one of the options below:
_____

I would like to maintain my existing options and elect to pass on the
opportunity to participate in the new plan.

_____

I would like to cancel my existing options from the previous plan and
participate in the new 1999 plan with options for 100,000 share so stock
at $0.10 per share.

Sincerely,

Agreed,

Rick Smith
President, TASER International

---------------------------------Phillips Smith

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 63711
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 17
Description: EX-10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

17
INCENTIVE STOCK OPTION AGREEMENT

THIS OPTION AGREEMENT, made and entered into effective the 15th day of
January, 1999, by and between TASER International, an Arizona corporation
(hereinafter the "Company"), and _____________________, an employee of the
Company, or one or more of its subsidiaries (hereinafter the "Employee").
WITNESSETH
The Company desires to carry out the purposes of its 1999 Stock Option
Plan, approved by its shareholders and directors on January 14, 1999, by
affording Employee an opportunity to acquire shares of its Common Stock
(hereinafter called the "Shares"), as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and for other good and valuable consideration, the parties hereto
agree as follows:
I.
GRANT OF OPTION
The Company hereby grants to the Employee the right and option
(hereinafter the "Option") to purchase all, or any part of an aggregate of
____________________________ Shares (such number being subject to adjustment as
provided in Paragraph VIII hereof) on the terms and conditions herein set forth
and in accordance with the terms and restrictions contained in that Subscription
Agreement attached hereto as EXHIBIT A. The Option is intended to qualify as an
Incentive Stock Option as defined in Section 422A(b) of the Internal Revenue
Code of 1986, as amended, and shall be interpreted in a manner consistent
therewith.
II.
PURCHASE PRICE
Subject to the provisions of Article VII hereof, the purchase price of
the Common Stock covered by the Option shall be _______ per share, which has
been determined to be the fair market value of the Common Stock of the Company
at the date of grant of this Option; provided, however, that if, at the time
this Option is granted, Employee owns stock of the Company representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company (including stock taken into account under the attribution rules of
Section 425(d) of the Internal Revenue Code), the purchase price shall be one
hundred ten percent (110%) of the fair market value of the Shares on the date
the Option is granted.
III.
TERM, EXERCISE AND VESTING OF OPTION
This Option shall expire at the close of business on Dec. 31, 2008,
subject to normal retirement or earlier termination as provided in Paragraphs VI
and VII hereof. The expiration date shall be not more than ten (10) years from
the date this Option is granted; provided, however, that at
2

Ed#: 1

*P64567/7100702/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 58008
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 18
Description: EX-10.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.03.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
18
the time this Option is granted, Employee owns stock of the Company representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company (including stock taken into account under the attribution rules of
Section 425(d) of the Internal Revenue Code), then the expiration date shall not
be more than five (5) years from the date the Option is granted.
Employee shall be entitled to exercise this Option, and acquire the
shares of Common Stock of the Corporation covered by this Option, as provided in
the following vesting schedule:
<TABLE>
<CAPTION>
Period of Time:
--------------

Shares Exercisable:
-----------------<C>

<S>
Grant through December 31, 1999

------January 1, 2000 through December 31, 2000
------January 1, 2001 through December 31, 2001
------</TABLE>
Shares shall vest monthly at the end of each month. For example, on June 30,
2000 all shares for 1999 and for the pro-rata through the first half of 2000
shall be considered vested.
IV.
EXECUTION OF AGREEMENT
This offer by the Company to Employee of an Option to purchase capital
stock of the Company shall be void if not agreed to by the Employee within
thirty (30) days hereof, to-wit: on or before Feb. 15, 1999.
V.
NON-TRANSFERABILITY OF OPTION RIGHTS
The Option shall not be transferable, otherwise than by will or the
laws of descent and distribution, and the Option may be exercised, during the
lifetime of the Employee, only by Employee. More particularly (but without
limiting the generality of the foregoing), the Option may not be assigned,
transferred (except as provided above), pledged or hypothecated in any way, and
shall not be subject to the execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition to
the Option contrary to the provisions hereof, or the levy of any execution,
attachment, or similar process upon the Option, shall be null and void and
without effect.
VI.
TERMINATION OF EMPLOYMENT
A.
Termination. In the event an Optionee, during his life, ceases
to be an Employee of the Company, or of any subsidiary of the Company, for any
reason, except upon total and permanent disability or death, any Option or
unexercised portion thereof granted to him which is otherwise exercisable shall
terminate on the ninetieth (90th) day following the date the Employee ceases to
be an Employee of the Company.
B.
Total and Permanent Disability or Death of Employee. In the
event of termination of employment because of total and permanent disability of
Employee, or his death, while an Employee
3

Ed#: 1

*P64567/7100703/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 63739
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 19
Description: EX-10.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.04.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
19
of the Company, or his death within three (3) months after his normal
retirement, any Option or unexercised portion thereof granted to him, if
otherwise exercisable by the optionee, may be exercised by him or by his
personal representative at any time prior to the expiration of twelve (12)
months from the date of death or termination of employment by reason of total
and permanent disability, but not later than the expiration of the option
period.
VII.
CHANGES IN CAPITAL STRUCTURE
If all or any portion of the Option shall be exercised subsequent to
any share dividend, recapitalization, merger, consolidation, exchange of share
or reorganization as a result of which shares of any class shall be issued in
respect to outstanding Common Stock, or if Common Stock shall be changed into
same or a different number of shares of the same or another class or classes,
the person or persons so exercising the Option shall receive, for the aggregate
price paid upon such exercise, the aggregate number and class of shares to which
they would have been entitled if Common Stock (as authorized at the date hereof)
had been purchased at the date hereof for the same aggregate price (on the basis
of the price per share set forth in Paragraph II hereof) and had not been
disposed of. No fractional share shall be issued upon any such exercise and the
aggregate price paid shall be appropriately reduced on account of any fractional
share not issued. No adjustment shall be made in the minimum number of shares
which may be purchased at any one time, as fixed by Paragraph III hereof.
VIII.
ADJUSTMENT TO SHARES
In the event of a stock split, any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off), or any other change in the corporate
structure or shares of the Company, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation) shall make appropriate adjustment (which determination
shall be conclusive) as to the number and kind of securities subject to and
reserved under the Plan and, in order to prevent dilution or enlargement of the
rights of Participants, the number, kind, and exercise price of securities
subject to outstanding Options. Without limiting the generality of the
foregoing, in the event that any of such transactions are effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities, or
assets, including cash, with respect to or in exchange for such Common Stock,
all Participants holding outstanding Options shall upon the exercise of such
Options receive, in lieu of any shares of Common Stock they may be entitled to
receive, such stock, securities, or assets, including cash, as would have been
issued to such Participants if their Options had been exercised and such
Participants had received Common Stock prior to such transaction.
Notwithstanding the foregoing paragraph, there shall be no adjustment
to the shares authorized pursuant to this Plan for an event described in the
foregoing paragraph which occurs before or simultaneously with the Effective
Date of this Plan.
4

Ed#: 2

*P64567/7100704/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 46638
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 20
Description: EX-10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

20
IX.
METHOD OF EXERCISING OPTION

Subject to the terms and conditions of this Option Agreement, the
Option may be exercised by written notice of the Company at its principal place
of business in the State of Arizona. Such notice shall state: Employee’s, or
Employee’s representative’s, election to exercise the Option; the number of
shares in respect to which it is being exercised; and shall be signed by the
person so exercising the Option. Such notice shall be accompanied by the payment
of the full purchase price of such shares and the delivery of such payment to
the Chief Financial Officer of the Company. The certificate for the shares as to
which the Option shall have been so exercised shall be registered in the name of
the person exercising the Option. If the Employee shall so request in the notice
exercising the Option, the certificate shall be registered in the name of the
Employee and another person jointly with right of survivorship, and shall be
delivered as provided above to or upon written order of the person exercising
the Option. In the event the Option shall be exercised pursuant to Paragraph VII
hereof, by any person or persons other than the Employee, such notice shall be
accompanied by appropriate proof of the right of such person to exercise the
Option. This Option shall not be exercised in any manner that would disqualify
the Option as an Incentive Stock Option, as defined in Section 422A(b) of the
Internal Revenue Code 1986, as amended.
X.
RESERVATION OF SHARES
The Company shall, at all times during the term of this Option, reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirement of this Option Agreement, and shall pay all original
issue and transfer taxes with respect to the issue and transfer of shares
pursuant hereto, and all other fees and expenses necessarily incurred by the
Company in connection therewith.
XI.
SUBSIDIARY
As used herein, the term "Subsidiary" shall mean any present or future
corporation which would be a "Subsidiary Corporation" of the Company, as that
term is defined in Section 425 of the Internal Revenue Code of 1986, as amended.
XII.
INCENTIVE STOCK OPTION PLAN
This Incentive Stock Option Agreement
conditions of the Stock Option Plan adopted by
Shareholders of the Company on the 14th day of
provisions said "Plan" are incorporated herein
hereof.
5

Ed#: 2

*P64567/7100705/2*

is subject to all the terms and
the Board of Directors and
January, 1999. All the terms and
by reference, and made a part

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 50947
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 21
Description: EX-10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

21
XIII.
RIGHTS AS STOCKHOLDERS

The holder of the Option shall not have any of the rights of a
stockholder with respect to the Shares covered by the Option, except to the
extent that one or more certificates for such Shares shall be delivered to him
upon the due exercise of the Option.
XIV.
NO REGISTRATION REQUIREMENTS
The Company shall not be deemed by reason of issuance of any Common
Stock under the Plan to have any obligation to register such shares under the
Securities Act of 1933, as amended, or maintain in effect any registration of
such shares. In addition, unless shares have been so registered, all options
granted under the Plan shall be on the condition that the acquisition of share
thereunder shall be for investment purposes only, and employees acquiring the
shares must bear the economic risk of the investment for an indefinite period of
time, since the shares so acquired cannot be sold unless they are subsequently
registered or an exemption from such registration is available. Employee agrees
that a legend shall be placed on the stock certificate acknowledging the
restrictions on subsequent distribution of the shares.
XV.
EMPLOYMENT
Nothing in the Plan, and no grant of an option hereunder, shall be
deemed to grant any right of continued employment, or to limit or waive any
rights or the Company to terminate Employee’s employment at any time, with or
without cause.
XVI.
GOVERNING LAWS
This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, successors, assigns and
representatives and shall be governed by and construed under the laws of the
State of Arizona.
IN WITNESS WHEREOF, the company has caused this Incentive Stock Option
Agreement to be executed by its duly-authorized officer and the Employee has
hereunto set his or her hand, all effective the date and year first above
written.
TASER International,
An Arizona corporation
By:
--------------------------------Its:
President
ATTEST:

EMPLOYEE

-----------------------------Secretary

--------------------------------------Name
6

Ed#: 2

*P64567/7100706/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 27
CRC: 11442
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 22
Description: EX-10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

22
FULL EXERCISE FORM

To Be Executed By The Registered Holder If Optionee
Desires To Exercise The Attached Option in Full.
The undersigned hereby exercises the right to purchase the ________
shares of Common Stock covered by the within Option at the date of this
subscription and herewith makes payment of the sum of $__________ representing
the Purchase Price of $________ per share in effect at that date. Certificates
for such shares shall be issued in the name of and delivered to the undersigned,
unless otherwise specified by written instructions, signed by the undersigned
and accompanying this subscription.
Dated:
-----------------Signature:
-------------------------------Address:
---------------------------------------------------------------------------------------------7

Ed#: 1

*P64567/7100707/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 38
CRC: 26705
P64567.SUB, DocName: EX-10.6, Doc: 12, Page: 23
Description: EX-10.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 710.07.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

23
PARTIAL EXERCISE FORM

To Be Executed By The Registered Holder If Optionee
Desires To Exercise, In Part, The Attached Option.
The undersigned hereby exercises the right to purchase ________ shares
of the total shares of Common Stock covered by the within Option at the date of
this subscription and herewith makes payment of the sum of $__________
representing the Purchase Price of $________ per share in effect at that date.
Certificates for such shares and a new Option of like tenor and date for the
balance of the shares not subscribed for shall be issued in the name of and
delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
(The following paragraph need be completed only if the Purchase Price
and number of shares of Common Stock specified in the within Option have been
adjusted pursuant to Paragraph VIII.)
The shares hereby subscribed for constitute __________ shares of Common
Stock (to the nearest whole share) resulting from adjustment of ______ shares of
the total of ____________ shares of Common Stock covered by the within Option,
as said shares were constituted at the date of the Option.
Dated:
-----------------Signature:
-------------------------------Address:
---------------------------------------------------------------------------------------------8
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/7100708/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.8, Doc: 13

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.8
p64567ex10-8.txt
EX-10.8

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 13 SN: *
*DOCHDR/13*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 3941
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 1
Description: Exhibit 10.08

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 10.8
WARRANT NO. 04
TASER INTERNATIONAL, INCORPORATED
COMMON STOCK PURCHASE WARRANT

TASER International, Incorporated, an Arizona corporation, (the
"Company"), hereby agrees that, for value received, Bruce R. Culver, or his
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time after the effective date of July 31,
2000, and before 5:00 p.m., Scottsdale, Arizona, time, on July 31, 2005, One
hundred thirty six thousand, three hundred sixty four (136,364) shares of the no
par value Common Stock of the Company (the "Common Stock"), at an exercise price
of $.55 per share, subject to adjustment as provided herein.
1.
Exercise of Warrant. The purchase rights granted by this
Warrant shall be exercised (in minimum quantities of 100 shares) by the holder
surrendering this Warrant with the form of exercise attached hereto duly
executed by such holder, to the Company at its principal office, accompanied by
payment, in cash or by cashier’s check payable to the order of the Company, of
the purchase price payable in respect of the Common Stock being purchased. If
less than all of the Common Stock purchasable hereunder is purchased, the
Company will, upon such exercise, execute and deliver to the holder hereof a new
Warrant evidencing the number of shares of Common Stock not so purchased. As
soon as practicable after the exercise of this Warrant and payment of the
purchase price, the Company will cause to be issued in the name of and delivered
to the holder hereof, or as such holder may direct, a certificate or
certificates representing the shares purchased upon such exercise. The Company
may require that such certificate or certificate contain on the fact thereof a
legend substantially as follows:
"The transfer of the shares represented by this certificate is
restricted pursuant to the terms of a Common Stock Purchase Warrant
dated July 31, 2000, issued by TASER International, Incorporated, a
copy of which is available for inspection at the offices of TASER
International, Incorporated. Transfer may not be made except in
accordance with the terms of the Common Stock Purchase Warrant. In
addition, no sale, offer to sell or transfer of the shares represented
by this certificate shall be made unless a registration statement under
the Federal Securities Act of 1933, as amended, (the "Act"), with
respect to such shares is then in effect or an exemption from the
registration requirements of the Act is then in fact applicable to such
shares."
2.
Negotiability and Transfer. This Warrant is issued upon the
following terms, to which the holder hereof consents and agrees:
(a)
Until this Warrant is duly transferred on the books
of the Company, the Company may treat the registered holder of this
Warrant as absolute owner hereof for all purposes without being
affected by any notice to the contrary.
(b)
Each successive holder of this Warrant, or of any
portion of the rights represented thereby, shall be bound by the terms
and conditions set forth herein.
Page 1 of 8

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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 11846
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 2
Description: Exhibit 10.08

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>

2
3.
Anti-dilution Adjustments. If the Company shall at any time
hereafter subdivide or combine its outstanding shares of Common Stock, or
declare a dividend payable in Common Stock, the exercise price in effect
immediately prior to the subdivision, combination, or record date for such
dividend payable in Common Stock shall forthwith be proportionately increased in
the case of combination, or proportionately decreased, in the case of
subdivision or declaration of a dividend payable in Common Stock, and each share
of Common Stock purchasable upon exercise of this Warrant, immediately preceding
such event, shall be changed to the number determined by dividing the
then-current exercise price by the exercise price as adjusted after such
subdivision, combination, or dividend payable in Common Stock.
No fractional shares of Common Stock are to be issued upon the exercise
of the Warrant, but the Company shall pay a cash adjustment in respect of any
fraction of a share which would otherwise be issuable in an amount equal to the
same fraction of the market price per share of Common Stock on the day of
exercise as determined in good faith by the Company.
In case of any capital reorganization or any reclassification of the
shares of Common Stock of the Company, or in the case of any consolidation with
or merger of the Company into or with another corporation, or the sale of all or
substantially all of its assets to another corporation, which is effected in
such a manner that the holders of Common Stock shall be entitled to receive
stock, securities, or assets with respect to or in exchange for Common Stock,
then, as a part of such reorganization, reclassification, consolidation, merger,
or sale, as the case may be, lawful provision shall be made so that the holder
of the Warrant shall have the right thereafter to receive, upon the exercise
hereof, the kind and amount of shares of stock or other securities or property
which the holder would have been entitled to receive if, immediately prior to
such reorganization, reclassification, consolidation, merger, or sale, the
holder had held the number of shares of Common Stock which were then purchasable
upon the exercise of the Warrant. In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be made
in the application of the provisions set forth herein with respect to the rights
and interest thereafter of the holder of the Warrant, to the end that the
provisions set forth herein (including provisions with respect to adjustments of
the exercise price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the exercise of the Warrant.
When any adjustment is required to be made in the exercise price,
initial or adjusted, the Company shall forthwith determine the new exercise
price, and
(a) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new exercise price; and
(b) cause a copy of such statement to be mailed to the holder of the
Warrant as of a date within ten (10) days after the date when the
circumstances giving rise to the adjustment occurred.
4.
Transferability; Registration Rights. Prior to making any
disposition of the Warrant or of any Common Stock purchased upon exercise of the
Warrant, the holder will give
Page 2 of 8

Ed#: 1

*P64567/6100802/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 51657
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 3
Description: Exhibit 10.08

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
3
written notice to the Company describing briefly the manner of any such proposed
disposition. The holder will not make any such disposition until (i) the Company
has notified him that, in the opinion of its counsel, registration under the Act
is not required with respect to such disposition, or (ii) a registration
statement covering the proposed distribution has been filed by the Company and
has become effective. The holder then will make any disposition only pursuant to
the conditions of such opinion or registration. The Company agrees that, upon
receipt of written notice from the holder hereof with respect to such proposed
distribution, it will use its best efforts, in consultation with the holder’s
counsel, to ascertain as promptly as possible whether or not registration is
required, and will advise the holder promptly with respect thereto, and the
holder will cooperate in providing the Company with information necessary to
make such determination.
If, at any time one (1) year after the date hereof and prior to the
expiration of seven (7) years from the date hereof, the Company shall propose to
file any registration statement under the Securities Act of 1933, as amended,
covering a public offering of the Company’s Common Stock and permitting the
inclusion of shares of selling shareholders, it will notify the holder hereof at
least thirty (30) days prior to each such filing and will include in the
registration statement (to the extent permitted by applicable regulation) the
Common Stock purchased by the holder or purchasable by the holder upon the
exercise of the Warrant to the extent requested by the holder hereof.
Notwithstanding the foregoing, the number of shares of the holders of the
Warrants proposed to be registered hereby shall be reduced pro rata with an
other selling shareholder (other than the Company) upon the request of the
managing underwriter of such offering. If the registration statement or offering
statement filed pursuant to such forty-five (45) day notice has not become
effective within six (6) months following the date such notice is given to the
holder hereof, the Company must again notify such holder in the manner provided
above.
At any time one (1) year after the date hereof and prior to the
expiration of five (5) years from the date hereof, and provided that a
registration statement on Form S-3 (or its equivalent) is then available to the
Company, and on a one-time basis only, if the holders of 51 % or more of the
Warrants and the shares acquired upon exercise of the Warrants request the
registration of the shares on Form S-3 (or its equivalent), the Company shall
promptly thereafter use its best efforts to effect the registration under the
Securities Act of 1933, as amended, of such shares which such holders request in
writing to be so registered, and in a manner corresponding to the methods of
distribution described in such holders’ request.

All expenses of any such registrations referred 10 in this Section 4,
except the fees of counsel to such holders and underwriting commissions or
discounts, shall be borne by the Company.
The Company will mail to each record holder, at the last known post
office address, written notice of any exercise of the rights granted under this
Section 4, by certified or registered mail, return receipt requested, and each
holder shall have thirty (30) days from the date of deposit of such notice in
the U.S. Mail to notify the Company in writing whether such holder wishes to
join in such exercise.
The Company will furnish the holder hereof with a reasonable number of
copies of any prospectus included in such filings and will amend or supplement
the same as required during the period of required use thereof. The Company will
maintain the effectiveness of any registration
Page 3 of 8

Ed#: 1

*P64567/6100803/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 22701
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 4
Description: Exhibit 10.08

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
4
statement or the offering statement filed by the Company, whether or not at the
request of the holder hereof, for at least six (6) months following the
effective date thereof.
In the case of the filing of any registration statement, and to the
extent permissible under the Act and controlling precedent thereunder, the
Company and the holder hereof shall provide cross indemnification agreements to
each other in customary scope covering the accuracy and completeness of the
information furnished by each.
The holder of the Warrant agrees to cooperate with the Company in the
preparation and filing of any such registration statement or offering statement,
and in the furnishing of information concerning the holder for inclusion
therein, or in any efforts by the Company to establish that the proposed sale is
exempt under the Act as to any proposed distribution.
5.

Cashless Exercise Option.

(a) Provided the Company’s Common Stock shall then be traded
on an exchange or quoted by NASDAQ or otherwise traded as described in
5(d) hereof, the holder of this Warrant shall have the right to require
the Company to convert this Warrant (the "Conversion Right"), at any
time from July 31, 2000 and prior to its expiration, into shares of
Common Stock as provided for in this Section 5. Upon exercise of the
Conversion Right, the Company shall deliver to the holder (without
payment by the bolder of any exercise price) that number of shares of
Common Stock equal to the quotient obtained by dividing (x), the value
of the Warrant at the time the Conversion Right is exercised
(determined by subtracting the aggregate exercise price for the Warrant
Shares in effect immediately prior to the exercise of the Conversion
Right from the aggregate Fair Market Value [as determined below] for
the Warrant Shares immediately prior to the exercise of the Conversion
Right), by (y), the Fair Market Value of one share of Common Stock
immediately prior to the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the holder, at
any time or from time to time, prior to its expiration, on any business
day, by delivering a written notice (the "Conversion Notice") to the
Company at the offices of the Company exercising the Conversion Right
and specifying (i) the total number of shares of Stock the Warrant
bolder will purchase pursuant to such conversation and (ii) a place and
a date, not less than five (5) nor more than twenty (20) business days
from the date of the Conversion Notice, for the closing of such
purchase.
(c) At any closing under Section 5(b) hereof, (i) the holder
will surrender the Warrant, (ii) the Company will deliver to the holder
a certificate or certificates for the number of shares of Common Stock
issuable upon such conversion, together with cash, in lieu of any
fraction of a share, and (iii) the Company will deliver to the holder a
new Warrant representing the number of shares, if any, with respect to
which the Warrant shall not have been exercised.
(d) "Fair Market Value" of a share of Common Stock as of a
particular date (the "Determination Date") shall mean:
Page 4 of 8

Ed#: 2

*P64567/6100804/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 28276
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 5
Description: Exhibit 10.08

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
(i) If the Company’s Common Stock is traded on an
exchange or is quoted on the National Association of
Securities Dealers, Inc., Automated Quotation ("NASDAQ")
National Market System, or the Small Cap Market, then the
average closing or last sale prices, respectively, reported
for the ten (10) business days immediately preceding the
Determination Date.
(ii) If the Company’s Common Stock is not traded on
an exchange or on the NASDAQ National Market System, or the
Small Cap Market, but is traded in the over-the-counter
market, then the average of the closing bid and asked prices
reported for the ten (10) business days immediately preceding
the Determination Date.

6.
Notices: The Company shall mail to the registered holder of
the Warrant, at his last known post office address appearing on the books of the
Company, not less than fifteen (15) days prior to the date on which (a) a record
will be taken for the purpose of determining the holders of Common Stock
entitled to dividends (other than cash dividends) or subscription rights or (b)
a record will be taken (or in lieu thereof, the transfer books will be closed)
for the purpose of determining the holders of Common Stock entitled to notice of
and to vote at a meeting of stockholders at which any capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, dissolution,
liquidation, winding up, or sale of substantially all of the Company’s assets
shall be considered and acted upon.
7.
Reservation of Common Stock. A number of shares of Common
Stock sufficient to provide for the exercise of the Warrant upon the basis
herein set forth shall at all times be reserved for the exercise thereof.
8.
Miscellaneous. Whenever reference is made herein to the issue
or sale of shares of Common Stock, the term "Common Stock" shall include any
stock of any class of the Company other than preferred stock with a fixed limit
on dividends and a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the Company.
The Company will not, by amendment of its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution, or sale of assets,
or by any other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations, or conditions to be observed
or performed hereunder by the Company, but will, at all times in good faith,
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect the
rights of the holder hereof against dilution.
Upon written request of the holder of this Warrant, the Company will
promptly provide such holder with a then-current written list of the names and
addresses of all holders of Warrants originally issued under the terms of, and
concurrent with, this Warrant.
The representations, warranties, and agreements herein contained shall
survive the exercise of this Warrant. References to the "holder of" include the
immediate holder of shares purchased on the
Page 5 of 8

Ed#: 2

*P64567/6100805/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 44
CRC: 25150
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 6
Description: Exhibit 10.08

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
6
exercise of this Warrant, and the word "holder" shall include the plural
thereof. This Common Stock Purchase Warrant shall be interpreted under the laws
of the State of Arizona.
All shares of Common Stock or other securities issued upon the exercise
of the Warrant shall be validly issued, fully paid, and non-assessable, and the
Company will pay all taxes in respect of the issuer thereof.
Notwithstanding anything contained herein to the contrary, the holder
of this Warrant shall not be deemed a stockholder (including no right to vote on
any matters coming before the shareholders) of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised.
IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant
to be executed by its duly-authorized officer and the holder hereof has hereunto
set his or her hand, all effective the date and year first above written.

TASER International, Incorporated

By: /s/ Patrick W. Smith
-------------------------------Patrick W. Smith
It’s: Chief Executive Officer

/s/ Bruce R. Culver
-----------------------------------Bruce R. Culver

Page 6 of 8

Ed#: 2

*P64567/6100806/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 33988
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 7
Description: Exhibit 10.08

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

7
WARRANT EXERCISE FORM
To be signed only upon exercise of Warrant.

The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _______________ shares of Common Stock of
Taser International, Incorporated, to which such Warrant relates and herewith
makes payment of $ ________________ therefor in cash or by certified check,
and requests that such shares be issues and be delivered to_________________,
the address for which is set forth below the signature of the undersigned.
Date:_____________________________
_____________________________
(Taxpayer’s I.D. Number)

____________________________________
(Signature)
____________________________________
____________________________________
(Address)

ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrant.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto __________________ the right to purchase shares of Common Stock
of Taser International, Incorporated, to which the within Warrant relates and
appoints ________________ attorney, to transfer said right on the books of Taser
International, Incorporated, with full power of substitution in the premises.
Date:_____________________________

____________________________________
(Signature)
____________________________________
____________________________________
(Address)

Page 7 of 8

Ed#: 2

*P64567/6100807/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 41
CRC: 38
P64567.SUB, DocName: EX-10.8, Doc: 13, Page: 8
Description: Exhibit 10.08

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.08.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

8
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 5.)

The undersigned hereby irrevocably elects a cashless exercise of the
right of purchase represented by the within Common Stock Purchase Warrant for,
and to purchase thereunder, ______________ shares of Common Stock, as provided
for in Section 5 therein.
If said number of shares shall not be all the shares purchasable under
the within Common Stock Purchase Warrant, a new Warrant is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher number of shares.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional shares to:
NAME:

___________________________________________
(Please Print Name)

ADDRESS:

___________________________________________
___________________________________________

SOCIAL SECURITY NUMBER:

________________________________

SIGNATURE:

________________________________

NOTE: The above signature should correspond exactly with the name on
the first page of this Common Stock Purchase Warrant or with the name
of the assignee appearing in the assignment form on the preceding page.

Page 8 of 8
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/6100808/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.9, Doc: 14

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.9
p64567ex10-9.txt
EX-10.9

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 14 SN: *
*DOCHDR/14*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 31
CRC: 32740
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6100901/2*

1
Exhibit 10.9
[ICER CORPORATION LOGO]

THIS AGREEMENT is made this 15th day of October, 1993 between Mr. John H. Cover
(hereinafter called "Mr. Cover"), and ICER Corporation (hereinafter called
ICER), an Arizona Corporation.
WITNESSETH:
WHEREAS, Mr. Cover has critical skills and industry knowledge material to
the development and marketing of products relating to the business of ICER
NOW, THEREFORE, the parties agree as follows:
ARTICLE I: SCOPE OF THE AGREEMENT
1. Mr. Cover agrees to join the management team of ICER Corporation as an
officer and director of the company for one (1) year full time
employment. His position will encompass responsibility for technology
and product development, but will not be limited to such areas.
2. In accordance with his position with ICER, Mr. Cover agrees not to
engage in independent business relations with competitors of ICER
wherein:
i) Competitors of ICER are defined as companies engaged in the
manufacture and/or design of electronic weapons that are less than
fourteen inches in length and are non lethal.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 47
CRC: 51507
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 2

[E/O]

<PAGE>
2
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6100902/1*

COVER AGREEMENT

ii) Independent business relations are defined as any fee for service
arrangement, or any product development work with competitors as
defined in i).
iii) Independent business relations do not include any work or
relationships conducted within the framework of Mr. Cover’s
representation of ICER.
iv) Mr. Cover is free to leave unaltered the licensing arrangements
already in existence with such competitors and to pursue
compensation from such competitors for the use of his existing
patents at his discretion.
v) The provisions of this section shall remain in full force and effect
for the period of Mr. Cover’s employment with ICER.
vi) Breach of this agreement wherein Mr. Cover engages in independent
business relations with competitors of ICER during the period
described in iv), will result in the forfeiture of Mr. Cover’s
remaining stock options and the immediate termination of his
employment with ICER.
3. Mr. Cover agrees to license ICER Corporation: Rights to utilize the
TASER trademark in conjunction with product marketing and other business
functions. Further, Mr. Cover agrees not to license the use of the TASER
trademark to any company not already licensed for such use (see addendum
I).
4. Mr. Cover will provide ICER with a comprehensive listing of his existing
patents and trademarks to be attached as an addendum to this document
(addendum I). Such listing will include the names and addresses of all
licensed entities, and all renewal rights for such licensing for said
patents and trademarks.
5. All technical designs and intellectual property generated during Mr.
Cover’s work with ICER will be work-made-for-hire or assigned to ICER
and will be the exclusive property of the Company.
6. Mr. Cover affirms that he has complete authority over the patents and
trademarks in the agreement and that he is free to enter into this
agreement without any hindrance from or violation of prior commitments.
Mr. Cover further affirms that he is not bound by non-disclosure or
trade secret protection clauses which would inhibit him from fully
applying his knowledge to his work at ICER. Accordingly, Mr. Cover
indemnifies ICER from any damages

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 14933
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
3
ICER CORPORATION
COVER AGREEMENT
-------------------------------------------------------------------------------resulting from litigation regarding prior commitments which would preclude
him from having entered into this agreement.
7. Mr. Cover agrees not to disclose the confidential information of ICER
Corporation without clear consent from the other members of management.
Such information will include any information which is clearly designated
as confidential, including trade secrets developed, marketing plans,
manufacturing know how, financial or other data which is designated as
confidential.
ARTICLE II: COMPENSATION
1. Mr. Cover will be paid a salary of $2,500 per month during the time of his
full time employment with the Company.
2. Mr. Cover will receive stock options for 10,000 shares of ICER Corporation
representing ten (10) percent of the company with the following vesting
schedule:
2,500
2,500
2,500
2,500

shares
shares
shares
shares

Ed#: 2

*P64567/6100903/2*

at initiation of this agreement
upon completion of functional prototype
at first shipment of product to market
on Oct. 15, 1994 (1 year).

3. These options will have a strike price of $0.36 (thirty six cents per
share) and a time to expiration of 5 years during Mr. Cover’s continued
involvement with the company.
4. Further, Mr. Cover will receive a cash bonus in the amount of the exercise
price of the stock options at the date and time of each stock option
vesting that can be used only for exercising the above stock options.
5. Mr. Cover’s equity position (via stock options) is guaranteed not to be
diluted below ten (10) percent through the first $250,000 of invested
capital.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 52
CRC: 21268
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
4
ICER CORPORATION
COVER AGREEMENT
-------------------------------------------------------------------------------ARTICLE III: CONTINGENCIES
1. Patrick W. Smith and Phillips W. Smith may elect to discontinue the
activities of the corporation upon 2 weeks’ notice to Mr. Cover. Under such
circumstances, Mr. Phillips W. Smith will have the right to reclaim the
liquid assets of the company not to exceed the amount of his cumulative
investment. Further, from date of such notice Mr. Cover will have the right
to use his skills and trademarks for whatever purpose he desires.
2. Mr. Cover may elect not to continue his work with the Company with 2 weeks’
notice. Mr. Cover would retain all vested options with right to exercise
for 6 months from the date of departure from the company. Unvested options
would be forfeited, and the corresponding shares would remain the property
of the Company.
3. In the event that Mr. Cover should not be able to exercise power of
attorney over the equity in his name while the company is privately held
(i.e. the shares are not on the public market), the Corporation would have
option to repurchase such shares within 6 months from Mr. Cover’s estate or
heirs for an amount equal to the greater of:
i) The book value of such shares calculated by standard accounting
practices
ii) $10 per share
iii) Amounts solicited from competitive bidders.
AGREED,

By:

/s/ Patrick Smith
----------------------Patrick Smith
For ICER CORPORATION

Dated:

10/15/93
--------------------

[SEAL]
CORPORATE SEAL

By:

Ed#: 2

*P64567/6100904/2*

/s/ John H. Cover
----------------------John H. Cover

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 27653
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
AMENDMENT TO LICENSING AGREEMENT

THIS AMENDMENT TO LICENSING AGREEMENT ("AMENDMENT") is made and entered
into this 31st day of August, 1996, by and between John H. Cover, Jr. ["JACK
COVER"] and Air Taser, Incorporated f/k/a/ ICER Corporation, an Arizona
corporation ["AIR TASER"].
In consideration of the covenants and agreements hereinafter set forth,
the amounts of money paid in accordance herewith, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
that certain Licensing Agreement dated October 15, 1993 ("LICENSE") is hereby
amended as follows:
1.
AIR TASER hereby agrees to pay to JACK COVER and JACK COVER hereby
agrees to accept the sum of One Hundred Thousand Dollars ($100,000) in full
payment and satisfaction of any and all minimum royalties and earned royalties
now due or hereinafter accruing to JACK COVER from AIR TASER pursuant to the
terms of the LICENSE as originally executed or as subsequently modified or
amended, in writing, prior to the date hereof. Said payment shall be made
contemporaneously with the full execution and delivery of this AMENDMENT by
each of the parties hereto.
2.
JACK COVER, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, for: (i) himself, (ii) his heirs,
(iii) his legal representatives, legatees, successors and assigns of all of the
foregoing persons and entities, hereby releases and forever discharges AIR
TASER, any past, present and future shareholders, successors, assigns, officers,
directors, agents, attorneys and employees of AIR TASER, together with their
respective heirs, legal representatives, legatees, successors, and assigns, of
and from all actions, claims, demands, damages, debts, losses, liabilities,
indebtedness, causes of action either at law or in equity and obligations of
whatever kind or nature, whether known or unknown, direct or indirect, new or
existing, by reason of any matter, cause or thing whatsoever from the beginning
of the world to the date hereof concerning any minimum of earned royalties which
are now due or which may hereafter accrue to JACK COVER pursuant to the terms of
the LICENSE.
3.
This AMENDMENT embodies the entire agreement between the parties and
supersedes any prior agreements or understanding between them in connection
with the subject matter hereof and the transactions contemplated hereby. There
are no oral or parol agreements, representations, or inducements existing
between the parties relating to this transaction which are not expressly set
forth herein and covered hereby. All terms of this AMENDMENT are contractual
and not mere recitals and shall be construed as if drafted by all parties
hereto. The terms of this AMENDMENT are and shall be binding upon each of the
parties hereto, their agents, employees successors and assigns, and upon all
other persons
-1 of 2-

Ed#: 4

*P64567/6100905/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 476
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
6
claiming any interest in the subject matter hereof through any of the parties
hereto.
4.
To the extent that this AMENDMENT contradicts, is inconsistent or in
conflict with any prior agreements between or among any or all of the parties,
this AMENDMENT supersedes any conflicting or inconsistent provision of any prior
agreement and is controlling to the extent necessary to resolve such conflict or
inconsistency. Any and all provisions in a prior agreement not inconsistent with
this AMENDMENT remain valid and binding.
5.
It is acknowledged that the parties hereto have read this AMENDMENT
and consulted counsel before executing same; that they have relied upon their
own judgment and that of their respective counsel in executing this AMENDMENT
and have not relied on or been induced by any representation, statement or act
by any other party referred to in this instrument; that the parties hereto have
entered into this AMENDMENT voluntarily, with full knowledge of its
significance; and that this AMENDMENT is in all respects complete and final.
6.
If any term or provision of this AMENDMENT or the application thereof
to any person, entity or circumstance shall, to any extent, be held invalid
and/or unenforceable by a court of competent jurisdiction, the remainder of this
AMENDMENT, or the application of such term or provisions to persons, entities or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby, and each term and provision of the AMENDMENT
shall be valid and be enforced to the fullest extent permitted by law.
7.
This AMENDMENT may not be amended, changed, or modified except by
written instrument executed by all parties hereto.
8.
This AMENDMENT shall be construed and enforced according to the laws
of the State of Arizona.
9.
This AMENDMENT may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one instrument.
IN WITNESS WHEREOF, the parties have caused this AMENDMENT to be duly
executed as of the day and year first above written.
AIR TASER, INCORPORATED
By: /s/ Patrick Smith
-----------------

Title:

/s/ John H. Cover, Jr.
-----------------John H. Cover, Jr.
11 Half Moon Bend
Coronado, CA 92118

President
--------------2 of 2-

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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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Lines: 50
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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.07.00

Date: 7-MAY-2001 14:55:25.87

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7
2nd AMENDMENT TO THE AIR TASER LICENSING AGREEMENT

This 2nd Amendment to the AIR TASER licensing agreement (2nd Amendment) is
made and entered into this 31st day of August, 1996, by and between John H.
Cover, Jr. ["JACK COVER"] and AIR TASER, Incorporated f/k/a ICER Corporation, an
Arizona Corporation ["AIR TASER"].
In consideration of the covenants and agreements hereinafter set forth,
the amounts of money paid in accordance herewith, and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
that certain Licensing Agreement dated October 15, 1993 ["LICENSE"] is hereby
amended as follows:
1. AIR TASER hereby agrees to pay to Jack Cover, and Jack Cover hereby agrees to
accept the sum of FIFTEEN THOUSAND DOLLARS ($15,000) in full payment for a
limited exclusivity for rights to technology embodied in U.S. patent
#5,078,117 ["The ’117 Patent"]. In accordance with this limited exclusivity,
Jack Cover agrees that he shall license no other company, person, or entity
of any type to utilize the technology described in the ’117 patent for use in
electronic weapon system other than the companies licensed for such use prior
to this 31st day of August, 1996. These pre-existing licenses are non
transferable and shall not be transferred to any entity other than the
original license holder as enumerated below. Further, Mr. Cover shall not
expand or modify the rights of the existing licensees, as listed below,
without written approval from AIR TASER, Inc. A comprehensive listing of such
licensed companies is given below:
a) EESTI, Engineering, LLC, a company in Poway, CA. (Copy of license
attached as Exhibit A.)
b) Yong Suk Park, d.b.a. Bestex, Co. (Copy of license addendum regarding
’117 patent rights attached as Exhibit B.)
2. This agreement in no way binds Mr. Cover from licensing rights to utilize the
’117 technology in applications which are not electronic weapons. Mr. Cover
is free to license any person, company, association, agency, or entity of any
type to utilize the ’117 technology so long as the license contains the
specific language below:
"The licensee may not use the technology embodied in U.S. Patent
#5,078,117 in conjunction with any electronic weapon system. The violation
of this restriction shall cause immediate cancellation of this license
without notice, and may cause damages payable to John H. Cover and/or AIR
TASER, Inc."
3. If any term or provision of this 2nd Amendment or the application thereof to
any person entity, or circumstance shall, to any extent, be held invalid and
or unenforceable by a court of competent jurisdiction, the remainder of this
2nd Amendment, or the application of such term or provisions to persons,
entities, or

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8
circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of
the 2nd Amendment shall be valid and be enforced to the fullest extent
permitted by law.
4.

This 2nd Amendment may not be amended, changed, or modified except by
written instrument executed by all parties hereto.

5.

This 2nd Amendment shall be construed and enforced according to the laws of
the state of Arizona.

IN WITNESS WHEREOF, the parties have caused this 2nd Amendment to be
duly executed as of the day and year first above written.
AIR TASER, INCORPORATED,
By: /s/ Patrick Smith
_________________
President

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/s/ John H. Cover, Jr.
______________________
John H. Cover, Jr.
11 Half Moon Bend
Coronado, CA 92118

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JB: P64567 PN: 610.09.09.00

9
EXHIBIT A.

Date: 7-MAY-2001 14:55:25.87

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Validation: Y
Lines: 41
CRC: 18529
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JB: P64567 PN: 610.09.10.00

Date: 7-MAY-2001 14:55:25.87

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<PAGE>
10
ELECTROARMS, INC.
John H. Cover, Pres. 602/529-2344
5833 No. Kolb Rd. #10212
Tucson, AZ 85730
December 15, 1995
LICENSE AGREEMENT BETWEEN ANTON SIMSON, EESTI Engrg, LLC, POWAY, CA,
LICENSEE & JOHN H. COVER, LICENSOR - under Pat. No. 5,078,117 (generally
covering the use of compressed gas capsules that are easily discharged &
the gas will propell projectiles, weights, contactors, nets, etc., in a
non-firearm mode of operation).
This Agreement specifically pertains to EESTI’s manufacture of Taser-type
cassettes designed to snap onto stun guns giving the stun gun owner the
Taser stand-off range & effectiveness in stopping power over dangerous
criminals.
More specifically this License relates to J.H. Cover’s License with Eastex
Co., Yong Park, who imports & sells the Thunder Power - and other stun guns
- which will be used in conjunction with the EESTI SGA Cassettes containing
the SPOGC’s.
In return for this Exclusive License to EESTI, J.H. Cover will receive an
Earned Royalty from Anton Simson, EESTI, of $0.25 - or 25(cents) @ for each
SGA Cassette they Make & Sell.
In summary, the Licensor, John H. Cover, hereby grants an Exclusive License
under Patent #5,078,117 to Anton Simson, d.b.a. EESTI Engineering, LLC, to
manufacture and sell the Stun Gun/SGA Taser Cassettes as the Exclusive
Licensee.
Signatures below constitute the legal acceptance by the two Parties of the
above Terms & Conditions.
/s/ Anton Simson
2-19-96
----------------------------Anton Simson, Licensee - Date

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/s/ John H. Cover
12/15/95
-----------------------------John H. Cover, Licensor - Date

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Operator: BPX31319

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11

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

EXHIBIT B.

Date: 7-MAY-2001 14:55:25.87

SN: 0

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12
ELECTROARMS, INC.
619/423-0689
11 Half Moon Bend, Coronado, CA 92118
Yong S Park, Pres.
Bestex Co., Unit B
3421 San Fernando Rd.
Los Angeles, CA 90065

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.12.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

December 1, 1998

Subject: License Addendum covering
Bestex Sale of a Stun Gun
Adaptor/SGA designed for the Thunder
Power Stun Gun.

ADDENDUM TO THE LICENSE AGREEMENT signed by Yong Suk Park, d.b.a. Bestex Co.,
3/7/90 & John H. Cover, Licensor, on 2/19/90.
Licensor hereby grants an Exclusive License to distribute and sell the SGA
Taser Cassettes designed to "snap" onto the front of the Bestex Thunder Power
Stun Gun modified to function with the SGA -- which projects the high voltage
electric contactors at an attacker -- such that the user does not receive a
shock to this hand (insulation)
This License is under J.H. Cover’s Patent #5,078,117 covering the
Self-Puncturing Compressed Gas Capsule. This technology permits the use of
compressed air to propell the contactors & is therefore not classified as a
Firearm. EESTI, Anton Simson, Poway, CA will make the SGA under my Patent
License & supply them to Bestex.
The Terms for Bestex’s Exclusivity are: 1)$20,000 upfront ($10,000 upon
execution of the License -- 1st week of March, 1996 -- and $10,000 April 1,
1996), 2) Bestex’s Minimum Royalty will be $2500/mos starting 4/2/96, and 3)
Bestex will pay J.H. Cover $2 Earned Royalty for each Thunder Power Stun Gun
sold(or any modification or substitution thereof that fits the SGA) and
25(cents) for each SGA Cassette sold.
It is important that Yong Park, Anton Simson & Jack Cover work as a team on
this program. There are decisions to be made such as the Packaging of the
Product -- the Thunder Power & (2) SGA cassettes in a box -- sales and
advertising strategies including the name of the Product. "Public Defender" and
ElectroStorm(stop rape & murder) are possibilities. An early meeting such as
the first week in December is suggested. Jack Cover will consult as needed
without compensation.
The signatures below constitute the legal acceptance of the two parties of the
above terms & conditions.

/s/ Yong Suk Park,
12/18/95
----------------------------Yong Suk Park, Licensee - Date

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/s/ John H. Cover
12/15/95
---------------------------John H. Cover, Licensor

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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Validation: Y
Lines: 13
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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.13.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

13
8/31/96

AIR TASER INCORPORATED

Rec’d $15,000 for 2nd Amendment Compensation
/s/ J.H. Cover
-------------J.H. Cover

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Lines: 23
CRC: 18608
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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.14.00

Date: 7-MAY-2001 14:55:25.87

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*P64567/6100914/1*

14
[SPECIMEN STOCK CERTIFICATE]
[AIR TASER LOGO]
INTELLIGENT SELF DEFENSE

Number
00004

Shares
50,000
AIR TASER INCORPORATED
Share Issue Authorized by /s/ illegible
------------President

/s/ illegible
------------Secretary

THIS CERTIFIES THAT John H. Cover is the registered holder of Fifty Thousand
(50,000) Shares transferrable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be Hereunto
affixed
this Seventeenth day of June A.D. 1994

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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

15
[SPECIMEN STOCK CERTIFICATE]

[SEAL]

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto AIR TASER, INC.
____________ Shares represented by the within Certificate, and do hereby
irrevocably constitute and appoint PATRICK SMITH Attorney to transfer the said
Shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated

AUGUST 31, 1994

In presence of
/s/ illegible
-----------------------

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/s/ John H. Cover
----------------------John H. Cover
11 Half Moon Bend
Coronado, CA 92118

NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.01

Date: 7-MAY-2001 14:55:25.87

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Ed#: 3

*P64567/610091501/3*

16
SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT ["Settlement Agreement"] is made and entered into
this 8/30/96 day of August, 1996, by and between John H. Cover, Jr. ["JACK
COVER"] and Virginia A. Cover ["VIRGINIA COVER"] and Air Taser, Incorporated
f/k/a ICER Corporation, an Arizona corporation ["AIR TASER"].
RECITALS
A. WHEREAS, AIR TASER, is an Arizona corporation engaged in the business
of manufacturing and selling certain goods and products, including a non-lethal
electronic self-defense device used to temporarily immobilize an attacker ["AIR
TASER DEVICE"].
B. WHEREAS, JACK COVER, was and is the sole owner and licensor of certain
U.S. patents, including:
a.

Patent #4,253,132 [the "132 Patent"] which covers generally the
circuitry by which current from a battery is transformed so that an
electrical charge with which a potential attacker is struck operates
to temporarily immobilize a potential attacker; and

b.

Patent #5,078,117 [the "117 Patent"] which covers generally the
non-explosive means of projecting electrically charged darts to
deliver an immobilizing electrical charge to a potential attacker.

C. WHEREAS, VIRGINIA COVER is the spouse of JACK COVER and may have or
claim certain marital property rights in and to the 132 Patent, the 117 Patent
and other assets which are the subject of this Settlement Agreement.
D. WHEREAS, on or about October 15, 1993, JACK COVER, as licensor, and AIR
TASER, as licensee, executed a certain written Licensing Agreement ["AIR TASER
LICENSE"].
A true and correct copy of the AIR TASER LICENSE executed by and between
AIR TASER and JACK COVER is attached hereto as Exhibit "A" and by reference
made a part hereof.
E. WHEREAS, by written agreement executed on or about October 15, 1993, by
and between AIR TASER and JACK COVER ["EMPLOYMENT AGREEMENT"], JACK COVER
accepted a position of employment with AIR TASER for a period of one (1) year
upon the terms and conditions set forth therein. JACK COVER asserts that on or
about October 15, 1993, in accordance with Article 1, paragraph 4, of the
EMPLOYMENT AGREEMENT, he tendered to AIR TASER a copy of a certain patent
license with Electronic Medical Research Laboratories, Inc. d/b/a Tasertron
["TASERTRON"] covering the 132 Patent and granting certain exclusive rights
relative to the U.S. law enforcement market. In or about June, 1994, JACK COVER
resigned as a full time employee of AIR TASER.
</R>

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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.02

Date: 7-MAY-2001 14:55:25.87

SN: 0

17

A true and correct copy of the EMPLOYMENT AGREEMENT executed by and
between AIR TASER and JACK COVER is attached hereto as Exhibit "B" and by
reference made a part hereof.
F.
WHEREAS, pursuant to Article I, paragraph 7, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed not to disclose the confidential information of
AIR TASER, including trade secrets, marketing plans, manufacturing know-how,
and financial or other data designated as confidential.
G.
WHEREAS, pursuant to Article I, paragraph 3, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed to license AIR TASER to utilize the "Taser"
trademark in conjunction with product marketing and other business functions and
further agreed not to license the use of the "Taser" trademark to any company
not licensed for such use prior to October 15, 1993.
H.
WHEREAS, pursuant to Article I, paragraph 5, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed that all technical designs and intellectual
property generated during his employment with AIR TASER would be
work-made-for-hire, would be assigned to AIR TASER and would be the exclusive
property of AIR TASER.
I.
WHEREAS, in April, 1995, after receiving a letter dated March 29,
1995 from AIR TASER’s attorneys, Brown & Bain, alleging certain violations of
the AIR TASER LICENSE and threatening legal action, JACK COVER and VIRGINIA
COVER filed suit in the Superior Court of the State of Arizona in and for the
County of Maricopa, captioned Cover, et al. v. Icer Corporation n/k/a Air
Taser, Incorporated, case number CV95-06851 [the "ARIZONA LITIGATION"], seeking
a declaratory judgment holding that the AIR TASER LICENSE does not include the
right to sell the AIR TASER DEVICE to law enforcement agencies together with
an injunctive Order prohibiting AIR TASER from selling or attempting to sell
the AIR TASER DEVICE to law enforcement agencies.
J.
WHEREAS, AIR TASER vigorously denies any and all liability with
respect to the allegations of fact and the claims asserted in the complaint
filed by JACK COVER and VIRGINIA COVER in the ARIZONA LITIGATION.
K.
WHEREAS, in October, 1995, AIR TASER filed its Answer and Counterclaim
in the ARIZONA LITIGATION wherein its denied, inter alia, that the AIR TASER
LICENSE restricts the sale of the AIR TASER DEVICE to any particular market or
user and further alleged, by way of counterclaim, various causes of action
including breach of contract, breach of fiduciary duty and fraud for which it
requested both money damages and injunctive and other equitable relief.
</R>

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Validation: Y
Lines: 51
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Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.03

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
18
<R>
L.
WHEREAS, JACK COVER and VIRGINIA COVER vigorously deny any and all
liability with respect to the allegations and the claims asserted in the
counterclaim filed by AIR TASER in the ARIZONA LITIGATION. JACK COVER
affirmatively asserts that on or prior to October 15, 1993, he disclosed the
terms of the TASERTRON license to AIR TASER, including the terms purporting to
grant exclusivity as to the use of the 132 Patent within certain markets and
geographical boundaries.
M.
WHEREAS, in February, 1995, TASERTRON filed an action against AIR
TASER in the Federal District Court for the Central District of California
captioned Electronic Medical Research Laboratories, Inc. d/b/a/ Tasertron v. Air
Taser, Inc., case number ED CV 95-53 RT (JRX) ["CALIFORNIA LITIGATION"]
asserting an exclusive right to market devices utilizing the technology covered
by the 132 Patent within certain markets and geographical boundaries. In
September, 1995 the CALIFORNIA LITIGATION was settled and AIR TASER agreed,
inter alia, to refrain from selling the AIR TASER DEVICE to U.S. law enforcement
agencies for a specified period of time.
N.
WHEREAS, all parties hereto desire to fully settle and compromise all
matters in controversy heretofore existing between them.
O.
WHEREAS, all parties have examined the benefits to be obtained under
this Settlement Agreement and have considered the costs, risks and delays
associated with the continued prosecution of the claims asserted in the ARIZONA
LITIGATION. Each of the parties, having full knowledge of the contents hereof
and after obtaining the advice of counsel, believes that, in consideration of
all the circumstances and after significant investigation and settlement
negotiations between and among the parties, the settlement embodied in this
Settlement Agreement is fair, reasonable and in the best interests of all
parties concerned.
NOW THEREFORE, in consideration of the foregoing Recitals, the
representations, warranties, covenants and agreements contained in this
Settlement Agreement, the sum of One Dollar ($1.00) each to the other in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto represent, warrant, covenant
and agree as follows:
1.
The foregoing Recitals and all Exhibits referred to herein and
attached hereto, are incorporated in this Settlement Agreement as if set forth
in full in the body hereof.
2.
It is hereby stipulated and agreed that, subject only to the terms of
that certain Stipulation of Settlement ("STIPULATION") executed by and between
AIR TASER and Electronic Medical Research Laboratories, Inc. d/b/a/ Tasertron in
the CALIFORNIA LITIGATION, in its present form or as it may hereafter be
amended, the AIR TASER
</R>
-3-

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Name: TASER
Validation: Y
Lines: 49
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Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.04

Date: 7-MAY-2001 14:55:25.87

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19
<R>
LICENSE authorizing the manufacture, use and sale of devices covered by the 132
Patent and the 117 Patent is unrestricted as to any particular market, user,
geographical area, dimension or design. However, the AIR TASER LICENSE shall
not encompass applications of the technology covered by the 117 Patent other
than in conjunction with electronic devices. A copy of the STIPULATION is
attached hereto as Exhibit "C".
3. It is hereby stipulated and agreed that paragraph 6.2 of the AIR TASER
LICENSE is modified so that if, an any month, the minimum royalty exceeds the
earned royalty, that excess shall be applicable as a credit to AIR TASER in the
next calendar month in the following manner: if the earned royalty for the next
month exceeds the minimum royalty for that month, then the excess shall apply
to reduce the earned royalty dollar for dollar until that excess for the
previous month is used up. However, if all the excess is not used up in that
next month, then it shall no longer operate as a credit in the future. In no
event shall AIR TASER be thereby relieved of the obligation to pay the agreed
minimum royalty in any month.
4. AIR TASER agrees that the negative balance in JACK COVER’s cumulative
royalty account existing as of the date of execution of this Settlement
Agreement, which negative balance constitutes a credit to AIR TASER against
future earned royalties, is hereby eliminated.
5. It is hereby stipulated and agreed that the period of exclusivity
relative to devices utilizing the technology covered by the 117 Patent and
meeting certain specified characteristics as provided in paragraph 4.2 of the
AIR TASER LICENSE has expired and that, subject to the provisions of paragraph
6 of this Settlement Agreement, JACK COVER is free to license others to utilize
the technology covered by the 117 Patent on a non-exclusive basis.
6. JACK COVER hereby agrees that he shall not on his own account, nor
shall he authorize in any future patent licenses he may grant to other
individuals or other entities, manufacture, use or sell or license for
manufacture, use or sale (a) any launchers which are compatible with the AIR
TASER cartridge model number 34200 or (b) cartridges which are compatible with
the AIR TASER power handle model number 34100. "Compatible" for these purposes
means a device which, without modification by the user, will operate with the
AIR TASER components [model numbers 34100 and 34200] to deliver an electric
shock to a target. AIR TASER will not knowingly and intentionally manufacture or
sell any devices [excluding model numbers 34100 and 34200] which are compatible
with any launchers or cartridges manufactured by other existing patent licenses
of JACK COVER. In any future patent licenses which JACK COVER may grant, and in
any amendments to any existing licenses which he may in the future enter into,
he shall include the following language:
</R>
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Name: TASER
Validation: Y
Lines: 40
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[E/O]

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<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.05

Date: 7-MAY-2001 14:55:25.87

SN: 0

20
"This license does not allow the licensee to manufacture, use or sell
(a) any launchers which are compatible with the AIR TASER cartridge
model number 34200 or (b) any cartridges which are compatible with the
AIR TASER power handle model number 34100. "Compatible for these
purposes means a device which, without modification by the user, will
operate with the AIR TASER components [model numbers 34100 and 34200]
to deliver an electric shock to a target. Furthermore, licensee hereby
acknowledges that it has had an opportunity to inspect or is otherwise
familiar with the AIR TASER air cartridge and the AIR TASER power
handle prior to execution of the license.

In order to facilitate JACK COVER’s compliance with this paragraph,
AIR TASER shall within ten (10) days following execution and delivery of this
Settlement Agreement, deliver three (3) inoperative power handles [model 34100]
and three (3) inoperative cartridges [model 34200] to JACK COVER.
7.
It is hereby stipulated and agreed that the last sentence of paragraph
6.3 of the AIR TASER LICENSE shall be deleted and stricken from the AIR TASER
LICENSE, and the following sentence shall be inserted in its place:
"If the DEFAULT is not cured by payment of this MINIMUM ROYALTY by
cashier’s check or money order on or before 5:00 P.M. local Arizona
time of the tenth (10th) day following written notice by Licensor to
Licensee of the facts constituting the alleged default, this licensing
agreement shall terminate automatically without further notice."
8.
It is hereby stipulated and agreed that the last sentence of
paragraph 6.4 of the AIR TASER LICENSE shall be deleted and stricken from the
AIR TASER LICENSE, and the following sentence shall be inserted in its place:
"If the DEFAULT is not cured by payment of this EARNED ROYALTY by
cashier’s check or money order on or before 5:00 P.M. local Arizona
time of the tenth (10th) day following written notice by Licensor to
Licensee of the facts constituting the alleged default, this licensing
agreement shall terminate automatically without further notice."
</R>
-5-

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*P64567/610091505/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 48
CRC: 23631
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 21
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.06

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
21
<R>
9. AIR TASER does not know of any reason why the 132 Patent or the 117
Patent should not continue in existence until the dates set forth in the AIR
TASER LICENSE. AIR TASER will not take, nor will it cause anyone else to take,
any action which would impair the validity of either patent and, if AIR TASER
shall in the future have any concern as to the early termination of either
patent, it will notify JACK COVER of the basis for its concern so that he might
take such action as he deems necessary to avoid such early termination.
10. It is hereby stipulated and agreed that upon expiration of the 132
Patent, AIR TASER’s obligation to pay JACK COVER a $2.00 per unit earned
royalty for each unit which utilizes the power generation device and electric
wave form described in the 132 Patent shall be terminated, notwithstanding AIR
TASER’s continued use of the technology covered by the 132 Patent.
11. It is hereby stipulated and agreed that upon expiration of the 117
Patent, AIR TASER’s obligation to pay JACK COVER a $0.25 per unit earned
royalty for each device which utilizes compressed gasses to launch electrical
contactors from the power generator shall be terminated, notwithstanding AIR
TASER’s continued use of the technology covered by the 117 Patent.
12. It is hereby stipulated and agreed that upon expiration of the 117
Patent, AIR TASER’s obligation to make any further minimum royalty payments or
earned royalty payments, as those terms are used in paragraphs 6.1 and 6.2 of
the AIR TASER LICENSE, to JACK COVER shall be terminated, notwithstanding AIR
TASER’s continued use of the technology covered by either or both the 117
Patent and/or the 132 Patent.
13. JACK COVER hereby represents and warrants that he is the sole owner
of the "Taser" registered trademark, Registration No. 1,235,685, and that of
those licensees of the "Taser" trademark whose licenses came into existence on
or prior to October 15, 1993, AIR TASER and Electronic Medical Research
Laboratories, Inc. d/b/a Tasertron are the only licensees currently using or
authorized to use the "Taser" trademark. JACK COVER hereby reaffirms his prior
agreement, as originally set forth in Article I, paragraph 3, of the EMPLOYMENT
AGREEMENT, that AIR TASER, as licensee, is authorized to utilize the "Taser"
trademark in conjunction with product marketing and other business functions
and that JACK COVER shall not license the use of the "Taser" trademark to any
individual or entity not licensed for such use prior to October 15, 1993. In
order to prevent abandonment of the "Taser" trademark, JACK COVER hereby agrees
that AIR TASER shall have the right, jointly with JACK COVER, to police and
protect the use of the "Taser" trademark by others, in his name or in the name
of AIR TASER, in a reasonable manner to maintain the quality of the mark and to
prevent the unauthorized use of the mark by third parties. However, other
patent licensees of JACK COVER may, with his prior
</R>
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*P64567/610091506/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 22753
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 22
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.07

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
22
<R>
written consent, refer to the "Taser" device for comparative purposes only
[patent licensees not expressly licensed to use the "Taser" trademark on or
prior to October 15, 1993 may not claim that their device is a "Taser" or
incorporate the "Taser" trademark in their product name], provided that the
word "Taser" is designated as a registered trademark, that the patent licensee
includes a disclaimer that said patent licensee is not licensee of the "Taser"
trademark and that said disclaimer appears in the same context as the word
"Taser" in the same size typeface as the word "Taser", but in no event may the
word "Taser" appear in a typeface larger than 12 points. JACK COVER further
represents and warrants that attached hereto as Group Exhibit "D" is a full and
complete list of the names and current addresses of all licensees of the
"Taser" trademark together with the copies of the subject licenses and all
amendments thereto.
14. JACK COVER does hereby sell, transfer and assign to AIR TASER all
shares of AIR TASER stock acquired by him at any time [i.e., 50,000 shares]
free and clear of all liens, claims and encumbrances. JACK COVER agrees that
contemporaneously with the execution and delivery of this Settlement Agreement
he shall surrender said stock, properly endorsed, to AIR TASER.
15. JACK COVER hereby represents and warrants that Exhibit "E" attached
hereto is a full and complete list of the names and current addresses of all
past or present licensees of the 117 Patent and the 132 Patent together with
copies of the subject licenses and any and all amendments thereto.
16. JACK COVER hereby represents and warrants that, except for the
ARIZONA LITIGATION, there are no law suits pending or threatened and there are
no existing or potential causes of action involving the 117 Patent, the 132
Patent and/or the "Taser" trademark.
17. JACK COVER hereby reaffirms his prior agreement, as originally set
forth in Article I, paragraph 5, of the EMPLOYMENT AGREEMENT that all technical
designs and intellectual property generated by JACK COVER during his work with
ATR TASER was work-made-for-hire, was, or upon request, will be assigned to AIR
TASER and is the exclusive property of AIR TASER. JACK COVER further agrees to
execute all documents and perform all acts necessary to enable AIR TASER to
acquire or perfect any and all rights, titles, patents, copyrights, interests
and other protection which may be available with regard to such technical
designs and intellectual properties. JACK COVER agrees that contemporaneously
with the execution and delivery of this Settlement Agreement he shall execute
and deliver to AIR TASER the Declaration for Patent Application with Power of
Attorney and the Assignment attached hereto as Exhibits "F" and "G",
respectively. AIR TASER warrants and agrees that the Declaration for Patent,
Exhibit "F", covers both a method of manufacturing compressed fluid containers
and a
</R>
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Ed#: 6

*P64567/610091507/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 11637
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 23
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.08

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
23
<R>
double walled compressed gas cylinder, and that patent, should it be granted,
would not, to the best of its knowledge, replace or conflict with the 117
Patent, and even if the patent should be granted, it would not allow AIR TASER
to utilize the technology covered by the 117 patent without paying JACK COVER
the royalties required by the AIR TASER LICENSE. Attached hereto as Exhibit "H"
is a schedule of intellectual property generated by JACK COVER during his work
with AIR TASER which the parties agree was either work-made-for-hire or
assigned to AIR TASER and which is the exclusive property of AIR TASER.
18. JACK COVER hereby reaffirms his continuing contractual obligation not
to disclose confidential information of AIR TASER, as originally set forth in
Article I, paragraph 7, of the EMPLOYMENT AGREEMENT. The term "confidential
information" shall mean any information or material which is proprietary to AIR
TASER, whether owned or developed by AIR TASER, which is not generally known
other than by AIR TASER, and which JACK COVER may have obtained through any
direct or indirect contact with AIR TASER. Confidential information includes,
without limitation, business records and plans, financial statements and
projections, marketing plans, manufacturing know-how, pricing structure, costs,
appraisals, customer lists, the identity of suppliers of AIR TASER whose
identities became known to JACK COVER as a result of his employment by AIR
TASER and other proprietary information which is designated as confidential.
The parties hereto acknowledge and agree that damages at law may not
be a measurable or adequate remedy for a breach of JACK COVER’s continuing
obligation not to disclose the confidential information of AIR TASER, and,
accordingly, consent to the entry by any court of competent jurisdiction in
Arizona, or, if jurisdiction is not appropriate in Arizona, such other court of
competent jurisdiction, of an order enjoining the violation of such agreement
should the requirements for an injunction be met and further agree that the
entry of such order would be an appropriate remedy for the breach of this
obligation.
19. JACK COVER and AIR TASER agree that contemporaneously with the
execution and delivery of this Settlement Agreement, they shall execute and
exchange Releases in the form attached hereto as Exhibits "I" and "J".
20. Except as otherwise provided herein and notwithstanding the execution
of the Releases executed and exchanged pursuant to paragraph 19 hereof, the
terms of the AIR TASER LICENSE, as modified by this Settlement Agreement,
including without limitation the terms governing the duration of the AIR TASER
LICENSE, the specified minimum royalty and the per unit earned royalties
applicable to both the 117 Patent and the 132 Patent, shall hereafter remain in
full force and effect.
</R>
-8-

Ed#: 4

*P64567/610091508/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 45
CRC: 39428
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 24
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.09

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
24
<R>
21. Within five (5) business days following the execution of this
Settlement Agreement by all parties hereto, JACK COVER and VIRGINIA COVER, by
and through their attorney of record, shall prepare and file with the Court
wherein the ARIZONA LITIGATION is now pending an appropriate Motion and Agreed
Order providing for the dismissal of the ARIZONA LITIGATION on its merits, with
prejudice and without costs or attorneys’ fees, all matters in controversy
having been fully settled, compromised and adjourned.
22. VIRGINIA COVER hereby consents to each and every term and provision
of the Settlement Agreement as set forth herein and hereby sells, transfers and
assigns to AIR TASER any right, title and interest she may have in or to the
property hereby transferred by JACK COVER to AIR TASER.
23. The parties hereto acknowledge that it is their intent to consummate
this Settlement Agreement and agree to execute all documents and to perform all
acts reasonably necessary to effectuate and implement all terms and conditions
of this Settlement Agreement.
24. This Settlement Agreement shall be preserved as confidential by the
parties hereto. The parties hereto, and each of them, agree (i) to take all
precautions necessary to safeguard the information contained in this Settlement
Agreement and any and all information furnished in connection herewith from
disclosure to any person or entity other than employees, officers, directors and
agents (including legal counsel and financial advisors) and, in addition, those
individuals who otherwise normally have access to information of such nature
under the parties’ established confidentiality procedures; (ii) not to use this
Settlement Agreement or any information contained herein or furnished in
connection herewith for any purpose other than to resolve the issues and
controversies as may exist between the parties. The parties hereto, and each of
them, further agree that if any of them are requested or required by law to
disclose the contents of this Settlement Agreement or any information contained
herein or furnished in connection herewith, the party so requested will provide
all other parties with prompt written notice of the request so that any party
may seek an appropriate protective order or consent to the waiver of compliance
with this confidentiality provision of the Settlement Agreement. If in the
absence of a protective order or such waiver, any party is, nonetheless,
compelled to disclose any or the contents of this Settlement Agreement to a
Court or other tribunal under circumstances where such party would be liable
for contempt or other penalty if disclosure is not made, said party shall
disclose to such Court or other tribunal only that limited portion of the
information which is legally required to be disclosed.
</R>
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Ed#: 4

*P64567/610091509/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 13527
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 25
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.10

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
25
<R>
25. Unless expressly provided otherwise in this Settlement Agreement, any
notice, request, demand or other communication required to be given under this
Settlement Agreement or any document or instrument executed and delivered
pursuant to this Settlement Agreement shall be in writing, shall be
deemed to be given or delivered (a) on the date of personal or facsimile
delivery of the notice, request, demand or other communication at or before 2:00
p.m. local Arizona time, (b) on the second business day after the day of mailing
of such notice, request, demand or other communication by United States
Registered Mail or United States Certified Mail, postage prepaid, or (c) on the
next business day after mailing of such notice, request, demand or other
communication by express next-day courier, freight charges prepaid, to the
parties (including any person or entity designated for receipt of a photocopy
thereof) at the following addresses or at such other address as any of the
parties may hereafter specify in the aforementioned manner:
if to JACK COVER:

John H. Cover, Jr.
5855 North Kolb Road
Apt. 10212
Tucson, AZ 85750
(Facsimile:

with a copy to:

)

Gary F. Howard, Esq.
Howard & Rouse, P.C.
3800 North Central Avenue
Suite 280
Phoenix, AZ 85012
(Facsimile: 602-263-6005)

if to VIRGINIA COVER:

Virginia A. Cover
11 Half Moon Bend
Coronado, CA 92118
(Facsimile:

with a copy to:

)

Gary F. Howard, Esq.
Howard & Rouse, P.C.
3800 North Central Avenue
Suite 280
Phoenix, AZ 85012
(Facsimile: 602-263-6005)

</R>
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Ed#: 5

*P64567/610091510/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 13787
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 26

[E/O]

<PAGE>
26
<R>
if to AIR TASER:

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.11

Date: 7-MAY-2001 14:55:25.87

SN: 0

Patrick W. Smith
Air Taser, Inc.
7339 E. Evans Road, Suite 1
Scottsdale, AZ 85260
(Facsimile: 602-991-0791)

with a copy to:

Joel H. Shapiro, Esq.
Kamenear, Kadison & Anderson
20 North Wacker Drive
Suite 4100
Chicago, IL 60606
(Facsimile: 312-332-6163)

26. This Settlement Agreement embodies the entire agreement between the
parties and supersedes any prior agreements or understanding between them in
connection with the subject matter hereof and the transactions contemplated
hereby. There are no oral or parol agreements, representations, or inducements
existing between the parties relating to this transaction which are not
expressly set forth herein and covered hereby. All terms of this Settlement
Agreement are contractual and not mere recitals and shall be construed as if
drafted by all parties hereto. The terms of this Settlement Agreement are and
shall be binding upon each of the parties hereto, their agents, employees
successors and assigns, and upon all other persons claiming any interest in the
subject matter hereof through any of the parties hereto.
27. To the extent that this Settlement Agreement contradicts, is
inconsistent or in conflict with any prior agreements between or among any or
all of the parties, this Settlement Agreement supersedes any conflicting or
inconsistent provision of any prior agreement and is controlling to the extent
necessary to resolve such conflict or inconsistency. Any and all provisions in
a prior agreement not inconsistent with this Settlement Agreement remain valid
and binding.
28. This Settlement Agreement may not be amended, changed, or modified
except by written instrument executed by all parties to this Settlement
Agreement.
29. The place of business of AIR TASER, the place of negotiation,
execution and delivery of this Settlement Agreement and the other
documents and instruments to be executed and delivered pursuant to this
Settlement Agreement, and the place of performance under this Settlement
Agreement being the State of Arizona, this Settlement Agreement shall be
construed and enforced according to the laws of the State of Arizona.
</R>
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Ed#: 3

*P64567/610091511/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 58324
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 27

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.12

IN WITNESS WHEREOF, the parties have caused this Settlement Agreement to
be duly executed as of the day and year first above written.
AIR TASER, INCORPORATED
/s/ Patrick Smith
------------------------Title: President
----------------------

/s/ John H. Cover, Jr.
--------------------------John H. Cover, Jr.
/s/ Virginia A. Cover
--------------------------Virginia A. Cover

</R>
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*P64567/610091512/3*

<PAGE>
27
<R>
30. This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.

By:

Date: 7-MAY-2001 14:55:25.87

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 43373
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 28

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.16.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

28
LICENSING AGREEMENT

1.

CONSIDERATION; EFFECTIVE DATE
1.1 The effective date of this agreement shall be Oct. 15, 1993.

2.

PARTIES
2.1 John H. Cover is an individual with business located at Box 404, 4725
Sunrise Drive, Tucson, Arizona 85718 (LICENSOR)
2.2 ICER Corporation is an Arizona Corporation engaged in the development
of non lethal electronic weapons for sale to the general consumer market
(LICENSEE).

3.

BACKGROUND
3.1 Licensor represents and warrants that he owns several patent rights,
both domestic and foreign as listed on Exhibit "A" though not in every
country of the world, and specifically U.S. Patent Number 4,254,132 and
5,078,117, (the Licensed Patents) concerning a power supply and ballistics
launching mechanism for weapons or other devices utilizing electricity for
immobilization purposes.
3.2 Licensor is not aware of any ownership of another of inventions or
patent rights or trade secret or know-how rights in conflict with his own;
and Licensor believes that he possesses such right, title and interest in
and to the electronic immobilization devices and equipment useful therein
as is necessary and appropriate to the terms of this agreement.
3.3 Licensee is a company seeking to develop such technology for
manufacture and marketing an alternative non lethal self defense device to
firearms.
3.4 Any other concepts, advanced technologies or other patents Licensor now
possesses or might obtain in the future are specifically excluded from this
agreement. HOWEVER, SUCH TECHNOLOGIES MAY BE COVERED IN SEPARATE
ARRANGEMENTS SPECIFYING CONTRACT AND SALARIED WORK.

4.

LICENSE

Ed#: 2

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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 43
CRC: 40478
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 29

[E/O]

<PAGE>
29
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.17.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

COVER AGREEMENT

4.1 Licensor hereby grants Licensee a non exclusive license for use of
patent number 4,254,132 and the electric wave form and power generator
described therein. Under said licensed patent to manufacture, use and sell
devices, with and without launching mechanisms covered by patent number
4,254,132.
4.2. LICENSOR HEREBY GRANTS LICENSEE LICENSE FOR PATENT 5,078,117. LICENSOR
IS LICENSED UNDER SAID PATENT TO MANUFACTURE, USE AND SELL DEVICES COVERED
BY PATENT 5,078,117. THIS LICENSE WILL BE EXCLUSIVE FOR DEVICES WHICH MEET
ALL OF THE FOLLOWING CHARACTERISTICS:
i)
ii)
iii)
iv)

ELECTRONIC WEAPONRY DESIGNED TO IMMOBILIZE
WEAPON AS IN i) WHEREIN THE GREATEST DIMENSION OF THE WEAPON IS
OF LESS THAN FOURTEEN INCHES.
A WEAPON WHICH IS DESIGNED TO BE NON LETHAL
A WEAPON DESIGNED FOR USE AGAINST HUMANS

THIS EXCLUSIVITY BINDS LICENSEE TO ENSURE THAT ANY FURTHER LICENSING
OF PATENT 5,078,117 DESCRIBES CLEARLY THAT THE LICENSING OF PATENT
5,078,117 DESCRIBES CLEARLY THAT THE LICENSE MAY NOT BE USED FOR
MANUFACTURE OF DEVICES WHICH MEET THOSE FOUR CHARACTERISTICS. THIS
EXCLUSIVITY WILL BE BINDING FOR TWENTY FOUR MONTHS (24). AFTER TWENTY FOUR
MONTHS, THIS EXCLUSIVITY CLAUSE WILL REMAIN IN EFFECT IF THE TOTAL EARNED
ROYALTIES PAID BY LICENSEE TO LICENSOR EXCEEDS $100,000 PER YEAR, USING
MONTHS 12-24 AS THE FIRST YEAR FOR SUCH CALCULATION. SHOULD THE EARNED
ROYALTIES FALL BELOW $100,000 PER YEAR, LICENSOR WILL BE FREE TO LICENSE
PATENT 5,078,117 FOR SIMILAR USE.
4.3. No party shall enter into any contracts or make any warranties on
behalf of the other party.
4.4. Licensee shall not negotiate sub license or assign this license unless
specifically authorized in writing by Licensor. Bona fide sales by Licensee
to bona fide third parties for resale are not sub licensing so long as
these sales are not in violation of Paragraph 6.12 below.
5.

Ed#: 5

*P64567/6100917/5*

TERM OF LICENSE
5.1. The license will be for the period of validity of patent 4,254,132 on
devices utilizing the technology described therein

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 49373
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 30

[E/O]

<PAGE>
30
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.18.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

COVER AGREEMENT

and for the PERIOD OF VALIDITY of patent 5,078,117 for mechanisms
utilizing the technology described therein.
5.2 Licensee’s obligation to pay royalties, as set forth in
Paragraph 6, runs in favor of Licensor’s heirs, successors and
assigns.
6.

Ed#: 3

*P64567/6100918/3*

ROYALTIES
6.1 From Oct. 15, 1993 until the expiration of the above described
patents, unless Licensee ceases to make, use, or sell devices covered by
the Licensed Patents, Licensee agrees to pay Licensor a MINIMUM ROYALTY of
Two thousand five hundred and no/100 Dollars ($2,500) per month payable on
the 15th and on the 15th of each and every month thereafter during the
term of this license. Payment of the MINIMUM ROYALTY shall be delinquent
if not paid within 5 days after the due date.
6.2 LICENSEE ALSO AGREES TO PAY AN EARNED ROYALTY TO BE COMPUTED MONTHLY
AND, AFTER REDUCTION BY THE AMOUNT PAID IN CUMULATIVE MINIMUM ROYALTIES
ABOVE CUMULATIVE EARNED ROYALTIES, SAID EARNED ROYALTIES SHALL BE EQUAL TO
TWO DOLLARS PER UNIT ($2.00) FOR EACH UNIT WHICH UTILIZES THE POWER
GENERATION DEVICE AND ELECTRIC WAVE FORM DESCRIBED IN PATENT 4,254,132 AND
$0.25 PER UNIT FOR EACH DEVICE WHICH UTILIZES COMPRESSED GASSES TO LAUNCH
ELECTRICAL CONTACTORS FROM THE POWER GENERATOR. THIS $0.25 EARNED
ROYALTY SHALL REMAIN IN EFFECT FOR THE LIFE OF PATENT 4,254,132 IF IT DOES
NOT UTILIZE THE TECHNOLOGY DESCRIBED IN PATENT NUMBER 5,078,117. IF IT
DOES UTILIZE THE TECHNOLOGY DESCRIBED IN PATENT NUMBER 5,078,117, THEN THE
EARNED ROYALTY SHALL REMAIN IN EFFECT FOR THE LIFE OF SAID PATENT
5,078,117. AN EARNED ROYALTY OF $0.10 WILL BE PAID FOR "PRACTICE
CASSETTES" WHICH UTILIZE THE TECHNOLOGY IN PATENT 5,078,117, WHEREIN
"PRACTICE CASSETTES" ARE DEFINED AS DEVICES WHICH SIMULATE THE ACTION OF
PROPELLING ELECTRICAL CONTACTORS TO A TARGET BUT WHICH ARE
NON-FUNCTIONAL--I.E. ARE NOT RELIABLE CONTACTORS FOR USE IN COMBAT
SITUATIONS.
6.3 Licensee’s MINIMUM ROYALTY payment is due on the 15th of each month.
MINIMUM ROYALTY payments are past due five days thereafter. If MINIMUM
ROYALTY payments are not made within five days of the due date, then a
DEFAULT of this agreement occurs automatically and without notice.
Licensee has

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 30753
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 31

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.19.00

<PAGE>
31
ICER CORPORATION

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 5

*P64567/6100919/5*

COVER AGREEMENT

payment with a cashier’s check or money order for the full amount of the
MINIMUM ROYALTY due. If the DEFAULT is not cured by payment of this MINIMUM
ROYALTY by cashier’s check or money order by 5:00 P.M. on the tenth day after
which it is due, this licensing agreement is automatically terminated without
notice.
6.4. Licensee’s EARNED ROYALTY payment is due on the fifteenth day of the month
following the month in which the REVENUES FROM SALES WERE RECEIVED. EARNED
ROYALTY payments are past due and delinquent if not paid by 5:00 P.M. on the
twentieth day of SAID MONTH. If EARNED ROYALTY payments are not made by the
twentieth of the month, then a DEFAULT of this agreement occurs automatically
and without notice. Licensee has until the thirtieth of the month to cure the
DEFAULT by payment with a cashier’s check or money order for the full amount of
the EARNED ROYALTY due. If the DEFAULT is not cured by payment of this EARNED
ROYALTY by cashier’s check or money order by 5:00 P.M. on the thirtieth day of
the month in which it is due, this licensing agreement is automatically
terminated without notice.
6.5. Royalties are payable by Licensee to Licensor at the address of the
Licensor.
6.6. Royalties are payable in U.S. Dollars
6.7. Accompanying each EARNED ROYALTY payment, Licensee will provide to Licensor
the accounting data on the sales of the licensed devices, including any daily
summaries and the monthly summary from which the gross sales figures for the
month are determined.
6.8. Licensee will keep books, accounts, and records that reflect all revenues
and expenditures incurred in connection with the operation of its business. The
books, accounts, and records shall be maintained at the regular place of
business of Licensee. Licensee, during regular business hours, shall make the
books, accounts, and records required to be maintained herein available to
Licensor and/or his designated legal representative for examination and audit by
appointment upon reasonable request and during normal business hours. Licensor
agrees to pay for said examination and audit, however, if said examination and
audit reveals a discrepancy of more than 5% of reported figures, Licensee shall
pay for an examination and audit

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 48
CRC: 17933
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 32

[E/O]

<PAGE>
32
ICR CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.20.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

COVER AGREEMENT

6.9.
Within sixty days after the end of each calendar year, Licensee
shall prepare and deliver to Licensor a detailed statement of sales during
the calendar year that result from the operations of Licensee’s business.
6.10.
Licensor agrees that all such information shall be held by its
legal representatives, agents, trustees, attorneys, and accountants in
confidence.
6.11.
Licensee will mark each of the subject devices with the following
notice: "Licensed under U.S. Patent No. 4,253,132" Or: "Licensed under U.S.
Patent No. 5,078,117" Or both.
6.12.
7.

DELETED.

INFRINGEMENT OF LICENSOR’s PATENTS
7.1.
In the event that any party shall become aware of any perceived
infringement or any appropriation of Licensor’s patents, trade secrets, or
know how rights in the electronic immobilization devices or equipment,
products or materials useful therein, the party shall give notice thereof
to the other party hereto.
7.2.
Licensee agrees to cooperate with any lawful efforts that
Licensor may undertake to seek legal remedies for any such infringements or
misappropriations.

8.

Ed#: 3

*P64567/6100920/3*

INDEMNITIES FOR MALFEANCE, LIABILITY FOR PERSONAL INJURY OR PROPERTY
DAMAGE
8.1.
The License herein granted to Licensee is primarily in the
nature of a sharing of information and a covenant not to sue for
infringements of the Licensor’s rights and is not in the nature of a
specification of activities required of the Licensee or of equipment or
process of details required to be used by the Licensee.
8.2.
The manufacture, use, and sale of Licensee’s products shall be
the sole responsibility of Licensee and/or its agents.
8.3.
Accordingly, Licensor shall not be liable for any personal injury
or property damage resulting from the design, construction, or use of the
licensed technology or of the equipment or products used in connection with
the technology, if such injury or damage arises from the activities of
Licensee.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 44
CRC: 49066
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 33

[E/O]

<PAGE>
33
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.21.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

COVER AGREEMENT

8.4 In no event shall Licensor be liable for any direct, special,
incidental, or consequential damages, or any damages whatsoever, whether in
an action for contract, negligence, or other tortious action arising out
of, or in connection with, the use of any of the products covered by this
license.
8.5 Licensee shall protect, save, indemnify, and hold Licensor harmless
from all claims, demands, charges, or litigation arising out of the making,
using, or selling of the merchandise and devices produced and sold by
Licensee and arising, directly or indirectly, out of, or by reason of, any
business activities of Licensee. Licensee shall reimburse Licensor for all
loss, damage, or expense, including reasonable attorney’s fees (should such
a creature exist), which he may suffer or incur, directly or indirectly, by
reason of any such claims, demands, charges, or litigation. This indemnity
shall extend to and include any claims for personal injuries or damage
caused to persons using the merchandise or devices made or sold by
Licensee.
9.

CONTROLLING LAWS
9.1 All questions relating to the validity, interpretation, performance,
or enforcement of this agreement, whether by arbitration or otherwise,
shall be determined in a court with the laws applicable to the State of
Arizona, U.S.A.

10.

BINDING EFFECT
10.1 Each and every provision on this license shall bind and shall inure to
the benefit of the parties hereto and their legal representatives.
10.2 The term "legal representatives" means in addition to executors and
administrators, every person, partnership, corporation, or association
succeeding to the interest or to any part of the interest in or to this
license or in the subject matter of this license, of either Licensor or
Licensee, whether such succession results from the act of a party interest,
occurs by operation of law, or is the effect of the operation of the law
together with the act of such a party. Each and every covenant, agreement,
and condition of this agreement to be performed by the Licensee shall be
binding upon all successors in the interest to Licensee.

11.

NOTICES

Ed#: 2

*P64567/6100921/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 54520
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 34

[E/O]

Phone: (602) 223-4455

Date: 7-MAY-2001 14:55:25.87

SN: 0

COVER AGREEMENT

All notices required herein shall be in writing.

11.2.
Written notices may be delivered personally to the president of
the subject party or to the officer or person specified below.
11.3.
Written notices shall be deemed to have been effective three days
following the date of mailing by certified mail, postage prepaid, return
receipt requested, addressed to John H. Cover, Licensor, as follows:
BOX 404
4725 Sunrise Dr.
Tucson, Arizona 85718
Licensee addressed to:
4601 East Indian Bend Road
Scottsdale, Arizona 85253
11.4
Each party shall have the right to change the effective address
for a notice by a notice in writing directed to the other party above.
12.

ENTIRE AGREEMENT; AMENDMENTS; HEADINGS
12.1
This agreement together with its appendices constitutes the
entire agreement between the parties REGARDING LICENSING OF TECHNOLOGY, and
SUPERSEDES any prior communications ON THE SUBJECT whether written or oral.
12.2
This agreement may be amended or modified only by an instrument
in writing, signed by duly constituted officers of both parties.
12.3
No waiver, no matter how long continuing or how many times
extended, shall be construed as a permanent waiver or as an amendment to
this instrument.
12.4
The marginal headings herein are for purposes of convenient
reference only and shall not be used to construe or modify the terms
written in the text of this instrument.

13.

FAILURE TO PERFORM

Ed#: 2

*P64567/6100922/2*

<PAGE>
34
ICER CORPORATION
11.1.

Operator: BPX31319

JB: P64567 PN: 610.09.22.00

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 29
CRC: 42131
P64567.SUB, DocName: EX-10.9, Doc: 14, Page: 35

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.23.00

COVER AGREEMENT

13.1. Licensee, as well as its successors in interest and or assigns, agrees
that failure to perform in accordance with the terms of this license,
terminates this license and any manufactures, use, or sale of devices covered
by the Licensed Patents, with or without launching mechanisms, thereafter is
without license.

AGREED,

Dated: 10/15/93
-------------------CORPORATE SEAL
[SEAL]
</TEXT>
</DOCUMENT>

Ed#: 4

*P64567/6100923/4*

<PAGE>
35
ICER CORPORATION

By: /s/ Patrick Smith
----------------------Patrick Smith
For ICER CORPORATION

Date: 7-MAY-2001 14:55:25.87

SN: 0

By: /s/ John H. Cover
----------------------John H. Cover

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.10, Doc: 15

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.10
p64567ex10-10.txt
EX-10.10

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 15 SN: *
*DOCHDR/15*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 47
CRC: 63302
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 10.10
[Taser(R) Logo]
[TASER INTERNATIONAL LETTERHEAD]
PROMISSORY NOTE

$500,000.00
January 23, 2001
Scottsdale, Arizona
FOR VALUE RECEIVED, the undersigned TASER International, Inc., a Delaware
corporation ("Maker"), promises to pay to Phil Purer or his order ("Payee") the
sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00), together with
interest at the rate of one and one-half percent (1.50%) per month from the
date hereof through the earlier of (a) the closing of an underwritten initial
public offering of Maker’s common stock or (b) July 1, 2002 (the applicable
date being the "Maturity Date").
Payments: On or before the Maturity Date, Maker shall pay the sum of all
interest and principal due under this Note from the date of this Note through
the date of such payment. Maker shall not be required to make any payment of
interest or principal pursuant to this Note prior to the Maturity Date.
Type and Place of Payments: Payments of principal and interest pursuant to
this Note shall be made in lawful money of the United states of America to Payee
at 1610 Loma Vista Drive, Beverly Hills, California 90210, or at such other
address as Payee shall direct.
Advance Payment: Maker may prepay all or any portion of the amounts due
under this Note at any time without penalty or premium.
Warrant Right: In consideration of the loan from Payee to Maker evidenced
by this Note, Maker shall issue to Payee on the date of this Note a warrant to
purchase up to 5,000 shares of Maker’s common stock, which warrants shall be
exercisable at a price per share of $10.00 and which warrant shall be
substantially in the form of EXHIBIT A attached hereto.
Default: Maker shall be in default under this note if it shall fail to
fully pay this Note within ten (10) business days after the Maturity Date.
Successors and Assigns: This Note shall be binding upon Maker and upon its
successors and assigns, and shall inure to the benefit of Payee and his heirs,
devisees, personal representatives, successors and assigns. This Note shall be
fully assignable by Payee without Maker’s consent.
PAGE 1 - PROMISSORY NOTE

Ed#: 4

*P64567/6101003/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 476
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

2
[Taser(R) LOGO]
[TASER INTERNATIONAL LETTERHEAD]

Maximum Interest: Nothing contained in this Note shall be deemed to
establish or require the payment of a rate of interest in excess of the maximum
rate permitted by law. If the rate of interest required to be paid under this
Note at any time exceeds the maximum rate permitted by law, the rate of
interest required to be paid pursuant to this Note shall be automatically
reduced to the maximum rate permitted by law.
Address Changes: Each party agrees to notify the other by registered or
certified mail of any change in the party’s address.
Arizona Law: This Note shall be governed by and construed under the laws
of the state of Arizona without regard to the conflicts of laws provisions
thereof.
MAKER:
TASER International, Inc.
By: /s/ Thomas P. Smith
---------------------Its:
President
---------------------Accepted as of the above date:
/s/ Phil Purer
-------------Phil Purer

PAGE 2 - PROMISSORY NOTE

Ed#: 4

*P64567/6101004/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 57735
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6101005/2*

3
[TASER (R) LOGO]
[TASER INTERNATIONAL INCORPORATED LETTERHEAD]

THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF TASER INTERNATIONAL, INC.
(void after January 23, 2006)
This certifies that Phil Purer or assigns (the "Holder"), for
value received and subject to the provisions hereinafter set forth, is entitled
to purchase from TASER International, Inc., a Delaware corporation (the
"Company"), Five Thousand (5,000) fully paid and nonassessable shares of the
Company’s Common Stock, $0.00001 par value per share (such stock being
hereinafter referred to as the "Common Stock" and such Common Stock as may be
acquired upon exercise hereof being hereinafter referred to as the "Warrant
Stock"), at the price of Ten Dollars ($10.00) per share.
This Warrant is subject to the following provisions, terms and
conditions:
1.
Exercise and Issuance. This Warrant may be exercised in whole
or in part (but not as to any fractional share of Common Stock) at any time
commencing on the date hereof (the "Issue Date") until the fifth anniversary of
the Issue Date. The rights represented by this Warrant may be exercised by the
Holder by written notice of exercise substantially in the form attached hereto
as Exhibit A delivered to the Secretary of the Company at the principal office
of the Company accompanied by this Warrant (properly endorsed, if required) and
payment to the Company, by cash, certified check or bank draft, of the purchase
price of the shares of Warrant Stock being purchased. The Company agrees that
the Warrant Stock so purchased shall be and is deemed to be issued as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such Warrant Stock. Certificates for the shares of Warrant
Stock so purchased shall be delivered to the Holder within a reasonable time,
not exceeding forty-five (45) days after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
Warrant representing the number of shares of Warrant Stock, if any, with respect
to which this Warrant has not been exercised shall also be delivered to the
Holder within such time.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 55245
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 4

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

4
[TASER (R) LOGO]
[TASER INTERNATIONAL INCORPORATED LETTERHEAD]

2.
Covenants of Company. The Company covenants and agrees that
all shares of Warrant Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be duly authorized and issued,
fully paid and nonassessable and free from all liens and charge with respect to
the issuance thereof. The Company further covenants and agrees that until
expiration of this Warrant, the Company will at all times have authorized and
reserved for the purpose of issuance or transfer upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
3.
Exercise Price and Share Adjustments. The initial number of
shares of Common Stock purchasable upon exercise of this Warrant and the
exercise price payable therefore shall be subject to adjustment from time to
time, as provided below:
(a)
In case the Company shall at any time hereafter
subdivide or combine the outstanding shares of Common Stock or declare a
dividend payable in Common Stock, the total number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be adjusted so that the
Holder shall be entitled to receive the number of shares of Common Stock which
the Holder would have owned or have been entitled to receive immediately
following any of the events described above had this Warrant been exercised in
full immediately prior to any such event. An adjustment made pursuant to this
Section 3(a) shall, in the case of a subdivision or combination, be made as of
the effective date thereof, and in the case of a stock dividend, become
effective as of the record date therefore. In the event of any such adjustment
of the total number of shares of Common Stock purchasable upon the exercise of
this Warrant, the exercise price shall be adjusted to be the amount resulting
from dividing the number of shares of Common Stock covered by this Warrant
immediately after such adjustment into the total amount payable upon exercise of
this Warrant in full immediately prior to such adjustment.
(b)
If any capital reorganization or reclassification of
the capital stock of the Company (other than a subdivision or combination
referred to in Section 3(a) hereof), or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its assets
to another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Holder
shall have the right to purchase and receive upon the basis and upon the terms
and conditions specified in this Warrant and in lieu of the Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities or assets as would
have been issued or delivered to the Holder if he had exercised this Warrant and
had received upon exercise of this Warrant the Common Stock prior to such
reorganization, reclassification, consolidation, merger or sale, unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed to the Holder at
the last address of the
2

Ed#: 2

*P64567/6101006/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 52900
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.07.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

5
[TASER(R) LOGO]
[TASER INTERNATIONAL INCORPORATED LETTERHEAD]

Holder appearing on the books of the Company, the obligation to deliver to the
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase.
(c)
If the Company takes any other action, or if any
other event occurs which does not come within the scope of the provisions of
Paragraphs 3(a) or 3(b) hereof, but which should result in an adjustment in the
exercise price and/or the number of the shares subject to the Warrant in order
to fairly protect the purchase rights of the Holder, an appropriate adjustment
in such purchase rights shall be made by the Company.
(d)
No fractional shares of Common Stock are to be issued
upon the exercise of this Warrant, but the Company shall pay a cash adjustment
in respect of any fraction of a share which would otherwise be issuable in an
amount equal to the same fraction of the market price per share of Common Stock
on the date of exercise.
(e)
Upon any adjustment of the exercise price or number
of shares purchasable hereunder, the Company shall give written notice thereof,
by first class mail, postage prepaid, addressed to the Holder at the address of
the Holder as shown on the books of the Company, which notice shall state the
Warrant exercise price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
4.
Holder Not Deemed a Stockholder. The Holder shall not be
entitled to vote on or be deemed the holder of Common Stock or any other
securities which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
Holder any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any mater submitted to stockholders at any
meeting thereof, or give or withhold consent to any corporate action (whether
upon any recapitalization, issue of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance
or otherwise) or to receive notice of meetings or other actions affecting
stockholders, or to receive dividends or subscription rights or otherwise, until
the rights to purchase Warrant Stock hereunder shall have been exercised.
5.
Transferability. Prior to making any disposition of the
Warrant or of any Warrant Stock, the Holder will give written notice to the
Company describing briefly the manner of such proposed disposition. The Holder
will not make any such disposition unless or until: (i) a registration statement
under the Securities Act of 1933, as amended (the "Securities Act") covering the
proposed distribution has been filed by the Company and has become effective,
(ii) the disposition is made in accordance with Rule 144 under the Securities
Act or (iii) the Company has received an opinion of counsel for the Holder
reasonably satisfactory to the
3

Ed#: 3

*P64567/6101007/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 6171
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.08.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

6
[TASER(R) LOGO]
[TASER INTERNATIONAL INCORPORATED LETTERHEAD]

Company stating that registration under the Securities Act is not required with
respect to such disposition.
6.
Investment Representations. The Holder acknowledges and agrees
that: (i) this Warrant and any shares of Warrant Stock which may be acquired
upon exercise hereof are being or will be acquired for investment purposes and
not with a view toward the distribution or sale thereof, (ii) this Warrant and
the Warrant Stock will not be registered under either federal or applicable
state securities laws and must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available, (iii) investment in the Company is highly speculative, (iv) he has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of his investment and has the ability to bear
the economic risks (including the risk of a total loss) of his investment, (v)
he has had the opportunity to ask questions of the Company concerning the
Company’s business and assets and to obtain any additional information which he
considered necessary to verify the accuracy or to amplify the Company’s
disclosures with respect to his investment and has had all such questions
answered to his satisfaction and (vi) the Company will be relying upon the
foregoing investment representations in agreeing to issue this Warrant and the
Warrant Stock to the Holder. The Holder acknowledges that the transferability of
the Warrant and of any Warrant Stock will be subject to restrictions imposed by
all applicable federal and state securities laws and agrees that the
certificates evidencing the Warrant Stock may be imprinted with an appropriate
legend setting forth these restrictions on transferability.
7.
Amendment. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by means of an instrument in writing
signed by the party against which enforcement of the charge, waiver, discharge
or termination is sought.
8.
Termination. This Warrant shall terminate and no longer be
exercisable at 5:00 p.m., Arizona time on January 23, 2006.
Dated:

January 23, 2001

TASER INTERNATIONAL, INC.
By: /s/ [Illegible]
---------------------------------------Its:
President
----------------------------------------

Accepted as of the above date:
/s/ PHIL PURER
-------------------------------Phil Purer
4

Ed#: 4

*P64567/6101008/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 22841
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 7

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.08.02

Date: 7-MAY-2001 14:55:25.87

SN: 0

7
EXHIBIT A
WARRANT EXERCISE
(To be signed only upon exercise of Warrant)

TO:

TASER International, Inc., 7339 E. Evans Road, Scottsdale, AZ 85260

The undersigned, the holder of the foregoing Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder,
shares of Common Stock of TASER International,
Inc., and herewith encloses $
in full payment therefore. Please issue a
certificate for such shares in the name of the undersigned and deliver it to
the undersigned at the address stated below. If such number of shares shall not
be all of the share purchasable under the Warrant, unless the Warrant has
expired, please issue a new Warrant Certificate of like tenor for the balance
of the shares purchasable thereunder to be delivered to the undersigned at the
address stated below.
Name
---------------------------------(Please Print)
Address
--------------------------------------------------------------Dated

Signature
---------------------

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

5

Ed#: 1

*P64567/610100802/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 43119
P64567.SUB, DocName: EX-10.10, Doc: 15, Page: 8

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.10.08.03

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
8
PERSONAL GUARANTEE OF LOAN
Reference is hereby made to a loan between, Phil Purer (Payee), and Taser
International. an Arizona Corporation (Debtor) dated January 23, 2001 in the
amount of $500,000.00 plus interest.
In consideration of Payee’s having executed said Laon at the request of the
undersigned, the undersigned (Guarantors) hereby jointly and severally
unconditionally guarantee to Payee and Payee’s successors and assigns, the
payment of the principal, interest and other sums provided for in said Loan and
the performance and observance of all agreements and conditions contained in
said Loan on the part of Debtor to be performed or observed.
Guarantors hereby waive presentment for payment, demand for payment, notice of
nonpayment or dishonor, protest and notice of protest, diligence in collection,
and any and all formalities that may be legally required to charge them or
either or any of them with liability; and the Guarantors, and each of them, for
further agree that their liability as Guarantors shall in no way be impaired or
affected by any renewals, waivers, or extensions that may be made from time to
time, with or without the knowledge and consent of any one or more of them, of
any default or the time of payment or performance required under said Loan, or
by any forbearance or delay in enforcing any obligation thereof, or by
assignment of said Loan, or by any modifications of the terms or provisions of
the Loan.
The Guarantors further jointly and severally covenant and agree to pay all
expenses and fees, including attorney fees that may be incurred by the Payee or
its successors or assigns enforcing any of the terms or provisions of this
Guarantee.
This Guarantee shall be binding upon the heirs, legal representatives,
successors, and assigns of the Guarantors, and each of them, shall not be
discharged or affected, in whole or in part by the death, bankruptcy,
insolvency of the Guarantors, or anyone or more of them.
This Guarantee is absolute, unconditional, and continuing, and payment of the
sums for which the undersigned becomes liable shall be made at the office of
Payee or its successors or assigns from time to time on demand as the same
become or are declared due.
Guarantors hereby waives any and all benefits under Arizona Revised Statutes
("A.R.S.") Sections 12-1641 -12.1646 and Rule 17(f) of the Arizona Rules of
Civil Procedure.
IN WITNESS THEREOF, Guarantor has hereunto set his hands and seal this
Agreement the 25th day of January, 2001.
Guarantor:
By:

Patrick W. Smith

Date:

/s/ Patrick W. Smith
-------------------January 25, 2001
Deanna M. Smith

By:
Date:

/s/ Deanna M. Smith
------------------January 25, 2001

</TEXT>
</DOCUMENT>

Thomas P. Smith
By:

/s/ Thomas P. Smith
-------------------

Date:

Ed#: 1

*P64567/610100803/1*

January 25, 2001

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.11, Doc: 16

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.11
p64567ex10-11.txt
EX-10.11

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 16 SN: *
*DOCHDR/16*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 76
CRC: 53409
P64567.SUB, DocName: EX-10.11, Doc: 16, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.11.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 10.11
PROMISSORY NOTE

$189,980

Date:

December 31, 1998
Tempe, Arizona

For value received, the undersigned TASER INTERNATIONAL, INC., an Arizona
corporation ("Promisor") promises to pay to the order of B&M DISTRIBUTING, INC.
or assigns ("Payee"), at 1912 W. 4th St., Tempe, Arizona 85281 (or at such
other place as Payee may designate), the sum of ONE HUNDRED EIGHTY-NINE
THOUSAND, NINE HUNDRED AND EIGHTY DOLLARS AND NO/100 DOLLARS ($189,980) plus
interest as defined below calculated on a daily basis (based on a 365-day year)
from the date hereof on the principal balance from time to time outstanding.
Principal, interest and all other sums payable hereunder shall be paid in
lawful money of the United States of America as follows:
A.

Interest shall accrue on the principal at the base rate of ten percent
(10.0%) per annum. Interest shall be simple interest calculated on the
outstanding daily principal balance. Principal and interest shall be
completely due and payable as a balloon payment on March 31, 2000.

B.

If a payment of principal or interest to be made pursuant to this Note
becomes past due for a period in excess of ten (10) business day
("Default"), Promisor shall pay to Payee default interest ("Default
Interest") that shall accrue, in addition to the stated rate of interest,
at the rate of five percent of the amount of such overdue payment until the
overdue payment is paid. Further, in event of Default, all remaining unpaid
principal and accrued interest, and all installments, shall become due and
payable immediately without demand or notice. All payments on this Note
shall be applied first in payment of any costs or charges, then to Default
Interest accrued, then to the base interest accrued, and then to reduce
principal.

Promisor may prepay this Note in whole or in part at any time without penalty.
Time is of the essence.
In any event of default under this Note occurs and remains in effect for ten
(10) business days, Promisor promises to pay all costs of collection, including
reasonable attorneys’ fees, whether or not a lawsuit is commenced as part of
the collection process, and whether or not taxable as costs by a court.
Promisor waives trial by jury and consents to the personal jurisdiction of the
Arizona courts located in the State of Arizona, County of Maricopa.
If any event of default under this Note occurs and remains in effect for ten
(10) business days, or upon bankruptcy, insolvency, dissolution or fraudulent
conveyance of Promisor, or upon default under any other obligations of Promisor
to Payee or its affiliates, then this Note shall become due immediately, all
without presentment, demand, protest or notice, all of which hereby are waived.
This Note shall be subordinate to obligations due from Promisor to Silicon
Valley Bank or any such other institution that Payee agrees to in writing.
Promisor shall be in default immediately if there is a sale, transfer,
assignment or any other disposition not in the normal course of business of any
assets pledged as security for Silicon Valley Bank. Promisor warrants that any
obligations owed from it to either Patrick Smith or Thomas Smith are
subordinated to this Note with the exception of reasonable day to day operating
expenses including payroll. Promisor further assures that it will take all
steps requested by Payee to affirm such subordination, including causing said
parties to execute a subordination agreement.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
Promisor waives presentment for payment, protest, and notice of protest and
nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of Payee
under this Note or assignment by Payee of this Note shall affect the liability
of Promisor. All rights of Payee under this Note are cumulative and may be
exercised concurrently or consecutively at Payee’s option.
-1-

Ed#: 3

*P64567/6101101/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 25
CRC: 2249
P64567.SUB, DocName: EX-10.11, Doc: 16, Page: 2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.11.02.00

PROMISOR
TASER INTERNATIONAL, INC.
an Arizona corporation

By: /s/ Patrick Smith
_________________
Patrick Smith
President

Attest: /s/ Thomas Smith
________________
Thomas Smith
-2-

Ed#: 2

*P64567/6101102/2*

<PAGE>
2
This Note shall be construed in accordance with the laws of the State of
Arizona, irrespective of its choice of law principles.
Signed this 17th day of March, 1999.

Date: 7-MAY-2001 14:55:25.87

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 54394
P64567.SUB, DocName: EX-10.11, Doc: 16, Page: 3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.11.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

3
PERSONAL GUARANTY

THIS GUARANTY, dated as of March 17, 1999, is made and given by the
undersigned guarantors, jointly and severally, (collectively, "Guarantor"), in
favor of B&M Distributing, Inc. ("BMD").
A.
BMD is prepared to extend additional credit to Taser International, Inc.,
an Arizona corporation ("Debtor") in the amount of $189,980 (the "Principal
Amount") pursuant to a separate agreement with Taser International, Inc. (the
"Credit Agreement").
B.
It is a condition precedent, among others, to BMD’s inducement to extend
credit accommodations to Debtor that this Guaranty be executed and delivered by
Guarantor.
C.
Guarantor expects to derive benefits from the extension of credit
accommodations to Debtor by BMD and finds it advantageous, desirable and in
Guarantor’s best interest to execute and deliver this Guaranty to BMD.
Guarantor is providing this Guaranty at the request of Debtor to induce BMD to
extend or continue financial accommodations to Debtor.
NOW, THEREFORE, in consideration of the foregoing and credit
accommodations to be extended to Debtor and for other good and valuable
consideration, Guarantor covenants and agrees with BMD as follows:
Section a.
The Guaranty. Undersigned Guarantor (if more than one, jointly
and severally), absolutely, irrevocably and unconditionally guarantees and
promises to pay to BMD, upon demand: (i) the Principal Amount and for all sums
payable or to become payable in the Credit Agreement, or at the election of BMD
any one or more installments thereof, if Debtor fails to pay punctually any one
or more amounts when due under the Credit Agreement (principal, interest and/or
other charges) at the time and in the manner provided therein; and (ii) all
other obligations of Debtor to BMD arising under or in connection with the
purchase or distribution of goods or services, any agreement between Debtor and
BMD executed and delivered in connection with the purchase or distribution of
goods or services, and all other documents and instruments evidencing, securing,
or executed or delivered in connection with the Credit Agreement and all other
agreements between Debtor and BMD.
The word "obligations" is used in its most comprehensive sense and includes any
and all advances, debts, charges, obligations and liabilities of Debtor
previously, now or hereafter made, incurred or created, with or without notice
to Guarantor, whether voluntary or involuntary, and however arising, whether
due or not due, absolute or contingent, liquidated or unliquidated, determined
or undetermined, and whether recovery upon such indebtedness may be or
hereafter become barred by any statute of limitations, and whether such
indebtedness may be or hereafter become otherwise unenforceable (collectively,
the Principal Amount together with all other obligations specified above, the
"Obligations").
Section b.
Continuing Guaranty. The liability and obligation of Guarantor
hereunder shall survive and absolutely, unconditionally and completely continue
in full force and effect until
Page 1 of 4

Ed#: 3

*P64567/6101103/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 30696
P64567.SUB, DocName: EX-10.11, Doc: 16, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.11.04.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
4
indefeasible payment and performance in full of the Obligations, notwithstanding
any termination of Debtor’s liability by operation of law, and notwithstanding
that the Obligations or any part thereof is deemed to have been paid or
discharged by operation of law or by some act or agreement of BMD. For purposes
of this Guaranty, the Obligations shall be deemed to be paid only to the extent
that BMD actually receives immediately available funds. Guarantor shall remain
liable for any deficiency remaining if BMD elects to enforce the Credit
Agreement or foreclose any security agreement securing all or any part of the
Obligations, whether or not the liability of Debtor for such deficiency is
discharged pursuant to statute, judicial decision or otherwise; and agrees not
to assert the benefits of any statutory provision limiting the right of BMD to
recover a deficiency judgment, or to proceed otherwise against any person or
entity obligated for payment of the Obligations, after any foreclosure or sale
of any security for the Obligations.
Section c. Actions Not Required. Guarantor waives any and all right to cause a
marshalling of the assets of Debtor or any other action by any court or other
government body with respect thereto or to cause BMD to proceed against any
security for the Obligations or any other recourse which BMD may have with
respect thereto and further waives and agrees not to assert: (1) any right to
require BMD to pursue any other remedy available to BMD, or to pursue any remedy
in any particular order or manner; (ii) the benefit of any statute of
limitations affecting Guarantor’s liability hereunder or the enforcement hereof;
(iii) demand, diligence, presentment for payment, protest and demand, and notice
of extension, dishonor, protest, demand, nonpayment and acceptance of this
Guaranty; (iv) notice of the existence, creation or incurring of new or
additional indebtedness of Debtor to BMD; (v) the benefits of any statutory
provision limiting the liability of a surety, including without limitation the
provisions of A.R.S. Sections 12-1641 et seq.; and (vi) any defense arising by
reason of any disability or other defense of Debtor or by reason of he cessation
from any cause whatsoever (other than payment in full) of the liability of
Debtor for the Obligations. Guarantor further acknowledges that time is of the
essence with respect to its obligations under this Guaranty.
Section d. Remedies. All remedies afforded to BMD by this Guaranty are separate
and cumulative remedies and Guarantor agrees that no one of such remedies,
whether or not exercised by BMD, shall be deemed to be in exclusion of any of
the other remedies available to BMD and shall in no way limit or prejudice any
other legal or equitable remedy which BMD may have hereunder and with respect to
the Obligations. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to BMD. The obligations of
Guarantor hereunder are separate and independent of the Obligations of Debtor
and of any other guarantor, and a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against any other
guarantor, or whether any other guarantor is joined in any action or actions.
Section e. Authorizations. Guarantor authorizes BMD, without notice or demand
and without affecting Guarantor’s liability hereunder, from time to time, to:
(1) renew, modify, compromise, extend, accelerate or otherwise change the time
for payment of, or otherwise change the terms of the Obligations or any part
thereof; and (ii) apply any and all payments from Debtor, Guarantor or any other
guarantor, in such order or manner as BMD in its discretion may determine.
Section f. Costs and Expenses. Guarantor agrees to pay or reimburse BMD on
demand for all out-of-pocket expenses (including reasonable attorneys’ fees)
incurred by BMD in enforcing this
Page 2 of 4

Ed#: 4

*P64567/6101104/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 6528
P64567.SUB, DocName: EX-10.11, Doc: 16, Page: 5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.11.05.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
5
Guaranty against Guarantor, or arising out of or in connection with any failure
of Guarantor to fully and timely perform the obligations of Guarantor
hereunder, whether or not a suit is filed.
Section h. Governing Law. This Guaranty shall be governed by and construed
according to the laws of the State of Arizona, irrespective of its choice of
law principles.
Section i. Consent to Jurisdiction. BMD may bring any action or proceeding to
enforce or arising out of this Guaranty in any court of competent jurisdiction.
ANY ACTION OR PROCEEDING BROUGHT BY GUARANTOR ARISING OUT OF THIS GUARANTY
SHALL BE BROUGHT SOLELY IN A COURT OF COMPETENT JURISDICTION LOCATED IN THE
COUNTY OF MARICOPA, STATE OF ARIZONA, OR IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA.
Section j. Waivers and Amendments. This Guaranty sets forth the entire
agreement of Guarantor and BMD with respect to the subject matter hereof and
supersedes all prior oral and written agreements and representations by BMD to
Guarantor. No modification or waiver of any provision of this Guaranty or any
right of BMD hereunder and no release of Guarantor from any obligation
hereunder shall be effective unless in a writing executed by an authorized
officer of BMD. A waiver so signed shall be effective only in the specific
instance and for the specific purpose given.
Section k. Representations. Guarantor represents and warrants to BMD as
follows: (i) Guarantor is and will continue to be fully informed about all
aspects of the financial condition and business affairs of Debtor that Guarantor
deems relevant to the obligations of Guarantor hereunder, and waives and fully
discharges BMD from any and all obligations to communicate to Guarantor any
information whatsoever regarding Debtor or Debtor’s financial condition or
business affairs, including without limitation any notice of any default by
Debtor; (ii) Guarantor has all requisite power to enter into this Guaranty, to
execute, to carry out and perform its obligations under the terms of this
Guaranty; (iii) this Guaranty is a valid and binding legal obligation of
Guarantor, and is enforceable in accordance with its terms; and (iv) all action
on the part of Guarantor necessary for or appropriate to or in connection with
the execution, delivery and performance by Guarantor of this Guaranty has been
taken.
Section l. Reliance. If Debtor is a corporation, limited liability company or
partnership, it is not necessary for BMD to inquire into the powers of Debtor
or the officers, directors, partners or agents acting or purporting to act on
its behalf, and any of the Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
Section m. Successors and Assigns. This Guaranty shall inure to the
benefit of BMD and its successors and assigns and shall be binding upon
Guarantor and its successors and assigns. BMD may assign this Guaranty in
whole or in part without notice.
Section n. Guarantor Acknowledgements. Guarantor acknowledges that (i) it has
been advised by counsel in the negotiation, execution and delivery of this
Guaranty, (ii) BMD has no fiduciary relationship to Guarantor, the relationship
being solely that of debtor and creditor, and (iii) no joint venture exists
between Guarantor and BMD.
Page 3 of 4

Ed#: 3

*P64567/6101105/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 21
CRC: 29048
P64567.SUB, DocName: EX-10.11, Doc: 16, Page: 6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.11.06.00

IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.

Signature: /s/ Thomas Smith
---------------------------Name: Thomas Smith
Signature: /s/ Patrick Smith
---------------------------Name: Patrick Smith
Page 4 of 4
</TEXT>
</DOCUMENT>

Ed#: 3

*P64567/6101106/3*

6

UNDERSIGNED:

Date: 7-MAY-2001 14:55:25.87

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.12, Doc: 17

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.12
p64567ex10-12.txt
EX-10.12

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 17 SN: *
*DOCHDR/17*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 171
CRC: 16611
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.02.00-1 SN: 0

Ed#: 6

*P64567/6101202/6*

1
Exhibit 10.12

[BANK OF AMERICA LOGO]
PROMISSORY NOTE
<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------------------------------Principal Loan
Loan Date
Maturity
Loan No
Call
Collateral
Account
Officer
Initials
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
-----------------------------------------------------------------------------------------------------------------------------------$60,000.00
10-24-2000
01-24-2001
New
15380
Z0315
------------------------------------------------------------------------------------------------------------------------------------

</Table>
References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
-------------------------------------------------------------------------------BORROWER: Taser International Incorporated
7339 E. Evans Rd Ste 1
Scottsdale, AZ 85260

LENDER: Bank of America, N.A.
101 North First Avenue
Phoenix, AZ 85003

-------------------------------------------------------------------------------PRINCIPAL
AMOUNT: $60,000.00

INITIAL
RATE: 11.500%

DATE OF NOTE:
OCTOBER 24, 2000

PROMISE TO PAY. Taser International Incorporated ("Borrower") promises to pay to
Bank of America, N.A. ("Lender"), or order, in lawful money of the United States
of America, the principal amount of Sixty Thousand & 00/100 Dollars ($60,000.00)
or so much as may be outstanding, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated from
the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on January 24, 2001. In addition, Borrower will
pay regular monthly payments of accrued unpaid interest beginning November 24,
2000, and all subsequent interest payments are due on the same day of each month
after that. The annual interest rate for this Note is computed on a 365/360
basis; that is, by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will pay
Lender at Lender’s address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs and any late
charges, then to any unpaid interest, and any remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an Index which is the fluctuating rate of
Interest established by Lender from time to time as its "Prime Rate" whether or
not such rate shall otherwise be published (the "Index"). The Index is not
necessarily the lowest rate charged by lender on its loans and is set by lender
in its sole discretion. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute Index after notifying Borrower. Lender
will tell Borrower the current Index rate upon Borrower’s request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each date of such change in
the Index. The Index currently is 9.500% per annum. The interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of 2.000
percentage points over the Index, resulting in an initial rate of 11.500% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower’s obligation to continue to make payments of accrued unpaid
interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
4.000% of the unpaid portion of the regularly scheduled payment.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 171
CRC: 16611
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 1

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.02.00-2E SN: 0

subject to any limits under applicable law, Lender’s attorneys’ fees and
Lender’s legal expenses whether or not there is a lawsuit, including attorneys’
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by law.
THIS NOTE HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF
ARIZONA. IF THERE IS A LAWSUIT, BORROWER AGREES UPON LENDER’S REQUEST TO SUBMIT
TO THE JURISDICTION OF THE COURTS OF ANY COUNTY, THE STATE OF ARIZONA. THIS NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ARIZONA.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower’s right, title and interest in and to, Borrower’s accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Note against any and all such accounts, and, at
Lender’s option, to administratively freeze all such accounts to allow Lender to
protect Lender’s charge and setoff rights provided on this paragraph.
LINE OF CREDIT. This Note evidences a straight line of credit. Once the total
amount of principal has been advanced, Borrower is not entitled to further loan
advances. Advances under this Note, as well as directions for payment from
Borrower’s accounts, may be requested orally or in writing by Borrower or by an
authorized person. Lender may, but need not, require that all oral requests be
confirmed in writing. The following party or parties are authorized to request
advances under the line of credit until Lender receives from Borrower at
Lender’s address shown above written notice of revocation of their authority:
Patrick W. Smith, President; and Thomas P. Smith, Vice President, Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower’s
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender’s internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor’s guarantee of this Note or any other loan with Lender; (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.
ARBITRATION. Any claim or controversy ("Claim") between the parties, whether
arising in contract or tort or by statute including, but not limited to, Claims
resulting from or relating to this Agreement shall, upon the request of either
party, be resolved by arbitration in accordance with the Federal Arbitration Act
(Title 9, US Code). Arbitration proceedings will be conducted in accordance with
the rules for arbitration of financial services disputes of J.A.M.S./Endispute.
The arbitration shall be conducted in any state where real or personal property
collateral for the credit is located or if there is no collateral, in the state
of any Borrower’s domicile at the time of the execution of this Agreement or at
the commencement of any arbitration proceeding. The arbitration hearing shall
commence within 90 days of the demand for arbitration and close within 90 days
of commencement, and any award, which may include legal fees, shall be issued
(with a brief written statement of the reasons therefore) within 30 days of the
close of hearing. Any dispute concerning whether a claim is arbitrable or barred
by the statute of limitations shall be determined by the arbitrator. This
arbitration provision is not intended to limit the right of any party to
exercise self-help remedies, to seek and obtain interim or provisional relief of
any kind or to initiate judicial or non-judicial foreclosure against any real or
personal property collateral.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Ed#: 6

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 38
CRC: 58281
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.03.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6101203/2*

<PAGE>
2
10-24-2000

PROMISSORY NOTE
PAGE 2
(CONTINUED)
-------------------------------------------------------------------------------GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender’s security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made.
EFFECTIVE RATE. Borrower agrees to an effective rate of interest that is the
rate specified in this Note plus any additional rate resulting from any other
charges in the nature of interest paid or to be paid in connection with this
Note.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
TASER INTERNATIONAL INCORPORATED
BY:
----------------------------PATRICK W. SMITH, PRESIDENT
===============================================================================

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 187
CRC: 28256
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.04.00-1 SN: 0

3
COMMERCIAL GUARANTY

<Table>
<Caption>
PRINCIPAL
<S>
<C>

LOAN DATE
<C>

MATURITY
<C>

LOAN NO.
<C>

CALL
<C>

COLLATERAL
<C>

ACCOUNT
<C>
15380

OFFICER
<C>
Z0315

INITIALS
<C>

References in the shaded area are for Lenders use only and do not
limit the applicability of this document to any particular loan or item.

</Table>
Borrower:

Taser International Incorporated
7339 E. Evans Rd Ste 1
Scottsdale, AZ 85260

Ed#: 4

*P64567/6101204/4*

Lender: Bank of America, N.A.
101 North First Avenue
Phoenix, AZ 85003

Guarantor: Patrick W. Smith
27404 N. 45th Way
Cave Creek, AZ 85331
-------------------------------------------------------------------------------AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, Patrick W.
Smith ("Guarantor") absolutely and unconditionally guarantees and promises to
pay to Bank of America, N.A. ("Lender") or its order, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
Taser International Incorporated ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. Under this Guaranty, the liability of
Guarantor is unlimited and the obligations of Guarantor are continuing.
DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:
BORROWER. The word "Borrower" means Taser International Incorporated.
GUARANTOR. The word "Guarantor" means Patrick W. Smith.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated October 24, 2000.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower’s liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness,
lease obligations, other obligations, and liabilities of Borrower, or any
of them, and any present or future judgments against Borrower, or any of
them; and whether any such Indebtedness is voluntarily or involuntarily
incurred, due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined; whether Borrower may be liable
individually or jointly with others, or primarily or secondarily, or as
guarantor or surety; whether recovery on the Indebtedness may be or may
become barred or unenforceable against Borrower for any reason whatsoever;
and whether the Indebtedness arises from transactions which may be voidable
on account of infancy, insanity, ultra vires, or otherwise.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether nor
or hereafter existing, executed in connection with the Indebtedness.
NATURE OF GUARANTY. Guarantor’s liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness. Accordingly, no payments made upon the Indebtedness will
discharge or diminish the continuing liability of Guarantor in connection with
any remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted. Any married person
who signs this Guaranty hereby expressly agrees that recourse under this
agreement may be had against both his or her separate property and community
property, whether now owned or hereafter acquired.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 187
CRC: 28256
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.04.00-2E SN: 0

Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender’s actual notice of Guarantor’s death. Subject
to the foregoing, Guarantor’s executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. It is anticipated
that fluctuations may occur in the aggregate amount of Indebtedness covered by
this Guaranty, and it is specifically acknowledged and agreed by Guarantor that
reductions in the amount of Indebtedness, even to zero dollars ($0.00), prior
to written revocation of this Guaranty by Guarantor shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor’s heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may
from time to time be zero dollars ($0.00).
GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor’s liability under this Guaranty, from time to time: (a) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise extend additional credit to Borrower; (b) to alter, compromise, renew,
extend, accelerate, or otherwise change one or more times the time for payment
or other terms of the Indebtedness or any part of Indebtedness, including
increases and decreases of the rate of interest on the Indebtedness; extensions
may be repeated and may be for longer than the original loan term; (c) to take
and hold security for the payment of this Guaranty or the Indebtedness, and
exchange, enforce, waive, subordinate, fail or decide not to perfect, and
release any such security, with or without the substitution of new collateral;
(d) to release, substitute, agree not to sue, or deal with any one or more of
Borrower’s sureties, endorsers, or other guarantors on any terms or in any
manner Lender may choose; (e) to determine how, when and what application of
payments and credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(g) to sell, transfer, assign, or grant participations in all or any part of the
Indebtedness; and (h) to assign or transfer this Guaranty in whole or in part.
GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower’s request and not at the
request of the Lender; (c) Guarantor has full power, right and authority to
enter into this Guaranty; (d) the provisions of this Guaranty do not conflict
with or result in a default under any agreement or other instrument binding
upon Guarantor and do not result in a violation of any law, regulation, court
decree or order applicable to Guarantor; (e) Guarantor has not and will not,
without the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor’s assets, or any interest therein; (f) upon Lender’s request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor’s financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor’s financial condition; (h) no litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower’s financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor’s risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of

Ed#: 4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 189
CRC: 18101
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.05.00-1 SN: 0

Ed#: 4

*P64567/6101205/4*

<PAGE>
4
10-24-2000

COMMERCIAL GUARANTY
PAGE 2
(CONTINUED)
===============================================================================
Code; (f) to pursue any other remedy within Lender’s power; or (g) to commit any
act or omission of any kind, or at any time, with respect to any matter
whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender’s commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor’s subrogation rights or Guarantor’s rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower’s
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (d) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (f) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower’s
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of enforcement of this Guaranty.
In addition to the waivers set forth above, Guarantor expressly waives, to the
extent permitted by Arizona law, all of Guarantor’s rights under sections
12-1641, 12-1642, 12-1643, 12-1644, 44-142, and 47-3605 of the Arizona Revised
Statutes, and Rule 17f of the Arizona Revised Statutes Rules of Civil Procedure,
as now enacted or hereafter modified, amended or replaced.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor’s full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.
LENDER’S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor’s obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor’s right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender or by any neglect to exercise
such right of setoff or to enforce such security interest or by any delay in so
doing. Every right of setoff and security interest shall continue in full force

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 189
CRC: 18101
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.05.00-2E SN: 0

Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Guaranty. No alteration of or amendment to this
Guaranty shall be effective unless given in writing and signed by the party
or parties sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Arizona. If there is a lawsuit, Guarantor agrees
upon Lender’s request to submit to the jurisdiction of the courts of any
County, State of Arizona. This Guaranty shall be governed by and construed
in accordance with the laws of the State of Arizona.
ATTORNEYS’ FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender’s costs and expenses, including attorneys’ fees and Lender’s legal
expenses, incurred in connection with the enforcement of this Guaranty.
Lender may pay someone else to help enforce this Guaranty, and Guarantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender’s attorneys’ fees and legal expenses whether or not there is
a lawsuit, including attorneys’ fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection
services. Guarantor also shall pay all court costs and such additional fees
as may be directed by the court.
NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
(unless otherwise required by law), and, except for revocation notices by
Guarantor, shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier, or when deposited in the
United States mail, first class postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above or to such other
addressee as either party may designate to the other in writing. All
revocation notices by Guarantor shall be in writing and shall be effective
only upon delivery to Lender as provided above in the section titled
"DURATION OF GUARANTY." If there is more than one Guarantor, notice to any
Guarantor will constitute notice to all Guarantors. For notice purposes,
Guarantor agrees to keep Lender informed at all times of Guarantor’s
current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor, the
words "Borrower" and "Guarantor" respectively shall mean all and any one or
more of them. The words "Guarantor," "Borrower," and "Lender" include the
heirs, successors, assigns, and transferees of each of them. Caption
headings in this Guaranty are for convenience purposes only and are not to
be used to interpret or define the provisions of this Guaranty. If a court
of competent jurisdiction finds any provision of this Guaranty to be
invalid or unenforceable as to any person or circumstance, such finding
shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower
or Guarantor are corporations or partnerships, it is not necessary for
Lender to inquire into the powers of Borrower or Guarantor or of the
officers, directors, partners, or agents acting or purporting to act on
their behalf, and any Indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Guaranty shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or
any other provision of this Guaranty. No prior waiver by Lender, nor any
course of dealing between Lender and Guarantor, shall constitute a waiver

Ed#: 4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 45523
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.06.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6101206/1*

<PAGE>
5
10-24-2000

COMMERCIAL GUARANTY
PAGE 3
(CONTINUED)
________________________________________________________________________________
collateral, in the state of any Borrower’s domicile at the time of the
execution of this Agreement or at the commencement of any arbitration
proceeding. The arbitration hearing shall commence within 90 days of the demand
for arbitration and close within 90 days of commencement, and any award, which
may include legal fees, shall be issued (with a brief written statement of the
reasons therefore) within 30 days of the close of hearing. Any dispute
concerning whether a claim is arbitrable or barred by the statute of
limitations shall be determined by the arbitrator. This arbitration provision
is not intended to limit the right of any party to exercise self-help remedies,
to seek and obtain interim or provisional relief of any kind or to initiate
judicial or non-judicial foreclosure against any real or personal property
collateral.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED OCTOBER 24, 2000.
GUARANTOR:
X___________________________
Patrick W. Smith
_______________________________________________________________________________
INDIVIDUAL ACKNOWLEDGMENT
STATE OF __________________________________)
)ss
COUNTY OF__________________________________)
On this day before me, the undersigned Notary Public, personally appeared
Patrick W. Smith, to me known to be the individual described in and who
executed the Commercial Guaranty, and acknowledged that he or she signed the
Guaranty as his or her free and voluntary act and deed, for the uses and
purposes therein mentioned.
Given under my hand and official seal this_______day of__________, 20____.
By___________________________ Residing at________________________________
Notary Public in and for the State of____ My commission expires__________

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 189
CRC: 63603
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.07.00-1 SN: 0

6
COMMERCIAL GUARANTY

<Table>
<Caption>
---------------------------------------------------------------------------------------------------PRINCIPAL
LOAN DATE
MATURITY
LOAN NO
CALL COLLATERAL
ACCOUNT
OFFICER
INITIALS
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
15380
Z0315
---------------------------------------------------------------------------------------------------References in the shaded area are for Lender’s use only and do not limit the applicability of this
document to any particular loan or item.
----------------------------------------------------------------------------------------------------

</Table>
BORROWER:

Taser International Incorporated
7339 E. Evans Rd Ste 1
Scottsdale, AZ 85260

Ed#: 8

*P64567/6101207/8*

LENDER: Bank of America, N.A.
101 North First Avenue
Phoenix, AZ 85003

GUARANTOR: Thomas P. Smith
7500 E. Deer Valley Rd Unit 15
Scottsdale, AZ 85255
================================================================================
AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, Thomas P.
Smith ("Guarantor") absolutely and unconditionally guarantees and promises to
pay to Bank of America, N.A. ("Lender") or its order, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
Taser International Incorporated ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. Under this Guaranty, the liability of
Guarantor is unlimited and the obligations of Guarantor are continuing.
DEFINITIONS. The following words shall have the following meanings when used in
the Guaranty:
BORROWER. The word "Borrower" means Taser International Incorporated.
GUARANTOR. The word "Guarantor" means Thomas P. Smith.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated October 24, 2000.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower’s liabilities,
obligations, debts, and indebtedness to Lender, now existing or
hereinafter incurred or created, including, without limitation, all loans,
advances, interest, costs, debts, overdraft indebtedness, credit card
indebtedness, lease obligations, other obligations, and liabilities of
Borrower, or any of them, and any present or future judgments against
Borrower, or any of them; and whether any such indebtedness is voluntarily
or involuntarily incurred, due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined; whether Borrower
may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the
indebtedness may be or may become barred or unenforceable against Borrower
for any reason whatsoever; and whether the indebtedness arises from
transactions which may be voidable on account of infancy, insanity, ultra
vires, or otherwise.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
NATURE OF GUARANTY. Guarantor’s liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all Indebtedness.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter incurred or contracted. Any married person who signs this Guaranty
hereby expressly agrees that recourse under this agreement may be had against
both his or her separate property and community property, whether now owned or

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 189
CRC: 63603
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.07.00-2E SN: 0

granted after Guarantor’s revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind the estate of Guarantor as to Indebtedness created both before and after
the death or incapacity of Guarantor, regardless of Lender’s actual notice of
Guarantor’s death. Subject to the foregoing, Guarantor’s executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation received by Lender from any one or more Guarantors shall
not affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and it is specifically acknowledged and agreed by
Guarantor that reductions in the amount of Indebtedness, even to zero dollars
($0.00), prior to written revocation of this Guaranty by Guarantor shall not
constitute a termination of this Guaranty. This Guaranty is binding upon
Guarantor and Guarantor’s heirs, successors and assigns so long as any of the
guaranteed Indebtedness remains unpaid and even though the Indebtedness
guaranteed may from time to time be zero dollars ($0.00).
GUARANTOR’S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor’s liability under this Guaranty, from time to time: (a) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (b) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fall or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower’s sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(g) to sell, transfer, assign, or grant participations in all or any part of the
Indebtedness; and (h) to assign or transfer this Guaranty in whole or in part.
GUARANTOR’S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower’s request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of the Guaranty do not conflict with or result in a
default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor’s assets, or any
interest therein; (f) upon Lender’s request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present the financial condition of Guarantor as
of the dates the financial information is provided; (g) no material adverse
change has occurred in Guarantor’s financial condition since the date of the
most recent financial statements provided to Lender and no event has occurred
which may materially adversely affect Guarantor’s financial condition; (h) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(i) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (j) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower’s financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor’s risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR’S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other

Ed#: 8

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 191
CRC: 56709
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.10.00-1 SN: 0

Ed#: 2

*P64567/6101210/2*

<PAGE>
7
10-24-2000

COMMERCIAL GUARANTY
PAGE 2
(CONTINUED)
-------------------------------------------------------------------------------Code; (f) to pursue any other remedy within Lender’s power; or (g) to commit
any act or omission of any kind, or at any time, with respect to any matter
whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender’s commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely
affects Guarantor’s subrogation rights or Guarantor’s rights to proceed
against Borrower for reimbursement, including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or
discharging the Indebtedness; (c) any disability or other defense of Borrower,
of any other guarantor, or of any other person, or by reason of the cessation
of Borrower’s liability from any cause whatsoever, other than payment in full
in legal tender, of the Indebtedness; (d) any right to claim discharge of the
Indebtedness on the basis of unjustified impairment of any collateral for the
Indebtedness; (e) any statute of limitations, if at any time any action or suit
brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (f) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness. If
payment is made by Borrower, whether voluntarily or otherwise, or by any third
party, on the Indebtedness and thereafter Lender is forced to remit the amount
of that payment to Borrower’s trustee in bankruptcy or to any similar person
under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.
In addition to the waivers set forth above, Guarantor expressly waives, to the
extent permitted by Arizona law, all of Guarantor’s rights under sections
12-1641, 12-1642, 12-1643, 12-1644, 44-142, and 47-3605 of the Arizona Revised
Statutes, and Rule 17f of the Arizona Revised Statutes Rules of Civil
Procedure, as now enacted or hereafter modified, amended or replaced.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR’S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor’s full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER’S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor’s obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor’s right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender or by any neglect to

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 191
CRC: 56709
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.10.00-2E SN: 0

any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions
as Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters
set forth in this Guaranty. No alteration of or amendment to this Guaranty
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Arizona. If there is a lawsuit, Guarantor agrees
upon Lender’s request to submit to the jurisdiction of the courts of any
County, State of Arizona. This Guaranty shall be governed by and construed
in accordance with the laws of the State of Arizona.
ATTORNEYS’ FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender’s costs and expenses, including attorneys’ fees and Lender’s legal
expenses, incurred in connection with the enforcement of this Guaranty.
Lender may pay someone else to help enforce this Guaranty, and Guarantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender’s attorneys’ fees and legal expenses whether or not there is
a lawsuit, including attorneys’ fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection
services. Guarantor also shall pay all court costs and such additional fees
as may be directed by the court.
NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile
(unless otherwise required by law), and, except for revocation notices by
Guarantor, shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier, or when deposited in the
United States mail, first class postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above or to such other
addresses as either party may designate to the other in writing. All
revocation notices by Guarantor shall be in writing and shall be effective
only upon delivery to Lender as provided above in the section titled
"DURATION OF GUARANTY." If there is more than one Guarantor, notice to any
Guarantor will constitute notice to all Guarantors. For notice purposes,
Guarantor agrees to keep Lender informed at all times of Guarantor’s
current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor, the
words "Borrower" and "Guarantor" respectively shall mean all and any one or
more of them. The words "Guarantor," "Borrower," and "Lender" include the
heirs, successors, assigns, and transferees of each of them. Caption
headings in this Guaranty are for convenience purposes only and are not to
be used to interpret or define the provisions of this Guaranty. If a court
of competent jurisdiction finds any provision of this Guaranty to be
invalid or unenforceable as to any person or circumstance, such finding
shall not render that provision invalid or unenforceable as to any other
persons or circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. If any one or more of Borrower
or Guarantor are corporations or partnerships, it is not necessary for
Lender to inquire into the powers of Borrower or Guarantor or of the
officers, directors, partners, or agents acting or purporting to act on
their behalf, and any Indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Guaranty shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or

Ed#: 2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 8119
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 8

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.10.01

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/610121001/1*

<PAGE>
8
10-24-2000

COMMERCIAL GUARANTY
PAGE 3
(CONTINUED)
________________________________________________________________________________
collateral, in the state of any Borrower’s domicile at the time of the execution
of this Agreement or at the commencement of any arbitration proceeding. The
arbitration hearing shall commence within 90 days of the demand for arbitration
and close within 90 days of commencement, and any award, which may include legal
fees, shall be issued (with a brief written statement of the reasons therefore)
within 30 days of the close of hearing. Any dispute concerning whether a claim
is arbitrable or barred by the statute of limitations shall be determined by the
arbitrator. This arbitration provision is not intended to limit the right of any
party to exercise self-help remedies, to seek and obtain interim or provisional
relief of any kind or to initiate judicial or non-judicial foreclosure against
any real or personal property collateral.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED OCTOBER 24, 2000.
GUARANTOR:
X ______________________________________
THOMAS P. SMITH
________________________________________________________________________________
INDIVIDUAL ACKNOWLEDGEMENT
STATE OF ______________________________)
) SS
COUNTY OF _____________________________)

On this day before me, the undersigned Notary Public, personally appeared Thomas
P. Smith, to me known to be the individual described in and who executed the
Commercial Guaranty, and acknowledged that he or she signed the Guaranty as his
or her free and voluntary act and deed, for the uses and purposes therein
mentioned.
GIVEN UNDER MY HAND AND OFFICIAL SEAL THIS ____________ DAY OF ________________,
20______.
BY __________________________________ RESIDING AT ______________________________
NOTARY PUBLIC IN AND FOR THE STATE OF __________________________
MY COMMISSION EXPIRES __________________________
________________________________________________________________________________
________________________________________________________________________________

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 130
CRC: 21381
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 9

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.10.02-1 SN: 0

[E/O]

<PAGE>
9
[Bank of America Logo]
COMMERCIAL SECURITY AGREEMENT
-------------------------------------------------------------------------------<Table>
<Caption>
PRINCIPAL
<S>
$60,000.00

LOAN DATE
<C>
10-24-2000

MATURITY
<C>
01-24-2001

LOAN NO
<C>
NEW

CALL
<C>

COLLATERAL
<C>

ACCOUNT
<C>
15380

OFFICER
<C>
Z0315

INITIALS
<C>

</Table>
-------------------------------------------------------------------------------References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
Borrower:

Taser International Incorporated
7339 E. Evans Rd Ste 1
Scottsdale, AZ 85260

Ed#: 1

*P64567/610121002/1*

Lender: Bank of America, N.A.
101 North First Avenue
Phoenix, AZ 85003

================================================================================
THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN TASER INTERNATIONAL
INCORPORATED (REFERRED TO BELOW AS "GRANTOR"); AND BANK OF AMERICA, N.A.
(REFERRED TO BELOW AS "LENDER"). FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO
LENDER A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND
AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT
TO THE COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
ALL EQUIPMENT
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions
for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral
section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor’s right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 130
CRC: 21381
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 9

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.10.02-2E SN: 0

unenforceable.
LENDER. The word "Lender" means Bank of America, N.A., its successors and
assigns.
NOTE. The word "Note" means the note or credit agreement dated October 24,
2000, in the principal amount of $60,000.00 from Taser International
Incorporated to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of and substitutions for
the note or credit agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest in
and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor’s
right, title and interest in and to Grantor’s accounts with Lender (whether
checking, savings, or some other account), including all accounts held jointly
with someone else and all accounts Grantor may open in the future, excluding,
however, all IRA and Keogh accounts, and all trust accounts for which the grant
of a security interest would be prohibited by law. Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all indebtedness
against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
ORGANIZATION. Grantor is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Arizona.

Ed#: 1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 140
CRC: 10981
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 10

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.11.00-1 SN: 0

Ed#: 2

*P64567/6101211/2*

<PAGE>
10
10-24-2000

COMMERCIAL SECURITY AGREEMENT
PAGE 2
(CONTINUED)
________________________________________________________________________________
AUTHORIZATION. The execution, delivery, and performance of this Agreement by
Grantor have been duly authorized by all necessary action by Grantor and do not
conflict with, result in a violation of, or constitute a default under (a) any
provision of its articles of incorporation or organization, or bylaws, or any
agreement or other instrument binding upon Grantor or (b) any law, governmental
regulation, court decree, or order applicable to Grantor.
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to perfect
and continue Lender’s security interest in the Collateral. Upon request of
Lender, Grantor will deliver to Lender any and all of the documents evidencing
or constituting the Collateral, and Grantor will note Lender’s interest upon any
and all chattel paper if not delivered to Lender for possession by Lender.
Grantor hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. Lender may at any time, and without
further authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use as a
financing statement. Grantor will reimburse Lender for all expenses for the
perfection and the continuation of the perfection of Lender’s security interest
in the Collateral. Grantor promptly will notify Lender before any change in
Grantor’s name including any change to the assumed business names of Grantor.
THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN EFFECT EVEN THOUGH
ALL OR ANY PART OF THE INDEBTEDNESS IS PAID IN FULL AND EVEN THOUGH FOR A PERIOD
OF TIME GRANTOR MAY NOT BE INDEBTED TO LENDER.
NO VIOLATION. The execution and delivery of this Agreement will not violate any
law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or
condition or this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of accounts,
chattel paper, or general intangibles, the Collateral is enforceable in
accordance with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor’s address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Arizona, without the prior written consent of Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor’s business, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall
not pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent of
Lender. This includes security interests even if junior in right to the security
interests granted under this Agreement. Unless waived by Lender, all proceeds
from any disposition of the Collateral (for whatever reason) shall be held in
trust for Lender and shall not be commingled with any other funds; provided
however, this requirement shall not constitute consent by Lender to any sale or
other disposition. Upon receipt, Grantor shall immediately deliver any such
proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender’s rights in the Collateral
against the claims and demands of all other persons.
COLLATERAL SCHEDULES AND LOCATIONS. Insofar as the Collateral consists of

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 140
CRC: 10981
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 10

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.11.00-2E SN: 0

contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender’s interest in
the Collateral is not jeopardized in Lender’s sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys’ fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender’s interest in the Collateral, in Lender’s
opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened release of any hazardous waste or
substance, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of
1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., or other applicable state or Federal laws, rules,
or regulations adopted pursuant to any of the foregoing. The terms "hazardous
waste" and "hazardous substance" shall also include, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos. The
representations and warranties contained herein are based on Grantor’s due
diligence in investigating the Collateral for hazardous wastes and substances.
Grantor hereby (a) releases and waives any future claims against Lender for
indemnity or contribution in the event Grantor becomes liable for cleanup or
other costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach of this
provision of this Agreement. This obligation to indemnify shall survive the
payment of the Indebtedness and the satisfaction of this Agreement.

Ed#: 2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 149
CRC: 60753
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 11

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.12.00-1 SN: 0

Ed#: 3

*P64567/6101212/3*

<PAGE>
11
10-24-2000

COMMERCIAL SECURITY AGREEMENT
PAGE 3
(CONTINUED)
-------------------------------------------------------------------------------MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least thirty (30) days’ prior written
notice to Lender and not including any disclaimer of the insurer’s
liability for failure to give such a notice. Each insurance policy also
shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require.
In no event shall the insurance be in an amount less than the amount agreed
upon in the Agreement to Provide Insurance. If Grantor at any time fails to
obtain or maintain any insurance as required under this Agreement, Lender
may (but shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if it so chooses "single interest insurance," which
will cover only Lender’s interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.
INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums, to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the payment
of premiums shall remain Grantor’s sole responsibility.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonably request including the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the
property insured; (e) the then current value on the basis of which
insurance has been obtained and the manner of determining that value; and
(f) the expiration date of the policy. In addition, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
GRANTOR’S RIGHT TO POSSESSION. Until default, Grantor may have possession of
the tangible personal property and beneficial use of all the Collateral and may
use it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor’s right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender’s security interest in such Collateral. If
Lender at any time has possession of any Collateral, whether before or after an
Event of Default, Lender shall be deemed to have exercised reasonable care in

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 149
CRC: 60753
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 11

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.12.00-2E SN: 0

during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will
be due and payable at the Note’s maturity. This Agreement also will secure
payment of these amounts. Such right shall be in addition to all other rights
and remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any
time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor’s existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor’s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral securing
the Indebtedness. This includes a garnishment of any of Grantor’s deposit
accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or such Guarantor dies or
becomes incompetent.
ADVERSE CHANGE. A material adverse change occurs in Grantor’s financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.

Ed#: 3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 147
CRC: 35340
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 12

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.13.00-1 SN: 0

Ed#: 3

*P64567/6101213/3*

<PAGE>
12
10-24-2000

COMMERCIAL SECURITY AGREEMENT
PAGE 4
(CONTINUED)
-------------------------------------------------------------------------------RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Arizona Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following rights
and remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time
of repossession, Grantor agrees Lender may take such other goods, provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in its
own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender will give Grantor reasonable notice of the time after which any
private sale or any other intended disposition of the Collateral is to be
made. The requirements of reasonable notice shall be met if such notice is
given at least ten (10) days before the time of the sale or disposition.
All expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring, preparing
for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.
APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
have the following rights and remedies regarding the appointment of a
receiver: (a) Lender may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Lender and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part
of the Indebtedness secured by this Agreement and shall be payable on
demand, with interest at the Note rate from date of expenditure until
repaid.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness in
such order of preference as Lender may determine. Insofar as the Collateral
consists of accounts, general intangibles, insurance policies, instruments,
chattel paper, choses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Collateral as Lender may determine, whether or not
Indebtedness or Collateral is then due. For these purposes, Lender may, on
behalf of and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 147
CRC: 35340
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 12

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.13.00-2E SN: 0

amendment.
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
by Lender in the State of Arizona. If there is a lawsuit, Grantor agrees
upon Lender’s request to submit to the jurisdiction of the courts of any
County, the State of Arizona. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona.
ATTORNEYS’ FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender’s costs and expenses, including attorneys’ fees and Lender’s legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
include Lender’s attorneys’ fees and legal expenses whether or not there is
a lawsuit, including attorneys’ fees and legal expenses for bankruptcy
proceedings (and including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under
this Agreement shall be joint and several, and all references to Grantor
shall mean each and every Grantor. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile (unless otherwise required
by law), and shall be effective when actually delivered or when deposited
with a nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party to whom
the notice is to be given at the address shown above. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party’s address. To the extent permitted by applicable law,
if there is more than one Grantor, notice to any Grantor will constitute
notice to all Grantors. For notice purposes, Grantor will keep Lender
informed at all times of Grantor’s current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the

Ed#: 3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 83
CRC: 32236
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 13

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.14.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
13
10-24-2000

COMMERCIAL SECURITY AGREEMENT
PAGE 5
(CONTINUED)
-------------------------------------------------------------------------------Collateral, and, in the place and stead of Grantor, to execute and deliver
its release and settlement for the claim; and (d) to file any claim or
claims or to take any action or institute or take part in any proceedings,
either in its own name or in the name of Grantor, or otherwise, which in
the discretion of Lender may seem to be necessary or advisable. This power
is given as security for the Indebtedness, and the authority hereby
conferred is and shall be irrevocable and shall remain in full force and
effect until renounced by Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
of the Collateral, this Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender’s rights or of any of Grantor’s obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
ARBITRATION. Any claim or controversy ("Claim") between the parties, whether
arising in contract or tort or by statute including, but not limited to, Claims
resulting from or relating to this Agreement shall, upon the request of either
party, be resolved by arbitration in accordance with the Federal Arbitration Act
(Title 9, US Code). Arbitration proceedings will be conducted in accordance with
the rules for arbitration of financial services disputes of J.A.M.S./Endispute.
The arbitration shall be conducted in any state where real or personal property
collateral for the credit is located or if there is no collateral, in the state
of any Borrower’s domicile at the time of the execution of this Agreement or at
the commencement of any arbitration proceeding. The arbitration hearing shall
commence within 90 days of the demand for arbitration and close within 90 days
of commencement, and any award, which may include legal fees, shall be issued
(with a brief written statement of the reasons therefore) within 30 days of the
close of hearing. Any dispute concerning whether a claim is arbitrable or barred
by the statute of limitations shall be determined by the arbitrator. This
arbitration provision is not intended to limit the right of any party to
exercise self-help remedies, to seek and obtain interim or provisional relief of
any kind or to initiate judicial or non-judicial foreclosure against any real or
personal property collateral.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER 24,
2000.
GRANTOR:
TASER INTERNATIONAL INCORPORATED

Ed#: 4

*P64567/6101214/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 90
CRC: 1891
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 14

[E/O]

<PAGE>
<Table>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.15.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 4

*P64567/6101215/4*

14

<S>

<C>

THIS SPACE FOR USE OF FILING OFFICER
FINANCING STATEMENT - FOLLOW INSTRUCTIONS CAREFULLY
This Financing Statement is presented for filing pursuant to the Uniform Commercial Code
and will remain effective, with certain exceptions, for 5 years from date of filing.
----------------------------------------------------------------------------------------------------------A. NAME & TEL. # OF CONTACT AT FILER (optional)
B. FILING OFFICE ACCT.# (optional)
----------------------------------------------------------------------------------------------------------C. RETURN COPY TO: (Name and Mailing Address)
[
]
BANK OF AMERICA, N.A.
P.O. BOX 830632
DALLAS, TX 75283-0632
[
]
----------------------------------------------------------------------------------------------------------D. OPTIONAL DESIGNATION (if applicable): / / LESSOR/LESSEE
/ / CONSIGNOR/CONSIGNEE
/ / NON-UCC FILING
-----------------------------------------------------------------------------------------------------------------------------1. DEBTOR’S EXACT FULL LEGAL NAME - Insert only one debtor name (1a or 1b)
--------------------------------------------------------------------------------------------------------------------------1a. ENTITY’S NAME
TASER INTERNATIONAL INCORPORATED
OR --------------------------------------------------------------------------------------------------------------------------1b. INDIVIDUAL’S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
-----------------------------------------------------------------------------------------------------------------------------1c. MAILING ADDRESS
CITY
STATE
COUNTRY
POSTAL CODE
7339 E. EVANS RD STE 1
SCOTTSDALE
AZ
85260
-----------------------------------------------------------------------------------------------------------------------------1d. S.S. OR TAX I.D.#
OPTIONAL
1e. TYPE OF ENTITY
1f. ENTITY’S STATE
1g. ENTITY’S ORGANIZATIONAL I.D.#, if any
860741227
ADD’NL INFO RE
OR COUNTRY OF
ENTITY DEBTOR
ORGANIZATION
/ / NONE
-----------------------------------------------------------------------------------------------------------------------------2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert only one debtor name (2a or 2b)
--------------------------------------------------------------------------------------------------------------------------2a. ENTITY’S NAME
OR --------------------------------------------------------------------------------------------------------------------------2b. INDIVIDUAL’S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
-----------------------------------------------------------------------------------------------------------------------------2c. MAILING ADDRESS
CITY
STATE
COUNTRY
POSTAL CODE
-----------------------------------------------------------------------------------------------------------------------------2d. S.S. OR TAX I.D.#
OPTIONAL
2e. TYPE OF ENTITY
2f. ENTITY’S STATE
2g. ENTITY’S ORGANIZATIONAL I.D.#, if any
ADD’NL INFO RE
OR COUNTRY OF
ENTITY DEBTOR
ORGANIZATION
/ / NONE
-----------------------------------------------------------------------------------------------------------------------------3. SECURED PARTY’S (ORIGINAL S/P or ITS TOTAL ASSIGNEE) EXACT FULL LEGAL NAME - Insert only one secured party name (3a or 3b)
--------------------------------------------------------------------------------------------------------------------------3a. ENTITY’S NAME
BANK OF AMERICA, N.A.
OR --------------------------------------------------------------------------------------------------------------------------3b. INDIVIDUAL’S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
-----------------------------------------------------------------------------------------------------------------------------3c. MAILING ADDRESS
CITY
STATE
COUNTRY
POSTAL CODE
101 NORTH FIRST AVENUE
PHOENIX
AZ
85003
-----------------------------------------------------------------------------------------------------------------------------4. This FINANCING STATEMENT covers the following types or items of property:
ALL EQUIPMENT; WHETHER ANY OF THE FOREGOING IS OWNED NOW OR ACQUIRED LATER; ALL ACCESSIONS, ADDITIONS, REPLACEMENTS, AND
SUBSTITUTIONS RELATING TO ANY OF THE FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING; ALL PROCEEDS
RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL INTANGIBLES AND ACCOUNTS PROCEEDS).

-----------------------------------------------------------------------------------------------------------------------------5. CHECK
/ / This FINANCING STATEMENT is signed by the Secured Party
7. If filed in Florida (check one)
BOX
instead of the Debtor to perfect a security interest
Documentary
Documentary stamp
(if applicable)
(a) in collateral already subject to a security interest
/ / stamp tax
/X/ tax not
in another jurisdiction when it was brought into this
paid
applicable
state, or when the debtor’s location was changed to this
state, or (b) in accordance with other statutory provisions
[additional data may be required]
-----------------------------------------------------------------------------------------------------------------------------6. REQUIRED SIGNATURE(S)
8. / / This FINANCING STATEMENT is to be filed [for record]
(or recorded) in the REAL ESTATE RECORDS
Attach Addendum
[if applicable]
-----------------------------------------------------------------------------------------------------------------------------PATRICK W. SMITH, PRESIDENT
9. Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s)
[ADDITIONAL FEE]
(optional) / / All Debtors
/ / Debtor 1
/ / Debtor 2
-----------------------------------------------------------------------------------------------------------------------------THOMAS P. SMITH, VICE PRESIDENT
CFI PROSERVICES, INC. 400 S.W. 6TH AVENUE, PORTLAND, OREGON 97204
(1) FILING OFFICER COPY - NATIONAL FINANCING STATEMENT (FORM UCC1)(TRANS)(REV. 12/18/95)

</Table>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 133
CRC: 52064
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 15

[E/O]

<PAGE>
<Table>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.19.00-1 SN: 0

Ed#: 2

*P64567/6101219/2*

15

<S>

<C>

THIS SPACE FOR USE OF FILING OFFICER
FINANCING STATEMENT - FOLLOW INSTRUCTIONS CAREFULLY
This Financing Statement is presented for filing pursuant to the Uniform Commercial Code
and will remain effective, with certain exceptions, for 5 years from date of filing.
----------------------------------------------------------------------------------------------------------A. NAME & TEL. # OF CONTACT AT FILER (optional)
B. FILING OFFICE ACCT.# (optional)
----------------------------------------------------------------------------------------------------------C. RETURN COPY TO: (Name and Mailing Address)
[
]
BANK OF AMERICA, N.A.
P.O. BOX 830632
DALLAS, TX 75283-0632
[
]
----------------------------------------------------------------------------------------------------------D. OPTIONAL DESIGNATION (if applicable): / / LESSOR/LESSEE
/ / CONSIGNOR/CONSIGNEE
/ / NON-UCC FILING
-----------------------------------------------------------------------------------------------------------------------------1. DEBTOR’S EXACT FULL LEGAL NAME - Insert only one debtor name (1a or 1b)
--------------------------------------------------------------------------------------------------------------------------1a. ENTITY’S NAME
TASER INTERNATIONAL INCORPORATED
OR --------------------------------------------------------------------------------------------------------------------------1b. INDIVIDUAL’S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
-----------------------------------------------------------------------------------------------------------------------------1c. MAILING ADDRESS
CITY
STATE
COUNTRY
POSTAL CODE
7339 E. EVANS RD STE 1
SCOTTSDALE
AZ
85260
-----------------------------------------------------------------------------------------------------------------------------1d. S.S. OR TAX I.D.#
OPTIONAL
1e. TYPE OF ENTITY
1f. ENTITY’S STATE
1g. ENTITY’S ORGANIZATIONAL I.D.#, if any
860741227
ADD’NL INFO RE
OR COUNTRY OF
ENTITY DEBTOR
ORGANIZATION
/ / NONE
-----------------------------------------------------------------------------------------------------------------------------2. ADDITIONAL DEBTOR’S EXACT FULL LEGAL NAME - Insert only one debtor name (2a or 2b)
--------------------------------------------------------------------------------------------------------------------------2a. ENTITY’S NAME
OR --------------------------------------------------------------------------------------------------------------------------2b. INDIVIDUAL’S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
-----------------------------------------------------------------------------------------------------------------------------2c. MAILING ADDRESS
CITY
STATE
COUNTRY
POSTAL CODE
-----------------------------------------------------------------------------------------------------------------------------2d. S.S. OR TAX I.D.#
OPTIONAL
2e. TYPE OF ENTITY
2f. ENTITY’S STATE
2g. ENTITY’S ORGANIZATIONAL I.D.#, if any
ADD’NL INFO RE
OR COUNTRY OF
ENTITY DEBTOR
ORGANIZATION
/ / NONE
-----------------------------------------------------------------------------------------------------------------------------3. SECURED PARTY’S (ORIGINAL S/P or ITS TOTAL ASSIGNEE) EXACT FULL LEGAL NAME - Insert only one secured party name (3a or 3b)
--------------------------------------------------------------------------------------------------------------------------3a. ENTITY’S NAME
BANK OF AMERICA, N.A.
OR --------------------------------------------------------------------------------------------------------------------------3b. INDIVIDUAL’S LAST NAME
FIRST NAME
MIDDLE NAME
SUFFIX
-----------------------------------------------------------------------------------------------------------------------------3c. MAILING ADDRESS
CITY
STATE
COUNTRY
POSTAL CODE
101 NORTH FIRST AVENUE
PHOENIX
AZ
85003
-----------------------------------------------------------------------------------------------------------------------------4. This FINANCING STATEMENT covers the following types or items of property:
ALL EQUIPMENT; WHETHER ANY OF THE FOREGOING IS OWNED NOW OR ACQUIRED LATER; ALL ACCESSIONS, ADDITIONS, REPLACEMENTS, AND
SUBSTITUTIONS RELATING TO ANY OF THE FOREGOING; ALL RECORDS OF ANY KIND RELATING TO ANY OF THE FOREGOING; ALL PROCEEDS
RELATING TO ANY OF THE FOREGOING (INCLUDING INSURANCE, GENERAL INTANGIBLES AND ACCOUNTS PROCEEDS).

-----------------------------------------------------------------------------------------------------------------------------5. CHECK
/ / This FINANCING STATEMENT is signed by the Secured Party
7. If filed in Florida (check one)
BOX
instead of the Debtor to perfect a security interest
Documentary
Documentary stamp
(if applicable)
(a) in collateral already subject to a security interest
/ / stamp tax
/X/ tax not
in another jurisdiction when it was brought into this
paid
applicable
state, or when the debtor’s location was changed to this
state, or (b) in accordance with other statutory provisions
[additional data may be required]
-----------------------------------------------------------------------------------------------------------------------------6. REQUIRED SIGNATURE(S)
8. / / This FINANCING STATEMENT is to be filed [for record]
(or recorded) in the REAL ESTATE RECORDS
Attach Addendum
[if applicable]
-----------------------------------------------------------------------------------------------------------------------------PATRICK W. SMITH, PRESIDENT
9. Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s)
[ADDITIONAL FEE]
(optional) / / All Debtors
/ / Debtor 1
/ / Debtor 2
-----------------------------------------------------------------------------------------------------------------------------THOMAS P. SMITH, VICE PRESIDENT
CFI PROSERVICES, INC. 400 S.W. 6TH AVENUE, PORTLAND, OREGON 97204
(5) SECURED PARTY COPY - NATIONAL FINANCING STATEMENT (FORM UCC1)(TRANS)(REV. 12/18/95)

</Table>

GENERAL INSTRUCTIONS FOR NATIONAL FINANCING STATEMENT (FORM UCC1)(TRANS)

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 133
CRC: 52064
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 15

[E/O]

1a.

1b.

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.19.00-2E SN: 0

Entity Debtor. "Entity" means an organization having a legal identity
separate from its owner. A partnership is an entity; a sole proprietorship
is not an entity, even if it does business under a trade name. If Debtor is
a partnership, enter exact full legal name of partnership; you need not
enter names of partners as additional Debtors. If Debtor is a registered
entity (e.g., corporation, limited partnership, limited liability company),
it is advisable to examine Debtor’s current filed charter documents to
determine correct name, entity type, and state of organization.
Individual Debtor. "Individual" means a natural person and a sole
proprietorship, whether or not operating under a trade name. Don’t use
prefixes (Mr., Mrs., Ms.). Use suffix box only for titles for lineage (Jr.,
Sr., III) and not for other suffixes or titles (e.g., M.D.). Use married
woman’s personal name (Mary Smith, not Mrs. John Smith). Enter individual
Debtor’s family name (surname) in Last Name box, first given name in First
Name box,

Ed#: 2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 91
CRC: 42528
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 16

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.20.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 1

*P64567/6101220/1*

16
and all additional given names in Middle Name box.
For both entity and individual Debtors: Don’t use Debtor’s trade name,
D/B/A, A/K/A, F/K/A, etc. in place of Debtor’s legal name; you may add
such other names as additional Debtors if you wish.

1c.

An address is always required for the Debtor named in 1a or 1b.

1d.

Debtor’s social security or tax identification number is required in
some states. Enter social security number of a sole proprietor, not tax
identification number of the sole proprietor.

1e,f,g. "Additional information re entity Debtor" is optional. It helps
searchers to distinguish this Debtor from others with the same or a
similar name. Type of entity and state of organization can be determined
from Debtor’s current filed charter documents. Organizational I.D.
number, if any, is assigned by the agency where the charter document was
filed; this is different from taxpayer I.D. number; this should be
entered preceded by the 2-character U.S. Postal identification of state
of organization (e.g., CA12345, for a California corporation whose
organizational I.D. number is 12345).
Note: If a Debtor is a transmitting utility as defined in applicable Commercial
Code, attach Addendum (Form UCC1 Ad) and check box Ad8.
2.

If an additional Debtor is included, complete Item 2, determined and
formatted per Instruction 1. To include further additional Debtors, or
one or more additional Secured Parties, attach either Addendum (Form
UCC1Ad) or other additional page(s), using correct format. Follow
Instruction 1 for determining and formatting additional names.

3.

Enter information, determined and formatted per Instruction 1. If there
is more than one Secured Party, see Instruction 2. If there has been a
total assignment of the Secured Party’s interest prior to filing this
form, you may provide either assignor Secured Party’s or assignee’s name
and address in Item 3.

4.

Use Item 4 to indicate the types or describe the Items of collateral. If
space in Item 4 is insufficient, put the entire collateral description
or continuation of the collateral description on either Addendum (Form
UCC1Ad) or other attached additional page(s).

5,6.

All Debtors must sign. Under certain circumstances, Secured Party may
sign instead of Debtor; if applicable, check box in Item 5 and provide
Secured Party’s signature in Item 6, and under certain circumstances, in
some states, you must also provide additional data; use Addendum (Form
UCC1Ad) or attachment to provide such additional data.

7.

If filing in the state of Florida you must check one of the two boxes in
Item 7 to comply with documentary stamp tax requirements.

8.

If the collateral consists of or includes fixtures, timber, minerals,
and/or mineral-related accounts, check the box in Item 8 and complete
the required information on Addendum (Form UCC1Ad). If the collateral
consists of or includes crops, consult applicable law of state where
this Financing Statement is to be filed and complete Ad3B, and Ad4 if
required, on Addendum (Form UCC1Ad) and, if required, check box in Item
8.

9.

Check box 9 to request Search Certificate(s) on all or some of the
Debtors named in this Financing Statement. The Certificate will list all
Financing Statements on file against the designated Debtor currently
effective on the date of the Certificate, including this Financing
Statement. There is an additional fee for each Certificate. This item is
optional. If you have checked box 9, file copy 3 (Search Request Copy)
of this form together with copies 1 and 2. Not all states will honor a
search request made via this form; some states require a separate
request form.
INSTRUCTIONS RE OPTIONAL ITEMS A-D

A.

To assist filing officers who might wish to communicate with filer,
filer may provide information in Item A. This item is optional.

B.

If filer has an account with filing officer or is authorized to pay fees

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 96
CRC: 45357
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 17

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.21.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 4

*P64567/6101221/4*

17
AGREEMENT TO PROVIDE INSURANCE

<Table>
<S>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
<C>
__________________________________________________________________________________________
PRINCIPAL LOAN DATE
MATURITY
LOAN NO
CALL COLLATERAL ACCOUNT
OFFICER INITIALS
$60,000.00 10-24-2000 01-24-2001 NEW
15380
Z0315
__________________________________________________________________________________________
</Table>
REFERENCES IN THE SHADED AREA ARE FOR LENDER’S USE ONLY AND DO NOT LIMIT THE
APPLICABILITY OF THIS DOCUMENT TO ANY PARTICULAR LOAN OR ITEM.
________________________________________________________________________________
BORROWER: TASER INTERNATIONAL INCORPORATED
LENDER: BANK OF AMERICA, N.A.
7339 E. EVANS RD STE 1
101 NORTH FIRST AVENUE
SCOTTSDALE, AZ 85260
PHOENIX, AZ 85003
________________________________________________________________________________
INSURANCE REQUIREMENTS. Taser International Incorporated ("Grantor")
understands that insurance coverage is required in connection with the
extending of a loan or the providing of other financial accommodations to
Grantor by Lender. These requirements are set forth in the security documents.
The following minimum insurance coverages must be provided on the following
described collateral (the "Collateral"):
COLLATERAL: ALL EQUIPMENT.
TYPE. All risks, including fire, theft and liability.
AMOUNT. $60,000.00.
BASIS. Replacement value.
ENDORSEMENTS. Lender’s loss payable clause with stipulation that
coverage will not be cancelled or diminished without a minimum of
thirty (30) days’ prior written notice to Lender.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. Grantor understands
that credit may not be denied solely because insurance was not purchased
through Lender.
INSURANCE MAILING ADDRESS. All documents and other materials relating to
insurance for this loan should be mailed, delivered or directed to the
following address:
BANK OF AMERICA, N.A.
COMMERCIAL LOAN ADMIN. - INSURANCE
P.O. BOX 830634
DALLAS, TX 75283-0634
NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, thirty (30)
days from the date of this Agreement, evidence of the required insurance as
provided above, with an effective date of October 24, 2000, or earlier. Grantor
acknowledges and agrees that if Grantor fails to provide any required insurance
or fails to continue such insurance in force, Lender may do so at Grantor’s
expense as provided in the applicable security document. The cost of any such
insurance, at the option of Lender, shall be payable on demand or shall be
added to the Indebtedness as provided in the security document. GRANTOR
ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL
PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE
BALANCE OF THE LOAN; HOWEVER GRANTOR’S EQUITY IN THE COLLATERAL MAY NOT BE
INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR
PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY
FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER 24,
2000.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 9406
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 18

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.22.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

18
NOTICE OF INSURANCE REQUIREMENTS

<Table>
<S>
<C>
<C>
<C>
<C>
<C>
<C>
-------------------------------------------------------------------------------LOAN DATE
LOAN NO. CALL
COLLATERAL
CUSTOMER NO.
OFFICER
INITIALS
10-24-2000
NEW
15380
Z0315
-------------------------------------------------------------------------------</Table>
References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
BORROWER: TASER INTERNATIONAL INCORPORATED
LENDER: BANK OF AMERICA, N.A.
7339 E. EVANS RD STE 1
101 NORTH FIRST AVENUE
SCOTTSDALE, AZ 85260
PHOENIX, AZ 85003
================================================================================
<Table>
<S>
[
TO: [
[
</Table>

<C>
]
]
]

DATE: OCTOBER 24, 2000

DEAR INSURANCE AGENT:
TASER INTERNATIONAL INCORPORATED ("GRANTOR") IS OBTAINING A LOAN FROM BANK OF
AMERICA, N.A.. PLEASE SEND APPROPRIATE EVIDENCE OF INSURANCE TO BANK OF
AMERICA, N.A., TOGETHER WITH THE REQUESTED ENDORSEMENTS, ON THE FOLLOWING
PROPERTY, WHICH BORROWER IS GIVING AS SECURITY FOR THE LOAN.
COLLATERAL: ALL EQUIPMENT.
TYPE. All risks, including fire, theft and liability.
AMOUNT. $60,000.00.
BASIS. Replacement value.
ENDORSEMENTS. Lender’s loss payable clause with stipulation that
coverage will not be cancelled or diminished without a minimum of
thirty (30) days’ prior written notice to Lender.
BORROWER:
TASER INTERNATIONAL INCORPORATED
BY:
-----------------------------------------PATRICK W. SMITH, PRESIDENT
MAIL TO:
[
[
[
[
[
[

BANK OF AMERICA, N.A.
COMMERCIAL LOAN ADMIN. - INSURANCE
P.O. BOX 830634
DALLAS, TX 75283-0634

]
]
]
]
]
]

Ed#: 4

*P64567/6101222/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 83
CRC: 51254
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.12.23.00

[E/O]

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
19
[BANK OF AMERICA LOGO]
DISBURSEMENT REQUEST AND AUTHORIZATION
<Table>
<Caption>
PRINCIPAL
<C>
$60,000.00

<S>

LOAN DATE
<C>
10-24-2000

MATURITY
<C>
01-24-2001

LOAN NO.
<C>
New

CALL
<C>

COLLATERAL
<C>

ACCOUNT
<C>
15380

OFFICER
<C>
Z0315

INITIALS
<C>

</Table>
References in the shaded area are for Lender’s use only and do not
limit the applicability of this document to any particular loan or item.
BORROWER:

Taser International Incorporated
LENDER: Bank of America, N.A.
7339 E. Evans Rd Ste 1
101 North First Avenue
Scottsdale, AZ 85260
Phoenix, AZ 85003
_______________________________________________________________________________
LOAN TYPE. This is a Variable Rate (2.000% over fluctuating rate of interest
established by Lender from time to time as its "Prime Rate" whether or not such
rate shall otherwise be published, making an initial rate of 11.500%),
Non-Revolving Line of Credit Loan to a Corporation for $60,000.00 due on
January 24, 2001.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
[ ] Personal, Family, or Household Purposes or Personal Investment.
[X] Business (including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan is: Purchase Machinery &
Equipment.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender’s conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $60,000.00 as follows:
<Table>
<S>
Undisbursed Funds:
Note Principal:

<C>
$60,000.00
---------$60,000.00

</Table>
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
<Table>
<S>
Prepaid Finance Charges Paid in Cash:
Other Charges Paid in Cash:
$5.00 Recording
$12.50 Lien Search
$12.50 Goodstanding
Total Charges Paid in Cash:

Ed#: 6

*P64567/6101223/6*

<C>
$0.00
$30.00

-----$30.00

</Table>
DEBITING OF ACCOUNT. Borrower authorizes Lender to debit from Borrower’s account
number ____________, all of the above Charges Paid in Cash and any other closing
costs associated with the Loan.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER’S FINANCIAL
CONDITION AS DISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO LENDER.
THIS AUTHORIZATION IS DATED OCTOBER 24, 2000.
BORROWER:
TASER INTERNATIONAL INCORPORATED
BY:____________________________________________

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 155
CRC: 21850
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 20

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.24.00-1 SN: 0

20
CORPORATE RESOLUTION TO BORROW

<Table>
<S>
PRINCIPAL
$60,000.00

<C>
LOAN DATE
10-24-2000

<C>
MATURITY
01-24-2001

<C>
LOAN NO
NEW

<C> <C>
CALL COLLATERAL

<C>
ACCOUNT
15380

<C>
OFFICER
Z0315

<C>
INITIALS

</Table>
References in the shaded area are for Lender’s use only and do not limit the
applicability of this document to any particular loan or item.
BORROWER: TASER INTERNATIONAL INCORPORATED
7339 E. EVANS RD STE 1
SCOTTSDALE, AZ 85260

LENDER: BANK OF AMERICA, N.A.
101 NORTH FIRST AVENUE
PHOENIX, AZ 85003

================================================================================
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF TASER INTERNATIONAL
INCORPORATED (THE "CORPORATION"), HEREBY CERTIFY THAT the Corporation is
organized and existing under and by virtue of the laws of the state of Arizona
as a corporation for profit, with its principal office at 7339 E. Evans Rd Ste
1, Scottsdale, AZ 85260, and is duly authorized to transact business in the
State of Arizona.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held ON OCTOBER 24, 2000, at which a quorum was present and voting,
or by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that ANY ONE (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
NAMES
-----

POSITIONS
---------

ACTUAL SIGNATURES
-----------------

Patrick W. Smith

President

X
--------------------------------

Thomas P. Smith

Vice President

Ed#: 1

*P64567/6101224/1*

X
--------------------------------

acting for and on behalf of the Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Bank of America, N.A.
("Lender"), on such terms as may be agreed upon between the Corporation and
Lender, such sum or sums of money as in their judgment should be borrowed,
without limitation.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accommodations of the Corporation, on
Lender’s forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any indebtedness
of the Corporation to Lender, and also to execute and deliver to Lender one
or more renewals, extensions, modifications, refinancings, consolidations,
or substitutions for one or more of the notes, any portion of the notes, or
any other evidence of credit accommodations.
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accommodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness
of the Corporation to Lender at any time owing, however the same may be
evidenced, any property now or hereafter belonging to the Corporation or in
which the Corporation now or hereafter may have an interest, including
without limitation all real property and all personal property (tangible or
intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness is incurred, or at any other time or
times, and may be either in addition to or in lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 155
CRC: 21850
P64567.SUB, DocName: EX-10.12, Doc: 17, Page: 20

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.12.24.00-2E SN: 0

[E/O]

to cause such other disposition of the proceeds derived therefrom as they
may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or
proper in order to carry into effect the provisions of these Resolutions.
The following person or persons currently are authorized to request
advances and authorize payments under the line of credit until Lender
receives written notice of revocation of their authority: Patrick W. Smith,
President; and Thomas P. Smith, Vice President.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation’s agreements or commitments in effect at
the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender’s address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the foregoing
Resolutions now stand of record on the books of the Corporation; and that the
Resolutions are in full force and effect and have not been modified or revoked
in any manner whatsoever. The Corporation has no corporate seal, and therefore,
no seal is affixed to this certificate.
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON OCTOBER 24, 2000 AND ATTEST
THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR GENUINE
SIGNATURES.
CERTIFIED TO AND ATTESTED BY:
X
--------------------------------X
--------------------------------NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
================================================================================
</TEXT>
</DOCUMENT>

Ed#: 1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.13, Doc: 18

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.13
p64567ex10-13.txt
EX-10.13

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 18 SN: *
*DOCHDR/18*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 41244
P64567.SUB, DocName: EX-10.13, Doc: 18, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.13.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
EXHIBIT 10.13
[TASER INTERNATIONAL LOGO]
PROMISSORY NOTE

Amount of Note ($): $200,000 CASH
City: SCOTTSDALE, State: ARIZONA
Date: MARCH 31, 2000
FOR VALUE RECEIVED the undersigned jointly and severally promise(s) to pay
to the order of:
BRUCE R. CULVER
the principal sum of:
TWO HUNDRED THOUSAND & NO/100 ($200,000.00) DOLLARS together with interest
thereon from the date at the rate of:
10.00%
percent per annum until maturity. The principal balance and interest shall be
due and payable on or before January 1, 2001.
Unless specifically disallowed by law, should litigation arise hereunder,
service of process therefore may be obtained through certified mail, return
receipt requested; the parties hereto waiving and all rights they may have to
object to the method by which service was perfected.
All matters pertinent to this Agreement (including its interpretation,
application, validity, performance and breach), shall be governed by, construed
and enforce in accordance with the laws of the State of Arizona. The parties
herein waive trial by jury and agree to submit to the personal jurisdiction and
venue of a court of subject matter jurisdiction located in Maricopa County,
State of Arizona. In the event that litigation results from or arises out of
this Agreement or the performance thereof, the parties agree to reimburse the
prevailing party’s reasonable attorney’s fees, court costs, and all other
expenses, whether or not taxable by the court as costs, in addition to any
other relief to which the prevailing party may be entitled. In such event, no
action shall be entertained by said court or any court of competent
jurisdiction if filed more than one year subsequent to the date the cause(s) of
action actually accrued regardless of whether damages were otherwise as of said
time calculable.
TASER INTERNATIONAL INC.
-----------------------CORPORATION

/s/ Bruce R. Culver
-------------------------------Signature

By: /s/ Patrick W. Smith
------------------------------------Signature

Bruce R. Culver
Name Printed

Patrick W. Smith
CEO

</TEXT>
</DOCUMENT>

Ed#: 3

*P64567/6101301/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-10.14, Doc: 19

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.14
p64567ex10-14.txt
EX-10.14

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 19 SN: *
*DOCHDR/19*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 99
CRC: 34944
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.01.00-1 SN: 0

1
Exhibit 10.14
INDUSTRIAL REAL ESTATE LEASE
(Multi Tenant Facility)

COMMERCIAL
ARTICLE ONE:

BASIC TERMS

This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of
the Lease referred to in this Article One explain and define the Basic Terms
and are to be read in conjunction with the Basic Terms.
Section 1.01.

DATE OF LEASE:

Section 1.02.

LANDLORD (INCLUDE LEGAL ENTITY):

November 17, 2000
NORTON P REMES and JOAN A

REMES, CO-TRUSTEES OF THE NORTON P REMES and JOAN A. REMES REVOCABLE TRUST dated
November 17, 1994
Address of Landlord:

10040 E. Happy Valley Road, Suite 401
Scottsdale, AZ 85255

Section 1.03. TENANT (INCLUDE LEGAL ENTITY):
Arizona corporation
Address of Tenant:

Taser International, an

7860 East McClain Drive, Suite 2B & 2C
Scottsdale, AZ 85260

Section 1.04. PROPERTY: The Property is part of Landlord’s multi-tenant
real property development known as North Scottsdale Airpark #1A, Lots 2 & 3,
commonly known as 7860 E. McClain, and described or depicted in Exhibit "A"
(the "Project"). The Project includes the land, the buildings and all other
improvements located on the land, and the common areas described in Paragraph
4.05(a). The Property is 7860 E. McClain Drive, Suite 2B & 2C, Scottsdale, AZ
85260 consisting of approximately + or - 11,800 square feet to include nine (9)
covered parking stalls on the east side of the building
Section 1.05. LEASE TERM: Five (5) years Zero (0) months BEGINNING ON
January 1, 2001 or such other date as specified in this Lease, and ENDING ON
December 31,2005
Section 1.06. PERMITTED USES: (See Article Five) Administrative offices,
warehouse and light manufacturing
Section 1.07.
Guarantee

TENANT’S GUARANTOR: (If none, so state) see attached

Section 1.08.
Landlord’s Broker:
Tenant’s Broker:

BROKERS: (see Article Fourteen)(if none, so state)
Colliers Classic
American Realty Brokers

Section 1.09. COMMISSION PAYABLE TO LANDLORD’S BROKER: (See Article
Fourteen) $ under separate cover
Section 1.10.

Ed#: 13

*P64567/6101401/13*

INITIAL SECURITY DEPOSIT: (See Section 3.03) $11,500.00

Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (see Section
4.05) Thirty (30) including nine (9) covered
Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT:
See Rider #1
Dollars ($ n/a
)
per month for the first ______ months, as provided in Section 3.01, and shall be
increase on the first day of the ________ month(s) after the Commencement Date,
either (i) as provided in Section 3.02, or (ii)
see Rider #1. (If (ii) is
completed, then (i) and Section 3.02 are inapplicable.)
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02);

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 99
CRC: 34944
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 1

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.01.00-2E SN: 0

[E/O]

1

Ed#: 13

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 88
CRC: 35478
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.14.02.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 9

*P64567/6101402/9*

<PAGE>
2
ARTICLE TWO: LEASE TERM
Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the beginning
or end of the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term, unless advanced or delayed under any provision of
this Lease.
Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to Tenant
if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord’s non-delivery of the Property to the Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. If Landlord does not deliver possession of the Property to Tenant within
sixty (60) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the sixty
(60) day period ends. If Tenant gives such notice, the Lease shall be cancelled
and neither Landlord nor Tenant shall have any further obligations to the
other. If Tenant does not give such notice, Tenant’s right to cancel the
Lease shall expire and the Lease Term shall commence upon the delivery of
possession of the Property to Tenant. If delivery of possession of the Property
to Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an
amendment to this Lease setting forth the actual Commencement Date and
expiration date of the Lease. Failure to execute such amendment shall not affect
the actual Commencement Date and expiration date of the Lease.
Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior to the
Commencement Date, Tenant’s occupancy of the Property shall be subject to all of
the provisions of this Lease. Early occupancy of the Property shall not advance
the expiration date of this Lease. Tenant shall pay Base Rent and all other
charges specified in this Lease for the early occupancy period.
Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse Landlord
for and indemnify Landlord against all damages which Landlord incurs from
Tenant’s delay in vacating the Property. If Tenant does not vacate the Property
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant, Tenant’s occupancy of the Property shall be a
"month-to-month" tenancy, subject to all of the terms of this Lease applicable
to a month-to-month tenancy, except that the Base Rent then in effect shall be
increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01 TIME AND MANNER OF PAYMENT. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord’s address or at such other place as
Landlord may designate in writing.
Section 3.03. SECURITY DEPOSIT; INCREASES.
(a) Upon the execution of this Lease, Tenant shall deposit with Landlord a
cash Security Deposit in the amount set forth in Section 1.10 above. Landlord
may apply all or part of the Security Deposit to any unpaid rent or other
changes due from Tenant or to cure any other defaults of Tenant. If Landlord
uses any part of the Security Deposit, Tenant shall restore the Security Deposit
to its full amount within ten (10) days after Landlord’s written request.
Tenant’s failure to do so shall be a material default under this Lease. No
interest shall be paid on the Security Deposit. Landlord shall not be required
to keep the Security Deposit separate from its other accounts and no trust
relationship is created with respect to the Security Deposit.
(b) Each Time the Base Rent is increased, Tenant shall deposit additional
funds with Landlord sufficient to increase the Security Deposit to an amount
which bears the same relationship to the adjusted Base Rent as the initial
Security Deposit bore to the initial Base Rent.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 133
CRC: 7982
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.03.00-1 SN: 0

<PAGE>
3
Section 3.04. TERMINATION; ADVANCE PAYMENTS. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant’s default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant’s successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.
ARTICLE FOUR:

OTHER CHARGES PAYABLE BY TENANT

Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02.

PROPERTY TAXES.

(a) REAL PROPERTY TAXES. Tenant shall pay all real property taxes on the
Property (including any fees, taxes or assessments against, or as a result of,
any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08
below, such payment shall be made at least ten (10) days prior to the
delinquency date of the taxes. Within such ten (10)-day period, Tenant shall
furnish Landlord with satisfactory evidence that the real property taxes have
been paid. Landlord shall reimburse Tenant for any real property taxes paid by
Tenant covering any period of time prior to or after the Lease Term. If Tenant
fails to pay the real property taxes when due, Landlord may pay the taxes and
Tenant shall reimburse Landlord for the amount of such tax payment as
Additional Rent.
(b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i) any
fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord’s right to receive, or the
receipt of, rent or income from the Property or against Landlord’s business of
leasing the Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (iv) any tax imposed upon this transaction or based
upon a re-assessment of the Property due to a change of ownership, as defined
by applicable law, or other transfer of all or part of Landlord’s interest in
the Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. "Real property tax" does not,
however, include Landlord’s federal or state income, franchise, inheritance or
estate taxes.
(c) JOINT ASSESSMENT. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant’s share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor’s worksheets or
other reasonably available information. Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord’s written statement.
(d)

PERSONAL PROPERTY TAXES.

(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from the Property.
(ii) If any of Tenant’s personal property is taxed with the Property,
Tenant shall pay Landlord the taxes for the personal property within fifteen
(15) days after Tenant receives a written statement from Landlord for such
personal property taxes.
Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant’s
proportionate share of the cost of such utilities and services and Tenant shall
pay such Landlord within fifteen (15) days after receipt of Landlord’s written
statement.
Section 4.04.

Ed#: 6

*P64567/6101403/6*

INSURANCE POLICIES.

(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 133
CRC: 7982
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 3

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.03.00-2E SN: 0

[E/O]

in the full amount of its replacement value. Such policy shall contain an
inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain
insurance for Tenant’s fixtures or equipment or building improvements installed
by Tenant on the Property. During the Lease Term, Landlord shall also maintain
a rental income insurance policy, with loss payable to Landlord, in an amount
equal to one year’s Base Rent, plus estimated real property taxes and insurance
premiums. Tenant shall be liable for the payment of any deductible amount under
Landlord’s or Tenant’s insurance policies maintained pursuant to this Section
4.04, in an amount not to exceed Ten Thousand Dollars ($10,000). Tenant shall
not do or permit anything to be done which invalidates any such insurance
policies.
(c) PAYMENT OF PREMIUMS. Subject to Section 4.08, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after
Tenant’s receipt of a copy of the premium statement or other evidence of the
amount due, except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to obtain as
provided in Paragraph 4.04(a). For insurance policies
(c) 1988 Southern California Chapter
Initials /s/ R.G.
of the Society of Industrial
[SIOR(TM) LOGO]
------------and Office Realtors,(R) Inc.
(MULTI-TENANT NET FORM)
/s/ J.R. AR
-------------

3

Ed#: 6

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 129
CRC: 6859
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.04.00-1 SN: 0

Ed#: 7

*P64567/6101404/7*

<PAGE>
4
maintained by Landlord which cover improvements on the entire Project, Tenant
shall pay Tenant’s prorated share of the premiums, in accordance with the
formula in Paragraph 4.05(e) for determining Tenant’s share of Common Area
costs. If insurance policies maintained by Landlord cover improvements on real
property other than the Project, Landlord shall deliver to Tenant a statement of
the premium applicable to the Property showing in reasonable detail how Tenant’s
share of the premium was computed. If the Lease Term expires before the
expiration of an insurance policy maintained by Landlord, Tenant shall be liable
for Tenant’s prorated share of the insurance premiums. Before the Commencement
Date, Tenant shall deliver to Landlord a copy of any policy of insurance which
Tenant is required to maintain under this Section 4.04. At least thirty (30)
days prior to the expiration of any such policy, Tenant shall deliver to
Landlord a renewal of such policy. As an alternative to providing a policy of
insurance, Tenant shall have the right to provide Landlord a certificate of
insurance, executed by an authorized officer of the insurance company, showing
that the insurance which Tenant is required to maintain under this Section 4.04
is in full force and effect and containing such other information which Landlord
reasonably requires.
(d) GENERAL INSURANCE PROVISIONS.
(i)
Any insurance which Tenant is required to maintain under this
Lease shall include a provision which requires the insurance carrier to
give Landlord not less than thirty (30) days’ written notice prior to any
cancellation or modification of such coverage.
(ii) If Tenant fails to deliver any policy, certificate or renewal to
Landlord required under this Lease within the prescribed time period or if
any such policy is cancelled or modified during the Lease Term without
Landlord’s consent, Landlord may obtain such insurance, in which case
Tenant shall reimburse Landlord for the cost of such insurance within
fifteen (15) days after receipt of a statement that indicates the cost of
such insurance.
(iii) Tenant shall maintain all insurance required under this Lease
with companies holding a "General Policy Rating" of A-12 or better, as set
forth in the most current issue of "Best Key Rating Guide". Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04 may not be
available in the future. Tenant acknowledges that the insurance described
in this Section 4.04 is for the primary benefit of Landlord. If at any time
during the Lease Term, Tenant is unable to maintain the insurance required
under the Lease, Tenant shall nevertheless maintain insurance coverage
which is customary and commercially reasonable in the insurance industry
for Tenant’s type of business, as that coverage may change from time to
time. Landlord makes no representation as to the adequacy of such insurance
to protect Landlord’s or Tenant’s interests. Therefore, Tenant shall obtain
any such additional property or liability insurance which Tenant deems
necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all rights of
recovery against the other, or against the officers, employees, agents or
representatives of the other, for loss of or damage to its property or the
property of others under its control, if such loss or damage is covered by
any insurance policy in force (whether or not described in this Lease) at
the time of such loss or damage. Upon obtaining the required policies of
insurance, Landlord and Tenant shall give notice to the insurance carriers
of this mutual waiver of subrogation.
Section 4.05. COMMON AREAS; USE, MAINTENANCE AND COSTS.
(a) COMMON AREAS. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant.
Such activities and changes are permitted if they do not materially affect
Tenant’s use of the Property.
(b) USE OF COMMON AREAS. Tenant shall have the nonexclusive right (in

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 129
CRC: 6859
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 4

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.04.00-2E SN: 0

[E/O]

spaces shall only be used by those legally permitted to use them. If Tenant
parks more vehicles in the parking area than the number set forth in Section
1.11 of this Lease, such conduct shall be a material breach of this Lease. In
addition to Landlord’s other remedies under the Lease, Tenant shall pay a daily
charge determined by Landlord for each such additional vehicle.
(d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
in good order, condition and repair and shall operate the Project, in Landlord’s
sole discretion, as a first-class industrial/commercial real property
development. Tenant shall pay Tenant’s pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of the Common
Areas. Common Area costs include, but are not limited to, costs and expenses for
the following: gardening and landscaping: utilities, water and sewage charges;
maintenance of signs (other than tenants’ signs); premiums for liability,
property damage, fire and other types of casualty insurance on the Common Areas
and worker’s compensation insurance; all property taxes and assessments levied
on or attributable to the Common Areas and all Common Area improvements; all
personal property taxes levied on or attributable to personal property used in
connection with the Common Areas; straight-line depreciation on personal
property owned by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance
(C)1988 Southern California Chapter
Initials /s/ R.G.
of the Society of Industrial [SIOR(TM) LOGO]
------------and Office Realtors, (R) Inc.
(MULTI-TENANT NET FORM)
/s/ J.R. AR
------------4

Ed#: 7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 129
CRC: 22096
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.05.00-1 SN: 0

<PAGE>
5
of the Common Areas; fees for required licenses and permits; repairing,
resurfacing, repaving, maintaining, painting, lighting, cleaning, refuse
removal, security and similar items; reserves for roof replacement and exterior
painting and other appropriate reserves; and a reasonable allowance to Landlord
for Landlord’s supervision of the Common Areas (not to exceed five percent (5%)
of the gross rents of the Project for the calendar year). Landlord may cause any
or all of such services to be provided by third parties and the cost of such
services shall be included in Common Area costs. Common Area costs shall not
include depreciation of real property which forms part of the Common Areas.
(e) TENANT’S SHARE AND PAYMENT. Tenant shall pay Tenant’s annual pro rata
share of all Common Area costs (prorated for any fractional month) upon written
notice from Landlord that such costs are due and payable, and in any event prior
to delinquency. Tenant’s pro rata share shall be calculated by dividing the
square foot area of the Property, as set forth in Section 1.04 of the Lease, by
the aggregate square foot area of the Project which is leased or held for lease
by tenants, as of the date on which the computation is made. Tenant’s initial
pro rata share is set out in Paragraph 1.12(b). Any changes in the Common Area
costs and/or the aggregate area of the Project leased or held for lease during
the Lease Term shall be effective on the first day of the month after such
change occurs. Landlord may, at Landlord’s election, estimate in advance and
charge to Tenant as Common Area costs, all real property taxes for which Tenant
is liable under Section 4.02 of the Lease, all insurance premiums for which
Tenant is liable under Section 4.04 of the Lease, all maintenance and repair
costs for which Tenant is liable under Section 6.04 of the Lease, and all other
Common Area costs payable by Tenant hereunder. At Landlord’s election, such
statements of estimated Common Area costs shall be delivered monthly, quarterly
or at any other periodic intervals to be designated by Landlord. Landlord may
adjust such estimates at any time based upon Landlord’s experience and
reasonable anticipation of costs. Such adjustments shall be effective as of the
next rent payment date after notice to Tenant. Within sixty (60) days after the
end of each calendar year of the Lease Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by
Landlord during the preceding calendar year and Tenant’s pro rata share. Upon
receipt of such statement, there shall be an adjustment between Landlord and
Tenant, with payment to or credit given by Landlord (as the case my be) so that
Landlord shall receive the entire amount of Tenant’s share of such costs and
expenses for such period.
Section 4.06. LATE CHARGES. Tenant’s failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed encumbering the
Property. Therefore, if Landlord does not receive any rent payment within ten
(10) days after it becomes due, Tenant shall pay Landlord a late charge equal to
ten percent (10%) of the overdue amount. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of such late payment.
Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest at the rate
of fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.
Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES.
If requested by any ground lessor or lender to whom Landlord has granted a
security interest in the Property, or if Tenant is more than ten (10) days late
in the payment of rent more than once in any consecutive twelve (12)-month
period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the
annual real property taxes and insurance premiums payable by Tenant under this
Lease, together with each payment of Base Rent. Landlord shall hold such
payments in a non-interest bearing impound account. If unknown, Landlord shall
reasonably estimate the amount of real property taxes and insurance premiums
when due. Tenant shall pay any deficiency of funds in the impound account to
Landlord upon written request. If Tenant defaults under this Lease, Landlord
may apply any funds in the impound account to any obligation then due under
this Lease.
ARTICLE FIVE: USE OF PROPERTY

Ed#: 7

*P64567/6101405/7*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 129
CRC: 22096
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 5

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.05.00-2E SN: 0

[E/O]

pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous Material to
be generated, produced, brought upon, used, stored, treated or disposed of in
or about the Property by Tenant, its agents, employees, contractors, sublessees
or invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant’s proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the installation or
use of any storage tanks on the Property.
Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs on
the Property without Landlord’s prior written consent. Tenant shall not conduct
or permit any auctions or sheriff’s sales at the Property.
Section 5.05. INDEMNITY. Tenant shall indemnify Landlord against and
hold Landlord harmless from any and all costs, claims or liability arising
from: (a) Tenant’s use of the Property; (b) the conduct of Tenant’s business or
anything else done or

(c) 1988 Southern California Chapter
of the Society of Industrial
[SIOR(TM) LOGO]
and Office Realtors, (R) Inc.
(MULTI-TENANT NET FORM)

5

Initials /s/ R.G.
----------/s/ J.R. AR
-----------

Ed#: 7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 120
CRC: 64339
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.06.00-1 SN: 0

Ed#: 4

*P64567/6101406/4*

<PAGE>
6
permitted by Tenant to be done in or about the Property, including any
contamination of the Property or any other property resulting from the presence
or use of Hazardous Material caused or permitted by Tenant; (c) any breach or
default in the performance of Tenant’s obligations under this Lease; (d) any
misrepresentation or breach of warranty by Tenant under this Lease; or (e) other
acts or omissions of Tenant. Tenant shall defend Landlord against any such cost,
claim or liability at Tenant’s expense with counsel reasonably acceptable to
Landlord or, at Landlord’s election, Tenant shall reimburse Landlord for any
legal fees or costs incurred by Landlord in connection with any such claim. As a
material part of the consideration to Landlord, Tenant assumes all risk of
damage to property or injury to persons in or about the Property arising from
any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord’s gross negligence or
willful misconduct. As used in this Section, the term "Tenant" shall include
Tenant’s employees, agents, contractors and invitees, if applicable.
Section 5.06. LANDLORD’S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant’s compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall give
Tenant prior notice of such entry, except in the case of an emergency. Landlord
may place customary "For Sale" or "For Lease" signs on the Property.
Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies with
all terms of this Lease, Tenant may occupy and enjoy the Property for the full
Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. EXISTING CONDITIONS. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant’s intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto. If Landlord or Landlord’s Broker has provided a Property
Information Sheet or other Disclosure Statement regarding the Property, a copy
is attached as an exhibit to the Lease.
Section 6.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant’s
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions arising in or about the
Property or upon other portions of the Project, or from other sources or places;
or (d) any act or omission of any other tenant of the Project. Landlord shall
not be liable for any such damage or injury even though the cause of or the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord’s gross negligence or willful misconduct.
Section 6.03. LANDLORD’S OBLIGATIONS.
(a) Except as provided in Article Seven (Damage or Destruction) and Article
Eight (Condemnation), Landlord shall keep the following in good order, condition
and repair: the foundations, exterior walls and roof of the Property.
However, Landlord shall not be obligated to maintain or repair windows,
doors, plate glass or the interior surfaces of exterior walls. Landlord shall
make repairs under this Section 6.03 within a reasonable time after receipt of
written notice from Tenant of the need for such repairs.
(b) Tenant shall pay or reimburse Landlord for all costs Landlord incurs
under Paragraph 6.03(a) above as Common Area costs as provided for in Section
4.05 of the Lease. Tenant waives the benefit of any statute in effect now or in
the future which might give Tenant the right to make repairs at Landlord’s
expense or to terminate this Lease due to Landlord’s failure to keep the
Property in good order, condition and repair.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 120
CRC: 64339
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 6

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.06.00-2E SN: 0

[E/O]

obligated to maintain in an attractive, first-class and fully operative
condition.
(b) Tenant shall fulfill all of Tenant’s obligations under this Section
6.04 at Tenant’s sole expense. If Tenant fails to maintain, repair or replace
the Property as required by this Section 6.04, Landlord may, upon ten (10) days’
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.
(c) 1988 Southern California Chapter [SIOR(TM) LOGO]
of the Society of Industrial
and Office Realtors,(R) Inc.
Initials /s/ R.G.
-----------------/s/ J.R. AR
-----------------(MULTI-TENANT NET FORM)
6

Ed#: 4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 126
CRC: 60538
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.07.00-1 SN: 0

Ed#: 6

*P64567/6101407/6*

<PAGE>
7
Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord’s prior written consent, except for non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in cost
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord’s written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.
(b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days’ prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord’s consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.
Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Landlord’s consent) prior to the expiration of the Lease and to
restore the Property to its prior condition, all at Tenant’s expense. All
alterations, additions and improvements which Landlord has not required Tenant
to remove shall become Landlord’s property and shall be surrendered to Landlord
upon the expiration or earlier termination of the Lease, except that Tenant may
remove any of Tenant’s machinery or equipment which can be removed without
material damage to the Property. Tenant shall repair, at Tenant’s expense, any
damage to the Property caused by the removal of any such machinery or equipment.
In no event, however, shall Tenant remove any of the following materials or
equipment (which shall be deemed Landlord’s property) without Landlord’s prior
written consent: any power wiring or power panels; lighting or lighting
fixtures; wall coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other heating or air
conditioning equipment; fencing or security gates; or other similar building
operating equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. PARTIAL DAMAGE TO PROPERTY.
(a) Tenant shall notify Landlord in writing immediately upon the occurrence
of any damage to the Property. If the Property is only partially damaged (i.e.,
less than fifty percent (50%) of the Property is untenantable as a result of
such damage or less than fifty percent (50%) of Tenant’s operations are
materially impaired) and if the proceeds received by Landlord from the insurance
policies described in Paragraph 4.04(b) are sufficient to pay for the necessary
repairs, this Lease shall remain in effect and Landlord shall repair the damage
as soon as reasonably possible. Landlord may elect (but is not required) to
repair any damage to Tenant’s fixtures, equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, in which case this Lease shall remain in full force and effect, or
(ii) terminate this Lease as of the date the damage occurred. Landlord shall
notify Tenant within thirty (30) days after receipt of notice of the occurrence
of the damage whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall pay Landlord the
"deductible amount" (if any) under Landlord’s insurance policies and, if the
damage was due to an act or omission of Tenant, or Tenant’s employees, agents,
contractors or invitees, the difference between the actual cost of repair and
any insurance proceeds received by Landlord. If Landlord elects to terminate the
Lease, Tenant may elect to continue this Lease in full force and effect, in
which case Tenant shall repair any damage to the Property and any building in
which the Property is located. Tenant shall pay the cost of such repairs, except

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 126
CRC: 60538
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 7

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.07.00-2E SN: 0

[E/O]

Landlord shall notify Tenant of such election within thirty (30) days after
Tenant’s notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord’s sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.
Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Tenant’s use of the Property is impaired. However, the reduction
shall not exceed the sum of one year’s payment of Base Rent, insurance premiums
and real property taxes. Except for such possible reduction in Base Rent,
insurance premiums and real property taxes, Tenant shall not be entitled to any
compensation, reduction, or reimbursement from Landlord as a result of any
damage, destruction, repair, or restoration of or to the Property.
(c)1988 Southern California Chapter
Initials /s/ R.G.
of the Society of Industrial [SIOR(TM) LOGO]
------------and Office Realtors, (R) Inc.
(MULTI-TENANT NET FORM)
/s/ J.R. AR
-------------

7

Ed#: 6

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 136
CRC: 24321
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 8

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.08.00-1 SN: 0

Ed#: 7

*P64567/6101408/7*

8

Section 7.04. WAIVER. Tenant waives the protection of any statute, code
or judicial decision which grants a tenant the right to terminate a lease in
the event of the substantial or total destruction of the leased property.
Tenant agrees that the provisions of Section 7.02 above shall govern the rights
and obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs
first. If more than twenty percent (20%) of the floor area of the building in
which the Property is located, or which is located on the Property, is taken,
either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice to
the other within ten (10) days after receipt of written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority takes title or possession). If neither Landlord nor Tenant terminates
this Lease, this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant’s trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord’s expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. LANDLORD’S CONSENT REQUIRED. No portion of the Property or
of Tenant’s interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord’s prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty
percent (20%) of the partnership interests shall require Landlord’s consent.
If Tenant is a corporation, any change in the ownership of a controlling
interest of the voting stock of the corporation shall require Landlord’s
consent.
Section 9.02 TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord’s consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant’s
Affiliate"). In such case, any Tenant’s Affiliate shall assume in writing all
of Tenant’s obligations under this Lease.
Section 9.03 NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord’s consent, shall release Tenant or
change Tenant’s primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord’s acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant’s
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord may consent
to subsequent assignments or modifications of this Lease by Tenant’s
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant’s liability under this Lease.
Section 9.04 OFFER TO TERMINATE. If Tenant desires to assign the Lease or
sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice of

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 136
CRC: 24321
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 8

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.08.00-2E SN: 0

[E/O]

(but not assign), all or a portion of the Property to the proposed transferee,
but only on the other terms of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the Lease
the Landlord’s Share (stated in Section 1.13) of the Profit (defined below)
on such transaction as and when received by Tenant, unless Landlord gives
written notice to Tenant and the assignee or subtenant that Landlord’s
Share shall be paid by the assignee or subtenant to Landlord directly. The
"Profit" means (A) all amounts paid to Tenant for such assignment or
sublease, including "key" money, monthly rent in excess of the monthly rent
payable under the Lease, and all fees and other consideration paid for the
assignment or sublease, including fees under any collateral agreements,
less (B) costs and expenses directly incurred by Tenant in connection with
the execution and performance of such assignment or sublease for real
estate broker’s commissions and costs of renovation or construction of
tenant improvements required under such assignment or sublease. Tenant is
entitled to recover such costs and expenses before Tenant is obligated to
pay the Landlord’s Share to Landlord. The Profit in the
(C)1988 Southern California Chapter
of the Society of Industrial
and Office Realtors,(R) Inc.

[SIOR(TM) LOGO]

Initials /s/ R.G.
----------/s/ J.R. AR
-----------

(MULTI-TENANT NET FORM)

8

Ed#: 7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 129
CRC: 14211
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 9

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.09.00-1 SN: 0

<PAGE>
9
case of a sublease of less than all the Property is the rent allocable to
the subleased space as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the Property within
thirty (30) days after the transaction documentation is signed, and
Landlord may inspect Tenant’s books and records to verify the accuracy of
such statement. On written request, Tenant shall promptly furnish to
Landlord copies of all the transaction documentation, all of which shall be
certified by Tenant to be complete, true and correct. Landlord’s receipt of
Landlord’s Share shall not be a consent to any further assignment or
subletting. The breach of Tenant’s obligation under this Paragraph 9.05(b)
shall be a material default of the Lease.
Section 9.06. NO MERGER. No merger shall result from Tenant’s sublease of
the Property under this Article Nine, Tenant’s surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. COVENANTS AND CONDITIONS. Tenant’s performance of each of
Tenant’s obligations under this Lease is a condition as well as a covenant.
Tenant’s right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants
and conditions.
Section 10.02. DEFAULTS. Tenant shall be in material default under this
Lease:
(a) If Tenant abandons the Property or if Tenant’s vacation of the
Property results in the cancellation of any insurance described in Section
4.04;
(b) If Tenant fails to pay rent or any other charge when due;
(c) If Tenant fails to perform any of Tenant’s non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30)-day period and thereafter diligently
pursues its completion. However, Landlord shall not be required to give such
notice if Tenant’s failure to perform constitutes a non-curable breach of this
Lease. The notice required by this Paragraph is intended to satisfy any and all
notice requirements imposed by law on Landlord and is not in addition to any
such requirement.
(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant’s assets located at the
Property or of Tenant’s interest in this Lease and possession is not restored
to Tenant within thirty (30) days; or (iv) if substantially all of Tenant’s
assets located at the Property or of Tenant’s interest in this Lease is
subjected to attachment, execution or other judicial seizure which is not
discharged within thirty (30) days. If a court of competent jurisdiction
determines that any of the acts described in this subparagraph (d) is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession) and such trustee or Tenant transfers
Tenant’s interest hereunder, then Landlord shall receive, as Additional Rent,
the excess, if any, of the rent (or any other consideration) paid in connection
with such assignment or sublease over the rent payable by Tenant under this
Lease.
(e) If
purports to
of Tenant’s
no guaranty

Ed#: 6

*P64567/6101409/6*

any guarantor of the Lease revokes or otherwise terminates, or
revoke or otherwise terminate, any guaranty of all or any portion
obligations under the Lease. Unless otherwise expressly provided,
of the Lease is revocable.

Section 10.03. REMEDIES. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant’s right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 129
CRC: 14211
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 9

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.09.00-2E SN: 0

[E/O]

of the award" is computed by allowing interest on unpaid amounts at the rate of
fifteen percent (15%) per annum, or such lesser amount as may then be the
maximum lawful rate. As used in subpart (iii) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one percent
(1%). If Tenant has abandoned the Property, Landlord shall have the option of
(i) retaking possession of the Property and recovering from Tenant the amount
specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);
(b) Maintain Tenant’s right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord’s rights and
remedies under this Lease, including the right to recover the rent as it
becomes due;
(c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.
Section 10.04. REPAYMENT OF "FREE" RENT. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated
Rent". Tenant shall

(c) 1988 Southern California Chapter
of the Society of Industrial
[SIOR(TM) LOGO]
and Office Realtors, (R) Inc.
(MULTI-TENANT NET FORM)
9

Initials /s/ R.G.
----------/s/ J.R. AR
-----------

Ed#: 6

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 127
CRC: 48281
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 10

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.10.00-1 SN: 0

Ed#: 8

*P64567/6101410/8*

<PAGE>
10
be credited with having paid all of the Abated Rent on the expiration of the
Lease Term only if Tenant has fully, faithfully, and punctually performed all of
Tenant’s obligations hereunder, including the payment of all rent (other than
the Abated Rent) and all other monetary obligations and the surrender of the
Property in the physical condition required by this Lease. Tenant acknowledges
that its right to receive credit for the Abated Rent is absolutely conditioned
upon Tenant’s full, faithful and punctual performance of its obligations under
this Lease. If Tenant defaults and does not cure within any applicable grace
period, the Abated Rent shall immediately become due and payable in full and
this Lease shall be enforced as if there were no such rent abatement or other
rent concession. In such case Abated Rent shall be calculated based on the full
initial rent payable under this Lease.
Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence
of any act which affirms the Landlord’s intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord’s damages for default
shall include all costs and fees, including reasonable attorneys’ fees that
Landlord incurs in connection with the filing, commencement, pursuing and/or
defending of any action in any bankruptcy court or other court with respect to
the Lease; the obtaining of relief from any stay in bankruptcy restraining any
action to evict Tenant; or the pursuing of any action with respect to
Landlord’s right to possession of the Property. All such damages suffered
(apart from Base Rent and other rent payable hereunder) shall constitute
pecuniary damages which must be reimbursed to Landlord prior to assumption of
the Lease by Tenant or any successor to Tenant in any bankruptcy or other
proceeding.
Section 10.06. CUMULATIVE REMEDIES. Landlord’s exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall execute
such further documents and assurances as such lender may require, provided that
Tenant’s obligations under this Lease shall not be increased in any material way
(the performance of ministerial acts shall not be deemed material), and Tenant
shall not be deprived of its rights under this Lease. Tenant’s right to quiet
possession of the Property during the Lease Term shall not be disturbed if
Tenant pays the rent and performs all of Tenant’s obligations under this Lease
and is not otherwise in default. If any ground lessor, beneficiary or mortgagee
elects to have this Lease prior to the lien of its ground lease, deed of trust
or mortgage and gives written notice thereof to Tenant, this Lease shall be
deemed prior to such ground lease, deed of trust or mortgage whether this Lease
is dated prior or subsequent to the date of said ground lease, deed of trust or
mortgage or the date of recording thereof.
Section 11.02. ATTORNMENT: If Landlord’s interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord’s interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property under the transfer
of Landlord’s interest.
Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. If Tenant fails to do so
within ten (10) days after written request, Tenant hereby makes, constitutes
and irrevocably appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
Section 11.04. ESTOPPEL CERTIFICATES.
(a) Upon Landlord’s written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement certifying: (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 127
CRC: 48281
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 10

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.10.00-2E SN: 0

Section 11.05. TENANT’S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property.
Tenant represents and warrants to Landlord that each such financial statement is
a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the "Defaulting Party") shall reimburse
the other party (the "Nondefaulting Party") upon demand for any costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a
(c)1988 Southern California Chapter
of the Society of Industrial
and Office Realtors,(R) Inc

Initials /s/ R.G.
----------[SIOR(TM)LOGO]

(MULTI-TENANT NET FORM)
10

/s/ J.R. AR
-----------

Ed#: 8

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 135
CRC: 28405
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 11

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.11.00-1 SN: 0

<PAGE>
11
settlement, enforcement of rights or otherwise. Furthermore, if any action
for breach of or to enforce the provisions of this Lease is commenced, the court
in such action shall award to the party in whose favor a judgment is entered, a
reasonable sum as attorneys’ fees and costs. The losing party in such action
shall pay such attorneys’ fees and costs. Tenant shall also indemnify Landlord
against and hold Landlord harmless from all costs, expenses, demands and
liability Landlord may incur if Landlord becomes or is made a party to any claim
or action (a) instituted by Tenant against any third party, or by any third
party against Tenant, or by or against any person holding any interest under or
using the Property by license of or agreement with Tenant; (b) for foreclosure
of any lien for labor or material furnished to or for Tenant or such other
person; (c) otherwise arising out of or resulting from any act or transaction of
Tenant or such other person; or (d) necessary to protect Landlord’s interest
under this Lease in a bankruptcy proceeding, or other proceeding under Title 11
of the United States Code, as amended. Tenant shall defend Landlord against any
such claim or action at Tenant’s expense with counsel reasonably acceptable to
Landlord or, at Landlord’s election, Tenant shall reimburse Landlord for any
legal fees or costs Landlord incurs in any such claim or action.
Section 12.02 LANDLORD’S CONSENT. Tenant shall pay Landlord’s reasonable
attorneys’ fees incurred in connection with Tenant’s request for Landlord’s
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord’s consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.
Section 13.02.

Ed#: 9

*P64567/6101411/9*

LANDLORD’S LIABILITY; CERTAIN DUTIES.

(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet
been applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not be
in default under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant’s notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default if such
cure is commenced within such thirty (30)-day period and thereafter diligently
pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord’s interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.
Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
Section 13.04. INTERPRETATION. The captions of the Articles or Sections
of this Lease are to assist the parties in reading this Lease and are not a
part of the terms or provisions of this Lease. Whenever required by the context
of this Lease, the singular shall include the plural and the plural shall
include the singular. The masculine, feminine and neuter genders shall each
include the other. In any provision relating to the conduct, acts or omissions
of Tenant, the term "Tenant" shall include Tenant’s agents, employees,
contractors, invitees, successors or others using the Property with Tenant’s
expressed or implied permission.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 135
CRC: 28405
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 11

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

JB: P64567 PN: 610.14.11.00-2E SN: 0

statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
Section 13.08. NO RECORDATION. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form" memorandum of this Lease executed by both parties
be recorded. The party requiring such recording shall pay all transfer taxes
and recording fees.
Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant’s successor unless
the rights or interests of Tenant’s successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant’s Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general
(c)1988 Southern California Chapter
of the Society of Industrial
and Office Realtors,(R) Inc.

[SIOR(TM) LOGO]

Initials /s/ R.G.
-----------/s/ J.R. AR
------------

[SIOR(TM) LOGO]
(MULTI-TENANT NET FORM)
11

Ed#: 9

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 93
CRC: 31112
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 12

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.14.12.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
12
partner of the partnership, that he or it has full authority to sign for the
partnership and that this Lease binds the partnership and all general partners
of the partnership. Tenant shall give written notice to Landlord of any general
partner’s withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant’s recorded statement
of partnership or certificate of limited partnership.
Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.
Section 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord’s control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord’s control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.
Section 13.13 EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord’s delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 13.14. SURVIVAL. All representations and warranties of Landlord and
Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. BROKER’S FEE. When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord’s Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord’s Broker, or the sum stated in
Section 1.09 above for services rendered to Landlord by Landlord’s Broker in
this transaction. Landlord shall pay Landlord’s Broker a commission if Tenant
exercises any option to extend the Lease Term or to buy the Property, or any
similar option or right which Landlord may grant to Tenant, of if Landlord’s
Broker is the procuring cause of any other lease or sale entered into between
Landlord and Tenant covering the Property. Such commission shall be the amount
set forth in Landlord’s Broker’s commission schedule in effect as of the
execution of this Lease. If a Tenant’s Broker is named in Section 1.08 above,
Landlord’s Broker shall pay an appropriate portion of its commission to
Tenant’s Broker if so provided in any agreement between Landlord’s Broker and
Tenant’s Broker. Nothing contained in this Lease shall impose any obligation on
Landlord to pay a commission or fee to any party other than Landlord’s Broker.
Section 14.02. PROTECTION OF BROKERS. If Landlord sells the Property, or
assigns Landlord’s interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord’s Broker
thereafter required of Landlord under this Article Fourteen. Landlord’s Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys’ fees to be paid by the losing party. Such attorneys’ fees
shall be fixed by the court in such action. This Paragraph is included in this
Lease for the benefit of Landlord’s Broker.
Section 14.03. AGENCY DISCLOSURE; NO OTHER BROKERS. Landlord and Tenant
each warrant that they have dealt with no other real estate broker(s) in
connection with this transaction except: Colliers Classic who represents
Landlord and American Realty Brokers, who represents Tenant.
In the event that
represents both Landlord and Tenant, Landlord
and Tenant hereby confirm that they were timely advised of the dual
representation and that they consent to the same, and that they do not expect
said broker to disclose to either of them the confidential information of the
other party.
ARTICLE FIFTEEN:

Ed#: 10

*P64567/6101412/10*

COMPLIANCE

The parties hereto agree to comply with all applicable federal, state and
local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights Act and all
amendments thereto, the Foreign Investment In Real Property Tax Act, the

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 48516
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 13

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.14.13.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
13
Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialed all Riders which
are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on November 28, 2000

NORTON P. REMES and JOAN A. REMES, CO-TRUSTEES

at ________________________

OF THE NORTON P. REMES and JOAN A. REMES
REVOCABLE TRUST dated November 17, 1994
By: /s/ Norton P. Remes
---------------------------------Its: Trustee
---------------------------------By: /s/ Joan A. Remes
---------------------------------Its: Trustee
---------------------------------"TENANT"

Signed on Nov. 24, 2000

Taser International, an Arizona

at ________________________

Corporation

By: /s/ Patrick Smith
---------------------------------Its: CEO
---------------------------------By:
---------------------------------Its:
---------------------------------IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION
OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS(R), INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS(R), INC.,
ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE
OR THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO ADVISE
THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL.

(C) 1988 Southern California Chapter
of the Society of Industrial
and Office Realtors, (R) Inc.
(Multi-Tenant Net Form)
13

Ed#: 6

*P64567/6101413/6*

Initials

/s/ R.G.
-----------/s/ J.R. AR
------------

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 70
CRC: 18159
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 14

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.14.14.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

14
RIDER #1 TO INDUSTRIAL REAL ESTATE LEASE

This Rider #1 to Industrial Real Estate Lease ("Rider") is entered into this
17th day of November, 2000 by and between NORTON P. REMES and JOAN A. REMES,
CO-TRUSTEES OF THE NORTON P. REMES and JOAN A. REMES REVOCABLE TRUST dated
November 17, 1994 ("Landlord") and Taser International, an Arizona corporation,
("Tenant").
WHEREAS, Landlord and Tenant have entered into that certain, attached,
Industrial Real Estate Lease ("Lease") dated November 17, 2000 and;
WHEREAS, Landlord and Tenant wish to further modify certain terms and conditions
of the Lease;
NOW THEREFORE, Landlord and Tenant do hereby agree to modify the Lease as
follows:
1.

BASE RENT,

The Base Rent for the term of the Lease shall be as follows:

Lease Year

1
2
3
4
5

$10,030.00
$10,330.90
$10,640.83
$10,960.05
$11,288.85

per
per
per
per
per

month,
month,
month,
month,
month,

plus
plus
plus
plus
plus

applicable
applicable
applicable
applicable
applicable

tax,
tax,
tax,
tax,
tax,

(NNN)
(NNN)
(NNN)
(NNN)
(NNN)

2.
ADDITIONAL RENT. Tenant shall pay monthly as Additional Rent its prorata
share of all estimated Common Area/Operating Expenses. This estimate will
include, but is not limited to, Property Taxes and Insurance. These expenses
will be reconciled and adjusted semi-annually in accordance with Section
4.05(e). Tenant will occupy 52% of building, i.e., 22,690 square feet -/11,800=52%. 2000 estimate is $.19 per square foot, per month.
3.
IMPROVEMENTS.
the following:

Tenant will take suite is "AS-IS" condition, except for

Landlord, at Landlord’s sole expense, will hereby agree to install the
following:
1.
2.

Ed#: 7

*P64567/6101414/7*

Replace carpet (chosen from Landlord’s swatches only).
Broom clean warehouse prior to move in.

In addition, Landlord agrees to provide a total of $29,500.00 for additional
improvements only, not to include furniture or fixtures. Any additional
improvements (over this amount) to the suite will be at Tenants sole expense.
Tenant shall submit to Landlord, prior to construction of any improvements, a
reasonable detailed description or plan describing the improvements to be made.
All improvements will be completed in accordance with applicable building codes,
by licensed contractors. Tenant will not permit any liens to be place against
the property in connection with construction of improvements.
All other terms and conditions of the Lease will remain in full force and
effect.
The above terms and conditions are agreed to and accepted this 28th day of
November, 2000.
LANDLORD:
NORTON P. REMES and JOAN A. REMES,
TRUSTEES OF THE NORTON P. REMES
and JOAN A. REMES REVOCABLE TRUST
dated November 17, 1994

TENANT:
Taser International, an Arizona
corporation

BY: /s/ Norton P. Remes
----------------------Its: Trustee
----------------------By: /s/ Joan A. Remes
----------------------Its: Trustee
-----------------------

By: /s/ Patrick Smith
-----------------------Its: CEO
-----------------------By:
-----------------------Its:
------------------------

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 66
CRC: 50543
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 15

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.14.15.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

<PAGE>
15
GUARANTEE OF LEASE
Reference is hereby made to a lease between, NORTON P. REMES and JOAN A. REMES,
CO-TRUSTEES OF THE NORTON P. REMES and JOAN A. REMES REVOCABLE TRUST dated
November 17, 1994 (Landlord), and Taser International, an Arizona corporation
(Tenant), of certain premises located at 7860 E. McClain Drive, Suite 2B & 2C
in the City of Scottsdale, County of Maricopa, State of Arizona.
In consideration of Landlord’s having executed said Lease at the request of the
undersigned and other valuable considerations, the receipt whereof is hereby
acknowledged, the undersigned (Guarantors) hereby jointly and severally
unconditionally guarantee to Landlord and Landlord’s successors and assigns,
the payment of the rents and other sums provided for in said Lease and the
performance and observance of all agreements and conditions contained in said
Lease on the part of Tenant to be performed or observed.
Guarantors hereby waive presentment for payment, demand for payment, notice of
nonpayment or dishonor, protest and notice of protest, diligence in collection,
and any and all formalities that may be legally required to charge them or
either or any of them with liability; and the Guarantors, and each of them, for
further agree that their liability as Guarantors shall in no way be impaired or
affected by any renewals, waivers, or extensions that may be made from time to
time, with or without the knowledge and consent of any one or more of them, of
any default or the time of payment or performance required under said Lease, or
by any forbearance or delay in enforcing any obligation thereof, or by
assignment of said Lease or subletting of the demised Premises, neglect or
refusal to enforce or to realize upon any security that may have been given or
may hereafter be given thereunder or hereunder, or by any modifications of the
terms or provisions of the Lease.
The Guarantors further jointly and severally covenant and agree to pay all
expenses and fees, including attorney fees that may be incurred by the Landlord
or its successors or assigns enforcing any of the terms or provisions of this
Guarantee.
This Guarantee shall be binding upon the heirs, legal representatives,
successors, and assigns of the Guarantors, and each of them, shall not be
discharged or affected, in whole or in part by the death, bankruptcy,
insolvency of the Guarantors, or any one or more of them.
This Guarantee is absolute, unconditional, and continuing and payment of the
sums for which the undersigned becomes liable shall be made at the office of
Landlord or its successors or assigns from time to time on demand as the same
become or are declared due.
Guarantors hereby waives any and all benefits under Arizona Revised Statutes
("A.R.S.") Sections 12-1641 - 12-1646 and Rule 17(f) of the Arizona Rules of
Civil Procedure.
IN WITNESS THEREOF, Guarantor has hereunto set his hands and seal this
Agreement the 27th day of November 2000.
Guarantor:

Phillips W. Smith

By: /s/ Phillips W. Smith
---------------------------Date:
11/27/00
--------------------------

By:

By:

By:

---------------------------Date:
--------------------------

---------------------------Date:
--------------------------

---------------------------Date:
--------------------------

15

Ed#: 4

*P64567/6101415/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 10
CRC: 26310
P64567.SUB, DocName: EX-10.14, Doc: 19, Page: 16

[E/O]

<PAGE>

Phone: (602) 223-4455

7860 E. McClain * Scottsdale, Arizona

[OFFICE FLOOR PLAN GRAPHIC]

[STREET MAP GRAPHIC]

Date: 7-MAY-2001 14:55:25.87

SN: 0

Ed#: 2

*P64567/6101416/2*

16

</TEXT>
</DOCUMENT>

Operator: BPX31319

JB: P64567 PN: 610.14.16.00

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567.SUB, DocName: EX-23.2, Doc: 20

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-23.2
p64567ex23-2.txt
EX-23.2

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:55:25.87

PN: DOCHDR 20 SN: *
*DOCHDR/20*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 19
CRC: 2720
P64567.SUB, DocName: EX-23.2, Doc: 20, Page: 1
Description: Exhibit 23.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 723.02.01.00

Date: 7-MAY-2001 14:55:25.87

SN: 0

1
Exhibit 23.2

[AA LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 12, 2001 (and to all references to our firm) included in or made
a part of this SB-2 Registration Statement.

Phoenix, Arizona
February 12, 2001
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/7230201/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 38
CRC: 59770
P64567A1.SUB, DocName: COVER, Doc: 1, Page: 1

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 910.00.00.00

[E/O]

Date: 7-MAY-2001 14:59:03.02

SN: 0

*P64567/910/3*

<PAGE>
1
THOMAS P. PALMER

(503) 802-2018
FAX (503) 972-3718
tom@tonkon.com
February 26, 2001

VIA EDGAR
Securities and Exchange Commission
Division of Corporation Finance
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
TASER International, Inc.
Registration Statement on Form SB-2, filed February 14, 2001
Registration No. 333-55658, Amendment No. 1
On behalf of TASER International, Inc., a Delaware corporation (the
"Company"), transmitted through the Edgar system for filing pursuant to the
Securities Act of 1933, as amended, is accompanying Amendment No. 1 to the above
referenced Registration Statement on Form SB-2 (the "Registration Statement").
Amendment No. 1 includes certain exhibits not included with the original filing
of the Registration Statement and newly provides pro forma balance sheet
information as of December 31, 2000 with respect to the Company in the Summary
Financial Information portion of the Prospectus Summary. It also makes certain
clarifications and corrects typographical and other minor errors.
Please telephone me at the number above if you have any questions.
Very truly yours,
/s/ THOMAS P. PALMER
----------------------------Thomas P. Palmer
</TEXT>
</DOCUMENT>

Ed#: 3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 11756
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 1

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 001.00.00.00 SN: 8
Ed#: 4
*P64567/001/4*
EDGAR 2

[B/E]

<R>

As filed with the Securities and Exchange Commission on February 26, 2001
</R>
<R>

Registration No. 333-55658
</R>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<R>

Amendment No. 1
</R>
<R>

To
</R>
<R>

Form SB-2
</R>

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

TASER INTERNATIONAL, INC.
(Name of small business issuer in its charter)
Delaware
(State or other Jurisdiction of
Incorporation or Organization)

3699
(Primary Standard Industrial
Classification Code Number)

7860 E. McClain Drive, Suite 2
Scottsdale, Arizona 85260
(480) 991-0797
(Address and telephone number of
principal executive offices and
principal place of business)

86-0741227
(I.R.S. Employer
Identification Number)
Patrick W. Smith,
Chief Executive Officer
TASER International, Inc.
7860 E. McClain Drive, Suite 2
Scottsdale, Arizona 85260
(480) 991-0797
(Name, address and telephone
number of agent for service)

Copies to:
<R>

Thomas P. Palmer, Esq.
Jeffrey S. Cronn, Esq.
Tonkon Torp LLP
888 S.W. Fifth Avenue, Suite 1600
Portland, Oregon 97204
(503) 802-2018

Mark A. von Bergen, Esq.
Joshua E. Husbands, Esq.
Weiss Jensen Ellis & Howard
2300 U.S. Bancorp Tower
111 S.W. Fifth Avenue
Portland, Oregon 97204
(503) 243-2300

</R>

Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities
Act, check the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 11756
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 1

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 001.00.00.00-1 SN: 8
Ed#: 4
*P64567/001/4*
EDGAR 2

for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
The registrant hereby amends this registration statement on such date or dates as may be necessary to
delay its effective date until the registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act
of 1933 or until the registration statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 59996
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 2

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 003.00.00.00 SN: 16 Ed#: 6
*P64567/003/6*
EDGAR 2

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
<R>

SUBJECT TO COMPLETION, DATED FEBRUARY 26, 2001
</R>

PRELIMINARY PROSPECTUS

1,000,000 Units

<R>

This is an initial public offering of units by TASER International, Inc. Each unit consists of one share of
common stock and one redeemable public warrant to purchase one share of common stock. We expect that the
initial public offering price will be between $9 and $11 per unit. Prior to this offering, there has been no public
market for our securities. We have filed an application to list the units, the common stock and the public warrants
on The Nasdaq SmallCap Market under the symbols “TASRU,” “TASR” and “TASRW,” respectively.
</R>

The common stock and warrants will trade only as a unit for at least 30 days following this offering. The
representative of the underwriters will then determine when the units separate, after which the common stock and
the public warrants will trade separately.
Investing in these units involves significant risks. See “Risk Factors” beginning on page 4.
Per Unit
Initial public offering price
Underwriting discount
Proceeds to TASER International, Inc.

$
$
$

Total
$
$
$

The Securities and Exchange Commission and state securities regulators have not approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Paulson Investment Company, Inc. is the representative of the underwriters. We have granted the representative
the option for a period of 45 days to purchase up to an additional 150,000 units to cover over-allotments.

PAULSON INVESTMENT COMPANY, INC.
The date of this prospectus is

, 2001.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 15129
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 3

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 004.00.00.00 SN: 24 Ed#: 8
*P64567/004/8*
EDGAR 2

[gatefold cover]
Page 1 of the gatefold: The artwork depicts below the company logo a side view of the ADVANCED TASER
M26 with certain parts labeled and a top view of the AIR TASER 34000.
Pages 2 and 3 of the gatefold: The artwork depicts a pictorial diagram illustrating the effective range of the
ADVANCED TASER M26 compared to batons and chemical sprays over distances of between zero and twenty
feet.
Below the pictorial diagram are smaller photographs of the air cartridges (ammunition), the probes, the dataport
on the ADVANCED TASER M26 and the AFID tags.
Below the smaller pictures the following captions appear:
<R>

“The ADVANCED TASER M26 fires two small metal probes with fine wires attached. When the probes make
contact, small barbs adhere to the target. Electrical signals are transmitted through the wires into the body of the
subject, impairing his ability to perform coordinated action.”
</R>
<R>

“The ADVANCED TASER M26 records the time and date of up to 585 firings. This data can be downloaded to
a computer and used to investigate potential misuse of the weapon.”
</R>

“The ADVANCED TASER M26 disperses 20-50 serial numbered identification tags upon firing. These tags
can be used to trace the registered owner of the air cartridge used.”

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 9642
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 4

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 005.00.00.00 SN: 15 Ed#: 4
*P64567/005/4*
EDGAR 2

PROSPECTUS SUMMARY
The following summary highlights selected information contained in this prospectus. This summary does not
contain all the information you should consider before investing in the units. Before making an investment decision,
you should read the entire prospectus carefully, including the “Risk Factors” section, the financial statements and
the notes to the financial statements.
Our Company
<R>

TASER International, Inc. develops, assembles and markets less-lethal, conducted energy weapons primarily for
use in the law enforcement and corrections market. Our ADVANCED TASER weapon offers improved
performance over other less-lethal force options used by law enforcement agencies. It can temporarily incapacitate
virtually any individual regardless of pain tolerance, drug use, or body size — factors that cause other less-lethal
options to have decreased effectiveness. Yet it has a comparable or lower injury rate than other less-lethal weapons
and has had no reported long-term, adverse after-effects.
</R>

The ADVANCED TASER uses compressed nitrogen to shoot two small probes up to 21 feet. These barbed
probes are connected to the weapon by high-voltage insulated wires. When the probes make contact with the target,
the ADVANCED TASER transmits powerful electrical pulses along the wires and into the body of the target
through up to two inches of clothing. These electrical pulses impair voluntary muscle control so that the subject
cannot perform coordinated action.
Law enforcement agencies are increasingly adopting less-lethal weapons, including pepper sprays, rubber
bullets, and conducted energy weapons such as TASERs. Effective less-lethal weapons may increase the safety of
law enforcement officers, decrease suspect injuries, improve community relations, reduce litigation and police
department medical and liability insurance costs, and potentially save lives.
<R>

Since December 1999, over 350 police departments in the United States have made initial purchases of our
products, and 15 police departments, including San Diego, Sacramento and Albuquerque, have purchased our
products for every patrol officer. In addition, at February 1, 2001, more than 200 other police departments were
evaluating the use of the ADVANCED TASER.
</R>

The key elements of our growth strategy are:
• To expand sales in the law enforcement and corrections market, which we believe to be the opinion leader for
all other markets for less-lethal weapons;
• To expand into the related private security and military markets;
• To expand into the consumer market;
• To develop enhanced less-lethal weapons and technologies, such as longer-range TASERs and TASERs with
multiple shot capabilities; and
• To acquire related businesses that enhance our strategic position.
<R>

Our corporate headquarters is located at 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260 and our
telephone number is (480) 991-0797. Our website address is www.eTASER.com. Information contained on our
website or any other website does not constitute a part of this prospectus.
</R>

1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 62442
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 5
Description: Page has been edited

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 006.00.00.00 SN: 12 Ed#: 10
*P64567/006/10*
EDGAR 2

This Offering
Securities offered

1,000,000 units. Each unit consists of one share of common stock and one public
warrant to purchase an additional share of common stock.
The common stock and public warrants will trade only as a unit for at least
30 days following this offering. The representative of the underwriters will then
determine when the units separate, after which the common stock and the public
warrants will trade separately.

<R>

Public warrants

The public warrants included in the units will be exercisable commencing 30 days
after this offering. The exercise price of a public warrant is 150% of the initial
public offering price of the units. The public warrants expire on the fifth
anniversary of the closing of this offering.

</R>

We have the right, commencing three months after the closing of this offering, to
redeem the public warrants issued in this offering at a redemption price of $0.25
per public warrant, after providing 30 days prior written notice to the public
warrant holders, if the average closing bid price of the common stock equals or
exceeds 200% of the initial public offering price of the units for ten consecutive
trading days ending prior to the date of the notice of redemption.
Common stock outstanding after 2,510,754 shares
this offering
Use of proceeds

Repayment of debt, sales and marketing, research and development, production
tooling and working capital.

Proposed Nasdaq SmallCap
Market symbols
Common stock
TASR
Units offered in this offering TASRU
Public warrants included in
the units
TASRW
The number of shares of common stock outstanding after this offering is based on 1,510,754 shares outstanding
as of February 12, 2001. The number of shares of common stock outstanding after this offering assumes no exercise
of the representative’s over-allotment option and does not include an aggregate of 1,687,049 shares of common
stock that may become outstanding as follows:
• 434,322 shares of common stock issuable upon exercise of stock options outstanding as of February 12, 2001,
with a weighted average exercise price of $5.96;
• 52,727 shares of common stock issuable upon exercise of warrants outstanding as of February 12, 2001, with a
weighted average exercise price of $4.71;
• 1,000,000 shares of common stock issuable upon exercise of the public warrants; and
• 100,000 shares of common stock issuable upon exercise of the representative’s warrants and 100,000 shares of
common stock issuable upon exercise of the public warrants underlying the representative’s warrants.
Historical information regarding our securities has been adjusted to reflect a 1-for-6 reverse stock split effected
in connection with our reincorporation in Delaware on February 12, 2001. Except as otherwise indicated, all
information in this prospectus assumes no exercise of the representative’s over-allotment option or the
representative’s warrants. References to “we,” “us,” the “company” or “TASER” mean TASER International,
Inc., unless otherwise indicated.
2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 38421
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 6

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 007.00.00.00 SN: 21 Ed#: 6
*P64567/007/6*
EDGAR 2

SUMMARY FINANCIAL INFORMATION
<R>

Years ended December 31,
1999

2000

Statements of Operations Data:
Net sales
Gross profit
Loss from operations
Net loss

$ 2,366,440
873,855
(1,329,478)
(1,610,299)

$3,499,758
2,062,445
(46,885)
(415,629)

Basic and diluted net loss per share of common stock

$

$

Basic and diluted shares of common stock

(0.52)
3,076,410

(0.17)

2,482,976

</R>
<R>

December 31, 2000
Actual

As adjusted

Balance Sheet Data:
Working capital (deficiency)
Property and equipment, net
Total assets
Total long-term debt

$(1,011,984)
274,273
1,039,066
2,822,144

$5,438,016
524,273
6,756,378
1,322,144

Stockholders’ equity (deficit)

$(3,559,855)

$4,640,145

</R>
<R>

The as adjusted balance sheet data reflects:
</R>
<R>

• the receipt of approximately $8,200,000 as the estimated net proceeds from the sale of 1,000,000 units offered
by us in this offering at an assumed public offering price of $10.00 per unit, after deducting the underwriting
discount, expense allowance and estimated offering expenses; and
</R>
<R>

• our planned use of the net proceeds of this offering.
</R>

<R>

We have rights to the following registered trademarks: TASER® and AIR TASER®. We also have the following
unregistered trademarks: TASER Wave™, T-Wave™, AUTO TASER™, ADVANCED TASER™ and AFID™. Each
other trademark, trade name or service mark appearing in this prospectus belongs to its respective holder.
</R>

3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 13280
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 7

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 008.00.00.00 SN: 11 Ed#: 4
*P64567/008/4*
EDGAR 2

RISK FACTORS
This offering involves a high degree of risk. You should carefully consider the following risk factors and all
other information contained in this prospectus before purchasing any units. Any of the following risks could
materially harm our business, operating results and financial condition, and could result in a decrease in the
trading price of our units, common stock or public warrants, or in a complete loss of your investment.
Risks Related to Our Business
We have no history of profitable operations and may incur future losses.
Since our inception in 1993, we have incurred significant losses. Our net losses for the years ended
December 31, 1999 and 2000 were $1.6 million and $416,000, respectively. At December 31, 2000, we had an
accumulated deficit of approximately $6.7 million. In addition, we expect our operating expenses to increase
significantly as we expand our sales and marketing efforts and otherwise support our expected growth. Given these
planned expenditures, we may incur additional losses in the near future. We may never achieve or sustain
profitability.
We are materially dependent on acceptance of our products by the law enforcement and corrections market.
We have recently devoted significant resources to sales opportunities in the law enforcement and corrections
market. A substantial number of law enforcement and corrections agencies may not purchase our conducted energy,
less-lethal weapons. Despite the absence of reported long-term, adverse after-effects from the use of our products,
these agencies may be influenced by claims or perceptions that conducted energy weapons are unsafe or may be
used in an abusive manner. In addition, earlier generation conducted energy weapons may have been perceived as
ineffective. Sales of our products to these agencies may be delayed or limited by these claims or perceptions. If our
products are not widely accepted by the law enforcement and corrections market, we may not be able to expand
sales of our products in additional markets.
We have a limited operating history in the law enforcement and corrections market.
Under an agreement with another company, we were prevented from selling our products in the law
enforcement and corrections market until February 1998. We shifted our corporate focus to this market only in late
1999. Due to our limited operating history, we may not be able to attain significant sales in this market.
We substantially depend on sales of a single product line.
We derived the majority of our revenues from sales of ADVANCED TASERs and related cartridges in 2000. A
decrease in the prices of or demand for this product line, or its failure to achieve broad market acceptance, would
significantly harm our business, financial condition and operating results.
We may not be able to manage our projected growth.
We may experience growth that strains our managerial, financial and other resources. Our systems, procedures,
controls and management resources may not be adequate to support our future operations. We will need to
continually improve our operational, financial and other internal systems to manage our growth effectively. If we
are unable to manage our growth, our business, operating results and financial condition could be adversely
affected.
We may face potential personal injury and other liability claims.
Our products are often used in aggressive confrontations that may result in serious, permanent bodily injury to
those involved. Although there have been no reported long-term, adverse after-effects from the use of our products,
our products may cause or be associated with these injuries. A person injured in a
4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 39491
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 8

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 009.00.00.00 SN: 12 Ed#: 5
*P64567/009/5*
EDGAR 2

confrontation or otherwise in connection with the use of our products may bring legal action against us to recover
damages on the basis of theories including personal injury, wrongful death, negligent design, dangerous product or
inadequate warning. We may also be subject to lawsuits involving allegations of misuse of our products. If
successful, personal injury, misuse and other claims could have a material adverse effect on our operating results
and financial condition. Although we carry product liability insurance, significant litigation could also result in a
diversion of management’s attention and resources, negative publicity and an award of monetary damages in excess
of our insurance coverage.
We plan to relocate our product assembly operations from Mexico to the United States by the end of the second
quarter of 2001, which may adversely affect product availability and cost.
We plan to terminate assembly operations with our turnkey supplier in Guaymas, Mexico and relocate some
production equipment from Mexico to the United States. In anticipation of moving our product assembly operations
from Mexico, we have initiated a parallel production capability in our new facility in Scottsdale, Arizona. If we
encounter delays or unforeseen problems in this move, it may significantly adversely affect our ability to produce
and ship product and generate short-term sales and cash flow. Also, assembly of our products in the United States
may result in an increase in our cost of products sold.
We are materially dependent on independent distributors for the sale of our products.
We sell our products primarily through a network of independent distributors. Our arrangements with these
distributors are generally short-term. If we do not competitively price our products, meet the requirements of our
distributors or end-users, provide adequate marketing support, or comply with the terms of our distribution
arrangements, our distributors may fail to aggressively market our products or may terminate their relationships
with us. These developments would likely have a material adverse effect on our sales.
We expend significant resources in anticipation of a sale due to our lengthy sales cycle.
Generally, law enforcement and corrections agencies consider a wide range of issues before committing to
purchase our products, including product benefits, training costs, the cost to use our products in addition to or in
place of other less-lethal products, product reliability and budget constraints. The length of our sales cycle may
range from 60 days to a year or more. We may incur substantial selling costs and expend significant effort in
connection with the evaluation of our products by potential customers before they place an order. If these potential
customers do not purchase our products, we will have expended significant resources and received no revenue in
return.
Most of our end-users are subject to budgetary and political constraints.
Most of our end-user customers are government agencies. These agencies often do not set their own budgets and
therefore have little control over the amount of money they can spend. In addition, these agencies experience
political pressure that may dictate the manner in which they spend money. As a result, even if an agency wants to
acquire our products, it may be unable to purchase them due to budgetary or political constraints. Some government
agency orders may also be canceled or substantially delayed due to budgetary, political or other scheduling delays
which frequently occur in connection with the acquisition of products by government agencies.
Government regulation of our products may adversely affect sales.
Federal regulation of sales in the United States. Our weapons are not firearms regulated by the Bureau of
Alcohol, Tobacco and Firearms, but are consumer products regulated by the United States Consumer Product Safety
Commission. Although there are currently no federal laws restricting sales of our weapons in the United States,
future federal regulation could adversely affect sales of our products.
Federal regulation of international sales. Our weapons are controlled as a “crime control” implement by the
United States Department of Commerce, or DOC, for export directly from the United
5

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4210
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 9

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 010.00.00.00 SN: 9
Ed#: 4
*P64567/010/4*
EDGAR 2

States. Consequently, we must obtain an export license from the DOC for the export of our weapons from the
United States other than to Canada. While we have a history of timely obtaining DOC export licenses for sales of
our weapons to the majority of our international customers, unforeseen changes in U.S. export regulations could
significantly and adversely affect our international sales.
State and local regulation. Our weapons are currently controlled, restricted or their use prohibited by several
state and local governments. Our weapons are banned from consumer sale or use in seven states: New York, New
Jersey, Rhode Island, Michigan, Wisconsin, Massachusetts and Hawaii. Law enforcement use of our products is also
restricted in Michigan, New Jersey, Rhode Island, Massachusetts and Hawaii. Some municipalities, including
Omaha, Nebraska and Washington, D.C., also prohibit consumer use of our products. Other jurisdictions may ban
or restrict the sale of our products and our product sales may be significantly affected by additional state, county
and city governmental regulation.
Foreign regulation. Certain foreign jurisdictions including Japan, the United Kingdom, Australia, Italy and
Hong Kong prohibit the sale of our products.
We are dependent on key personnel.
Our success depends to a significant extent upon the continued services of our executive officers and other key
management, sales and technical personnel. In particular, we rely upon Mr. Patrick W. Smith, our chief executive
officer, and Mr. Thomas P. Smith, our president. The loss of the services of any of our executive officers or other
key management, sales or technical personnel could adversely affect us. We intend to purchase key-person
insurance on the lives of Thomas and Patrick Smith following this offering.
We may not be able to adequately protect or enforce our intellectual property rights.
We have licensed or patented certain aspects of the technology incorporated in our products. The validity and
breadth of claims covered in technology patents involve complex legal and factual questions, and the resolution of
such claims may be highly uncertain, lengthy, and expensive. The scope of any patent to which we have or may
obtain rights may not prevent others from developing and selling competing products. In addition, our patents may
be held invalid upon challenge, others may claim rights in or ownership of our patents, and our products may
infringe, or be alleged to infringe, upon the intellectual property rights of others.
We may face competition from larger, more established companies.
The law enforcement and corrections market and other markets we plan to enter are highly competitive. We face
competition from numerous larger, better capitalized and more widely known companies that make other less-lethal
weapons and products. Increased competition may result in greater pricing pressure, which could adversely affect
our gross margins.
<R>

We may incur significant warranty costs if our products fail to operate properly.
</R>
<R>

We offer a lifetime warranty on our AIR TASER and ADVANCED TASER weapons under which we will
replace any weapon that fails to operate properly for a $25 fee. We may incur significant warranty costs if our
products are defective in hardware or workmanship and fail to operate properly for these or any other reason. In
2000, we recalled and replaced a series of ADVANCED TASERs due to a defective component.
</R>

Our revenues and operating results may fluctuate unexpectedly from quarter to quarter, which may cause our
stock price to decline.
Our revenues and operating results have varied significantly in the past and may vary significantly in the future
due to various factors, including changes in our operating expenses, the timing of the introduction of new products
and services, market acceptance of our new products and services, regulatory changes that may affect the
competitive environment for our products, and budgetary cycles of municipal,
6

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 60195
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 10

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 011.00.00.00 SN: 9
Ed#: 4
*P64567/011/4*
EDGAR 2

state, and federal law enforcement agencies. As a result of these and other factors, we believe that period-to-period
comparisons of our operating results may not be meaningful in the near term and that you should not rely upon our
performance in a particular period as indicative of our performance in any future period.
We depend on third-party suppliers for key components of our weapons.
We depend on certain domestic and foreign suppliers for the delivery of raw materials used in the production of
our products. Specifically, we depend on suppliers of sub-assemblies, machined parts, injection molded parts, steel
castings, custom wire fabrications, and other miscellaneous custom parts for our products. We do not have longterm supply agreements with any of these suppliers. Although we believe that alternative supplies for these
materials and components are available, any interruption of supply for any material components of our products
could significantly delay the shipment of our products and have a material adverse effect on our business, financial
condition and operating results.
Foreign currency fluctuations may reduce our competitiveness in foreign markets.
Although our policy of exclusively entering into dollar-denominated contracts eliminates our risk of foreign
exchange losses, the relative change in currency values creates fluctuations in product pricing for potential
international customers. These changes in end-user foreign prices may result in lost orders and reduce the
competitiveness of our products in certain foreign markets. These changes may also negatively affect the financial
condition of some foreign customers and reduce or eliminate their future orders of our products.
We are parties to a lawsuit involving the rights of a former distributor of our products.
A former distributor of our products has filed a lawsuit in the state of New York asserting certain rights of
exclusive sales representation with respect to our products. The former distributor claims that he has the exclusive
right to market and sell our products to an extensive list of our current and potential customers throughout the
United States. We believe the claims are without merit.
Risks Related to This Offering
We may use the proceeds of this offering in ways that do not improve our operating results or the market value of
our common stock.
We intend to use the net proceeds from this offering for repayment of stockholder and other debt, increased
marketing efforts, research and development and general corporate purposes. Repayment of our debt will not
directly improve our operating results. Our management will retain broad discretion and significant flexibility in
applying the net proceeds from this offering. If our management does not apply the proceeds effectively, our
business will be harmed.
You will suffer immediate dilution of your investment and may experience further dilution in the future.
We anticipate that the initial public offering price of the units will be substantially higher than the net tangible
book value per share of our common stock after this offering. As a result, you will incur immediate dilution of
approximately $8.15 in net tangible book value for each share of our common stock included in the units you
purchase. If any currently outstanding options or warrants to purchase our common stock are exercised, your
investment will be further diluted.
There has been no prior market for our securities and a public market for our securities may not develop or be
sustained.
Prior to this offering, you could not buy or sell our securities publicly. If an active public market for our
securities is not sustained after this offering, the market price of our securities may fall below their initial public
offering price, and the liquidity of your investment may be significantly limited.
7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 50366
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 11

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 012.00.00.00 SN: 11 Ed#: 4
*P64567/012/4*
EDGAR 2

The initial public offering price of our units may not accurately reflect their future market performance.
The initial public offering price of the units has been determined based on negotiations between the
underwriters’ representative and us. The initial public offering price may not be indicative of future market
performance and may bear no relationship to the price at which our units, common stock or public warrants will
trade.
The price of our securities may be volatile.
The stock market has recently experienced significant price and volume fluctuations. The price of our securities
may fluctuate significantly in response to a number of factors, including:
• Our quarterly operating results;
• Changes in earnings estimates by analysts and whether our earnings meet or exceed such estimates;
• Announcements of technological innovations by us or our competitors;
• Additions or departures of key personnel; and
• Other events or factors that may be beyond our control.
Volatility in the market price of our securities could lead to claims against us. Defending these claims could
result in significant costs and a diversion of our management’s attention and resources.
Future sales of our common stock by our existing stockholders could decrease the trading price of our common
stock.
Sales of a large number of shares of our common stock in the public markets after this offering, or the potential
for such sales, could decrease the trading price of our common stock and could impair our ability to raise capital
through future sales of our common stock. Upon completion of this offering, there will be 2,510,754 shares of our
common stock outstanding. The 1,000,000 shares of common stock sold in this offering and the 1,000,000 shares of
common stock reserved for issuance upon exercise of the public warrants sold in this offering will be freely
tradeable without restrictions or further registration under the Securities Act of 1933, unless such shares are
purchased by our “affiliates,” as that term is defined in the Securities Act of 1933. An additional 1,687,049 shares
of common stock, including shares issuable upon exercise of the representative’s warrants, may become outstanding
upon exercise or conversion of options or warrants currently outstanding or sold in this offering, subject to various
lock-up agreements prohibiting the sale of such shares for one year following completion of this offering.
<R>

The exercise of previously issued options and warrants may dilute your investment in our shares and impair our
ability to obtain equity financing.
</R>

In addition to the 1,510,754 shares outstanding as of February 12, 2001, there are currently outstanding options
to purchase 434,322 shares of our common stock, 119,055 of which are currently exercisable. We have reserved an
additional 259,000 shares of our common stock for issuance pursuant to options that may be granted in the future to
key employees, and others, under our 2001 Stock Option Plan. In addition, we have issued warrants to acquire up to
52,727 shares of our common stock. During the terms of such options and warrants, the holders of such securities
have the opportunity to profit from a rise in the value or market price of our common stock, and the exercise of
these options and warrants could dilute the then book value per share of our common stock. The existence of these
options and warrants could adversely affect the terms at which we could obtain additional equity financing.
Moreover, the holders of the options and warrants may be expected to exercise them at a time when we could obtain
equity capital on terms more favorable than those provided by the options and warrants.
8

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 46143
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 12

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 013.00.00.00 SN: 13 Ed#: 5
*P64567/013/5*
EDGAR 2

We will need to comply with federal and state securities laws to maintain the tradeability of our securities.
We must maintain in effect the registration statement filed with the Securities and Exchange Commission with
respect to the units and must also comply with the securities laws of a state for the units, common stock and public
warrants to be tradeable in that state. If we do not comply with federal or state securities laws, your ability to sell
the securities offered by this prospectus may be significantly reduced.
Certain of our directors or investors will personally benefit from the use of the proceeds of this offering.
We will use the proceeds from this offering to repay a $1.5 million loan from a director who is also a
stockholder and to retire the interest accrued through March 1, 2001, on our outstanding stockholder notes. In
addition, if the over-allotment option granted to the representative of the underwriters is exercised in full,
approximately $1.3 million in stockholder notes, including a note issued to our chairman, will be retired. This debt
matures July 1, 2002.
We may need additional financing.
<R>

If revenues are less than expected, or if expenses exceed our expectations, we may be required to find additional
sources of financing to continue or expand our operations. We could seek additional financing from a number of
sources, including, but not limited to, possible further sales of equity or debt securities and loans from banks,
affiliates of the company, or other financial institutions. We may not be able to sell any such securities, or obtain
such additional financing, on terms and conditions acceptable or favorable to us, or at all, if and when needed by us.
</R>

Our existing stockholders will continue to control us.
Upon completion of this offering, existing stockholders will own approximately 60% of our outstanding
common stock. These stockholders will continue to control most matters requiring approval by our stockholders,
including the election of our directors.
We do not intend to pay cash dividends.
Any investors who have or anticipate any need for immediate income from their investment should not purchase
any of the units offered hereby.
Provisions of our charter documents and Delaware law may have anti-takeover effects that could hinder a
change in our corporate control.
Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger or
acquisition that a stockholder may consider favorable. These provisions include:
• authorizing our board of directors to issue preferred stock without stockholder approval;
• providing for a classified board of directors with staggered, three-year terms; and
• allowing written stockholder actions only by unanimous consent.
Provisions of Delaware law, including provisions that prohibit business combinations with entities holding
greater than a threshold amount of voting stock, also may discourage, delay or prevent someone from acquiring or
merging with us, which may cause the market price of our securities to decline.
You should not rely upon our forward-looking statements.
Some of the statements made in this prospectus discuss future events and developments, including our future
business strategy and our ability to generate revenue, income and cash flow. In some cases, you can identify
forward-looking statements by words or phrases such as “may,” “will,” “should,” “expects,”
9

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 9476
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 13

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 014.00.00.00 SN: 18 Ed#: 5
*P64567/014/5*
EDGAR 2

“plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “our future success depends,”
“seek to continue,” or the negative of these words or phrases, or comparable words or phrases. These statements are
only predictions. Actual events or results may differ materially. In evaluating these statements, you should
specifically consider various facts, including the risks outlined under “Risk Factors.” These factors may cause our
actual results to differ materially from any forward-looking statement. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy
and completeness of these statements. We are under no duty to update any of the forward-looking statements after
the date of this prospectus to conform these statements to actual results.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 1,000,000 units that we are selling in this offering will be
approximately $8,200,000, or $9,527,500 if the representative exercises its over-allotment option in full, based on
an assumed public offering price of $10.00 per unit, and after deducting the underwriting discount, expense
allowance, and estimated offering expenses of $650,000 payable by us.
We expect to allocate the net proceeds of this offering as follows:
Approximate
Amount
Payment of stockholder note
Other debt repayment
Accrued expenses and payables
Accounts receivable and inventory
Sales and marketing programs
Research and development
Tooling and equipment
Other working capital/ general corporate purposes
Total

Approximate
Percentage

$1,500,000
1,180,000
300,000
1,000,000
1,500,000
500,000
250,000
1,970,000

18%
14%
4%
12%
18%
6%
3%
25%

$8,200,000

100%

The debt we intend to repay includes:
<R>

• a $1,500,000 note at an interest rate of bank prime, which was 9.5% at December 31, 2000, plus 1%, payable
to a director;
</R>

• a $500,000 note at an interest rate of 18% payable to a private investor;
<R>

• a $189,980 note at an interest rate of 10% payable to a third-party vendor;
</R>

• a $99,974 note at an interest rate of 10% payable to our chairman;
• a remaining balance of $94,000 on a note at an interest rate of 11% payable to a private investor; and
• approximately $300,000 of accrued but unpaid interest on notes to our stockholders, including our chairman
and a director.
Further, if the representative exercises its over-allotment option in full, we will repay the principal on other
outstanding stockholder notes of approximately $1.3 million.
Payment of accrued expenses and payables includes deferred employee expense reimbursement, accumulated
interest, past due trade payables, and other miscellaneous accrued expenses.
<R>

Pending application of the net proceeds, we intend to invest the net proceeds in interest-bearing, investment
grade securities.
</R>

10

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 62992
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 14

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 015.00.00.00 SN: 12 Ed#: 6
*P64567/015/6*
EDGAR 2

The foregoing discussion is merely an estimate based on our current business plan. Our actual expenditures may
vary depending upon circumstances not yet known, such as the time actually required to reach a positive cash flow
or to successfully expand the market for our products.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our shares of common stock and do not anticipate paying
any cash dividends in the foreseeable future. Currently, we intend to retain any future earnings for use in the
operation and expansion of our business. Any future decision to pay cash dividends will be at the discretion of our
board of directors and will depend upon our financial condition, results of operations, capital requirements and
other factors our board of directors may deem relevant.
11

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 26545
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 15

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 016.00.00.00 SN: 14 Ed#: 5
*P64567/016/5*
EDGAR 2

CAPITALIZATION
The following table sets forth our capitalization at December 31, 2000 on an actual basis and on a pro forma
basis, after giving effect to our reincorporation in Delaware, our related 1-for-6 reverse stock split, and the sale of
1,000,000 units offered hereby at an estimated price of $10.00 per unit and the initial application of the estimated
net proceeds therefrom. This table should be read in conjunction with, and is qualified by, the financial statements
and notes thereto included elsewhere in this prospectus.
<R>

December 31, 2000
Actual
Current portion of note payable(1)
Current portion of notes payable to related parties
Accounts payable and accrued liabilities
Inventory financing payable
Accrued interest

$

$
Long-term notes payable to stockholders and others, and capital lease
obligations, excluding current portion
Stockholders’ equity (deficit)
Preferred stock $0.00001 par value, 25,000,000 shares authorized; no
shares issued and outstanding
Common stock $0.00001 par value, 50,000,000 shares authorized;
1,510,754 shares issued and outstanding actual, 2,510,754 shares issued
and outstanding pro forma(2)
Additional paid-in capital
Deferred compensation
Retained earnings (deficit)(3)
Total stockholders’ equity (deficit)
Total capitalization (deficiency)

Pro Forma

(dollars in thousands)
100
$ —
125
—
300
—
190
—
268
—
983

$

—

$ 2,822

$1,322

—

—

1,890
1,310
(80)
(6,680)

—
4,720
(80)
—

(3,560)

4,640

$ (738)

$5,962

</R>

(1) Subsequent to December 31, 2000, an investor advanced us $500,000, which is due to be repaid with the
proceeds from this offering upon its closing or by July 1, 2002, whichever is earlier.
<R>

(2) Does not include (i) 434,322 shares of common stock issuable upon exercise of stock options issued pursuant to
our stock option plans, which have a weighted average exercise price of $5.96 per share, (ii) an additional
52,727 shares of common stock issuable upon exercise of warrants outstanding, which have a weighted average
exercise price of $4.71, and (iii) the shares of common stock underlying the units issuable upon exercise of the
representative’s over-allotment option or the representative’s warrants.
</R>
<R>

(3) Our accumulated deficit, which was $6.7 million at December 31, 2000, was reclassified into additional paid-in
capital upon the termination of our S-corporation tax status in the first quarter of 2001.
</R>

12

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 61874
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 16

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 017.00.00.00 SN: 11 Ed#: 5
*P64567/017/5*
EDGAR 2

DILUTION
If you invest in our units, your interest will be diluted to the extent of the difference between the public offering
price per share of our common stock and the as adjusted net tangible book value per share of our common stock
after this offering. For purposes of the dilution computation and the following tables, we have allocated the full
purchase price of a unit to the share of common stock included in the unit and nothing to the warrant included in the
unit. As of December 31, 2000, our net tangible book value was a negative $3,559,855, or a deficiency of $2.36 per
share of common stock. Net tangible book value per share represents the amount of our total tangible assets reduced
by the amount of our total liabilities, divided by the total number of shares of common stock outstanding. Dilution
in net tangible book value per share represents the difference between the amount per share paid by the purchasers
of our units in this offering and the net tangible book value per share of our common stock immediately afterwards.
Without taking into effect any changes in the net tangible book value after December 31, 2000, other than to give
effect to the sale of 1,000,000 units in this offering at the assumed initial public offering price of $10.00 per unit
and the application of the net proceeds of this offering, the net tangible book value of TASER as of December 31,
2000 would have been $4,640,145, or $1.85 per share. This represents an immediate increase of $4.20 per share of
common stock to existing stockholders and an immediate dilution of $8.15 per share of common stock to the new
investors who purchase units in this offering. The following table illustrates this per share dilution:
Assumed initial public offering price
Net tangible book value (deficiency) per share before this offering
Increase in net tangible book value per share attributable to new
investors

$10.00
$(2.36)
$ 4.21

As adjusted net tangible book value per share after this offering

$ 1.85

Dilution in net tangible book value per share to new investors

$ 8.15

If the representative’s over-allotment option is exercised in full, dilution per share to new investors would be
$7.76 per share of common stock.
The following table summarizes as of December 31, 2000 the differences between the existing stockholders and
the new investors with respect to the number of shares of common stock purchased, the total consideration paid, and
the average price per share paid:
Shares Purchased
Number
Existing stockholders
New investors
Total

Total Consideration

Percent

Amount

Percent

1,510,754
1,000,000

60%
40%

$ 3,199,898
10,000,000

24%
76%

2,510,754

100%

$13,199,898

100%

Average Price
Per Share
$ 2.12
$10.00

The above computations assume no exercise of outstanding options or warrants to purchase common stock, the
representative’s over-allotment option, the public warrants included in units sold in this offering or the
representative’s warrants. To the extent that these options and warrants are exercised, there will be further dilution
to new investors.
13

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 53039
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 17

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 018.00.00.00 SN: 11 Ed#: 5
*P64567/018/5*
EDGAR 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with
the financial statements and related notes to the financial statements included elsewhere in this prospectus. This
discussion contains forward-looking statements that relate to future events or our future financial performance.
These statements involve known and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these forward-looking statements. These risks and
other factors include, among others, those listed under “Risk Factors” and those included elsewhere in this
prospectus.
Overview
We began operations in Arizona in 1993 for the purpose of developing and manufacturing less-lethal selfdefense devices. From inception until the introduction of our first product, the AIR TASER, in 1994, we were in the
development stage and focused our efforts on product development, raising capital, hiring key employees and
developing marketing materials to promote our product line.
<R>

In 1995 and 1996, we focused our efforts on promoting retail sales and establishing distribution channels for the
AIR TASER product line. However, our marketing efforts were limited by a non-compete agreement prohibiting
the company from marketing or selling our products to the U.S. law enforcement and military markets.
Accordingly, initial sales of the AIR TASER were limited to the consumer market. While early sales in this market
were promising, by the end of 1996 we were unable to establish consistent sales channels in the consumer
marketplace and sales declined. In late 1996, we relocated our production facilities to Mexico to reduce production
costs.
</R>

In 1997, we introduced our second product line, the AUTO TASER. The initial market response to the AUTO
TASER suggested the demand for this product would more than compensate for the declining AIR TASER sales.
Because of strong pressure from pre-production orders, we accelerated the development of the AUTO TASER. As a
result of this acceleration, production costs of the AUTO TASER far exceeded initial projections, and we
experienced a substantial amount of AUTO TASER returns due to product defects.
The non-compete agreement that had precluded sales to the law enforcement and military markets expired in
1998. During this year, we focused our development efforts on the ADVANCED TASER product line, a redesigned
and enhanced version of the AIR TASER, targeted primarily to the U.S. law enforcement and corrections market.
During 1998, in addition to $66,000 paid to outside research and development consultants, we also incurred
substantial internal unallocated expenses associated with the development of the ADVANCED TASER. Further,
end-user sales of the AUTO TASER continued to decline, and product returns remained higher than expectations.
<R>

In August 1999, the AUTO TASER product line was discontinued and we closed our production facilities in
Mexico. We sold all remaining finished goods associated with the AUTO TASER product line by the end of the
first quarter of 2000. We outsourced the production of our remaining finished goods and non-proprietary
components to a third-party assembler. We shifted our focus to completion of the ADVANCED TASER
development project and introduced the first ADVANCED TASER units for sale to law enforcement customers in
December 1999. As a result of these activities and product development expenses, we had accumulated a deficit of
$6.3 million by December 31, 1999.
</R>

The first full year of the ADVANCED TASER product line sales was 2000. We spent the year focusing on
building the distribution channel for marketing the product line and developing a nationwide training campaign to
introduce the product line to law enforcement agencies, primarily in North America.
14

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 27753
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 18

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 019.00.00.00 SN: 12 Ed#: 5
*P64567/019/5*
EDGAR 2

Results of Operations
<R>

For the years ended December 31, 1999 and 2000, sales by product line were as follows:
</R>
<R>

Product Line

1999

%

2000

%

ADVANCED TASER (including cartridges and accessories)
AIR TASER (including cartridges and accessories)
AUTO TASER (including accessories)
Miscellaneous sales (components, freight, services, equipment)

$ 80,000
1,327,000
608,000
351,000

3%
56%
26%
15%

$2,152,000
1,241,000
24,000
83,000

62%
35%
1%
2%

Total sales

$2,366,000

100%

$3,500,000

100%

</R>

Net sales. Net sales increased $1.1 million, or 48%, from $2.4 million for the year ended December 31, 1999 to
$3.5 million for the year ended December 31, 2000. The increase was due almost entirely to the first full year of
sales of the ADVANCED TASER, primarily to law enforcement agencies. The increase in sales was partially offset
by the decline in AUTO TASER sales due to the discontinuation of this product line and somewhat lower sales of
the AIR TASER to consumers.
<R>

Cost of products sold. Cost of products sold decreased from $1.5 million in 1999, or 63% of net sales, to $1.4
million in 2000, or 41% of net sales. The decrease in cost of products sold as a percentage of net sales was due
primarily to the lower direct production costs associated with the AIR and ADVANCED TASERs, which averaged
33% of gross sales as compared to 55% of gross sales for the AUTO TASER, and a one-time charge related to the
phase out of the AUTO TASER product line of approximately $355,000 in 1999.
</R>

At December 31, 2000, our principal product costs included the following:
• Direct materials: Direct materials include raw materials and sub-assemblies sold to our contract manufacturer
for insertion into the final production assemblies as well as supplies used in production. Direct materials
represent the majority of our cost of products.
• Direct labor: Direct labor represents the expenses incurred in our Scottsdale, Arizona facility for the assembly
and packaging of sub-assemblies. Once finished, these sub-assemblies are sold to our contract manufacturer for
insertion in finished product. Prior to 2000, direct labor included wages paid to employees in our Mexico
production facility.
• Shipping expense: Shipping expense includes those costs associated with shipping finished products to our
customers. This includes freight paid to ship orders, special handling charges and related transaction fees.
In 2001, we anticipate that direct labor will represent a larger portion of cost of products sold as we move final
assembly to our facility in Scottsdale.
Gross profit. Gross profit increased $1.2 million, or 136%, from $874,000 in 1999 to $2.1 million in 2000. Our
gross profit margin was 37% of net sales in 1999 compared to 59% in 2000 due to increased sales of higher margin
ADVANCED TASER products and the write offs taken in 1999 as a result of the phase out of the AUTO TASER.
Operating expenses. Operating expenses decreased $203,000, or 32%, from $634,000 in 1999 to $431,000 in
2000. Operating expenses were 27% of net sales in 1999 compared to 12% of net sales in 2000. This reduction in
operating expenses is due largely to the closure of our manufacturing facility in Mexico in August 1999, and the
associated reduction in staff when we outsourced production and assembly. Operating expenses are the indirect
costs associated with producing our products, such as rent on production facilities, engineering and support salaries
and other indirect manufacturing costs. We do not anticipate proportionate increases in operating expenses in the
event our revenues increase.
Sales, general and administrative expenses. Sales, general and administrative expenses increased by $163,000,
or 12%, from $1.4 million in 1999 to $1.5 million in 2000. Sales, general and administrative
15

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 46965
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 19

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 020.00.00.00 SN: 14 Ed#: 5
*P64567/020/5*
EDGAR 2

expenses were 58% of net sales in 1999 compared to 44% of net sales in 2000. These costs increased to support the
sales of the ADVANCED TASER and included sales commissions and product demonstration costs. However,
sales, general and administrative expenses declined as a percentage of sales in 2000 due to the fixed nature of
certain of these costs and higher per unit sales prices attributable to the ADVANCED TASER product line.
Interest expense. Interest expense increased by $88,000, or 31%, from $281,000 in 1999 to $369,000 in 2000.
The increase reflects the cost of the higher level of related party debt in 2000 over 1999, primarily used to fund
working capital. In addition, we issued warrants and options in 2000 valued at $26,000 to certain stockholders for
loan guarantees.
<R>

Corporate tax status. Prior to our re-incorporation in Delaware in February 2001, we were an S-corporation,
which allowed all the tax attributes to flow through to the stockholders. In February 2001, we changed our tax
reporting status to that of a C-corporation. When we changed our reporting status, all accumulated shareholder
deficit was converted to additional paid-in capital. As a result there are no net operating loss carry forwards
available to us.
</R>

Net loss. The net loss decreased $1.2 million, or 74%, from $1.6 million in 1999 to $416,000 in 2000. Basic and
diluted net loss per common share was $0.52 in 1999 compared to $0.17 in 2000. The reduced net loss in 2000
resulted primarily from increased sales volume and increased gross margins attributable to sales of the
ADVANCED TASER line.
Liquidity and Capital Resources
Liquidity. We had a working capital deficiency of $2.4 million at December 31, 1999 and $1.0 million at
December 31, 2000. The improvement in working capital from 1999 to 2000 was largely due to the extension of
short-term related party debt to long-term debt. In both 1999 and 2000, cash was used primarily to fund operating
losses and for investment in property and equipment. We have historically addressed our working capital shortfalls
through capital investment and debt financing from related parties.
In 2000 we generated cash from operations of $66,000, primarily as a result of a significant customer deposit of
$440,000 received in December 2000. In 1999, operations consumed $705,000 in cash. Although we anticipate that
our cash flow from operations will be at least break-even in 2001, we have not historically generated sufficient cash
from operations to fund future growth or to repay our long-term debt that principally comes due July 1, 2002.
<R>

We anticipate that, after the completion of this offering, our cash resources will be adequate to meet our
liquidity needs for at least the next 12 months. There can also be no assurances that our working capital objectives
will be reached in the near future, if ever. If additional capital is required, it may not be available on favorable terms
or at all.
</R>

Capital resources. In the past, we have funded our operating deficits primarily through indebtedness to related
parties. Our indebtedness to stockholders and related parties totaled $2.9 million at December 31, 2000. The
majority of this indebtedness matures at the earlier of the completion of this offering or July 2002. The indebtedness
bears interest ranging from 9% to 27%. A significant portion of this indebtedness will be repaid from the proceeds
of this offering, including the representative’s over-allotment option, if exercised.
Capital commitments. At December 31, 2000, we had no material commitments for capital expenditures. Other
commitments include rental payments under operating leases for office space and equipment, and commitments
under employment contracts with our chief executive officer, president, and chief financial officer.
16

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 9767
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 20

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 021.00.00.00 SN: 10 Ed#: 5
*P64567/021/5*
EDGAR 2

BUSINESS
Company overview
We develop, assemble and market less-lethal, conducted energy weapons primarily for use in the law
enforcement and corrections market. Over 350 police departments in the United States have made initial purchases
of our products and 15 police departments, including San Diego, Sacramento, and Albuquerque, have purchased our
products for every patrol officer. As of February 1, 2001, more than 200 additional police departments were
evaluating our newest product, the ADVANCED TASER.
<R>

We sell two principal products. We introduced the AIR TASER in 1994 and targeted it primarily at the
consumer market. We designed the AIR TASER to look like a cellular telephone or other consumer electronic item,
rather than a weapon. The terms of an agreement we signed with Electronic Medical Laboratories, Inc., doing
business as Tasertron and the original licensee of a patent on certain technology used in our weapons, precluded us
from selling our products to United States law enforcement, corrections and military agencies until February 1998.
After expiration of this agreement, we introduced the ADVANCED TASER, an upgraded and redesigned version of
the AIR TASER, to appeal to the law enforcement and corrections market. It uses the same basic operating principle
as the AIR TASER but produces four times the AIR TASER’s power output. It is also pistol-shaped to make it
easier for police officers to use. The ADVANCED TASER can be sold with an integrated laser sight and a built-in
memory option to record the time and date of up to 585 firings. We believe the ADVANCED TASER will also
appeal to the security, military and consumer markets, and intend to pursue sales in these markets after further
penetrating the law enforcement and corrections market.
</R>

Industry background
The market for less-lethal weapons includes law enforcement agencies, correctional facilities, military agencies,
private security guard companies and retail consumers. We believe law enforcement officials are the opinion leaders
regarding market acceptance of new security products. In recent years, successful new security products — such as
the GLOCK handgun and the Mag-Lite flashlight — were first marketed to and accepted by police departments. We
therefore focus on the law enforcement agency segment of the market for less-lethal weapons.
Generally, each police force has a use-of-force policy that dictates the level of force its officers can use to
respond to various situations. A police officer is trained to use only the minimum force necessary to overcome the
threat of injury or violence posed by a suspect. For example, under most policies, an officer may not use lethal force
unless a subject poses a threat of significant bodily injury or fatality to the officer or other persons.
In fact, most police officers never deploy lethal force in the course of their careers. While the vast majority of
law enforcement officers around the world are armed with firearms, only a small percentage will actually ever use
them. Many police officers, however, must use less-lethal force on a regular basis. Less-lethal force can range from
a control hold to the use of a baton, chemical spray, or other means to control a subject that is actively resisting the
officer.
Police officers are often injured while trying to subdue a suspect with less-lethal force. Traditional tactics such
as using a baton or fist to control a suspect result not only in a significant risk of injury to the suspect, but also a
significant risk that the officer will be injured. If an officer can subdue a suspect from a safe distance using effective
less-lethal weapons, he greatly reduces the probability that he or the suspect, as well as bystanders, will be injured
during a confrontation.
A variety of new less-lethal weapons have been developed to address the need to temporarily incapacitate an
attacker without causing permanent injury or fatality. These weapons vary in approach, but generally include stun
guns, batons and clubs, chemical sprays, rubber bullets, pepper balls and other impact munitions. Each weapon has
distinct advantages and disadvantages, and law enforcement agencies
17

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 43981
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 21

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 022.00.00.00 SN: 15 Ed#: 5
*P64567/022/5*
EDGAR 2

require different tools for different situations. We believe that the following characteristics of less-lethal weapons
are the most important to law enforcement agencies:
<R>

• Effectiveness: temporary incapacitation of aggressive suspects;
</R>
<R>

• Range: variable distance over which the weapon is effective;
</R>
<R>

• Safety: low risk of injury or death;
</R>
<R>

• Ease of use: simple operation, low maintenance and no contamination;
</R>
<R>

• Dependability: reliability in many environments, product durability;
</R>
<R>

• Accountability: tracking to reduce misuse of the weapon; and
</R>
<R>

• Cost: low cost per use and possible reduction of litigation expense.
</R>

The ADVANCED TASER solution
All our products are designed to perform well in terms of the above characteristics. We believe the
ADVANCED TASER, however, offers the best combination of these characteristics currently available in a lesslethal weapon. This superior performance could make the ADVANCED TASER the less-lethal weapon of choice in
many situations for law enforcement agencies and other security services.
• Effectiveness
<R>

Most less-lethal weapons rely upon a pain response for effect. A less-lethal weapon that inflicts only pain may
not stop the most dangerous and aggressive suspects. The ADVANCED TASER is designed to cause complete yet
temporary physical incapacitation, not just discomfort or distraction. In police testing and field use, the
ADVANCED TASER has incapacitated even highly focused individuals who have demonstrated the ability to fight
through other less-lethal weapons that rely only on pain.
</R>

• Range
Batons and chemical sprays can only be used from close distances, usually less than five feet. Rubber bullets,
beanbag rounds, and similar less-lethal impact weapons must be used at distances greater than 30 feet to minimize
suspects’ injuries. Therefore, we believe that other less-lethal weapons as a group are generally ineffective between
five and thirty feet. The ADVANCED TASER is designed to operate within this range. Since it is equally effective
at very close range, we believe the ADVANCED TASER represents a more versatile less-lethal weapon for
encounters taking place within 21 feet.
• Safety
In tests involving over 1,000 human volunteers and in hundreds of field applications, the ADVANCED TASER
has had no reported long-term, adverse after-effects. In field uses, our technology has been found to have a
comparable or lower risk of injury to officers and suspects than other less-lethal technologies. Further, the recovery
time from an application of the ADVANCED TASER is generally less than one minute. In contrast, recovery time
from the application of chemical sprays can range from ten minutes to one hour. Recovery time from the effect of
impact rounds can vary from hours to weeks, depending on bruising and bone breakage.
• Ease of Use
The ADVANCED TASER is shaped and designed to function like a standard handgun. Accordingly, it is easy

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 43981
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 21

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 022.00.00.00-1 SN: 15 Ed#: 5
*P64567/022/5*
EDGAR 2

for law enforcement officers to use during stressful situations, since their firearms training familiarizes them with
the muscle movements required for its operation. Further, the weapon requires no maintenance other than a periodic
battery check. The ADVANCED TASER also does not leave contaminating residues, unlike chemical sprays that
may contaminate buildings, vehicles or other closed facilities or officer uniforms.
18

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 54251
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 22

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

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*P64567/023/5*
EDGAR 2

• Dependability
The ADVANCED TASER operates effectively under a variety of unfavorable conditions, such as wind and
rain, that render chemical sprays less effective. The ADVANCED TASER housing is constructed of high tensilestrength polycarbonate to withstand the rigors of typical police use.
• Accountability
<R>

The ADVANCED TASER incorporates features designed to reduce inappropriate use. Our cartridges contain
numerous confetti-like Anti-Felon Identification tags, or AFIDs, which are scattered when the unit is fired. AFID
tags recovered from usage sites can thus help identify the owner of the cartridge used. The ADVANCED TASER
we market to law enforcement and corrections agencies also comes with a data port that records the exact time, date
and duration of up to 585 firings.
</R>

• Cost
The ADVANCED TASER is sold to law enforcement agencies for approximately $400 per unit. The air
cartridge ammunition is priced under $18 per shot. These prices are competitive with impact munitions and most
other specialized less-lethal weapons, with the exception of the least expensive chemical sprays. However, the
indirect costs of decontaminating buildings, vehicles, and uniforms resulting from the use of chemical sprays can
place the ADVANCED TASER at an overall cost advantage per use.
In addition, litigation costs for law enforcement agencies can be significant. Reducing the number of injuries
and fatalities caused by law enforcement officers may reduce the number of suits filed against agencies for
excessive use of force, wrongful death and injury. Further, reducing officer injuries minimizes medical claims and
lost time for work-related injuries.
As with other less-lethal weapons, these characteristics, particularly safety, may also have the benefit of
increasing goodwill between law enforcement agencies and their communities. Community relations considerations
can be particularly important at a time when almost any interaction with police can be videotaped and scrutinized by
the media and the public.
Our strategy
Key elements of our strategy for growth include the following:
• Fully exploit the expanding law enforcement and corrections market.
<R>

Our goal is to make the ADVANCED TASER the dominant less-lethal weapon for use by law enforcement and
corrections agencies. Law enforcement officials are often viewed as experts with regard to weapons and other
security products. As a result, we believe that widespread acceptance of the ADVANCED TASER in this market
will enhance its credibility and represent a necessary first step toward expanding sales of our products in additional
markets.
</R>

• Expand into private security, military, and consumer markets.
After increasing our presence in the law enforcement and corrections market, we intend to expand our
penetration in the private security, military and consumer self-defense markets. We believe the same performance
characteristics that will enable our products to succeed in the law enforcement and corrections market will also
appeal to potential customers in these additional markets.
• Develop enhanced less-lethal weapon technologies.
We intend to improve our less-lethal weapons technology to provide further growth and market opportunities.
Among other things, we intend to develop multiple shot capability and greater effective range. These innovations
may increase our revenues by allowing us to sell upgraded less-lethal weapons and accessories, both to existing and
potential new customers.
19

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 49568
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 23

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

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*P64567/024/5*
EDGAR 2

• Acquire businesses that enhance our strategic position.
We may acquire businesses that will complement our growth strategy and enhance our competitive position in
our markets. However, we have no current plans for such acquisitions.
Markets
Law enforcement and corrections
<R>

Federal, state and local law enforcement agencies in the United States currently represent the primary target
market for the ADVANCED TASER. According to United States Bureau of Justice statistics, there were nearly
19,000 of these agencies in the United States in 1996 that employed about 740,000 full-time, sworn law
enforcement officers. In 1995, industry analysts estimated that the total number of non-administrative correctional
officers in the United States was approximately 450,000.
</R>
<R>

Acceptance of the ADVANCED TASER by United States police departments has been fairly rapid since its
introduction in December 1999. We believe it could prove equally suitable for use in correctional facilities. The
ADVANCED TASER is particularly useful in these confined and crowded settings since it provides a means of
bringing virtually any individual under control without requiring the use of lethal force. We anticipate that some
correctional officers will be armed with ADVANCED TASERs, particularly as its performance attributes become
more familiar to the wider law enforcement community.
</R>

In the law enforcement market, over 350 police departments have made initial purchases of the ADVANCED
TASER for testing or deployment. In addition, 15 police departments, including San Diego, Sacramento, and
Albuquerque, purchased enough of our weapons to issue one to each of their patrol officers.
Private security firms and guard services
In 1999, it was estimated that there were over 1.7 million privately employed security guards or personnel in the
United States. They represent a broad range of individuals, including bodyguards, commercial and government
building security guards, commercial money carrier employees, and many others. We believe that security
personnel armed with ADVANCED TASERs could be as effective in many circumstances as those armed with
conventional firearms. At the same time, arming guards with ADVANCED TASERs may reduce the potential
liability of private security companies and personnel.
A number of environments can prove problematic for the use of conventional firearms. The use of conventional
firearms in airplanes, for example, poses a significant threat to the integrity of the aircraft and the safety of the
passengers. Conventional firearms may also be inappropriate in subways, buses, transit systems, banks and casinos.
In many of these crowded environments, the contamination associated with the use of chemical sprays could also
pose significant problems.
One large private security force overseas has ordered over 1,000 ADVANCED TASERs for delivery in Spring
2001. We are in the early stage of pursuing additional opportunities for sales of the ADVANCED TASER in private
security markets, and have made only limited sales to date.
Consumer/personal protection
In the late 1990s, industry sources estimated that 35 million Americans owned handguns. We believe these
handgun owners represent one segment of a potentially large consumer market for our products.
<R>

As a result of our shift in focus, the share of our sales made to consumer markets fell sharply from 1999 to
2000. In 1999, sales to consumers represented 88% of total revenues while these sales dropped to only 32% of total
sales in 2000. We expect the relative share of sales to consumer markets to remain small in the next few years.
Given the size of the potential consumer market, however, we believe consumer sales could contribute a substantial
portion of our revenues in the future, particularly if the ADVANCED TASER becomes more established in the law
enforcement and corrections market.
</R>

20

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 20471
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 24

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 025.00.00.00 SN: 15 Ed#: 5
*P64567/025/5*
EDGAR 2

Military
Military police forces may use the ADVANCED TASER for purposes similar to those of civilian police units.
Military peace-keeping forces also perform policing functions, and the ADVANCED TASER may prove an
effective tool for these operations. The ADVANCED TASER may also be used by armed forces to reduce the
possibility of civilian casualties resulting from combat operations on battlefields consisting of both civilians and
combatants. We have yet to pursue sales opportunities in the military market.
Products
Our weapons use compressed nitrogen to shoot two small electrified probes up to a maximum distance of 21
feet. The probes and compressed nitrogen are stored in a replaceable cartridge attached to the base of the weapon.
Our proprietary replacement cartridges are sold separately.
After firing, the probes discharged from our cartridges remain connected to the weapon by high-voltage
insulated wires that transmit electrical pulses into the target. These electrical pulses, which we call TASER-Waves
or T-Waves, are transmitted through the body’s nerves in a manner similar to the transmission of signals used by the
brain to communicate with the body. The T-Waves temporarily overwhelm the normal electrical signals within the
body’s nerve fibers, impairing subjects’ ability to control their bodies or perform coordinated actions. T-Waves can
penetrate up to two inches of clothing. The initial effect lasts up to five seconds and the charge can be repeated for
up to approximately ten minutes by repeatedly firing the weapon.
Since all our weapons use the same cartridges, we can support multiple platforms and still achieve economies of
scale in cartridge production. Our cartridges contain numerous colored, confetti-like tags bearing the cartridge’s
serial number. These tags, referred to as Anti-Felon Identification tags, or AFIDs, are scattered when one of our
weapons is fired. We require sellers of our products to participate in the AFID program by registering buyers of our
cartridges. In many cases, we can use AFIDs to identify the registered owner of cartridges fired.
We introduced our initial product, the AIR TASER, in 1994. We designed the AIR TASER to look like a
cellular telephone rather than a weapon to target the consumer electronics market. Currently, the AIR TASER
product line consists of the AIR TASER, a cartridge that shoots two small electrified probes up to 15 feet, an
optional laser sight, and a number of holstering accessories. We continue to target the AIR TASER line to the
consumer market.
<R>

We developed the ADVANCED TASER product line, launched in December 1999, primarily for the law
enforcement and corrections market. The ADVANCED TASER M26 is our primary product in this market and is
sold exclusively to law enforcement and corrections agencies. The ADVANCED TASER M26 offers the following
improvements over the AIR TASER:
</R>

• Increased effectiveness: the ADVANCED TASER has four times the power of the AIR TASER and has
proven effective in incapacitating over 99% of volunteers tested.
<R>

• Better accountability: the ADVANCED TASER’s memory system records the time, date, and duration of up
to 585 firings. By downloading this information periodically, law enforcement and corrections agencies can
track every use of the ADVANCED TASER. These agencies can use this data to investigate potential misuse.
</R>

• Ease of use: the ADVANCED TASER’s familiar pistol shape and integrated laser sight minimize the training
required for law enforcement and corrections officers and make it easier to use.
<R>

Our products are sold primarily through our network of distributors at a wide range of prices. Our most
inexpensive consumer product is the entry-level consumer AIR TASER, with a retail price of $99. Our high-end
consumer model, the ADVANCED TASER M18L with integrated laser sight, retails for $600. The ADVANCED
TASER M26 is currently our best selling item. Distributors sell the M26 to law enforcement and corrections
agencies for $400. Retail cartridge prices range from $16 to $30 per unit.
</R>

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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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*P64567/026/5*
EDGAR 2

In addition to weapons and cartridges, we sell holsters, attachments, cases and other accessories that
complement our core products. Although to date these accessories have generated limited sales, they offer
additional revenue opportunities and attractive margins.
We offer a lifetime warranty on the AIR TASER. Under this warranty, we will replace any AIR TASER that
fails to operate properly for a $25 fee. The AIR TASER is designed to disable an attacker for up to 30 seconds, and
we encourage users to leave the unit and flee after firing it. As a result, we also provide free replacement units to
consumers who follow this suggested procedure. To qualify for the replacement unit, users must file a police report
that describes the incident and confirms the use of the AIR TASER.
We offer a no-questions-asked lifetime replacement policy on the ADVANCED TASER. If the weapon fails to
operate properly for any reason, we will replace it for a fee of $25. The fee is intended to help defray the handling
and repair costs associated with product returns. This policy is attractive to our law enforcement and corrections
agency customers. In particular, it avoids disputes regarding the source or cause of any defect. Warranty costs under
both the AIR TASER and the ADVANCED TASER replacement policies have been minimal to date.
Sales and marketing
Law enforcement and corrections agencies represent our primary target market. In this market, the decision to
purchase the ADVANCED TASER is normally made by a group of people including the agency head, his training
staff, and weapons experts. The decision sometimes involves political decision-makers such as city council
members. The decision-making process can take as little as a few weeks or as long as several years.
United States distribution. With the exception of several accounts to which we sell directly, the vast majority of
our law enforcement agency sales in the United States occur through our network of more than 25 independent
regional police equipment distributors. To service these distributors and assist us in expanding sales to new ones, we
retain two manufacturer’s representatives that call on potential distributors. We compensate our manufacturer’s
representatives solely on a commission basis, calculated as a percentage of the sales they complete. Sales in the
consumer market are made through different independent distributors, dealers, and retailers. We provide our
distributors with performance-based incentive programs.
International distribution. As a result of our shift in focus to the United States law enforcement and corrections
market, our international sales efforts are currently limited to presentations and training seminars conducted by
TASER personnel. We recently began introducing the ADVANCED TASER in Europe and parts of the Middle
East, South America and Asia, but have yet to devote significant resources to these markets. Sales outside the
United States and Canada accounted for 48% and 18% of total revenues in 1999 and 2000, respectively. In 2001,
we expect international sales to account for approximately 10% of our total sales.
We have worked in the past with more than 20 foreign distributors. These foreign distributors purchase products
from us and resell them to sub-distributors, retail dealers or end users. We continue to provide most foreign
distributors with short-term exclusive contracts to sell our products in a designated region. Although many of these
relationships are inactive, we continue to ship products as ordered.
Training Programs. Most law enforcement and corrections agencies will not purchase new weapons until a
training program is in place to certify all officers in their proper use. We offer an eight-hour class that certifies law
enforcement and corrections agency trainers as instructors in the use of the ADVANCED TASER. We have
certified over 2,500 law enforcement training officers as ADVANCED TASER instructors. Our certification
program is designed to make it easier for departments to comply with these training requirements.
Fifty of our certified instructors have undergone further training and become certified as master instructors. We
authorize these individuals to train other law enforcement and corrections agency trainers,
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<R>

not just end-users within these organizations. Twenty-five of our master instructors have agreed to conduct
ADVANCED TASER training classes on a regular basis. These instructors independently organize and promote
their own training sessions, and we provide them with logistical support. They are independent professional trainers,
serve as local area TASER experts, and assist our distributors in conducting TASER demonstrations at other police
departments within their regions. Through the end of 2000, we did not charge for attendance at these classes but
now charge $195 per attendee. We pay master instructors a per-session training fee and a share of the attendance
fees collected at each session that they conduct. These training sessions have led directly to the sale of
ADVANCED TASERs to a number of police departments.
</R>

Communications. In addition to our training programs, we regularly participate in a variety of trade shows and
conferences. Our marketing efforts also benefit from significant free news coverage. Other marketing
communications include video e-mails, press releases, and conventional print advertising in law enforcement trade
publications. Our website also contains similar marketing information.
Manufacturing
After a review of our operating costs and changes in regulations pertaining to the export of the technology used
to produce our weapons, we elected to move our final assembly operations from our subcontractor in Guaymas,
Mexico to our new facility in Scottsdale, Arizona. We own all of the production equipment used for the final
assembly of our products in the Guaymas facility, and expect to reinstall it in Scottsdale no later than April 2001.
We currently assemble the compressed nitrogen containers used inside our air cartridges in our Scottsdale facility.
Our Scottsdale facility has approximately 6,000 square feet of assembly and warehouse space. We plan to
employ between 15 and 25 assembly personnel by the end of 2001. After the move, our production capabilities will
support the assembly of 2,000 ADVANCED TASERs, 1,000 AIR TASERs, and 24,000 cartridges per month on a
single shift. We can expand our production capabilities by adding additional personnel and a second shift with
negligible new investment in tooling and equipment. We expect our Scottsdale facility and tooling to be sufficient
to support our current growth projections at least through 2003.
We currently purchase finished circuit boards and injection-molded plastic components from third-party
suppliers in Phoenix. Although we currently obtain these components from single source suppliers, we own the
injection-molded component tooling used in their production. As a result, we believe we could obtain alternative
suppliers without incurring significant production delays. We acquire most of our components on a purchase order
basis and do not have long-term contracts with suppliers.
Competition
In the law enforcement and corrections market, the ADVANCED TASER competes directly with the conducted
energy weapon sold by Electronic Medical Research Laboratories, Inc., doing business as Tasertron. Tasertron is
the sole remaining manufacturer of the original TASER weapon introduced in the 1970s. The ADVANCED
TASER also competes indirectly with a variety of other less lethal alternatives. In the consumer market, the AIR
TASER competes directly with a conducted energy weapon introduced by Bestex, Inc. in 1996, called the DualDefense, and indirectly with other less-lethal alternatives.
Law enforcement and corrections market. Tasertron had an exclusive license to sell TASER products in the
North American law enforcement and corrections market until February 1998. Compared to the Tasertron unit, our
ADVANCED TASER offers reduced size, additional power, and a more convenient pistol-shaped design. We
believe agencies choosing to employ a conducted energy weapon will prefer to adopt a single weapon system. Since
its introduction, the ADVANCED TASER has competed successfully against the Tasertron unit, even in agencies
that had previously purchased Tasertron units.
Other less-lethal weapons, sold by companies such as Armor Holdings, Inc. and Jaycor, Inc., compete with our
ADVANCED TASER indirectly. Many law enforcement and corrections personnel consider less23

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lethal weapons to be distinct tools, each best-suited to a particular set of circumstances. Consistent with this tool kit
approach, purchasing any given tool does not preclude the purchase of one or several more. In other cases,
budgetary considerations and limited space on officers’ belts dictate that only a limited number of less-lethal
weapons will be purchased and carried. We believe the ADVANCED TASER’s versatility, effectiveness, and low
injury rate enable it to compete effectively against other less-lethal alternatives.
Consumer market. Conducted energy weapons have gained limited acceptance in the consumer market for lesslethal weapons. These weapons compete with other less-lethal weapons such as stun guns, batons and clubs, and
chemical sprays. The primary competitive factors in the consumer market include a weapon’s cost, its effectiveness,
and its ease of use. The widespread adoption of the ADVANCED TASER by law enforcement agencies may help
us overcome a perceived historic lack of consumer confidence in conducted energy weapons.
Regulation
United States regulation. The AIR TASER and ADVANCED TASER are subject to the same regulations.
Neither weapon is considered a “firearm” by the Bureau of Alcohol, Tobacco, and Firearms. There are, therefore,
no firearms-related regulations regarding the sale and distribution of our weapons within the United States. In the
1980s, however, many states introduced regulations restricting the sale and use of stun guns, inexpensive hand-held
shock devices. We believe existing stun gun regulations also apply to our weapon systems.
In many cases, the law enforcement and corrections market is subject to different regulations than the consumer
market. Where different regulations exist, we assume the regulations affecting the consumer market also apply to
the private security market. Based on a review of current regulations, we have determined the following states
regulate the sale and use of our weapon systems:
State
Connecticut
Florida
Hawaii
Illinois
Indiana
Massachusetts
Michigan
New Jersey
New York
North Carolina
North Dakota
Rhode Island
Washington
Wisconsin

Law Enforcement Use
Legal
Legal
Prohibited
Legal
Legal
Legal
Prohibited (except for evaluation)
Prohibited
Legal
Legal
Legal
Prohibited
Legal
Legal

24

Consumer Use
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Prohibited
Prohibited
Prohibited
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Legal, subject to restrictions
Prohibited

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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Phone: (602) 223-4455

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*P64567/029/5*
EDGAR 2

The following cities and counties also regulate our weapon systems:
City
Annapolis
Baltimore
Chicago
Howard County, MD
Lynn County, OH
New York City
Philadelphia
Washington, D.C.

Law Enforcement Use
Legal
Legal
Legal
Legal
Legal
Legal
Legal
Legal

Consumer Use
Prohibited
Prohibited
Prohibited
Prohibited
Legal, subject to restrictions
Prohibited
Prohibited
Prohibited

United States export regulation. Our weapon systems are considered a crime control product by the United
States Department of Commerce. Accordingly, the export of our weapon systems is regulated under the export
administration regulations. As a result, we must obtain export licenses from the Department of Commerce for all
shipments to foreign countries other than Canada. Most of our requests for export licenses have been granted, and
the need to obtain these licenses has not caused a material delay in our shipments. The need to obtain licenses,
however, has limited or impeded our ability to ship to certain foreign markets. In addition, export regulations
prohibit the further shipment of our products from foreign markets in which we hold an export license for the
products to foreign markets in which we do not hold an export license for the products.
In addition, in the fall of 2000, the Department of Commerce introduced new regulations restricting the export
of the technology used in our weapon systems. These regulations apply to both the technology incorporated in our
weapon systems and in the processes used to produce them. The technology export regulations do not apply to
production that takes place within the United States. After moving our final assembly to our Scottsdale facility,
these technology export regulations will no longer apply to us but will still apply to certain of our suppliers located
outside of the United States.
Foreign regulation. Foreign regulations are numerous and often unclear. We prefer to work with an exclusive
distributor who is familiar with applicable regulations in each of our foreign markets. Experience with foreign
distributors in the past indicates that restrictions may prohibit certain sales of our products in a number of countries.
The countries in which we are aware of restrictions include Belgium, Denmark, Hong Kong, Italy, Japan, New
Zealand, Norway, Sweden, Switzerland, and the United Kingdom. In Australia, Canada, and India we are also
aware that sales of our products are permitted to law enforcement and corrections agencies but prohibited to
consumers.
Intellectual property
We protect our intellectual property with a variety of patents and trademarks. In addition, we use confidentiality
agreements with employees and some suppliers to ensure the safety of our trade secrets. We hold a United States
patent on the construction of the gas cylinder used to store the compressed nitrogen in our cartridges. This patent
expires in 2015. We are the licensee of a United States patent on the process by which compressed gases launch the
probes in our cartridges. This patent expires in 2009. Using this compressed gas technology instead of gunpowder
prevents our products from being classified as firearms by the Bureau of Alcohol, Tobacco and Firearms. We also
have a broad-based patent application pending covering the wave form of the energy we developed for the
ADVANCED TASER.
We have several unregistered and federally registered trademarks. We own the AIR TASER and TASER
registered trademarks.
Research and development
Our research and development initiatives are led by our internal personnel and make use of specialized
consultants when necessary. These initiatives include bio-medical research as well as electrical
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and mechanical engineering design. Future development projects will focus on reducing the size, extending the
range, and improving the functionality of our weapons. Total research and development expenditures were $6,900
in 1999 and $7,100 in 2000.
Employees
As of December 31, 2000, we had 16 full-time employees. Six employees were involved in sales, marketing and
training. Two were employed in research, development and engineering. We also employed four administrative
personnel and four in production support. Our employees are not covered by any collective bargaining agreement,
and we have never experienced a work stoppage. We believe that our relations with our employees are good.
Facilities
We conduct our operations from a modern 11,800-square-foot facility located in Scottsdale, Arizona. The
monthly rent for this facility is approximately $11,000. Our lease expires on January 1, 2006. We believe this
facility will meet our needs for the next three years and that additional space will be available on reasonable terms
upon the expiration of our current lease or if we require additional space.
Legal proceedings
<R>

We are a defendant in a lawsuit filed in February 2000 by a former distributor of our products in the United
States District Court, Southern District of New York. This former distributor claims the exclusive right to sell our
products to many of the largest law enforcement, corrections, and military agencies in the United States and seeks
monetary damages. We signed no contracts with this former distributor. We also believe that he has no reasonable
basis for claims to informal or implied contractual rights. As a result, we believe his claims are without merit, and
the litigation will have no material adverse affect on our business, operating results or financial condition.
</R>

Corporate information
We were incorporated in Arizona in September 1993 as ICER Corporation. We changed our name to AIR
TASER, Inc. in December 1993, and to TASER International, Incorporated in April 1998. In February 2001, we
reincorporated in Delaware as TASER International, Inc.
26

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MANAGEMENT
Directors and executive officers
Our directors and executive officers are as follows:
Name

Age

Phillips W. Smith
Patrick W. Smith
Thomas P. Smith
Bruce R. Culver
Matthew R. McBrady
Karl F. Walter
Kathleen C. Hanrahan

63
30
33
55
30
54
37

Position
Chairman
Chief Executive Officer and Director
President and Director
Director
Director
Director
Chief Financial Officer

Phillips W. Smith is the chairman of our board of directors. Dr. Smith has served as a director since 1993.
Since January 1999, Dr. Smith has served on the board of directors of Pentawave, Inc., a developer of cross-media
publishing software. From June 1991 to September 1997, Dr. Smith served as the president and chief executive
officer of Zycad Corporation, a developer of engineering and manufacturing applications software. Dr. Smith holds
a B.S.E. degree from West Point, an M.B.A. degree from Michigan State University, and a Ph.D. in Business
Administration from St. Louis University.
Patrick W. Smith is the chief executive officer and a co-founder of TASER. Mr. Smith has served as our chief
executive officer and as a director since 1993. Mr. Smith holds a B.S. degree in Biology and Neurobiology from
Harvard University, an M.B.A. degree from the University of Chicago, and a Masters Degree in International
Finance from the University of Leuven in Leuven, Belgium.
Thomas P. Smith is the president and a co-founder of TASER. Mr. Smith has served as our president since
April 1994 and as a director since 1993. Mr. Smith holds a B.S. degree in Ecology and Evolutionary Biology from
the University of Arizona and an M.B.A. degree from Northern Arizona University.
Bruce R. Culver has served as a director of TASER since January 1994. Mr. Culver co-founded Professional
Staff, P.L.C., a human resource management company, and has served on its board of directors since April 1990. In
March 1993, Mr. Culver organized and has since remained the chief executive officer of Culver Distributions, Inc.,
doing business as California Distribution Company, providing warehouse and distribution services to internet
companies. Since April 1997, Mr. Culver has served on the board of Pentawave, Inc., becoming its chairman in
October 2000.
Matthew R. McBrady has served as a director of TASER since January 2001. From August 1998 though July
1999, Mr. McBrady served as a member of the staff of President Clinton’s Council of Economic Advisers. In
December 1997, Mr. McBrady began working as a financial and analytical consultant for Avenue A, Inc, an internet
marketing company, and served as its vice president of analytics from June 1999 through October 1999.
Mr. McBrady taught corporate finance courses at the University of Southern California during the summer terms of
1997 and 1998, at Harvard College from September 1996 through May 1997, and at Harvard Business School
during the spring term of 1998. Mr. McBrady holds a B.S. in Economics from Harvard University, an M.S. in
International Economics from Oxford University, and expects to receive a Ph.D. in Corporate and International
Finance from Harvard University in June 2001.
Karl F. Walter has served as a director of TASER since January 2001. Mr. Walter was a co-founder of Glock,
Inc., a subsidiary of GLOCK GmbH, an Austrian semi-automatic pistols manufacturer. From January 1994 through
February 1997, Mr. Walter worked as a director of law enforcement sales for Sturm Ruger Co., a firearms
manufacturer. Since March 1997, Mr. Walter has worked as the program manager for AV Technology International,
LLC, a builder of armored vehicles.
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Kathleen C. Hanrahan is our chief financial officer, serving in that position since November 2000.
Ms. Hanrahan first joined TASER in January 1996 as an internal controls consultant and became our controller in
March 1996.
Our certificate of incorporation provides that we have no less than three and no more than nine directors divided
into three classes (Class 1, Class 2, and Class 3), with members of each class serving for staggered three-year terms.
As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other
classes continuing for the remainder of their respective three-year terms. Messrs. Phillips Smith and Bruce Culver
have been designated as Class 1 directors, whose term expires at the 2001 annual meeting; Messrs. Patrick Smith
and Karl Walter have been designated as Class 2 directors, whose term expires at the 2002 annual meeting; and
Messrs. Thomas Smith and Matthew McBrady have been designated as Class 3 directors, whose term expires at the
2003 annual meeting.
Each officer serves at the discretion of our board of directors. No officer is subject to an agreement that requires
the officer to serve TASER for a specified number of years. Mr. Thomas Smith and Mr. Patrick Smith are
Dr. Phillips Smith’s sons. No other family relationships exist among our directors and executive officers.
Director compensation
Prior to 2001, directors were not compensated for their service on the board. Beginning in 2001, independent
directors will receive $1,250 per quarter. In addition, in December 2000, Messrs. McBrady and Walter each
received options to purchase 6,667 shares vesting ratably over four years at an exercise price of $3.30 per share.
Directors are also reimbursed for expenses incurred in connection with attendance at meetings.
Committees of the board of directors
<R>

Our board of directors has an Audit Committee consisting of Mr. McBrady and Mr. Walter, and a
Compensation Committee consisting of Mr. Culver and Mr. Walter. The Audit Committee meets with management
and our independent public accountants to determine the adequacy of our internal controls and other financial
reporting matters. The Compensation Committee reviews and recommends to the board of directors the
compensation and benefits of our officers, reviews general policy matters relating to compensation and benefits of
our employees and administers the issuance of stock options and discretionary cash bonuses to our officers,
employees, directors and consultants. We intend to appoint only independent directors to the Audit and
Compensation Committees.
</R>

Executive compensation
The following table sets forth information regarding compensation awarded to, earned by or paid to our chief
executive officer for all services rendered to us during 1998, 1999 and 2000. None of our other executive officers
earned in excess of $100,000 in 2000.
Summary Compensation Table
Annual Compensation
Name and Principal Position
Patrick W. Smith
Chief Executive Officer

Year

Salary

Bonus

Long Term Compensation
Securities Underlying Options
(#)

2000
1999
1998

$65,208
$49,161
$43,205

$2,500
—
—

—
10,000
—

Option grants in last fiscal year
We did not grant any options to our chief executive officer during the year ended December 31, 2000.
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Fiscal year end option values
The following table sets forth information regarding the number and value of unexercised options held by our
chief executive officer on December 31, 2000. He did not exercise options to purchase common stock during 2000.
Number of Securities
Underlying Options at Fiscal
Year End(#)
Name
Patrick W. Smith

Value of Unexercised In-theMoney Options at Fiscal
Year End($)(1)

Exercisable

Unexercisable

Exercisable

Unexercisable

6,389

3,611

$46,895

$26,505

(1) Based on the estimated fair value of our common stock as of December 31, 2000, determined by our board of
directors to be $8.00 per share.
Stock option plans
We have two stock option plans: the 1999 stock option plan and the 2001 stock option plan.
The 1999 stock option plan is an incentive and stock option plan which authorizes us to issue options to
purchase up to 833,333 shares of our common stock. Under this plan, we have issued options to purchase 143,322
shares at $0.24 to $7.20 per share, including 10,000 options to Patrick W. Smith. We will issue no further options
under the plan. The plan is administered by our board of directors. Subject to the provisions of this plan, the board
determines who will receive options, the number of options granted, the manner of exercise and the exercise price
of the options. The term of incentive stock options granted under the plan may not exceed ten years, or five years
for options granted to an optionee owning more than 10% of our voting stock. The exercise price of an incentive
stock option granted under this plan must be equal to or greater than the fair market value of the shares of our
common stock on the date the option is granted. The exercise price of a non-qualified option granted under this plan
must be equal to or greater than 85% of the fair market value of the shares of our common stock on the date the
option is granted. An incentive stock option granted to an optionee owning more than 10% of our voting stock must
have an exercise price equal to or greater than 110% of the fair market value of our common stock on the date the
option is granted.
<R>

The 2001 stock option plan is an incentive and stock option plan which authorizes us to issue options to
purchase up to 550,000 shares of our common stock. Under this plan, we have issued options to purchase 291,000
shares at an average price of $8.33 per share, including 60,000 options to Patrick W. Smith. The plan is
administered by our board of directors. Subject to the provisions of this plan, the board determines who will receive
options, the number of options granted, the manner of exercise and the exercise price of the options. The term of
incentive stock options granted under the plan may not exceed ten years, or five years for incentive stock options
granted to an optionee owning more than 10% of our voting stock. The exercise price of an incentive stock option
granted under this plan must be equal to or greater than the fair market value of the shares of our common stock on
the date the option is granted. The exercise price of a non-qualified option granted under this plan must be equal to
or greater than 85% of the fair market value of the shares of our common stock on the date the option is granted. An
incentive stock option granted to an optionee owning more than 10% of our voting stock must have an exercise
price equal to or greater than 110% of the fair market value of our common stock on the date the option is granted.
</R>

Employment agreements
<R>

In July 1998, we entered into an employment agreement with Patrick W. Smith pursuant to which he agreed to
serve as our chief executive officer. The agreement is for an initial three-year term ending June 30, 2001, and is
automatically renewed for a two-year term on such date and every two years thereafter unless we give Mr. Smith
one-year prior notice of termination, if the termination is without cause. The agreement provides for annual base
compensation in the amount of $65,000, which amount may be increased based on performance. In 2000,
Mr. Smith’s salary was increased to $90,000. We may terminate this agreement with or without cause. Should we
terminate the agreement without cause, upon a change of control or upon his death or disability, our chief executive
officer is entitled to compensation equal to 12, 24 or 18 months of salary, respectively.
</R>

29

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 58092
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 33

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 034.00.00.00 SN: 20 Ed#: 5
*P64567/034/5*
EDGAR 2

CERTAIN TRANSACTIONS
<R>

In 1998, Mr. Bruce R. Culver, a director of TASER, loaned us $622,525. In March 1998, $150,000 of such
amount was converted into 20,833 shares of our common stock at an estimated value of $7.20 per share. In
December 1998, we issued Mr. Culver a promissory note for $472,525, the remaining amount due. The note bears
interest at a rate of 10% per year and matures July 1, 2002. In 1999, Mr. Culver loaned an additional $150,000 to us
at an interest rate of 10%, due July 1, 2002. In 2000, Mr. Culver loaned an additional $200,000 to us at an interest
rate of 10%, due July 1, 2002. As of December 31, 2000, the aggregate amount due to Mr. Culver under these notes
was $822,525 in principal plus accrued interest of $140,794.
</R>
<R>

In January 1999, Mr. Culver loaned us $1,500,000. In return, we issued him a promissory note for $500,000 at
an effective interest rate of 27.1% per year, and 1,666,667 shares of our common stock at a price of $0.60 per share.
These shares were subject to a repurchase agreement between Mr. Culver and us that allowed us to repurchase the
shares if we met certain operating performance criteria. We met the criteria and repurchased the shares from
Mr. Culver in July 2000 in exchange for a promissory note in the amount of $1,000,000. We consolidated this note
and the January 1999 note for $500,000 into a new note for $1,500,000 which carries interest at bank prime, which
was 9.5% at December 31, 2000, plus 1% and matures July 1, 2002.
</R>
<R>

In 1998, Mr. Phillips W. Smith, our chairman, loaned us $455,691 in the form of a stockholder note at an
interest rate of 9%. This note is currently outstanding, and the maturity has been extended to July 1, 2002 at an
interest rate of 10%. Further, Mr. Smith has deferred expenses in the amount of $99,794, which has been formalized
in a note bearing 10% interest, which matures July 1, 2002. As of December 31, 2000, the aggregate amount due to
Mr. Smith under these notes was $555,485 in principal plus accrued interest of $119,045.
</R>
<R>

In 1999, Mr. Smith worked as a full time advisor to us and was compensated solely by an option on 16,667
shares of our common stock at a price of $0.66 per share.
</R>

30

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 42734
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 34

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 035.00.00.00 SN: 15 Ed#: 5
*P64567/035/5*
EDGAR 2

PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial ownership of our common stock as of
December 31, 2000, and as adjusted to reflect the sale of 1,000,000 units in this offering, by:
• each person or group of affiliated persons known to be the beneficial owner of more than 5% of our
outstanding common stock;
• each of our directors;
• our chief executive officer; and
• all of our directors and executive officers as a group.
<R>

As of such date, there were 1,510,754 shares of common stock outstanding before giving effect to the sale of
units in this offering. We believe that, except as otherwise listed below, each named beneficial owner has sole
voting and investment power with respect to the shares listed.
</R>
<R>

Number of
Shares
Beneficially
Owned

Name of Beneficial Owner
Phillips W. Smith(1)
Patrick W. Smith(2)
Bruce R. Culver(3)
Thomas P. Smith(4)
Malcolm W. Sherman(5)
Karl F. Walter(6)
Matthew R. McBrady(7)
All directors and executive officers as a group (7 persons)(8)

388,479
361,584
491,146
217,674
123,796
1,111
1,111
1,475,637

Percentage
Beneficially
Owned Before
This Offering
23.1%
21.5%
29.2%
12.9%
7.4%
*
*
92.1%

Percentage
Beneficially
Owned After
This Offering
14.5%
13.5%
18.3%
8.1%
4.6%
*
*
56.7%

</R>

The address of each person in this table is c/o 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260,
(480) 991-0797.
As of December 31, 2000, we had nine stockholders.
* less than 1%
(1) Includes 20,833 shares subject to options or warrants that are exercisable within 60 days.
(2) Includes 11,250 shares subject to options that are exercisable within 60 days.
(3) Includes 31,061 shares subject to warrants that are exercisable within 60 days.
(4) Includes 11,250 shares subject to options that are exercisable within 60 days.
(5) Includes 3,333 shares subject to options that are exercisable within 60 days.
(6) Includes 1,111 shares subject to options that are exercisable within 60 days.
(7) Includes 1,111 shares subject to options that are exercisable within 60 days.
<R>

(8) Includes 91,148 shares subject to options or warrants that are exercisable within 60 days.
</R>

31

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 55136
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 35

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 036.00.00.00 SN: 13 Ed#: 5
*P64567/036/5*
EDGAR 2

DESCRIPTION OF SECURITIES
Upon completion of the offering, our authorized capital stock will consist of (1) 50,000,000 shares of common
stock, $0.00001 par value, and (2) 25,000,000 shares of preferred stock, $0.00001 par value, of which there will be
2,510,754 shares of common stock and no shares of preferred stock outstanding. The following description of our
capital stock is a summary and is qualified in its entirety by the provisions of our certificate of incorporation and
our bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a
part.
Units
Each unit consists of one share of common stock and one public warrant to purchase an additional share of
common stock. The common stock and warrants will trade only as a unit for at least 30 days following this offering.
The representative of the underwriters will then determine when the units separate, after which the common stock
and the public warrants will trade separately.
Common stock
Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder
vote and may not cumulate their votes. Holders of common stock are entitled to share in all dividends that the board
of directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or
winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of
liabilities and after providing for each class of stock, if any, having preference over the common stock.
Holders of our common stock have no conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to our common stock. The rights of the holders of common stock are subject to
any rights that may be fixed for holders of preferred stock. All outstanding shares of common stock are, and the
shares underlying all options and public warrants will be, duly authorized, validly issued, fully paid and nonassessable upon our issuance of these shares.
Preferred stock
Our certificate of incorporation provides for the issuance of up to 25,000,000 shares of preferred stock. As of
the date of this prospectus, there are no outstanding shares of preferred stock. Subject to certain limitations
prescribed by law and the rights and preferences of the preferred stock, our board of directors is authorized, without
further stockholder approval, from time to time to issue up to an aggregate of 25,000,000 shares of our preferred
stock, in one or more additional series. Each new series of preferred stock may have different rights and preferences
that may be established by our board of directors.
The rights and preferences of future series of preferred stock may include:
• number of shares to be issued;
• dividend rights and dividend rates;
• right to convert the preferred stock into a different type of security;
• voting rights attributable to the preferred stock;
• right to receive preferential payments upon a liquidation of the company;
• right to set aside a certain amount of assets for payments relating to the preferred stock; and
• prices to be paid upon redemption of the preferred stock.
Public warrants
General
Each public warrant entitles the holder to purchase one share of our common stock at an exercise price per share
of 150% of the initial public offering price of the units. The exercise price is subject to adjustment upon the
occurrence of certain events as provided in the public warrant certificate and

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 55136
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 35

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 036.00.00.00-1 SN: 13 Ed#: 5
*P64567/036/5*
EDGAR 2

32

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 12020
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 36

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 037.00.00.00 SN: 10 Ed#: 4
*P64567/037/4*
EDGAR 2

summarized below. Our public warrants may be exercised at any time during the period commencing 30 days after
this offering and ending on the fifth anniversary date of the closing of this offering, which is the expiration date.
Those of our public warrants which have not previously been exercised will expire on the expiration date. A public
warrant holder will not be deemed to be a holder of the underlying common stock for any purpose until the public
warrant has been properly exercised.
Separate transferability
Our public warrants will trade only as a unit for a period of at least 30 days following this offering. The
representative of the underwriters will then determine when the units separate, after which the common stock and
the public warrants will trade separately.
Redemption
<R>

We have the right, commencing three months after the closing of this offering, to redeem the public warrants
issued in this offering at a redemption price of $0.25 per public warrant after providing 30 days prior written notice
to the public warrant holders, if the average closing bid price of the common stock equals or exceeds 200% of the
initial public offering price of the units for ten consecutive trading days ending prior to the date of the notice of
redemption. We will send the written notice of redemption by first class mail to public warrant holders at their last
known addresses appearing on the registration records maintained by the transfer agent for our public warrants. No
other form of notice or publication or otherwise will be required. If we call the public warrants for redemption, they
will be exercisable until the close of business on the business day next preceding the specified redemption date.
</R>

Exercise
A public warrant holder may exercise our public warrants only if an appropriate registration statement is then in
effect with the Securities and Exchange Commission and if the shares of common stock underlying our public
warrants are qualified for sale under the securities laws of the state in which the holder resides.
Our public warrants may be exercised by delivering to our transfer agent the applicable public warrant
certificate on or prior to the expiration date or the redemption date, as applicable, with the form on the reverse side
of the certificate executed as indicated, accompanied by payment of the full exercise price for the number of public
warrants being exercised. Fractional shares will not be issued upon exercise of our public warrants.
Adjustments of exercise price
The exercise price is subject to adjustment if we declare any stock dividend to stockholders or effect any split or
share combination with respect to our common stock. Therefore, if we effect any stock split or stock combination
with respect to our common stock, the exercise price in effect immediately prior to such stock split or combination
will be proportionately reduced or increased, as the case may be. Any adjustment of the exercise price will also
result in an adjustment of the number of shares purchasable upon exercise of a public warrant or, if we elect, an
adjustment of the number of public warrants outstanding.
Prior warrants
As of the date of this prospectus, we had issued and outstanding warrants to purchase 52,727 shares of our
common stock at a weighted average exercise price of $4.71, the forms of which have been filed as exhibits to the
registration statement of which this prospectus is a part.
33

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 32884
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 37

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 038.00.00.00 SN: 14 Ed#: 5
*P64567/038/5*
EDGAR 2

Registration rights
All holders of registration rights contained in agreements with us have waived such rights in connection with
this offering. In connection with this offering, we have granted Paulson Investment Company, Inc., representative
of the underwriters of this offering, warrants to purchase shares of our common stock. These representative’s
warrants, as well as the shares of common stock and warrants included in the units issuable upon exercise of the
representative’s warrants, are being registered on the registration statement of which this prospectus is a part. We
will cause the registration statement to remain effective until the earlier of the time that all of the representative’s
warrants have been exercised and the date which is five years after the effective date of this offering. The common
stock and warrants issued to the representative upon exercise of these warrants will be freely tradeable. We will bear
all expenses incurred in connection with the registration of the shares of common stock and warrants included in the
units issuable upon the exercise of the representative’s warrants.
Anti-takeover provisions of our charter documents
Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying
or preventing a change of control of TASER:
• Our board is divided into three classes, with each class serving a three-year staggered term, so that one-third of
the board is elected each year;
• The authorized number of our directors can be changed only by resolution of the board of directors;
• We can issue preferred stock without any vote or further action by stockholders;
• Any action required or permitted to be taken by our stockholders at an annual or a special meeting is valid only
if it is properly brought before the meeting, and written stockholder action is valid only if unanimous; and
• Our bylaws limit persons who may call a special meeting of our stockholders.
These provisions may deter hostile takeovers or delay changes in control of our management, which could depress
the market price of our securities.
Transfer agent and public warrant agent
The transfer agent for our common stock and public warrants is US Stock Transfer Corporation, Glendale,
California.
34

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 8057
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 38

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 039.00.00.00 SN: 13 Ed#: 6
*P64567/039/6*
EDGAR 2

SHARES ELIGIBLE FOR FUTURE SALE
This offering
<R>

Upon completion of this offering, we expect to have 2,510,754 shares of common stock outstanding, assuming
no exercise of outstanding options or warrants, or 2,660,754 shares if the representative’s over-allotment is
exercised in full. Of these shares, the 1,000,000 shares of common stock issued as part of the units sold in this
offering will be freely tradeable without restrictions or further registration under the Securities Act of 1933, except
that any shares purchased by our “affiliates,” as that term is defined under the Securities Act, may generally only be
sold in compliance with the limitations of Rule 144 under the Securities Act. The 1,000,000 shares of common
stock underlying the public warrants issued as part of the units sold in this offering will also be freely tradeable after
exercise of the warrants, except for shares held by our affiliates.
</R>

Outstanding restricted stock
<R>

The 1,510,754 outstanding shares of common stock held by our existing stockholders are restricted securities
within the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act unless
an exemption from registration is available, including the exemption from registration offered by Rule 144. Holders
of all of our outstanding restricted shares of common stock have agreed not to sell or otherwise dispose of any of
their shares of common stock for a period of one year after completion of this offering, without the prior written
consent of Paulson Investment Company, Inc., subject to certain limited exceptions. Prior to the expiration of this
lock-up period, no shares of our outstanding restricted common stock may be sold in the public market pursuant to
Rule 144. After the expiration of this lock-up period, or earlier with the prior written consent of Paulson Investment
Company, Inc., all 1,510,754 of these outstanding restricted shares may be sold in the public market pursuant to
Rule 144.
</R>

In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, a person
who has beneficially owned restricted shares for at least one year, including a person who may be deemed to be our
affiliate, may sell within any three-month period a number of shares of common stock that does not exceed a
specified maximum number of shares. This maximum is equal to the greater of 1% of the then outstanding shares of
our common stock or the average weekly trading volume in the common stock during the four calendar weeks
immediately preceding the sale. Sales under Rule 144 are also subject to restrictions relating to manner of sale,
notice and availability of current public information about us. In addition, under Rule 144(k) of the Securities Act, a
person who is not our affiliate, has not been an affiliate of ours within three months prior to the sale and has
beneficially owned shares for at least two years would be entitled to sell such shares immediately without regard to
volume limitations, manner of sale provisions, notice or other requirements of Rule 144.
Preferred stock
As of December 31, 2000, we had no shares of preferred stock outstanding.
Options
Beginning 90 days after the date of this prospectus, certain shares issued or issuable upon the exercise of options
granted by us prior to the date of this prospectus will also be eligible for sale in the public market pursuant to
Rule 701 under the Securities Act of 1933, except that
of these shares are subject to the lock-up agreements
discussed above. Pursuant to Rule 701, persons who purchase shares upon exercise of options granted under a
written compensatory plan or contract may sell such shares in reliance on Rule 144 without having to comply with
the holding period requirements of Rule 144, and in the case of non-affiliates, without having to comply with the
public information, volume limitation or notice provisions of Rule 144. As of February 12, 2001, we had options
outstanding to purchase 434,322 shares of common stock which have not been exercised and which become
exercisable at various times in
35

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 11402
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 39

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 040.00.00.00 SN: 10 Ed#: 5
*P64567/040/5*
EDGAR 2

the future. Any shares issued upon the exercise of these options will be eligible for sale pursuant to Rule 701.
We intend to file registration statements on Form S-8 under the Securities Act to register approximately 434,322
shares of our common stock issuable under our stock option plans. These registration statements are expected to be
filed within three to six months after the completion of this offering. Shares of our common stock issued upon the
exercise of stock options after the effective date of the Form S-8 registration statements will be eligible for resale in
the public market without restriction, subject to Rule 144 limitations and the lock-up agreements discussed above.
Warrants
As of February 12, 2001, we had warrants outstanding to purchase 52,727 shares of common stock which have
not been exercised and which are currently exercisable. Any shares issued upon the exercise of these warrants will
be eligible for sale pursuant to Rule 144, except that these shares are also subject to the lock-up agreements
discussed above.
Representative’s warrants
<R>

In connection with this offering, we have agreed to issue to the representative of the underwriters warrants to
purchase 100,000 units. The representative’s warrants will be exercisable into units at any time during the four-year
period commencing one year after the effective date of this offering. We will cause the registration statement to
remain effective until the earlier of the time that all of the representative’s warrants have been exercised and the
date which is five years after the effective date of this offering. The common stock and warrants issued to the
representative upon exercise of these warrants will be freely tradeable.
</R>

36

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 34146
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 40

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 041.00.00.00 SN: 15 Ed#: 4
*P64567/041/4*
EDGAR 2

UNDERWRITING
Paulson Investment Company, Inc. is acting as the representative of the underwriters. We and the underwriters
named below have entered into an underwriting agreement with respect to the units being offered. In connection
with this offering and subject to certain conditions, each of the underwriters named below has severally agreed to
purchase, and we have agreed to sell, the number of units set forth opposite the name of each underwriter.
Underwriters

Number of Units

Paulson Investment Company, Inc.
Total

The underwriting agreement provides that the underwriters are obligated to purchase all of the units offered by
this prospectus, other than those covered by the over-allotment option, if any units are purchased. The underwriting
agreement also provides that the obligations of the several underwriters to pay for and accept delivery of the units
are subject to the approval of certain legal matters by counsel and certain other conditions. These conditions include
the requirements that no stop order suspending the effectiveness of the registration statement be in effect and that no
proceedings for such purpose have been instituted or threatened by the Securities and Exchange Commission.
The representative has advised us that the underwriters propose to offer our units to the public initially at the
offering price set forth on the cover page of this prospectus and to selected dealers at such price less a concession of
not more than $ per unit. The underwriters and selected dealers may reallow a concession to other dealers,
including the underwriters, of not more than $ per unit. After completion of the initial public offering of the
units, the offering price, the concessions to selected dealers and the reallowance to their dealers may be changed by
the underwriters.
The underwriters have informed us that they do not expect to confirm sales of our units offered by this
prospectus to any accounts over which they exercise discretionary authority.
Over-allotment option
Pursuant to the underwriting agreement, we have granted Paulson Investment Company, Inc. an option,
exercisable for 45 days from the date of this prospectus, to purchase up to an additional
units on the same
terms as the units being purchased by the underwriters from us. Paulson Investment Company, Inc. may exercise the
option solely to cover over-allotments, if any, in the sale of the units that the underwriters have agreed to purchase.
If the over-allotment option is exercised in full, the total public offering price, underwriting discounts and
commissions, and proceeds to us before offering expenses will be $
,$
and $
, respectively.
Stabilization
Until the distribution of the units offered by this prospectus is completed, rules of the Securities and Exchange
Commission may limit the ability of the underwriters to bid for and to purchase units. As an exception to these
rules, the underwriters may engage in transactions that stabilize the price of the units. Paulson Investment Company,
Inc., on behalf of the underwriters, may engage in over-allotment sales, stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934.
• Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short position.
• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum.
37

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4244
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 41

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 042.00.00.00 SN: 10 Ed#: 6
*P64567/042/6*
EDGAR 2

• Syndicate covering transactions involve purchases of the common stock and public warrants in the open market
after the distribution has been completed in order to cover syndicate short positions. The underwriters may also
elect to reduce any short position by exercising all or part of the over-allotment option to purchase additional
units as described above.
• Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the units
originally sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate
short positions.
<R>

In general, the purchase of a security to stabilize or to reduce a short position could cause the price of the
security to be higher than it might be otherwise. These transactions may be effected on The Nasdaq SmallCap
Market or otherwise. Neither we nor the underwriters can predict the direction or magnitude of any effect that the
transactions described above may have on the price of the units. In addition, neither we nor the underwriters can
represent that the underwriters will engage in these types of transactions or that these types of transactions, once
commenced, will not be discontinued without notice.
</R>

Indemnification
The underwriting agreement provides for indemnification between us and the underwriters against specified
liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriters to payments
that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the
Securities and Exchange Commission, indemnification for liabilities under the Securities Act of 1933 is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Underwriters’ compensation
We have agreed to sell the units to the underwriters at the initial offering price of $
, less the
%
underwriting discount. The underwriting agreement also provides that upon the closing of the sale of the units
offered, Paulson Investment Company, Inc. will be paid a nonaccountable expense allowance equal to 2.5 percent of
the gross proceeds from the sale of the units offered by this prospectus, including the over-allotment option.
We have also agreed to issue warrants to the representative to purchase from us up to
units at an
exercise price per unit equal to 120% of the offering price per unit. These warrants are exercisable during the fouryear period beginning one year from the date of effectiveness of the registration statement. These warrants, and the
securities underlying the warrants, are not transferable for one year following the effective date of the registration,
except to an individual who is an officer or partner of an underwriter, by will or by the laws of descent and
distribution, and are not redeemable. These warrants will have registration rights. We will cause the registration
statement to remain effective until the earlier of the time that all of the representative’s warrants have been
exercised and the date which is five years after the effective date of this offering. The common stock and warrants
issued to the representative upon exercise of these warrants will be freely tradeable.
The holders of the representative’s warrants will have, in that capacity, no voting, dividend or other stockholder
rights. Any profit realized by the representative on the sale of the securities issuable upon exercise of the
representative’s warrants may be deemed to be additional underwriting compensation. The securities underlying the
representative’s warrants are being registered on the registration statement. During the term of the representative’s
warrants, the holders thereof are given the opportunity to profit from a rise in the market price of our common
stock. We may find it more difficult to raise additional equity capital while the representative’s warrants are
outstanding. At any time at which the representative’s warrants are likely to be exercised, we may be able to obtain
additional equity capital on more favorable terms.
38

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 12541
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 42

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 043.00.00.00 SN: 13 Ed#: 5
*P64567/043/5*
EDGAR 2

Lock-up agreements
Our officers, directors and other stockholders have agreed that for a period of one year from the date this
registration statement becomes effective that they will not sell, contract to sell, grant any option for the sale or
otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable
for our equity securities, other than through intra-family transfers or transfers to trusts for estate planning purposes,
without the consent of Paulson Investment Company, Inc., as the representative of the underwriters, which consent
will not be unreasonably withheld.
Determination of offering price
Before this offering, there has been no public market for the units and the common stock and public warrants
contained in the units. Accordingly, the initial public offering price of the units offered by this prospectus and the
exercise price of the public warrants were determined by negotiation between us and the underwriters. Among the
factors considered in determining the initial public offering price of the units and the exercise price of the public
warrants were:
• our history and our prospects;
• the industry in which we operate;
• the status and development prospects for our proposed products and services;
• our past and present operating results;
• the previous experience of our executive officers; and
• the general condition of the securities markets at the time of this offering.
The offering price stated on the cover page of this prospectus should not be considered an indication of the
actual value of the units. That price is subject to change as a result of market conditions and other factors, and we
cannot assure you that the units, or the common stock and public warrants contained in the units, can be resold at or
above the initial public offering price.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon on our behalf by Tonkon Torp LLP,
Portland, Oregon. Certain legal matters will be passed upon for the underwriters by Weiss Jensen Ellis & Howard,
P.C., Portland, Oregon.
EXPERTS
The financial statements as of and for the years ended December 31, 1999 and 2000 included in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said firm as experts in auditing and
accounting in giving said reports.
39

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 30061
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 43

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 044.00.00.00 SN: 10 Ed#: 5
*P64567/044/5*
EDGAR 2

WHERE YOU CAN FIND MORE INFORMATION
<R>

We have filed a registration statement on Form SB-2 under the Securities Act with the Securities and Exchange
Commission with respect to the units offered hereby. This prospectus filed as part of the registration statement does
not contain all of the information contained in the registration statement and exhibits thereto and reference is hereby
made to such omitted information. Statements made in this registration statement are summaries of the terms of
such referenced contracts, agreements or documents and are not necessarily complete. Reference is made to each
such exhibit for a more complete description of the matters involved and such statements shall be deemed qualified
in their entirety by such reference. The registration statement and the exhibits and schedules thereto filed with the
Securities and Exchange Commission may be inspected by you at the Securities and Exchange Commission’s
principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission’s regional offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 11400, Chicago, Illinois 60661. The
Commission also maintains a website at http://www.sec.gov that contains reports, proxy statements and information
statements and other information regarding registrants that file electronically with the Commission. For further
information pertaining to us and the units offered by this prospectus, reference is made to the registration statement.
</R>

We intend to furnish our stockholders with annual reports containing financial statements audited by our
independent accountants.
40

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 18287
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 44

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 045.00.00.00 SN: 8
Ed#: 4
*P64567/045/4*
EDGAR 2

TASER INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS
Page
TASER International, Inc.:
Report of Independent Public Accountants
Balance Sheets as of December 31, 1999 and 2000
Statements of Operations for the Years Ended December 31, 1999 and
2000
Statements of Stockholders’ Deficit for the Years Ended December 31,
1999 and 2000
Statements of Cash Flows for the Years Ended December 31, 1999 and
2000
Notes to Financial Statements

F-1

F-2
F-3
F-4
F-5
F-6
F-7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 47016
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 45

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 046.00.00.00 SN: 8
Ed#: 4
*P64567/046/4*
EDGAR 2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
TASER International, Inc.:
We have audited the accompanying balance sheets of TASER International, Inc. (an Arizona corporation) as of
December 31, 1999 and 2000, and the related statements of operations, stockholders’ deficit and cash flows for the
years then ended. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of TASER International, Inc. as of December 31, 1999 and 2000, and the results of its operations and its
cash flows for each of the years in the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
ARTHUR ANDERSEN LLP
Phoenix, Arizona
February 12, 2001
F-2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 56259
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 46

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 047.00.00.00 SN: 15 Ed#: 3
*P64567/047/3*
EDGAR 2

TASER INTERNATIONAL, INC.
BALANCE SHEETS
December 31, 1999 and 2000
1999
Assets
Current Assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $48,000 in 1999 and
$55,000 in 2000
Inventory
Prepaids and other

$

Total current assets
Property and Equipment, net
Total assets

$

54,905

312,681
221,169
24,535

349,036
256,110

764,793
274,273

605,146

$ 1,039,066

$

100,000
124,574
22,171
532,589
539,329
189,980
268,134
1,776,777
2,778,219
43,925

2,799,578

4,598,921

2,889,590
1,180,182
—
(6,264,204)

1,889,590
1,310,308
(79,920)
(6,679,833)

(2,194,432)

(3,559,855)

Commitments and Contingencies
Stockholders’ Deficit:
Common stock, 0.00001 par value per share; 50 million shares
authorized; 3,177,421 and 1,510,754 shares issued and
outstanding at December 31, 1999 and 2000, stated at
Additional paid-in capital
Deferred compensation
Accumulated deficit
Total stockholders’ deficit
$

605,146

$ 1,039,066

The accompanying notes are an integral part of these balance sheets.
F-3

206,408

2,704,818
74,781
19,979

Total liabilities

Total liabilities and stockholders’ deficit

$

121,921
158,167
14,043

Liabilities and Stockholders’ Deficit
Current Liabilities:
Current portion of note payable
$ 112,000
Current portion of notes payable to related parties
1,664,774
Current portion of capital lease obligations
19,176
Accounts payable and accrued liabilities
517,629
Customer deposits
62,317
Inventory financing payable
189,980
Accrued interest
138,942
Total current liabilities
Notes Payable to Related Parties, net of current portion
Capital Lease Obligations, net of current portion

2000

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 61071
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 47

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 048.00.00.00 SN: 11 Ed#: 4
*P64567/048/4*
EDGAR 2

TASER INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 2000

Net Sales
Cost of Products Sold

1999

2000

$ 2,366,440
1,492,585

$3,499,758
1,437,313

873,855
633,828
1,383,185
6,867
179,453

2,062,445
430,871
1,546,519
7,137
124,803

Gross profit
Operating expenses
Sales, general and administrative expenses
Research and development expenses
Depreciation
Loss from operations
Interest Expense
Net Loss
Basic and diluted net loss per common share
Basic and diluted common shares

(1,329,478)
280,821

(46,885)
368,744

$(1,610,299)

$ (415,629)

$

$

(0.52)
3,076,410

(0.17)
2,482,976

The accompanying notes are an integral part of these financial statements.
F-4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 40525
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 48

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 049.00.00.00 SN: 5
Ed#: 3
*P64567/049/3*
EDGAR 2

[B/E]

TASER INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the Years Ended December 31, 1999 and 2000
Common Stock
Shares
Balance, December 31,
1998
Shares sold for cash
Issuance of common stock
Stock options granted for
payment of consulting
fees and loan guarantees
Net loss
Balance, December 31,
1999
Exchange of shares from
related party for note
payable
Stock options granted for
payment of Board fee
Stock options granted for
payment of consulting
fee
Stock options granted for
loan guarantees
Net loss
Balance, December 31,
2000

Amount

Additional
Paid-in
Capital

1,359,239 $ 1,389,590 $1,177,856
1,666,667 1,000,000
—
151,515
500,000
—

Accumulated
Deficit

Total
Stockholders’
Deficit

—
—
—

$(4,653,905)
—
—

$(2,086,459)
1,000,000
500,000

Deferred
Compensation
$

—
—

—
—

2,326
—

—
—

—
(1,610,299)

2,326
(1,610,299)

3,177,421

2,889,590

1,180,182

—

(6,264,204)

(2,194,432)

—

—

(1,666,667) (1,000,000)
—

—

79,920

(79,920)

—

—

13,917

—

—
—

—
—

36,289
—

—
—

1,510,754 $ 1,889,590 $1,310,308

$(79,920)

—
—

—

—

13,917

—
(415,629)

36,289
(415,629)

$(6,679,833)

$(3,559,855)

The accompanying notes are an integral part of these financial statements.
F-5

(1,000,000)

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 46085
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 49

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 050.00.00.00 SN: 6
Ed#: 4
*P64567/050/4*
EDGAR 2

TASER INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999 and 2000

Cash Flows from Operating Activities:
Net loss
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities —
Depreciation
Change in assets and liabilities:
Accounts receivable
Inventory
Prepaids and other
Accounts payable and accrued liabilities
Customer deposits
Accrued interest

1999

2000

$(1,610,299)

$ (415,629)

179,453

124,803

90,474
607,165
16,598
(152,510)
62,317
101,650

(190,760)
(63,002)
(10,492)
14,960
477,012
129,192

(705,152)

66,084

(133,760)

(99,759)

(19,195)
—
728,344
(1,329,635)
1,500,000
—
2,326

(16,266)
(12,000)
163,238
—
—
(79,920)
130,126

Net cash (used in) provided by operating activities
Cash Flows from Investing Activities:
Purchases of property and equipment, net
Cash Flows from Financing Activities:
Net payments under capital leases
Payments on note payable
Net proceeds from notes payable to related parties
Net borrowings (payments) under line of credit
Issuance of common stock
Deferred compensation
Compensatory stock options
Net cash provided by financing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, beginning of year

881,840

185,178

42,928
11,977

151,503
54,905

Cash and Cash Equivalents, end of year

$

54,905

$ 206,408

Supplemental Disclosure:
Cash paid for interest

$

179,171

$ 239,552

Noncash Investing and Financing Activities:
Acquisition of property and equipment under capital leases

$

33,635

Exchange of shares from related party for note payable

$

—

$

$1,000,000

The accompanying notes are an integral part of these financial statements.
F-6

43,207

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4041
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 50

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 051.00.00.00 SN: 6
Ed#: 3
*P64567/051/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 2000
1. The Company
a. History and Nature of Organization
TASER International, Inc. (TASER or the Company) was incorporated and began operations in Arizona in 1993
for the purpose of developing and manufacturing less-lethal, self-defense devices. From its inception until the
Company commenced production in December 1994, the Company was in the development stage. During the
period leading up to the start of production, the Company’s activities included raising capital, hiring key personnel
and obtaining the necessary licenses. All production costs during the period from inception through December 31,
1995, consisting of research and development activities and limited product manufacturing, were expensed as
incurred.
Through 1996, the Company was developing its signature product, the AIR TASER, and establishing the
marketing channels to promote retail sales. Significant nonrecurring expenditures were incurred, including research
and development costs, the development of marketing and sales materials, the purchase of the licensing rights to the
TASER technology and trademark, and the relocation of the manufacturing operations to Mexico, which resulted in
significant operating losses.
In 1997, the Company introduced a new product, the AUTO TASER. As a result of significant expenditures for
research and development, manufacturing difficulties, scrap, engineering changes and other costs associated with
the start up of this product line, the Company continued to experience operating losses in 1997, 1998 and 1999.
This product line was discontinued August 1, 1999.
In 1998, the Company formally changed its name from Air Taser, Inc. to TASER International, Inc. and began
development of its ADVANCED TASER product, which was introduced for sale in December 1999.
b. Financing
The Company has been financed primarily from bank financing, usually guaranteed by major stockholders, and
advances and investment by a number of major stockholders. Since inception, the Company has sustained
significant operating losses and has, at December 31, 2000, a deficit in working capital of approximately
$1,009,000. In addition, new capital will be required to fund further product development, market penetration,
working capital and future operations. The Company believes that additional financing will be available under terms
and conditions that are acceptable to the Company. However, there can be no assurance that additional financing
will be available. In the event the Company is unable to obtain the needed financing required, the two major
stockholders have guaranteed to fund working capital and operational cash needs through at least December 31,
2001.
c. Initial Public Offering
The Company is contemplating an initial public offering (IPO) of 1,000,000 shares of common stock at an
estimated price of $10 per unit, consisting of one share of common stock and one warrant to purchase one share of
common stock (Note 10).
d. Reincorporation and Restatement of Shares
In February 2001, the Company reincorporated in the State of Delaware. In connection with the reincorporation,
the Company completed a 1-for-6 share reverse stock split. The accompanying financial statements and footnotes
have been restated for the lower number of shares of common stock outstanding for all periods presented.
F-7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 14780
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 51

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 052.00.00.00 SN: 9
Ed#: 4
*P64567/052/4*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
2. Summary of Significant Accounting Policies
a. Cash and Cash Equivalents
Cash and cash equivalents include funds on hand and short-term investments with original maturities of three
months or less.
b. Inventory
Inventories are stated at the lower of cost or market; cost is determined using the most recent acquisition cost
method which approximates the first-in, first-out (FIFO) method. Inventories consisted of the following at
December 31:
Raw materials and work-in-process
Finished goods

1999

2000

$131,007
27,160

$153,506
67,663

$158,167

$221,169

c. Property and Equipment
Property and equipment are stated at cost. Additions and improvements are capitalized while ordinary
maintenance and repair expenditures are charged to expense as incurred. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets.
d. Customer Deposits
The Company requires certain deposits in advance of shipment for foreign customer sales orders. At
December 31, 2000, customer deposits consisted primarily of one foreign customer sales order.
e. Cost of Products Sold
During 2000, the Company outsourced the assembly of its finished goods, but continued to manufacture certain
proprietary components internally. Prior to August 1999, all finished goods were assembled internally. At
December 31, 2000, cost of products sold represents net amounts paid to a vendor to acquire finished goods sold to
customers and the manufacturing costs, including material, labor and overhead related to the proprietary
components the Company manufactures internally. Prior to August 1999, costs of products sold included the
manufacturing costs, including materials, labor and overhead related to finished goods and components. Shipping
costs incurred related to product delivery are also included in cost of products sold.
At December 31, 1999, included within cost of products sold is a one-time charge related to the phase-out of the
AUTO TASER product line of approximately $355,000.
f. Revenue Recognition
The Company recognizes revenues when products are shipped and all sales are final. The Company charges
certain of its customers shipping fees, which are recorded as a component of net sales.
On December 3, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in Financial Statements, which provides additional guidance in applying
generally accepted accounting principles for revenue recognition in financial statements. The issuance of SAB
No. 101 did not have a material impact on the revenue recognition method of the Company.
F-8

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 47840
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 52

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 053.00.00.00 SN: 6
Ed#: 3
*P64567/053/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
g. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
h. Advertising Costs
The Company expenses the production cost of advertising as incurred or the first time the advertising takes
place. The Company incurred advertising costs of $24,652 and $35,035 in 1999 and 2000, respectively. Advertising
costs are included in sales, general and administrative expenses in the statements of operations.
i. Warranty Costs
The Company warrants its products from manufacturing defects for their lives and will replace any defective
units with a new one. Included in accrued liabilities at December 31, 2000 is $50,000 to cover estimated future
warranty costs.
j. Research and Development Expenses
The Company expenses research and development costs as incurred. The Company incurred product
development expense of $6,867 and $7,137 in 1999 and 2000, respectively. Product development costs are included
in operating expenses in the statements of operations.
k. Income Taxes
The Company, since inception, has qualified as an S corporation under the Internal Revenue Code, and
accordingly, is not directly subject to income taxes. There is no provision or benefit for income taxes reflected in
the accompanying financial statements, since items of taxable income and losses are reported in the individual
returns of stockholders.
Subsequent to December 31, 2000, the Company reincorporated in the State of Delaware and elected to be taxed
as a C corporation. Net operating losses (NOLs) prior to the change to a C corporation accrued to the individual
stockholders. Accordingly, such losses are not available to reduce future taxes payable by the Company as a C
corporation.
Upon termination of the S status, the Company is required to implement Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (SFAS No. 109), which requires the calculation of existing
temporary differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Management does not expect such implementation to have a significant impact on the
Company.
Had the Company been a C corporation in 1999 and 2000, no federal or state income tax benefit would have
been recorded for the NOLs discussed above because their realizability could not be determined as more likely than
not. Accordingly, no pro forma benefit for federal or state income taxes is recorded as if the Company were taxed as
a C corporation for any of the periods presented. Additionally, the accumulated deficit at the time of the S election
termination will be reclassified to additional paid-in capital.
F-9

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 9577
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 53

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 054.00.00.00 SN: 7
Ed#: 3
*P64567/054/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
l. Concentration of Credit Risk and Major Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts
receivable, accounts payable and notes payable to related parties. Sales are typically made on credit and the
Company generally does not require collateral. The Company performs ongoing credit evaluations of its customers’
financial condition and maintains an allowance for estimated potential losses. Accounts receivable are presented net
of an allowance for doubtful accounts. Provision for bad debts was $32,250 and $72,905 at December 31, 1999 and
2000, respectively.
For the years ended December 31, 1999 and 2000, sales by product were as follows:
<R>

1999

2000

(000s omitted)
Sales by product line:
AIR TASER
AUTO TASER
ADVANCED TASER
Other

Geographic:
United States
Other countries

$1,327
608
80
351

$1,241
24
2,152
83

$2,366

$3,500

52%
48

82%
18

100%

100%

</R>

m. Financial Instruments
The Company’s financial instruments include cash, accounts receivable and accounts payable. Due to the shortterm nature of these instruments, the fair value of these instruments approximates their recorded value. The
Company does not have material financial instruments with off-balance sheet risk.
The Company has notes payable to stockholders at varying terms which, based on the short-term nature of the
notes and financing obtained from outside sources, the Company believes are stated at their estimated fair market
value.
n. Segment Information
Effective January 1, 1998, the Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise
and Related Information. This statement requires disclosure of certain information about the Company’s operating
segments, products, geographic areas in which it operates and major customers. This statement also allows a
company to aggregate similar segments for reporting purposes. Management has determined that its operations can
be aggregated into one reportable segment. Therefore, no separate segment disclosures have been included in the
accompanying notes to the financial statements.
o. Stock-Based Compensation
The Company measures compensation costs related to stock option plans using the intrinsic value method and
provides pro forma disclosures of net income (loss) and earnings (loss) per common share as if the fair value based
method had been applied in measuring compensation costs. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair value of the Company’s common stock at the date of measurement over
the amount an employee must pay to acquire the stock and is amortized over the vesting period, generally three
years.
F-10

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 31151
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 54

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 055.00.00.00 SN: 6
Ed#: 4
*P64567/055/4*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
p. Comprehensive Income
Effective January 1, 1998, the Company adopted SFAS No. 130, Reporting Comprehensive Income. This
statement requires that all components of comprehensive income be reported in the financial statements in the
period in which they are recognized. During the years ended December 31, 1999 and 2000, the Company did not
have any components of comprehensive income.
q. Income (Loss) Per Common Share
Income (loss) per common share is computed in accordance with SFAS No. 128, Earnings Per Share. Basic
income (loss) per common share is based upon the weighted average shares outstanding. Diluted income (loss) per
common share is based on the weighted average shares outstanding and dilutive common stock equivalents. As a
result of anti-dilutive effects, approximately 145,875 and 186,049 options and warrants were not included in the
computation of diluted earnings per share for 1999 and 2000, respectively.
r. Recent Accounting Pronouncements
Effective January 1, 2000, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. This statement requires that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. During 1999 and 2000, the Company did not have any
derivative instruments or hedging activities.
3. Property and Equipment
Property and equipment consist of the following at December 31, 1999 and 2000:
Estimated
Useful Lives
Leasehold improvements
Production equipment
Telephone and office equipment
Computer equipment
Furniture and fixtures

5 years
5 years
5 years
3-5 years
5-7 years

1999
$

—
335,050
31,535
332,460
22,767
721,812
(465,702)

Less: accumulated depreciation

$ 256,110

F-11

2000
$

5,000
380,326
31,535
383,492
57,542
857,895
(583,622)

$ 274,273

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 26550
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 55

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 056.00.00.00 SN: 9
Ed#: 4
*P64567/056/4*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
4. Commitments and Contingencies
a. Operating Leases
The Company has entered into operating leases for office space and equipment. Rent expense under these leases
for the years ended December 31, 1999 and 2000, was $147,655 and $93,241, respectively. Future minimum lease
payments under operating leases as of December 31, 2000, are as follows:
2001
2002
2003
2004
2005
Thereafter

$144,481
142,643
146,362
150,193
154,139
143,156

Total

$880,974

b. Litigation
The Company is involved in certain legal actions and claims arising in the normal course of business.
Management is of the opinion that it maintains adequate insurance and that such matters will be resolved without a
material effect on the Company’s financial position.
In February 2000, the Company was named a defendant in a suit with a former distributor in the state of New
York. The distributor alleges unfair termination of the distribution relationship and is seeking substantial damages.
The Company believes the case is without significant merit, and intends to vigorously defend itself. In the opinion
of management, this dispute will not have a material adverse effect on the Company’s financial position.
c. Employment Agreements
The Company has employment agreements with its President, Chief Executive Officer (CEO) and Chief
Financial Officer (CFO). The Company may terminate the agreements with or without cause. Should the Company
terminate the agreements without cause, upon a change of control of the Company or death of the employee, the
President, CEO and CFO are entitled to additional compensation. Under these circumstances, these officers may
receive the remaining amounts under the contract upon termination which could total $510,000.
5. Income Taxes
Concurrently with the change in tax status as discussed in Note 2, the Company will adopt the provisions of
SFAS No. 109. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.
Management believes that the following estimated deferred tax assets and liabilities would exist at
December 31, 2000, if the date of tax status change was effective on December 31, 2000. The Company
F-12

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 4699
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 56

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 057.00.00.00 SN: 6
Ed#: 3
*P64567/057/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
would provide a full valuation reserve for the deferred tax asset because the Company has not sustained taxable net
income in any periods at sufficient levels to assure realization:
Deferred tax assets:
Nondeductible reserves for bad debts, sales returns and other
Depreciation
Valuation reserve

$ 42,171
26,646
(68,817)
$

—

6. Line of Credit
During 1999, the Company had a line of credit with a bank with a total commitment of up to $1,500,000. The
line was used to fund the Company’s working capital needs, and was personally guaranteed by two stockholders,
had an interest rate of 10% and was secured by virtually all of the assets of the Company. At December 31, 1998,
borrowings under the line were $1,329,600. The line matured and was paid in full on February 15, 1999.
7. Inventory Financing Agreement
The Company has entered into an inventory financing agreement with its warehouser and minority stockholder.
Under the agreement, the Company has the right to sell its product to the warehouser at a stated price up to
quantities totaling the lesser of $500,000 or the number of units sold in the last two months. The Company
repurchased the product once sold to a third party at the stated price plus 2% per month (24% annually). In June
1998, the agreement expired and the Company issued a $189,980 note for the amount due. The note bears interest at
10% and is paid monthly and matured March 31, 2000. As of December 31, 2000, no amounts of principal have
been paid on this note and the balance is recorded as a current payable.
8. Notes Payable
At December 31, 1999 and 2000 debt obligations were as follows:
Notes payable to stockholders, interest at varying rates of 9% to 27%,
principal and interest due July 1, 2002
Note payable to stockholder, interest at 9.18% payable monthly,
principal matures July 15, 2001
Note payable to private investor, interest at 11%, payable monthly,
principal matured June 30, 2000
Capital leases, interest at varying rates of 7% to 23%, due in monthly
installments through December 2005, secured by equipment

1999

2000

$ 1,678,010

$2,878,010

61,545

24,783

112,000

100,000

39,155

66,096

1,890,710
(1,795,950)

Less: Current portion
Total

$

F-13

94,760

3,068,889
(246,745)
$2,822,144

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 40310
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 57

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 058.00.00.00 SN: 10 Ed#: 5
*P64567/058/5*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
At December 31, 2000, aggregate annual maturities of long-term debt and capital leases were as follows:
2001
2002
2003
2004
2005

$ 246,745
2,809,359
5,308
3,589
3,888
$3,068,889

During 1998, a significant stockholder loaned the Company approximately $725,691. In March 1998, $150,000
was converted into 20,833 shares of common stock at an estimated fair value of $7.20 per share. In December 1998,
the Company issued a promissory note for $455,691, the remaining amounts due. The note carried interest at 9%
(increased to 10% in January 2001) and its maturity was extended to July 1, 2002.
In addition, during 1998, another stockholder loaned the Company approximately $622,525. In March 1998,
$150,000 was converted into 20,833 shares of common stock at an estimated market value of $7.20 per share. In
December 1998, the Company issued a promissory note for $472,525, the remaining amounts due. The note carried
interest at 9% (increased to 10% in January 2001) and its maturity was extended to July 1, 2002.
In January 1999, a stockholder loaned the Company $1,500,000. In return, the Company issued a promissory
note for $500,000 at an effective interest rate of 27.12% to mature October 31, 2000 and issued 1,666,667 shares of
common stock to the stockholder at a fair market value of $0.60 per share. The stock issued was subject to a
repurchase agreement which allowed the Company to repurchase the shares issued at cost if certain criteria were
met. In July 2000, the Company repurchased the 1,666,667 shares under the agreement in exchange for a
promissory note for $1,000,000. This $1,000,000 note and the $500,000 note issued in January 1999 were
consolidated into a new note for $1,500,000 which carries interest at bank prime (9.5% at December 31, 2000) plus
1% and matures July 1, 2002.
In March 1999, the Company issued a promissory note to a stockholder for $100,000 at an interest rate of 10%
which matures on July 1, 2002.
In March 1999, the Company issued a promissory note to a stockholder for $99,794 at an interest rate of 10%
which matures July 1, 2002.
In July 1999, the Company issued a promissory note to a stockholder for $50,000 to fund working capital needs
at an interest rate of 10% which matures July 1, 2002.
In May 2000, the Company issued a promissory note to a stockholder for $200,000 to fund working capital
needs at an interest rate of 10% which matures on July 1, 2002.
In January 2001, the Company issued a promissory note to a private investor to fund working capital for
$500,000 at an interest rate of 18% which matures the earlier of the close of the IPO or July 1, 2002.
9. Stockholders’ Equity
a. Common Stock
Concurrent with the re-incorporation in Delaware effective February 2001, the Company adopted a certificate of
incorporation and authorized the issuance of two classes of stock to be designated “common stock” and “preferred
stock”, provided that both common and preferred stock shall have a par value of
F-14

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 3383
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 58

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 059.00.00.00 SN: 5
Ed#: 3
*P64567/059/3*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
$0.00001 per share and authorized the Company to issue 50 million shares of common stock and 25 million shares
of preferred stock.
Additionally, effective February 2001, the Company declared a 1-for-6 reverse stock split of common stock. All
references to the number of shares, per share amounts, conversion amounts and stock option data of the Company’s
common stock have been restated to reflect this reverse stock split for all periods presented.
b. Preferred Stock
The Company is authorized to issue up to 25 million shares of preferred stock, $0.00001 par value. The power
to issue any shares of preferred stock of any class or any series of any class and designations, voting powers,
preferences, and relative participating, optional or other rights, if any, or the qualifications, limitations, or
restrictions thereof, shall be determined by the Board of Directors.
c. Warrants
At December 31, 2000, the Company has warrants outstanding to purchase 42,747 shares of common stock at
prices ranging from $0.24 to $21.00 per share with an average exercise price of $3.49 per share and a weighted
average useful life of 3.58 years. A summary of warrants outstanding and exercisable at December 31, 2000 is
presented in the table below:
Outstanding
Weighted
Average
Exercise
Price

Warrants

Expiration
Date

$21.00
0.24
3.30

3,333
16,667
22,727

7/31/05
1/1/03
7/31/05

$ 3.49

42,727

In 2000, the Company issued 22,727 warrants to a stockholder as a loan guarantee. The warrants are exercisable
at $3.30 per share and expire July 31, 2005. These warrants have been recorded at fair value as additional paid-in
capital and the related expense recorded in the accompanying financial statements.
In January 2001, the Company issued 5,000 warrants to a private investor as a loan guarantee and 5,000
warrants to its attorney related to the IPO. These warrants are exercisable at $10 per share and expire January 1,
2006.
d. Deferred Compensation
During 2000, two non-employee Board of Director members received their director fees for services relating to
2001 to 2004 through the issuance of 13,333 options at an exercisable price of $3.30. These options have been
recorded at fair value as deferred compensation in the accompanying balance sheets and will be amortized into
expense over the next four years.
e. Stock Option Plans
The Company has historically issued stock options for various equity owners and key employees as a means of
attracting and retaining quality personnel. The option holders have the right to purchase a stated amount of shares at
the estimated market value on the grant date. The options generally vest over a three-year period.
F-15

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 32705
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 59

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 060.00.00.00 SN: 11 Ed#: 5
*P64567/060/5*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
The directors of the Company adopted the Company’s 1998-1999 Stock Option Plan. The 1998-1999 Plan was
administered by the Board of Directors which determined the employees, directors or consultants which will be
granted options and the terms of the options, including the vesting provision which typically is over a three-year
period.
The 1998-1999 Plan and options previously granted were voluntarily canceled by the recipients.
The Company has a 1999 Stock Option Plan (the “1999 Plan”) that provides for officers, key employees and
consultants to receive nontransferable stock options to purchase up to 833,333 shares of the Company’s common
stock. The term of the options may not exceed ten years although most options granted had an initial expiration
period of between five and seven years. In 1998, the Company had a similar plan which was cancelled in 1999.
In 1999, the Company issued 16,667 five-year options to a stockholder at an exercise price of $0.66 per share
for consulting services, and 3,959 ten-year options to a lender at an exercise price of $7.20 per share for a loan
guarantee. In 2000, the Company issued 4,697 ten-year options to a non-employee at an exercise price of $3.30 per
share for consulting services, and 3,333 five-year options to a stockholder at an exercise price of $0.24 per share for
a loan guarantee. These options have been recorded at fair value as additional paid-in capital and the related expense
recorded in the year in which the service is provided in the accompanying financial statements. In 2000, the 1999
Plan was cancelled.
A summary of the Company’s stock options at December 31, 1999 and 2000 and for the years then ended is
presented in the table below:
1999

2000

Options

Weighted
Average
Exercise
Price

Options

Weighted
Average
Exercise
Price

Options outstanding, beginning of year
Granted
Exercised
Expired/terminated

65,334
124,791
—
(65,250)

$6.37
0.82
—
6.38

124,875
18,530
—
(83)

$0.82
3.30
—
0.24

Options outstanding, end of year

124,875

$0.82

143,322

$1.14

42,352

$1.21

84,979

$1.02

Exercisable at end of year

Stock options outstanding and exercisable at December 31, 2000 are as follows:
Outstanding

Exercisable

Average
Exercise
Price

Options

Average
Life(a)

Options

$0.24
0.60
0.66
7.20
3.30

3,333
80,833
36,667
3,959
18,530

3.50
7.52
3.00
9.74
8.42

3,333
50,718
23,426
3,958
3,544

$1.02

143,322

6.58

84,979

(a) Average contractual life remaining.
F-16

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 10769
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 60

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 061.00.00.00 SN: 10 Ed#: 4
*P64567/061/4*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
The Company measures the compensation cost of its stock option plan using the intrinsic value based method of
accounting prescribed in Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees.
Accordingly, no compensation cost has been recognized for its stock option plan. The weighted average remaining
contractual life of those options is approximately 6.64 years. Had the Company’s compensation cost been
determined using the fair value based method of accounting prescribed by SFAS No. 123, Accounting for StockBased Compensation, the Company’s net loss and net loss per common share would have been adjusted to the
following pro forma amounts (amounts in thousands except per common share amounts):
Year Ended December 31,
Net loss available to common stockholders:
As reported
Pro forma
Basic and diluted net loss per common share:
As reported
Pro forma

1999

2000

$(1,610)
(1,633)

$ (416)
(440)

$ (0.52)
(0.53)

$(0.17)
(0.18)

In January 2001, the Company adopted the 2001 Stock Option Plan (the “2001 Plan”) that provides for officers,
key employees and consultants to receive nontransferable stock options to purchase up to 550,000 shares of the
Company’s common stock. In January 2001, the Company issued 291,000 ten year options to employees,
shareholders and consultants at exercise prices ranging from $8.00 to $8.80 per share.
10. Subsequent Event
The Company intends to file an SB-2 registration statement offering 1,000,000 units at an estimated initial
offering price of $10 per unit consisting of one share of common stock and one warrant to purchase one share of
common stock. Also, the Company intends to issue to the representative of the IPO’s underwriters warrants which
enable the representative to acquire 100,000 units for 120% of the IPO unit offering price.
F-17

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 27354
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 61

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 062.00.00.00 SN: 16 Ed#: 5
*P64567/062/5*
EDGAR 2

You should rely only on the information contained in this prospectus. We have not authorized anyone to
provide you with information different from the information contained in this prospectus. We are offering to
sell, and seeking offers to buy, units only in jurisdictions in which offers and sales are permitted.
<R>

Page
Prospectus Summary
Risk Factors
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Business
Management
Certain Transactions
Principal Shareholders
Description of Securities
Shares Eligible for Future Sale
Underwriting
Legal Matters
Experts
Where You Can Find More Information
Index to Financial Statements

1
4
10
11
12
13
14
17
27
30
31
32
35
37
39
39
40
F-1

</R>

Until
, 2001 (25 days after the date of this prospectus), all broker-dealers that effect the
transactions in these securities, whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.

<R>

1,000,000 UNITS
</R>

PROSPECTUS

PAULSON INVESTMENT
COMPANY, INC.
<R>

, 2001
</R>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 60447
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 62

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 063.00.00.00 SN: 19 Ed#: 5
*P64567/063/5*
EDGAR 2

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Our certificate of incorporation allows and our bylaws require that we indemnify our directors and officers who
are or were a party to, or are threatened to be made a party to, any proceeding (including a derivative action if the
director or officer is not found liable to us), against all expenses reasonably incurred by a director or officer in
connection with such a proceeding (including expenses, judgments, fines and amounts paid in settlement), if the
director or officer acted in good faith, in a manner he or she believed was not opposed to our best interests, and,
with respect to a criminal proceeding, had no reason to believe that his or her conduct was unlawful.
We have entered into separate indemnification agreements with each of our directors and officers. The
agreements provide for mandatory indemnification for and limit the liability of our directors and officers in serving
us to the fullest extent permitted by the Delaware General Corporation Law. Specifically, under the agreements, our
directors and officers will not be personally liable for monetary damages for their errors or omissions, except for
liability for the breach of a director’s or officer’s duty of loyalty to us or our stockholders, for intentional
misconduct or acts not in good faith, for making any unlawful distribution, for any transaction from which the
director or officer derived an improper benefit, or for violating section 16(b) of the Securities Exchange Act of
1934, as amended, or similar laws.
Our bylaws and indemnification agreements generally require that we advance to our directors and officers
expenses incurred by them in defending a proceeding in advance of its final disposition, provided that the director
or officer agrees to reimburse us for such advances if it is ultimately found that the director or officer is not entitled
to indemnification. In addition, our bylaws permit us to purchase insurance on behalf of our directors and officers
against any liability asserted against them in such capacity. We intend to obtain such insurance.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of SEC Registration, NASD filing and Nasdaq listing fees, and all
other estimated expenses, all of which we will pay, in connection with the issuance and distribution of the securities
being registered:
Nature of Expense
SEC Registration fee
NASD Filing fees
Nasdaq Listing fee
Accounting fees and expenses
Legal fees and expenses
Directors and officers insurance expenses
Printing and related expenses
Blue sky legal fees and expenses
Transfer agent fees and expenses
Miscellaneous expenses
Total

Amount
$

8,649
3,960
8,000
125,000
125,000
150,000
145,000
65,000
1,250
18,131

$650,000

Item 26. Recent Sales of Unregistered Securities.
We have issued the following securities within the last three years. The following information regarding our
securities has been adjusted to reflect a 1-for-6 reverse stock split effected in connection with our redomestication in
Delaware on February 12, 2001.
II-1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 15252
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 63

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 064.00.00.00 SN: 17 Ed#: 10
*P64567/064/10*
EDGAR 2

(1) In March 1998, pursuant to an exemption under Section 4(2) of the Securities Act, we sold shares of our
common stock as follows: 20,833 shares at $7.20 per share for an aggregate purchase price of $150,000 to Bruce R.
Culver; and 20,833 shares at $7.20 per share for an aggregate purchase price of $150,000 to Phillips W. Smith.
(2) In January 1999, pursuant to an exemption under Section 4(2) of the Securities Act, we sold shares of our
common stock as follows: 1,666,667 shares at $0.60 per share for an aggregate purchase price of $1,000,000 to
Bruce R. Culver. These shares were subject to a repurchase option that was exercised by us in July 2000 at the same
price ($0.60 per share) for an aggregate purchase price of $1,000,000.
(3) In September 1999, pursuant to an exemption under Section 4(2) of the Securities Act, we sold shares of
our common stock as follows: 151,515 shares at $3.30 per share for an aggregate purchase price of $500,000 to
Bruce R. Culver.
Item 27. Exhibits.
<R>

Exhibit
No.
1.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
5.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14

Description
Form of Underwriting Agreement*
Registrant’s Certificate of Incorporation*
Registrant’s Bylaws*
Reference is made to pages 1-4 of Exhibit 3.1 and pages 1-5 and 12-14 of Exhibit 3.2
Form of Common Stock Certificate**
Form of Public Warrant*
Form of Unit Certificate**
Form of Warrant Agent Agreement**
Form of Representative’s Warrant
Opinion of Tonkon Torp LLP**
Employment Agreement with Patrick W. Smith, dated July 1, 1998*
Employment Agreement with Thomas P. Smith, dated November 15, 2000*
Employment Agreement with Kathleen C. Hanrahan, dated November 15, 2000*
Form of Indemnification Agreement between the Registrant and its directors*
Form of Indemnification Agreement between the Registrant and its officers*
1999 Employee Stock Option Plan*
2001 Stock Option Plan
Form of Warrant issued to Bruce Culver and Phil Smith*
Licensing Agreement with respect to intellectual property dated October 15, 1993, as amended, by and between the
Registrant and John H. Cover, Jr., and related documents (supersedes previously filed Exhibit 10.9)
Promissory Note, dated January 23, 2001 payable to Phillip Purer in the amount of $500,000 and related security
documents*
Promissory Note, dated December 31, 1998, payable to B & M Distributing, Inc., in the amount of $189,980 and
related guarantee and security documents*
Promissory Note dated October 24, 2000, payable to Bank of America in the amount of $60,000 and related
guarantee and security documents*
Form of Promissory Notes issued to stockholders*
Lease between the Registrant and Norton P. Remes and Joan A. Remes Revocable Trust, dated November 17,
2000*

</R>

II-2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 17390
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 64

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 065.00.00.00 SN: 18 Ed#: 6
*P64567/065/6*
EDGAR 2

<R>

Exhibit
No.
23.1
23.2
24

Description
Consent of Tonkon, Torp LLP (included in Exhibit 5.1)
Consent of Arthur Andersen LLP, independent public accountants
Power of Attorney. Reference is made to the signature page.

</R>
<R>

* Previously filed
</R>
<R>

** To be filed by amendment.
</R>

Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of
us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in the opinion of our 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 Securities Act and will be governed by the final
adjudication of such issue.
We hereby undertake to:
(1) File, during any period in which offers or sales are being made, a post-effective amendment to this
registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the
“Securities Act”);
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental
change in the information in the registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the dollar value of the securities offered would not exceed that
which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, treat each post-effective amendment as a new
registration statement of the securities offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at
the end of the offering.
(4) For purposes of determining any liability under the Securities Act, treat the information omitted from
the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act as
part of this registration statement as of the time it was declared effective.
(5) For determining any liability under the Securities Act, treat each post-effective amendment that contains
a form of prospectus as a new registration statement for the securities offered in the
II-3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 52055
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 65

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 066.00.00.00 SN: 14 Ed#: 7
*P64567/066/7*
EDGAR 2

registration statement, and that offering of the securities at that time as the initial bona fide offering of those
securities.
In addition, we hereby undertake to provide to the underwriters at the closing specified in the underwriting
agreement, certificates in such denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 31155
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 66

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 067.00.00.00 SN: 15 Ed#: 5
*P64567/067/5*
EDGAR 2

SIGNATURES
<R>

In accordance with the requirements of the Securities Act of 1933, the registrant has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, in the City of
Scottsdale, Arizona on February 26, 2001.
</R>

TASER INTERNATIONAL, INC.
BY: /s/PATRICK W. SMITH
Patrick W. Smith, Chief Executive Officer
<R>

In accordance with the requirements of the Securities Act of 1933, this Amendment No. 1 to the registration
statement was signed by the following persons in the capacities and on the dates stated.
</R>
<R>

Signature
/s/ PATRICK W. SMITH
Patrick W. Smith
/s/ THOMAS P. SMITH*

Title

Date

Chief Executive Officer (Principal
Executive Officer) and Director

February 26, 2001

President and Director

February 26, 2001

Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)

February 26, 2001

Director and Chairman of the Board

February 26, 2001

Director

February 26, 2001

Director

February 26, 2001

Director

February 26, 2001

Thomas P. Smith
/s/ KATHLEEN C. HANRAHAN*
Kathleen C. Hanrahan
/s/ PHILLIPS W. SMITH
Phillips W. Smith
/s/ BRUCE R. CULVER*
Bruce R. Culver
/s/ KARL F. WALTER*
Karl F. Walter
/s/ MATTHEW R. MCBRADY*
Matthew R. McBrady
</R>
<R>

*By /s/ PATRICK W. SMITH
</R>
<R>

Patrick W. Smith, Attorney-in-Fact
</R>

II-5

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 63842
P64567A1.SUB, DocName: SB-2/A, Doc: 2, Page: 67

[B/E]

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 14:59:03.02

JB: P64567 PN: 068.00.00.00 SN: 12 Ed#: 8
*P64567/068/8*
EDGAR 2

EXHIBIT INDEX
<R>

Exhibit
No.
1.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
5.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
23.1
23.2
24

Description
Form of Underwriting Agreement*
Registrant’s Certificate of Incorporation*
Registrant’s Bylaws*
Reference is made to pages 1-4 of Exhibit 3.1 and pages 1-5 and 12-14 of Exhibit 3.2
Form of Common Stock Certificate**
Form of Public Warrant*
Form of Unit Certificate**
Form of Warrant Agent Agreement**
Form of Representative’s Warrant
Opinion of Tonkon Torp LLP**
Employment Agreement with Patrick W. Smith, dated July 1, 1998*
Employment Agreement with Thomas P. Smith, dated November 15, 2000*
Employment Agreement with Kathleen C. Hanrahan, dated November 15, 2000*
Form of Indemnification Agreement between the Registrant and its directors*
Form of Indemnification Agreement between the Registrant and its officers*
1999 Employee Stock Option Plan*
2001 Stock Option Plan
Form of Warrant issued to Bruce Culver and Phil Smith*
Licensing Agreement with respect to intellectual property dated October 15, 1993, as amended, by and between the
Registrant and John H. Cover, Jr., and related documents (supersedes previously filed Exhibit 10.9)
Promissory Note, dated January 23, 2001 payable to Phillip Purer in the amount of $500,000 and related security
documents*
Promissory Note, dated December 31, 1998, payable to B & M Distributing, Inc., in the amount of $189,980 and
related guarantee and security documents*
Promissory Note dated October 24, 2000, payable to Bank of America in the amount of $60,000 and related
guarantee and security documents*
Form of Promissory Notes issued to stockholders*
Lease between the Registrant and Norton P. Remes and Joan A. Remes Revocable Trust, dated November 17,
2000*
Consent of Tonkon, Torp LLP (included in Exhibit 5.1)
Consent of Arthur Andersen LLP, independent public accountants
Power of Attorney. Reference is made to the signature page.

</R>
<R>

* Previously filed
</R>
<R>

** To be filed by amendment.
</R>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A1.SUB, DocName: EX-4.6, Doc: 3

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-4.6
p64567a1ex4-6.txt
EX-4.6

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 3

Date: 7-MAY-2001 14:59:03.02

SN: *

*DOCHDR/3*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 30
CRC: 60786
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 1
Description: Exhibit 4.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.01.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 1

*P64567/6040601/1*

1
EXHIBIT 4.6
TASER INTERNATIONAL, INC.
PURCHASE WARRANT
Issued to:
PAULSON INVESTMENT COMPANY, INC.
Exercisable to Purchase
_________ UNITS

THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
AND IS NOT TRANSFERABLE
EXCEPT AS PROVIDED HEREIN

Void after ____________________ , 2006

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 61
CRC: 29506
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 2
Description: Exhibit 4.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.02.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

2

This is to certify that, for value received and subject to the
terms and conditions set forth below, the Warrantholder (hereinafter defined) is
entitled to purchase, and the Company promises and agrees to sell and issue to
the Warrantholder, at any time on or after ____________ , 2002 and on or before
____________ , 2006, up to ______ Units (hereinafter defined) at the Exercise
Price (hereinafter defined).
This Warrant Certificate is issued subject to the following
terms and conditions:
1.
Definitions of Certain Terms. Except as may be otherwise
clearly required by the context, the following terms have the following
meanings:
(a)

"Act" means the Securities Act of 1933, as amended.

(b)

"Closing Date" means the date on which the Offering

(c)

"Commission" means the Securities and Exchange

is closed.
Commission.
(d)
value, of the Company.
(e)

"Common Stock" means the common stock, $0.00001 par
"Company" means TASER International, Inc., a Delaware

corporation.
(f)
"Company’s Expenses" means any and all expenses
payable by the Company or the Warrantholder in connection with an offering
described in Section 6 hereof, except Warrantholder’s Expenses.
(g)
"Effective Date" means the date on which the
Registration Statement is declared effective by the Commission.
(h)
"Exercise Price" means the price at which the
Warrantholder may purchase one complete Unit (or Securities obtainable in lieu
of one complete Unit) upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $ ___________
per Unit (120% of the initial public offering price of a Unit). If a Warrant is
exercised for a component of a Unit or Units, then the price payable in
connection with such exercise shall be determined by allocating $0.001 to the
Unit Warrant and the balance of the Exercise Price to the share of Common Stock,
or, in each case, to any securities obtainable in addition to or in lieu of such
Unit Warrant or share of Common Stock by virtue of the application of Section 3
of this Warrant.
(i)
"Offering" means the public offering of Units made
pursuant to the Registration Statement.
(j)
"Participating Underwriter" means any underwriter
participating in the sale of the Securities pursuant to a registration under
Section 6 of this Warrant Certificate.
(k)
"Registration Statement" means the Company’s
registration statement (File No. 333-____________), as amended on the Closing
Date.

Page 1 - Purchase Warrant

Ed#: 2

*P64567/6040602/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 8867
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 3
Description: Exhibit 4.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.03.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

3

(l)
"Rules and Regulations" means the rules and
regulations of the Commission adopted under the Act.
(m)
"Securities" means the securities obtained or
obtainable upon exercise of the Warrant or securities obtained or obtainable
upon exercise, exchange or conversion of such securities.
the Units
the Units
of Common
the terms

(n)
"Unit" means, as the case may require, either one of
offered to the public pursuant to the Registration Statement or one of
obtainable on exercise of a Warrant, each Unit consisting of one share
Stock and one Unit Warrant to purchase one share of Common Stock on
and conditions described in the Registration Statement.

(o)
"Unit Warrant" means a Common Stock purchase warrant
included as a component of a Unit.
(p)

"Warrant Certificate" means a certificate evidencing

the Warrant.
(q)
"Warrantholder" means a record holder of the Warrant
or Securities. The initial Warrantholder is Paulson Investment Company, Inc.
(r)
"Warrantholder’s Expenses" means the sum of (i) the
aggregate amount of cash payments made to an underwriter, underwriting
syndicate, or agent in connection with an offering described in Section 6 hereof
multiplied by a fraction, the numerator of which is the aggregate sales price of
the Securities sold by such underwriter, underwriting syndicate, or agent in
such offering on behalf of the Warrantholder and the denominator of which is the
aggregate sales price of all of the securities sold by such underwriter,
underwriting syndicate, or agent in such offering and (ii) all out-of-pocket
expenses of the Warrantholder, except for the fees and disbursements of one firm
retained as legal counsel for the Warrantholder on behalf of all of the
Warrantholders that will be paid by the Company.
(s)
"Warrant" means the warrant evidenced by this
certificate, any similar certificate issued in connection with the Offering, or
any certificate obtained upon transfer or partial exercise of the Warrant
evidenced by any such certificate.
2.
Exercise of Warrants. All or any part of the Warrant may be
exercised commencing on the first anniversary of the Effective Date and ending
at 5:00 p.m. (Pacific Time) on the fifth anniversary of the Effective Date by
surrendering this Warrant Certificate, together with appropriate instructions,
duly executed by the Warrantholder or by its duly authorized attorney, at the
office of the Company, 7860 East McClain Drive, Suite 2, Scottsdale, Arizona
85260, or at such other office or agency as the Company may designate. Upon
receipt of notice of exercise, the Company shall immediately instruct its
transfer agent to prepare certificates for the Securities to be received by the
Warrantholder upon completion of the Warrant exercise. When such certificates
are prepared, the Company shall notify the Warrantholder and deliver such
certificates to the Warrantholder or as per the Warrantholder’s instructions
immediately upon payment in full by the Warrantholder, in lawful money of the
United States, of the Exercise Price payable with respect to the Securities
being purchased. If the Warrantholder shall represent and warrant that all
applicable registration and prospectus delivery requirements for their sale have
been complied with upon sale
Page 2 - Purchase Warrant

Ed#: 1

*P64567/6040603/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 39463
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 4
Description: Exhibit 4.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.04.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
4
of the securities received upon exercise of the Warrant, such certificates shall
not bear a legend with respect to the Act.
If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.
3.
Adjustments in Certain Events. The number, class, and price of
Securities for which this Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:
(a)
If the outstanding shares of the Company’s Common
Stock are divided into a greater number of shares or a dividend in stock is paid
on the Common Stock, the number of shares of Common Stock for which the Warrant
is then exercisable will be proportionately increased and the Exercise Price
will be proportionately reduced; and, conversely, if the outstanding shares of
Common Stock are combined into a smaller number of shares of Common Stock, the
number of shares of Common Stock for which the Warrant is then exercisable will
be proportionately reduced and the Exercise Price will be proportionately
increased. The increases and reductions provided for in this subsection 3(a)
will be made with the intent and, as nearly as practicable, the effect that
neither the percentage of the total equity of the Company obtainable on exercise
of the Warrants nor the price payable for such percentage upon such exercise
will be affected by any event described in this subsection 3(a).
(b)
In case of any change in the Common Stock through
merger, consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company, then, as a condition of such
change, lawful and adequate provision will be made so that the holder of this
Warrant Certificate will have the right thereafter to receive upon the exercise
of the Warrant the kind and amount of shares of stock or other securities or
property to which he would have been entitled if, immediately prior to such
event, he had held the number of shares of Common Stock obtainable upon the
exercise of the Warrant. In any such case, appropriate adjustment will be made
in the application of the provisions set forth herein with respect to the rights
and interest thereafter of the Warrantholder, to the end that the provisions set
forth herein will thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Warrant. The Company will not permit any change in its
capital structure to occur unless the issuer of the shares of stock or other
securities to be received by the holder of this Warrant Certificate, if not the
Company, agrees to be bound by and comply with the provisions of this Warrant
Certificate.
(c)
When any adjustment is required to be made in the
number of shares of Common Stock, other securities, or the property purchasable
upon exercise of the Warrant, the Company will promptly determine the new number
of such shares or other securities or property
Page 3 - Purchase Warrant

Ed#: 1

*P64567/6040604/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 20015
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 5
Description: Exhibit 4.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.05.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
5
purchasable upon exercise of the Warrant and (i) prepare and retain on file a
statement describing in reasonable detail the method used in arriving at the new
number of such shares or other securities or property purchasable upon exercise
of the Warrant and (ii) cause a copy of such statement to be mailed to the
Warrantholder within thirty (30) days after the date of the event giving rise to
the adjustment.
(d)
No fractional shares of Common Stock or other
securities will be issued in connection with the exercise of the Warrant, but
the Company will pay, in lieu of fractional shares, a cash payment therefor on
the basis of the mean between the bid and asked prices of the Common Stock in
the over-the-counter market or the last sale price of the Common Stock on the
Nasdaq SmallCap Market or a national securities exchange on the day immediately
prior to exercise.
(e)
If securities of the Company or securities of any
subsidiary of the Company are distributed pro rata to holders of Common Stock,
such number of securities will be distributed to the Warrantholder or his
assignee upon exercise of his rights hereunder as such Warrantholder or assignee
would have been entitled to if this Warrant Certificate had been exercised prior
to the record date for such distribution. The provisions with respect to
adjustment of the Common Stock provided in this Section 3 will also apply to the
securities to which the Warrantholder or his assignee is entitled under this
subsection 3(e).
(f)
Notwithstanding anything herein to the contrary,
there will be no adjustment made hereunder on account of the sale by the Company
of the Common Stock or other Securities purchasable upon exercise of the
Warrant.
4.
Reservation of Securities. The Company agrees that the number
of shares of Common Stock, Unit Warrants or other Securities sufficient to
provide for the exercise of the Warrant upon the basis set forth above will at
all times during the term of the Warrant be reserved for issuance upon exercise
of the Warrant.
5.
Validity of Securities. All Securities delivered upon the
exercise of the Warrant will be duly and validly issued in accordance with their
terms, and the Company will pay all documentary and transfer taxes, if any, in
respect of the original issuance thereof upon exercise of the Warrant.
6.
Certificate.

Registration of Securities Issuable on Exercise of Warrant

(a)
The Company will register the Securities with the
Commission pursuant to the Act so as to allow the unrestricted sale of the
Securities to the public from time to time commencing on the first anniversary
of the Effective Date and ending at 5:00 p.m. (Pacific Time) on the fifth
anniversary of the Effective Date (the "Registration Period"). The Company will
also file such applications and other documents necessary to permit the sale of
the Securities to the public during the Registration Period in those states
designated by the Warrantholders among those in which the Units were qualified
for sale in the Offering or in such other states as the Company and the
Warrantholder agree to. In order to comply with the provisions of this Section
6(a), the Company is not required to file more than one registration statement
in addition to the Registration Statement.
Page 4 - Purchase Warrant

Ed#: 1

*P64567/6040605/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 24094
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 6
Description: Exhibit 4.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.06.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

6

(b)
The Company will pay all of the Company’s Expenses
and each Warrantholder will pay its pro rata share of the Warrantholder’s
Expenses relating to the registration, offer and sale of the Securities.
(c)
Except as specifically provided herein, the manner
and conduct of the registration, including the contents of the registration
statement, will be entirely in the control and at the discretion of the Company.
The Company will file such post-effective amendments and supplements as may be
necessary to maintain the currency of the registration statement during the
Registration Period. In addition, if the Warrantholder participating in the
registration is advised by counsel that the registration statement, in their
opinion, is deficient in any material respect, the Company will use its best
efforts to cause the registration statement to be amended to eliminate the
concerns raised.
(d)
The Company will furnish to the Warrantholder the
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Securities owned by
it.
(e)
The Company will, at the request of Warrantholders
holding at least 50 percent of the then outstanding Warrants, (i) furnish an
opinion of the counsel representing the Company for the purposes of the
registration pursuant to this Section 6, addressed to the Warrantholders and any
Participating Underwriter, (ii) in the event of an underwritten offering,
furnish an appropriate letter from the independent public accountants of the
Company, addressed to the Warrantholders and any Participating Underwriter, and
(iii) make such representations and warranties to the Warrantholders and any
Participating Underwriter as are customarily given to underwriters of public
offerings of equity securities in connection with such offerings. A request
pursuant to this subsection (e) may be made on three occasions. The documents
required to be delivered pursuant to this subsection (e) will be dated within
ten days of the request and will be, in form and substance, equivalent to
similar documents furnished to the underwriters in connection with the Offering,
with such changes as may be appropriate in light of changed circumstances.
7.

Indemnification in Connection with Registration.

(a)
If any of the Securities are registered, the Company
will indemnify and hold harmless each selling Warrantholder, any person who
controls any selling Warrantholder within the meaning of the Act, and any
Participating Underwriter against any losses, claims, damages, or liabilities,
joint or several, to which any Warrantholder, controlling person, or
Participating Underwriter may be subject under the Act or otherwise; and it will
reimburse each Warrantholder, each controlling person, and each Participating
Underwriter for any legal or other expenses reasonably incurred by the
Warrantholder, controlling person, or Participating Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action, insofar as such losses, claims, damages, or liabilities, joint or
several (or actions in respect thereof), arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained, on
the effective date thereof, in any such registration statement or any
preliminary prospectus or final prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated
Page 5 - Purchase Warrant

Ed#: 1

*P64567/6040606/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 40216
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 7
Description: Exhibit 4.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.07.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
7
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any case to the extent that any
loss, claim, damage, or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any registration statement, preliminary prospectus, final prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished by a Warrantholder for use in the preparation thereof. The
indemnity agreement contained in this subsection (a) will not apply to amounts
paid to any claimant in settlement of any suit or claim unless such payment is
first approved by the Company, such approval not to be unreasonably withheld.
(b)
Each selling Warrantholder, as a condition of the
Company’s registration obligation, will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed any registration
statement or other filing, or any amendment or supplement thereto, and any
person who controls the Company within the meaning of the Act, against any
losses, claims, damages, or liabilities to which the Company or any such
director, officer, or controlling person may become subject under the Act or
otherwise, and will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, or controlling person in connection
with investigating or defending any such loss, claim, damage, liability, or
action, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in said registration statement, any
preliminary or final prospectus, or other filing or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in said registration statement, preliminary or final prospectus, or other
filing, or amendment or supplement, in reliance upon and in conformity with
written information furnished by such Warrantholder for use in the preparation
thereof; provided, however, that the indemnity agreement contained in this
subsection (b) will not apply to amounts paid to any claimant in settlement of
any suit or claim unless such payment is first approved by the Warrantholder,
such approval not to be unreasonably withheld.
(c)
Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, notify the indemnifying party of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party otherwise than under
subsections (a) and (b).
(d)
If any such action is brought against any indemnified
party and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party;
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
Page 6 - Purchase Warrant

Ed#: 1

*P64567/6040607/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 47300
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 8
Description: Exhibit 4.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.08.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>

8
8.
Restrictions on Transfer. This Warrant Certificate and the
Warrant may not be sold, transferred, assigned, pledged or hypothecated for a
period of one year following the Effective Date of the Offering, except
transfers to officers or partners (not directors) of the underwriters and
members of the selling group and/or their officers or partners or by will or
operation of law. The Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates evidencing the
same aggregate number of Warrants.
9.
No Rights as a Shareholder. Except as otherwise provided
herein, the Warrantholder will not, by virtue of ownership of the Warrant, be
entitled to any rights of a shareholder of the Company but will, upon written
request to the Company, be entitled to receive such quarterly or annual reports
as the Company distributes to its shareholders.
10.

Optional Conversion.

(a)
In addition to and without limiting the right of any
Warrantholder under the terms of this Warrant, the Warrantholder shall have the
right (the "Conversion Right") to convert this Warrant or any portion thereof
into Securities as provided in this Section 10 at any time or from time-to-time
after the first anniversary of the date hereof and prior to its expiration. Upon
exercise of the Conversion Right with respect to a particular number of Units
subject to this Warrant (the "Converted Securities"), the Company shall deliver
to the holder of this Warrant, without payment by the holder of any exercise
price or any cash or other consideration, that number of Units equal to the
quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Securities by the sum of the fair market value (as defined in
paragraph (c) below) of a single share of Common Stock plus a single Unit
Warrant, determined in each case as of the close of business on the Conversion
Date (as hereinafter defined). The "Net Value" of the Converted Securities shall
be determined by subtracting the aggregate Exercise Price of the Converted
Securities from the aggregate fair market value of the Converted Securities.
Notwithstanding anything in this Section 10 to the contrary, the Conversion
Right cannot be exercised with respect to a number of Converted Securities
having a Net Value below $100. No fractional shares shall be issuable upon
exercise of the Conversion Right, and if the number of shares to be issued in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the holder of this Warrant an amount in cash equal to the fair
market value of the resulting fractional share.
(b)
The Conversion Right may be exercised by the holder
of this Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of Securities
subject to this Warrant which are being surrendered (referred to in paragraph
(a) above as the Converted Securities) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the shares of Common Stock and Unit
Warrants issuable upon exercise of the Conversion Right, together with a check
in payment of any fractional share and, in the case of a partial exercise, a new
Warrant evidencing the Securities remaining subject to this Warrant, shall be
issued as of the Conversion Date, and shall be delivered to the holder of this
Warrant within seven days following the Conversion Date.
Page 7 - Purchase Warrant

Ed#: 1

*P64567/6040608/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 39
CRC: 32162
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 9
Description: Exhibit 4.6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.09.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

9

(c)
For purposes of this Section 10, the "fair market
value" of a share of Common Stock or Unit Warrant as of a particular date shall
be the mean between the bid and asked price of the Common Stock or Unit Warrant,
as the case may be, as quoted in the over the counter market, or, if applicable,
the closing sale price of the Common Stock or Unit Warrant, as the case may be,
on the Nasdaq Stock Market or a national exchange.
11.
Notice. Any notices required or permitted to be given
hereunder will be in writing and may be served personally or by mail addressed
as follows:
If to the Company:
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260
Attn: Chief Executive Officer
If to the Warrantholder:
at the address furnished
by the Warrantholder to the
Company for the purpose of
notice.
Any notice so given by
after mailing when deposited in
mail, return receipt requested,
above. Any party may by written
for notice purposes.

mail will be deemed effectively given 48 hours
the United States mail, registered or certified
postage prepaid and addressed as specified
notice to the other specify a different address

[Remainder of Page Intentionally Blank]

Page 8 - Purchase Warrant

Ed#: 1

*P64567/6040609/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 33
CRC: 45169
P64567A1.SUB, DocName: EX-4.6, Doc: 3, Page: 10
Description: Exhibit 4.6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.06.10.00

<PAGE>

Date: 7-MAY-2001 14:59:03.02

SN: 0

10
12.
Applicable Law. This Warrant Certificate will be governed by
and construed in accordance with the laws of the State of Oregon, without
reference to conflict of laws principles thereunder. All disputes relating to
this Warrant Certificate shall be tried before the courts of Oregon located in
Multnomah County, Oregon, to the exclusion of all other courts that might have
jurisdiction.
Dated as of ______________ , 2001.
TASER INTERNATIONAL, INC.
By:________________________________
Patrick W. Smith,
Chief Executive Officer
Agreed and Accepted as of ______________ , 2001
PAULSON INVESTMENT COMPANY, INC.
By:_______________________________
Authorized Officer

Purchase 9 - Purchase Warrant
</TEXT>
</DOCUMENT>

Ed#: 1

*P64567/6040610/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A1.SUB, DocName: EX-10.7, Doc: 4

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.7
p64567a1ex10-7.txt
EX-10.7

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 4

Date: 7-MAY-2001 14:59:03.02

SN: *

*DOCHDR/4*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 7083
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 1
Description: Exhibit 10.7

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.01.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

1
Exhibit 10.7
TASER INTERNATIONAL, INC.
2001 STOCK OPTION PLAN
(EFFECTIVE JANUARY 6, 2001)
SECTION 1. INTRODUCTION

Taser International, Inc. has adopted its 2001 Stock Option Plan providing for
the grant of stock options to certain eligible individuals who have or will
render services to the Company. This Plan has been approved by the Board of
Directors of the Company effective January 6, 2001.
The purpose of the Plan is to advance the interests of the Company and its
stockholders by enhancing the Company’s ability to attract and retain qualified
persons to perform services for the Company, by providing incentives to such
persons to put forth maximum efforts for the Company and by rewarding persons
who contribute to the achievement of the Company’s economic objectives. The Plan
seeks to achieve this purpose by providing for Options which may contribute
Incentive Stock Options or Non-qualified Stock Options.
SECTION 2. ADMINISTRATION
SECTION 2.1

COMMITTEE COMPOSITION.

The Plan shall be administered by the Board, or by a committee of the Board
consisting of not less than three persons; provided, however, that from and
after the date on which the Company first registers a class of its equity
securities under Section 12 of the Exchange Act, the Plan shall be administered
to the extent provided herein by such a committee of the Board. Members of such
committee, if established, shall be appointed from time to time by the Board,
shall serve at the pleasure of the Board and may resign at any time upon written
notice to the Board. As used in this Plan, the term "Committee" will refer to
the Board or to such committee, if established.
SECTION 2.2

COMMITTEE RESPONSIBILITIES.

(a)
The Committee shall have the authority to recommend to the Board
for its consideration and approval (i) the Employees, Outside Directors and
Consultants who are to receive Options under the Plan, (ii) the time or times
when Options will be granted, (iii) the type, number, exercise price, vesting
requirements and other features and conditions of such Options, (iv) the
duration of each Option, (v) the restrictions and conditions to which the
exercisability of Options may be subject, and (vi) such other provisions of the
Options as the Committee may deem necessary or desirable and as are consistent
with the terms of the Plan. The Committee shall determine the form or forms of
the Stock Option Agreements with Optionees which shall evidence the particular
terms, conditions, rights and duties of the Company and the Optionees with
respect to Options granted pursuant to the Plan, which agreement shall be
consistent with the provisions of the Plan.
(b)
With the consent of the Optionee affected thereby, and subject to
the consideration and approval of the Board, the Committee may amend or modify
the terms of any outstanding Option in any
Stock Option Plan - Page 1
</R>

Ed#: 5

*P64567/6100701/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 10414
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 2
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.02.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
2
<R>
manner, provided that the amended or modified terms are permitted by the Plan as
then in effect. Without limiting the generality of the foregoing sentence, the
Committee may, with the consent of the Optionee affected thereby and subject to
consideration and approval of the Board, modify the exercise price, number of
shares, or other terms and conditions of an Option, extend the term of an
Option, accelerate the exercisability or vesting or otherwise terminate any
restrictions relating to an Option, accept surrender of any outstanding Option,
or, to the extent not previously exercised or vested, authorize the grant of new
Options in substitution for surrendered Options.
(c) The Committee shall have the authority to interpret the Plan and,
subject to the provisions of the Plan, to establish, adopt and revise such
rules and regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee’s decisions and
determinations under the Plan need not be uniform and may be made selectively
among Optionees, whether or not such Optionees are similarly situated. Each
determination, interpretation, or other action made or taken by the Committee
pursuant to the provisions of the Plan shall be conclusive and binding for all
purposes. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
under the Plan.
SECTION 3. SHARES AVAILABLE FOR GRANTS
SECTION 3.1

BASIC LIMITATION.

The Maximum number of shares of Common Stock that shall be authorized and
reserved for issuance under the Plan shall be 550,000 shares, $.00001 par
value. The limitation of this Section 3.1 shall be subject to adjustment
pursuant to Section 3.3.
SECTION 3.2

ADDITIONAL SHARES AVAILABLE FOR USE.

If Options are forfeited or terminate for any other reason before being
exercised, then the corresponding Common Stock shall again become available for
the grant of Options under the Plan. Also, previously acquired shares of Common
Stock which are tendered by the Optionee to the Company in whole or partial
satisfaction of the Exercise Price pursuant to Section 6.2, or in whole or
partial satisfaction of withholding obligations pursuant to Section 10.2, shall
become available for use under the Plan to the extent permitted by Rule 16b-3
of the Exchange Act. The aggregate number of shares of Common Stock that may be
issued under the Plan upon the exercise of Incentive Stock Options shall in no
event exceed 5,000,000 shares.
SECTION 3.3

ADJUSTMENT TO SHARES.

In the event of a stock split, any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend payable in
Common Stock, extraordinary dividend or divestiture (including a spin-off), a
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise) into a lesser number of shares of Common Stock,
or any other change in the corporate structure or shares of the Company, the
Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) shall make
appropriate adjustments (which determination shall be conclusive) as to one or
more of:
(a) The number of and kind of securities subject to and reserved under
the Plan;
Stock Option Plan- Page 2
</R>

Ed#: 5

*P64567/6100702/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 60
CRC: 62294
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 3
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.03.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
3
<R>
(b) In order to prevent dilution or enlargement of the rights of Optionees,
the number, kind and Exercise Price of securities subject to outstanding
Options;
(c) The limitations set forth in Section 5.2.
Without limiting the generality of the foregoing, in the event that any of
such transactions are effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or assets, including cash, with
respect to or in exchange for such Common Stock, all Optionees holding
outstanding Options shall upon the exercise of such Options receive, in lieu of
any shares of Common Stock they may be entitled to receive, such stock,
securities, or assets, including cash, as would have been issued to such
Optionees if their Options had been exercised and such Optionees had received
Common Stock prior to such transaction.
Notwithstanding the provisions of this Section 3.3, there shall be no
adjustment to the shares authorized pursuant to this Plan for an event
described in Section 3.3 that occurs before or simultaneously with the
effective date of this Plan.
Except as provided in this Section 3.3, an Optionee shall have no rights
by reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
SECTION 4.
SECTION 4.1

ELIGIBILITY

NON-QUALIFIED STOCK OPTIONS.

Only Employees, Outside Directors and Consultants shall be eligible for the
grant of NSOs.
SECTION 4.2

INCENTIVE STOCK OPTIONS.

Only Employees who are common-law employees of the Company, a Parent or a
Subsidiary shall be eligible for the grant of Incentive Stock Options. In
addition, an Employee who owns more than 10% of the total combined voting power
of all classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an Incentive Stock Option
unless the requirements set forth in Section 422(c)(6) of the Code are
satisfied.
SECTION 5.
SECTION 5.1

STOCK OPTIONS

STOCK OPTION AGREEMENT.

Each grant of an Option under the Plan shall be evidenced by a Stock Option
Agreement between the Optionee and the Company. Such Option shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan as shall be determined by the Committee in its
discretion and upon consideration and approval of the Board. The provisions of
the various Stock Option Agreements entered into under the Plan need not be
identical. Options shall be granted for no cash consideration unless minimal
cash consideration is required by applicable law.
Stock Option Plan - Page 3
</R>

Ed#: 5

*P64567/6100703/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 59
CRC: 23404
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 4
Description: Exhibit 10.7

[E/O]

<PAGE>
4
<R>
SECTION 5.2

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.04.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

NUMBER OF SHARES.

Each Stock Option Agreement shall specify the number of Common Stock subject to
the Option. Options granted to any Optionee in a single fiscal year of the
Company shall not cover more than 75,000 shares of Common Stock, except that
Options granted to a new Employee in the fiscal year of the Company in which
his or her service as an Employee first commences shall not cover more than
100,000 shares of Common Stock. The limitations set forth in the preceding
sentence shall be subject to adjustment in accordance with Section 3.3.
SECTION 5.3
(a)

EXERCISE PRICE.

Incentive Stock Options.

The Exercise Price per share to be paid by the Optionee at the time an
Incentive Stock Option is exercised shall be determined by the Committee, in
its discretion and upon consideration and approval of the Board; provided,
however that the such price shall not be less than (i) 100% of the Fair Market
Value of one share of Common Stock on the date the Option is granted, or (ii)
110% of the Fair Market Value of one share of Common Stock on the date the
Option is granted if, at the time the Option is granted, the Optionee owns,
directly or indirectly (as determined pursuant to Section 424(d) of the Code),
more than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or Parent corporation of the Company (within the
meaning of Sections 424(f) and 424(e), respectively, of the Code).
(b)

Non-qualified Stock Options.

The Exercise Price per share to be paid by the Optionee at the time an NSO is
exercised shall be determined by the Committee, in its discretion and upon
consideration and approval of the Board; provided, however that the such price
shall not be less than 85% of the Fair Market Value of one share of Common
Stock on the date the Option is granted.
SECTION 5.4

EXERCISABILITY AND TERM.

An Option shall become exercisable at such times and in such installments
(which may be cumulative) as shall be determined by the Committee in its
discretion at the time the Option is granted. Upon the completion of its term,
an Option, to the extent not then exercised, shall expire.
(a)

Incentive Stock Options.

The period during which an Incentive Stock Option may be exercised shall be
fixed by the Committee in its discretion and upon consideration and approval of
the Board at the time such Option is granted; provided that the term of an
Incentive Stock Option shall in no event exceed (i) 10 years from the date of
grant, or (ii) 5 years from the date of grant if, at the time the Option is
granted, the Optionee owns, directly or indirectly (as determined pursuant to
Section 424(d) of the Code), more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary or Parent corporation
of the Company (within the meaning of Sections 424(f) and 424(e), respectively,
of the Code).
(a) Non-qualified Stock Options.
Stock Option Plan-Page 4
</R>

Ed#: 5

*P64567/6100704/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 66
CRC: 27583
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 5
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.05.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
5
<R>
The period during which an NSO may be exercised shall be fixed by the Committee
in its discretion and upon consideration and approval of the Board at the time
such Option is granted.
SECTION 5.5

MANNER OF EXERCISE.

An Option may be exercised by an Optionee in whole or in part from time to
time, subject to the conditions contained herein and in the Stock Option
Agreement, by delivery, in person or through certified or registered mail, of
written notice of exercise to the Company at its principal executive office
(Attention: Chief Financial Officer), and by paying in full the total Option
Exercise Price for the shares of Common Stock purchased. Such notice shall be
in a form satisfactory to the Committee and shall specify the particular Option
(or portion thereof) that is being exercised and the number of shares with
respect to which the Option is being exercised. Subject to compliance with
Section 11.1 of the Plan, the exercise of the Option shall be deemed effective
upon receipt of such notice and payment complying with the terms of the Plan
and the Stock Option Agreement.
As soon as practicable after the effective exercise of the Option, the
Optionee shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the Company shall deliver to the Optionee
one or more duly issued stock certificates evidencing such ownership. If an
Optionee exercises any Option with respect to some, but not all, of the shares
of Common Stock subject to such Option, the right to exercise such Option with
respect to the remaining shares shall continue until it expires or terminates
in accordance with its terms. An Option shall only be exercisable with respect
to whole shares.
SECTION 6. PAYMENT FOR OPTION SHARES
SECTION 6.1

GENERAL RULE.

The entire Exercise Price of Common Stock issued upon exercise of Options shall
be payable in cash or cash equivalents at the time when such shares of Common
Stock are purchased, provided, however, that the Committee, in its discretion
upon the original grant or thereafter, and upon the consideration and approval
of the Board, may allow such payments to be made in any form described in this
Section 6. In determining whether or upon what terms and conditions an Optionee
will be permitted to pay the Exercise Price of an Option in a form other than
cash, the Committee may consider all relevant facts and circumstances including,
without limitation, the tax and securities law consequences to the Optionee and
the Company and the financial accounting consequences to the Company.
SECTION 6.2

SURRENDER OF STOCK.

To the extent that this Section 6.2 is applicable, an Optionee may pay all or
any part of the Exercise Price by surrendering, or attesting to the ownership
of, shares of Common Stock that are already owned by the Optionee. Such shares
of Common Stock shall be valued at their Fair Market Value on the date when the
new shares of Common Stock are purchased under the Plan.
SECTION 6.3

EXERCISE/SALE.

To the extent that this Section 6.3 is applicable, an Optionee may pay all or
any part of the Exercise Price and any withholding taxes by delivering (on a
form prescribed by the Company) an irrevocable direction
Stock Option Plan-Page 5
</R>

Ed#: 11

*P64567/6100705/11*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 67
CRC: 23810
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 6
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.06.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
6
<R>
to a securities broker approved by the Company to sell all or part of the
Common Stock being purchased under the Plan and to deliver all or part of the
sales proceeds to the Company.
SECTION 6.4

EXERCISE/PLEDGE.

To the extent that this Section 6.4 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) an irrevocable direction to pledge all or part of
the Common Stock being purchased under the Plan to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company.
SECTION 6.5

PROMISSORY NOTE.

To the extent that this Section 6.5 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) a full-recourse promissory note. However, the par
value of the Common Stock being purchased under the Plan, if newly issued,
shall be paid in cash or cash equivalents.
SECTION 6.6

OTHER FORMS OF PAYMENT.

To the extent that this Section 6.6 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid in any other form that is
consistent with applicable laws, regulations and rules.
SECTION 6.7

DISPOSITION OF COMMON STOCK ACQUIRED PURSUANT TO THE EXERCISE OF
INCENTIVE STOCK OPTIONS.

Prior to making a disposition (as defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option granted under the Plan before the expiration of two years after its date
of grant or before the expiration of one year after its date of exercise, the
Optionee shall send written notice to the Company of the proposed date of such
disposition, the number of shares to be disposed of, the amount of proceeds to
be received from such disposition and any other information relating to such
disposition that the Company may reasonably request. The right of an Optionee to
make any such disposition shall be conditioned on the receipt by the Company of
all amounts necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to such disposition. The
Committee shall have the right, in its sole discretion, to endorse the
certificates representing such shares with a legend restricting transfer and to
cause a stop transfer order to be entered with the Company’s transfer agent
until such time as the Company receives the amounts necessary to satisfy such
withholding and employment-related tax requirements or until the later of the
expiration or two years from its date of grant or one year from its date of
exercise.
SECTION 6.8

AGGREGATE LIMITATIONS OF STOCK SUBJECT TO INCENTIVE STOCK
OPTIONS.

To the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options (within the meaning of Section 422 of the Code)
are exercisable for the first time by an Optionee during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
Subsidiary or any parent corporation of the Company) exceeds $100,000 (or such
other amount as may be prescribed by the Code from time to time), such excess
Options shall be treated as Non-qualified Stock Options. The determination shall
be made by taking Incentive Options into account in the order in which they were
granted. If such excess only applies to a portion of an Incentive Stock Option,
the Committee, in its
Stock Option Plan- Page 6
</R>

Ed#: 6

*P64567/6100706/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 3031
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 7
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.07.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
7
<R>
discretion, shall designate which shares shall be treated as shares acquired
upon exercise of an Incentive Stock Option.
SECTION 7.
SECTION 7.1

EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE

Termination of Employment or Other Service Due to Death,
Disability, or Retirement.

Except as otherwise provided in the Plan, or as otherwise determined by the
Committee upon consideration and approval of the Board, either at the time an
Option is granted or thereafter, in the event an Optionee’s employment or other
service with the Company and all Subsidiaries or Parent is terminated by reason
of such Optionee’s death, Disability or Retirement, all outstanding Options
then held by the Optionee shall become immediately exercisable in full and
remain exercisable after such termination for a period of three months in the
case of Retirement and one year in the case of death or Disability (but in no
event after the expiration date of any such Option).
SECTION 7.2

TERMINATION OF EMPLOYMENT OF OTHER SERVICE FOR REASONS OTHER THAN
DEATH, DISABILITY OR RETIREMENT.

Except as otherwise provided in the Plan, or as otherwise determined by the
Committee upon consideration and approval of the Board, either at the time an
Option is granted or thereafter, in the event an Optionee’s employment or other
service with the Company and all Subsidiaries or Parent in relation to which
the Option was granted is terminated for any reason other than death,
Disability or Retirement, all rights of the Optionee shall immediately
terminate without notice of any kind, and no Options then held by the Optionee
shall thereafter be exercisable; provided, however, that if such termination is
due to any reason other than termination by the Company or any Subsidiary or
Parent for "cause," all outstanding Options then held by such Optionee shall
remain exercisable for a period of three months after such termination (but in
no event after the expiration date of any such Option). For purposes of this
Section 7.2, "cause" shall be as defined in any employment or other agreement
or policy applicable to the Optionee or, if no such agreement or policy exists,
shall mean (a) the unauthorized use or disclosure of the confidential
information or trade secrets of the Company, which use or disclosure causes
material harm to the Company, (b) any material breach of a non-competition
agreement entered into with the Company, (c) conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the United States or
any state thereof, (d) gross negligence or (d) continued failure to perform
assigned duties after receiving written notification from the Board. The
foregoing shall not be deemed an exclusive list of all acts or omissions that
the Company (or a Parent or Subsidiary) may consider grounds for the discharge
of the Optionee.
SECTION 7.3

MODIFICATION OF EFFECT OF TERMINATION.

Notwithstanding the provisions of this Section 7, upon an Optionee’s
termination of employment or other service with the Company and all
Subsidiaries or Parent with respect to which Options were granted, the
Committee may, in its sole discretion upon consideration and approval of the
Board (which discretion may be exercised before or following such termination),
cause Options, or any portions thereof, then held by such Optionee to become
exercisable and remain exercisable following such termination in the manner
determined by the Committee and approved by the Board; provided, however, that
no Option shall be exercisable after the expiration date thereof, and any
Incentive Stock Option that remains unexercised more than three months
following employment termination by reason of Retirement or more than one
Stock Option Plan-Page 7
</R>

Ed#: 3

*P64567/6100707/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 52567
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 8
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.08.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
8
<R>
year following employment termination by reason of death or Disability shall
thereafter be deemed to be a Non-qualified Stock Option.
SECTION 8. CHANGE OF CONTROL
SECTION 8.1

ACCELERATION OF VESTING.

If a Change of Control of the Company shall be about to occur or shall occur,
the Committee, in its discretion and upon consideration and approval of the
Board, may determine that all outstanding Options shall become immediately
exercisable in full and shall remain exercisable during the remaining term
thereof, regardless of whether the employment or other status of the Optionees
with respect to which Options have been granted shall continue with the Company
or any Subsidiary, subject to the following limitations: If the Company and the
other party to the transaction constituting a Change in Control agree that such
transaction is to be treated as a "pooling of interests" for financial reporting
purposes, and if such transaction in fact is so treated, then the acceleration
of exercisability shall not occur to the extent that the Company’s independent
accountants and such other party’s independent accountants each determine in
good faith that such acceleration would preclude the use of "pooling of
interests" accounting.
SECTION 8.2

CASH PAYMENT.

If a Change in Control of the Company shall be about to occur or shall occur,
then the Committee, in its discretion and upon consideration and approval of the
Board and without the consent of any Optionee effected thereby, may determine
that some or all Optionees holding outstanding Options shall receive, with
respect to some or all of the shares of Common Stock subject to such Options, as
of the effective date of any such Change of Control of the Company, cash in an
amount equal to the excess of the Fair Market Value of such shares immediately
prior to the effective date of such Change of Control over the Exercise Price of
such Options.
SECTION 8.3

LIMITATION ON CHANGE OF CONTROL PAYMENTS.

Notwithstanding any provision of Sections 8.1 or 8.2 above to the contrary, if,
with respect to an Optionee, the acceleration of the exercisability of an Option
as provided for in Section 8.1 or the payment of cash in exchange for all or
part of an Option as provided in Section 8.2 (which acceleration or payment
could be deemed a "payment" within the meaning of Section 280G(b)(2) of the
Code), together with any other payments which such Optionee has the right to
receive from the Company or any corporation which is a member of an "affiliated
group" (as defined in Section 1504(b) of the Code) of which the Company is a
member, would constitute a "parachute payment" (as defined in Section 280G(b)(2)
of the Code), then the acceleration of exercisability and the payments to such
Optionee pursuant to Sections 8.1 and 8.2 above shall be reduced to the largest
extent or amount as, in the sole judgment of the Committee, will result in no
portion of such payments being subject to the excise tax imposed by Section 4999
of the Code.
Stock Option Plan - Page 8
</R>

Ed#: 4

*P64567/6100708/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 24162
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 9
Description: Exhibit 10.7

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.09.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

9
SECTION 9. LIMITATION ON RIGHTS

SECTION 9.1

EMPLOYMENT OR SERVICE.

Nothing in the Plan shall interfere with or limit in any way the right of the
Company or any Subsidiary or Parent to terminate the employment or service of
any Employee, Outside Director or Consultant at any time, or confer upon any
Employee, Outside Director or Consultant any right to continue in the employ or
service of the Company or any Subsidiary or Parent.
SECTION 9.2

STOCKHOLDERS’ RIGHTS.

An Optionee shall have no dividend rights, voting rights or other rights as a
stockholder with respect to any Common Stock covered by his or her Option prior
to the time when a stock certificate for such Common Stock is issued or, in the
case of an Option, the time when he or she becomes entitled to receive such
Common Stock by filing a notice of exercise and paying the Exercise Price. No
adjustment shall be made for cash dividends or other rights for which the
record date is prior to such time, except as expressly provided in the Plan.
SECTION 9.3

RESTRICTIONS ON TRANSFER.

Other than pursuant to a qualified domestic relations order (as defined by the
Code), no right or interest of any Optionee in an Option prior to the exercise
of such Option shall be assignable or transferable, or subjected to any lien,
during the lifetime of the Optionee, either voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, including execution,
levy, garnishment, attachment, pledge, divorce, or bankruptcy. In the event of
an Optionee’s death, such Optionee’s rights and interest in Options shall be
transferable by testamentary will or the laws of descent and distribution, any
payment of any amounts due under the Plan shall be made to, and exercise of any
Options (to the extent permitted pursuant to Section 7 of the Plan) may be made
by the Optionee’s legal representatives, heirs or legatees.
If, in the opinion of the Committee, an Optionee holding an Option is
disabled from caring for his or her affairs because of a mental condition,
physical condition, or age, any payments due the Optionee may be made to, and
any rights of the Optionee under the Plan shall be exercised by, such
Optionee’s guardian, conservator, or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status.
SECTION 9.4

NON-EXCLUSIVITY OF THE PLAN.

Nothing contained in the Plan is intended to amend, modify, or rescind any
previously approved compensation plans or programs entered into by the Company.
The Plan will be construed to be in addition to any and all other such plans or
programs. Neither the adoption of the Plan nor the submission of the Plan to
the stockholders of the Company for approval will be construed as creating any
limitations on the power or authority of the Board to adopt such additional or
other compensation arrangements as the Board may deem necessary or desirable.
Stock Option Plan- Page 9
</R>

Ed#: 6

*P64567/6100709/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 45092
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 10
Description: Exhibit 10.7

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.10.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

10
SECTION 10. WITHHOLDING TAXES

SECTION 10.1

GENERAL.

To the extent required by applicable federal, state, local or foreign law, an
Optionee or his or her successor shall make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise in
connection with the Plan. The Company shall not be required to issue any Common
Stock or make any cash payment under the Plan until such obligations are
satisfied.
SECTION 10.2

SHARE WITHHOLDING.

The Committee, in its discretion and upon consideration and approval of the
Board, may permit an Optionee to satisfy all or part of his or her withholding
or income tax obligations by having the Company withhold all or a portion of any
Common Stock that otherwise would be issued to him or her or by surrendering all
or a portion of any Common Stock that he or she previously acquired. Such shares
of Common Stock shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash.
SECTION 11. SECURITIES LAW RESTRICTIONS
SECTION 11.1

SHARE ISSUANCE.

Notwithstanding any other provision of the Plan or any agreements entered into
pursuant hereto, the Company shall not be required to issue or deliver any
certificate for shares of Common Stock under this Plan, and an Option shall not
be considered to be exercised notwithstanding the tender by the Optionee of any
consideration therefore, unless and until each of the following conditions has
been fulfilled:
(a) (i) There has be in effect with respect to such shares a registration
statement under the Securities Act and any applicable state securities laws if
the Committee, in its sole discretion, shall have determined to file, cause to
become effective, and maintain the effectiveness of such registration statement;
or (ii) if the Committee has determined not to so register the shares of Common
Stock to be issued under the Plan, (A) exemptions from registration under the
Securities Act and applicable state securities laws shall be available for such
issuance (as determined by counsel to the Company) and (B) there shall have been
received from the Optionee (or, in the event of death or disability, the
Optionee’s heir(s) or legal representative(s)), any representations or
agreements requested by the Company in order to permit such issuance to be made
pursuant to such exemptions; and
(b) There shall have been obtained any other consent, approval, or permit
from any state or federal governmental agency which the Committee shall, in its
sole discretion upon the advice of counsel, deem necessary or advisable.
SECTION 11.2

SHARE TRANSFERS.

Shares of Common Stock issued pursuant to Options granted under the Plan may
not be sold, assigned, transferred, pledged, encumbered, or otherwise disposed
of, whether voluntarily or involuntarily, directly or indirectly, by operation
of law or otherwise, except pursuant to registration under the Securities Act
and applicable state securities laws or pursuant to exemptions from such
registrations. The Company may condition the sale, assignment, transfer,
pledge, encumbrance, or other disposition of such shares not
Stock Option Plan-Page 10
</R>

Ed#: 6

*P64567/6100710/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 35230
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 11
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.11.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
11
<R>
issued pursuant to an effective and current registration statement under the
Securities Act and all applicable state securities laws on the receipt from the
party to whom the shares of Common Stock are to be so transferred of any
representations or agreements requested by the Company in order to permit such
transfer to be made pursuant to exemptions from registration under the
Securities Act and applicable state securities laws.
SECTION 11.3

HOLDING PERIOD REQUIREMENTS.

Any Options granted and any Common Stock acquired pursuant to the exercise of
Options under this Plan may be subject to a six-month holding requirement from
the grant date in order for the transaction to be exempt from the short-swing
trading profits provision of Section 16(b) of the Exchange Act.
SECTION 11.4

LEGENDS.

(a)
Unless a registration statement under the Securities Act and
applicable state securities laws is in effect with respect to the issuance or
transfer of shares of Common Stock under the Plan, each certificate representing
any such shares shall be endorsed with a legend in substantially the following
form, unless counsel for the Company is of the opinion as to any such
certificate that such legend is unnecessary:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH
STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE SOLELY ESTABLISHED TO THE
SATISFACTION OF THE COMPANY AND ITS COUNSEL.
(b)
The Committee, in its sole discretion, may endorse certificates
representing shares issued pursuant to the exercise of Incentive Stock Options
with a legend in substantially the following form:
THE SALE, EXCHANGE, PLEDGE, ASSIGNMENT, OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TRANSFER RESTRICTIONS
CONTAINED IN SECTION 5.05 OF THE BYLAWS OF THIS CORPORATION AND IN THE
CORPORATION’S 2001 STOCK OPTION PLAN, AND REFERENCE SHOULD BE MADE TO THOSE
DOCUMENTS FOR THE TERMS OF SUCH RESTRICTIONS.
SECTION 12. AMENDMENT, MODIFICATION AND TERMINATION
SECTION 12.1

TERM OF THE PLAN.

The Plan, as set forth herein, shall become effective on January 6, 2001. The
Plan shall remain in effect until it is terminated under Section 12.2, except
that no Incentive Stock Options shall be granted on or after the 10th
anniversary of the later of (a) the date when the Board adopted the Plan or (b)
the date when
Stock Option Plan-Page 11
</R>

Ed#: 4

*P64567/6100711/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 34204
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 12
Description: Exhibit 10.7

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.12.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
12
<R>
the Board adopted the most recent increase in the number of Common Stock
available under Section 3 which was approved by the Company’s stockholders.
SECTION 12.2

AMENDMENT OR TERMINATION.

The Board may, at any time and for any reason, amend, suspend or terminate the
Plan or any portion thereof. An amendment of the Plan shall be subject to the
approval of the Company’s stockholders only to the extent required by
applicable laws, regulations or rules. No Options shall be granted under the
Plan after the termination thereof. No termination, suspension, or amendment of
the Plan shall alter or impair any outstanding Option without the consent of
the Optionee affected thereby; provided, however, that this sentence shall not
impair the right of the Committee to take whatever action it deems appropriate
under Section 3.3 or Section 8 of the Plan.
SECTION 13.
SECTION 13.1

MISCELLANEOUS

GOVERNING LAW.

The place of administration of the Plan shall be conclusively deemed to be
within the State of Arizona, and the rights and obligations of any and all
persons having or claiming to have had an interest under the Plan or any Stock
Option Agreement shall be governed by and construed exclusively and solely in
accordance with the laws of the State of Delaware without regard to the
conflict of laws provisions of any jurisdictions. All parties agree to submit
to the jurisdiction of the state and federal courts of Arizona with respect to
matters relating to the Plan and agree not to raise or assert the defense that
such forum is not convenient for such party.
SECTION 13.2

SUCCESSORS AND ASSIGNS.

This Plan shall be binding upon and inure to the benefit of the successors and
permitted assigns of the Company, including, without limitation, whether by way
or merger, consolidation, operation of law, assignment, purchase, or other
acquisition of substantially all of the assets or business of the Company, and
any and all such successors and assigns shall absolutely and unconditionally
assume all of the Company’s obligations under the Plan.
SECTION 13.3

SURVIVAL OF PROVISIONS.

The rights, remedies, agreements, obligations, and covenants contained in or
made pursuant to the Plan, any Stock Option Agreement, and any other notices or
agreements in connection therewith, including, without limitation, any notice
of exercise of an Option, shall survive the execution and delivery of such
notices and agreements and the delivery and receipt of shares of Common Stock
and shall remain in full force and effect.
SECTION 14.
SECTION 14.1

DEFINITIONS

BOARD

Board means the Company’s Board of Directors, as constituted from time to time.
Stock Option Plan-Page 12
</R>

Ed#: 5

*P64567/6100712/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 60
CRC: 29878
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 13
Description: Exhibit 10.7

[E/O]

<PAGE>
13
<R>
SECTION 14.2

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.13.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

CHANGE IN CONTROL

Change in Control shall mean:
(a)
The sale, lease, exchange or other transfer of all or
substantially all of the Company’s assets, in one transaction or in a series of
related transactions;
(b)
The approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company; or
(c)
A change in the control of the Company of a nature that would be
required to be reported (assuming such event had not been "previously
reported") in response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the effective date of the Plan, pursuant to Section 13 or 15(d) of
the Exchange Act, whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, such Change in
Control shall be deemed to have occurred at such time as:
(i)

any Person becomes, after the effective date of the Plan, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 20% or more of the combined
voting power of the Company’s outstanding securities ordinarily
having the right to vote at elections of directors, or

(ii)

individuals who constitute the Board on the effective date of
the Plan cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director
subsequent to the effective date of the Plan whose election, or
nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors
comprising or deemed pursuant hereto to comprise the Board on
the effective date of the Plan (either by a specific vote or by
approval of the proxy statement of the Company in which such
person is named as a nominee for director) shall be, for
purposes of this clause (ii) and the following sentence,
considered as though such person were a member of the Board on
the effective date of the Plan. Notwithstanding anything in the
foregoing to the contrary, no Change of Control shall be deemed
to have occurred for purposes of Section 8 by virtue of any
transaction which shall have been approved by the affirmative
vote of at least a majority of the members of the Board or by
the stockholders of the Company on the effective date of the
Plan.

SECTION 14.3

CODE

Code means the Internal Revenue Code of 1986, as amended.
SECTION 14.4

COMMITTEE

Committee means a committee of the Board, as described in Section 2.
SECTION 14.5

COMMON STOCK

Common Stock means the common stock of the Company.
Stock Option Plan - Page 13
</R>

Ed#: 4

*P64567/6100713/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 32408
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 14
Description: Exhibit 10.7

[E/O]

<PAGE>
14
<R>
SECTION 14.6

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.14.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

COMPANY

Company means Taser International, Inc., a Delaware corporation.
SECTION 14.7

CONSULTANT

Consultant means a consultant or adviser who provides bona fide services to the
Company, a Parent, or a Subsidiary as an independent contractor. Service as a
Consultant shall be considered employment for all purposes of the Plan, except
as provided in Section 4.2.
SECTION 14.8

DISABILITY

Disability means the permanent and total disability of the Optionee within the
meaning of Section 22(e)(3) of the Code.
SECTION 14.9

EMPLOYEE

Employee means a common-law employee of the Company, a Parent, or Subsidiary.
SECTION 14.10

EXCHANGE ACT

Exchange Act means the Securities Exchange Act of 1934, as amended.
SECTION 14.11

EXERCISE PRICE

Exercise Price means the amount for which one share of Common Stock may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement.
SECTION 14.12

FAIR MARKET VALUE

Fair Market Value means, with respect to the Common Stock, the following:
(a)
If the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or admitted
but transactions in the Common Stock are reported on the NasdaqK Small Cap
Market, the last sale price of the Common Stock on such exchange or reported by
the NasdaqK Small Cap Market System as of such date (or, if no shares were
traded on such day, as of the next preceding day on which there was such a
trade).
(b)
If the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the NasdaqK Small Cap Market System, and bid
and asked prices therefore in the over-the-counter market are reported by The
NasdaqK Small Cap Market, the Nasdaq Bulletin Board, or the National Quotation
Bureau, Inc. (or any comparable reporting service), the mean of the closing bid
and asked prices as of such date, as so reported by the applicable NasdaqX
system, or, if not so reported thereon, as reported by the National Quotation
Bureau, Inc. (or such comparable reporting service).
(c)
In all other cases, such price as the Committee determines in
good faith in the exercise of its reasonable discretion.
Stock Option Plan - Page 14
</R>

Ed#: 3

*P64567/6100714/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 61
CRC: 59034
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 15
Description: Exhibit 10.7

[E/O]

<PAGE>
15
<R>
SECTION 14.13

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.15.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

INCENTIVE STOCK OPTION

Incentive stock option means a stock option as described in Section 422(b) of
the Code.
SECTION 14.14

NON-QUALIFIED STOCK OPTION

Non-qualified stock option means any option that is not an incentive stock
option as described in Section 422 of the Code nor an option as described in
Section 423 of the Code.
SECTION 14.15

OPTION

Option means an Incentive Stock Option or Non-qualified Stock Option granted
under the Plan and entitling the holder to purchase Common Stock.
SECTION 14.16

OPTIONEE

Optionee means an individual or estate who holds an Option.
SECTION 14.17

OUTSIDE DIRECTOR

Outside Director shall mean a member of the Board who is not an Employee.
Service as an Outside Director shall be considered employment for all purposes
of the Plan, except as provided in Section 4.2.
SECTION 14.18

PARENT

Parent means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.
SECTION 14.19

PERSON

Person means any individual, corporation, partnership, group, association, or
other "person" (as such term is used in Section 14(d) of the Exchange Act),
other than the Company, a wholly-owned Subsidiary of the Company, or any
employee benefit plan sponsored by the Company or a wholly-owned Subsidiary of
the Company.
SECTION 14.20

PLAN

Plan means this Taser International, Inc. 2001 Stock Option Plan, as amended
from time to time.
SECTION 14.21

RETIREMENT

Retirement means the retirement of an Optionee pursuant to and in accordance
with the regular retirement plan or practice of the Company or Subsidiary then
covering the Optionee, or, if approved by the Board for purposes of the Plan,
any early retirement plan or practice of the Company or Subsidiary then
covering the Optionee.
Stock Option Plan-Page 15
</R>

Ed#: 3

*P64567/6100715/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 46
CRC: 43210
P64567A1.SUB, DocName: EX-10.7, Doc: 4, Page: 16
Description: Exhibit 10.7

[E/O]

<PAGE>
16
<R>
SECTION 14.22

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.07.16.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

SECURITIES ACT

Securities Act means the Securities Act of 1933, as amended.
SECTION 14.23

STOCK OPTION AGREEMENT

Stock Option Agreement means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
Option.
SECTION 14.24

SUBSIDIARY

Subsidiary means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.
SECTION 15.

EXECUTION

To record the adoption of the Plan by the Board, the Company has caused its
duly authorized officer to execute this document in the name of the Company.
Taser International, Inc.
By:___________________________
Adoption by Board of Directors:

January 6, 2001

Ratification/Adoption by Stockholders:

_________, 2001

Stock Option Plan-Page 16
</R>
</TEXT>
</DOCUMENT>

Ed#: 3

*P64567/6100716/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A1.SUB, DocName: EX-10.9, Doc: 5

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.9
p64567a1ex10-9.txt
EX-10.9

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 5

Date: 7-MAY-2001 14:59:03.02

SN: *

*DOCHDR/5*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 31
CRC: 32740
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.01.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 2

*P64567/6100901/2*

1
Exhibit 10.9
[ICER CORPORATION LOGO]

THIS AGREEMENT is made this 15th day of October, 1993 between Mr. John H. Cover
(hereinafter called "Mr. Cover"), and ICER Corporation (hereinafter called
ICER), an Arizona Corporation.
WITNESSETH:
WHEREAS, Mr. Cover has critical skills and industry knowledge material to
the development and marketing of products relating to the business of ICER
NOW, THEREFORE, the parties agree as follows:
ARTICLE I: SCOPE OF THE AGREEMENT
1. Mr. Cover agrees to join the management team of ICER Corporation as an
officer and director of the company for one (1) year full time
employment. His position will encompass responsibility for technology
and product development, but will not be limited to such areas.
2. In accordance with his position with ICER, Mr. Cover agrees not to
engage in independent business relations with competitors of ICER
wherein:
i) Competitors of ICER are defined as companies engaged in the
manufacture and/or design of electronic weapons that are less than
fourteen inches in length and are non lethal.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 47
CRC: 51507
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 2

[E/O]

<PAGE>
2
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.02.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 1

*P64567/6100902/1*

COVER AGREEMENT

ii) Independent business relations are defined as any fee for service
arrangement, or any product development work with competitors as
defined in i).
iii) Independent business relations do not include any work or
relationships conducted within the framework of Mr. Cover’s
representation of ICER.
iv) Mr. Cover is free to leave unaltered the licensing arrangements
already in existence with such competitors and to pursue
compensation from such competitors for the use of his existing
patents at his discretion.
v) The provisions of this section shall remain in full force and effect
for the period of Mr. Cover’s employment with ICER.
vi) Breach of this agreement wherein Mr. Cover engages in independent
business relations with competitors of ICER during the period
described in iv), will result in the forfeiture of Mr. Cover’s
remaining stock options and the immediate termination of his
employment with ICER.
3. Mr. Cover agrees to license ICER Corporation: Rights to utilize the
TASER trademark in conjunction with product marketing and other business
functions. Further, Mr. Cover agrees not to license the use of the TASER
trademark to any company not already licensed for such use (see addendum
I).
4. Mr. Cover will provide ICER with a comprehensive listing of his existing
patents and trademarks to be attached as an addendum to this document
(addendum I). Such listing will include the names and addresses of all
licensed entities, and all renewal rights for such licensing for said
patents and trademarks.
5. All technical designs and intellectual property generated during Mr.
Cover’s work with ICER will be work-made-for-hire or assigned to ICER
and will be the exclusive property of the Company.
6. Mr. Cover affirms that he has complete authority over the patents and
trademarks in the agreement and that he is free to enter into this
agreement without any hindrance from or violation of prior commitments.
Mr. Cover further affirms that he is not bound by non-disclosure or
trade secret protection clauses which would inhibit him from fully
applying his knowledge to his work at ICER. Accordingly, Mr. Cover
indemnifies ICER from any damages

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 14933
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.03.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
3
ICER CORPORATION
COVER AGREEMENT
-------------------------------------------------------------------------------resulting from litigation regarding prior commitments which would preclude
him from having entered into this agreement.
7. Mr. Cover agrees not to disclose the confidential information of ICER
Corporation without clear consent from the other members of management.
Such information will include any information which is clearly designated
as confidential, including trade secrets developed, marketing plans,
manufacturing know how, financial or other data which is designated as
confidential.
ARTICLE II: COMPENSATION
1. Mr. Cover will be paid a salary of $2,500 per month during the time of his
full time employment with the Company.
2. Mr. Cover will receive stock options for 10,000 shares of ICER Corporation
representing ten (10) percent of the company with the following vesting
schedule:
2,500
2,500
2,500
2,500

shares
shares
shares
shares

Ed#: 2

*P64567/6100903/2*

at initiation of this agreement
upon completion of functional prototype
at first shipment of product to market
on Oct. 15, 1994 (1 year).

3. These options will have a strike price of $0.36 (thirty six cents per
share) and a time to expiration of 5 years during Mr. Cover’s continued
involvement with the company.
4. Further, Mr. Cover will receive a cash bonus in the amount of the exercise
price of the stock options at the date and time of each stock option
vesting that can be used only for exercising the above stock options.
5. Mr. Cover’s equity position (via stock options) is guaranteed not to be
diluted below ten (10) percent through the first $250,000 of invested
capital.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 52
CRC: 21268
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.04.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
4
ICER CORPORATION
COVER AGREEMENT
-------------------------------------------------------------------------------ARTICLE III: CONTINGENCIES
1. Patrick W. Smith and Phillips W. Smith may elect to discontinue the
activities of the corporation upon 2 weeks’ notice to Mr. Cover. Under such
circumstances, Mr. Phillips W. Smith will have the right to reclaim the
liquid assets of the company not to exceed the amount of his cumulative
investment. Further, from date of such notice Mr. Cover will have the right
to use his skills and trademarks for whatever purpose he desires.
2. Mr. Cover may elect not to continue his work with the Company with 2 weeks’
notice. Mr. Cover would retain all vested options with right to exercise
for 6 months from the date of departure from the company. Unvested options
would be forfeited, and the corresponding shares would remain the property
of the Company.
3. In the event that Mr. Cover should not be able to exercise power of
attorney over the equity in his name while the company is privately held
(i.e. the shares are not on the public market), the Corporation would have
option to repurchase such shares within 6 months from Mr. Cover’s estate or
heirs for an amount equal to the greater of:
i) The book value of such shares calculated by standard accounting
practices
ii) $10 per share
iii) Amounts solicited from competitive bidders.
AGREED,

By:

/s/ Patrick Smith
----------------------Patrick Smith
For ICER CORPORATION

Dated:

10/15/93
--------------------

[SEAL]
CORPORATE SEAL

By:

Ed#: 2

*P64567/6100904/2*

/s/ John H. Cover
----------------------John H. Cover

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 27653
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.05.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

5
AMENDMENT TO LICENSING AGREEMENT

THIS AMENDMENT TO LICENSING AGREEMENT ("AMENDMENT") is made and entered
into this 31st day of August, 1996, by and between John H. Cover, Jr. ["JACK
COVER"] and Air Taser, Incorporated f/k/a/ ICER Corporation, an Arizona
corporation ["AIR TASER"].
In consideration of the covenants and agreements hereinafter set forth,
the amounts of money paid in accordance herewith, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
that certain Licensing Agreement dated October 15, 1993 ("LICENSE") is hereby
amended as follows:
1.
AIR TASER hereby agrees to pay to JACK COVER and JACK COVER hereby
agrees to accept the sum of One Hundred Thousand Dollars ($100,000) in full
payment and satisfaction of any and all minimum royalties and earned royalties
now due or hereinafter accruing to JACK COVER from AIR TASER pursuant to the
terms of the LICENSE as originally executed or as subsequently modified or
amended, in writing, prior to the date hereof. Said payment shall be made
contemporaneously with the full execution and delivery of this AMENDMENT by
each of the parties hereto.
2.
JACK COVER, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, for: (i) himself, (ii) his heirs,
(iii) his legal representatives, legatees, successors and assigns of all of the
foregoing persons and entities, hereby releases and forever discharges AIR
TASER, any past, present and future shareholders, successors, assigns, officers,
directors, agents, attorneys and employees of AIR TASER, together with their
respective heirs, legal representatives, legatees, successors, and assigns, of
and from all actions, claims, demands, damages, debts, losses, liabilities,
indebtedness, causes of action either at law or in equity and obligations of
whatever kind or nature, whether known or unknown, direct or indirect, new or
existing, by reason of any matter, cause or thing whatsoever from the beginning
of the world to the date hereof concerning any minimum of earned royalties which
are now due or which may hereafter accrue to JACK COVER pursuant to the terms of
the LICENSE.
3.
This AMENDMENT embodies the entire agreement between the parties and
supersedes any prior agreements or understanding between them in connection
with the subject matter hereof and the transactions contemplated hereby. There
are no oral or parol agreements, representations, or inducements existing
between the parties relating to this transaction which are not expressly set
forth herein and covered hereby. All terms of this AMENDMENT are contractual
and not mere recitals and shall be construed as if drafted by all parties
hereto. The terms of this AMENDMENT are and shall be binding upon each of the
parties hereto, their agents, employees successors and assigns, and upon all
other persons
-1 of 2-

Ed#: 4

*P64567/6100905/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 476
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 6

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.06.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
6
claiming any interest in the subject matter hereof through any of the parties
hereto.
4.
To the extent that this AMENDMENT contradicts, is inconsistent or in
conflict with any prior agreements between or among any or all of the parties,
this AMENDMENT supersedes any conflicting or inconsistent provision of any prior
agreement and is controlling to the extent necessary to resolve such conflict or
inconsistency. Any and all provisions in a prior agreement not inconsistent with
this AMENDMENT remain valid and binding.
5.
It is acknowledged that the parties hereto have read this AMENDMENT
and consulted counsel before executing same; that they have relied upon their
own judgment and that of their respective counsel in executing this AMENDMENT
and have not relied on or been induced by any representation, statement or act
by any other party referred to in this instrument; that the parties hereto have
entered into this AMENDMENT voluntarily, with full knowledge of its
significance; and that this AMENDMENT is in all respects complete and final.
6.
If any term or provision of this AMENDMENT or the application thereof
to any person, entity or circumstance shall, to any extent, be held invalid
and/or unenforceable by a court of competent jurisdiction, the remainder of this
AMENDMENT, or the application of such term or provisions to persons, entities or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby, and each term and provision of the AMENDMENT
shall be valid and be enforced to the fullest extent permitted by law.
7.
This AMENDMENT may not be amended, changed, or modified except by
written instrument executed by all parties hereto.
8.
This AMENDMENT shall be construed and enforced according to the laws
of the State of Arizona.
9.
This AMENDMENT may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one instrument.
IN WITNESS WHEREOF, the parties have caused this AMENDMENT to be duly
executed as of the day and year first above written.
AIR TASER, INCORPORATED
By: /s/ Patrick Smith
-----------------

Title:

/s/ John H. Cover, Jr.
-----------------John H. Cover, Jr.
11 Half Moon Bend
Coronado, CA 92118

President
--------------2 of 2-

Ed#: 2

*P64567/6100906/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 30830
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 7

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.07.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 2

*P64567/6100907/2*

7
2nd AMENDMENT TO THE AIR TASER LICENSING AGREEMENT

This 2nd Amendment to the AIR TASER licensing agreement (2nd Amendment) is
made and entered into this 31st day of August, 1996, by and between John H.
Cover, Jr. ["JACK COVER"] and AIR TASER, Incorporated f/k/a ICER Corporation, an
Arizona Corporation ["AIR TASER"].
In consideration of the covenants and agreements hereinafter set forth,
the amounts of money paid in accordance herewith, and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
that certain Licensing Agreement dated October 15, 1993 ["LICENSE"] is hereby
amended as follows:
1. AIR TASER hereby agrees to pay to Jack Cover, and Jack Cover hereby agrees to
accept the sum of FIFTEEN THOUSAND DOLLARS ($15,000) in full payment for a
limited exclusivity for rights to technology embodied in U.S. patent
#5,078,117 ["The ’117 Patent"]. In accordance with this limited exclusivity,
Jack Cover agrees that he shall license no other company, person, or entity
of any type to utilize the technology described in the ’117 patent for use in
electronic weapon system other than the companies licensed for such use prior
to this 31st day of August, 1996. These pre-existing licenses are non
transferable and shall not be transferred to any entity other than the
original license holder as enumerated below. Further, Mr. Cover shall not
expand or modify the rights of the existing licensees, as listed below,
without written approval from AIR TASER, Inc. A comprehensive listing of such
licensed companies is given below:
a) EESTI, Engineering, LLC, a company in Poway, CA. (Copy of license
attached as Exhibit A.)
b) Yong Suk Park, d.b.a. Bestex, Co. (Copy of license addendum regarding
’117 patent rights attached as Exhibit B.)
2. This agreement in no way binds Mr. Cover from licensing rights to utilize the
’117 technology in applications which are not electronic weapons. Mr. Cover
is free to license any person, company, association, agency, or entity of any
type to utilize the ’117 technology so long as the license contains the
specific language below:
"The licensee may not use the technology embodied in U.S. Patent
#5,078,117 in conjunction with any electronic weapon system. The violation
of this restriction shall cause immediate cancellation of this license
without notice, and may cause damages payable to John H. Cover and/or AIR
TASER, Inc."
3. If any term or provision of this 2nd Amendment or the application thereof to
any person entity, or circumstance shall, to any extent, be held invalid and
or unenforceable by a court of competent jurisdiction, the remainder of this
2nd Amendment, or the application of such term or provisions to persons,
entities, or

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 26
CRC: 57631
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 8

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.08.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
8
circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby, and each term and provision of
the 2nd Amendment shall be valid and be enforced to the fullest extent
permitted by law.
4.

This 2nd Amendment may not be amended, changed, or modified except by
written instrument executed by all parties hereto.

5.

This 2nd Amendment shall be construed and enforced according to the laws of
the state of Arizona.

IN WITNESS WHEREOF, the parties have caused this 2nd Amendment to be
duly executed as of the day and year first above written.
AIR TASER, INCORPORATED,
By: /s/ Patrick Smith
_________________
President

Ed#: 4

*P64567/6100908/4*

/s/ John H. Cover, Jr.
______________________
John H. Cover, Jr.
11 Half Moon Bend
Coronado, CA 92118

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 2
CRC: 56867
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 9

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.09.00

9
EXHIBIT A.

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 1

*P64567/6100909/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 41
CRC: 18529
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 10

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.10.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
10
ELECTROARMS, INC.
John H. Cover, Pres. 602/529-2344
5833 No. Kolb Rd. #10212
Tucson, AZ 85730
December 15, 1995
LICENSE AGREEMENT BETWEEN ANTON SIMSON, EESTI Engrg, LLC, POWAY, CA,
LICENSEE & JOHN H. COVER, LICENSOR - under Pat. No. 5,078,117 (generally
covering the use of compressed gas capsules that are easily discharged &
the gas will propell projectiles, weights, contactors, nets, etc., in a
non-firearm mode of operation).
This Agreement specifically pertains to EESTI’s manufacture of Taser-type
cassettes designed to snap onto stun guns giving the stun gun owner the
Taser stand-off range & effectiveness in stopping power over dangerous
criminals.
More specifically this License relates to J.H. Cover’s License with Eastex
Co., Yong Park, who imports & sells the Thunder Power - and other stun guns
- which will be used in conjunction with the EESTI SGA Cassettes containing
the SPOGC’s.
In return for this Exclusive License to EESTI, J.H. Cover will receive an
Earned Royalty from Anton Simson, EESTI, of $0.25 - or 25(cents) @ for each
SGA Cassette they Make & Sell.
In summary, the Licensor, John H. Cover, hereby grants an Exclusive License
under Patent #5,078,117 to Anton Simson, d.b.a. EESTI Engineering, LLC, to
manufacture and sell the Stun Gun/SGA Taser Cassettes as the Exclusive
Licensee.
Signatures below constitute the legal acceptance by the two Parties of the
above Terms & Conditions.
/s/ Anton Simson
2-19-96
----------------------------Anton Simson, Licensee - Date

Ed#: 4

*P64567/6100910/4*

/s/ John H. Cover
12/15/95
-----------------------------John H. Cover, Licensor - Date

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 8
CRC: 1012
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 11

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.11.00

Ed#: 1

*P64567/6100911/1*

11

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

EXHIBIT B.

Date: 7-MAY-2001 14:59:03.02

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 17448
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 12

[E/O]

<PAGE>
12
ELECTROARMS, INC.
619/423-0689
11 Half Moon Bend, Coronado, CA 92118
Yong S Park, Pres.
Bestex Co., Unit B
3421 San Fernando Rd.
Los Angeles, CA 90065

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.12.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

December 1, 1998

Subject: License Addendum covering
Bestex Sale of a Stun Gun
Adaptor/SGA designed for the Thunder
Power Stun Gun.

ADDENDUM TO THE LICENSE AGREEMENT signed by Yong Suk Park, d.b.a. Bestex Co.,
3/7/90 & John H. Cover, Licensor, on 2/19/90.
Licensor hereby grants an Exclusive License to distribute and sell the SGA
Taser Cassettes designed to "snap" onto the front of the Bestex Thunder Power
Stun Gun modified to function with the SGA -- which projects the high voltage
electric contactors at an attacker -- such that the user does not receive a
shock to this hand (insulation)
This License is under J.H. Cover’s Patent #5,078,117 covering the
Self-Puncturing Compressed Gas Capsule. This technology permits the use of
compressed air to propell the contactors & is therefore not classified as a
Firearm. EESTI, Anton Simson, Poway, CA will make the SGA under my Patent
License & supply them to Bestex.
The Terms for Bestex’s Exclusivity are: 1)$20,000 upfront ($10,000 upon
execution of the License -- 1st week of March, 1996 -- and $10,000 April 1,
1996), 2) Bestex’s Minimum Royalty will be $2500/mos starting 4/2/96, and 3)
Bestex will pay J.H. Cover $2 Earned Royalty for each Thunder Power Stun Gun
sold(or any modification or substitution thereof that fits the SGA) and
25(cents) for each SGA Cassette sold.
It is important that Yong Park, Anton Simson & Jack Cover work as a team on
this program. There are decisions to be made such as the Packaging of the
Product -- the Thunder Power & (2) SGA cassettes in a box -- sales and
advertising strategies including the name of the Product. "Public Defender" and
ElectroStorm(stop rape & murder) are possibilities. An early meeting such as
the first week in December is suggested. Jack Cover will consult as needed
without compensation.
The signatures below constitute the legal acceptance of the two parties of the
above terms & conditions.

/s/ Yong Suk Park,
12/18/95
----------------------------Yong Suk Park, Licensee - Date

Ed#: 2

*P64567/6100912/2*

/s/ John H. Cover
12/15/95
---------------------------John H. Cover, Licensor

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 13
CRC: 59126
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 13

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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.13.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

13
8/31/96

AIR TASER INCORPORATED

Rec’d $15,000 for 2nd Amendment Compensation
/s/ J.H. Cover
-------------J.H. Cover

Ed#: 2

*P64567/6100913/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 18608
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 14

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.14.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 1

*P64567/6100914/1*

14
[SPECIMEN STOCK CERTIFICATE]
[AIR TASER LOGO]
INTELLIGENT SELF DEFENSE

Number
00004

Shares
50,000
AIR TASER INCORPORATED
Share Issue Authorized by /s/ illegible
------------President

/s/ illegible
------------Secretary

THIS CERTIFIES THAT John H. Cover is the registered holder of Fifty Thousand
(50,000) Shares transferrable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be Hereunto
affixed
this Seventeenth day of June A.D. 1994

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 28
CRC: 23655
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 15

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<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

15
[SPECIMEN STOCK CERTIFICATE]

[SEAL]

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto AIR TASER, INC.
____________ Shares represented by the within Certificate, and do hereby
irrevocably constitute and appoint PATRICK SMITH Attorney to transfer the said
Shares on the books of the within named Corporation with full power of
substitution in the premises.
Dated

AUGUST 31, 1994

In presence of
/s/ illegible
-----------------------

Ed#: 4

*P64567/6100915/4*

/s/ John H. Cover
----------------------John H. Cover
11 Half Moon Bend
Coronado, CA 92118

NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 60010
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 16

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.01

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 3

*P64567/610091501/3*

16
SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT ["Settlement Agreement"] is made and entered into
this 8/30/96 day of August, 1996, by and between John H. Cover, Jr. ["JACK
COVER"] and Virginia A. Cover ["VIRGINIA COVER"] and Air Taser, Incorporated
f/k/a ICER Corporation, an Arizona corporation ["AIR TASER"].
RECITALS
A. WHEREAS, AIR TASER, is an Arizona corporation engaged in the business
of manufacturing and selling certain goods and products, including a non-lethal
electronic self-defense device used to temporarily immobilize an attacker ["AIR
TASER DEVICE"].
B. WHEREAS, JACK COVER, was and is the sole owner and licensor of certain
U.S. patents, including:
a.

Patent #4,253,132 [the "132 Patent"] which covers generally the
circuitry by which current from a battery is transformed so that an
electrical charge with which a potential attacker is struck operates
to temporarily immobilize a potential attacker; and

b.

Patent #5,078,117 [the "117 Patent"] which covers generally the
non-explosive means of projecting electrically charged darts to
deliver an immobilizing electrical charge to a potential attacker.

C. WHEREAS, VIRGINIA COVER is the spouse of JACK COVER and may have or
claim certain marital property rights in and to the 132 Patent, the 117 Patent
and other assets which are the subject of this Settlement Agreement.
D. WHEREAS, on or about October 15, 1993, JACK COVER, as licensor, and AIR
TASER, as licensee, executed a certain written Licensing Agreement ["AIR TASER
LICENSE"].
A true and correct copy of the AIR TASER LICENSE executed by and between
AIR TASER and JACK COVER is attached hereto as Exhibit "A" and by reference
made a part hereof.
E. WHEREAS, by written agreement executed on or about October 15, 1993, by
and between AIR TASER and JACK COVER ["EMPLOYMENT AGREEMENT"], JACK COVER
accepted a position of employment with AIR TASER for a period of one (1) year
upon the terms and conditions set forth therein. JACK COVER asserts that on or
about October 15, 1993, in accordance with Article 1, paragraph 4, of the
EMPLOYMENT AGREEMENT, he tendered to AIR TASER a copy of a certain patent
license with Electronic Medical Research Laboratories, Inc. d/b/a Tasertron
["TASERTRON"] covering the 132 Patent and granting certain exclusive rights
relative to the U.S. law enforcement market. In or about June, 1994, JACK COVER
resigned as a full time employee of AIR TASER.
</R>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 5403
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<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.02

Date: 7-MAY-2001 14:59:03.02

SN: 0

17

A true and correct copy of the EMPLOYMENT AGREEMENT executed by and
between AIR TASER and JACK COVER is attached hereto as Exhibit "B" and by
reference made a part hereof.
F.
WHEREAS, pursuant to Article I, paragraph 7, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed not to disclose the confidential information of
AIR TASER, including trade secrets, marketing plans, manufacturing know-how,
and financial or other data designated as confidential.
G.
WHEREAS, pursuant to Article I, paragraph 3, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed to license AIR TASER to utilize the "Taser"
trademark in conjunction with product marketing and other business functions and
further agreed not to license the use of the "Taser" trademark to any company
not licensed for such use prior to October 15, 1993.
H.
WHEREAS, pursuant to Article I, paragraph 5, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed that all technical designs and intellectual
property generated during his employment with AIR TASER would be
work-made-for-hire, would be assigned to AIR TASER and would be the exclusive
property of AIR TASER.
I.
WHEREAS, in April, 1995, after receiving a letter dated March 29,
1995 from AIR TASER’s attorneys, Brown & Bain, alleging certain violations of
the AIR TASER LICENSE and threatening legal action, JACK COVER and VIRGINIA
COVER filed suit in the Superior Court of the State of Arizona in and for the
County of Maricopa, captioned Cover, et al. v. Icer Corporation n/k/a Air
Taser, Incorporated, case number CV95-06851 [the "ARIZONA LITIGATION"], seeking
a declaratory judgment holding that the AIR TASER LICENSE does not include the
right to sell the AIR TASER DEVICE to law enforcement agencies together with
an injunctive Order prohibiting AIR TASER from selling or attempting to sell
the AIR TASER DEVICE to law enforcement agencies.
J.
WHEREAS, AIR TASER vigorously denies any and all liability with
respect to the allegations of fact and the claims asserted in the complaint
filed by JACK COVER and VIRGINIA COVER in the ARIZONA LITIGATION.
K.
WHEREAS, in October, 1995, AIR TASER filed its Answer and Counterclaim
in the ARIZONA LITIGATION wherein its denied, inter alia, that the AIR TASER
LICENSE restricts the sale of the AIR TASER DEVICE to any particular market or
user and further alleged, by way of counterclaim, various causes of action
including breach of contract, breach of fiduciary duty and fraud for which it
requested both money damages and injunctive and other equitable relief.
</R>

-2-

Ed#: 8

*P64567/610091502/8*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 51
CRC: 22406
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 18
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.03

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
18
<R>
L.
WHEREAS, JACK COVER and VIRGINIA COVER vigorously deny any and all
liability with respect to the allegations and the claims asserted in the
counterclaim filed by AIR TASER in the ARIZONA LITIGATION. JACK COVER
affirmatively asserts that on or prior to October 15, 1993, he disclosed the
terms of the TASERTRON license to AIR TASER, including the terms purporting to
grant exclusivity as to the use of the 132 Patent within certain markets and
geographical boundaries.
M.
WHEREAS, in February, 1995, TASERTRON filed an action against AIR
TASER in the Federal District Court for the Central District of California
captioned Electronic Medical Research Laboratories, Inc. d/b/a/ Tasertron v. Air
Taser, Inc., case number ED CV 95-53 RT (JRX) ["CALIFORNIA LITIGATION"]
asserting an exclusive right to market devices utilizing the technology covered
by the 132 Patent within certain markets and geographical boundaries. In
September, 1995 the CALIFORNIA LITIGATION was settled and AIR TASER agreed,
inter alia, to refrain from selling the AIR TASER DEVICE to U.S. law enforcement
agencies for a specified period of time.
N.
WHEREAS, all parties hereto desire to fully settle and compromise all
matters in controversy heretofore existing between them.
O.
WHEREAS, all parties have examined the benefits to be obtained under
this Settlement Agreement and have considered the costs, risks and delays
associated with the continued prosecution of the claims asserted in the ARIZONA
LITIGATION. Each of the parties, having full knowledge of the contents hereof
and after obtaining the advice of counsel, believes that, in consideration of
all the circumstances and after significant investigation and settlement
negotiations between and among the parties, the settlement embodied in this
Settlement Agreement is fair, reasonable and in the best interests of all
parties concerned.
NOW THEREFORE, in consideration of the foregoing Recitals, the
representations, warranties, covenants and agreements contained in this
Settlement Agreement, the sum of One Dollar ($1.00) each to the other in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto represent, warrant, covenant
and agree as follows:
1.
The foregoing Recitals and all Exhibits referred to herein and
attached hereto, are incorporated in this Settlement Agreement as if set forth
in full in the body hereof.
2.
It is hereby stipulated and agreed that, subject only to the terms of
that certain Stipulation of Settlement ("STIPULATION") executed by and between
AIR TASER and Electronic Medical Research Laboratories, Inc. d/b/a/ Tasertron in
the CALIFORNIA LITIGATION, in its present form or as it may hereafter be
amended, the AIR TASER
</R>
-3-

Ed#: 5

*P64567/610091503/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 43399
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 19
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.04

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
19
<R>
LICENSE authorizing the manufacture, use and sale of devices covered by the 132
Patent and the 117 Patent is unrestricted as to any particular market, user,
geographical area, dimension or design. However, the AIR TASER LICENSE shall
not encompass applications of the technology covered by the 117 Patent other
than in conjunction with electronic devices. A copy of the STIPULATION is
attached hereto as Exhibit "C".
3. It is hereby stipulated and agreed that paragraph 6.2 of the AIR TASER
LICENSE is modified so that if, an any month, the minimum royalty exceeds the
earned royalty, that excess shall be applicable as a credit to AIR TASER in the
next calendar month in the following manner: if the earned royalty for the next
month exceeds the minimum royalty for that month, then the excess shall apply
to reduce the earned royalty dollar for dollar until that excess for the
previous month is used up. However, if all the excess is not used up in that
next month, then it shall no longer operate as a credit in the future. In no
event shall AIR TASER be thereby relieved of the obligation to pay the agreed
minimum royalty in any month.
4. AIR TASER agrees that the negative balance in JACK COVER’s cumulative
royalty account existing as of the date of execution of this Settlement
Agreement, which negative balance constitutes a credit to AIR TASER against
future earned royalties, is hereby eliminated.
5. It is hereby stipulated and agreed that the period of exclusivity
relative to devices utilizing the technology covered by the 117 Patent and
meeting certain specified characteristics as provided in paragraph 4.2 of the
AIR TASER LICENSE has expired and that, subject to the provisions of paragraph
6 of this Settlement Agreement, JACK COVER is free to license others to utilize
the technology covered by the 117 Patent on a non-exclusive basis.
6. JACK COVER hereby agrees that he shall not on his own account, nor
shall he authorize in any future patent licenses he may grant to other
individuals or other entities, manufacture, use or sell or license for
manufacture, use or sale (a) any launchers which are compatible with the AIR
TASER cartridge model number 34200 or (b) cartridges which are compatible with
the AIR TASER power handle model number 34100. "Compatible" for these purposes
means a device which, without modification by the user, will operate with the
AIR TASER components [model numbers 34100 and 34200] to deliver an electric
shock to a target. AIR TASER will not knowingly and intentionally manufacture or
sell any devices [excluding model numbers 34100 and 34200] which are compatible
with any launchers or cartridges manufactured by other existing patent licenses
of JACK COVER. In any future patent licenses which JACK COVER may grant, and in
any amendments to any existing licenses which he may in the future enter into,
he shall include the following language:
</R>
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Ed#: 4

*P64567/610091504/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 30526
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 20
Description: EDGAR ONLY

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.05

Date: 7-MAY-2001 14:59:03.02

SN: 0

20
"This license does not allow the licensee to manufacture, use or sell
(a) any launchers which are compatible with the AIR TASER cartridge
model number 34200 or (b) any cartridges which are compatible with the
AIR TASER power handle model number 34100. "Compatible for these
purposes means a device which, without modification by the user, will
operate with the AIR TASER components [model numbers 34100 and 34200]
to deliver an electric shock to a target. Furthermore, licensee hereby
acknowledges that it has had an opportunity to inspect or is otherwise
familiar with the AIR TASER air cartridge and the AIR TASER power
handle prior to execution of the license.

In order to facilitate JACK COVER’s compliance with this paragraph,
AIR TASER shall within ten (10) days following execution and delivery of this
Settlement Agreement, deliver three (3) inoperative power handles [model 34100]
and three (3) inoperative cartridges [model 34200] to JACK COVER.
7.
It is hereby stipulated and agreed that the last sentence of paragraph
6.3 of the AIR TASER LICENSE shall be deleted and stricken from the AIR TASER
LICENSE, and the following sentence shall be inserted in its place:
"If the DEFAULT is not cured by payment of this MINIMUM ROYALTY by
cashier’s check or money order on or before 5:00 P.M. local Arizona
time of the tenth (10th) day following written notice by Licensor to
Licensee of the facts constituting the alleged default, this licensing
agreement shall terminate automatically without further notice."
8.
It is hereby stipulated and agreed that the last sentence of
paragraph 6.4 of the AIR TASER LICENSE shall be deleted and stricken from the
AIR TASER LICENSE, and the following sentence shall be inserted in its place:
"If the DEFAULT is not cured by payment of this EARNED ROYALTY by
cashier’s check or money order on or before 5:00 P.M. local Arizona
time of the tenth (10th) day following written notice by Licensor to
Licensee of the facts constituting the alleged default, this licensing
agreement shall terminate automatically without further notice."
</R>
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Ed#: 5

*P64567/610091505/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 48
CRC: 23631
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Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.06

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
21
<R>
9. AIR TASER does not know of any reason why the 132 Patent or the 117
Patent should not continue in existence until the dates set forth in the AIR
TASER LICENSE. AIR TASER will not take, nor will it cause anyone else to take,
any action which would impair the validity of either patent and, if AIR TASER
shall in the future have any concern as to the early termination of either
patent, it will notify JACK COVER of the basis for its concern so that he might
take such action as he deems necessary to avoid such early termination.
10. It is hereby stipulated and agreed that upon expiration of the 132
Patent, AIR TASER’s obligation to pay JACK COVER a $2.00 per unit earned
royalty for each unit which utilizes the power generation device and electric
wave form described in the 132 Patent shall be terminated, notwithstanding AIR
TASER’s continued use of the technology covered by the 132 Patent.
11. It is hereby stipulated and agreed that upon expiration of the 117
Patent, AIR TASER’s obligation to pay JACK COVER a $0.25 per unit earned
royalty for each device which utilizes compressed gasses to launch electrical
contactors from the power generator shall be terminated, notwithstanding AIR
TASER’s continued use of the technology covered by the 117 Patent.
12. It is hereby stipulated and agreed that upon expiration of the 117
Patent, AIR TASER’s obligation to make any further minimum royalty payments or
earned royalty payments, as those terms are used in paragraphs 6.1 and 6.2 of
the AIR TASER LICENSE, to JACK COVER shall be terminated, notwithstanding AIR
TASER’s continued use of the technology covered by either or both the 117
Patent and/or the 132 Patent.
13. JACK COVER hereby represents and warrants that he is the sole owner
of the "Taser" registered trademark, Registration No. 1,235,685, and that of
those licensees of the "Taser" trademark whose licenses came into existence on
or prior to October 15, 1993, AIR TASER and Electronic Medical Research
Laboratories, Inc. d/b/a Tasertron are the only licensees currently using or
authorized to use the "Taser" trademark. JACK COVER hereby reaffirms his prior
agreement, as originally set forth in Article I, paragraph 3, of the EMPLOYMENT
AGREEMENT, that AIR TASER, as licensee, is authorized to utilize the "Taser"
trademark in conjunction with product marketing and other business functions
and that JACK COVER shall not license the use of the "Taser" trademark to any
individual or entity not licensed for such use prior to October 15, 1993. In
order to prevent abandonment of the "Taser" trademark, JACK COVER hereby agrees
that AIR TASER shall have the right, jointly with JACK COVER, to police and
protect the use of the "Taser" trademark by others, in his name or in the name
of AIR TASER, in a reasonable manner to maintain the quality of the mark and to
prevent the unauthorized use of the mark by third parties. However, other
patent licensees of JACK COVER may, with his prior
</R>
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Ed#: 5

*P64567/610091506/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 22753
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 22
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.07

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
22
<R>
written consent, refer to the "Taser" device for comparative purposes only
[patent licensees not expressly licensed to use the "Taser" trademark on or
prior to October 15, 1993 may not claim that their device is a "Taser" or
incorporate the "Taser" trademark in their product name], provided that the
word "Taser" is designated as a registered trademark, that the patent licensee
includes a disclaimer that said patent licensee is not licensee of the "Taser"
trademark and that said disclaimer appears in the same context as the word
"Taser" in the same size typeface as the word "Taser", but in no event may the
word "Taser" appear in a typeface larger than 12 points. JACK COVER further
represents and warrants that attached hereto as Group Exhibit "D" is a full and
complete list of the names and current addresses of all licensees of the
"Taser" trademark together with the copies of the subject licenses and all
amendments thereto.
14. JACK COVER does hereby sell, transfer and assign to AIR TASER all
shares of AIR TASER stock acquired by him at any time [i.e., 50,000 shares]
free and clear of all liens, claims and encumbrances. JACK COVER agrees that
contemporaneously with the execution and delivery of this Settlement Agreement
he shall surrender said stock, properly endorsed, to AIR TASER.
15. JACK COVER hereby represents and warrants that Exhibit "E" attached
hereto is a full and complete list of the names and current addresses of all
past or present licensees of the 117 Patent and the 132 Patent together with
copies of the subject licenses and any and all amendments thereto.
16. JACK COVER hereby represents and warrants that, except for the
ARIZONA LITIGATION, there are no law suits pending or threatened and there are
no existing or potential causes of action involving the 117 Patent, the 132
Patent and/or the "Taser" trademark.
17. JACK COVER hereby reaffirms his prior agreement, as originally set
forth in Article I, paragraph 5, of the EMPLOYMENT AGREEMENT that all technical
designs and intellectual property generated by JACK COVER during his work with
ATR TASER was work-made-for-hire, was, or upon request, will be assigned to AIR
TASER and is the exclusive property of AIR TASER. JACK COVER further agrees to
execute all documents and perform all acts necessary to enable AIR TASER to
acquire or perfect any and all rights, titles, patents, copyrights, interests
and other protection which may be available with regard to such technical
designs and intellectual properties. JACK COVER agrees that contemporaneously
with the execution and delivery of this Settlement Agreement he shall execute
and deliver to AIR TASER the Declaration for Patent Application with Power of
Attorney and the Assignment attached hereto as Exhibits "F" and "G",
respectively. AIR TASER warrants and agrees that the Declaration for Patent,
Exhibit "F", covers both a method of manufacturing compressed fluid containers
and a
</R>
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Ed#: 6

*P64567/610091507/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 11637
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 23
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.08

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
23
<R>
double walled compressed gas cylinder, and that patent, should it be granted,
would not, to the best of its knowledge, replace or conflict with the 117
Patent, and even if the patent should be granted, it would not allow AIR TASER
to utilize the technology covered by the 117 patent without paying JACK COVER
the royalties required by the AIR TASER LICENSE. Attached hereto as Exhibit "H"
is a schedule of intellectual property generated by JACK COVER during his work
with AIR TASER which the parties agree was either work-made-for-hire or
assigned to AIR TASER and which is the exclusive property of AIR TASER.
18. JACK COVER hereby reaffirms his continuing contractual obligation not
to disclose confidential information of AIR TASER, as originally set forth in
Article I, paragraph 7, of the EMPLOYMENT AGREEMENT. The term "confidential
information" shall mean any information or material which is proprietary to AIR
TASER, whether owned or developed by AIR TASER, which is not generally known
other than by AIR TASER, and which JACK COVER may have obtained through any
direct or indirect contact with AIR TASER. Confidential information includes,
without limitation, business records and plans, financial statements and
projections, marketing plans, manufacturing know-how, pricing structure, costs,
appraisals, customer lists, the identity of suppliers of AIR TASER whose
identities became known to JACK COVER as a result of his employment by AIR
TASER and other proprietary information which is designated as confidential.
The parties hereto acknowledge and agree that damages at law may not
be a measurable or adequate remedy for a breach of JACK COVER’s continuing
obligation not to disclose the confidential information of AIR TASER, and,
accordingly, consent to the entry by any court of competent jurisdiction in
Arizona, or, if jurisdiction is not appropriate in Arizona, such other court of
competent jurisdiction, of an order enjoining the violation of such agreement
should the requirements for an injunction be met and further agree that the
entry of such order would be an appropriate remedy for the breach of this
obligation.
19. JACK COVER and AIR TASER agree that contemporaneously with the
execution and delivery of this Settlement Agreement, they shall execute and
exchange Releases in the form attached hereto as Exhibits "I" and "J".
20. Except as otherwise provided herein and notwithstanding the execution
of the Releases executed and exchanged pursuant to paragraph 19 hereof, the
terms of the AIR TASER LICENSE, as modified by this Settlement Agreement,
including without limitation the terms governing the duration of the AIR TASER
LICENSE, the specified minimum royalty and the per unit earned royalties
applicable to both the 117 Patent and the 132 Patent, shall hereafter remain in
full force and effect.
</R>
-8-

Ed#: 4

*P64567/610091508/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 45
CRC: 39428
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 24
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.09

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
24
<R>
21. Within five (5) business days following the execution of this
Settlement Agreement by all parties hereto, JACK COVER and VIRGINIA COVER, by
and through their attorney of record, shall prepare and file with the Court
wherein the ARIZONA LITIGATION is now pending an appropriate Motion and Agreed
Order providing for the dismissal of the ARIZONA LITIGATION on its merits, with
prejudice and without costs or attorneys’ fees, all matters in controversy
having been fully settled, compromised and adjourned.
22. VIRGINIA COVER hereby consents to each and every term and provision
of the Settlement Agreement as set forth herein and hereby sells, transfers and
assigns to AIR TASER any right, title and interest she may have in or to the
property hereby transferred by JACK COVER to AIR TASER.
23. The parties hereto acknowledge that it is their intent to consummate
this Settlement Agreement and agree to execute all documents and to perform all
acts reasonably necessary to effectuate and implement all terms and conditions
of this Settlement Agreement.
24. This Settlement Agreement shall be preserved as confidential by the
parties hereto. The parties hereto, and each of them, agree (i) to take all
precautions necessary to safeguard the information contained in this Settlement
Agreement and any and all information furnished in connection herewith from
disclosure to any person or entity other than employees, officers, directors and
agents (including legal counsel and financial advisors) and, in addition, those
individuals who otherwise normally have access to information of such nature
under the parties’ established confidentiality procedures; (ii) not to use this
Settlement Agreement or any information contained herein or furnished in
connection herewith for any purpose other than to resolve the issues and
controversies as may exist between the parties. The parties hereto, and each of
them, further agree that if any of them are requested or required by law to
disclose the contents of this Settlement Agreement or any information contained
herein or furnished in connection herewith, the party so requested will provide
all other parties with prompt written notice of the request so that any party
may seek an appropriate protective order or consent to the waiver of compliance
with this confidentiality provision of the Settlement Agreement. If in the
absence of a protective order or such waiver, any party is, nonetheless,
compelled to disclose any or the contents of this Settlement Agreement to a
Court or other tribunal under circumstances where such party would be liable
for contempt or other penalty if disclosure is not made, said party shall
disclose to such Court or other tribunal only that limited portion of the
information which is legally required to be disclosed.
</R>
-9-

Ed#: 4

*P64567/610091509/4*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 13527
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 25
Description: EDGAR ONLY

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.10

Date: 7-MAY-2001 14:59:03.02

SN: 0

<PAGE>
25
<R>
25. Unless expressly provided otherwise in this Settlement Agreement, any
notice, request, demand or other communication required to be given under this
Settlement Agreement or any document or instrument executed and delivered
pursuant to this Settlement Agreement shall be in writing, shall be
deemed to be given or delivered (a) on the date of personal or facsimile
delivery of the notice, request, demand or other communication at or before 2:00
p.m. local Arizona time, (b) on the second business day after the day of mailing
of such notice, request, demand or other communication by United States
Registered Mail or United States Certified Mail, postage prepaid, or (c) on the
next business day after mailing of such notice, request, demand or other
communication by express next-day courier, freight charges prepaid, to the
parties (including any person or entity designated for receipt of a photocopy
thereof) at the following addresses or at such other address as any of the
parties may hereafter specify in the aforementioned manner:
if to JACK COVER:

John H. Cover, Jr.
5855 North Kolb Road
Apt. 10212
Tucson, AZ 85750
(Facsimile:

with a copy to:

)

Gary F. Howard, Esq.
Howard & Rouse, P.C.
3800 North Central Avenue
Suite 280
Phoenix, AZ 85012
(Facsimile: 602-263-6005)

if to VIRGINIA COVER:

Virginia A. Cover
11 Half Moon Bend
Coronado, CA 92118
(Facsimile:

with a copy to:

)

Gary F. Howard, Esq.
Howard & Rouse, P.C.
3800 North Central Avenue
Suite 280
Phoenix, AZ 85012
(Facsimile: 602-263-6005)

</R>
-10-

Ed#: 5

*P64567/610091510/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 49
CRC: 13787
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 26

[E/O]

<PAGE>
26
<R>
if to AIR TASER:

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.11

Date: 7-MAY-2001 14:59:03.02

SN: 0

Patrick W. Smith
Air Taser, Inc.
7339 E. Evans Road, Suite 1
Scottsdale, AZ 85260
(Facsimile: 602-991-0791)

with a copy to:

Joel H. Shapiro, Esq.
Kamenear, Kadison & Anderson
20 North Wacker Drive
Suite 4100
Chicago, IL 60606
(Facsimile: 312-332-6163)

26. This Settlement Agreement embodies the entire agreement between the
parties and supersedes any prior agreements or understanding between them in
connection with the subject matter hereof and the transactions contemplated
hereby. There are no oral or parol agreements, representations, or inducements
existing between the parties relating to this transaction which are not
expressly set forth herein and covered hereby. All terms of this Settlement
Agreement are contractual and not mere recitals and shall be construed as if
drafted by all parties hereto. The terms of this Settlement Agreement are and
shall be binding upon each of the parties hereto, their agents, employees
successors and assigns, and upon all other persons claiming any interest in the
subject matter hereof through any of the parties hereto.
27. To the extent that this Settlement Agreement contradicts, is
inconsistent or in conflict with any prior agreements between or among any or
all of the parties, this Settlement Agreement supersedes any conflicting or
inconsistent provision of any prior agreement and is controlling to the extent
necessary to resolve such conflict or inconsistency. Any and all provisions in
a prior agreement not inconsistent with this Settlement Agreement remain valid
and binding.
28. This Settlement Agreement may not be amended, changed, or modified
except by written instrument executed by all parties to this Settlement
Agreement.
29. The place of business of AIR TASER, the place of negotiation,
execution and delivery of this Settlement Agreement and the other
documents and instruments to be executed and delivered pursuant to this
Settlement Agreement, and the place of performance under this Settlement
Agreement being the State of Arizona, this Settlement Agreement shall be
construed and enforced according to the laws of the State of Arizona.
</R>
-11-

Ed#: 3

*P64567/610091511/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 58324
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 27

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.15.12

IN WITNESS WHEREOF, the parties have caused this Settlement Agreement to
be duly executed as of the day and year first above written.
AIR TASER, INCORPORATED
/s/ Patrick Smith
------------------------Title: President
----------------------

/s/ John H. Cover, Jr.
--------------------------John H. Cover, Jr.
/s/ Virginia A. Cover
--------------------------Virginia A. Cover

</R>
-12-

Ed#: 3

*P64567/610091512/3*

<PAGE>
27
<R>
30. This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.

By:

Date: 7-MAY-2001 14:59:03.02

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 43373
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 28

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.16.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

28
LICENSING AGREEMENT

1.

CONSIDERATION; EFFECTIVE DATE
1.1 The effective date of this agreement shall be Oct. 15, 1993.

2.

PARTIES
2.1 John H. Cover is an individual with business located at Box 404, 4725
Sunrise Drive, Tucson, Arizona 85718 (LICENSOR)
2.2 ICER Corporation is an Arizona Corporation engaged in the development
of non lethal electronic weapons for sale to the general consumer market
(LICENSEE).

3.

BACKGROUND
3.1 Licensor represents and warrants that he owns several patent rights,
both domestic and foreign as listed on Exhibit "A" though not in every
country of the world, and specifically U.S. Patent Number 4,254,132 and
5,078,117, (the Licensed Patents) concerning a power supply and ballistics
launching mechanism for weapons or other devices utilizing electricity for
immobilization purposes.
3.2 Licensor is not aware of any ownership of another of inventions or
patent rights or trade secret or know-how rights in conflict with his own;
and Licensor believes that he possesses such right, title and interest in
and to the electronic immobilization devices and equipment useful therein
as is necessary and appropriate to the terms of this agreement.
3.3 Licensee is a company seeking to develop such technology for
manufacture and marketing an alternative non lethal self defense device to
firearms.
3.4 Any other concepts, advanced technologies or other patents Licensor now
possesses or might obtain in the future are specifically excluded from this
agreement. HOWEVER, SUCH TECHNOLOGIES MAY BE COVERED IN SEPARATE
ARRANGEMENTS SPECIFYING CONTRACT AND SALARIED WORK.

4.

LICENSE

Ed#: 2

*P64567/6100916/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 43
CRC: 40478
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 29

[E/O]

<PAGE>
29
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.17.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

COVER AGREEMENT

4.1 Licensor hereby grants Licensee a non exclusive license for use of
patent number 4,254,132 and the electric wave form and power generator
described therein. Under said licensed patent to manufacture, use and sell
devices, with and without launching mechanisms covered by patent number
4,254,132.
4.2. LICENSOR HEREBY GRANTS LICENSEE LICENSE FOR PATENT 5,078,117. LICENSOR
IS LICENSED UNDER SAID PATENT TO MANUFACTURE, USE AND SELL DEVICES COVERED
BY PATENT 5,078,117. THIS LICENSE WILL BE EXCLUSIVE FOR DEVICES WHICH MEET
ALL OF THE FOLLOWING CHARACTERISTICS:
i)
ii)
iii)
iv)

ELECTRONIC WEAPONRY DESIGNED TO IMMOBILIZE
WEAPON AS IN i) WHEREIN THE GREATEST DIMENSION OF THE WEAPON IS
OF LESS THAN FOURTEEN INCHES.
A WEAPON WHICH IS DESIGNED TO BE NON LETHAL
A WEAPON DESIGNED FOR USE AGAINST HUMANS

THIS EXCLUSIVITY BINDS LICENSEE TO ENSURE THAT ANY FURTHER LICENSING
OF PATENT 5,078,117 DESCRIBES CLEARLY THAT THE LICENSING OF PATENT
5,078,117 DESCRIBES CLEARLY THAT THE LICENSE MAY NOT BE USED FOR
MANUFACTURE OF DEVICES WHICH MEET THOSE FOUR CHARACTERISTICS. THIS
EXCLUSIVITY WILL BE BINDING FOR TWENTY FOUR MONTHS (24). AFTER TWENTY FOUR
MONTHS, THIS EXCLUSIVITY CLAUSE WILL REMAIN IN EFFECT IF THE TOTAL EARNED
ROYALTIES PAID BY LICENSEE TO LICENSOR EXCEEDS $100,000 PER YEAR, USING
MONTHS 12-24 AS THE FIRST YEAR FOR SUCH CALCULATION. SHOULD THE EARNED
ROYALTIES FALL BELOW $100,000 PER YEAR, LICENSOR WILL BE FREE TO LICENSE
PATENT 5,078,117 FOR SIMILAR USE.
4.3. No party shall enter into any contracts or make any warranties on
behalf of the other party.
4.4. Licensee shall not negotiate sub license or assign this license unless
specifically authorized in writing by Licensor. Bona fide sales by Licensee
to bona fide third parties for resale are not sub licensing so long as
these sales are not in violation of Paragraph 6.12 below.
5.

Ed#: 5

*P64567/6100917/5*

TERM OF LICENSE
5.1. The license will be for the period of validity of patent 4,254,132 on
devices utilizing the technology described therein

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 49373
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 30

[E/O]

<PAGE>
30
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.18.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

COVER AGREEMENT

and for the PERIOD OF VALIDITY of patent 5,078,117 for mechanisms
utilizing the technology described therein.
5.2 Licensee’s obligation to pay royalties, as set forth in
Paragraph 6, runs in favor of Licensor’s heirs, successors and
assigns.
6.

Ed#: 3

*P64567/6100918/3*

ROYALTIES
6.1 From Oct. 15, 1993 until the expiration of the above described
patents, unless Licensee ceases to make, use, or sell devices covered by
the Licensed Patents, Licensee agrees to pay Licensor a MINIMUM ROYALTY of
Two thousand five hundred and no/100 Dollars ($2,500) per month payable on
the 15th and on the 15th of each and every month thereafter during the
term of this license. Payment of the MINIMUM ROYALTY shall be delinquent
if not paid within 5 days after the due date.
6.2 LICENSEE ALSO AGREES TO PAY AN EARNED ROYALTY TO BE COMPUTED MONTHLY
AND, AFTER REDUCTION BY THE AMOUNT PAID IN CUMULATIVE MINIMUM ROYALTIES
ABOVE CUMULATIVE EARNED ROYALTIES, SAID EARNED ROYALTIES SHALL BE EQUAL TO
TWO DOLLARS PER UNIT ($2.00) FOR EACH UNIT WHICH UTILIZES THE POWER
GENERATION DEVICE AND ELECTRIC WAVE FORM DESCRIBED IN PATENT 4,254,132 AND
$0.25 PER UNIT FOR EACH DEVICE WHICH UTILIZES COMPRESSED GASSES TO LAUNCH
ELECTRICAL CONTACTORS FROM THE POWER GENERATOR. THIS $0.25 EARNED
ROYALTY SHALL REMAIN IN EFFECT FOR THE LIFE OF PATENT 4,254,132 IF IT DOES
NOT UTILIZE THE TECHNOLOGY DESCRIBED IN PATENT NUMBER 5,078,117. IF IT
DOES UTILIZE THE TECHNOLOGY DESCRIBED IN PATENT NUMBER 5,078,117, THEN THE
EARNED ROYALTY SHALL REMAIN IN EFFECT FOR THE LIFE OF SAID PATENT
5,078,117. AN EARNED ROYALTY OF $0.10 WILL BE PAID FOR "PRACTICE
CASSETTES" WHICH UTILIZE THE TECHNOLOGY IN PATENT 5,078,117, WHEREIN
"PRACTICE CASSETTES" ARE DEFINED AS DEVICES WHICH SIMULATE THE ACTION OF
PROPELLING ELECTRICAL CONTACTORS TO A TARGET BUT WHICH ARE
NON-FUNCTIONAL--I.E. ARE NOT RELIABLE CONTACTORS FOR USE IN COMBAT
SITUATIONS.
6.3 Licensee’s MINIMUM ROYALTY payment is due on the 15th of each month.
MINIMUM ROYALTY payments are past due five days thereafter. If MINIMUM
ROYALTY payments are not made within five days of the due date, then a
DEFAULT of this agreement occurs automatically and without notice.
Licensee has

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 30753
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 31

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.19.00

<PAGE>
31
ICER CORPORATION

Date: 7-MAY-2001 14:59:03.02

SN: 0

Ed#: 5

*P64567/6100919/5*

COVER AGREEMENT

payment with a cashier’s check or money order for the full amount of the
MINIMUM ROYALTY due. If the DEFAULT is not cured by payment of this MINIMUM
ROYALTY by cashier’s check or money order by 5:00 P.M. on the tenth day after
which it is due, this licensing agreement is automatically terminated without
notice.
6.4. Licensee’s EARNED ROYALTY payment is due on the fifteenth day of the month
following the month in which the REVENUES FROM SALES WERE RECEIVED. EARNED
ROYALTY payments are past due and delinquent if not paid by 5:00 P.M. on the
twentieth day of SAID MONTH. If EARNED ROYALTY payments are not made by the
twentieth of the month, then a DEFAULT of this agreement occurs automatically
and without notice. Licensee has until the thirtieth of the month to cure the
DEFAULT by payment with a cashier’s check or money order for the full amount of
the EARNED ROYALTY due. If the DEFAULT is not cured by payment of this EARNED
ROYALTY by cashier’s check or money order by 5:00 P.M. on the thirtieth day of
the month in which it is due, this licensing agreement is automatically
terminated without notice.
6.5. Royalties are payable by Licensee to Licensor at the address of the
Licensor.
6.6. Royalties are payable in U.S. Dollars
6.7. Accompanying each EARNED ROYALTY payment, Licensee will provide to Licensor
the accounting data on the sales of the licensed devices, including any daily
summaries and the monthly summary from which the gross sales figures for the
month are determined.
6.8. Licensee will keep books, accounts, and records that reflect all revenues
and expenditures incurred in connection with the operation of its business. The
books, accounts, and records shall be maintained at the regular place of
business of Licensee. Licensee, during regular business hours, shall make the
books, accounts, and records required to be maintained herein available to
Licensor and/or his designated legal representative for examination and audit by
appointment upon reasonable request and during normal business hours. Licensor
agrees to pay for said examination and audit, however, if said examination and
audit reveals a discrepancy of more than 5% of reported figures, Licensee shall
pay for an examination and audit

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 48
CRC: 17933
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 32

[E/O]

<PAGE>
32
ICR CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.20.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

COVER AGREEMENT

6.9.
Within sixty days after the end of each calendar year, Licensee
shall prepare and deliver to Licensor a detailed statement of sales during
the calendar year that result from the operations of Licensee’s business.
6.10.
Licensor agrees that all such information shall be held by its
legal representatives, agents, trustees, attorneys, and accountants in
confidence.
6.11.
Licensee will mark each of the subject devices with the following
notice: "Licensed under U.S. Patent No. 4,253,132" Or: "Licensed under U.S.
Patent No. 5,078,117" Or both.
6.12.
7.

DELETED.

INFRINGEMENT OF LICENSOR’s PATENTS
7.1.
In the event that any party shall become aware of any perceived
infringement or any appropriation of Licensor’s patents, trade secrets, or
know how rights in the electronic immobilization devices or equipment,
products or materials useful therein, the party shall give notice thereof
to the other party hereto.
7.2.
Licensee agrees to cooperate with any lawful efforts that
Licensor may undertake to seek legal remedies for any such infringements or
misappropriations.

8.

Ed#: 3

*P64567/6100920/3*

INDEMNITIES FOR MALFEANCE, LIABILITY FOR PERSONAL INJURY OR PROPERTY
DAMAGE
8.1.
The License herein granted to Licensee is primarily in the
nature of a sharing of information and a covenant not to sue for
infringements of the Licensor’s rights and is not in the nature of a
specification of activities required of the Licensee or of equipment or
process of details required to be used by the Licensee.
8.2.
The manufacture, use, and sale of Licensee’s products shall be
the sole responsibility of Licensee and/or its agents.
8.3.
Accordingly, Licensor shall not be liable for any personal injury
or property damage resulting from the design, construction, or use of the
licensed technology or of the equipment or products used in connection with
the technology, if such injury or damage arises from the activities of
Licensee.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 44
CRC: 49066
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 33

[E/O]

<PAGE>
33
ICER CORPORATION

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.21.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

COVER AGREEMENT

8.4 In no event shall Licensor be liable for any direct, special,
incidental, or consequential damages, or any damages whatsoever, whether in
an action for contract, negligence, or other tortious action arising out
of, or in connection with, the use of any of the products covered by this
license.
8.5 Licensee shall protect, save, indemnify, and hold Licensor harmless
from all claims, demands, charges, or litigation arising out of the making,
using, or selling of the merchandise and devices produced and sold by
Licensee and arising, directly or indirectly, out of, or by reason of, any
business activities of Licensee. Licensee shall reimburse Licensor for all
loss, damage, or expense, including reasonable attorney’s fees (should such
a creature exist), which he may suffer or incur, directly or indirectly, by
reason of any such claims, demands, charges, or litigation. This indemnity
shall extend to and include any claims for personal injuries or damage
caused to persons using the merchandise or devices made or sold by
Licensee.
9.

CONTROLLING LAWS
9.1 All questions relating to the validity, interpretation, performance,
or enforcement of this agreement, whether by arbitration or otherwise,
shall be determined in a court with the laws applicable to the State of
Arizona, U.S.A.

10.

BINDING EFFECT
10.1 Each and every provision on this license shall bind and shall inure to
the benefit of the parties hereto and their legal representatives.
10.2 The term "legal representatives" means in addition to executors and
administrators, every person, partnership, corporation, or association
succeeding to the interest or to any part of the interest in or to this
license or in the subject matter of this license, of either Licensor or
Licensee, whether such succession results from the act of a party interest,
occurs by operation of law, or is the effect of the operation of the law
together with the act of such a party. Each and every covenant, agreement,
and condition of this agreement to be performed by the Licensee shall be
binding upon all successors in the interest to Licensee.

11.

NOTICES

Ed#: 2

*P64567/6100921/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 42
CRC: 54520
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 34

[E/O]

Phone: (602) 223-4455

Date: 7-MAY-2001 14:59:03.02

SN: 0

COVER AGREEMENT

All notices required herein shall be in writing.

11.2.
Written notices may be delivered personally to the president of
the subject party or to the officer or person specified below.
11.3.
Written notices shall be deemed to have been effective three days
following the date of mailing by certified mail, postage prepaid, return
receipt requested, addressed to John H. Cover, Licensor, as follows:
BOX 404
4725 Sunrise Dr.
Tucson, Arizona 85718
Licensee addressed to:
4601 East Indian Bend Road
Scottsdale, Arizona 85253
11.4
Each party shall have the right to change the effective address
for a notice by a notice in writing directed to the other party above.
12.

ENTIRE AGREEMENT; AMENDMENTS; HEADINGS
12.1
This agreement together with its appendices constitutes the
entire agreement between the parties REGARDING LICENSING OF TECHNOLOGY, and
SUPERSEDES any prior communications ON THE SUBJECT whether written or oral.
12.2
This agreement may be amended or modified only by an instrument
in writing, signed by duly constituted officers of both parties.
12.3
No waiver, no matter how long continuing or how many times
extended, shall be construed as a permanent waiver or as an amendment to
this instrument.
12.4
The marginal headings herein are for purposes of convenient
reference only and shall not be used to construe or modify the terms
written in the text of this instrument.

13.

FAILURE TO PERFORM

Ed#: 2

*P64567/6100922/2*

<PAGE>
34
ICER CORPORATION
11.1.

Operator: BPX31319

JB: P64567 PN: 610.09.22.00

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 29
CRC: 42131
P64567A1.SUB, DocName: EX-10.9, Doc: 5, Page: 35

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.09.23.00

COVER AGREEMENT

13.1. Licensee, as well as its successors in interest and or assigns, agrees
that failure to perform in accordance with the terms of this license,
terminates this license and any manufactures, use, or sale of devices covered
by the Licensed Patents, with or without launching mechanisms, thereafter is
without license.

AGREED,

Dated: 10/15/93
-------------------CORPORATE SEAL
[SEAL]
</TEXT>
</DOCUMENT>

Ed#: 4

*P64567/6100923/4*

<PAGE>
35
ICER CORPORATION

By: /s/ Patrick Smith
----------------------Patrick Smith
For ICER CORPORATION

Date: 7-MAY-2001 14:59:03.02

SN: 0

By: /s/ John H. Cover
----------------------John H. Cover

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A1.SUB, DocName: EX-23.2, Doc: 6

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-23.2
p64567a1ex23-2.txt
EX-23.2

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 6

Date: 7-MAY-2001 14:59:03.02

SN: *

*DOCHDR/6*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 65252
P64567A1.SUB, DocName: EX-23.2, Doc: 6, Page: 1
Description: Exhibit 23.2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 723.02.01.00

Date: 7-MAY-2001 14:59:03.02

SN: 0

1
Exhibit 23.2

[AA LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<R>
As independent public accountants, we hereby consent to the use of our report
dated February 12, 2001 (and to all references to our firm) included in or made
a part of Amendment #1 of the Registration Statement on Form SB-2.
</R>

<R>
Phoenix, Arizona
February 23, 2001
</R>
</TEXT>
</DOCUMENT>

Ed#: 3

*P64567/7230201/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 44
CRC: 50212
P64567B1.SUB, DocName: COVER, Doc: 1, Page: 1
Description: SEC Letter

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31366

JB: P64567 PN: 950.00.00.00

Date: 9-MAY-2001 17:18:18.07

SN: 0

*P64567/950/1*

1
[TONKON TORP LLP Letterhead]

JEFFREY S. CRONN

(503) 802-2048
FAX (503) 972-3748
jeffc@tonkon.com

May 9, 2001

VIA EDGAR
AND AIR COURIER
Securities and Exchange Commission
Division of Corporate Finance, Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Attn:

Filing Desk
Re:

TASER International, Inc.
Registration Statement on Form SB-2
Registration No. 333-55658

On behalf of TASER International, Inc., a Delaware corporation
(the "Company"), and with reference to the above Registration Statement on Form
SB-2, I enclose for filing pursuant to Rule 424(b)(1) of the Securities Act of
1933, as amended, ten copies of the final Prospectus prepared in connection with
the underwritten offering of up to 920,000 units of the Company (including
120,000 units to cover overallotments, if any). Each unit consists of one and
one-half shares of common stock and one and one-half redeemable public warrants,
each whole warrant to purchase one share of common stock. In accordance with
Rule 424(e), each such copy has been marked to indicate that it is being filed
pursuant to Rule 424(b)(1).
Please acknowledge receipt of the enclosures by stamping the
enclosed copy of this letter and returning it to me in the enclosed
self-addressed stamped envelope.

Ed#: 1

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 22
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Description: SEC Letter

[E/O]

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JB: P64567 PN: 951.00.00.00

*P64567/951/2*

<PAGE>
2
Securities and Exchange Commission
May 9, 2001
Page 2

Please telephone me at the number above if you have any
questions.
Very truly yours,
/s/ Jeffrey S. Cronn
Jeffrey S. Cronn
JSC/clh
Enclosure
Copy:

Mr. Mark Austin
Mr. Alan E. Rowland

</TEXT>
</DOCUMENT>

Date: 9-MAY-2001 17:18:18.07

SN: 0

Ed#: 2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 45932
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[B/E]

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Operator: BPX31366

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*P64567/003/30*
EDGAR 2

PROSPECTUS
FILED PURSUANT TO RULE 424(b)(1)
REGISTRATION NO. 333-55658

800,000 Units

This is an initial public offering of units by TASER International, Inc. Each unit consists of one and one-half
shares of common stock and one and one-half redeemable public warrants, each whole warrant to purchase one
share of common stock. The initial public offering price is $13.00 per unit. Prior to this offering, there has been no
public market for our securities. Our units, common stock and public warrants have been approved for trading on
The Nasdaq SmallCap Market under the symbols “TASRU,” “TASR” and “TASRW,” respectively.
The common stock and warrants will trade only as a unit for at least 30 days following this offering. The
underwriter will then determine when the units separate, after which the common stock and the public warrants will
trade separately. The underwriter intends to separate the units 30 days after this offering absent unforeseen
circumstances.
Investing in these units involves significant risks. See “Risk Factors” beginning on page 4.
Per Unit
Initial public offering price
Underwriting discount
Proceeds to TASER International, Inc

$13.00
$ 1.04
$11.96

Total
$10,400,000
$ 832,000
$ 9,568,000

The Securities and Exchange Commission and state securities regulators have not approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Paulson Investment Company, Inc. is the underwriter. We have granted the underwriter the option for a period
of 45 days to purchase up to an additional 120,000 units to cover over-allotments.

PAULSON INVESTMENT COMPANY, INC.
The date of this prospectus is May 8, 2001.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 57145
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

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*P64567/004/16*
EDGAR 2

PROSPECTUS SUMMARY
The following summary highlights material information which is presented in more detail elsewhere in this
prospectus. Before making an investment decision, you should read the entire prospectus carefully, including the
“Risk Factors” section, the financial statements and the notes to the financial statements.
Historical information regarding our securities has been adjusted to reflect a 1-for-6 reverse stock split effected
in connection with our reincorporation in Delaware on February 12, 2001. Except as otherwise indicated, all
information in this prospectus assumes no exercise of the underwriter’s over-allotment option or the underwriter’s
warrants. References to “we,” “us,” the “company” or “TASER” mean TASER International, Inc., unless
otherwise indicated.
Our Company
TASER International, Inc. develops, assembles and markets less-lethal, conducted energy weapons primarily for
use in the law enforcement and corrections market. Our ADVANCED TASER weapon offers improved
performance over other less-lethal force options used by law enforcement agencies. It can temporarily incapacitate
virtually any individual regardless of pain tolerance, drug use, or body size — factors that cause other less-lethal
options to have decreased effectiveness. The ADVANCED TASER also has a comparable or lower injury rate than
other less-lethal weapons and has had no reported long-term, adverse after-effects.
The ADVANCED TASER uses compressed nitrogen to shoot two small probes up to 21 feet. These barbed
probes are connected to the weapon by high-voltage insulated wires. When the probes make contact with the target,
the ADVANCED TASER transmits powerful electrical pulses along the wires and into the body of the target
through up to two inches of clothing. These electrical pulses impair voluntary muscle control so that the subject
cannot perform coordinated action.
Nearly all law enforcement agencies authorize the use of less-lethal weapons, including pepper sprays, impact
devices, and conducted energy weapons such as TASERs. Effective less-lethal weapons may increase the safety of
law enforcement officers, decrease suspect injuries, improve community relations, reduce litigation and police
department medical and liability insurance costs, and potentially save lives.
Since December 1999, over 400 police departments in the United States have made initial purchases of our
products, and 15 police departments, including San Diego, Sacramento and Albuquerque, have purchased our
products for every patrol officer. In addition, at February 1, 2001, more than 200 other police departments were
evaluating the use of the ADVANCED TASER.
The key elements of our growth strategy are:
• To expand sales in the law enforcement and corrections market, which we believe to be the opinion leader for
all other markets for less-lethal weapons;
• To expand into the related private security and military markets;
• To expand into the consumer market;
• To develop enhanced less-lethal weapons and technologies, such as longer-range TASERs and TASERs with
multiple shot capabilities; and
• To acquire related businesses that enhance our strategic position.
Our corporate headquarters is located at 7860 East McClain Drive, Suite 2, Scottsdale, Arizona 85260 and our
telephone number is (480) 991-0797. Our website address is www.eTASER.com. Information contained on our
website or any other website does not constitute a part of this prospectus.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
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*P64567/005/29*
EDGAR 2

This Offering
Securities offered

800,000 units. Each unit consists of one and one-half shares of common stock and
one and one-half public warrants, each whole warrant to purchase an additional
share of common stock. See “Description of Securities.”
The common stock and public warrants will trade only as a unit for at least
30 days following this offering. The underwriter will then determine when the
units separate, after which the common stock and the public warrants will trade
separately.

Public warrants

The public warrants included in the units will be exercisable commencing 30 days
after this offering. The exercise price of a public warrant is $9.53. The public
warrants expire on the fifth anniversary of the closing of this offering.
We have the right to redeem the public warrants issued in this offering at a
redemption price of $0.25 per public warrant, after providing 30 days prior
written notice to the public warrant holders, if at the time of the notice, the basic
net income per share of our common stock as confirmed by audit for a 12-month
period preceding the date of the notice is equal to or greater than $1.00.

Common stock outstanding after 2,710,754 shares
this offering
Use of proceeds

Sales and marketing, purchases of inventory, repayment of stockholder and other
debt, working capital, research and development, and production tooling. See
“Use of Proceeds.”

Nasdaq SmallCap Market
symbols
Common stock
TASR
Units offered in this
offering
TASRU
Public warrants included
in the units
TASRW
The number of shares of common stock outstanding after this offering is based on 1,510,754 shares outstanding
as of March 15, 2001. The number of shares of common stock outstanding after this offering assumes no exercise of
the underwriter’s over-allotment option and does not include an aggregate of 1,927,049 shares of common stock
that may become outstanding as follows:
• 434,322 shares of common stock issuable upon exercise of stock options outstanding as of March 15, 2001,
with a weighted average exercise price of $4.94;
• 52,727 shares of common stock issuable upon exercise of warrants outstanding as of March 15, 2001, with a
weighted average exercise price of $4.71;
• 1,200,000 shares of common stock issuable upon exercise of the public warrants; and
• 120,000 shares of common stock issuable upon exercise of the underwriter’s warrants and 120,000 shares of
common stock issuable upon exercise of the public warrants underlying the underwriter’s warrants.
2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 61047
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[B/E]

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Operator: BPX31366

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*P64567/006/25*
EDGAR 2

SUMMARY FINANCIAL INFORMATION
Years Ended December 31,
1999

2000

Statements of Operations Data:
Net sales
Gross margin
Loss from operations
Net loss

$ 2,208,488
120,002
(1,386,838)
(1,666,733)

$3,412,620
1,574,231
(46,885)
(473,247)

Basic and diluted net loss per share of common stock

$

$

Basic and diluted shares of common stock

(0.54)
3,076,410

(0.19)

2,482,976

December 31, 2000
Actual

As adjusted

Balance Sheet Data:
Working capital (deficiency)
Property and equipment, net
Total assets
Total long-term debt

$(1,069,344)
274,273
1,039,066
2,822,144

$6,580,656
1,024,273
8,737,212
2,822,144

Stockholders’ equity (deficit)

$(3,617,215)

$4,782,785

The as adjusted balance sheet data reflects:
• the receipt of approximately $8,556,000 as the estimated net proceeds from the sale of 800,000 units offered by
us in this offering at a public offering price of $13.00 per unit, after deducting the underwriting discount,
expense allowance and estimated offering expenses; and
• our planned use of the net proceeds of this offering.

Notice to New Jersey investors: Offers and sales in this offering in New Jersey may only be made to accredited
investors as defined in Rule 501(a) of Regulation D under the Securities Act of 1933. Under Rule 501(a), to be an
accredited investor an individual must have (i) a net worth or joint net worth with the individual’s spouse of more
than $1,000,000 or (ii) income of more than $200,000 in each of the two most recent years or joint income with the
individual’s spouse of more than $300,000 in each of those years and a reasonable expectation of reaching the same
income level in the current year. Other standards apply to investors who are not individuals. There will be no
secondary sales of the securities to persons who are not accredited investors for 90 days after the date of this
offering in New Jersey by the underwriters and selected dealers.
Notice to California investors. Each purchaser of units in California, and each transferee of units or components
thereof in California, must meet, alone or with their spouse, one of the following suitability standards: (i) gross
annual income of $60,000 and a minimum net worth of $250,000 (exclusive of home, home furnishings and
automobile), or (ii) a minimum net worth (exclusive of home, home furnishings and automobile) of at least
$500,000.

We have rights to the following registered trademarks: TASER® and AIR TASER ®. We also have the following
unregistered trademarks: TASER Wave™, T-Wave™, AUTO TASER™, ADVANCED TASER™ and AFID™. Each
other trademark, trade name or service mark appearing in this prospectus belongs to its respective holder.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
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[B/E]

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*P64567/007/12*
EDGAR 2

RISK FACTORS
This offering involves a high degree of risk. You should carefully consider the following risk factors and all
other information contained in this prospectus before purchasing any units. Any of the following risks could
materially harm our business, operating results and financial condition, and could result in a decrease in the
trading price of our units, common stock or public warrants, or in a complete loss of your investment.
Risks Related to Our Business
We have no history of profitable operations and may incur future losses.
Since our inception in 1993, we have incurred significant losses. Our net losses for the years ended
December 31, 1999 and 2000 were $1.7 million and $473,000, respectively. We may never achieve or sustain
profitability. At December 31, 2000, we had an accumulated deficit of approximately $6.8 million and negative
stockholders’ equity of $3.6 million. We also had a net working capital deficit of $2.4 million and $1.1 million at
December 31, 1999 and 2000, respectively. In addition, we expect our operating expenses to increase significantly
as we expand our sales and marketing efforts and otherwise support our expected growth. Given these planned
expenditures, we may incur additional losses in the near future.
Our business is difficult to evaluate because we have a limited operating history in the law enforcement and
corrections market and have been focused on our current business strategy for only approximately one and onehalf years.
We revised our business strategy in late 1999 to concentrate on the law enforcement and corrections market.
Accordingly, we have a limited operating history based on which you can evaluate our present business and future
prospects. We face risks and uncertainties relating to our ability to implement our business plan successfully. Our
prospects must be considered in light of the risks, expenses and difficulties frequently encountered by newly-public
companies that have recently changed their business strategies. If we are unsuccessful in addressing these risks and
uncertainties, our business, results of operations, financial condition and prospects will be materially harmed.
We are materially dependent on acceptance of our products by the law enforcement and corrections market, and
if law enforcement and corrections agencies do not purchase our products, our revenues will be adversely
affected and we may not be able to expand into other markets.
A substantial number of law enforcement and corrections agencies may not purchase our conducted energy,
less-lethal weapons. In addition, if our products are not widely accepted by the law enforcement and corrections
market, we may not be able to expand sales of our products into other markets. Law enforcement and corrections
agencies may be influenced by claims or perceptions that conducted energy weapons are unsafe or may be used in
an abusive manner. In addition, earlier generation conducted energy weapons may have been perceived as
ineffective. Sales of our products to these agencies may also be delayed or limited by these claims or perceptions.
We substantially depend on sales of the ADVANCED TASER, and if this product is not widely accepted, our
growth prospects will be diminished.
In 2000, we derived the majority of our revenues from sales of ADVANCED TASERs and related cartridges,
and expect to depend on sales of this product for the foreseeable future. A decrease in the prices of or demand for
this product line, or its failure to achieve broad market acceptance, would significantly harm our growth prospects,
operating results and financial condition.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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EDGAR 2

If we are unable to manage our projected growth, our growth prospects may be limited and our future
profitability may be adversely affected.
We intend to expand our sales and marketing programs and our manufacturing capability. Rapid expansion may
strain our managerial, financial and other resources. If we are unable to manage our growth, our business, operating
results and financial condition could be adversely affected. Our systems, procedures, controls and management
resources also may not be adequate to support our future operations. We will need to continually improve our
operational, financial and other internal systems to manage our growth effectively, and any failure to do so may
lead to inefficiencies and redundancies, and result in reduced growth prospects and profitability.
We may face personal injury and other liability claims that harm our reputation and adversely affect our sales
and financial condition.
Our products are often used in aggressive confrontations that may result in serious, permanent bodily injury to
those involved. Our products may cause or be associated with these injuries. A person injured in a confrontation or
otherwise in connection with the use of our products may bring legal action against us to recover damages on the
basis of theories including personal injury, wrongful death, negligent design, dangerous product or inadequate
warning. We may also be subject to lawsuits involving allegations of misuse of our products. If successful, personal
injury, misuse and other claims could have a material adverse effect on our operating results and financial
condition. Although we carry product liability insurance, significant litigation could also result in a diversion of
management’s attention and resources, negative publicity and an award of monetary damages in excess of our
insurance coverage.
Our future success is dependent on our ability to expand sales through distributors and our inability to recruit
new distributors would negatively affect our sales.
Our distribution strategy is to pursue sales through multiple channels with an emphasis on independent
distributors. Our inability to recruit and retain police equipment distributors who can successfully sell our products
would adversely affect our sales. In addition, our arrangements with our distributors are generally short-term. If we
do not competitively price our products, meet the requirements of our distributors or end-users, provide adequate
marketing support, or comply with the terms of our distribution arrangements, our distributors may fail to
aggressively market our products or may terminate their relationships with us. These developments would likely
have a material adverse effect on our sales. Our reliance on the sales of our products by others also makes it more
difficult to predict our revenues, cash flow and operating results.
We expend significant resources in anticipation of a sale due to our lengthy sales cycle and may receive no
revenue in return.
Generally, law enforcement and corrections agencies consider a wide range of issues before committing to
purchase our products, including product benefits, training costs, the cost to use our products in addition to or in
place of other less-lethal products, product reliability and budget constraints. The length of our sales cycle may
range from 60 days to a year or more. We may incur substantial selling costs and expend significant effort in
connection with the evaluation of our products by potential customers before they place an order. If these potential
customers do not purchase our products, we will have expended significant resources and received no revenue in
return.
Most of our end-users are subject to budgetary and political constraints which may delay or prevent sales.
Most of our end-user customers are government agencies. These agencies often do not set their own budgets and
therefore have little control over the amount of money they can spend. In addition, these agencies experience
political pressure that may dictate the manner in which they spend money. As a result, even if an agency wants to
acquire our products, it may be unable to purchase them due to budgetary or political constraints. Some government
agency orders may also be canceled or substantially
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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EDGAR 2

delayed due to budgetary, political or other scheduling delays which frequently occur in connection with the
acquisition of products by such agencies.
Government regulation of our products may adversely affect sales.
Federal regulation of sales in the United States. Our weapons are not firearms regulated by the Bureau of
Alcohol, Tobacco and Firearms, but are consumer products regulated by the United States Consumer Product Safety
Commission. Although there are currently no federal laws restricting sales of our weapons in the United States,
future federal regulation could adversely affect sales of our products.
Federal regulation of international sales. Our weapons are controlled as a “crime control” implement by the
United States Department of Commerce, or DOC, for export directly from the United States. Consequently, we
must obtain an export license from the DOC for the export of our weapons from the United States other than to
Canada. While we have a history of timely obtaining DOC export licenses for sales of our weapons to the majority
of our international customers, unforeseen changes in U.S. export regulations could significantly and adversely
affect our international sales.
State and local regulation. Our weapons are currently controlled, restricted or their use prohibited by several
state and local governments. Our weapons are banned from consumer sale or use in seven states: New York, New
Jersey, Rhode Island, Michigan, Wisconsin, Massachusetts and Hawaii. Law enforcement use of our products is also
restricted in Michigan, New Jersey, Rhode Island and Hawaii. Some municipalities, including Omaha, Nebraska
and Washington, D.C., also prohibit consumer use of our products. Other jurisdictions may ban or restrict the sale
of our products, and our product sales may be significantly affected by additional state, county and city
governmental regulation.
Foreign regulation. Certain foreign jurisdictions, including Japan, the United Kingdom, Australia, Italy and
Hong Kong, prohibit the sale of conducted energy weapons, limiting our international sales opportunities.
If we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial
litigation costs to protect our rights.
Our future success depends in part upon our proprietary technology. Our protective measures, including a
patent, trademarks and trade secret laws, may prove inadequate to protect our proprietary rights. Our United States
patent on the construction of the gas cylinder used to store the compressed nitrogen in our cartridges expires in
2015. The holder of the patent on the process by which compressed gases launch the probes in our cartridges has
licensed the technology covered by the patent for use in electronic weapons only to us and to two other companies.
This patent expires in 2009. The scope of any patent to which we have or may obtain rights may not prevent others
from developing and selling competing products. The validity and breadth of claims covered in technology patents
involve complex legal and factual questions, and the resolution of such claims may be highly uncertain, lengthy,
and expensive. In addition, our patents may be held invalid upon challenge, others may claim rights in or ownership
of our patents.
We are subject to intellectual property infringement claims, which will cause us to incur litigation costs and
divert management attention from our business.
Any intellectual property infringement claims against us, with or without merit, could be costly and timeconsuming to defend and divert our management’s attention from our business. If our products were found to
infringe a third party’s proprietary rights, we could be required to enter into royalty or licensing agreements in order
to be able to sell our products. Royalty and licensing agreements, if required, may not be available on terms
acceptable to us or at all.
In early April 2001, a patent licensee sued us in the United States District Court, Central District of California.
The lawsuit alleges that certain technology used in the firing mechanism for our weapons infringes upon a patent for
which the licensee holds a license, and seeks injunctive relief and unspecified
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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*P64567/010/11*
EDGAR 2

monetary damages. An outcome that is adverse to us, costs associated with defending the lawsuit, and the diversion
of management’s time and our resources as a result of the claim could harm our business and our financial
condition.
Competition in the law enforcement and corrections market could reduce our sales and prevent us from
achieving profitability.
The law enforcement and corrections market is highly competitive. We face competition from numerous larger,
better capitalized and more widely known companies that make other less-lethal weapons and products, as well as
from a small company that also sells conducted energy less-lethal weapons. Increased competition may result in
greater pricing pressure, lower gross margins and reduced sales, and prevent us from achieving profitability.
Defects in our products could reduce demand for our products and result in a loss of sales, delay in market
acceptance and injury to our reputation.
Complex components and assemblies used in our products may contain undetected defects that are subsequently
discovered at any point in the life of the product. In 2000, we recalled a series of ADVANCED TASERs due to a
defective component in connection with which we incurred expenses of approximately $9,000 and recorded an
additional charge of approximately $41,000 to account for related future expenses. Defects in our products may
result in a loss of sales, delay in market acceptance, injury to our reputation and increased warranty costs.
Our revenues and operating results may fluctuate unexpectedly from quarter to quarter, which may cause our
stock price to decline.
Our revenues and operating results have varied significantly in the past and may vary significantly in the future
due to various factors, including changes in our operating expenses, market acceptance of our products and services,
regulatory changes that may affect the marketability of our products, and budgetary cycles of municipal, state and
federal law enforcement and corrections agencies. As a result of these and other factors, we believe that period-toperiod comparisons of our operating results may not be meaningful in the near term and that you should not rely
upon our performance in a particular period as indicative of our performance in any future period.
Our dependence on third-party suppliers for key components of our weapons could delay shipment of our
products and reduce our sales.
We depend on certain domestic and foreign suppliers for the delivery of components used in the assembly of
our products. Our reliance on third-party suppliers creates risks related to our potential inability to obtain an
adequate supply of components or subassemblies and reduced control over pricing and timing of delivery of
components and subassemblies. Specifically, we depend on suppliers of sub-assemblies, machined parts, injection
molded plastic parts, printed circuit boards, custom wire fabrications and other miscellaneous custom parts for our
products. The final assembly of the cartridges used in the firing of our weapons was prevented for four weeks
beginning in November 2000 by a supplier’s receipt of defective wire used as a component in the cartridges. We
also do not have long-term supply agreements with any of our suppliers. Any interruption of supply for any material
components of our products could significantly delay the shipment of our products and have a material adverse
effect on our revenues, profitability and financial condition.
Foreign currency fluctuations may reduce our competitiveness and sales in foreign markets.
The relative change in currency values creates fluctuations in product pricing for potential international
customers. These changes in foreign end-user costs may result in lost orders and reduce the competitiveness of our
products in certain foreign markets. These changes may also negatively affect the financial condition of some
foreign customers and reduce or eliminate their future orders of our products.
7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 7478
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 9

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 011.00.00.00 SN: 24 Ed#: 11
*P64567/011/11*
EDGAR 2

If we were to default under our revolving credit agreement, the bank could proceed against substantially all of
our assets, making it impossible for us to continue operations.
We have recently entered into a revolving credit agreement with a bank and pledged substantially all of our
assets, other than our intellectual property, to secure such indebtedness. If for any reason we were unable to meet
our payment obligations, we would be in default under such agreement and the bank could declare our debt
immediately due and payable and proceed against its collateral. In such event, much of our equipment and inventory
would likely be sold to others, and we would be unable to continue operations.
Pending litigation may subject us to significant litigation costs and divert management attention from our
business.
A former distributor of our products has filed a lawsuit in the state of New York asserting certain rights of
exclusive sales representation with respect to our products. The former distributor claims that he has the exclusive
right to market and sell our products to an extensive list of our current and potential customers throughout the
United States. The suit was dismissed in February 2001 for lack of personal jurisdiction of the New York court. In
March 2001, the former distributor appealed the dismissal. In addition, in early April 2001, a patent licensee sued us
in the United States District Court, Central District of California. The lawsuit alleges that certain technology used in
the firing mechanism for our weapons infringes upon a patent for which the licensee holds a license, and seeks
injunctive relief and unspecified monetary damages. An outcome that is adverse to us, costs associated with
defending these lawsuits and the diversion of our management’s time and our resources as a result of these claims
could harm our business or financial condition.
Risks Related to This Offering
We may use the proceeds of this offering in ways that do not improve our operating results or the market value of
our securities.
We intend to use the net proceeds from this offering for increased sales and marketing efforts, purchases of
inventory, repayment of a portion of our stockholder and other debt, general corporate purposes, research and
development, and purchases of production tooling and equipment. Repayment of our debt will not directly improve
our operating results. Our management will retain broad discretion and significant flexibility in applying the net
proceeds from this offering. If our management does not apply the proceeds effectively, our business will be
harmed.
You will suffer immediate and substantial dilution of your investment.
We anticipate that the initial public offering price of the units will be substantially higher than the net tangible
book value per share of our common stock after this offering. As a result, you will incur immediate dilution of
approximately $6.91, or 81%, in net tangible book value for each share of our common stock included in the units
you purchase.
There has been no prior market for our securities and a public market for our securities may not develop or be
sustained.
Prior to this offering, you could not buy or sell our securities publicly. If an active public market for our
securities does not develop after this offering, the market price of our securities may fall below their initial public
offering price, and the liquidity of your investment may be significantly limited.
The initial public offering price of our units may not accurately reflect their future market performance.
The initial public offering price of the units has been determined based on negotiations between the underwriter
and us. The initial public offering price may not be indicative of future market performance and may bear no
relationship to the price at which our units, common stock or public warrants will trade.
8

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 23653
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 10

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 012.00.00.00 SN: 24 Ed#: 11
*P64567/012/11*
EDGAR 2

The price of our securities may be volatile, which may lead to losses by investors.
The stock market has recently experienced significant price and volume fluctuations. You may not be able to
resell our securities at or above the initial public offering price. The price of our securities may fluctuate
significantly in response to a number of factors, including:
• Our quarterly operating results;
• Changes in earnings estimates by analysts and whether our earnings meet or exceed such estimates;
• Announcements of technological innovations by us or our competitors;
• Additions or departures of key personnel; and
• Other events or factors that may be beyond our control.
Volatility in the market price of our securities could lead to claims against us. Defending these claims could
result in significant litigation costs and a diversion of our management’s attention and resources.
Future sales of our common stock by our existing stockholders could decrease the trading price of our common
stock.
Sales of a large number of shares of our common stock in the public markets after this offering, or the potential
for such sales, could decrease the trading price of our common stock and could impair our ability to raise capital
through future sales of our common stock. Upon completion of this offering, there will be 2,710,754 shares of our
common stock outstanding. The 1,200,000 shares of common stock sold in this offering and the 1,200,000 shares of
common stock reserved for issuance upon exercise of the public warrants sold in this offering will be freely
tradeable without restriction or further registration under the Securities Act of 1933, unless such shares are
purchased by our “affiliates,” as that term is defined in such act. An additional 1,927,049 shares of common stock,
including shares issuable upon exercise of the underwriter’s warrants, may become outstanding upon exercise or
conversion of options or warrants currently outstanding or sold in this offering, subject to various lock-up
agreements prohibiting the sale of such shares for one year following completion of this offering.
The exercise of previously issued options and warrants may dilute your investment in our shares and impair our
ability to obtain equity financing.
As of March 15, 2001, in addition to the 1,510,754 shares outstanding, there were currently outstanding options
to purchase 434,322 shares of our common stock, 119,055 of which were currently exercisable. We have reserved
an additional 259,000 shares of our common stock for issuance pursuant to options that may be granted in the future
to key employees, and others, under our 2001 Stock Option Plan. In addition, we have issued warrants to acquire up
to 52,727 shares of our common stock. While such options and warrants are outstanding, the holders of such
securities have the opportunity to profit from a rise in the value or market price of our common stock, and the
exercise of these options and warrants could dilute the then book value per share of our common stock. The
existence of these options and warrants could adversely affect the terms at which we could obtain additional equity
financing. Moreover, the holders of the options and warrants may be expected to exercise them at a time when we
could obtain equity capital on terms more favorable than those provided by the options and warrants.
We will need to comply with federal and state securities laws to maintain the tradeability of our securities.
We must maintain in effect the registration statement filed with the Securities and Exchange Commission with
respect to the units and must also comply with the securities laws of a state for the units, common stock and public
warrants to be tradeable in that state. If we do not comply with federal or state securities laws, your ability to sell
the securities offered by this prospectus may be significantly reduced.
9

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 42484
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 11

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 013.00.00.00 SN: 25 Ed#: 11
*P64567/013/11*
EDGAR 2

Certain of our directors or investors will personally benefit from the use of the proceeds of this offering.
We will use the proceeds from this offering to repay approximately $100,000 of unreimbursed business
expenses to our chairman and to retire the interest accrued through March 1, 2001 on our outstanding stockholder
notes. In addition, if the over-allotment option granted to the underwriter is exercised in full, approximately $1.3
million in stockholder notes, including a note issued to our chairman, will be retired. This debt matures July 1,
2002, unless extended.
Our directors and executive officers will continue to control us after this offering, which may lead to conflicts
with stockholders over corporate governance.
Following completion of this offering, our directors and executive officers will beneficially own approximately
53% of our outstanding common stock. These stockholders, acting together, would be able to significantly influence
all matters requiring approval by our stockholders, including the election of directors and significant corporate
transactions, such as mergers or other business combination transactions. This control may have the effect of
delaying or preventing a third party from acquiring or merging with us. In addition, prior to the appointment of
disinterested, independent directors to our board of directors in January 2001, certain past transactions, including
issuances of stock and options to and borrowings from officers and directors, were not approved by two
disinterested, independent directors at the time of the transaction.
We do not intend to pay cash dividends in the foreseeable future.
Any investors who have or anticipate any need for immediate income from their investment should not purchase
any of the units offered hereby.
Provisions of our charter documents and Delaware law may have anti-takeover effects that could hinder a
change in our corporate control, which may cause the market price of our securities to decline.
Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger or
acquisition that a stockholder may consider favorable. These provisions include:
• authorizing our board of directors to issue preferred stock without stockholder approval;
• providing for a classified board of directors with staggered, three-year terms; and
• allowing written stockholder actions only by unanimous consent.
Provisions of Delaware law, including provisions that prohibit business combinations with entities holding
greater than a threshold amount of voting stock, also may discourage, delay or prevent someone from acquiring or
merging with us, which may cause the market price of our securities to decline.
You should not rely upon our forward-looking statements.
Some of the statements made in this prospectus discuss future events and developments, including our future
business strategy and our ability to generate revenue, income and cash flow. In some cases, you can identify
forward-looking statements by words or phrases such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” “continue,” “our future success depends,” “seek to continue,” or the
negative of these words or phrases, or comparable words or phrases. These statements are only predictions. Actual
events or results may differ materially. In evaluating these statements, you should specifically consider various
facts, including the risks outlined under “Risk Factors.” These factors may cause our actual results to differ
materially from any forward-looking statement. Although we believe that the expectations reflected in the forwardlooking statements are reasonable, we cannot guarantee future results, levels of activity, performance or
achievements. We are under no duty to update any of the forward-looking statements after the date of this
prospectus to conform these statements to actual results.
10

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 36360
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 12

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 014.00.00.00 SN: 38 Ed#: 13
*P64567/014/13*
EDGAR 2

USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 800,000 units that we are selling in this offering will be
approximately $8,556,000, or $9,991,200 if the underwriter exercises its over-allotment option in full, based on a
public offering price of $13.00 per unit, and after deducting the underwriting discount, expense allowance, and
estimated offering expenses of $752,000 payable by us.
We expect to allocate the net proceeds of this offering as follows:
Approximate
Amount
Payment of note payable to stockholder
Accrued interest on notes payable to stockholders
Payment of notes due to unrelated private lender, including accrued
interest
Payment of note to third party vendor
Purchases of inventory
Sales and marketing programs
Research and development
Production tooling and equipment
Other working capital/general corporate purposes
Total

$ 100,000
300,000

Approximate
Percentage
1%
4

612,000
190,000
1,700,000
2,820,000
750,000
750,000
1,334,000

7
2
20
33
9
9
15

$8,556,000

100%

The debt we intend to repay includes:
• a $99,794 note at an interest rate of 10% payable to Phillips Smith, our chairman and a stockholder, for
unreimbursed business expenses;
• $300,400 of accrued interest on notes payable to Bruce Culver, a director and stockholder, and Phillips Smith,
consisting of $268,300 outstanding at December 31, 2000 and accrued interest for the period from January 1,
2001 through March 31, 2001 of approximately $32,100;
• $611,500 of notes and accrued interest at interest rates ranging from 11% to 18%, payable to an unrelated
private lender; and
• a $189,980 note at an interest rate of 10% payable to a third-party vendor.
Further, if the underwriter exercises its over-allotment option in full, we will repay the principal on other
outstanding stockholder notes of approximately $1.3 million which currently mature in July 2002.
We intend to use the portion of the net proceeds of this offering allocated to sales and marketing programs in
the next two years to develop a national and international program to educate law enforcement, corrections and
government agencies about our products. We also intend to dedicate such proceeds in 2002 and 2003 to the
development of a consumer market through activities including the addition of a customer service department and
the sponsorship of new consumer advertising campaigns.
We may use the portion of the net proceeds of this offering currently allocated to other working capital/general
corporate purposes to take advantage of early payment discounts which may be available from our suppliers, prepay
some of our capital leases or reduce our current liabilities other than amounts owing to related parties. Although we
currently have no agreements or commitments to do so, we may also use a portion of the net proceeds to license or
acquire new products, technologies or intellectual property or to acquire or invest in businesses complimentary to
ours. We have no current plans or proposals pending for any such acquisitions or investments. Pending application
of the net proceeds, we intend to invest the net proceeds in interest-bearing, investment grade securities.
The foregoing discussion is merely an estimate based on our current business plan. Our actual expenditures may
vary depending upon circumstances not yet known, such as the time actually required to reach a positive cash flow
or to successfully expand the market for our products.
11

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 41939
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 13

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 015.00.00.00 SN: 25 Ed#: 12
*P64567/015/12*
EDGAR 2

DIVIDEND POLICY
We have never declared or paid any cash dividends on our shares of common stock and do not anticipate paying
any cash dividends in the foreseeable future. Currently, we intend to retain any future earnings for use in the
operation and expansion of our business. Any future decision to pay cash dividends will be at the discretion of our
board of directors and will depend upon our financial condition, results of operations, capital requirements and
other factors our board of directors may deem relevant.
12

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 58462
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 14

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 016.00.00.00 SN: 33 Ed#: 14
*P64567/016/14*
EDGAR 2

CAPITALIZATION
The following table sets forth our capitalization at December 31, 2000 on an actual basis and on a pro forma
basis, after giving effect to our reincorporation in Delaware, our related 1-for-6 reverse stock split, and the sale of
800,000 units offered hereby at a public offering price of $13.00 per unit and the proposed application of the
estimated net proceeds therefrom. This table should be read in conjunction with, and is qualified by, the financial
statements and notes thereto included elsewhere in this prospectus.
December 31, 2000
Actual
Current portion of note payable(1)
Current portion of notes payable to stockholders
Accounts payable
Note payable to a third party vendor
Accrued interest on notes payable to stockholders

$

$
Long-term notes payable to stockholders and others, and capital lease
obligations, excluding current portion
Stockholders’ equity (deficit)
Preferred stock $0.00001 par value, 25,000,000 shares authorized; no
shares issued and outstanding
Common stock $0.00001 par value, 50,000,000 shares authorized;
3,177,421 shares issued and outstanding actual, 4,377,421 shares issued
and outstanding pro forma(2)
Additional paid-in capital
Common Stock held in treasury, at cost, 1,666,667 shares as of
December 31, 2000
Deferred compensation
Retained earnings (deficit)(3)
Total stockholders’ equity (deficit)
Total capitalization (deficiency)

Pro Forma

(dollars in thousands)
100
$
—
125
—
300
—
190
—
268
—
983

$

—

$ 2,822

$ 2,822

—

—

—
4,257

—
5,863

(1,000)
(80)
(6,794)

(1,000)
(80)
—

(3,617)

4,783

$ (795)

$ 7,605

(1) Subsequent to December 31, 2000, an unrelated private lender loaned us $500,000, which is due to be repaid,
with accrued interest, from proceeds from this offering upon its closing or by July 1, 2002, whichever is earlier.
(2) Does not include (i) 434,322 shares of common stock issuable upon exercise of stock options issued pursuant to
our stock option plans, which have a weighted average exercise price of $4.94 per share, (ii) an additional
52,727 shares of common stock issuable upon exercise of warrants outstanding, which have a weighted average
exercise price of $4.71, (iii) the shares of common stock exercisable upon exercise of the public warrants, and
(iv) the shares of common stock underlying the units issuable upon exercise of the underwriter’s over-allotment
option or the underwriter’s warrants.
(3) Our accumulated deficit, which was $6.8 million at December 31, 2000, was reclassified into additional paid-in
capital upon the termination of our S-corporation tax status in the first quarter of 2001.
13

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 1883
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 15

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 017.00.00.00 SN: 25 Ed#: 13
*P64567/017/13*
EDGAR 2

DILUTION
If you invest in our units, your interest will be diluted to the extent of the difference between the public offering
price per share of our common stock and the as adjusted net tangible book value per share of our common stock
after this offering. For purposes of the dilution computation and the following tables, we have allocated the full
purchase price of a unit to the share of common stock included in the unit and nothing to the warrant included in the
unit. As of December 31, 2000, our net tangible book value was a negative $3,617,215, or a deficiency of $2.39 per
share of common stock. Net tangible book value per share represents the amount of our total tangible assets reduced
by the amount of our total liabilities, divided by the total number of shares of common stock outstanding. Dilution
in net tangible book value per share represents the difference between the amount per share paid by the purchasers
of our units in this offering and the net tangible book value per share of our common stock immediately afterwards.
Without taking into effect any changes in the net tangible book value after December 31, 2000, other than to give
effect to the sale of 800,000 units, each consisting of one and one-half shares of common stock and one and onehalf warrants, each whole warrant to purchase one share of common stock, in this offering at the initial public
offering price of $13.00 per unit, in the aggregate, or $8.67 per one share of common stock and one warrant to
purchase one share of common stock, and the application of the net proceeds of this offering, the net tangible book
value of TASER as of December 31, 2000 would have been $4,782,785, or $1.76 per share. This represents an
immediate increase of $4.15 per share of common stock to existing stockholders and an immediate dilution of $6.91
per share of common stock to the new investors who purchase units in this offering. The following table illustrates
this per share dilution:
Initial public offering price per one share of common stock and one
warrant to purchase one share of common stock
Net tangible book value (deficiency) per share before this offering
Increase in net tangible book value per share attributable to new
investors

$8.67
$(2.39)
$ 4.15

As adjusted net tangible book value per share after this offering

$1.76

Dilution in net tangible book value per share to new investors

$6.91

The following table summarizes as of December 31, 2000 the differences between the existing stockholders and
the new investors with respect to the number of shares of common stock purchased, the total consideration paid, and
the average price per share paid:
Shares Purchased
Number
Existing stockholders
New investors
Total

Total Consideration

Percent

Amount

Percent

1,510,754
1,200,000

56%
44%

$ 3,189,548
10,400,000

23%
77%

2,710,754

100%

$13,589,548

100%

Average Price
Per Share
$2.11
$8.67

The above computations assume no exercise of outstanding options to purchase 434,322 shares of our common
stock as of March 15, 2001, which have a weighted average exercise price of $4.94 per share, or outstanding
warrants to purchase 52,727 shares of our common stock as of March 15, 2001, which have a weighted average
exercise price of $4.71 per share, the underwriter’s over-allotment option, the public warrants included in units sold
in this offering or the underwriter’s warrants, as the exercise of such securities would be anti-dilutive. If the
underwriter’s over-allotment option is exercised in full, dilution per share to new investors would be $6.54 per share
of common stock.
14

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 24746
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 16

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 018.00.00.00 SN: 23 Ed#: 12
*P64567/018/12*
EDGAR 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with
the financial statements and related notes to the financial statements included elsewhere in this prospectus. This
discussion contains forward-looking statements that relate to future events or our future financial performance.
These statements involve known and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these forward-looking statements. These risks and
other factors include, among others, those listed under “Risk Factors” and those included elsewhere in this
prospectus.
Overview
We began operations in Arizona in 1993 for the purpose of developing and manufacturing less-lethal selfdefense devices. From inception until the introduction of our first product, the AIR TASER, in 1994, we were in the
development stage and focused our efforts on product development, raising capital, hiring key employees and
developing marketing materials to promote our product line.
In 1995 and 1996, we focused our efforts on promoting retail sales and establishing distribution channels for the
AIR TASER product line. However, our marketing efforts were limited by a non-compete agreement prohibiting
the company from marketing or selling our products to the U.S. law enforcement and military markets.
Accordingly, initial sales of the AIR TASER were limited to the consumer market. While early sales in this market
were promising, by the end of 1996 we were unable to establish consistent sales channels in the consumer
marketplace and sales declined. In late 1996, we relocated our production facilities to Mexico to reduce production
costs.
In 1997, we introduced our second product line, the AUTO TASER. The initial market response to the AUTO
TASER suggested the demand for this product would more than compensate for the declining AIR TASER sales.
Because of strong pressure from pre-production orders, we accelerated the development of the AUTO TASER. As a
result of this acceleration, production costs of the AUTO TASER far exceeded initial projections, and we
experienced a substantial amount of AUTO TASER returns due to product defects.
The non-compete agreement that had precluded sales to the law enforcement and military markets expired in
1998. During this year, we focused our development efforts on the ADVANCED TASER product line, a redesigned
and enhanced version of the AIR TASER, targeted primarily to the U.S. law enforcement and corrections market.
During 1998, in addition to $66,000 paid to outside research and development consultants, we also incurred
substantial internal unallocated expenses associated with the development of the ADVANCED TASER. Further,
end-user sales of the AUTO TASER continued to decline, and product returns remained higher than expectations.
In August 1999, the AUTO TASER product line was discontinued and we closed our production facility in
Mexico. We sold all remaining finished goods associated with the AUTO TASER product line by the end of the
first quarter of 2000. Following closure of our Mexican facility, we outsourced the production of the AIR TASER
and certain non-proprietary assemblies to a third-party assembler. We shifted our focus to completion of the
ADVANCED TASER development project and introduced the first ADVANCED TASER units for sale to law
enforcement customers in December 1999. As a result of these activities and product development expenses, we had
accumulated a deficit of $6.3 million by December 31, 1999.
The first full year of the ADVANCED TASER product line sales was 2000. We spent the year focusing on
building the distribution channel for marketing the product line and developing a nationwide training campaign to
introduce the product line to law enforcement agencies, primarily in North America.
In the first quarter of 2001, we discontinued the outsourcing of the final assembly of our products and moved
such final assembly to our facility in Scottsdale, Arizona. As a result of this change, we anticipate
15

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 12562
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 17

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 019.00.00.00 SN: 24 Ed#: 13
*P64567/019/13*
EDGAR 2

that our direct labor costs will represent a larger portion of our total costs of products sold, but that our total costs of
products sold, including direct material and labor and overhead costs, will be slightly lower as a percentage of our
net sales in 2001.
Results of Operations
Years ended December 31, 1999 and 2000
The following table shows the percentage of total revenues represented by selected items included in our
statements of operations:
Year Ended
December 31,
1999

2000

Net Sales
Less Costs of Products Sold:
Direct Manufacturing Expense
Indirect Manufacturing Expense

100%

100%

45.3%
49.3%

39.6%
14.3%

Total Cost of Products Sold
Gross Margin
Sales, General and Administrative Expense
Research and Development Expense

94.6%
5.4%
65.3%
2.9%

53.9%
46.1%
47.3%
0.2%

Loss from Operations
Interest Expense

(62.8)%
12.7%

(1.4)%
12.5%

Net Loss

(75.5)%

(13.9)%

Net sales. Net sales increased $1.2 million, or 54.5%, from $2.2 million for the year ended December 31, 1999
to $3.4 million for the year ended December 31, 2000. The increase was due almost entirely to the first full year of
sales of the ADVANCED TASER, primarily to law enforcement agencies. The increase in sales was partially offset
by the decline in AUTO TASER sales due to the discontinuation of this product line and somewhat lower sales of
the AIR TASER to consumers.
For the years ended December 31, 1999 and 2000, sales by product line were as follows:
Product Line

1999

%

2000

%

ADVANCED TASER (including cartridges and accessories)
AIR TASER (including cartridges and accessories)
AUTO TASER (including accessories)
Miscellaneous sales (components, freight, services, equipment)

$ 80,000
1,311,000
601,000
216,000

4%
59%
27%
10%

$2,099,000
1,241,000
24,000
49,000

62%
36%
1%
1%

Net sales

$2,208,000

100%

$3,413,000

100%

Cost of products sold. Cost of products sold decreased from $2.1 million in 1999, or 94.5% of net sales, to $1.8
million in 2000, or 53.9% of net sales. The decrease in cost of products sold as a percentage of net sales was due
primarily to the lower direct production costs associated with the AIR and ADVANCED TASERs, which averaged
29.8% of gross sales as compared to 59.8% of gross sales for the AUTO TASER, and a one-time charge related to
the phase out of the AUTO TASER product line of approximately $355,000 in 1999 included in indirect
manufacturing expense. In 2001, we anticipate our cost of products sold will decrease as a percentage of net sales
due to lower labor costs, greater labor productivity, lower materials cost and greater operating control, all in
connection with the transfer of our product assembly operations from Mexico to the United States.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 30578
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Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 020.00.00.00 SN: 24 Ed#: 12
*P64567/020/12*
EDGAR 2

For the two years ended December 31, 2000, our principal product costs included the following:
• Direct materials: For the first eight months of 1999, direct materials included raw materials as well as supplies
used in production. From September 1999 through February 2001, direct materials included our purchase price
of finished goods from our contract manufacturer and raw materials. Direct materials represented the majority
of our direct manufacturing expense.
• Direct labor: Direct labor represented the expenses incurred in our Scottsdale, Arizona facility for the assembly
and packaging of sub-assemblies. Once finished, these sub-assemblies were transferred to our contract
manufacturer for insertion into our finished products. In the first eight months of 1999, direct labor included
wages paid to employees in our Mexican production facility.
• Shipping expense: Shipping expense included those costs associated with shipping finished products to our
customers. These costs included freight paid to ship orders, special handling charges and related transaction
fees.
• Indirect manufacturing expense: Indirect manufacturing expense included the indirect costs associated with
producing our products, such as rent on production facilities, depreciation on production equipment and
tooling, engineering and support salaries and other indirect manufacturing costs.
In 2001, our product cost structure will be significantly different than in 1999 and 2000 primarily due to the
discontinuation of our use of our contract assembler. Specifically, our cost of direct materials will include only the
cost of components and supplies required to manufacture our finished goods. Our direct labor and manufacturing
costs will continue to be allocated to cost of products sold, but should be lower than in 2000 due to the
consolidation of our product manufacturing and assembly operations at our new facility in Scottsdale, Arizona.
Gross margin. Gross margin increased $1.5 million, or 1211.8%, from $120,000 in 1999 to $1.6 million in
2000. Our gross profit margin was 5.4% of net sales in 1999 compared to 46.1% in 2000 due to increased sales of
higher margin ADVANCED TASER products and the one-time write off of $355,000 taken in 1999 as a result of
the phase out of the AUTO TASER. We anticipate our gross margin will increase to approximately 60% of net sales
in 2001 primarily due to increased sales of higher margin ADVANCED TASER products, partially offset by
relocation costs associated with the transfer of our product assembly operations from Mexico to the United States.
Sales, general and administrative expenses. Sales, general and administrative expenses increased by $171,000,
or 11.9%, from $1.4 million in 1999 to $1.6 million in 2000. Sales, general and administrative expenses were
65.3% of net sales in 1999 compared to 47.3% of net sales in 2000. These costs increased to support the sales of the
ADVANCED TASER and include sales commissions and product demonstration costs. However, sales, general and
administrative expenses declined as a percentage of sales in 2000 due to the fixed nature of certain of these costs
and increased gross margins attributable to the ADVANCED TASER product line.
Interest expense. Interest expense increased by $146,000, or 52.3%, from $280,000 in 1999 to $426,000 in
2000. The increase reflects the cost of the higher level of related party debt in 2000 over 1999, primarily used to
fund working capital. In addition, we issued warrants and options in 2000 valued at $93,907 to certain stockholders
in return for providing loans to us.
Corporate tax status. Prior to our reincorporation in Delaware in February 2001, we were an S-corporation,
which allowed all the tax attributes to flow through to the stockholders. In February 2001, we changed our tax
reporting status to that of a C-corporation. When we changed our reporting status, our accumulated shareholder
deficit was converted to additional paid-in capital. As a result, there are also no net operating loss carry forwards
available to us.
Net loss. Our net loss decreased $1.2 million, or 71.6%, from $1.7 million in 1999 to $473,000 in 2000. Basic
and diluted net loss per common share was $0.54 in 1999 compared to $0.19 in 2000. The
17

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 10301
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Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 021.00.00.00 SN: 20 Ed#: 12
*P64567/021/12*
EDGAR 2

reduced net loss in 2000 resulted primarily from increased sales volume and increased gross margins attributable to
sales of the ADVANCED TASER line.
Liquidity and Capital Resources
We have sustained significant operating losses since our inception. In 1999 and 2000, we financed our
operations through advances from and investments by major stockholders, and bank financing guaranteed by major
stockholders.
Liquidity. We had a working capital deficiency of $2.4 million at December 31, 1999 and $1.0 million at
December 31, 2000. The improvement in working capital from 1999 to 2000 was largely due to the extension of
short-term related party debt in 1999 to long-term debt in 2000. In both 1999 and 2000, cash was used primarily to
fund operating losses and for investment in property and equipment.
In 2000 we generated cash from operations of $8,000, primarily as a result of a significant customer deposit of
$440,000 received in December 2000. In 1999, operations consumed $704,000 in cash. We have not historically
generated sufficient cash from operations to fund future growth or to repay our long-term debt that principally
comes due July 1, 2002. However, we anticipate that our cash flow from operations will be at least break-even in
2001 because we expect our sales will increase and our cost of products sold will decrease as a percentage of our
total revenues, generating both positive cash flow and net income. We believe that, with anticipated cash flow from
operations for 2001 and the completion of this offering, our cash resources will be adequate to meet our expected
future liquidity needs for approximately the next two years.
Capital resources. We have funded our operating deficits primarily through loans from two major stockholders,
Phillips Smith and Bruce Culver. Our indebtedness to these stockholders totaled $2.9 million at December 31, 2000.
$1.3 million of this debt matures in July 2002 and bears interest at a rate of 10%.
In the event this offering is not completed, we have an agreement with Messrs. Smith and Culver whereby we
may extend the maturity date of their outstanding notes for a period not to exceed 24 months. We also may retire
the debt at any time without penalty. In addition, Mr. Culver has established a non-revocable letter of credit in the
amount of $500,000 on our behalf that we can use to fund any shortfalls in our monthly capital requirements. This
letter of credit expires on the earlier of the closing of this offering or December 31, 2001.
Subsequent to December 31, 2000, an unrelated private lender loaned us $500,000 to fund working capital. The
related promissory note carries interest at 18% and matures at the earlier of the completion of this offering or July
2002. In return for his loan, we granted him 5,000 ten-year warrants with an exercise price of $10 per share. The
fair value of these warrants is approximately $9,600.
Also subsequent to December 31, 2000, we obtained a revolving line of credit with a bank with a total
commitment of up to $1.5 million. The line was fully used to repay a $1.5 million promissory note to Bruce Culver,
is secured by assets of Mr. Culver and substantially all of our assets other than our intellectual property, and has an
interest rate of bank prime plus 1%. The line matures on April 30, 2002 and requires us to make monthly interest
payments until such date.
Capital commitments. At December 31, 2000, we had no material commitments for capital expenditures. Other
commitments include rental payments under operating leases for office space and equipment, and commitments
under employment contracts with our chief executive officer, president, and chief financial officer.
18

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 18462
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Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 022.00.00.00 SN: 30 Ed#: 12
*P64567/022/12*
EDGAR 2

BUSINESS
Company overview
We develop, assemble and market less-lethal, conducted energy weapons primarily for use in the law
enforcement and corrections market. Over 400 police departments in the United States have made initial purchases
of our products and 15 police departments, including San Diego, Sacramento, and Albuquerque, have purchased our
products for every patrol officer. As of February 1, 2001, more than 200 additional police departments were
evaluating our newest product, the ADVANCED TASER.
We sell two principal products. We introduced the AIR TASER in 1994 and targeted it primarily at the
consumer market. We designed the AIR TASER to look like a cellular telephone or other consumer electronic item,
rather than a weapon. The terms of an agreement we signed with Electronic Medical Laboratories, Inc., doing
business as Tasertron, the original licensee of a patent on certain technology used in our weapons, precluded us
from selling our products to United States law enforcement, corrections and military agencies until February 1998.
After expiration of this agreement, we introduced the ADVANCED TASER, an upgraded and redesigned version of
the AIR TASER, to appeal to the law enforcement and corrections market. It uses the same basic operating principle
as the AIR TASER but produces four times the AIR TASER’s power output. It is also pistol-shaped to make it
easier for police officers to use. The ADVANCED TASER can be sold with an integrated laser sight and a built-in
memory option to record the time and date of up to 585 firings. We believe the ADVANCED TASER will also
appeal to the private security, military and consumer markets, and intend to pursue sales in these markets after
further penetrating the law enforcement and corrections market.
Industry background
The market for less-lethal weapons includes law enforcement agencies, correctional facilities, military agencies,
private security guard companies and retail consumers. We believe law enforcement officials are the opinion leaders
regarding market acceptance of new security products. In recent years, successful new security products — such as
the GLOCK handgun and the Mag-Lite flashlight — were first marketed to and accepted by police departments. We
therefore focus on the law enforcement agency segment of the market for less-lethal weapons.
According to a 1997 report issued by a unit of the United States Department of Justice, nearly all local police
departments and all federal law enforcement agencies have a use-of-force policy that dictates the level of force its
officers can use to respond to various situations. A police officer is trained to use only the minimum force necessary
to overcome the threat of injury or violence posed by a suspect. For example, under most policies, an officer may
not use lethal force unless a subject poses a threat of significant bodily injury or fatality to the officer or other
persons.
In fact, studies by the Associated Press have concluded that most police officers never deploy lethal force in the
course of their careers. While the vast majority of law enforcement officers around the world are armed with
firearms, only a small percentage will actually ever use them. A 1996 study jointly published by the United States
Department of Justice and the National Institute of Justice, however, indicates that police officers use less-lethal
force on a regular basis. Less-lethal force can range from a control hold to the use of a baton, chemical spray, or
other means to control a subject that is actively resisting the officer.
Police officers are often injured while trying to subdue a suspect with less-lethal force. Traditional tactics such
as using a baton or fist to control a suspect result not only in a significant risk of injury to the suspect, but also a
significant risk that the officer will be injured. If an officer can subdue a suspect from a safe distance using effective
less-lethal weapons, he greatly reduces the probability that he or the suspect, as well as bystanders, will be injured
during a confrontation.
A variety of new less-lethal weapons have been developed to address the need to temporarily incapacitate an
attacker without causing permanent injury or fatality. These weapons vary in approach, but
19

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 60597
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Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 023.00.00.00 SN: 20 Ed#: 12
*P64567/023/12*
EDGAR 2

generally include stun guns, batons and clubs, chemical sprays, rubber bullets, pepper balls and other impact
munitions. Each weapon has distinct advantages and disadvantages, and law enforcement agencies require different
tools for different situations. We believe that the following characteristics of less-lethal weapons are the most
important to law enforcement agencies:
• Effectiveness: temporary incapacitation of aggressive suspects;
• Range: variable distance over which the weapon is effective;
• Safety: low risk of injury or death;
• Ease of use: simple operation, low maintenance and no contamination;
• Dependability: reliability in many environments, product durability;
• Accountability: tracking to reduce misuse of the weapon; and
• Cost: low cost per use and possible reduction of litigation expense.
The ADVANCED TASER solution
All our products are designed to perform well in terms of the above characteristics. We believe the
ADVANCED TASER, however, offers the best combination of these characteristics currently available in a lesslethal weapon. In our opinion, this superior performance could make the ADVANCED TASER the less-lethal
weapon of choice in many situations for law enforcement agencies and other security services.
• Effectiveness
Most less-lethal weapons rely upon a pain response for effect. A less-lethal weapon that inflicts only pain may
not stop the most dangerous and aggressive suspects. The ADVANCED TASER is designed to cause complete yet
temporary physical incapacitation, not just discomfort or distraction. In volunteer testing and field use, the
ADVANCED TASER has incapacitated even highly focused individuals who have demonstrated the ability to fight
through other less-lethal weapons that rely only on pain.
• Range
Batons and chemical sprays can only be used from close distances, usually less than five feet. Rubber bullets,
beanbag rounds, and similar less-lethal impact weapons must be used at distances greater than 30 feet to minimize
suspects’ injuries. Therefore, we believe that other less-lethal weapons as a group are generally ineffective between
five and thirty feet. The ADVANCED TASER is designed to operate within this range. Since it is equally effective
between zero and five feet, we believe the ADVANCED TASER represents a more versatile less-lethal weapon for
encounters taking place within 21 feet.
• Safety
In tests involving over 1,000 human volunteers and in hundreds of field applications, the ADVANCED TASER
has had no reported long-term, adverse after-effects. In field uses, our technology has been found to have a
comparable or lower risk of injury to officers and suspects than other less-lethal technologies. Further, the recovery
time from an application of the ADVANCED TASER is generally less than one minute. In contrast, recovery time
from the application of chemical sprays can range from ten minutes to one hour. Recovery time from the effect of
impact rounds can vary from hours to weeks, depending on bruising and bone breakage.
• Ease of Use
The ADVANCED TASER is shaped and designed to function like a standard handgun. Accordingly, it is easy
for law enforcement officers to use during stressful situations, since their firearms training familiarizes them with
the muscle movements required for its operation. It can be reloaded and fired again as quickly as a spent cartridge
can be removed and a replacement cartridge inserted, typically in less than five seconds. Further, the weapon
requires no maintenance other than a periodic battery check. The
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 31696
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Phone: (602) 223-4455

Operator: BPX31366

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*P64567/024/12*
EDGAR 2

ADVANCED TASER also does not leave contaminating residues, unlike chemical sprays that may contaminate
buildings, vehicles or other closed facilities or officer uniforms.
• Dependability
The ADVANCED TASER operates effectively under a variety of unfavorable conditions, such as wind and
rain, that render chemical sprays less effective. The ADVANCED TASER housing is constructed of high tensilestrength polycarbonate to withstand the rigors of typical police use.
• Accountability
The ADVANCED TASER incorporates features designed to reduce inappropriate use. Our cartridges contain
numerous confetti-like Anti-Felon Identification tags, or AFIDs, which are scattered when the unit is fired. AFID
tags recovered from usage sites can thus help identify the owner of the cartridge used. The ADVANCED TASER
we market to law enforcement and corrections agencies also comes with a data port that records the exact time, date
and duration of up to 585 firings.
• Cost
The ADVANCED TASER is sold to law enforcement agencies for approximately $400 per unit. The air
cartridge ammunition is priced under $18 per shot. These prices are competitive with impact munitions and most
other specialized less-lethal weapons, with the exception of the least expensive chemical sprays. However, the
indirect costs of decontaminating buildings, vehicles, and uniforms resulting from the use of chemical sprays can
place the ADVANCED TASER at an overall cost advantage per use.
In addition, litigation costs for law enforcement agencies can be significant. Reducing the number of injuries
and fatalities caused by law enforcement officers may reduce the number of suits filed against agencies for
excessive use of force, wrongful death and injury. Further, reducing officer injuries minimizes medical claims and
lost time for work-related injuries.
As with other less-lethal weapons, we believe that these characteristics, particularly safety, may also have the
benefit of increasing goodwill between law enforcement agencies and their communities. Community relations
considerations can be particularly important at a time when almost any interaction with police can be videotaped
and scrutinized by the media and the public.
Our strategy
Key elements of our strategy for growth include the following:
• Fully exploit the expanding law enforcement and corrections market.
Our goal is to make the ADVANCED TASER the dominant less-lethal weapon for use by law enforcement and
corrections agencies. Law enforcement officials are often viewed as experts with regard to weapons and other
security products. As a result, we believe that widespread acceptance of the ADVANCED TASER in this market
will enhance its credibility and represent a necessary first step toward expanding sales of our products in additional
markets.
• Expand into private security, military, and consumer markets.
After increasing our presence in the law enforcement and corrections market, we intend to expand our
penetration in the private security, military and consumer self-defense markets. We believe the same performance
characteristics that will enable our products to succeed in the law enforcement and corrections market will also
appeal to potential customers in these additional markets.
• Develop enhanced less-lethal weapon technologies.
We intend to improve our less-lethal weapons technology to provide further growth and market opportunities.
Among other things, we intend to develop multiple shot capability and greater effective range. These innovations
may increase our revenues by allowing us to sell upgraded less-lethal weapons and accessories, both to existing and
potential new customers.
21

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 46724
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Phone: (602) 223-4455

Operator: BPX31366

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*P64567/025/12*
EDGAR 2

• Acquire businesses that enhance our strategic position.
We may acquire businesses that will complement our growth strategy and enhance our competitive position in
our markets. However, we have no current plans for such acquisitions.
Markets
Law enforcement and corrections
Federal, state and local law enforcement agencies in the United States currently represent the primary target
market for the ADVANCED TASER. According to United States Bureau of Justice statistics, there were nearly
19,000 of these agencies in the United States in 1996 that employed about 740,000 full-time, sworn law
enforcement officers. In 1999, the United States Bureau of the Census estimated that there were more than 450,000
correctional officers in the United States.
Acceptance of the ADVANCED TASER by United States police departments has been fairly rapid since its
introduction in December 1999. We believe it could prove equally suitable for use in correctional facilities. The
ADVANCED TASER is particularly useful in these confined and crowded settings since it provides a means of
bringing virtually any individual under control without requiring the use of lethal force. We anticipate that some
correctional officers will be armed with ADVANCED TASERs, particularly as its performance attributes become
more familiar to the wider law enforcement community.
In the law enforcement market, over 400 police departments have made initial purchases of the ADVANCED
TASER for testing or deployment. In addition, 15 police departments, including San Diego, Sacramento, and
Albuquerque, purchased enough of our weapons to issue one to each of their patrol officers.
Private security firms and guard services
A report of the Security Industry Association for 1999-2000 estimated that there were over 1.7 million privately
employed security guards or personnel in the United States. They represent a broad range of individuals, including
bodyguards, commercial and government building security guards, commercial money carrier employees, and many
others. We believe that security personnel armed with ADVANCED TASERs could be as effective in many
circumstances as those armed with conventional firearms. At the same time, arming guards with ADVANCED
TASERs may reduce the potential liability of private security companies and personnel.
A number of environments can prove problematic for the use of conventional firearms. The use of conventional
firearms in airplanes, for example, poses a significant threat to the integrity of the aircraft and the safety of the
passengers. Conventional firearms may also be inappropriate in subways, buses, transit systems, banks and casinos.
In many of these crowded environments, the contamination associated with the use of chemical sprays could also
pose significant problems.
One large private security force overseas has ordered over 1,000 ADVANCED TASERs for delivery in Spring
2001. We are in the early stage of pursuing additional opportunities for sales of the ADVANCED TASER in private
security markets, and have made only limited sales to date.
Consumer/personal protection
A 1997 survey sponsored by the National Institute of Justice found that, in 1994, 44 million Americans owned
192 million firearms, 65 million of which were handguns. We believe these handgun owners represent one segment
of a potentially large consumer market for our products.
As a result of our shift in focus, the share of our sales made to consumer markets fell sharply from 1999 to
2000. In 1999, sales to consumers represented 88% of total sales while these sales dropped to only 32% of total
sales in 2000. We expect the relative share of sales to consumer markets to remain small in the next few years.
Given the size of the potential consumer market, however, we believe consumer sales
22

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 30097
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Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 026.00.00.00 SN: 18 Ed#: 12
*P64567/026/12*
EDGAR 2

could contribute a substantial portion of our revenues in the future, particularly if the ADVANCED TASER
becomes more established in the law enforcement and corrections market.
Military
Military police forces may use the ADVANCED TASER for purposes similar to those of civilian police units.
Military peace-keeping forces also perform policing functions, and the ADVANCED TASER may prove an
effective tool for these operations. The ADVANCED TASER may also be used by armed forces to reduce the
possibility of civilian casualties resulting from combat operations on battlefields consisting of both civilians and
combatants. We have yet to pursue sales opportunities in the military market.
Products
Our weapons use compressed nitrogen to shoot two small electrified probes up to a maximum distance of 21
feet. The probes and compressed nitrogen are stored in a replaceable cartridge attached to the base of the weapon.
Our proprietary replacement cartridges are sold separately.
After firing, the probes discharged from our cartridges remain connected to the weapon by high-voltage
insulated wires that transmit electrical pulses into the target. These electrical pulses, which we call TASER-Waves
or T-Waves, are transmitted through the body’s nerves in a manner similar to the transmission of signals used by the
brain to communicate with the body. The T-Waves temporarily overwhelm the normal electrical signals within the
body’s nerve fibers, impairing subjects’ ability to control their bodies or perform coordinated actions. T-Waves can
penetrate up to two inches of clothing and up to a class 3 bullet resistant vest, the second most protective of seven
classes of bullet resistant vests. The initial effect lasts up to five seconds and the charge can be repeated for up to
approximately ten minutes by repeatedly firing the weapon.
Since all our weapons use the same cartridges, we can support multiple platforms and still achieve economies of
scale in cartridge production. Our cartridges contain numerous colored, confetti-like tags bearing the cartridge’s
serial number. These tags, referred to as Anti-Felon Identification tags, or AFIDs, are scattered when one of our
weapons is fired. We require sellers of our products to participate in the AFID program by registering buyers of our
cartridges. In many cases, we can use AFIDs to identify the registered owner of cartridges fired.
We introduced our initial product, the AIR TASER, in 1994. We designed the AIR TASER to look like a
cellular telephone rather than a weapon to target the consumer electronics market. Currently, the AIR TASER
product line consists of the AIR TASER, a cartridge that shoots two small electrified probes up to 15 feet, an
optional laser sight, and a number of holstering accessories. We continue to target the AIR TASER line to the
consumer market.
We developed the ADVANCED TASER product line, launched in December 1999, primarily for the law
enforcement and corrections market. The ADVANCED TASER M26 is our primary product in this market and is
sold exclusively to law enforcement and corrections agencies. The ADVANCED TASER M26 offers the following
improvements over the AIR TASER:
• Increased effectiveness: the ADVANCED TASER has four times the power of the AIR TASER and has
proven effective in incapacitating over 99% of volunteers tested.
• Better accountability: the ADVANCED TASER’s memory system records the time, date, and duration of up to
585 firings. By downloading this information periodically, law enforcement and corrections agencies can track
every use of the ADVANCED TASER. These agencies can use this data to investigate potential misuse.
• Ease of use: law enforcement and corrections officers have reported to us that the ADVANCED TASER’s
familiar pistol shape and integrated laser sight minimize the training required for officers and make it easier to
use.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
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*P64567/027/12*
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Our products are sold primarily through our network of distributors at a wide range of prices. Our most
inexpensive consumer product is the entry-level consumer AIR TASER, with a retail price of $99. Our high-end
consumer model, the ADVANCED TASER M18L with integrated laser sight, retails for $600. The ADVANCED
TASER M26 is currently our best selling item. Distributors sell the M26 to law enforcement and corrections
agencies for $400. Retail cartridge prices range from $16 to $30 per unit.
In addition to weapons and cartridges, we sell holsters, attachments, cases and other accessories that
complement our core products. Although to date these accessories have generated limited sales, they offer
additional revenue opportunities and attractive margins.
We offer a lifetime warranty on the AIR TASER. Under this warranty, we will replace any AIR TASER that
fails to operate properly for a $25 fee. The AIR TASER is designed to disable an attacker for up to 30 seconds, and
we encourage users to leave the unit and flee after firing it. As a result, we also provide free replacement units to
consumers who follow this suggested procedure. To qualify for the replacement unit, users must file a police report
that describes the incident and confirms the use of the AIR TASER. Historically, approximately 2% of the AIR
TASERs sold by us have been returned by end users in connection with a warranty claim. Warranty costs under the
AIR TASER replacement policy have been minimal to date.
We offer a no-questions-asked lifetime replacement policy on the ADVANCED TASER. If the weapon fails to
operate properly for any reason, we will replace it for a fee of $25. The fee is intended to help defray the handling
and repair costs associated with product returns. This policy is attractive to our law enforcement and corrections
agency customers. In particular, it avoids disputes regarding the source or cause of any defect. Due to our recent
introduction of the ADVANCED TASER, we have created a reserve for product returns based on a 7% return rate.
In 2000, we recalled a series of ADVANCED TASERs due to a defective component in connection with which we
incurred expenses of approximately $9,000 and recorded an additional charge of approximately $41,000 to account
for related future expenses.
Sales and marketing
Law enforcement and corrections agencies represent our primary target market. In this market, the decision to
purchase the ADVANCED TASER is normally made by a group of people including the agency head, his training
staff, and weapons experts. The decision sometimes involves political decision-makers such as city council
members. The decision-making process can take as little as a few weeks or as long as several years.
United States distribution. With the exception of several accounts to which we sell directly, the vast majority of
our law enforcement agency sales in the United States occur through our network of more than 25 independent
regional police equipment distributors. To service these distributors and assist us in expanding sales to new ones, we
retain two manufacturer’s representatives that call on potential distributors. We compensate our manufacturer’s
representatives solely on a commission basis, calculated as a percentage of the sales they complete. Sales in the
consumer market are made through different independent distributors, dealers, and retailers. We provide our
distributors with performance-based incentive programs.
International distribution. As a result of our shift in focus to the United States law enforcement and corrections
market, our international sales efforts are currently limited to presentations and training seminars conducted by
TASER personnel. We recently began introducing the ADVANCED TASER in Europe and parts of the Middle
East, South America and Asia, but have yet to devote significant resources to these markets. Sales outside the
United States and Canada accounted for 48% and 18% of total revenues in 1999 and 2000, respectively. In 2001,
we expect international sales to account for approximately 10% of our total sales.
We have worked in the past with more than 20 foreign distributors. These foreign distributors purchase products
from us and resell them to sub-distributors, retail dealers or end users. We continue to
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provide most foreign distributors with short-term exclusive contracts to sell our products in a designated region.
Although many of these relationships are inactive, we continue to ship products as ordered.
Training Programs. Most law enforcement and corrections agencies will not purchase new weapons until a
training program is in place to certify all officers in their proper use. We offer an eight-hour class that certifies law
enforcement and corrections agency trainers as instructors in the use of the ADVANCED TASER. We have
certified over 2,500 law enforcement training officers as ADVANCED TASER instructors. Our certification
program is designed to make it easier for departments to comply with these training requirements.
Fifty of our certified instructors have undergone further training and become certified as master instructors. We
authorize these individuals to train other law enforcement and corrections agency trainers, not just end-users within
these organizations. Twenty-five of our master instructors have agreed to conduct ADVANCED TASER training
classes on a regular basis. These instructors independently organize and promote their own training sessions, and we
provide them with logistical support. They are independent professional trainers, serve as local area TASER
experts, and assist our distributors in conducting TASER demonstrations at other police departments within their
regions. Through the end of 2000, we did not charge for attendance at these classes but now charge $195 per
attendee. We pay master instructors a per-session training fee and a share of the attendance fees collected at each
session that they conduct. These training sessions have led directly to the sale of ADVANCED TASERs to a
number of police departments.
Communications. In addition to our training programs, we regularly participate in a variety of trade shows and
conferences. Our marketing efforts also benefit from significant free news coverage. Other marketing
communications include video e-mails, press releases, and conventional print advertising in law enforcement trade
publications. Our website also contains similar marketing information.
Manufacturing
We have installed a new production line in our facility in Scottsdale, Arizona, where we have historically
assembled the compressed nitrogen containers used in our air cartridges. After a review of our operating costs and
changes in regulations pertaining to the export of the technology used to produce our weapons, we elected to move
assembly operations from our subcontractor in Guaymas, Mexico to our new facility in Scottsdale. We own all of
the additional production equipment used for the final assembly of our products in the Guaymas facility, and expect
to move it to Scottsdale no later than May 2001.
Our Scottsdale facility has approximately 6,000 square feet of assembly and warehouse space. We plan to
employ between 15 and 25 assembly personnel by the end of 2001. After the move, our production capabilities will
support the assembly of 2,000 ADVANCED TASERs, 1,000 AIR TASERs, and 24,000 cartridges per month on a
single shift. We can expand our production capabilities by adding additional personnel and a second shift with
negligible new investment in tooling and equipment. We expect our Scottsdale facility and tooling to be sufficient
to support our current growth projections at least through 2003.
We currently purchase finished circuit boards from First Electronics, Inc. and injection-molded plastic
components from Frontier Tool & Mold, Inc., each located in Phoenix. Although we currently obtain these
components from single source suppliers, we own the injection-molded component tooling used in their production.
As a result, we believe we could obtain alternative suppliers without incurring significant production delays. We
also purchase small machined parts from Asia Sourcing of Taiwan, China, and custom cartridge assemblies from
MC Davis Company of Arizona City, Arizona. We believe that these or readily available alternative suppliers can
consistently meet our needs for these components. We acquire most of our components on a purchase order basis
and do not have long-term contracts with suppliers. We believe that our relations with our suppliers are good.
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Competition
In the law enforcement and corrections market, the ADVANCED TASER competes directly with the conducted
energy weapon sold by Electronic Medical Research Laboratories, Inc., doing business as Tasertron. Tasertron is
the sole remaining manufacturer of the original TASER weapon introduced in the 1970s. At March 31, 2001, over
430 police departments had purchased, in the aggregate, over 4,000 ADVANCED TASERs. We believe that
approximately 400 police departments actively deploy the Tasertron weapon.
We believe The ADVANCED TASER also competes indirectly with a variety of other less lethal alternatives.
In the consumer market, the AIR TASER competes directly with a conducted energy weapon introduced by Bestex,
Inc. in 1996, called the Dual-Defense, and indirectly with other less-lethal alternatives.
Law enforcement and corrections market. Tasertron had an exclusive license to sell TASER products in the
North American law enforcement and corrections market until February 1998. Compared to the Tasertron unit, our
ADVANCED TASER offers reduced size, additional power, and a more convenient pistol-shaped design. We
believe agencies choosing to employ a conducted energy weapon will prefer to adopt a single weapon system. Since
its introduction, the ADVANCED TASER has competed successfully against the Tasertron unit, even in agencies
that had previously purchased Tasertron units.
Other less-lethal weapons, sold by companies such as Armor Holdings, Inc. and Jaycor, Inc., compete with our
ADVANCED TASER indirectly. Many law enforcement and corrections personnel consider less-lethal weapons to
be distinct tools, each best-suited to a particular set of circumstances. Consistent with this tool kit approach,
purchasing any given tool does not preclude the purchase of one or several more. In other cases, budgetary
considerations and limited space on officers’ belts dictate that only a limited number of less-lethal weapons will be
purchased and carried. We believe the ADVANCED TASER’s versatility, effectiveness, and low injury rate enable
it to compete effectively against other less-lethal alternatives.
Consumer market. Conducted energy weapons have gained limited acceptance in the consumer market for lesslethal weapons. These weapons compete with other less-lethal weapons such as stun guns, batons and clubs, and
chemical sprays. The primary competitive factors in the consumer market include a weapon’s cost, its effectiveness,
and its ease of use. The widespread adoption of the ADVANCED TASER by law enforcement agencies may help
us overcome a perceived historic lack of consumer confidence in conducted energy weapons.
Regulation
United States regulation. The AIR TASER and ADVANCED TASER are subject to the same regulations.
Neither weapon is considered a “firearm” by the Bureau of Alcohol, Tobacco, and Firearms. Therefore, no
firearms-related regulations apply to the sale and distribution of our weapons within the United States. In the 1980s,
however, many states introduced regulations restricting the sale and use of stun guns, inexpensive hand-held shock
devices. We believe existing stun gun regulations also apply to our weapon systems.
In many cases, the law enforcement and corrections market is subject to different regulations than the consumer
market. Where different regulations exist, we assume the regulations affecting the consumer market also apply to
the private security market except as the applicable regulations otherwise specifically
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provide. Based on a review of current regulations, we have determined the following states regulate the sale and use
of our weapon systems:
State
Connecticut
Florida
Hawaii
Illinois
Indiana
Massachusetts
Michigan
New Jersey
New York
North Carolina
North Dakota
Rhode Island
Washington
Wisconsin

Law Enforcement Use
Legal
Legal
Prohibited
Legal
Legal
Legal
Prohibited (except for evaluation)
Prohibited
Legal
Legal
Legal
Prohibited
Legal
Legal

Consumer Use
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Prohibited
Prohibited
Prohibited
Legal, subject to restrictions
Legal, subject to restrictions
Prohibited
Legal, subject to restrictions
Prohibited

The following cities and counties also regulate our weapon systems:
City
Annapolis
Baltimore
Chicago
Howard County, MD
Lynn County, OH
New York City
Philadelphia
Washington, D.C.

Law Enforcement Use
Legal
Legal
Legal
Legal
Legal
Legal
Legal
Legal

Consumer Use
Prohibited
Prohibited
Prohibited
Prohibited
Legal, subject to restrictions
Prohibited
Prohibited
Prohibited

United States export regulation. Our weapon systems are considered a crime control product by the United
States Department of Commerce. Accordingly, the export of our weapon systems is regulated under export
administration regulations. As a result, we must obtain export licenses from the Department of Commerce for all
shipments to foreign countries other than Canada. Most of our requests for export licenses have been granted, and
the need to obtain these licenses has not caused a material delay in our shipments. The need to obtain licenses,
however, has limited or impeded our ability to ship to certain foreign markets. In addition, export regulations
prohibit the further shipment of our products from foreign markets in which we hold an export license for the
products to foreign markets in which we do not hold an export license for the products.
In addition, in the fall of 2000, the Department of Commerce introduced new regulations restricting the export
of the technology used in our weapon systems. These regulations apply to both the technology incorporated in our
weapon systems and in the processes used to produce them. The technology export regulations do not apply to
production that takes place within the United States. After moving our final assembly to our Scottsdale facility,
these technology export regulations will no longer apply to us but will still apply to certain of our suppliers located
outside of the United States.
Foreign regulation. Foreign regulations are numerous and often unclear. We prefer to work with an exclusive
distributor who is familiar with applicable regulations in each of our foreign markets. Experience with foreign
distributors in the past indicates that restrictions may prohibit certain sales of our products in a number of countries.
The countries in which we are aware of restrictions include Belgium, Denmark, Hong Kong, Italy, Japan, New
Zealand, Norway, Sweden, Switzerland, and the United Kingdom. In
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Australia, Canada, and India, we are also aware that sales of our products are permitted to law enforcement and
corrections agencies but prohibited to consumers.
Intellectual property
We protect our intellectual property with a variety of patents and trademarks. In addition, we use confidentiality
agreements with employees and some suppliers to ensure the safety of our trade secrets.
We hold a United States patent on the construction of the gas cylinder used to store the compressed nitrogen in
our cartridges. This patent expires in 2015. We and two other companies are the only licensees for use in electronic
weapons of the technology described in a United States patent held by John H. Cover, Jr. The licenses held by the
other licensees may not be transferred and their rights under the licenses may not be expanded or modified without
our approval. Mr. Cover’s patent covers the process by which compressed gases launch the probes in our cartridges
and expires in 2009. Using this compressed gas technology instead of gunpowder prevents our products from being
classified as firearms by the Bureau of Alcohol, Tobacco and Firearms. We also have a broad-based patent
application pending covering the energy wave form we developed for the ADVANCED TASER.
We own the AIR TASER and TASER registered trademarks. We also have several unregistered trademarks.
In early April 2001, James F. McNulty, Jr. sued us in the United States District Court, Central District of
California. The lawsuit alleges that certain technology used in the firing mechanism for our weapons infringes upon
a patent for which Mr. McNulty holds a license, and seeks injunctive relief and unspecified monetary damages. We
believe we do not infringe this patent, that Mr. McNulty’s claims are without merit and that the litigation will have
no material adverse effect on our business, operating results or financial condition.
Research and development
Our research and development initiatives are led by our internal personnel and make use of specialized
consultants when necessary. These initiatives include bio-medical research as well as electrical and mechanical
engineering design. Future development projects will focus on reducing the size, extending the range, and
improving the functionality of our weapons. Total research and development expenditures were $64,000 in 1999
and $7,100 in 2000.
Employees
As of December 31, 2000, we had 16 full-time employees. Six employees were involved in sales, marketing and
training. Two were employed in research, development and engineering. We also employed four administrative
personnel and four in production support. Our employees are not covered by any collective bargaining agreement,
and we have never experienced a work stoppage. We believe that our relations with our employees are good.
Facilities
We conduct our operations from a modern 11,800-square-foot facility located in Scottsdale, Arizona. The
monthly rent for this facility is approximately $11,000. Our lease expires on January 1, 2006. We believe this
facility will meet our needs for the next three years and that additional space will be available on reasonable terms
upon the expiration of our current lease or if we require additional space.
Legal proceedings
In February 2000, Thomas N. Hennigan, a distributor of our products from late 1997 through early 2000 sued us
in the United States District Court, Southern District of New York. Mr. Hennigan claims the exclusive right to sell
our products to many of the largest law enforcement, corrections, and military agencies in the United States. He
seeks monetary damages in the aggregate amount of $400 million
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against us and certain of our officers allegedly arising in connection with his service to us as a distributor on
theories of our failure to pay commissions, breach of contract, interference with contract, and on related theories.
We signed no contracts with Mr. Hennigan. We also believe that he has no reasonable basis for claims to informal
or implied contractual rights. As a result, we believe his claims are without merit, and the litigation will have no
material adverse affect on our business, operating results or financial condition. Mr. Hennigan’s suit was dismissed
in February 2001 for lack of personal jurisdiction of the New York court. In March 2001, he appealed the dismissal.
In early April 2001, James F. McNulty, Jr. sued us in the United States District Court, Central District of
California. The lawsuit alleges that certain technology used in the firing mechanism for our weapons infringes upon
a patent for which Mr. McNulty holds a license, and seeks injunctive relief and unspecified monetary damages. We
believe we do not infringe this patent, that Mr. McNulty’s claims are without merit and that the litigation will have
no material adverse effect on our business, operating results or financial condition.
Corporate information
We were incorporated in Arizona in September 1993 as ICER Corporation. We changed our name to AIR
TASER, Inc. in December 1993, and to TASER International, Incorporated in April 1998. In February 2001, we
reincorporated in Delaware as TASER International, Inc.
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MANAGEMENT
Directors and executive officers
Our directors and executive officers are as follows:
Name

Age

Phillips W. Smith
Patrick W. Smith
Thomas P. Smith
Bruce R. Culver
Matthew R. McBrady
Karl F. Walter
Kathleen C. Hanrahan

63
30
33
55
30
54
37

Position
Chairman
Chief Executive Officer and Director
President and Director
Director
Director
Director
Chief Financial Officer

Phillips W. Smith is the chairman of our board of directors. Dr. Smith has served as a director since 1993.
Since August 1997, Dr. Smith has served on the board of directors of Pentawave, Inc., a developer of cross-media
publishing software. Dr. Smith was chairman of the board of Pentawave from January 1999 through October 2000
and its chief executive officer from January through March 1999. From June 1990 to September 1997, Dr. Smith
served as the president and chief executive officer of Zycad Corporation, a developer of engineering and
manufacturing applications software. Dr. Smith holds a B.S.E. degree from West Point, an M.B.A. degree from
Michigan State University, and a Ph.D. in Business Administration from St. Louis University.
Patrick W. Smith is the chief executive officer and a co-founder of TASER. Mr. Smith has served as our chief
executive officer and as a director since 1993. Mr. Smith holds a B.S. degree in Biology and Neurobiology from
Harvard University, an M.B.A. degree from the University of Chicago, and a Masters Degree in International
Finance from the University of Leuven in Leuven, Belgium.
Thomas P. Smith is the president and a co-founder of TASER. Mr. Smith has served as our president since
April 1994 and as a director since 1993. Mr. Smith holds a B.S. degree in Ecology and Evolutionary Biology from
the University of Arizona and an M.B.A. degree from Northern Arizona University.
Bruce R. Culver has served as a director of TASER since January 1994. Mr. Culver co-founded Professional
Staff, P.L.C., a human resource management company, and has served on its board of directors since April 1990. In
March 1993, Mr. Culver organized and has since remained the chief executive officer of Culver Distributions, Inc.,
doing business as California Distribution Company, providing warehouse and distribution services to internet
companies. Since April 1997, Mr. Culver has served on the board of Pentawave, Inc., becoming its chairman in
October 2000.
Matthew R. McBrady has served as a director of TASER since January 2001. From August 1998 though
July 1999, Mr. McBrady served as a member of the staff of President Clinton’s Council of Economic Advisers. In
December 1997, Mr. McBrady began working as a financial and analytical consultant for Avenue A, Inc, an internet
marketing company, and served as its vice president of analytics from June 1999 through October 1999.
Mr. McBrady taught corporate finance courses at the University of Southern California during the summer terms of
1997 and 1998, at Harvard College from September 1996 through May 1997, and at Harvard Business School
during the spring term of 1998. Mr. McBrady holds a B.S. in Economics from Harvard University, an M.S. in
International Economics from Oxford University, and expects to receive a Ph.D. in Corporate and International
Finance from Harvard University in June 2001.
Karl F. Walter has served as a director of TASER since January 2001. Mr. Walter was a co-founder of Glock,
Inc., a subsidiary of GLOCK GmbH, an Austrian semi-automatic pistols manufacturer. From January 1994 through
February 1997, Mr. Walter worked as a director of law enforcement sales for Sturm
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Ruger Co., a firearms manufacturer. Since March 1997, Mr. Walter has worked as the program manager for AV
Technology International, LLC, a builder of armored vehicles.
Kathleen C. Hanrahan is our chief financial officer, serving in that position since November 2000.
Ms. Hanrahan first joined TASER in January 1996 as an internal controls consultant and became our controller in
March 1996.
Our certificate of incorporation provides that we have no less than three and no more than nine directors divided
into three classes (Class 1, Class 2, and Class 3), with members of each class serving for staggered three-year terms.
As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other
classes continuing for the remainder of their respective three-year terms. Messrs. Phillips Smith and Bruce Culver
have been designated as Class 1 directors, whose term expires at the 2001 annual meeting; Messrs. Patrick Smith
and Karl Walter have been designated as Class 2 directors, whose term expires at the 2002 annual meeting; and
Messrs. Thomas Smith and Matthew McBrady have been designated as Class 3 directors, whose term expires at the
2003 annual meeting.
Each officer serves at the discretion of our board of directors. No officer is subject to an agreement that requires
the officer to serve TASER for a specified number of years. Mr. Thomas Smith and Mr. Patrick Smith are Dr.
Phillips Smith’s sons. No other family relationships exist among our directors and executive officers.
Director compensation
Prior to 2001, directors were not compensated for their service on the board. Beginning in 2001, independent
directors will receive $1,250 per quarter. In addition, in December 2000, Messrs. McBrady and Walter each
received options to purchase 6,667 shares vesting ratably over four years at an exercise price of $3.30 per share.
Directors are also reimbursed for expenses incurred in connection with attendance at meetings.
Committees of the board of directors
Our board of directors has an Audit Committee consisting of Mr. McBrady and Mr. Walter, and a
Compensation Committee consisting of Mr. Culver and Mr. Walter. The Audit Committee meets with management
and our independent public accountants to determine the adequacy of our internal controls and other financial
reporting matters. The Compensation Committee reviews and recommends to the board of directors the
compensation and benefits of our officers, reviews general policy matters relating to compensation and benefits of
our employees and administers the issuance of stock options and discretionary cash bonuses to our officers,
employees, directors and consultants. We intend to appoint only independent directors to the Audit and
Compensation Committees.
Executive compensation
The following table sets forth information regarding compensation awarded to, earned by or paid to our chief
executive officer for all services rendered to us during 1998, 1999 and 2000. None of our executive officers earned
in excess of $100,000 in 2000.
Summary Compensation Table
Annual Compensation
Name and Principal Position
Patrick W. Smith
Chief Executive Officer

Year

Salary

Bonus

Long Term Compensation
Securities Underlying Options
(#)

2000
1999
1998

$65,208
$49,161
$43,205

$2,500
—
—

—
10,000
—

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Option grants in last fiscal year
We did not grant any options to our chief executive officer during the year ended December 31, 2000.
Fiscal year end option values
The following table sets forth information regarding the number and value of unexercised options held by our
chief executive officer on December 31, 2000. He did not exercise any options to purchase common stock during
2000.
Number of Securities
Underlying Options at Fiscal
Year End(#)
Name
Patrick W. Smith

Value of Unexercised In-theMoney Options at Fiscal
Year End($)(1)

Exercisable

Unexercisable

Exercisable

Unexercisable

6,672

3,328

$46,895

$26,505

(1) Based on the estimated fair value of our common stock as of December 31, 2000, determined by our board of
directors to be $8.00 per share.
Stock option plans
We have two stock option plans: the 1999 stock option plan and the 2001 stock option plan.
The 1999 stock option plan authorized us to issue options to purchase up to 833,333 shares of our common
stock. Under this plan, we have issued options to purchase 143,322 shares at $0.22 to $7.20 per share, including
10,000 options to Patrick W. Smith. We will issue no further options under the plan. The plan is administered by
our board of directors. Subject to the provisions of this plan, the board determines who will receive options, the
number of options granted, the manner of exercise and the exercise price of the options. The term of incentive stock
options granted under the plan may not exceed ten years, or five years for options granted to an optionee owning
more than 10% of our voting stock. The exercise price of an incentive stock option granted under this plan must be
equal to or greater than the fair market value of the shares of our common stock on the date the option is granted.
The exercise price of a non-qualified option granted under this plan must be equal to or greater than 85% of the fair
market value of the shares of our common stock on the date the option is granted. An incentive stock option granted
to an optionee owning more than 10% of our voting stock must have an exercise price equal to or greater than 110%
of the fair market value of our common stock on the date the option is granted.
The 2001 stock option plan authorizes us to issue options to purchase up to 550,000 shares of our common
stock. Under this plan, as of April 30, 2001, we had granted options to purchase 291,000 shares at an exercise price
equal or greater than the value of the common stock portion of the initial per unit public offering price in this
offering, including 60,000 options to Patrick W. Smith. The plan is administered by our board of directors. Subject
to the provisions of this plan, the board determines who will receive options, the number of options granted, the
manner of exercise and the exercise price of the options. The term of incentive stock options granted under the plan
may not exceed ten years, or five years for incentive stock options granted to an optionee owning more than 10% of
our voting stock. The exercise price of an incentive stock option granted under this plan must be equal to or greater
than the fair market value of the shares of our common stock on the date the option is granted. The exercise price of
a non-qualified option granted under this plan must be equal to or greater than 85% of the fair market value of the
shares of our common stock on the date the option is granted. An incentive stock option granted to an optionee
owning more than 10% of our voting stock must have an exercise price equal to or greater than 110% of the fair
market value of our common stock on the date the option is granted.
Employment agreements
In July 1998, we entered into an employment agreement with Patrick W. Smith pursuant to which he agreed to
serve as our chief executive officer. The agreement is for an initial three-year term ending June 30, 2001, and is
automatically renewed for a two-year term on such date and every two years
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Phone: (602) 223-4455

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Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 036.00.00.00 SN: 24 Ed#: 12
*P64567/036/12*
EDGAR 2

thereafter unless we give Mr. Smith one-year prior notice of termination, if the termination is without cause. The
agreement provides for annual base compensation in the amount of $65,000, which amount may be increased based
on performance. In 2000, Mr. Smith’s salary was increased to $90,000. We may terminate this agreement with or
without cause. Should we terminate the agreement without cause, upon a change of control or upon his death or
disability, our chief executive officer is entitled to compensation equal to 12, 24 or 18 months of salary,
respectively.
CERTAIN TRANSACTIONS
In 1998, Mr. Bruce R. Culver, a director of TASER, loaned us $622,525. In March 1998, $150,000 of such
amount was converted into 20,833 shares of our common stock at an estimated value of $7.20 per share. In
December 1998, we issued Mr. Culver a promissory note for $472,525, the remaining amount due. The note bears
interest at a rate of 10% per year and matures July 1, 2002.
In 1999, Mr. Culver loaned us $1,500,000. In return, in April 1999, we issued him a promissory note for
$500,000 at an effective interest rate of 27.1% per year to mature October 31, 2000, and 1,666,667 shares of our
common stock at a price of $0.60 per share. These shares were subject to a repurchase agreement between
Mr. Culver and us that allowed us to repurchase the shares if we met certain operating performance criteria. We met
the criteria and repurchased the shares from Mr. Culver in July 2000 in exchange for a promissory note in the
amount of $1,000,000. We consolidated this note and the April 1999 note into a new note for $1,500,000 which
carried interest at bank prime, which was 9.5% at December 31, 2000, plus 1%. We repaid the new note in full in
April 2001 with the proceeds of a loan from a commercial bank.
In March 1999, Mr. Culver loaned us $100,000, and in July 1999, Mr. Culver loaned us $50,000. The related
notes carry interest at a rate of 10% and mature July 2002. In May 2000, Mr. Culver loaned us an additional
$200,000 at an interest rate of 10%, due July 1, 2002.
We have used all amounts loaned to us by Mr. Culver to fund our working capital needs. As of April 30, 2001,
the aggregate principal amount due to Mr. Culver under the above notes outstanding on such date was $822,525
plus accrued interest of $166,637. Under certain circumstances, Mr. Culver has agreed to extend the maturity of
these notes.
In September 1999, we sold Mr. Culver 151,515 shares of our common stock for $3.30 per share for an
aggregate purchase price of $500,000.
In July 2000, we issued Mr. Culver a warrant to purchase 22,727 shares of our common stock at a price of $3.30
per share in connection with his provision of a $1,500,000 loan to us in such month. These warrants expire July 31,
2005.
In 1998, Mr. Phillips W. Smith, our chairman, loaned us $725,691 to fund our working capital needs. In
March 1998, $150,000 was converted into 20,833 shares of common stock at an estimated fair value of $7.20 per
share and $120,000 was repaid. In December 1998, we issued a promissory note for $455,691, the remaining
amount due. The note bears interest at a rate of 10% per year and matures July 1, 2002. Further, Mr. Smith has
deferred expenses in the amount of $99,794, which has been formalized in a note bearing 10% interest, which
matured December 31, 2000. Under certain circumstances, Mr. Smith has agreed to extend the maturity of these
notes. As of April 30, 2001, the aggregate principal amount due to Mr. Smith under these notes was $555,485 plus
accrued interest of $136,042.
In the event this offering is not completed, we have an agreement with Mr. Smith and Mr. Culver whereby we
may extend the maturity date of their outstanding notes for a period not to exceed 24 months. We may retire the
debt at any time without penalty. In addition, Mr. Culver has established a non-revocable letter of credit in the
amount of $500,000 on our behalf that we may use to fund any shortfalls in monthly working capital requirements
until we can make other financing arrangements, and provided us a related letter of support.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 42973
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

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*P64567/037/11*
EDGAR 2

In 1999, Mr. Smith worked as a full-time advisor to us and was compensated solely by a five-year option on
16,667 shares of our common stock with an exercise price of $0.66 per share.
In July 1999, Malcolm W. Sherman, a stockholder, loaned us $75,000 to acquire production equipment. The
related note carries interest at 9.18% and matures July 1, 2001. In May 2000, we issued Mr. Sherman an option to
purchase 3,333 shares of our common stock at an exercise price of $0.22 per share in connection with his
continuing provision of services to us following his retirement as a full-time employee and in consideration of his
provision of the loan.
Our board of directors has approved all transactions that we have entered into with related parties. However,
until January 2001, we did not have any disinterested, independent directors serving on our board of directors.
Consequently, none of our related party transactions effected prior to such date were approved by disinterested,
independent directors at the time of the transaction. Our two disinterested, independent directors have since
determined that our related party transactions that were entered into prior to such date and continue in effect,
including the outstanding loans from Messrs. Culver and Smith to us, are on terms no less favorable to us than we
could obtain from unaffiliated parties, and have ratified these transactions. We derived no revenue from related
party transactions during the fiscal year ended December 31, 2000.
On an ongoing basis, all related party transactions will be reviewed by our board of directors. It is the policy of
our board of directors that all proposed transactions by us with our directors, officers, five-percent stockholders and
their affiliates, including forgiveness of any loan from us to any such person, be entered into or approved only if
such transactions are on terms no less favorable to us than we could obtain from unaffiliated parties, are reasonably
expected to benefit us and are approved by a majority of the disinterested, independent members of our Board of
Directors. Such independent directors are authorized to consult with independent legal counsel at our expense in
determining whether to approve any such transaction.
34

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 31119
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 36

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 038.00.00.00 SN: 22 Ed#: 12
*P64567/038/12*
EDGAR 2

PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial ownership of our common stock as of
March 15, 2001, and as adjusted to reflect the sale of 800,000 units in this offering, by:
• each person or group of affiliated persons known to be the beneficial owner of more than 5% of our
outstanding common stock;
• each of our directors;
• our chief executive officer; and
• all of our directors and executive officers as a group.
As of such date, there were 1,510,754 shares of common stock outstanding before giving effect to the sale of
units in this offering. We believe that, except as otherwise described below, each named beneficial owner has sole
voting and investment power with respect to the shares listed.
Number of
Shares
Beneficially
Owned

Name of Beneficial Owner
Bruce R. Culver(1)
Phillips W. Smith(2)
Patrick W. Smith(3)
Thomas P. Smith(4)
Malcolm W. Sherman(5)
Karl F. Walter(6)
Matthew R. McBrady(7)
All directors and executive officers as a group (7 persons)(8)

491,146
388,943
363,118
219,208
123,796
417
417
1,478,921

Percentage
Beneficially
Owned Before
This Offering
31.9%
25.4%
23.8%
14.4%
8.2%
*
*
92.1%

Percentage
Beneficially
Owned After
This Offering
17.9%
14.2%
13.3%
8.0%
4.6%
*
*
52.7%

The address of each person identified in this table is c/o 7860 East McClain Drive, Suite 2, Scottsdale, Arizona
85260.
As of March 15, 2001, we had nine stockholders.
* less than 1%
(1) Includes 31,061 shares subject to warrants that are exercisable within 60 days.
(2) Includes 21,297 shares subject to options or warrants that are exercisable within 60 days.
(3) Includes 12,784 shares subject to options that are exercisable within 60 days.
(4) Includes 12,784 shares subject to options that are exercisable within 60 days.
(5) Includes 3,333 shares subject to options that are exercisable within 60 days.
(6) Includes 417 shares subject to options that are exercisable within 60 days.
(7) Includes 417 shares subject to options that are exercisable within 60 days.
(8) Includes 94,432 shares subject to options or warrants that are exercisable within 60 days.
35

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 27589
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 37

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 039.00.00.00 SN: 24 Ed#: 13
*P64567/039/13*
EDGAR 2

DESCRIPTION OF SECURITIES
Upon completion of the offering, our authorized capital stock will consist of 50,000,000 shares of common
stock, $0.00001 par value, and 25,000,000 shares of preferred stock, $0.00001 par value, of which there will be
2,710,754 shares of common stock and no shares of preferred stock outstanding. Our certificate of incorporation
and bylaws provide further information about our capital stock.
Units
Each unit consists of one and one-half shares of common stock and one and one-half public warrants, each
whole warrant to purchase one additional share of common stock. The common stock and warrants will trade only
as a unit for at least 30 days following this offering. The underwriter will then determine when the units separate,
after which the common stock and the public warrants will trade separately.
Common stock
Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder
vote and may not cumulate their votes. Holders of common stock are entitled to share in all dividends that the board
of directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or
winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of
liabilities and after providing for each class of stock, if any, having preference over the common stock.
Holders of our common stock have no conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to our common stock. The rights of the holders of common stock are subject to
any rights that may be fixed for holders of preferred stock. All outstanding shares of common stock are, and the
shares underlying all options and public warrants will be, duly authorized, validly issued, fully paid and nonassessable upon our issuance of these shares.
Preferred stock
Our certificate of incorporation provides for the issuance of up to 25,000,000 shares of preferred stock. As of
the date of this prospectus, there are no outstanding shares of preferred stock. Subject to certain limitations
prescribed by law and the rights and preferences of the preferred stock, our board of directors is authorized, without
further stockholder approval, from time-to-time to issue up to an aggregate of 25,000,000 shares of our preferred
stock, in one or more additional series. Each new series of preferred stock may have different rights and preferences
that may be established by our board of directors. A majority of our disinterested, independent directors must
approve any issuance by us of our preferred stock.
The rights and preferences of future series of preferred stock may include:
• number of shares to be issued;
• dividend rights and dividend rates;
• right to convert the preferred stock into a different type of security;
• voting rights attributable to the preferred stock;
• right to receive preferential payments upon a liquidation of the company;
• right to set aside a certain amount of assets for payments relating to the preferred stock; and
• prices to be paid upon redemption of the preferred stock.
36

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 56294
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 040.00.00.00 SN: 27 Ed#: 15
*P64567/040/15*
EDGAR 2

Public warrants
General
Each public warrant entitles the holder to purchase one share of our common stock at an exercise price per share
of 110% of two-thirds of the initial public offering price of the units. The exercise price is subject to adjustment
upon the occurrence of certain events as provided in the public warrant certificate and summarized below. Our
public warrants may be exercised at any time during the period commencing 30 days after this offering and ending
on the fifth anniversary date of the closing of this offering, which is the expiration date. Those of our public
warrants which have not previously been exercised will expire on the expiration date. A public warrant holder will
not be deemed to be a holder of the underlying common stock for any purpose until the public warrant has been
properly exercised.
Separate transferability
Our common stock and public warrants will trade only as a unit for at least 30 days following this offering. The
underwriter will then determine when the units separate, after which the common stock and the public warrants will
trade separately. The underwriter intends to separate the units 30 days after this offering absent unforeseen
circumstances. We will announce in advance the separation of the units by a public press release. Upon separation,
unit holders will receive certificates for the common stock and public warrants in exchange for their unit
certificates. Unit holders will receive cash in the place of any fractional shares of common stock or fractional
warrants created in connection with the separation of the units. The amount of cash paid for any fractional interest
in common stock or warrants will be equal to 50% of the closing price of our common stock and warrants,
respectively, on the date of separation of the units.
Redemption
We have the right to redeem the public warrants issued in this offering at a redemption price of $0.25 per public
warrant after providing 30 days prior written notice to the public warrant holders, if at the time of the notice, the
basic net income per share of our common stock as confirmed by audit for a 12-month period preceding the date of
the notice is equal to or greater than $1.00. We will send the written notice of redemption by first class mail to
public warrant holders at their last known addresses appearing on the registration records maintained by the transfer
agent for our public warrants. No other form of notice by publication or otherwise will be required. If we call the
public warrants for redemption, they will be exercisable until the close of business on the business day next
preceding the specified redemption date.
Exercise
A public warrant holder may exercise our public warrants only if an appropriate registration statement is then in
effect with the Securities and Exchange Commission and if the shares of common stock underlying our public
warrants are qualified for sale under the securities laws of the state in which the holder resides.
Our public warrants may be exercised by delivering to our transfer agent the applicable public warrant
certificate on or prior to the expiration date or the redemption date, as applicable, with the form on the reverse side
of the certificate executed as indicated, accompanied by payment of the full exercise price for the whole number of
public warrants being exercised. Warrants may only be exercised to purchase whole shares. Public warrant holders
will receive cash equal to the current market value of any fractional interest, which will be the value of one whole
interest multiplied by the fraction thereof, in the place of fractional warrants that remain after exercise if they would
then hold warrants to purchase less than one whole share. Fractional shares will not be issued upon exercise of our
public warrants.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 1991
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 39

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 041.00.00.00 SN: 25 Ed#: 11
*P64567/041/11*
EDGAR 2

Adjustments of exercise price
The exercise price is subject to adjustment if we declare any stock dividend to stockholders or effect any split or
reverse split with respect to our common stock. Therefore, if we effect any stock split or reverse split with respect to
our common stock, the exercise price in effect immediately prior to such stock split or reverse split will be
proportionately reduced or increased, respectively. Any adjustment of the exercise price will also result in an
adjustment of the number of shares purchasable upon exercise of a public warrant or, if we elect, an adjustment of
the number of public warrants outstanding.
Prior warrants
As of the date of this prospectus, we had issued and outstanding warrants to purchase 52,727 shares of our
common stock at a weighted average exercise price of $4.71, the forms of which have been filed as exhibits to the
registration statement of which this prospectus is a part.
Registration rights
All holders of registration rights contained in agreements with us have waived such rights in connection with
this offering. In connection with this offering, we have granted the underwriter of this offering warrants to purchase
shares of our common stock. These underwriter’s warrants, as well as the shares of common stock and warrants
included in the units issuable upon exercise of the underwriter’s warrants, are being registered on the registration
statement of which this prospectus is a part. We will cause the registration statement to remain effective until the
earlier of the time that all of the underwriter’s warrants have been exercised and the date which is five years after
the effective date of this offering. The common stock and warrants issued to the underwriter upon exercise of these
warrants will be freely tradeable. We will bear all expenses incurred in connection with the registration of the shares
of common stock and warrants included in the units issuable upon the exercise of the underwriter’s warrants.
Federal income tax considerations
The following discussion sets forth the material federal income tax consequences, under current law, relating to
the purchase and sale of the units and the underlying common stock and warrants. The discussion is a summary and
does not deal with all aspects of federal taxation that may be applicable to an investor. It does not consider specific
facts and circumstances that may be relevant to a particular investor’s tax position. Some holders, such as dealers in
securities, insurance companies, tax exempt organizations, foreign persons and those holding common stock or
warrants as part of a straddle or hedge transaction, may be subject to special rules that are not addressed in this
discussion. This discussion is based only on current provisions of the Internal Revenue Code of 1986, as amended,
and on administrative and judicial interpretations as of the date of this prospectus, all of which are subject to
change. You should consult your own tax advisor as to the specific tax consequences to you of this offering,
including the applicability of federal, state, local and foreign tax laws.
Allocation of Purchase Price
Each unit as a whole will have a tax basis equal to the cost of the unit. The measure of income or loss from
some of the transactions described below depends on the tax basis in each of the warrant and the share of common
stock comprising the unit. We have allocated the purchase price between the warrant and the common stock so that
the tax basis for the warrant will be equal to 20% of the price of the unit and the tax basis for the common stock will
be equal to 80% of the price of the unit. If you disagree with the allocation, please see your tax advisor for advice
on how to notify the Internal Revenue Service that you disagree with the allocation and claim a different basis.
38

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 933
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 042.00.00.00 SN: 18 Ed#: 13
*P64567/042/13*
EDGAR 2

Exercise or Sale of Warrants
No gain or loss will be recognized by a holder of a warrant on the purchase of shares of common stock for cash
on an exercise of a warrant, except that gain will be recognized to the extent cash is received in the place of
fractional shares or warrants. The tax basis of common stock received upon exercise of a warrant will equal the sum
of the tax basis of the exercised warrant and the exercise price. The holding period of the common stock acquired
will begin on the date the warrant is exercised. It does not include the period during which the warrant was held.
Gain or loss from the sale or other disposition of a warrant will be capital gain or loss to its holder if the
common stock to which the warrant relates would have been a capital asset in the holder’s hands. This capital gain
or loss will be long-term capital gain or loss if the holder has held the warrant for more than one year at the time of
the sale, disposition or lapse. If we redeem a warrant, the holder generally will realize capital gain or loss.
Individuals generally have a maximum federal income tax of 20% on long term capital gains. The deduction of
capital losses is subject to limitations.
Sale of Common Stock
A holder who sells common stock other than in connection with a tax free reorganization of involving us will
recognize gain or loss in an amount equal to the difference between the amount realized and the holder’s tax basis in
the common stock. Generally, the holder’s tax basis in the common stock will equal the portion of the unit price that
was allocable to the common stock. If the common stock is a capital asset in the holder’s hands, gain or loss upon
the sale of the common stock will be a long-term or short-term capital gain or loss, depending on whether the
common stock has been held for more than one year. Individuals generally have a maximum federal income tax of
20% on long-term capital gains. The deduction of capital losses is subject to limitations.
Expiration of Warrants Without Exercise
If a holder of a warrant allows it to expire or lapse without exercise, the expiration or lapse will be treated as a
sale or exchange of the warrant on the expiration date. The holder will have a loss equal to the amount of such
holder’s tax basis in the lapsed warrant. If the warrant is a capital asset in the hands of the holder, the loss will be a
long-term or short-term capital loss, depending on whether the warrant was held for more than one year. The
deduction of capital losses is subject to limitations.
Anti-takeover provisions of our charter documents
Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying
or preventing a change of control of TASER:
• Our board is divided into three classes, with each class serving a three-year staggered term, so that one-third of
the board is elected each year;
• The authorized number of our directors can be changed only by resolution of the board of directors;
• We can issue preferred stock without any vote or further action by stockholders;
• Any action required or permitted to be taken by our stockholders at an annual or a special meeting is valid only
if it is properly brought before the meeting, and written stockholder action is valid only if unanimous; and
• Our bylaws limit persons who may call a special meeting of our stockholders.
These provisions may deter hostile takeovers or delay changes in control of our management, which could depress
the market price of our securities.
Transfer agent and public warrant agent
The transfer agent for our common stock and public warrants is US Stock Transfer Corporation, Glendale,
California.
39

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 60166
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 043.00.00.00 SN: 25 Ed#: 13
*P64567/043/13*
EDGAR 2

SHARES ELIGIBLE FOR FUTURE SALE
This offering
Upon completion of this offering, we expect to have 2,710,754 shares of common stock outstanding, assuming
no exercise of outstanding options or warrants, or 2,890,754 shares if the underwriter’s over-allotment is exercised
in full. Of these shares, the 1,200,000 shares of common stock issued as part of the units sold in this offering will be
freely tradeable without restrictions or further registration under the Securities Act of 1933, except that any shares
purchased by our “affiliates,” as that term is defined under the Securities Act, may generally only be sold in
compliance with the limitations of Rule 144 under the Securities Act. The 1,200,000 shares of common stock
underlying the public warrants issued as part of the units sold in this offering will also be freely tradeable after
exercise of the warrants, except for shares held by our affiliates.
Outstanding restricted stock
The 1,510,754 outstanding shares of common stock held by our existing stockholders are restricted securities
within the meaning of Rule 144 and may not be sold in the absence of registration under the Securities Act unless
an exemption from registration is available, including the exemption from registration offered by Rule 144. Holders
of all of our outstanding restricted shares of common stock have agreed not to sell or otherwise dispose of any of
their shares of common stock for a period of one year after completion of this offering, without the underwriter’s
prior written consent, subject to certain limited exceptions. Prior to the expiration of this lock-up period, no shares
of our outstanding restricted common stock may be sold in the public market pursuant to Rule 144. After the
expiration of this lock-up period, or earlier with the underwriter’s prior written consent, all 1,510,754 of these
outstanding restricted shares may be sold in the public market pursuant to Rule 144.
In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, a person
who has beneficially owned restricted shares for at least one year, including a person who may be deemed to be our
affiliate, may sell within any three-month period a number of shares of common stock that does not exceed a
specified maximum number of shares. This maximum is equal to the greater of 1% of the then outstanding shares of
our common stock or the average weekly trading volume in the common stock during the four calendar weeks
immediately preceding the sale. Sales under Rule 144 are also subject to restrictions relating to manner of sale,
notice and availability of current public information about us. In addition, under Rule 144(k) of the Securities Act, a
person who is not our affiliate, has not been an affiliate of ours within three months prior to the sale and has
beneficially owned shares for at least two years would be entitled to sell such shares immediately without regard to
volume limitations, manner of sale provisions, notice or other requirements of Rule 144.
Preferred stock
As of March 15, 2001, we had no shares of preferred stock outstanding.
Options
Beginning 90 days after the date of this prospectus, certain shares issued or issuable upon the exercise of options
granted by us prior to the date of this prospectus will also be eligible for sale in the public market pursuant to
Rule 701 under the Securities Act, except that 1,927,032 of these shares are subject to the lock-up agreements
discussed above. Pursuant to Rule 701, persons who purchase shares upon exercise of options granted under a
written compensatory plan or contract may sell such shares in reliance on Rule 144 without having to comply with
the holding period requirements of Rule 144, and in the case of non-affiliates, without having to comply with the
public information, volume limitation or notice provisions of Rule 144. As of March 15, 2001, we had options
outstanding to purchase 434,322 shares of common stock which have not been exercised and which become
exercisable at various times in the future. Any shares issued upon the exercise of these options will be eligible for
sale pursuant to Rule 701.
40

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 49875
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 044.00.00.00 SN: 28 Ed#: 15
*P64567/044/15*
EDGAR 2

We intend to file registration statements on Form S-8 under the Securities Act to register approximately 434,322
shares of our common stock issuable under our stock option plans. These registration statements are expected to be
filed within three to six months after the completion of this offering. Shares of our common stock issued upon the
exercise of stock options after the effective date of the Form S-8 registration statements will be eligible for resale in
the public market without restriction, subject to Rule 144 limitations and the lock-up agreements discussed above.
Warrants
As of March 15, 2001, we had warrants outstanding to purchase 52,727 shares of common stock which have not
been exercised and which are currently exercisable. Any shares issued upon the exercise of these warrants will be
eligible for sale pursuant to Rule 144, except that these shares are also subject to the lock-up agreements discussed
above.
Underwriter’s warrants
In connection with this offering, we have agreed to issue to the underwriter warrants to purchase 80,000 units.
The underwriter’s warrants will be exercisable for units at any time during the four-year period commencing one
year after the effective date of this offering. We will cause the registration statement to remain effective until the
earlier of the time that all of the underwriter’s warrants have been exercised and the date which is five years after
the effective date of this offering. The common stock and warrants issued to the underwriter upon exercise of these
warrants will be freely tradeable.
41

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 27320
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[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 045.00.00.00 SN: 24 Ed#: 11
*P64567/045/11*
EDGAR 2

UNDERWRITING
Paulson Investment Company, Inc. is the underwriter of this offering. We and the underwriter have entered into
an underwriting agreement with respect to the units being offered. In connection with this offering and subject to
certain conditions, the underwriter named below has agreed to purchase, and we have agreed to sell, the number of
units set forth opposite its name.
Underwriter

Number of Units

Paulson Investment Company, Inc.

800,000

Total

800,000

The underwriting agreement provides that the underwriter is obligated to purchase all of the units offered by this
prospectus, other than those covered by the over-allotment option, if any units are purchased. The underwriting
agreement also provides that the obligations of the underwriter to pay for and accept delivery of the units are subject
to the approval of certain legal matters by counsel and certain other conditions. These conditions include the
requirements that no stop order suspending the effectiveness of the registration statement be in effect and that no
proceedings for such purpose have been instituted or threatened by the Securities and Exchange Commission.
The underwriter has advised us that it proposes to offer our units to the public initially at the offering price set
forth on the cover page of this prospectus and to selected dealers at such price less a concession of not more than
$0.60 per unit. The underwriter and selected dealers may reallow a concession to other dealers, including the
underwriter, of not more than $0.10 per unit. After completion of the initial public offering of the units, the offering
price, the concessions to selected dealers and the reallowance to their dealers may be changed by the underwriter.
A limited number of units, not to exceed four percent of the units sold in this offering, will be allocated and sold
to certain of our employees, friends and family members and to selected law enforcement officers as part of this
offering. No specific number of units have been reserved for this purpose. The units sold to these purchasers will be
sold at the initial public offering price of the units and will not be subject to a lock-up agreement.
The underwriter has informed us that it does not expect to confirm sales of our units offered by this prospectus
to any accounts over which it exercises discretionary authority.
Over-allotment option
Pursuant to the underwriting agreement, we have granted the underwriter an option, exercisable for 45 days
from the date of this prospectus, to purchase up to an additional 120,000 units on the same terms as the units being
purchased by the underwriter from us. The underwriter may exercise the option solely to cover over-allotments, if
any, in the sale of the units that the underwriter has agreed to purchase. If the over-allotment option is exercised in
full, the total public offering price, underwriting discounts and commissions, and proceeds to us before offering
expenses will be $11,960,000, $956,800 and $11,003,200, respectively.
Stabilization
Until the distribution of the units offered by this prospectus is completed, rules of the Securities and Exchange
Commission may limit the ability of the underwriter to bid for and to purchase units. As an exception to these rules,
the underwriter may engage in transactions that stabilize the price of the units. The underwriter may engage in overallotment sales, stabilizing transactions, syndicate covering transactions and penalty bids in accordance with
Regulation M under the Securities Exchange Act of 1934.
42

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 40392
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 44

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 046.00.00.00 SN: 22 Ed#: 13
*P64567/046/13*
EDGAR 2

• Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short position.
• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum.
• Syndicate covering transactions involve purchases of the common stock and public warrants in the open market
after the distribution has been completed in order to cover syndicate short positions. The underwriter may also
elect to reduce any short position by exercising all or part of the over-allotment option to purchase additional
units as described above.
• Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the units
originally sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate
short positions.
Short sales involve the sale by the underwriter of a greater number of shares than it is required to purchase in
this offering. Covered short sales are sales made in an amount not greater than the underwriter’s over-allotment
option to purchase additional shares in this offering. In determining the source of shares to close out the covered
short position, the underwriter will consider, among other things, the price of shares available for purchase in the
open market as compared with the price at which it may purchase shares through the over-allotment option. Naked
short sales are sales in excess of the over-allotment option. A naked short position is more likely to be created if the
underwriter is concerned that there may be downward pressure on the price of the shares in the open market after
pricing that could adversely affect investors who purchase in this offering.
In general, the purchase of a security to stabilize or to reduce a short position could cause the price of the
security to be higher than it might be otherwise. These transactions may be effected on The Nasdaq SmallCap
Market or otherwise. Neither we nor the underwriter can predict the direction or magnitude of any effect that the
transactions described above may have on the price of the units. In addition, neither we nor the underwriter can
represent that the underwriter will engage in these types of transactions or that these types of transactions, once
commenced, will not be discontinued without notice.
Indemnification
The underwriting agreement provides for indemnification between us and the underwriter against specified
liabilities, including liabilities under the Securities Act, and for contribution by us and the underwriter to payments
that may be required to be made with respect to those liabilities. We have been advised that, in the opinion of the
Securities and Exchange Commission, indemnification for liabilities under the Securities Act is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Underwriter’s compensation
We have agreed to sell the units to the underwriter at the initial offering price of $13.00, less the 8.0%
underwriting discount. The underwriting agreement also provides that upon the closing of the sale of the units
offered, the underwriter will be paid a nonaccountable expense allowance equal to 2.5 percent of the gross proceeds
from the sale of the units offered by this prospectus, including the over-allotment option.
We have also agreed to issue warrants to the underwriter to purchase from us up to 80,000 units at an exercise
price per unit equal to 120% of the offering price per unit. These warrants are exercisable during the four-year
period beginning one year from the date of effectiveness of the registration statement. These warrants, and the
securities underlying the warrants, are not transferable for one year following the effective date of the registration,
except to an individual who is an officer or partner of the underwriter, by will or by the laws of descent and
distribution, and are not redeemable. These warrants will have registration rights. We will cause the registration
statement to remain effective until the earlier of the time that all of the underwriter’s warrants have been exercised
and the date which is five years after the
43

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 46992
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 45

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 047.00.00.00 SN: 25 Ed#: 10
*P64567/047/10*
EDGAR 2

effective date of this offering. The common stock and warrants issued to the underwriter upon exercise of these
warrants will be freely tradeable.
The holders of the underwriter’s warrants will have, in that capacity, no voting, dividend or other stockholder
rights. Any profit realized by the underwriter on the sale of the securities issuable upon exercise of the underwriter’s
warrants may be deemed to be additional underwriting compensation. The securities underlying the underwriter’s
warrants are being registered on the registration statement. During the term of the underwriter’s warrants, the
holders thereof are given the opportunity to profit from a rise in the market price of our common stock. We may
find it more difficult to raise additional equity capital while the underwriter’s warrants are outstanding. At any time
at which the underwriter’s warrants are likely to be exercised, we may be able to obtain additional equity capital on
more favorable terms.
Lock-up agreements
Our officers, directors and other stockholders have agreed that for a period of one year from the date this
registration statement becomes effective that they will not sell, contract to sell, grant any option for the sale or
otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable
for our equity securities, other than through intra-family transfers or transfers to trusts for estate planning purposes,
without the consent of the underwriter, which consent will not be unreasonably withheld. The underwriter may
consent to an early release from the one-year lock-up period if in its opinion the market for the common stock
would not be adversely impacted by such sales and in cases of an officer, director or other stockholder’s financial
emergency. We are unaware of any officer, director or current stockholder who intends to ask for consent to dispose
of any of our equity securities during the lock-up period.
Determination of offering price
Before this offering, there has been no public market for the units and the common stock and public warrants
contained in the units. Accordingly, the initial public offering price of the units offered by this prospectus and the
exercise price of the public warrants were determined by negotiation between us and the underwriter. Among the
factors considered in determining the initial public offering price of the units and the exercise price of the public
warrants were:
• our history and our prospects;
• the industry in which we operate;
• the status and development prospects for our proposed products and services;
• our past and present operating results;
• the previous experience of our executive officers; and
• the general condition of the securities markets at the time of this offering.
The offering price stated on the cover page of this prospectus should not be considered an indication of the
actual value of the units. That price is subject to change as a result of market conditions and other factors, and we
cannot assure you that the units, or the common stock and public warrants contained in the units, can be resold at or
above the initial public offering price.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon on our behalf by Tonkon Torp LLP,
Portland, Oregon. Certain legal matters will be passed upon for the underwriter by Weiss Jensen Ellis & Howard,
P.C., Portland, Oregon.
44

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 43783
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 46

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 048.00.00.00 SN: 20 Ed#: 11
*P64567/048/11*
EDGAR 2

EXPERTS
The financial statements as of and for the years ended December 31, 1999 and 2000 included in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said firm as experts in auditing and
accounting and in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form SB-2 under the Securities Act with the Securities and Exchange
Commission with respect to the units offered hereby. This prospectus filed as part of the registration statement does
not contain all of the information contained in the registration statement and exhibits thereto and reference is hereby
made to such omitted information. Statements made in this registration statement are summaries of the terms of
such referenced contracts, agreements or documents and are not necessarily complete. Reference is made to each
such exhibit for a more complete description of the matters involved and such statements shall be deemed qualified
in their entirety by such reference. The registration statement and the exhibits and schedules thereto filed with the
Securities and Exchange Commission may be inspected by you at the Securities and Exchange Commission’s
principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, (202) 942-8090, and at the Commission’s regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 11400, Chicago,
Illinois 60661. The Commission also maintains a website at http://www.sec.gov that contains reports, proxy
statements and information statements and other information regarding registrants that file electronically with the
Commission. For further information pertaining to us and the units offered by this prospectus, reference is made to
the registration statement.
We intend to furnish our stockholders with annual reports containing financial statements audited by our
independent public accountants.
45

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 30852
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 47

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 051.00.00.00 SN: 10 Ed#: 8
*P64567/051/8*
EDGAR 2

TASER INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS
Page
TASER International, Inc.:
Report of Independent Public Accountants
Balance Sheets as of December 31, 1999 and 2000.
Statements of Operations for the Years Ended December 31, 1999 and
2000.
Statements of Stockholders’ Deficit for the Years Ended December 31,
1999 and 2000
Statements of Cash Flows for the Years Ended December 31, 1999 and
2000.
Notes to Financial Statements

F-1

F-2
F-3
F-4
F-5
F-6
F-7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 40845
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 48

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 052.00.00.00 SN: 13 Ed#: 9
*P64567/052/9*
EDGAR 2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
TASER International, Inc.:
We have audited the accompanying balance sheets of TASER International, Inc. (a Delaware corporation) as of
December 31, 1999 and 2000, and the related statements of operations, stockholders’ deficit and cash flows for each
of the two years in the period ended December 31, 2000. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of TASER International, Inc. as of December 31, 1999 and 2000, and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Phoenix, Arizona
April 30, 2001
F-2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 47194
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 49

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 053.00.00.00 SN: 15 Ed#: 11
*P64567/053/11*
EDGAR 2

TASER INTERNATIONAL, INC.
BALANCE SHEETS
December 31, 1999 and 2000
1999
Assets
Current Assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $48,000 in 1999 and
$55,000 in 2000
Inventory
Prepaids and other

$

Total current assets
Property and Equipment, net
Total assets

$

2000

54,905

Total liabilities
Commitments and Contingencies
Stockholders’ Deficit:
Preferred Stock, 0.00001 par value per share; 25 million shares
authorized; 0 shares issued and outstanding at December 31,
1999 and 2000
Common stock, 0.00001 par value per share; 50 million shares
authorized; 3,177,421 and 1,510,754 shares issued and
outstanding at December 31, 1999 and 2000
Additional paid-in capital
Deferred compensation
Common Stock held in treasury, at cost, 0 and 1,666,667 shares at
December 31, 1999 and 2000
Accumulated deficit

312,681
221,169
24,535

349,036
256,110

764,793
274,273

605,146

$ 1,039,066

$

2,762,178
74,781
19,979

1,834,137
2,778,219
43,925

2,856,938

4,656,281

—

—

32
4,256,558
(79,920)

—
(6,320,638)

(1,000,000)
(6,793,885)

(2,251,792)

(3,617,215)

$

605,146

$ 1,039,066

The accompanying notes are an integral part of these balance sheets.
F-3

100,000
124,574
22,171
589,949
539,329
189,980
268,134

32
4,068,814
—

Total stockholders’ deficit
Total liabilities and stockholders’ deficit

206,408

121,921
158,167
14,043

Liabilities and Stockholders’ Deficit
Current Liabilities:
Current portion of note payable
$ 112,000
Current portion of notes payable to related parties
1,664,774
Current portion of capital lease obligations
19,176
Accounts payable and accrued liabilities
574,989
Customer deposits
62,317
Inventory financing payable
189,980
Accrued interest, primarily to related parties
138,942
Total current liabilities
Notes Payable to Related Parties, net of current portion
Capital Lease Obligations, net of current portion

$

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 7618
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 50

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 054.00.00.00 SN: 15 Ed#: 9
*P64567/054/9*
EDGAR 2

TASER INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 2000

Net Sales
Cost of Products Sold:
Direct manufacturing expense
Indirect manufacturing expense

1999

2000

$ 2,208,488

$3,412,620

1,001,082
1,087,404

1,350,175
488,214

120,002
1,442,613
64,227

1,574,231
1,613,979
7,137

Gross margin
Sales, general and administrative expenses
Research and development expenses
Loss from operations
Interest Expense
Net Loss
Net losses per common and common equivalent share:
Basic
Diluted
Weighted average number of common and common equivalent
shares outstanding:
Basic
Diluted

(1,386,838)
279,895

(46,885)
426,362

$(1,666,733)

$ (473,247)

$

$

(0.54)
(0.54)

3,076,410
3,076,410

(0.19)
(0.19)

2,482,976
2,482,976

The accompanying notes are an integral part of these financial statements.
F-4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 18707
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 51

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 055.00.00.00 SN: 19 Ed#: 16
*P64567/055/16*
EDGAR 2

[B/E]

TASER INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the Years Ended December 31, 1999 and 2000
Common Stock
Shares

Amount

Additional
Paid-in
Capital

Treasury Stock

Balance, December 31, 1998
Shares sold for cash to stockholder
Issuance of common stock
Stock options granted for payment of
consulting fees
Net loss

1,359,239
1,666,667
151,515

$ 14
17
1

$2,567,432
999,983
499,999

—
—
—

—
—

—
—

1,400
—

—
—

—
—

Balance, December 31, 1999
Repurchase of shares from Stockholder for
note Payable
Stock options granted for payment of Board
fee
Stock options granted for payment of
consulting fee
Stock options and warrants granted for loan
guarantees
Net loss

3,177,421

32

4,068,814

—

—

—

—

—

—

—

79,920

—

—

—

—

13,917

—

—

—
—

—
—

93,907
—

—
—

—
—

Balance, December 31, 2000

3,177,421

$ 32

$4,256,558

Shares

Amount
$

(1,666,667)

—
—
—

(1,000,000)

(1,666,667)

$(1,000,000)

[Additional columns below]
[Continued from above table, first column(s) repeated]
Accumulated
Deficit

Total
Stockholders’
Deficit

—
—
—

$(4,653,905)
—
—

$(2,086,459)
1,000,000
500,000

—
—

—
(1,666,733)

1,400
(1,666,733)

—

(6,320,638)

(2,251,792)

Deferred
Compensation
Balance, December 31, 1998
Shares sold for cash to stockholder
Issuance of common stock
Stock options granted for payment of
consulting fees
Net loss
Balance, December 31, 1999
Repurchase of shares from
Stockholder for note Payable
Stock options granted for payment of
Board fee
Stock options granted for payment of
consulting fee
Stock options and warrants granted
for loan guarantees
Net loss
Balance, December 31, 2000

$

—

—

(79,920)
—
—
—
$(79,920)

(1,000,000)

—

—

—

13,917

—
(473,247)

93,907
(473,247)

$(6,793,885)

$(3,617,215)

The accompanying notes are an integral part of these financial statements.
F-5

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 22975
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 52

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 056.00.00.00 SN: 15 Ed#: 9
*P64567/056/9*
EDGAR 2

TASER INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999 and 2000

Cash Flows from Operating Activities:
Net loss
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities —
Depreciation
Change in assets and liabilities:
Accounts receivable
Inventory
Prepaids and other
Accounts payable and accrued liabilities
Customer deposits
Accrued interest

1999

2000

$(1,666,733)

$ (473,247)

Net cash (used in) provided by operating activities

124,803

90,474
607,165
16,598
(95,150)
62,317
101,650

(190,760)
(63,002)
(10,492)
14,960
477,012
129,192

(704,226)

8,466

(133,760)

(99,759)

(19,195)
—
728,344
(1,329,635)
1,500,000
—
1,400

(16,266)
(12,000)
163,238
—
—
(79,920)
187,744

Cash Flows from Investing Activities:
Purchases of property and equipment, net
Cash Flows from Financing Activities:
Net payments under capital leases
Payments on note payable
Net proceeds from notes payable to related parties
Net borrowings (payments) under line of credit
Issuance of common stock
Deferred compensation
Compensatory stock options

179,453

Net cash provided by financing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, beginning of year

880,914

242,796

42,928
11,977

151,503
54,905

Cash and Cash Equivalents, end of year

$

54,905

$ 206,408

Supplemental Disclosure:
Cash paid for interest

$

179,171

$ 239,552

Noncash Investing and Financing Activities:
Acquisition of property and equipment under capital leases

$

33,635

Exchange of shares from related party for note payable

$

—

Fair value of stock options issued for payment of consulting
fees

$

1,400

$

13,917

Fair value of stock options and warrants issued for loan
guarantees

$

0

$

93,907

Fair value of stock options and warrants issued for Board fees

$

0

$

79,920

$

$1,000,000

The accompanying notes are an integral part of these financial statements.
F-6

43,207

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 2808
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 53

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 057.00.00.00 SN: 11 Ed#: 9
*P64567/057/9*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 2000
1. The Company
a. History and Nature of Organization
TASER International, Inc. (TASER or the Company) was incorporated and began operations in Arizona in 1993
for the purpose of developing and manufacturing less-lethal, self-defense devices. From its inception until the
Company commenced production in December 1994, the Company was in the development stage. During the
period leading up to the start of production, the Company’s activities included raising capital, hiring key personnel
and obtaining the necessary licenses. All production costs during the period from inception through December 31,
1995, consisting of research and development activities and limited product manufacturing, were expensed as
incurred.
Through 1996, the Company was developing its signature product, the AIR TASER, and establishing the
marketing channels to promote retail sales. Significant nonrecurring expenditures were incurred, including research
and development costs, the development of marketing and sales materials, the purchase of the licensing rights to the
TASER technology and trademark, and the relocation of the manufacturing operations to Mexico, which resulted in
significant operating losses.
In 1997, the Company introduced a new product, the AUTO TASER. As a result of significant expenditures for
research and development, manufacturing difficulties, scrap, engineering changes and other costs associated with
the start up of this product line, the Company continued to experience operating losses in 1997, 1998 and 1999.
This product line was discontinued August 1, 1999.
In 1998, the Company formally changed its name from Air Taser, Inc. to TASER International, Inc. and began
development of its ADVANCED TASER product, which was introduced for sale in December 1999.
b. Financing
The Company has been financed primarily from advances from and investments by major stockholders and
bank financing guaranteed by major stockholders. Since inception, the Company has sustained significant operating
losses and has, at December 31, 2000, a deficit in working capital of approximately $1,069,000. In addition, new
capital will be required to fund further product development, market penetration, working capital and future
operations. The Company believes that additional financing will be available under terms and conditions that are
acceptable to it. However, there can be no assurance that additional financing will be available.
Subsequent to year end, the Company closed a loan for $500,000 from an unrelated private lender, and
management believes its operating cash flow throughout 2001 will be positive. In addition, in the event the
Company’s contemplated initial public offering is not completed, the Company has an agreement with two major
stockholders whereby the Company may, at the Company’s sole option, extend the maturity date of the
stockholders’ outstanding notes for a period not to exceed 24 months. The Company may also, at the Company’s
sole option, retire such debt at any time without penalty. In addition, a major stockholder has established a nonrevocable letter of credit in the amount of $500,000 on the Company’s behalf that the Company can use to fund any
shortfalls in the Company’s monthly capital requirements. The letter of credit expires at the earlier of the closing of
this offering or December 31, 2001.
c. Initial Public Offering
The Company is contemplating an initial public offering (IPO) of 800,000 units at an estimated price of $13 per
unit, consisting of one and one-half shares of common stock and one and one-half warrants, each whole warrant to
purchase one share of common stock (Note 11).
F-7

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 59869
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 54

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 058.00.00.00 SN: 17 Ed#: 11
*P64567/058/11*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
d. Reincorporation and Restatement of Shares
In February 2001, the Company reincorporated in the State of Delaware. In connection with the reincorporation,
the Company completed a 1-for-6 share reverse stock split. The accompanying financial statements and footnotes
have been restated for the lower number of shares of common stock outstanding for all periods presented.
2. Summary of Significant Accounting Policies
a. Cash and Cash Equivalents
Cash and cash equivalents include funds on hand and short-term investments with original maturities of three
months or less.
b. Inventory
Inventories are stated at the lower of cost or market; cost is determined using the most recent acquisition cost
method which approximates the first-in, first-out (FIFO) method. Inventories consisted of the following at
December 31:
Raw materials and work-in-process
Finished goods

1999

2000

$131,007
27,160

$153,506
67,663

$158,167

$221,169

Inventory cost in 1999 and 2000 includes primarily the cost paid to an outsourced manufacturer, which included
charges for material, labor and overhead.
c. Property and Equipment
Property and equipment are stated at cost. Additions and improvements are capitalized while ordinary
maintenance and repair expenditures are charged to expense as incurred. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets.
d. Long-Lived Assets
The Company periodically evaluates the carrying value of long-lived assets in accordance with Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. Under SFAS 121, long-lived assets to be held and used in operations are
reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be
fully recoverable. An impairment loss is recognized if the sum of the expected long-term undiscounted cash flow is
less than the carrying amount of the long-lived assets being evaluated. The Company has not recognized any
impairment losses during the two year period ended December 31, 2000.
e. Customer Deposits
The Company requires certain deposits in advance of shipment for foreign customer sales orders. At
December 31, 2000, customer deposits consisted primarily of one foreign customer sales order.
F-8

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 53040
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 55

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 059.00.00.00 SN: 10 Ed#: 9
*P64567/059/9*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
f. Cost of Products Sold
During 2000, the Company outsourced the assembly of its finished goods, but continued to manufacture certain
small, proprietary components internally. Prior to August 1999, all finished goods were assembled internally. At
December 31, 2000, cost of products sold represents net amounts paid to a vendor to acquire finished goods sold to
customers and the manufacturing costs, including material, labor and overhead related to the proprietary
components the Company manufactures internally. Prior to August 1999, costs of products sold included the
manufacturing costs, including materials, labor and overhead related to finished goods and components. Shipping
costs incurred related to product delivery are also included in cost of products sold.
At December 31, 1999, included within cost of products sold is a one-time charge related to the phase-out of the
AUTO TASER product line of approximately $355,000.
g. Revenue Recognition
The Company recognizes revenues when products are shipped and all sales are final. The Company charges
certain of its customers shipping fees, which are recorded as a component of net sales.
On December 3, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB)
No. 101, Revenue Recognition in Financial Statements,which provides additional guidance in applying generally
accepted accounting principles for revenue recognition in financial statements. The issuance of SAB No. 101 did
not have a material impact on the revenue recognition method of the Company.
h. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
i. Advertising Costs
The Company expenses the production cost of advertising as incurred or the first time the advertising takes
place. The Company incurred advertising costs of $24,652 and $35,035 in 1999 and 2000, respectively. Advertising
costs are included in sales, general and administrative expenses in the statements of operations.
j. Warranty Costs
The Company warrants its products from manufacturing defects for their lives and will replace any defective
units with a new one for a $25 fee. In 2000, the Company recalled a series of ADVANCED TASERs due to a
defective component in connection with which the Company incurred warranty expense of approximately $9,000
and recorded an additional charge of $41,000 to cover estimated future warranty costs based upon the number of
units sold and the estimated defect rate using its prior actual experience.
k. Research and Development Expenses
The Company expenses research and development costs as incurred. The Company incurred product
development expense of $64,227 and $7,137 in 1999 and 2000, respectively.
F-9

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 34724
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 56

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 060.00.00.00 SN: 17 Ed#: 11
*P64567/060/11*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
l. Income Taxes
The Company, since inception, has qualified as an S corporation under the Internal Revenue Code, and
accordingly, is not directly subject to income taxes. There is no provision or benefit for income taxes reflected in
the accompanying financial statements, since items of taxable income and losses are reported in the individual
returns of stockholders.
Subsequent to December 31, 2000, the Company reincorporated in the State of Delaware and elected to be taxed
as a C corporation. Net operating losses (NOLs) prior to the change to a C corporation accrued to the individual
stockholders. Accordingly, such losses are not available to reduce future taxes payable by the Company as a
C corporation.
Upon termination of the S status, the Company is required to implement SFAS No. 109, “Accounting for
Income Taxes” which requires the calculation of existing temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Management does not expect such
implementation to have a significant impact on the Company.
Had the Company been a C corporation in 1999 and 2000, no federal or state income tax benefit would have
been recorded for the NOLs discussed above because their realizability could not be determined as more likely than
not. Accordingly, no pro forma benefit for federal or state income taxes is recorded as if the Company were taxed as
a C corporation for any of the periods presented. Additionally, the accumulated deficit at the time of the S election
termination will be reclassified to additional paid-in capital.
m. Concentration of Credit Risk and Major Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts
receivable, accounts payable and notes payable to related parties. Sales are typically made on credit and the
Company generally does not require collateral. The Company performs ongoing credit evaluations of its customers’
financial condition and maintains an allowance for estimated potential losses. Accounts receivable are presented net
of an allowance for doubtful accounts. Provision for bad debts was $32,250 and $72,905 at December 31, 1999 and
2000, respectively.
For the years ended December 31, 1999 and 2000, sales by product were as follows:
1999

2000

(000s omitted)
Sales by product line:
AIR TASER
AUTO TASER
ADVANCED TASER
Other

Geographic:
United States
Other countries

Sales to customers outside of the United States are denominated in U.S. dollars.
F-10

$1,311
601
80
216

$1,241
24
2,099
49

$2,208

$3,413

52%
48

82%
18

100%

100%

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 36109
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 57

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 061.00.00.00 SN: 17 Ed#: 10
*P64567/061/10*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
n. Financial Instruments
The Company’s financial instruments include cash, accounts receivable and accounts payable. Due to the shortterm nature of these instruments, the fair value of these instruments approximates their recorded value. The
Company does not have any financial instruments with off-balance sheet risk.
The Company has notes payable to stockholders at varying terms which, based on the short-term nature of the
notes and financing obtained from outside sources, the Company believes are stated at their estimated fair market
value.
o. Segment Information
The Company has adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related
Information. This statement requires disclosure of certain information about the Company’s operating segments,
products, geographic areas in which it operates and major customers. This statement also allows a company to
aggregate similar segments for reporting purposes. Management has determined that its operations can be
aggregated into one reportable segment. Therefore, no separate segment disclosures have been included in the
accompanying notes to the financial statements.
p. Stock-Based Compensation
The Company measures compensation costs related to stock option plans using the intrinsic value method and
provides pro forma disclosures of net income (loss) and earnings (loss) per common share as if the fair value based
method had been applied in measuring compensation costs. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the fair value of the Company’s common stock at the date of measurement over
the amount an employee must pay to acquire the stock and is amortized over the vesting period, generally three
years.
q. Comprehensive Income
The Company has adopted SFAS No. 130, Reporting Comprehensive Income. This statement requires that all
components of comprehensive income be reported in the financial statements in the period in which they are
recognized. During the years ended December 31, 1999 and 2000, the Company did not have any components of
comprehensive income requiring separate reporting in the Company’s financial statements.
r. Income (Loss) Per Common Share
Income (loss) per common share is computed in accordance with SFAS No. 128, Earnings Per Share. Basic
income (loss) per common share is based upon the weighted average shares outstanding. Diluted income (loss) per
common share is based on the weighted average shares outstanding and dilutive common stock equivalents.
Approximately 144,875 and 186,049 options and warrants were not included in the computation of diluted earnings
per share for 1999 and 2000, respectively, as their effect would be anti-dilutive.
s. Recent Accounting Pronouncements
In June 1998, the Financial Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. Under SFAS 133, all derivatives are required to be recognized in the balance sheet at fair value.
Gains or losses from changes in fair value would be recognized in earnings in the period of change unless the
derivative is designated as a hedging instrument. In June 1999, the Financial Accounting Standards Board issued
SFAS No. 137, which amended SFAS 133, delaying its effective date to fiscal years beginning after June 15, 2000.
The Company does not currently hold any
F-11

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 18582
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 58

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 062.00.00.00 SN: 21 Ed#: 10
*P64567/062/10*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
derivative instruments nor does it engage in hedging activities. The Company does not believe the new standard will
impact its financial statements.
3. Property and Equipment
Property and equipment consist of the following at December 31, 1999 and 2000:
Estimated
Useful Lives
Leasehold improvements
Production equipment
Telephone and office equipment
Computer equipment
Furniture and fixtures

5 years
5 years
5 years
3-5 years
5-7 years

1999
$

—
335,050
31,535
332,460
22,767
721,812
(465,702)

Less: accumulated depreciation

$ 256,110

2000
$

5,000
380,326
31,535
383,492
57,542
857,895
(583,622)

$ 274,273

4. Commitments and Contingencies
a. Operating Leases
The Company has entered into operating leases for office space and equipment. Rent expense under these leases
for the years ended December 31, 1999 and 2000, was $147,655 and $93,241, respectively. Future minimum lease
payments under operating leases as of December 31, 2000, are as follows:
2001
2002
2003
2004
2005
Thereafter

$144,481
142,643
146,362
150,193
154,139
143,156

Total

$880,974

b. Litigation
From time to time, the Company is involved in certain legal actions and claims arising in the normal course of
business. Management is of the opinion that it maintains adequate insurance and that such matters will be resolved
without a material effect on the Company’s financial position or results of operations.
In early April 2001, a patent licensee sued the Company in the United States District Court, Central District of
California. The lawsuit alleges that certain technology used in the firing mechanism for the Company’s weapons
infringes upon a patent for which the licensee holds a license, and seeks injunctive relief and unspecified monetary
damages. The Company believes it does not infringe this patent, that the licensee’s claims are without merit and that
the litigation will have no material adverse effect on the Company’s financial condition or results of operations.
In February 2000, the Company was named a defendant in a suit with a former distributor in the state of New
York. The suit was dismissed in February 2001 for lack of jurisdiction of the New York
F-12

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 9675
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 59

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 063.00.00.00 SN: 24 Ed#: 11
*P64567/063/11*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
court. In March 2001, the former distributor appealed the dismissal. Management believes this matter will be
resolved without a material effect on the Company’s financial condition or results of operations.
c. Employment Agreements
The Company has employment agreements with its President, Chief Executive Officer (CEO) and Chief
Financial Officer (CFO). The Company may terminate the agreements with or without cause. Should the Company
terminate the agreements without cause, upon a change of control of the Company or death of the employee, the
President, CEO and CFO are entitled to additional compensation. Under these circumstances, these officers may
receive the remaining amounts under the contract upon termination which could total $510,000.
5. Income Taxes
Concurrently with the change in tax status as discussed in Note 2, the Company will adopt the provisions of
SFAS No. 109. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date.
Management believes that the following estimated deferred tax assets and liabilities would exist at
December 31, 2000, if the date of tax status change was effective on December 31, 2000. The Company would
provide a full valuation reserve for the deferred tax asset because the Company has not sustained taxable net income
in any periods at sufficient levels to assure realization:
Deferred tax assets:
Nondeductible reserves for bad debts, sales returns and other
Depreciation
Valuation reserve

$ 42,171
26,646
(68,817)
$

—

6. Lines of Credit
During 1999, the Company had a line of credit with a bank with a total commitment of up to $1,500,000. The
line was used to fund the Company’s working capital needs, and was personally guaranteed by two stockholders,
had an interest rate of 10% and was secured by virtually all of the assets of the Company. At December 31, 1998,
borrowings under the line were $1,329,600. The line matured and was paid in full on February 15, 1999.
In April 2001, the Company obtained a revolving line of credit with a bank with a total commitment of up to
$1,500,000. The line was fully used to repay a $1,500,000 promissory note to Mr. Bruce R. Culver, a director of the
Company, is secured by assets of Mr. Culver and substantially all of our assets other than our intellectual property,
and has an interest rate of bank prime plus 1%. The line matures on April 30, 2002 and requires the Company to
make monthly interest payments only until such date.
F-13

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 12616
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 60

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 064.00.00.00 SN: 24 Ed#: 16
*P64567/064/16*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
7. Inventory Financing Agreement
In 1995, the Company entered into an inventory financing agreement with its warehouser. Under the agreement,
the Company had the right to sell its product to the warehouser at a stated price up to quantities totaling the lesser of
$500,000 or the number of units sold in the last two months. The Company repurchased the product once sold to a
third party at the stated price plus 2% per month (24% annually). In June 1998, the agreement expired and the
Company issued a $189,980 note for the amount due. The note bears interest at 10% and is paid monthly and
matured March 31, 2000. As of December 31, 2000, no amounts of principal have been paid on this note and the
balance is recorded as a current payable.
8. Notes Payable
At December 31, 1999 and 2000 debt obligations were as follows:
Notes payable to stockholders, interest at varying rates of 9% to 27%,
principal and interest due through July 1, 2002
Note payable to stockholder, interest at 9.18% payable monthly,
principal matures July 15, 2001
Note payable to unrelated private lender, interest at 11%, payable
monthly, principal matured December 31, 2000
Capital leases, interest at varying rates of 7% to 23%, due in monthly
installments through December 2005, secured by equipment

1999

2000

$ 1,678,010

$2,878,010

61,545

24,783

112,000

100,000

39,155

66,096

1,890,710
(1,795,950)

Less: Current portion
Total

$

94,760

3,068,889
(246,745)
$2,822,144

At December 31, 2000, aggregate annual maturities of long-term debt and capital leases were as follows:
2001
2002
2003
2004
2005

$ 246,745
2,809,359
5,308
3,589
3,888
$3,068,889

During 1998, Mr. Phillips W. Smith, the Company’s chairman, loaned the Company approximately $725,691.
In March 1998, $150,000 was converted into 20,833 shares of common stock at an estimated fair value of $7.20 per
share and $120,000 was repaid. In December 1998, the Company issued a promissory note for $455,691, the
remaining amounts due. The note carried interest at 9% (increased to 10% in January 2001) and its maturity was
extended to July 1, 2002.
In addition, during 1998, Mr. Bruce R. Culver, a director of the Company, loaned the Company approximately
$622,525. In March 1998, $150,000 was converted into 20,833 shares of common stock at an estimated market
value of $7.20 per share. In December 1998, the Company issued a promissory note for $472,525, the remaining
amounts due. The note carried interest at 9% (increased to 10% in January 2001) and its maturity was extended to
July 1, 2002.
In January 1999, Mr. Culver loaned the Company $1,500,000. In return, the Company issued a promissory note
for $500,000 at an effective interest rate of 27.12% to mature October 31, 2000 and issued
F-14

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 56681
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 61

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 065.00.00.00 SN: 26 Ed#: 13
*P64567/065/13*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
1,666,667 shares of common stock to Mr. Culver at a fair market value of $0.60 per share. The stock issued was
subject to a repurchase agreement which allowed the Company to repurchase the shares issued at cost if certain
criteria were met. In July 2000, the Company repurchased the 1,666,667 shares under the agreement in exchange for
a promissory note for $1,000,000. This $1,000,000 note and the $500,000 note issued in January 1999 were
consolidated into a new note for $1,500,000 which carried interest at bank prime (9.5% at December 31, 2000) plus
1%. The Company repaid the new note in full with the proceeds of a loan from a commercial bank in April 2001.
In March 1999, the Company issued a promissory note to Mr. Culver for $100,000 at an interest rate of 10%
which matures on July 1, 2002.
In March 1999, the Company issued a promissory note to Mr. Smith for $99,794 at an interest rate of 10%
which matured December 31, 2000.
In July 1999, the Company issued a promissory note to Mr. Culver for $50,000 to fund working capital needs at
an interest rate of 10% which matures July 1, 2002.
In May 2000, the Company issued a promissory note to Mr. Culver for $200,000 to fund working capital needs
at an interest rate of 10% which matures on July 1, 2002.
In the event the planned IPO is not completed, the Company has an agreement with Mr. Smith and Mr. Culver
whereby the Company may at the Company’s sole option, extend the maturity date of the outstanding notes for a
period not to exceed 24 months. The Company, at the Company’s sole option, may retire the debt at any time
without penalty.
In July 1999, the Company issued a promissory note to Mr. Malcolm Sherman, a stockholder, for $75,000 to
acquire production equipment. The note carries interest at 9.18% and matures July 1, 2001.
In September 1997, the Company issued a promissory note to an unrelated private lender to fund working
capital for $112,000 at an interest rate of 11% which matures June 30, 2002.
In January 2001, the Company issued a promissory note to an unrelated private lender to fund working capital
for $500,000 at an interest rate of 18% which matures the earlier of the close of the IPO or July 1, 2002.
In April 2001, the Company obtained a revolving line of credit with a bank with a total commitment of up to
$1,500,000. The line was fully used to repay a $1,500,000 promissory note to Mr. Culver, is secured by assets of
Mr. Culver and substantially all of our assets other than our intellectual property, and has an interest rate of bank
prime plus 1%. The line matures on April 30, 2002 and requires the Company to make monthly interest payments
only until such date.
9. Stockholders’ Equity
a. Common Stock
Concurrent with the re-incorporation in Delaware effective February 2001, the Company adopted a certificate of
incorporation and authorized the issuance of two classes of stock to be designated “common stock” and “preferred
stock,” provided that both common and preferred stock shall have a par value of $0.00001 per share and authorized
the Company to issue 50 million shares of common stock and 25 million shares of preferred stock.
Additionally, effective February 2001, the Company declared a 1-for-6 reverse stock split of common stock. All
references to the number of shares, per share amounts, conversion amounts and stock option and warrant data of the
Company’s common stock have been restated to reflect this reverse stock split for all periods presented.
F-15

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 52329
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 62

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 066.00.00.00 SN: 21 Ed#: 13
*P64567/066/13*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
b. Preferred Stock
The Company is authorized to issue up to 25 million shares of preferred stock, $0.00001 par value. The power
to issue any shares of preferred stock of any class or any series of any class and designations, voting powers,
preferences, and relative participating, optional or other rights, if any, or the qualifications, limitations, or
restrictions thereof, shall be determined by the Board of Directors.
c. Warrants
At December 31, 2000, the Company has warrants outstanding to purchase 42,747 shares of common stock at
prices ranging from $0.22 to $21.00 per share with an average exercise price of $3.48 per share and a weighted
average useful life of 3.58 years. A summary of warrants outstanding and exercisable at December 31, 2000 is
presented in the table below:
Outstanding
Weighted
Average
Exercise
Price

Warrants

Expiration
Date

$21.00
0.22
0.22
3.30

3,333
8,334
8,333
22,727

7/31/05
1/1/03
1/1/03
7/31/05

$ 3.48

42,727

In 2000, the Company issued 22,727 warrants to a stockholder as consideration for his provision of a
$1,500,000 loan to the Company. The warrants are exercisable at $3.30 per share and expire July 31, 2005. These
warrants have been recorded at their estimated fair value of $77,862 as additional paid-in capital and the related
interest expense in the accompanying financial statements.
In January 2001, the Company issued 5,000 warrants to an unrelated private lender as a loan guarantee. These
warrants are exercisable at $10 per share and expire January 1, 2006. The fair value of these warrants of
approximately $9,650 will be recorded as additional paid-in capital and the related expense recorded in the year in
which the service is provided or ratably over the life of the debt.
d. Deferred Compensation
During 2000, two non-employee Board of Director members received their director fees for services relating to
2001 to 2004 through the issuance of, in the aggregate, 13,333 options at an exercise price of $3.30 per share. These
options have been recorded at their estimated fair value of $79,920 as deferred compensation in the accompanying
balance sheets and will be amortized into expense over the next four years.
e. Stock Option Plans
The Company has historically issued stock options for various equity owners and key employees as a means of
attracting and retaining quality personnel. The option holders have the right to purchase a stated amount of shares at
the estimated market value on the grant date. The options issued under the Company’s 1999 Stock Option Plan (the
“1999 Plan”) generally vest over a three-year period. The options issued under the Company’s 2001 Stock Option
Plan (the “2001 Plan”) generally vest over a four-year period.
F-16

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 42970
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 63

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 067.00.00.00 SN: 23 Ed#: 11
*P64567/067/11*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
The directors of the Company adopted the Company’s 1998-1999 Stock Option Plan. The 1998-1999 Plan was
administered by the Board of Directors which determined the employees, directors or consultants which will be
granted options and the terms of the options, including the vesting provision which typically is over a three-year
period.
The 1998-1999 Plan was terminated by the Company and options granted under it were voluntarily canceled by
the recipients or terminated in connection with termination of the recipients’ employment.
The 1999 Plan provides for officers, key employees and consultants to receive nontransferable stock options to
purchase up to 833,333 shares of the Company’s common stock. The term of the options may not exceed ten years
although most options granted had an initial expiration period of between five and seven years. In 1998, the
Company had a similar plan which was cancelled in 1999.
In 1999, the Company issued 16,667 five-year options to Mr. Phillips W. Smith at an exercise price of $0.66 per
share for consulting services, and 3,958 ten-year options to an unrelated private lender at an exercise price of $7.20
per share as consideration for his financing the Company’s purchase of inventory. In 2000, the Company issued
4,697 ten-year options to a non-employee at an exercise price of $3.30 per share for consulting services, and 3,333
five-year options to a stockholder at an exercise price of $0.22 per share in connection with his provision of services
and a loan to the Company. These options have been recorded at fair value as additional paid-in capital and the
related expense recorded in the year in which the service is provided in the accompanying financial statements.
A summary of the Company’s stock options at December 31, 1999 and 2000 and for the years then ended is
presented in the table below:
1999

2000

Options

Weighted
Average
Exercise
Price

Options

Weighted
Average
Exercise
Price

Options outstanding, beginning of year
Granted
Exercised
Expired/terminated

65,334
121,458
—
(61,917)

$6.37
0.83
—
6.71

124,875
21,863
—
(3,416)

$0.82
2.83
—
0.22

Options outstanding, end of year

124,875

$0.82

143,322

$1.14

42,352

$1.20

84,979

$1.02

Exercisable at end of year

Stock options outstanding and exercisable at December 31, 2000 are as follows:
Outstanding

Exercisable

Average
Exercise
Price

Options

Average
Life(a)

Options

$0.22
0.60
0.66
7.20
3.30

3,333
80,834
36,667
3,958
18,530

4.50
7.52
3.00
9.74
8.42

3,333
50,718
23,426
3,958
3,544

$1.02

143,322

6.60

84,979

(a) Average contractual life remaining in years.
F-17

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 64593
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 64

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 068.00.00.00 SN: 19 Ed#: 14
*P64567/068/14*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
The Company measures the compensation cost of its stock option plan using the intrinsic value based method of
accounting prescribed in Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees.
Accordingly, no compensation cost has been recognized for its stock option plan. The weighted average remaining
contractual life of those options is approximately 6.64 years. Had the Company’s compensation cost been
determined using the fair value of approximately $8,000 in 1999 and $8,300 in 2000, based on the method of
accounting prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, the Company’s net loss and
net loss per common share would have been adjusted to the following pro forma amounts (amounts in thousands
except per common share amounts):
Year Ended December 31,
Net loss available to common stockholders:
As reported
Pro forma
Basic and diluted net loss per common share:
As reported
Pro forma

1999

2000

$(1,667)
(1,675)

$ (406)
(414)

$ (0.54)
(0.54)

$(0.16)
(0.17)

In January 2001, the Company adopted the 2001 Plan which provides for officers, key employees and
consultants to receive nontransferable stock options to purchase up to 550,000 shares of the Company’s common
stock. In February 2001, the Company granted 291,000 ten-year options to employees, stockholders and one
consultant at exercise prices equal or greater than the value of the common stock portion of the initial per unit
public offering price in the Company’s contemplated IPO. Total compensation cost associated with the option
granted to the consultant is approximately $3,100.
10. Loss per Share
Basic net loss per share is based upon the weighted average number of common shares outstanding during the
period.
In periods of losses, diluted net loss per share is based upon the weighted average number of common shares
outstanding during the period. As the Company had a net loss for the years ended December 31, 1999 and 2000, the
Company’s common stock options and warrants were anti-dilutive.
Loss per share is calculated as follows for the year ended December 31:
1999

2000

Basic:
Net loss
Weighted average shares outstanding

$(1,666,733)
3,076,410

$ (473,247)
2,482,976

Net loss per share

$

$

Diluted:
Net loss
Weighted average shares used in basic calculation

$(1,666,733)
3,076,410

Stock options and warrants
Weighted average common and common equivalent shares outstanding
Net loss per share

$

F-18

(0.54)

(0.19)

$ (473,247)
2,482,976

0

0

3,076,410

2,482,976

(0.54)

$

(0.19)

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 11762
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 65

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 069.00.00.00 SN: 12 Ed#: 8
*P64567/069/8*
EDGAR 2

TASER INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)
11. Subsequent Event
The Company has filed a registration statement on Form SB-2 offering 800,000 units at an estimated initial
offering price of $13 per unit consisting of one and one-half shares of common stock and one and one-half warrants,
each whole warrant to purchase one share of common stock. Also, the Company intends to issue to the IPO’s
underwriter warrants which enable the underwriter to acquire 80,000 units for 120% of the IPO unit offering price.
F-19

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
CRC: 64876
P64567B1.SUB, DocName: 424B1, Doc: 2, Page: 66

[B/E]

Phone: (602) 223-4455

Operator: BPX31366

Date: 9-MAY-2001 17:18:18.07

JB: P64567 PN: 070.00.00.00 SN: 25 Ed#: 14
*P64567/070/14*
EDGAR 2

You should rely only on the information contained in this prospectus. We have not authorized anyone to
provide you with information different from the information contained in this prospectus. We are offering to
sell, and seeking offers to buy, units only in jurisdictions in which offers and sales are permitted.
Page
Prospectus Summary
Risk Factors
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Business
Management
Certain Transactions
Principal Stockholders
Description of Securities
Shares Eligible for Future Sale
Underwriting
Legal Matters
Experts
Where You Can Find More Information
Index to Financial Statements

1
4
11
12
13
14
15
19
30
33
35
36
40
42
44
45
45
F-1

Until June 2, 2001 (25 days after the date of this prospectus), all broker-dealers that effect the
transactions in these securities, whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.

800,000 UNITS

PROSPECTUS

PAULSON INVESTMENT
COMPANY, INC.
May 8, 2001

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.06.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030206/3*

6

<R>
the Corporation), business address and telephone number, residence address
and telephone number, and the number of shares of each class of stock of the
Corporation beneficially owned by that stockholder; (3) any interest of the
stockholder in the proposed business; (4) the name or names of each person
nominated by the stockholder to be elected or re-elected as a director, if any;
and (5) with respect to each nominee, that nominee’s name, business address and
telephone number, and residence address and telephone number, the number of
shares, if any, of each class of stock of the Corporation owned directly and
beneficially by that nominee, and all information relating to that nominee that
is required to be disclosed in solicitations of proxies for elections of
directors, or is other required, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, or any provision of law subsequently replacing
Regulation 14A, together with a duly acknowledged letter signed by the nominee
stating his or her acceptance of the nomination by that stockholder, stating his
or her intention to serve as a director if elected, and consenting to being
named as a nominee for director in any proxy statement relating to such
election. The person presiding at the annual meeting shall determine whether
business (including the nomination of any person as a director) has been
properly brought before the meeting and, if the facts so warrant, shall not
permit any business (or voting with respect to any particular nominee) to be
transacted that has not been properly brought before the meeting.
Notwithstanding any other provision of the Certificate of Incorporation or any
provision of law that might otherwise permit a lesser or no vote, and in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law or by the
Certificate of Incorporation, the affirmative vote of the holders of not less
than 66.67% of the voting power of the then outstanding shares of capital stock
entitled to vote thereon (the "Voting Stock"), voting together as a single
class, shall be required to amend or repeal, or to adopt a provision
inconsistent with, this Section 2.03-a.
</R>
Section 2.03-b. Date and Time. Annual meetings of stockholders shall be
held at such date and time as shall be designated by the Board of Directors and
stated in the notice of the meeting.
Section 2.03-c. Election of Directors. At each annual meeting of
stockholders beginning in 2001, the stockholders, voting as provided in the
Certificate of Incorporation or in these Bylaws, shall elect directors to
succeed directors whose terms are expiring, each such director to hold office
until the third annual meeting of stockholders after his or her election and
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal.
Section 2.04. Special Meetings.
<R>
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Certificate of Incorporation,
may only be called and proposed by: (i) the Chairman of the Board; (ii) the
Chief Executive Officer; (iii) the holder(s) of a majority of the voting power
of the Voting Stock; or (iv) the Board of Directors pursuant to a resolution
adopted by a majority of the then-authorized number of directors. Such request
shall state the purpose or purposes of the proposed meeting.
</R>
Bylaws-Taser International, Inc.
Page 2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 7

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.07.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030207/3*

7
Section 2.05. Purpose of Special Meeting.

Business transacted at any special meeting of the stockholders shall be
limited to the matters stated in the notice of such meeting, or other matters
necessarily incidental therefore.
Section 2.06. Notice of Meetings.
Notice of stockholder meetings shall be in writing. Such notice shall
state the place, date and time of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. A copy of such
notice shall be either delivered personally or mailed, postage prepaid, to each
stockholder of record entitled to vote at such meeting pursuant to Section 2.13
hereof not less than ten (10) nor more than sixty (60) days before such meeting.
If mailed, it shall be directed to each stockholder at his or her address as it
appears upon the records of the Corporation, and upon such mailing of any such
notice, the service thereof shall be complete, and the time of the notice shall
begin to run from the date that such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice to a
corporation, an association, or a partnership shall be accomplished by personal
delivery of such notice to any officer of a corporation or an association or to
any member of a partnership.
Section 2.07. Waiver of Notice.
Notice of any meeting of the stockholders may be waived before, at, or
after such meeting in a writing signed by the stockholder or representative
thereof entitled to vote the shares so represented. Such waiver shall be filed
with the Secretary or entered upon the records of the meeting.
Section 2.08. Quorum; Adjournment.
The holders of a majority of the voting power of all shares entitled to
vote, present in person or represented by proxy, shall constitute a quorum for
the transaction of all business at meetings of the stockholders, except as may
be otherwise provided by statute or by the Certificate of Incorporation. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the original meeting in accordance with the notice thereof.
If a quorum is present when a duly called or held meeting is convened, the
stockholders present in person or represented by proxy may continue to transact
business until adjournment notwithstanding the withdrawal of enough stockholders
originally present in person or by proxy to leave less than a quorum, and for
the purposes of voting pursuant to Section 2.09 hereof, stockholders holding a
majority of the voting power of all shares entitled to vote shall be deemed to
be present in person.
Bylaws-Taser International, Inc.
Page 3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 8

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.08.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030208/3*

8
Section 2.09. Vote Required.

When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the voting power of all shares entitled to vote present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one that by express provision of statute or of
the Certificate of Incorporation or of these Bylaws requires a different vote,
in which case such express provision shall govern the vote required.
Section 2.10. Voting Rights.
Except as may be otherwise required by statute or the Certificate of
Incorporation or these Bylaws, every stockholder of record of the Corporation
shall be entitled at each meeting of the stockholders to one vote for each share
of stock standing in his or her name on the books of the Corporation.
Section 2.11. Proxies.
At any meeting of the stockholders, any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing, signed by
the stockholder, and filed with the Secretary at or before the meeting. In
addition, a stockholder may cast or authorize the casting of a vote by a proxy
by transmitting to the Corporation or the Corporation’s duly authorized agent
before the meeting, an appointment of a proxy by means of a telegram, cablegram,
or any other form of electronic transmission, including telephonic transmission,
whether or not accompanied by written instructions of the stockholder. The
electronic transmission must set forth or be submitted with information from
which it can be determined that the appointment was authorized by the
stockholder. If it is determined that a telegram, cablegram, or other electronic
transmission is valid, the inspectors of election or, if there are no
inspectors, the other persons making that determination shall specify the
information upon which they relied to make that determination.
An appointment of a proxy or proxies for shares held jointly by two or
more stockholders is valid if signed by any one of them, unless and until the
Corporation receives from any one of those stockholders written notice denying
the authority of such other person or persons to appoint a proxy or proxies or
appointing a different proxy or proxies, in which case no proxy shall be
appointed unless the instrument shall otherwise provide. No proxy shall be voted
or acted upon after three (3) years from its date, unless the proxy provides for
a longer period. Subject to the above, any duly executed proxy shall continue in
full force and effect and shall not be revoked unless written notice of its
revocation or a duly executed proxy bearing a later date is filed with the
Secretary of the Corporation. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable proxy.
Bylaws-Taser International, Inc.
Page 4

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 9

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.09.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030209/3*

9
Section 2.12. Action in Writing.

Subject to the terms of any preferred stock of the Corporation, any
action required or permitted to be taken by the stockholders of the Corporation
must be taken at a duly called annual or special meeting of such stockholders or
by written consent of all (but not less than all) stockholders entitled to vote
in lieu of such a meeting.
Section 2.13. Closing of Books; Record Date.
The Board of Directors may fix, or authorize an officer to fix, a date,
not more than sixty (60) nor less than ten (10) days preceding the date of any
meeting of the stockholders of the Corporation, as a record date for the
determination of the stockholders of record on the date so fixed or their legal
representatives shall be entitled to notice of and to vote at such meeting,
notwithstanding any transfer of shares on the books of the Corporation against
the transfer of shares during the whole or any part of such period.
ARTICLE III: DIRECTORS
Section 3.01. General Powers.
The business of the Corporation shall be managed by its Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are by statute or by the Certificate of Incorporation
or by these Bylaws permitted, directed or required to be exercised or done by
the Board of Directors.
Section 3.02. Number and Qualification.
The number of directors that shall constitute the whole Board of
Directors shall from time to time be fixed exclusively by the Board of Directors
by a resolution adopted by a majority of the whole Board of Directors serving at
the time of that vote. In no event shall the number of directors that constitute
the whole Board of Directors be fewer than three (3), nor greater than nine (9).
No decrease in the number of directors shall have the effect of shortening the
term of any incumbent director. Directors of the Corporation need not be elected
by written ballot. Directors need not be stockholders.
Section 3.03. Classes and Terms.
The Board of Directors of the Corporation shall be divided into three
classes designated Class A, Class B, and Class C, respectively, all as nearly
equal in number as possible, with each director then in office receiving the
classification that at least a majority of the Board of Directors designates.
The initial term of office of directors of Class A shall expire at the annual
meeting of stockholders of the Corporation in 2001, of Class B shall expire at
the annual meeting of stockholders of the Corporation in 2002, and of Class C
shall expire at the annual meeting of stockholders of the Corporation in 2003,
and in all cases a director shall serve until the director’s successor is
elected and qualified or until his earlier death, resignation or removal. At
each annual meeting of stockholders beginning with the annual meeting of
Bylaws-Taser International, Inc.
Page 5

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
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[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.10.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030210/3*

10

<R>
stockholders in 2001, each director elected to succeed a director whose term is
then expiring shall hold office until the third annual meeting of stockholders
after his or her election and until his or her successor is elected and
qualified or until his or her earlier death, resignation or removal. If the
number of directors that constitutes the whole Board of Directors is changed as
permitted by the Certificate of Incorporation or these Bylaws, the majority of
the whole Board of Directors that adopts the change shall also fix and determine
the number of directors comprising each class; provided, however, that any
increase or decrease in the number of directors shall be apportioned among the
classes as equally as possible. Notwithstanding any provision of the Certificate
of Incorporation or any provision of law that might otherwise permit a lesser or
no vote, and in addition to any affirmative vote of the holders of any
particular class or series of the capital stock of the Corporation required by
law or by the Certificate of Incorporation, the affirmative vote of 66.67% of
the Voting Stock, voting together as a single class, shall be required to amend
or repeal, or to adopt any provision inconsistent with, this Section 3.03.
</R>
Section 3.04. Vacancies.
<R>
Vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, or other cause, and
newly-created directorships resulting from any increase in the authorized number
of directors, may be filled by no less than a majority vote of the remaining
directors then in office, though less than a quorum, who are designated to
represent the same class or classes of stockholders that the vacant position,
when filled, is to represent or by the sole remaining director (but not by the
stockholders except as required by law); provided, however, that, with respect
to any directorship to be filled by the Board of Directors by reason of an
increase in the number of directors: (a) such directorship shall be for a term
of office continuing only until the next election of one or more directors by
the stockholders; and (b) the Board of Directors may not fill more than two such
directorships during the period between any two successive annual meetings of
stockholders. Each director chosen in accordance with this provision shall
receive the classification of the vacant directorship to which he or she has
been appointed or, if it is a newly-created directorship, shall receive the
classification that at least a majority of the Board of Directors designates and
shall hold office until the first meeting of stockholders held after his or her
election for the purpose of electing directors of that classification and until
his or her successor is elected and qualified or until his or her earlier death,
resignation, or removal from office. Notwithstanding any provision of the
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser or no vote, and in addition to any affirmative vote of the holders of
any particular class or series of the capital stock of the Corporation required
by law or by the Certificate of Incorporation, the affirmative vote of 66.67% of
the Voting Stock, voting together as a single class, shall be required to amend
or repeal, or to adopt any provision inconsistent with, this Section 3.04.
</R>
Section 3.05. Meetings.
Section 3.05-a. Place of Meetings. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
Bylaws-Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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Lines: 0
CRC: 0
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<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.11.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030211/3*

11

Section 3.05-b. Regular Meetings. As soon as practicable after
each regular election of directors, the Board of Directors shall meet at the
registered office of the Corporation, or at such other place within or without
the State of Delaware as may be designated by the Board of Directors, for the
purpose of electing the officers of the Corporation and for the transaction of
such other business as shall come before the meeting. Other regular meetings of
the Board of Directors may be held without notice at such time and place within
and without the State of Delaware as shall from time to time be determined by
resolution of the Board of Directors.
Section 3.05-c. Special Meetings. Special meetings of the
Board of Directors may be called by the Chairman, Chief Executive Officer, or a
majority of the then directors, and shall be held at such time and place as
shall be designated in the notice thereof.
Section 3.05-d. Notice. Notice of a special meeting shall be
given to each Director at least twenty-four (24) hours before the time of the
meeting. Said notice shall be in writing and state the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called.
Whenever any provision of law, the Certificate of Incorporation, or the Bylaws
require notice to be given, any director may, in writing, either before or after
the meeting, waive notice thereof. Without notice, any director, by his or her
attendance at and participation in the action taken at the meeting, shall be
deemed to have waived notice thereof.
Section 3.05-e. Quorum: Voting Requirements: Adjournment. A
majority of the Board of Directors then in office shall constitute a quorum for
the transaction of business, and the act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation or these Bylaws.
If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the meeting to another
time or place, and no notice as to such adjourned meeting need be given other
than by announcement at the meeting at which such adjournment is taken. If a
quorum is present at the call of a meeting, the directors may continue to
transact business until adjournment notwithstanding the withdrawal of enough
directors to leave less than a quorum.
Section 3.05-f. Organization of Meetings. At all meetings of
the Board of Directors, the Chairman of the Board, or in his absence, the Chief
Executive Officer, or in his absence, any director appointed by the Chief
Executive Officer, shall preside, and the Secretary, or in his absence, any
person appointed by the Chairman, shall act as Secretary.
Section 3.05-g. Action in Writing. Except as may be otherwise
required by statute or the Certificate of Incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors of the
Corporation or of any committee thereof may be taken by written consent in lieu
of a meeting, if all members of the Board or committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
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Section 3.05-h. Absent Directors. A director may give advance
written consent or opposition to a proposal to be acted on at a meeting of the
Board of Directors. Such advance written consent or opposition shall be
ineffective unless the writing is delivered to the Chief Executive Officer,
Chairman or Secretary of the Corporation prior to the meeting at which such
proposal is to be considered. If the director is not present at the meeting,
consent or opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but such consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected, such substantial
similarity to be determined in the sole judgment of the presiding officer at the
meeting.
Section 3.06. Committees.
Section 3.06-a. Designation. The Board of Directors may
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
Section 3.06-b. Limitations on Authority. No committees of the
Corporation shall have authority as to any of the following matters:
(a) Approving or adopting, or recommending to the
stockholders any action or matter expressly required by law to be submitted to
stockholders for approval; or
(b) Adopting, amending or repealing any bylaw of the
Corporation.
Section 3.06-c. Minutes of Committee Meetings. Committees
shall keep regular minutes of their proceedings and report the same to the Board
of Directors when required.
Section 3.07. Telephone Conference Meetings.
Any Director or any member of a duly constituted committee of the Board
of Directors may participate in any meeting of the Board of Directors or of any
duly constituted committee thereof by means of a conference telephone or other
comparable communication technique whereby all persons participating in such a
meeting can hear and communicate with each other. For the purpose of
establishing a quorum and taking any action at such a meeting, the members
participating in such a meeting pursuant to this Section 3.07 shall be deemed
present in person at such meeting.
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Section 3.08. Compensation.

Unless otherwise provided by the Board of Directors, directors shall be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors or a committee thereof. Directors who are not employees of the
Corporation shall be paid at least $500 for attendance at each meeting of the
Board of Directors, or any committee thereof, unless a different sum is fixed by
resolution of the Board of Directors. Directors may also receive other
compensation, such as stock options or grants, for their service as directors or
committee members as determined by the Board of Directors. Nothing herein
contained shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.09. Limitation of Director Liability.
A director shall not be liable to the Corporation or its stockholders
for dividends illegally declared, distributions illegally made to stockholders,
or any other actions taken in good faith reliance upon financial statements of
the Corporation represented to the director to be correct by the Chief Executive
Officer of the Corporation or the officer having charge of its books of account
or certified by an independent or certified public accountant to fairly reflect
the financial condition of the Corporation; nor shall the director be liable if
in good faith in determining the amount available for dividends or distributions
the Board values the assets in a manner allowable under applicable law.
Section 3.10. Resignation and Removal.
<R>
A director may resign at any time by giving written notice to the
Secretary or Assistant Secretary. Such resignation shall take effect on the date
of the receipt of such notice or at such later date as specified therein. A
director of any class of directors of the Corporation may be removed before the
expiration date of that director’s term of office only by an affirmative vote of
the holders of 66.67% of the voting power of the Voting Stock, voting together
as a single class. Notwithstanding any provision of the Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, and in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law or by
the Certificate of Incorporation, the affirmative vote of 66.67% of the Voting
Stock, voting together as a single class, shall be required to amend or repeal,
or to adopt any provision inconsistent with, this Section 3.10.
</R>
ARTICLE IV: OFFICERS
Section 4.01. Selection: Qualifications.
Section 4.01-a. Election: Qualifications. The Board of
Directors at its next meeting after each annual meeting of the stockholders
shall choose a Chairman of the Board, a Chief Executive Officer, a Secretary, a
Chief Financial Officer, and such other officers or agents as it deems
necessary, none of whom need be members of the Board.
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Section 4.01-b. Additional Officers. The Board of Directors
may choose a President, additional Vice Presidents, Assistant Secretaries and
Assistant Treasurers and such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
Section 4.02. Salaries.
The salaries of all officers, and of the Chairman of the Corporation,
shall be fixed by the Board of Directors on an annual basis.
Section 4.03. Term of Office.
The officers of the Corporation shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
Board of Directors may be removed at any time with or without cause by the
affirmative vote of a majority of the Board of Directors. Any officer may resign
at any time by giving written notice to the Chief Executive Officer or the
Secretary of the Corporation. Any vacancy occurring in any office of the
Corporation by death, resignation, removal, or otherwise shall be filled by the
Board of Directors.
Section 4.04. Chairman of the Board.
The Chairman of the Board of Directors shall preside at all meetings of
the Board of Directors and of the stockholders and shall perform such other
duties as he or she may be directed to perform by the Board of Directors.
Section 4.05. Chief Executive Officer.
The Chief Executive Officer of the Corporation shall have general
active management of the business of the Corporation. Unless the Board has
elected a Chairman of the Board of Directors, the Chief Executive Officer shall
preside at meetings of the stockholders of the Corporation and at meetings of
the Board of Directors. The Chief Executive Officer may execute and deliver in
the name of the Corporation any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the Corporation, except in cases in
which the authority to sign and deliver is required by law to be exercised by
another person or is expressly delegated by the Board to some other officer or
agent of the Corporation; may delegate the authority to execute and deliver
documents to other officers of the Corporation; shall maintain records of and,
whenever necessary, certify any proceedings of the stockholders and the Board;
shall perform such other duties as may from time to time be prescribed by the
Board; and, in general, shall perform all duties usually incident to the office
of the Chief Executive Officer.
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Section 4.06. President.

The President of the Corporation shall have general active management
of the business of the Corporation in the absence or disability of the Chief
Executive Officer. He shall also generally assist the Chief Executive Officer
and exercise such other powers and perform such other duties as are delegated to
him by the Chief Executive Officer or Chairman, or as the Board of Directors
shall prescribe.
Section 4.07. Vice-Presidents.
Unless otherwise determined by the Board of Directors, the Vice
Presidents, if any, shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President. They shall also
generally assist the Chief Executive Officer and the President and exercise such
other powers and perform such other duties as are delegated to them by the Chief
Executive Officer or the President or as the Board of Directors shall prescribe.
Section 4.08. Secretary and Assistant Secretary.
The Secretary or Assistant Secretary shall attend all meetings of the
stockholders and of the Board of Directors and shall record all the proceedings
of the meetings of the stockholders and of the Board of Directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required, and shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Chairman or the
Board of Directors, under whose supervision he shall be.
The Assistant Secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of inability or refusal to act by the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Chairman, or Board
of Directors, may, from time to time, prescribe.
Section 4.09. Chief Financial Officer.
Section 4.09-a. Custody of Funds and Accounting. The Chief
Financial Officer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors.
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Section 4.09-b. Disbursements and Reports. The Chief Financial
Officer shall disburse the funds of the Corporation as may be ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Chief Executive Officer and the Board of Directors, at the regular
meetings of the Board, or when the Board of Directors so requires, an account of
all his transactions as Chief Financial Officer and of the financial condition
of the Corporation.
Section 4.09-c. Bond. If required by the Board of Directors,
the Chief Financial Officer shall give the Corporation a bond in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the
restoration, upon the expiration of his term of office or his resignation,
retirement, or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
ARTICLE V. CERTIFICATES FOR SHARES
Section 5.01. Issuance of Shares and Fractional Shares.
The Board of Directors is authorized to issue shares and fractional
shares of stock of the Corporation up to the full amount authorized by the
Certificate of Incorporation in such amounts as may be determined by the Board
of Directors and as permitted by law.
Section 5.02. Form of Certificate.
The shares of the Corporation shall be represented by certificates,
provided that the Board of Directors of the Corporation may resolve that some or
all of any or all classes or series of its stock will be uncertificated shares
as provided in Section 5.06. Certificates shall be signed by the Chairman of the
Board or the President and by the Secretary or Assistant Secretary of the
Corporation, certifying the number of shares of capital stock owned by him in
the Corporation. If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the designations,
preferences, and relative, participating, optional, or other special rights of
the various classes of stock or series thereof and the qualifications,
limitations, or restrictions of such rights, together with a statement of the
authority of the Board of Directors to determine the relative rights and
preferences of subsequent classes or series, shall be set forth in full on the
face or back of the certificate which the Corporation shall issue to represent
such stock, or, in lieu thereof, such certificate shall contain a statement that
the stock is, or may be, subject to certain rights, preferences, or restrictions
and that a statement of the same will be furnished without charge by the
Corporation upon request by any stockholder. Certificates representing the
shares of the capital stock of the Corporation shall be in such form not
inconsistent with law or the Certificate of Incorporation or these Bylaws as
shall be determined by the Board of Directors.
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Section 5.03. Facsimile Signatures.

Whenever any certificate is countersigned or otherwise authenticated by
a transfer agent, transfer clerk, or registrar, then a facsimile of the
signatures of the officers or agents of the Corporation may be printed or
lithographed upon such certificate in lieu of the actual signatures. In case any
officer or officers who shall have signed, or whose facsimile signature shall
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation,
or otherwise, before such certificate or certificates shall have been delivered
by the Corporation, such certificate or certificates may nevertheless be adopted
by the Corporation and be signed and delivered as though the person or persons
who signed such certificate or certificates, or whose facsimile signature or
signatures shall have been used thereon, had not ceased to be the officer or
officers of the Corporation.
Section 5.04. Lost, Stolen, or Destroyed Certificates.
The Board of Directors may direct a certificate or certificates to be
issued in place of a certificate or certificates previously issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates or uncertificated shares, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 5.05. Transfers of Stock.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books;
except that the Board of Directors may, by resolution duly adopted, establish
conditions upon the transfer of shares of stock to be issued by the Corporation,
and the purchasers of such shares shall be deemed to have accepted such
conditions on transfer upon the receipt of the certificate representing such
shares, provided that the restrictions shall be referred to on the certificates
or the purchaser shall have otherwise been notified thereof.
Section 5.06. Uncertificated Shares.
Unless prohibited by the Certificate of Incorporation or these Bylaws,
some or all of any or all classes and series of the Corporation’s shares may be
uncertificated shares. Upon receipt of proper transfer instructions from the
registered owner of uncertificated shares, such uncertificated shares shall be
canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the Corporation. Within a reasonable time after the
issuance or
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transfer of uncertificated shares, the Corporation shall send to the
new stockholder the information required by Section 5.02 to be stated on
certificates. If this Corporation becomes a publicly held corporation which
adopts, in compliance with Section 17 of the Securities Exchange Act of 1934, a
system of issuance, recordation, and transfer of its shares by electronic or
other means not involving an issuance of certificates, this information is not
required to be sent to new stockholders.
Section 5.07. Closing of Transfer Books: Record Date.
The Board of Directors or an officer of the Corporation authorized by
the Board may close the stock transfer books of the Corporation for a period not
exceeding sixty (60) days preceding the date of any meeting of stockholders as
provided in Section 2.13 hereof or the date for payment of any dividend as
provided in Section 6.02 hereof or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect. In lieu of closing the stock transfer books as aforesaid, the Board of
Directors or an officer of the Corporation authorized by the Board may fix, in
advance, a date, not exceeding sixty (60) days preceding the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to receive
payment.
Section 5.08. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive right of
the persons registered on its books as the owners of shares to receive dividends
and to vote as such owners and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided in the laws of Delaware.
Section 5.09. Stock Options and Agreements.
In addition to any stock options, plans, or agreements into which the
Corporation may enter, any stockholder of the Corporation may enter into an
agreement giving any other stockholder or stockholders or any third party an
option to purchase any of his stock in the Corporation, and such shares of stock
shall thereupon be subject to such agreement and transferable only upon proof of
compliance therewith; provided, however, that a copy of such agreement shall be
filed with the Corporation and reference thereto placed upon the certificates
representing said shares of stock.
ARTICLE VI: DIVIDENDS
Section 6.01. Method of Payment.
Dividends upon the capital stock of the Corporation may be declared by
the Board of Directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
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Section 6.02. Closing of Books: Record Date.

The Board of Directors or an officer of the Corporation authorized by
the Board may fix a date not exceeding sixty (60) days preceding the date fixed
for the payment of any dividend as the record date for the determination of the
stockholders entitled to receive payment of the dividend and, in such case, only
stockholders of record on the date so fixed shall be entitled to receive payment
of such dividend notwithstanding any transfer of shares on the books of the
Corporation after the record date. The Board of Directors or an officer of the
Corporation authorized by the Board may close the books of the Corporation
against the transfer of shares during the whole or any part of such period. If
the Board of Directors or an officer of the Corporation authorized by the Board
fails to fix such a record date, the record date shall be the thirtieth (30th)
day preceding the date of such payment.
Section 6.03. Reserves.
Before payment of any dividend, there may be set aside out of the funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves for meeting contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interest of the Corporation,
and the Board may modify or abolish any such reserve in the manner in which it
was created.
ARTICLE VII: CHECKS
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
ARTICLE VIII: CORPORATE SEAL
The Corporation shall have no corporate seal.
ARTICLE IX: FISCAL YEAR
The fiscal year of the Corporation shall end on December 31 unless
otherwise fixed by resolution of the Board of Directors.
ARTICLE X: AMENDMENTS
<R>
These Bylaws shall not be adopted, altered, amended or repealed except
in accordance with the provisions of the Certificate of Incorporation and these
Bylaws. Unless a different requirement is mandated by the Certificate of
Incorporation or these Bylaws, adoption, alteration, amendment or repeal of
these Bylaws requires the affirmative action of a majority of the directors then
in office or the vote of the holders of not less than 66.67% of the Voting
Stock, voting together as a single class, at an annual meeting of the
stockholders or any special meeting of the stockholders.
</R>
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ARTICLE XI: BOOKS AND RECORDS
Section 11.01. Books and Records.
The Board of Directors of the Corporation shall cause to be kept:

Section 11.01-a. A share register not more than one year old,
giving the names and addresses of the stockholders, the number and classes held
by each, and the dates on which the certificated or uncertificated shares were
issued;
Section 11.01-b. Records of all proceedings of stockholders
and directors; and
Section 11.01-c. Such other records and books of account as
shall be necessary and appropriate to the conduct of the corporate business.
Section 11.02. Computerized Records.
The records maintained by the Corporation, including its share
register, financial records, and minute books, may utilize any information
storage technique, including, for example, computer memory or microimages, even
though that makes them illegible visually, if the records can be converted, by
machine and within a reasonable time, into a form that is legible visually and
whose contents are assembled by related subject matter to permit convenient use
by persons in the normal course of business.
Section 11.03. Examination and Copying by Stockholders.
Every stockholder of record of the Corporation shall have a right to
examine, in person or by agent or attorney, at any reasonable time or times, at
the place or places where usually kept, and upon the showing of a proper
purpose, the Corporation’s stock ledger, a list of its stockholders and its
other books and records, and to make copies or extracts therefrom.
ARTICLE XII: LOANS AND ADVANCES
Section 12.01. Loans, Guarantees, and Suretyship.
The Corporation may lend money to, guarantee an obligation of, become a
surety for, or otherwise financially assist a person, if the transaction, or a
class of transactions to which the transaction belongs, is approved by the
affirmative vote of a majority of the directors present at a lawfully convened
meeting and such action: (a) is in the usual and regular course of business of
the Corporation; (b) is with, or for the benefit of, a related corporation, an
organization with which the Corporation has the power to make donations; (c) is
with, or for the benefit of, an officer or other employee of the Corporation or
a subsidiary, including an officer or employee who is a director of the
Corporation or a subsidiary, and may reasonably be expected, in the judgment of
the Board of Directors, to benefit the Corporation; or (d) has been approved by
the
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affirmative vote of the holders of seventy-five percent (75%) of the Voting
Stock, voting together as a single class. The loan, guarantee, or other
assistance may be with or without interest and may be unsecured or may be
secured in any manner that a majority of the Board of Directors approves,
including, without limitation, a pledge of or other security interest in shares
of the Corporation.
Section 12.02. Advances to Officers, Directors, and Employees.
The Corporation may, without a vote of the directors, advance money to
its directors, officers, or employees to cover expenses that can reasonably be
anticipated to be incurred by them in the performance of their duties and for
which they would be entitled to reimbursement in the absence of an advance.
ARTICLE XIII: INDEMNIFICATION
Section 13.01. Directors and Officers
Section 13.01-a. Indemnity in Third-Party Proceedings. The
Corporation shall indemnify its directors and officers in accordance with the
provisions of this Section 13.01-a if the director or officer was or is a party
to, or is threatened to be made a party to, any proceeding (other than a
proceeding by or in the right of the Corporation to procure a judgment in its
favor), against all expenses, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by the director or officer in connection with
such proceeding if the director or officer acted in good faith and in a manner
the director or officer reasonably believed was in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, the director or officer, in addition, had no reasonable cause to
believe that the director’s or officer’s conduct was unlawful; provided,
however, that the director or officer shall not be entitled to indemnification
under this Section 13.01-a: (1) in connection with any proceeding charging
improper personal benefit to the director or officer in which the director or
officer is adjudged liable on the basis that personal benefit was improperly
received by the director or officer unless and only to the extent that the court
conducting such proceeding or any other court of competent jurisdiction
determines upon application that, despite the adjudication of liability, the
director or officer is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, or (2) in connection with any proceeding (or
part thereof) initiated by such person or any proceeding by such person against
the Corporation or its directors, officers, employees or other agents unless:
(A) such indemnification is expressly required to be made by law, (B) the
proceeding was authorized by the Board of Directors, or (C) such indemnification
is provided by the Corporation, in its sole discretion, pursuant to the powers
vested in the Corporation under the Delaware General Corporation Law.
Section 13.01-b. Indemnity in Proceedings by or in the Right
of the Corporation. The Corporation shall indemnify its directors and officers
in accordance with the provisions of this Section 13.01-b if the director or
officer was or is a party to, or is threatened to be made a party to, any
proceeding by or in the right of the Corporation to procure a judgment in its
favor, against all expenses actually and reasonably incurred by the director or
officer in connection with the defense or settlement of such proceeding if the
director or officer acted in good faith and in a manner the director or officer
reasonably believed was in or not opposed to the best interests of the
corporation; provided, however, that the director or officer shall not be
entitled to indemnification under this Section 13.01-b: (1) in connection with
any proceeding in which the director or officer has been adjudged liable to the
Corporation unless and only to the extent that the court conducting such
proceeding, or the Delaware Court of Chancery, determines
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Operator: BPX31319

JB: P64567 PN: 603.02.22.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030222/3*

22

upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnification for such expenses as such court shall deem proper,
or (2) in connection with any proceeding (or part thereof) initiated by such
person or any proceeding by such person against the Corporation or its
directors, officers, employees or other agents unless (A) such indemnification
is expressly required to be made by law, (B) the proceeding was authorized by
the Board of Directors, or (C) such indemnification is provided by the
Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the Delaware General Corporation Law.
Section 13.02. Employees and Other Agents
The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those conferred
in this Article XIII to directors and officers of the Corporation.
Section 13.03. Good Faith.
Section 13.03-a. For purposes of any determination under this
Article XIII, a director or officer shall be deemed to have acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding to have had no reasonable cause to believe that his or her conduct
was unlawful, if his or her action is based on information, opinions, reports
and statements, including financial statements and other financial data, in each
case prepared or presented by:
1. one or more officers or employees of the
Corporation whom the director or officer believed to be reliable and competent
in the matters presented;
2. counsel, independent accountants or other persons
as to matters which the director or officer believed to be within such person’s
professional or expert competence; or
3. with respect to a director, a committee of the
Board of Directors upon which such director does not serve, as to matters within
such committee’s designated authority, which committee the director believes to
merit confidence; so long as, in each case, the director or executive officer
acts without knowledge that would cause such reliance to be unwarranted.
Section 13.03-b. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal proceeding, that he had reasonable cause to believe that his or her
conduct was unlawful.
Section 13.03-c. The provisions of this Section 13.03 shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
by the Delaware General Corporation Law.
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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.23.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030223/3*

23
Section 13.04. Advances of Expenses

The Corporation shall pay the expenses incurred by its directors or
officers in any proceeding (other than a proceeding brought for an accounting of
profits made from the purchase and sale by the director or officer of securities
of the corporation within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provision of any state statutory
law or common law) in advance of the final disposition of the proceeding at the
written request of the director or officer, if the director or officer: (a)
furnishes the Corporation a written affirmation of the director’s or officer’s
good faith belief that the director or officer is entitled to be indemnified
under this Article XIII, and (b) furnishes the Corporation a written undertaking
to repay the advance to the extent that it is ultimately determined that the
director or officer is not entitled to be indemnified by the Corporation. Such
undertaking shall be an unlimited general obligation of the director or officer
but need not be secured. Advances pursuant to this Section 13.04 shall be made
no later than 10 days after receipt by the Corporation of the affirmation and
undertaking described in clauses (a) and (b) above, and shall be made without
regard to the director’s or officer’s ability to repay the amount advanced and
without regard to the director’s or officer’s ultimate entitlement to
indemnification under this Article XIII. The Corporation may establish a trust,
escrow account or other secured funding source for the payment of advances made
and to be made pursuant to this Section 13.04 or of other liability incurred by
the director or officer in connection with any proceeding.
Section 13.05. Enforcement
Without the necessity of entering into an express contract, all rights
to indemnification and advances to directors and officers under this Article
XIII shall be deemed to be contractual rights and be effective to the same
extent and as if provided for in a contract between the Corporation and the
director or officer. Any director or officer may enforce any right to
indemnification or advances under this Article XIII in any court of competent
jurisdiction if: (a) the Corporation denies the claim for indemnification or
advances, in whole or in part, or (b) the Corporation does not dispose of such
claim within 45 days of request therefor. It shall be a defense to any such
enforcement action (other than an action brought to enforce a claim for
advancement of expenses pursuant to, and in compliance with, Section 13.01 of
this Article XIII) that the director or officer is not entitled to
indemnification under this Article XIII. However, except as provided in Section
13.12 of this Article XIII, the Corporation shall not assert any defense to an
action brought to enforce a claim for advancement of expenses pursuant to
Section 13.04 of this Article XIII if the director or officer has tendered to
the Corporation the affirmation and undertaking required thereunder. The burden
of proving by clear and convincing evidence that indemnification is not
appropriate shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors or independent legal counsel) to have made a
determination prior to the commencement of such action that indemnification is
proper in the circumstances because the director or officer has met the
applicable standard of conduct nor an actual determination by the Corporation
(including its Board of Directors or independent legal counsel) that
indemnification is improper because the director or officer has not met such
applicable standard of conduct, shall be asserted as a defense to the action or
create a presumption that the director or officer is not entitled to
indemnification under this Article XIII or otherwise. The director’s or
officer’s expenses incurred in connection with successfully establishing such
person’s right to indemnification or advances, in whole or in part, in any
proceeding shall also be paid or reimbursed by the Corporation.
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Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 24

[E/O]

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Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.24.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030224/3*

24
Section 13.06. Non-Exclusivity of Rights

The rights conferred on any person by this Article XIII shall not be
exclusive of any other right which such person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding office. The Corporation is authorized to enter into individual
contracts with any or all of its directors, officers, employees or agents
respecting indemnification and advances, to the fullest extent not prohibited by
the Delaware General Corporation Law.
Section 13.07. Survival of Rights
The rights conferred on any person by this Article XIII shall continue
as to a person who has ceased to be a director, officer, employee or other agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
Section 13.08. Insurance
To the fullest extent permitted by the Delaware General Corporation
Law, the Corporation, upon approval by the Board of Directors, may purchase
insurance on behalf of any person required or permitted to be indemnified
pursuant to this Article XIII.
Section 13.09. Amendments
Any repeal or modification of this Article XIII shall only be
prospective and shall not affect the rights under this Article XIII in effect at
the time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any director, officer, employee or agent of the
Corporation.
Section 13.10. Savings Clause
If this Article XIII or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director and officer to the full extent not
prohibited by any applicable portion of this Article XIII that shall not have
been invalidated, or by any other applicable law.
Section 13.11. Certain Definitions
For the purposes of this Article XIII, the following definitions shall
apply:
Section 13.11-a. The term "PROCEEDING" shall include any
threatened, pending or completed action, suit or proceeding, whether brought in
the right of the Corporation or otherwise, and whether of a civil, criminal,
administrative or investigative nature, in which the director or officer may be
or may have been involved as a party, witness or otherwise, by reason of the
fact that the director or officer is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, whether or not serving in such capacity at
the time any liability or expense is incurred for which indemnification or
reimbursement can be provided under this Article XIII.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
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Lines: 0
CRC: 0
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[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.25.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030225/3*

25

Section 13.11-b. The term "EXPENSES" includes, without
limitation thereto, expenses of investigations, judicial or administrative
proceedings or appeals, attorney, accountant and other professional fees and
disbursements and any expenses of establishing a right to indemnification under
this Article XIII, but shall not include amounts paid in settlement by the
director or officer or the amount of judgments or fines against the director or
officer.
Section 13.11-c. References to "OTHER ENTERPRISE" include,
without limitation, employee benefit plans; references to "FINES" include,
without limitation, any excise taxes assessed on a person with respect to any
employee benefit plan; references to "SERVING AT THE REQUEST OF THE Corporation"
include, without limitation, any service as a director, officer, employee or
agent which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
its beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "NOT OPPOSED TO THE BEST INTERESTS OF THE CORPORATION" as referred to in
this Article XIII.
Section 13.11-d. References to "THE CORPORATION" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer or employee of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this Article XIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
Section 13.11-e. The meaning of the phrase "TO THE FULLEST
EXTENT PERMITTED BY LAW" shall include, but not be limited to: (i) to the
fullest extent authorized or permitted by any amendments to or replacements of
the Delaware General Corporation Law adopted after the date of this Article XIII
that increase the extent to which a corporation may indemnify its directors and
officers, and (ii) to the fullest extent permitted by the provision of the
Delaware General Corporation Law that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any amendment to
or replacement of the Delaware General Corporation Law.
Section 13.12. Notification and Defense of Claim
As a condition precedent to indemnification under this Article XIII,
not later than 30 days after receipt by the director or officer of notice of the
commencement of any proceeding the director or officer shall, if a claim in
respect of the proceeding is to be made against the Corporation under this
Article XIII, notify the Corporation in writing of the commencement of the
proceeding. The failure to properly notify the Corporation shall not relieve the
Corporation from any liability which it may have to the director or officer
otherwise than under this Article XIII. With respect to any proceeding as to
which the director or officer so notifies the Corporation of the commencement:
Section 13.12-a. The Corporation shall be entitled to
participate in the proceeding at its own expense.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
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Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 26

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.26.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030226/3*

26

Section 13.12-b. Except as otherwise provided in this Section
13.12, the Corporation may, at its option and jointly with any other
indemnifying party similarly notified and electing to assume such defense,
assume the defense of the proceeding, with legal counsel reasonably satisfactory
to the director or officer. The director or officer shall have the right to use
separate legal counsel in the proceeding, but the Corporation shall not be
liable to the director or officer under this Article XIII for the fees and
expenses of separate legal counsel incurred after notice from the Corporation of
its assumption of the defense, unless (1) the director or officer reasonably
concludes that there may be a conflict of interest between the Corporation and
the director or officer in the conduct of the defense of the proceeding, or (2)
the Corporation does not use legal counsel to assume the defense of such
proceeding. The Corporation shall not be entitled to assume the defense of any
proceeding brought by or on behalf of the Corporation or as to which the
director or officer has made the conclusion provided for in (1) above.
Section 13.12-c. If two or more persons who may be entitled to
indemnification from the Corporation, including the director or officer seeking
indemnification, are parties to any proceeding, the Corporation may require the
director or officer to use the same legal counsel as the other parties. The
director or officer shall have the right to use separate legal counsel in the
proceeding, but the Corporation shall not be liable to the director or officer
under this Article XIII for the fees and expenses of separate legal counsel
incurred after notice from the Corporation of the requirement to use the same
legal counsel as the other parties, unless the director or officer reasonably
concludes that there may be a conflict of interest between the director or
officer and any of the other parties required by the Corporation to be
represented by the same legal counsel.
Section 13.12-d. The Corporation shall not be liable to
indemnify the director or officer under this Article XIII for any amounts paid
in settlement of any proceeding effected without its written consent, which
shall not be unreasonably withheld. The director or officer shall permit the
Corporation to settle any proceeding that the Corporation assumes the defense
of, except that the Corporation shall not settle any action or claim in any
manner that would impose any penalty or limitation on the director or officer
without such person’s written consent.
Section 13.13. Exclusions
Notwithstanding any provision in this Article XIII, the Corporation
shall not be obligated under this Article XIII to make any indemnification in
connection with any claim made against any director or officer: (a) for which
payment is required to be made to or on behalf of the director or officer under
any insurance policy, except with respect to any excess amount to which the
director or officer is entitled under this Article XIII beyond the amount of
payment under such insurance policy; (b) if a court having jurisdiction in the
matter finally determines that such indemnification is not lawful under any
applicable statute or public policy; (c) in connection with any proceeding (or
part of any proceeding) initiated by the director or officer, or any proceeding
by the director or officer against the Corporation or its directors, officers,
employees or other persons entitled to be indemnified by the Corporation,
unless: (1) the Corporation is expressly required by law to make the
indemnification; (2) the proceeding was authorized by the Board of Directors of
the Corporation; or (3) the director or officer initiated the proceeding
pursuant to Section 13.05 of this Article XIII and the director or officer is
successful in whole or in part in such proceeding; or (d) for an accounting of
profits made from the purchase and sale by the director or officer of securities
of the Corporation within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provision of any state statutory
law or common law.
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Lines: 0
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[E/O]

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Operator: BPX31319

JB: P64567 PN: 603.02.27.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

27
Section 13.14. Subrogation

In the event of payment under this Article XIII, the Corporation shall
be subrogated to the extent of such payment to all of the rights of recovery of
the director or officer. The director or officer shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable the Corporation effectively to bring suit to enforce such rights.
ARTICLE XIV: DEFINITIONS AND USAGE
Whenever the context of these Bylaws requires, the plural shall be read
to include the singular, and vice versa; and words of the masculine gender shall
refer to the feminine gender, and vice versa; and words of the neuter gender
shall refer to any gender.
<R>
The undersigned, Secretary of the Corporation, hereby certifies that
the foregoing is a true and complete copy of the Corporation’s Bylaws as amended
effective April 10, 2001 and the same have not been modified and remain in full
force and effect on the date of this certificate.
</R>
<R>
Dated:

April 24, 2001.

</R>
<R>
</R>

/s/ Kathleen C. Hanrahan
_______________________________
Kathleen C. Hanrahan, Secretary

372437 V4
Bylaws-Taser International, Inc.
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</TEXT>
</DOCUMENT>

Ed#: 5

*P64567/6030227/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-4.3, Doc: 5

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-4.3
p64567a3ex4-3.txt
EX-4.3

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 5

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/5*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 7602
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 1
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 4.3
VOID AFTER 5:00 P.M. PACIFIC TIME ON __________, 2006
WARRANTS TO PURCHASE COMMON STOCK

W-_____

Ed#: 4

*P64567/6040301/4*

_________Warrants
TASER INTERNATIONAL, INC.
CUSIP ______________
THIS CERTIFIES THAT

or registered assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from TASER International, Inc., a corporation incorporated under the
laws of the state of Delaware (the "Company"), subject to the terms and
conditions set forth hereinafter and in the Warrant and Unit Agreement
hereinafter more fully described (the "Warrant Agreement"), at any time on or
before the close of business on __________, 2006 or, if such Warrant is redeemed
as provided in the Warrant Agreement, at any time prior to the effective time of
such redemption (the "Expiration Date"), one fully paid and non-assessable share
of Common Stock of the Company (the "Common Stock") upon presentation and
surrender of this Warrant Certificate, with the instructions for the
registration and delivery of Common Stock filled in, at the stock transfer
office in Glendale, California, of U.S. Stock Transfer Corporation, Warrant
Agent of the Company (the "Warrant Agent") or of its successor warrant agent or,
if there be no successor warrant agent, at the corporate offices of the Company,
and upon payment of the Exercise Price (as defined in the Warrant Agreement) and
any applicable taxes paid either in cash, or by certified or official bank
check, payable in lawful money of the United States of America to the order of
the Company. Each Warrant entitles the holder to purchase one share of Common
Stock initially for one hundred ten percent (110%) of: two-thirds of the Initial
Public Offering price of the Units (the "Exercise Price"). The number and kind
of securities or other property for which the Warrants are exercisable are
subject to further adjustment in certain events, such as mergers, splits, stock
dividends, recapitalizations and the like, to prevent dilution. Upon 30 days
notice, the Company may redeem any or all outstanding and unexercised Warrants
at any time if the basic net income per share of Common Stock as confirmed by an
audit conducted in accordance with generally accepted accounting principles
applicable in the United States (which such audit may be conducted with respect
to any fiscal year of the Company or any other 12-month period ending on the
last day of a fiscal quarter of the Company, in the Company’s sole discretion),
for an audited 12-month period preceding the date of such notice is equal to or
greater than $1.00, at a price of $0.25 per Warrant. All Warrants not
theretofore exercised or redeemed will expire on _________, 2006.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 43039
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 2
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040302/3*

2

This Warrant Certificate is subject to all of the terms,
provisions and conditions of the Warrant Agreement, dated as of ____________,
2001 (the "Warrant Agreement"), between the Company and the Warrant Agent, to
all of which terms, provisions and conditions the registered holder of this
Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
incorporated herein by reference and made a part hereof and reference is made to
the Warrant Agreement for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Warrant Agent, the Company and
the holders of the Warrant Certificates. Copies of the Warrant Agreement are
available for inspection at the stock transfer office of the Warrant Agent or
may be obtained upon written request addressed to the Company at 7860 East
McClain Drive, Suite 2, Scottsdale, Arizona 85260, Attention: Chief Financial
Officer.
The Company shall not be required upon the exercise of the
Warrants evidenced by this Warrant Certificate to issue fractions of Warrants,
Common Stock or other securities, but shall make adjustment therefor in cash on
the basis of the current market value of any fractional interest as provided in
the Warrant Agreement.
In certain cases, the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States,
certain states thereof or other jurisdictions. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement to continue to
be effective during the term of the Warrants with respect to such sales under
the Securities Act of 1933, as amended, and to take such action under the laws
of various states as may be required to cause the sale of securities upon
exercise to be lawful. However, the Company will not be required to honor the
exercise of Warrants if, in the opinion of the Board of Directors, upon advice
of counsel, the sale of securities upon such exercise would be unlawful. In
certain cases, the Company may, but is not required to, purchase Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Warrants.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender to the Warrant Agent, any successor warrant agent
or, in the absence of any successor warrant agent, at the corporate offices of
the Company, may be exchanged for another Warrant Certificate or Certificates
evidencing in the aggregate the same number of Warrants as the Warrant
Certificate or Certificates so surrendered. If the Warrants evidenced by this
Warrant Certificate shall be exercised in part, the holder hereof shall be
entitled to receive upon surrender hereof another Warrant Certificate or
Certificates evidencing the number of Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be
entitled to vote, receive dividends or be deemed the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose whatever, nor shall anything contained in the
Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof or give or withhold consent to any
corporate action (whether upon any matter submitted to stockholders at any
meeting thereof, or give or withhold consent to any merger,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 19679
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 3
Description: ex-4.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040303/3*

<PAGE>
3
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, conveyance or
otherwise) or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Warrant Agreement) or to receive
dividends or subscription rights or otherwise until the Warrants evidenced by
this Warrant Certificate shall have been exercised and the Common Stock
purchasable upon the exercise thereof shall have become deliverable as provided
in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise
within any period during which the transfer books for the Company’s Common Stock
or other class of stock purchasable upon the exercise of the Warrants evidenced
by this Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent, and with every other
holder of a Warrant Certificate that:
(a) This Warrant Certificate is transferable on the registry
books of the Warrant Agent only upon the terms and conditions set forth in the
Warrant Agreement; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name this Warrant Certificate is registered as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all purposes
whatever and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 22
CRC: 44025
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 4
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

4

WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal.
Dated: _______________ , 2001

TASER International, Inc.

By: _____________________________
Patrick W. Smith,
Chief Executive Officer
Attest: _________________________
Secretary
Countersigned
U.S. Stock Transfer Corporation
By: ________________________________
Authorized Officer

Ed#: 3

*P64567/6040304/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 47278
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 5
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.05.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

5
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE THE
WARRANTS IN WHOLE OR IN PART)

To: TASER INTERNATIONAL, INC.
The undersigned Registered Holder

(

Ed#: 4

*P64567/6040305/4*

)

_______________________________________
(Please insert Social Security or other
identification number of Registered Holder)
hereby irrevocably elects to exercise the right of purchase represented by the
within this Warrant Certificate for, and to purchase thereunder, _______________
shares of Common Stock provided for therein and tenders payment herewith to the
order of TASER INTERNATIONAL, INC. in the amount of $________________. The
undersigned requests that certificates for such shares of Common Stock be issued
as follows:
Name:________________________________________________________________________
Address:______________________________________________________________________
Deliver to:___________________________________________________________________
Address:______________________________________________________________________
and if said number of Warrants being exercised shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Certificate for the balance of
such Warrants as well as the shares of Common Stock represented by this Warrant
Certificate be registered in the name of, and delivered to, the Registered
Holder at the address stated below:
Address:_____________________________________________________________________
Dated:_____________, _______
Signature
_______________________________________
(Signature must conform in all respects to the name of Registered Holder as
specified in the case of this Warrant Certificate in every particular, without
alteration or any change whatever.)
Signature Guaranteed:
_______________________________________
The signature should be guaranteed by an eligible institution (Banks,
Stockbrokers, Savings and Loan Association and Credit Union with membership in
an approved signature Medallion Program), pursuant to S.E.C. Rule 17Ad-15.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 48
CRC: 40330
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 6
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.06.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040306/3*

6
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (

)

_______________________________________
(Please insert
Social Security or other
identification number of
Registered Holder)
hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print Name and Address including Zip Code)
Warrants evidenced by the within Warrant Certificate, and
irrevocably constitutes and appoints

______________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of TASER International, Inc.
with the full power of substitution in the premises.
Dated:__________________, ________
Signature:
_________________________________
(Signature must conform in all respects to the name of Registered Holder as
specified on the face of this Unit Certificate in every particular, without
alteration or any change whatsoever, and the signature must be guaranteed in the
usual manner.)
Signature Guaranteed:
_________________________________
The signature should be guaranteed by an eligible institution (Banks,
Stockbrokers, Savings and Loan Association and Credit Union with membership in
an approved signature Medallion Program), pursuant to S.E.C. Rule 17Ad-15.
</TEXT>
</DOCUMENT>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-4.5, Doc: 6

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-4.5
p64567a3ex4-5.txt
EX-4.5

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 6

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/6*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 63769
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 1
Description: ex-4.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040501/3*

1
Exhibit 4.5
WARRANT AND UNIT AGREEMENT

TASER International, Inc., 7860 E. McClain Drive, Suite 2, Scottsdale, Arizona
85260, a Delaware corporation ("Company"), and US Stock Transfer Corporation,
1745 Gardena Avenue, Glendale, California, a _________ corporation ("Transfer
Agent"), agree as follows:
1. PURPOSE. The Company proposes to publicly offer and issue in an initial
public offering (the "Offering") ____________ units ("Units"). Each Unit will
entitle the registered holder of a Unit ("Unit Holder") to (i) one and one-half
(1.5) shares of the Company’s $0.00001 par value common stock ("Share") and (ii)
one and one-half (1.5) warrants, each whole warrant permitting the purchase of
one (1) Share ("Warrant").
2. WARRANTS. Each Warrant will entitle the registered holder of a Warrant
("Warrant Holder") to purchase from the Company one (1) Share at one hundred ten
percent (110%) of: two-thirds of the Initial Public Offering price of the Units
(the "Exercise Price"). A Warrant Holder may exercise all or any number of
Warrants resulting in the purchase of a whole number of Shares.
3. EXERCISE PERIOD. The Warrants may be exercised at any time during the period
commencing thirty (30) days after the effective date ("Offering Date") of the
Offering ("Exercise Date") and ending at 3:00 p.m., Denver Colorado time on the
fifth (5th) anniversary date of the closing of the Offering ("Expiration Date"),
except as changed by Section 15 of this Agreement.
4. NON-DETACHABILITY. A Warrant Certificate (as defined below) may not be
detached from a Share certificate contained in a Unit for at least thirty (30)
days following the Offering Date. Until such time, a Warrant Certificate may be
split up, combined, exchanged or transferred on the books of the Transfer Agent
only together with a Share certificate. Paulson Investment Company, Inc. will
then determine when the Units separate, after which the Shares and Warrants will
trade separately.
5. CERTIFICATES. The Warrant certificates shall be in registered form only and
shall be substantially in the form set forth in Exhibit A attached to this
Agreement ("Warrant Certificate"). The Unit certificates shall be in registered
form only and shall be substantially in the form set forth in Exhibit B attached
to this Agreement ("Unit Certificate"). Warrant and Unit Certificates shall be
signed by, or shall bear the facsimile signature of, the Chief Executive
Officer, President or a Vice President of the Company and the Secretary or an
Assistant Secretary of the Company. If any person, whose facsimile signature has
been placed upon any Warrant or Unit Certificate or the signature of an officer
of the Company, shall have ceased to be such officer before such Warrant or Unit
Certificate is countersigned, issued and delivered, such Warrant or Unit
Certificate shall be countersigned, issued and delivered with the same effect as
if such person had not ceased to be such officer. Any Warrant or Unit
Certificate may be signed by, or made to bear the facsimile signature of, any
person who at the actual date of the preparation of such Warrant or Unit
Certificate shall be a proper officer of the Company to sign such Warrant or
Unit Certificate, even though such person was not such an officer upon the date
of this Agreement.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 4803
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 2
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040502/3*

<PAGE>
2
6. ISSUANCE OF NEW CERTIFICATES. Notwithstanding any of the provisions of this
Agreement or the several Warrant or Unit Certificates to the contrary, the
Company may, at its option, issue new Warrant or Unit Certificates in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price or the number or kind of shares purchasable under the
several Warrant or Unit Certificates made in accordance with the provisions of
this Agreement.
7. COUNTERSIGNING. Warrant and Unit Certificates shall be manually countersigned
by the Transfer Agent and shall not be valid for any purpose unless so
countersigned. The Transfer Agent hereby is authorized to countersign and
deliver to, or in accordance with the instructions of, any Warrant or Unit
Holder any Warrant or Unit Certificate, respectively, which is properly issued.
8. REGISTRATION OF TRANSFER AND EXCHANGES. The Transfer Agent will keep or cause
to be kept books for registration of ownership or transfer of Warrant and Unit
Certificates issued hereunder. Such registers shall show the names and addresses
of the respective holders of the Warrant and Unit Certificates and the number of
Warrants and Units evidenced by each such Warrant or Unit Certificate. Subject
to the provisions of Section 4, the Transfer Agent shall from time to time
register the transfer of any outstanding Warrant or Unit Certificate upon
records maintained by the Transfer Agent for such purpose upon surrender of such
Warrant or Unit Certificate to the Transfer Agent for transfer, accompanied by
appropriate instruments of transfer in form satisfactory to the Company and the
Transfer Agent and duly executed by the Warrant or Unit Holder or a duly
authorized attorney. Upon any such registration of transfer, a new Warrant or
Unit Certificate shall be issued in the name of and to the transferee and the
surrendered Warrant or Unit Certificate shall be cancelled.
9. EXERCISE OF WARRANTS.
a. Any one Warrant or any multiple of one Warrant evidenced by any
Warrant Certificate may be exercised on or after the Exercise Date and on or
before the Expiration Date. A Warrant shall be exercised by the Warrant Holder
by surrendering to the Transfer Agent the Warrant Certificate evidencing such
Warrant with the exercise form on the reverse of such Warrant Certificate duly
completed and executed and delivering to the Transfer Agent, by good check or
bank draft payable to the order of the Company, the Exercise Price for each
Share to be purchased. No fractional warrant may be exercised, but will be
redeemed for cash equal to the current market value of such fractional warrant,
as defined in Section 19 of this Warrant and Unit Agreement.
b. Upon receipt of a Warrant Certificate with the exercise form thereon
duly executed together with payment in full of the Exercise Price (and an amount
equal to any applicable taxes or government charges) for the Shares for which
Warrants are then being exercised, the Transfer Agent shall requisition from any
transfer agent for the Shares, and upon receipt shall make delivery of,
certificates evidencing the total number of whole Shares for which Warrants are
then being exercised in such names and denominations as are required for
delivery to, or in accordance with the instructions of, the Warrant Holder. Such
certificates for the Shares shall be deemed to be issued, and the person to whom
such Shares are issued of record shall be deemed to have become a holder of
record of such Shares, as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price (and an amount equal to any
applicable taxes or government

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 36631
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 3
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040503/3*

<PAGE>
3
charges), whichever shall last occur, provided that if the books of the Company
with respect to the Shares shall be deemed to be closed, the person to whom such
Shares are issued of record shall be deemed to have become a record holder of
such Shares as of the date on which such books shall next be open (whether
before, on or after the Expiration Date). The Company covenants and agrees that
it shall not cause its stock transfer books to be closed for a period of more
than twenty (20) consecutive business days except upon consolidation, merger,
sale of all of its assets, dissolution or liquidation or as otherwise provided
by law.
c. In addition, if it is required by law and upon instruction by the
Company, the Transfer Agent will deliver to each Warrant Holder a prospectus
that complies with the provisions of Section 5 of the Securities Act, as
amended, and the Company agrees to supply the Transfer Agent with a sufficient
number of prospectuses to effectuate that purpose.
d. Any Warrant Certificate or Certificates may be exchanged at the
option of the holder thereof for another Warrant Certificate or Certificates of
different denominations, of like tenor and representing in the aggregate the
same number of Warrants, upon surrender of such Warrant Certificate or
Certificates, with the Form of Assignment duly filled in and executed, to the
Transfer Agent, at any time or from time-to-time after the close of business on
the date hereof and prior to the close of business on the Expiration Date. The
Transfer Agent shall promptly cancel the surrendered Warrant Certificate or
Certificates and deliver the new Warrant Certificate or Certificates pursuant to
the provisions of this Section.
e. If less than all the Warrants evidenced by a Warrant Certificate are
exercised upon a single occasion, a new Warrant Certificate for the balance of
the Warrants not so exercised shall be issued and delivered to, or in accordance
with, transfer instructions properly given by the Warrant Holder until the
Expiration Date.
f. All Warrant Certificates surrendered upon exercise of the Warrants
shall be cancelled.
g. Upon the exercise, or conversion of any Warrant, the Transfer Agent
shall account promptly to the Company with respect to Warrants exercised and
concurrently pay to the Company all moneys received by the Transfer Agent for
the purchase of securities or other property through the exercise of such
Warrants.
h. Expenses incurred by the Transfer Agent while acting in the capacity
as Transfer Agent, in accordance with this Agreement, will be paid by the
Company. A detailed accounting statement relating to the number of shares
exercised, names of registered Warrant Holder(s) and the net amount of exercise
funds remitted will be given to the Company with the payment of each exercise
amount.
10. REDEMPTION. The Warrants outstanding at the time of a redemption may be
redeemed at the option of the Company, in whole or in part on a pro-rata basis,
at any time if, at the time notice of such redemption is given by the Company as
provided in subsection a. below, the basic net income per share of Common Stock
as confirmed by an audit conducted in accordance with generally accepted
accounting principles applicable in the United States (which such audit may be

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 52
CRC: 24295
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 4
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040504/3*

<PAGE>
4
conducted with respect to any fiscal year of the Company or any other 12-month
period ending on the last day of a fiscal quarter of the Company, in the
Company’s sole discretion), for an audited 12-month period preceding the date of
such notice is equal to or greater than $1.00, at a price of $0.25 per Warrant
(the "Redemption Price"). On the redemption date (the "Redemption Date"), the
holders of record of redeemed Warrants shall be entitled to payment of the
Redemption Price upon surrender of such redeemed Warrants to the Company at the
principal office of the Transfer Agent in Glendale, California.
a. Notice of redemption of Warrants shall be given at least thirty (30)
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Transfer Agent and by
first class mail to all of the holders of record of Warrants at their respective
addresses appearing on the books or transfer records of the Company or such
other address designated in writing by the holder of record to the Transfer
Agent not less than forty (40) days prior to the Redemption Date.
b. From and after the Redemption Date, all rights of the Warrant
Holders (except the right to receive the Redemption Price) shall terminate, but
only if (i) no later than one day prior to the Redemption Date the Company shall
have irrevocably deposited with the Transfer Agent as paying agent a sufficient
amount to pay on the Redemption Date the Redemption Price for all Warrants
called for redemption and (ii) the notice of redemption shall have stated the
name and address of the Transfer Agent and the intention of the Company to
deposit such amount with the Transfer Agent no later than one day prior to the
Redemption Date.
c. The Transfer Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Transfer Agent for the redemption of
Warrants to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
d. Any amounts deposited with the Transfer Agent that shall be
unclaimed after six (6) months after the Redemption Date may be withdrawn by the
Company, and thereafter the holders of the Warrants called for redemption for
which such funds were deposited shall look solely to the Company for payment.
The Company shall be entitled to the interest, if any, on funds deposited with
the Transfer Agent and the holders of redeemed Warrants shall have no right to
any such interest.
e. If the Company fails to make a sufficient deposit with the Transfer
Agent as provided above, the holder of any Warrants called for redemption may at
the option of the holder (i) by notice to the Company declare the notice of
redemption a nullity as to such holder, or (ii) maintain an action against the
Company for the Redemption Price. If the holder brings such an action, the
Company will pay reasonable attorneys’ fees of the holder. If the holder fails
to bring an action against the Company for the Redemption Price within sixty
(60) days after the Redemption Date, the holder shall be deemed to have elected
to declare the notice of redemption to be a nullity as to such holder and such
notice shall be without any force or effect as to such holder. Except as
otherwise specifically provided in this subsection e., a notice of redemption,
once mailed by the Company, as provided in subsection a., shall be irrevocable.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 14157
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 5
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.05.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040505/3*

<PAGE>
5
11. TAXES. The Company will pay all taxes attributable to the initial issuance
of Shares upon exercise of Warrants. The Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in any
issue of Warrant or Unit Certificates or in the issue of any certificates of
Shares in the name other than that of the Warrant or Unit Holder upon the
exercise of any Warrant or Unit, as the case may be.
12. MUTILATED OR MISSING CERTIFICATES. If any Warrant or Unit Certificate is
mutilated, lost, stolen or destroyed, the Company and the Transfer Agent may, on
such terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant or Unit Certificate, include
the surrender thereof), and upon receipt of evidence satisfactory to the Company
and the Transfer Agent of such mutilation, loss, theft or destruction, issue a
substitute Warrant or Unit Certificate, respectively, of like denomination or
tenor as the Warrant or Unit Certificate so mutilated, lost, stolen or
destroyed. Applicants for substitute Warrant or Unit Certificates shall comply
with such other reasonable regulations and pay any reasonable charges as the
Company or the Transfer Agent may prescribe.
13. SUBSEQUENT ISSUE OF CERTIFICATES. Subsequent to their original issuance, no
Warrant or Unit Certificates shall be reissued except (i) such Certificates
issued upon transfer thereof in accordance with Section 8 hereof, (ii) such
Certificates issued upon any combination, split-up or exchange of Warrant or
Unit Certificates pursuant to Section 8 hereof, (iii) such Certificates issued
in replacement of mutilated, destroyed, lost or stolen Warrant or Unit
Certificates pursuant to Section 12 hereof, (iv) Warrant Certificates issued
upon the partial exercise of Warrant Certificates pursuant to Section 9 hereof,
and (v) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder pursuant
to Section 6 hereof. The Transfer Agent is hereby irrevocably authorized to
countersign and deliver, in accordance with the provisions of said Sections 6,
8, 9 and 12, the new Warrant or Unit Certificates, as the case may be, required
for purposes thereof, and the Company, whenever required by the Transfer Agent,
will supply the Transfer Agent with Warrant and Unit Certificates duly executed
on behalf of the Company for such purposes.
14. RESERVATION OF SHARES. For the purpose of enabling the Company to satisfy
all obligations to issue Shares upon exercise of Warrants, the Company will at
all times reserve and keep available free from preemptive rights, out of the
aggregate of its authorized but unissued shares, the full number of Shares which
may be issued upon the exercise of the Warrants. The Company covenants all
shares which shall be so issuable, will upon issue be fully paid and
nonassessable by the Company and free from all taxes, liens, charges and
security interests with respect to the issue thereof. In the case of a Warrant
exercisable solely for securities listed on a securities exchange or for which
there are at least two (2) independent market makers, the Company may elect to
redeem Warrants submitted to the Transfer Agent for exercise for a price equal
to the difference between the aggregate low asked price, or closing price, as
the case may be, of the securities for which such Warrant is exercisable on the
date of such submission and the Exercise Price of such Warrants; in the event of
such redemption, the Company will pay to the holder of such Warrants the
above-described redemption price in cash within ten (10) business days after
receipt of notice from the Transfer Agent that such Warrants have been submitted
for exercise.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 61188
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 6
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.06.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040506/3*

<PAGE>
6
15. GOVERNMENTAL RESTRICTIONS. If any Shares issuable upon the exercise of
Warrants require registration or approval of any governmental authority, the
Company will use commercially reasonable efforts to secure such registration or
approval and, to the extent practicable, take action in anticipation of and
prior to the exercise of the Warrants necessary to permit a public offering of
the securities underlying the Warrants during the term of this Agreement;
provided that in no event shall such Shares be issued, and the Company shall
have the authority to suspend the exercise of all Warrants, until such
registration or approval shall have been obtained; but all Warrants, the
exercise of which is requested during any such suspension, shall be exercisable
at the Exercise Price. If any such period of suspension continues past the
Expiration Date, all Warrants, the exercise of which have been requested on or
prior to the Expiration Date, shall be exercisable upon the removal of such
suspension until the close of business on the business day immediately following
the expiration of such suspension.
16. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE PRICE. The
number and kind of securities or other property purchasable upon exercise of a
Warrant shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of any of the following events:
a. In case the Company shall (i) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of such
shares or (iii) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event. Any
adjustment made pursuant to this subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this subsection, the
holder of any Warrant Certificate thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company, (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Transfer
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
b. In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in subsection a. above or subsection e.
below), any Warrant Holder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and shall be

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 44699
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 7
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.07.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040507/3*

<PAGE>
7
evidenced by a certified Board resolution filed with the Transfer Agent) shall
be made for the application of this Section with respect to the rights and
interests thereafter of the Warrant Holders (including but not limited to the
allocation of the Exercise Price between or among shares of classes of capital
stock), to the end that this Section (including the adjustments of the number of
shares of Common Stock or other securities purchasable and the Exercise Price
thereof) shall thereafter be reflected, as nearly as reasonably practicable, in
all subsequent exercises of the Warrants for any shares or securities or other
property (or cash) thereafter deliverable upon the exercise of the Warrants.
c. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section,
the Company will promptly file with the Transfer Agent a certificate signed by a
Chairman of the Board or the Chief Executive Officer, the President or a Vice
President of the Company and by the Secretary or an Assistant Secretary of the
Company setting forth the number and kind of securities or other property
purchasable upon exercise of a Warrant, as so adjusted, stating that such
adjustments in the number or kind of shares or other securities or property
conform to the requirements of this Section, and setting forth a brief statement
of the facts accounting for such adjustments. Promptly after receipt of such
certificate, the Company, or the Transfer Agent at the Company’s request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be
supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; provided, however, that failure to file or to give any notice
required under this subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section; and provided,
further, that, where appropriate, such notice may be given in advance and
included as part of the notice required to be given pursuant to Section 18
hereof.
d. In case of any consolidation of the Company with, or merger of the
Company into, another corporation (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Common
Stock), or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
corporation formed by such consolidation or merger or the corporation which
shall have acquired such assets, as the case may be, shall execute and deliver
to the Transfer Agent a supplemental warrant agreement providing that the holder
of each Warrant then outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, solely
the kind and amount of shares of stock and other securities and property (or
cash) receivable upon such consolidation, merger, sale or transfer by a holder
of the number of shares of Common Stock of the Company for which such Warrant
might have been exercised immediately prior to such consolidation, merger, sale
or transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section. The above provision of this subsection shall similarly
apply to successive consolidations, mergers, sales or transfers.
The Transfer Agent shall not have any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 23 hereof, may

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 65423
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 8
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.08.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040508/3*

<PAGE>
8
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, a certificate of a firm of independent
certified public accountants (who may be the accountants regularly employed by
the Company) with respect thereto.
e. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Agreement.
f. The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board, and not disapproved by the Transfer Agent, to make any computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence, be conclusive evidence of the correctness
of any computation made under this Section.
g. For the purpose of this Section, the term "Common Stock" shall mean
(i) the Common Stock or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that at any time as a result of an adjustment made pursuant
to this Section, the holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section, and all
other provisions of this Agreement, with respect to the Common Stock, shall
apply on like terms to any such other shares.
h. The Company may, from time to time and to the extent permitted by
law, reduce the exercise price of the Warrants by any amount for a period of not
less than twenty (20) days. If the Company so reduces the exercise price of the
Warrants, it will give not less than fifteen (15) days’ notice of such decrease,
which notice may be in the form of a press release, and shall take such other
steps as may be required under applicable law in connection with any offers or
sales of securities at the reduced price.
17. REDUCTION OF EXERCISE PRICE BELOW PAR VALUE. Before taking any action that
would cause an adjustment pursuant to Section 16 hereof reducing the portion of
the Exercise Price required to purchase one share of capital stock below the
then par value (if any) of a share of such capital stock, the Company will use
its best efforts to take any corporate action which, in the opinion of its
counsel, may be necessary in order that the Company may validly and legally
issue fully paid and non-assessable shares of such capital stock.
18. NOTICE TO WARRANT HOLDERS. In case the Company after the date hereof shall
propose (i) to offer to the holders of Common Stock, generally, rights to
subscribe to or purchase any additional shares of any class of its capital
stock, any evidences of its indebtedness or assets, or any other rights or
options or (ii) to effect any reclassification of Common Stock (other than a

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 21351
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 9
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.09.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040509/3*

<PAGE>
9
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock) or any capital reorganization, or any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required, or any sale, transfer or other
disposition of its property and assets substantially as an entirety, or the
liquidation, voluntary or involuntary dissolution or winding-up of the Company,
then, in each such case, the Company shall file with the Transfer Agent and the
Company, or the Transfer Agent on its behalf, shall mail (by first-class,
postage prepaid mail) to all registered holders of the Warrant Certificates
notice of such proposed action, which notice shall specify the date on which the
books of the Company shall close or a record be taken for such offer of rights
or options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up shall take place or commence, as the
case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate any adjustments in the Exercise Price and the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (i) above, at least ten (10) days prior
to the record date for determining holders of the Common Stock for purposes of
such action or, if a record is not to be taken, the date as of which the holders
of shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (ii) above, at least twenty (20) days
prior to the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up. Failure to give any such notice or any defect therein
shall not affect the legality or validity of any transaction listed in this
Section.
19. NO FRACTIONAL WARRANTS, UNITS OR SHARES. The Company shall not be required
to issue fractions of Warrants or Units upon the reissue of Warrants or Units,
any adjustments as described in Section 16 or otherwise; but the Company in lieu
of issuing any such fractional interest, shall adjust the fractional interest by
payment to the Warrant or Unit Holder an amount, in cash, equal to the current
market value of any such fraction or interest. If the total Warrants or Units
surrendered by exercise would result in the issuance of a fractional Share, the
Company shall not be required to issue a fractional Share but rather the
resulting fractional interest shall be adjusted by payment in an amount, in
cash, equal to the current market value of such fractional interest. The current
market value for such fractional interest will be the market value of one whole
interest multiplied by the fraction thereof.
20. RIGHTS OF WARRANT HOLDERS. No Warrant Holder, as such, shall have any rights
of a shareholder of the Company, either at law or equity, and the rights of the
Warrant Holders, as such, are limited to those rights expressly provided in this
Agreement or in the Warrant Certificates. The Company and the Transfer Agent may
treat the registered Warrant Holder in respect of any Warrant Certificates as
the absolute owner thereof for all purposes notwithstanding any notice to the
contrary.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 53
CRC: 52123
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 10
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.10.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040510/3*

<PAGE>
10
21. RIGHT OF ACTION. All rights of action in respect to this Agreement are
vested in the respective registered holders of the Warrant and Unit
Certificates; and any registered holder of any Warrant or Unit Certificate,
without the consent of the Transfer Agent or of any other holder of a Warrant or
Unit Certificate, may, in his own behalf for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, his right to exercise the
Warrants evidenced by such Warrant Certificate, for the purchase of shares of
the Common Stock in the manner provided in the Warrant Certificate and in this
Agreement.
22. AGREEMENT OF WARRANT AND UNIT HOLDERS. Every holder of a Warrant or Unit
Certificate by accepting the same consents and agrees with the Company, the
Transfer Agent and with every other holder of a Warrant or Unit Certificate,
respectively, that:
a. The Warrant and Unit Certificates are transferable on the registry
books of the Transfer Agent only upon the terms and conditions set forth in this
Agreement; and
b. The Company and the Transfer Agent may deem and treat the person in
whose name the Warrant or Unit Certificate is registered as the absolute owner
of the Warrant or Unit, as the case may be, (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Company or the
Transfer Agent) for all purposes whatever and neither the Company nor the
Transfer Agent shall be affected by any notice to the contrary.
23. TRANSFER AGENT. The Company hereby appoints the Transfer Agent to act as the
agent of the Company and the Transfer Agent hereby accepts such appointment upon
the following terms and conditions by all of which the Company and every Warrant
and Unit Holder, by acceptance of his Warrants or Units, shall be bound:
a. Statements contained in this Agreement and in the Warrant and Unit
Certificates shall be taken as statements of the Company. The Transfer Agent
assumes no responsibility for the correctness of any of the same except such as
describes the Transfer Agent or for action taken or to be taken by the Transfer
Agent.
b. The Transfer Agent shall not be responsible for any failure of the
Company to comply with any of the Company’s covenants contained in this
Agreement or in the Warrant or Unit Certificates.
c. The Transfer Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Transfer Agent shall incur no
liability or responsibility to the Company or to any Warrant or Unit Holder in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel, provided the
Transfer Agent shall have exercised reasonable care in the selection and
continued employment of such counsel.
d. The Transfer Agent shall incur no liability or responsibility to the
Company or to any Warrant or Unit Holder for any action taken in reliance upon
any notice, resolution, waiver,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 52369
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 11
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.11.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040511/3*

<PAGE>
11
consent, order, certificate or other paper, document or instrument believed by
it to be genuine and to have been signed, sent or presented by the proper party
or parties.
e. The Company agrees to pay to the Transfer Agent reasonable
compensation for all services rendered by the Transfer Agent in the execution of
this Agreement, to reimburse the Transfer Agent for all expenses, taxes and
governmental charges and all other charges of any kind or nature incurred by the
Transfer Agent in the execution of this Agreement and to indemnify the Transfer
Agent and save it harmless against any and all liabilities, including judgments,
costs and counsel fees, arising from the Transfer Agent’s engagement under this
Agreement except as a result of the Transfer Agent’s negligence, bad faith or
willful misconduct.
f. The Transfer Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Warrant or Unit Holders shall furnish
the Transfer Agent with reasonable security and indemnity for any costs and
expenses which may be incurred in connection with such action, suit or legal
proceeding, but this provision shall not affect the power of the Transfer Agent
to take such action as the Transfer Agent may consider proper, whether with or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants or Units may be enforced by the Transfer
Agent without the possession of any of the Warrant or Unit Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Transfer Agent shall be
brought in its name as Transfer Agent, and any recovery of judgement shall be
for the ratable benefit of the Warrant or Unit Holders as their respective
rights or interest may appear.
g. The Transfer Agent and any shareholder, director, officer or
employee of the Transfer Agent may buy, sell or deal in any of the Warrants,
Units or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Transfer Agent under this Agreement. Nothing herein shall preclude the Transfer
Agent from acting in any other capacity for the Company or for any other legal
entity.
24. SUCCESSOR TRANSFER AGENT. Any legal entity into which the Transfer Agent may
be merged or converted or with which it may be consolidated, or any legal entity
resulting from any merger, conversion or consolidation to which the Transfer
Agent shall be a party, or any legal entity succeeding to the corporate trust
business of the Transfer Agent, shall be the successor to the Transfer Agent
hereunder without the execution or filing of any paper or any further act of a
party or the parties hereto provided such legal entity is eligible to be
appointed under Section 25 below. In any such event or if the name of the
Transfer Agent is changed, the Transfer Agent or such successor may adopt the
countersignature of the original Transfer Agent and may countersign such Warrant
or Unit Certificates either in the name of the predecessor Transfer Agent or in
the name of the successor Transfer Agent.
25. CHANGE OF TRANSFER AGENT. The Transfer Agent may resign or be discharged by
the Company from its duties under this Agreement by the Transfer Agent or the
Company, as the case may be, giving notice in writing to the other, and by
giving a date when such resignation or discharge shall take effect, which notice
shall be sent at least thirty (30) days prior to the date so

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 64832
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 12
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.12.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040512/3*

<PAGE>
12
specified. If the Transfer Agent shall resign, be discharged or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Transfer Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Transfer Agent or by
any Warrant or Unit Holder or after discharging the Transfer Agent, then the
Company agrees to perform the duties of the Transfer Agent hereunder until a
successor Transfer Agent is appointed. Any successor Transfer Agent shall be a
bank or a trust company, in good standing, organized under the laws of any state
of the United States of America, having a combined capital and surplus of at
least $4,000,000 at the time of its appointment as Transfer Agent. After
appointment, the successor Transfer Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Transfer Agent without further act or deed, and the former Transfer Agent shall
deliver and transfer to the successor Transfer Agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for effecting the delivery or transfer. Failure to give
any notice provided for in this Section, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Transfer Agent or the appointment of the successor Transfer Agent, as the case
may be.
26. NOTICES. Any notice or demand authorized by this Agreement to be given or
made by the Transfer Agent or by any Warrant or Unit Holder to or on the Company
shall be sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Transfer Agent), as follows:
TASER International, Inc.
7860 E. McClain Drive, Suite 2
Scottsdale, Arizona 85260
Any notice or demand authorized by this Agreement to be given or made
by any Warrant or Unit Holder or by the Company to or on the Transfer Agent
shall be sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Transfer Agent with the Company), as follows:
US Stock Transfer Corporation
1745 Gardena Avenue
Glendale, California 91204
Any distribution, notice or demand required or authorized by this
Agreement to be given or made by the Company or the Transfer Agent to or on the
Warrant or Unit Holders shall be sufficiently given or made if sent by mail,
first class, certified or registered, postage prepaid, addressed to the Warrant
or Unit Holders at their last known addresses as they shall appear on the
registration books for the Warrant or Unit Certificates maintained by the
Transfer Agent.
27. SUPPLEMENTS AND AMENDMENTS. The Company and the Transfer Agent may from time
to time supplement or amend this Agreement without the approval of any Warrant
or Unit Holders in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 36
CRC: 49200
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 13
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.13.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
13
provisions in regard to matters or questions arising hereunder which the Company
and the Transfer Agent may deem necessary or desirable.
28. SUCCESSORS. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Transfer Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
29. TERMINATION. This Agreement shall terminate at the close of business on the
Expiration Date or such earlier date upon which all Warrants have been
exercised; provided, however, that if exercise of the Warrants is suspended
pursuant to Section 15 and such suspension continues past the Expiration Date,
this Agreement shall terminate at the close of business on the business day
immediately following expiration of such suspension. The provisions of Section
23 shall survive such termination.
30. GOVERNING LAW. This Agreement and each Warrant and Unit Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
[California] and for all purposes shall be construed in accordance with the laws
of said State.
31. BENEFITS OF
give any person
the Warrant and
this Agreement,
of the Company,

Ed#: 3

*P64567/6040513/3*

THIS AGREEMENT. Nothing in this Agreement shall be construed to
or corporation other than the Company, the Transfer Agent and
Unit Holders any legal or equitable right, remedy or claim under
and this Agreement shall be for the sole and exclusive benefit
the Transfer Agent and the Warrant and Unit Holders.

32. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an original and
all such counterparts shall together constitute but one and the same instrument.
33. INTEGRATION. As of the date hereof, this Agreement contains the entire and
only agreement, understanding, representation, condition, warranty or covenant
between the parties hereto with respect to the matters herein, supersedes any
and all other agreements between the parties hereto relating to such matters,
and may be modified or amended only by a written agreement signed by both
parties hereto pursuant to the authority granted by Section 27.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 37
CRC: 61384
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 14
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.14.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
14
34. DESCRIPTIVE HEADINGS. The descriptive headings of the Sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
Date:

_______________, 2001
TASER International, Inc.,
a Delaware corporation
By:_________________________________
Its Chief Executive Officer

SEAL
ATTEST:
____________________________
Its Secretary
US Stock Transfer Corporation,
a ____________ corporation
By:_________________________________
Its Vice President
SEAL
ATTEST:
____________________________
Its Secretary

Ed#: 3

*P64567/6040514/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 2
CRC: 49605
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 15
Description: ex-4.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.15.00

15
EXHIBIT A
[WARRANT CERTIFICATE]

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040515/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 6
CRC: 22031
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 16
Description: OLD EX-4.5

[E/O]

<PAGE>

16
EXHIBIT B
[UNIT CERTIFICATE]

</TEXT>
</DOCUMENT>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.16.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 5

*P64567/6040516/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.15, Doc: 7

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.15
p64567a3ex10-15.txt
EX-10.15

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 7

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/7*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.15, Doc: 7, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.15.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 2

*P64567/6101501/2*

1
Exhibit 10.15
[TASER INTERNATIONAL LETTERHEAD]
PROMISSORY NOTE

Amount of Note ($): $75,000 Cash
City: Scottsdale, State: Arizona
Date: July 1, 1999
FOR VALUE RECEIVED the undersigned jointly and severally promise(s) to pay
to the order of:
Malcolm Sherman, currently residing in Scottsdale, Arizona
the principal sum of:
Seventy-Five thousand & no/100 ($75,000.00) dollars together with interest
thereon from date at the rate of:
9.18% Per Annum
until maturity, said principal and interest shall be paid in 24 equal monthly
payments of $3,757.37, beginning on August 15, 1999 with the last payment
submitted on July 15, 2001. (Please see attached Loan Amortization).
Each maker and endorser severally waives demand, protest and notice of
maturity, non-payment or protest and all requirements necessary to hold each of
them liable as makers and endorsers and, should litigation be necessary to
enforce this note, each maker and endorser waives trial by jury and consents to
the personal jurisdiction and venue of a court of subject matter jurisdiction
located in the State of Arizona, and County of Maricopa.
Each maker and endorser further agrees, jointly and severally, to pay all
costs of collection, including a reasonable attorney’s fee in case the principal
of this note or any payment on the principal or any interest thereon is not paid
at the respective maturity thereof, or in case it becomes necessary to protest
the security hereof, whether suit be brought or not.
This note is to be construed and enforced according to the laws of the
State of Arizona; upon default in the payment of principal and/or interest when
due, the whole sum of principal and interest remaining unpaid shall, at the
option of the holder, become immediately due and payable and it shall accrue
interest at the highest rate allowable by law, or, if no highest rate is
otherwise indicated, at ten (10%) percent, from the date of default.
Default shall include, but not be limited to non-payment within ten (10)
days from the due date set out herein.
Unless specifically disallowed by law, should litigation arise hereunder,
service of process therefore may be obtained through certified mail, return
receipt requested; the parties hereto waiving and all rights they may have to
object to the method by which service was perfected.
/s/MWS
/s/TPS

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.15, Doc: 7, Page: 2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.15.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
2
Taser International, Inc. herein acknowledges and agrees to the following,
regarding the herein described Promissory Note.
A. The monies being borrowed are to secure tooling and equipment for that
product as described in the enclosed attachment, marked "A" and listed
as "Steman International Procurement, Quotation No: 98Q01-1-AT," Taser
International, Inc. purchase order numbers: 021025-00, 021026-00,
021027-00, 021028-00, 021024-00 additionally known as "The Advanced
Taser." Additional components as secured by Taser International, Inc. to
complete the production of this product are included in the UCC filing
and are described as electrical components, finished product or
packaging.
B. Taser International, Inc. agrees to the tooling and components as
purchased by the funds of this Promissory Note being subject to a UCC
filing in favor of Malcolm W. Sherman i.e., lender. Said UCC filing to
be valid for the full period of the listed payment schedule. Taser
International, Inc. agrees to the UCC filing of this lien and its
permission is granted for a "floating lien" to be issued to Malcolm W.
Sherman.
C. Taser International, Inc. agrees and acknowledges that they have no
right to sell, transfer, assign, sublease or encumber the equipment or
this agreement or material covered under this agreement.
D. All cost relative to the filing of the above listed UCC filings are to
be born by Taser International, Inc.
All matters pertinent to this Agreement (including its interpretation,
application, validity, performance and breech), shall be governed by, construed
and enforce in accordance with the laws of the State of Arizona. The parties
herein waive trial by jury and agree to submit to the personal jurisdiction and
venue of a court of subject matter jurisdiction located in Maricopa County,
State of Arizona. In the event that litigation results from or arises out of
this Agreement or the performance thereof, the parties agree to reimburse the
prevailing party’s reasonable attorney’s fees, court costs, and all other
expenses, whether or not taxable by the court as costs in addition to any other
relief to which the prevailing party may be entitled. In such event, no action
shall be entertained by said court or any court of competent jurisdiction if
filed more than one year subsequent to the date of the cause(s) of action
actually accrued regardless of whether damages were otherwise as of said time
calculable.
TASER INTERNATIONAL, INC.
------------------------Corporation
/s/ Malcolm W. Sherman
---------------------Payee - Signature
M. W. Sherman
--------------------Payee Name Printed
Attest: /s/ Thomas P. Smith
--------------------------Treasurer - Signature
Thomas P. Smith
--------------------------Treasurer
</TEXT>
</DOCUMENT>

Ed#: 2

*P64567/6101502/2*

By: /s/ Patrick Smith
--------------------President - Signature
Patrick Smith
--------------------President
Corporate Seal
[Corporate Seal]

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.16, Doc: 8

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.16
p64567a3ex10-16.txt
EX-10.16

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 8

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/8*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 10.16
[TASER INTERNATIONAL LETTERHEAD]

May 26, 2000
Malcolm Sherman
9068 E. Hillery Dr.
Scottsdale, AZ 85260
Dear Malcolm,
This letter is to confirm our previous discussions regarding your pending
retirement as a full time employee of TASER International.
-

As we discussed, we would like you to work directly with Tom Smith to train
him to maintain the current export customer base during the time between
now and your formal retirement on June 30, 2000.

-

The company will continue to pay your normal salary and car allowance up
through June 30, although your work schedule between now and that time will
be at your discretion in order to effectively train Tom and close any
pending deals.

-

After June 30, the company will pay your vacation time of 4 weeks in the
month of July. These payments will be made on a biweekly basis concurrent
with our normal payroll.

-

Your outstanding balance of non-reimbursed expenses
will be repaid in full on a biweekly basis starting
payments will be of the same amount as your current
allowance, paid on a biweekly basis concurrent with
disbursements.

-

You will be asked to continue to serve on the board of directors and as an
active significant shareholder. As you are aware, we do not remunerate our
board members with cash compensation. However, the company will extend your
current stock options (20,000 shares) for an additional 5 years after your
formal retirement (i.e. Expiration date of 7/1/2005). All of these options
shall be considered vested as of June 30, 2000 if they have not already
vested prior to that time.

-

Further, the company shall work with you as an independent contractor
(effective May 27th, 2000) in certain foreign countries. Specifically, you
shall be considered the exclusive foreign agent for the countries of:
-

PAGE 1

Ed#: 2

*P64567/6101601/2*

(approximately $30,000)
on August 15. These
salary plus car
our payroll

India
Nepal
Sri Lanka
PWS:/s/PWS
---

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

2
-

BANGLADESH
UKRAINE
JORDAN
ISRAEL

For a period of 12 months (i.e. Through June 30, 2001), these countries
shall be reserved for you, operating as an independent contractor, to
close an exclusive distribution deal. You will be paid a 10% commission
for all sales in these countries for the period of time that you remain
the exclusive agent. This 10% commission shall not include the $20,000
deposit already received from Jordan, but shall include any additional
sums received from the distributor in Jordan. Commissions will be paid
to Sherman as payments are received by TASER International regardless of
shipping dates as listed on purchase orders. Sales prices offered to
Sherman during the course of his appointment as "exclusive agent" shall
be equal to the best of prices offered to any other exclusive agreement
granted by the company. In those instances which requires overages in
billing, i.e. over the export selling price of TASER, these amount are
to be forwarded to third parties for "commissions". TASER International,
Inc, Agrees to forward via wire transfer or company check to such
accounts as directed upon instructions from Sherman after these funds
have been secured. Sherman’s 10% commission is based on the net product
prices as given to Sherman by TASER (less freight and miscellaneous
charges). Once payment of commissions or overages has been remitted as
instructed by Sherman, TASER shall be released of all liability
associated with the specific transactions.
In order to maintain your exclusive agency for these areas, the
following performance criteria must be met (the numbers in each column
represent the number of ADVANCED TASERs sold within the territory):
<Table>
<Caption>
---------------------------------------------------------------------------------------------------Country
3/30
3/30
3/30
3/30
3/30
3/30
2001
2002
2003
2004
2005
2006
---------------------------------------------------------------------------------------------------<S>
<C>
<C>
<C>
<C>
<C>
<C>
India
500
600
720
864
1036
1244
---------------------------------------------------------------------------------------------------Ukraine
300
360
432
518
622
748
--------------------------------------------------------------------------------------------------Sri Lanka
100
120
144
172
208
248
--------------------------------------------------------------------------------------------------Bangladesh
200
240
288
346
414
498
--------------------------------------------------------------------------------------------------Nepal
50
60
72
86
104
124
--------------------------------------------------------------------------------------------------Jordan
200
240
288
346
414
498
--------------------------------------------------------------------------------------------------Israel
200
240
288
346
414
498
---------------------------------------------------------------------------------------------------

</Table>
The sales in each column represent sales in the 12 calendar months
proceeding the date atop the column. Should sales not meet or exceed
this number, the exclusivity will expire without notice and the company
will have the option to pursue other sales opportunities in those
markets without further compensation due.
All inquiries from these territories will be forwarded to Sherman
directly, and no pricing information shall be given to inquiries without
Sherman’s prior consent.
-

Under the terms of this representation, you will be responsible for all
travel and other related expense for you to develop these markets. This
shall include telephone

PAGE 2

Ed#: 2

*P64567/6101602/2*

PWS:/s/PWS
---

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
3
charges, cellular air time and all other related incidental expenses. We
will, of course, support your efforts with reasonable collateral materials.
Although you will remain on the payroll for the month of June as an
employee, any sales in these territories (as listed above) beyond the
$20,000 deposit already received from Jordan shall be treated as
commissioned sales in your relationship as an independent contractor.
-

For purposes of supporting your role as a sales agent in the above listed
countries, you may continue to use the title of "Director of Sales and
Marketing." But this exception is FOR THOSE TERRITORIES ONLY. Accordingly,
you may use your existing business cards in conjunction with these
countries.

-

Any potential business outside the scope of countries listed in this
agreement, including any initiated by distributors in the countries listed
within this document (specifically: India, Nepal, Sri Lanka, Bangladesh,
Ukraine, Jordan and Israel), must be approved by TASER International in
advance. The company may accept or reject any offers for additional
countries at its sole discretion. The company has current prospects in
Egypt and other countries in the Middle East and shall pursue those
prospects directly.

-

Effective May 27th, you will be operating as an independent sales
representative and independent contractor in relation to these foreign
sales activities. You will also be responsible for ensuring that all
distribution agreements in those countries comply with US export law and
relevant laws concerning foreign commerce.

-

Although you will remain a member of our board of directors, any
commitments on behalf of the company subsequent to the date of this letter
must be approved, and joint signed by either Tom or Rick Smith as active
officers in the company.

-

All foreign orders shall be prepaid prior to shipment.

-

In the event the company is going to go public through an IPO, be acquired
by another entity, or raise a significant amount of capital to fund
operations, the company shall have the right to buy-out the exclusivity
provisions outlined above by a single payment equivalent to 6 months’
historical commissions.

-

I trust that the above accurately memorializes our discussion of yesterday.
Should a disagreement arise over any of the provisions relating to your
retirement, or the subsequent sales representation outlined above, we shall
first sit over a beer and work it out. If this is unsuccessful, both
parties (TASER International and Malcolm Sherman) hereby agree that any
disputes shall be settled in binding arbitration under the rules of the
American Arbitration Association. Specifically, this agreement sets forth
the entire understanding and agreement of the parties hereto with respect
to the subject matter hereof and supersedes all other representations and
understandings both written and oral. This agreement is drafted under the
laws of the state of Arizona, and the venue for any legal recourse shall
take place under laws as written in Arizona, and the venue for any legal
recourse shall take place under these laws and be adjudicated within its
jurisdiction. Further, the parties agree that any controversy or claim
arising out of, or relating to, this contract, or the breach thereof, shall
be settled by arbitration in accordance with the rules of the American
Arbitration

PAGE 3

Ed#: 2

*P64567/6101603/2*

PWS:/s/PWS
---

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
4
Association in the state of Arizona, USA under their auspices and the
parties agree to have any dispute heard and adjudicated under these rules
in the state of Arizona USA and both parties agree to be bound by the
decision of the arbitrator and to pay their proportionate fees as required
under the rules of the association and judgment upon the award rendered by
the arbitrator(s) may be entered into any court having jurisdiction
thereof.
-

This agreement may be amended or modified only in writing, signed in
advance by the parties hereto or their designated representatives. This
agreement shall inure to the benefit of and be binding upon the parties
hereto, and their respective successors and assigns.

-

This memorandum outlines all terms related to your pending retirement, and
the parties agree that any and all documents and or agreements entered into
or/of prior date to this agreement are herein cancelled and mutually
abrogated by the parties.

-

This memorandum outlines all terms related to your pending retirement, and
the parties hereby mutually release each other from any and all claims
and/or obligations related to your employment as Director of Sales and
Marketing for TASER International other than those obligations outlined
herein. Pre-existing financial obligations currently owed to you (such as
your salary, vacation pay, notes payable and accrued expenses) shall
survive this agreement in their current form.

-

TASER agrees to pay Sherman all outstanding balances owed as outlined above
regardless and excluded from the releases in the preceding paragraph. These
expenses will carry an effective interest rate of 10% per annum, accrued
monthly on the unpaid balance only, until the entire principal and accrued
interest is paid in full. Such interest shall be calculated from the
beginning date at which the expenses were outstanding (i.e. the average
monthly balance). However, any prior financing charges will be applied as
credits against the interest owed.

-

Regarding office space, TASER will make temporary office space available
through the end of July, 2000. After that time, the company will plan to
redistribute the use of space within our offices. Further, TASER will make
partial secretarial support available for preparation of formal letters and
contracts in conjunction with TASER sales for those territories assigned to
Sherman as a part of this contract only.

Malcolm, I’ve truly enjoyed the past 6 years together. I’ve grown tremendously
working with you. I wish you nothing but the best and hope you find more time
over the coming months and years to take some well-deserved personal time.
Sincerely,
/s/ Rick W. Smith
----------------Rick W. Smith
President, TASER
International
PAGE 4
</TEXT>
</DOCUMENT>

Understood and Agreed,
5/26/2000
--------date

Ed#: 2

*P64567/6101604/2*

/s/ Malcolm W. Sherman
---------------------Malcolm W. Sherman

PWS:/s/PWS
---

5/26/2000
--------date

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.17, Doc: 9

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.17
p64567a3ex10-17.txt
EX-10.17

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 9

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/9*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.17, Doc: 9, Page: 1

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.17.02.00

Ed#: 4

*P64567/6101702/4*

1
[SILICON VALLEY BANK LETTERHEAD]

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVB0IIS3615
DATE: APRIL 13, 2001
BENEFICIARY:
TASER INTERNATIONAL, INC.
7860 E. MCCLAIN DRIVE, SUITE 2
SCOTTSDALE, AZ 85260
ATTN: KATHY HANRAHAN, CONTROLLER
(480) 905-2012
APPLICANT:
BRUCE R. CULVER & DONNA T. CULVER
6592 E. OAK SPRING DRIVE
OAK PARK, CA 91377
(818) 991-9950
AMOUNT: US$500,000.00 (FIVE HUNDRED THOUSAND AND 00/100 U.S. DOLLARS)
EXPIRATION DATE: DECEMBER 31, 2001
LOCATION: AT OUR COUNTERS IN SANTA CLARA, CALIFORNIA
DEAR SIR/MADAM:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.
SVB0IIS3615 IN YOUR FAVOR AVAILABLE BY YOUR DRAFTS DRAWN ON US AT SIGHT AND
ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
1. THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.
PARTIAL DRAWS ARE ALLOWED. THIS LETTER OF CREDIT MUST ACCOMPANY ANY
DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE
RETURNED TO THE BENEFICIARY UNLESS IT IS FULLY UTILIZED.
DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND DATE OF THIS LETTER OF
CREDIT.
DOCUMENTS MUST BE FORWARDED TO US BY OVERNIGHT DELIVERY SERVICE TO:
SILICON VALLEY BANK, 3003 TASMAN DRIVE, SANTA CLARA CA 95054, ATTN:
INTERNATIONAL DIVISION.
WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS AND BONAFIDE HOLDERS THAT
THE DRAFTS DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS
OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO THE
DRAWEE, IF NEGOTIATED ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.
</R>
PAGE 1 OF 2

Date: 7-MAY-2001 15:05:10.86

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.17, Doc: 9, Page: 2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.17.03.00

Ed#: 3

*P64567/6101703/3*

2
[SILICON VALLEY BANK LETTERHEAD]

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVB011S3615
DATE: APRIL 13, 2001
EXCEPT AS EXPRESSLY STATED HEREIN THIS LETTER OF CREDIT IS SUBJECT TO THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500.

/s/ Danny J. Rowan
-------------------AUTHORIZED SIGNATURE

/s/ Dawn Y. Shinsato
-------------------AUTHORIZED SIGNATURE

DANNY J. ROWAN

DAWN Y. SHINSATO

PAGE 2 OF 2

Date: 7-MAY-2001 15:05:10.86

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.17, Doc: 9, Page: 3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.17.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

3
March 30, 2001

Board of Directors
TASER, International, Inc.
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260-1627
Letter of Support
Gentlemen:
<R>
The undersigned Phillips W. Smith and Bruce R. Culver are directors of
TASER International, Inc., a Delaware corporation (the "Company"). Through
loans, advances, provisions of guarantees, and other arrangements, we have from
time-to-time supported financially and otherwise the business of the Company.
</R>
We agree, by this letter, to continue to support the Company by
establishing an irrevocable, standby letter of credit issued by a bank of
recognized standing in an amount not less than $500,000. The letter of credit is
intended to provide additional financial resources on which the Company may rely
in the event of its suffering a working capital deficit or otherwise. Such
letter of credit may be drawn upon by the Company at any time prior to
December 31, 2001 upon presentation to the bank of a resolution validly
adopted by the Board of Directors of the Company confirming a determination by
the Board of Directors of the Company’s need for additional funds and electing
to draw upon such letter of credit.
In consideration of this letter of support and the provision of the letter
of credit, the Company shall pay each of us $10,000, and in the event of a draw
upon the letter of credit, enter into commercially reasonable arrangements for
the repayment to us of amounts so drawn.
If the foregoing accurately reflects our understanding, please so indicate
by signing the enclosed copy of this letter and returning it to us.
Very truly yours,
/s/ Phillips W. Smith
--------------------------------Phillips W. Smith

/s/ Bruce R. Culver
--------------------------------Bruce R. Culver
Agreed and accepted
this 30th day of March 2001.
TASER International, Inc.
/s/ Patrick W. Smith
--------------------------------Patrick W. Smith
Chief Executive Officer and Director
</TEXT>
</DOCUMENT>

Ed#: 5

*P64567/6101704/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.18, Doc: 10

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.18
p64567a3ex10-18.txt
EX-10.18

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 15:05:10.86

PN: DOCHDR 10 SN: *
*DOCHDR/10*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.18, Doc: 10, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.18.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 10.18
[TASER INTERNATIONAL(R) LOGO]

<R>
7339 East Evans Road - Scottsdale, AZ - 85280 - USA - (480) 991-0791 Fax (480) 991-0791
</R>
AMENDMENT TO PROMISSORY NOTE(S)
Note Balance: __________
City/State: Scottsdale, Arizona
Date of Amendment: 3/30/01
This Amendment No. __ to the Original Loans and Security Agreement
(this "Amendment") is made as of March 30, 2001 by and between TASER
International Inc. ("Borrower") and _____________ ("Lender").
Borrower and Lender are parties to, among other documents, a
Promissory Note agreement as of ______ (date of initial investment). Borrower
and Lender desire to amend the Promissory Notes in accordance with the following
terms.
NOW THEREFORE, Borrower and Lender agree as follows:
4.

The Maturity Dates are hereby amended to July 1, 2002. With an
additional provision that the company may at its discretion,
extend the maturity date 2 consecutive terms of 12 months each to
cover working capital shortfalls.

Unless otherwise defined, all other terms specified in the Promissory Notes
shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
above written.
Borrower:

Lender:

TASER International Inc.

By: /s/ Patrick W. Smith
_____________________

____________________

Name: Patrick W. Smith

Name:

</TEXT>
</DOCUMENT>

Ed#: 6

*P64567/6101801/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.19, Doc: 11

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.19
p64567a3ex10-19.txt
EX-10.19

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 15:05:10.86

PN: DOCHDR 11 SN: *
*DOCHDR/11*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 8
CRC: 3547
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 1
Description: Exhibit 10.19

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 10.19
LOAN AND SECURITY AGREEMENT
TASER INTERNATIONAL, INC.
1

Ed#: 1

*P64567/6101901/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 62733
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 2
Description: Exhibit 10.19

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 1

*P64567/6101902/1*

2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>
1

ACCOUNTING AND OTHER TERMS..............................................................................

Page
---<C>
4

2

LOAN AND TERMS OF PAYMENT...............................................................................
2.1
Promise to Pay.................................................................................
2.2
Interest Rate, Payments........................................................................
2.3
Fees...........................................................................................

4
4
4
5

3

CONDITIONS OF LOANS.....................................................................................
3.1
Conditions Precedent to Initial Advance........................................................
3.2
Conditions Precedent to all Advances...........................................................

5
5
5

4

CREATION OF SECURITY INTEREST...........................................................................
4.1
Grant of Security Interest.....................................................................

5
5

5

REPRESENTATIONS AND WARRANTIES..........................................................................
5.1
Due Organization and Authorization.............................................................
5.2
Collateral.....................................................................................
5.3
Litigation.....................................................................................
5.4
No Material Adverse Change in Financial Statements.............................................
5.5
Solvency.......................................................................................
5.6
Regulatory Compliance..........................................................................
5.7
Subsidiaries...................................................................................
5.8
Full Disclosure................................................................................

5
5
6
6
6
6
6
7
7

6

AFFIRMATIVE COVENANTS...................................................................................
6.1
Government Compliance..........................................................................
6.2
Financial Statements, Reports, Certificates....................................................
6.3
Inventory; Returns.............................................................................
6.4
Taxes..........................................................................................
6.5
Insurance......................................................................................
6.6
Primary Accounts...............................................................................
6.7
Further Assurances.............................................................................

7
7
7
7
8
8
8
8

7

NEGATIVE
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9

COVENANTS......................................................................................
Dispositions...................................................................................
Changes in Business, Ownership, Management or Business Locations...............................
Mergers or Acquisitions........................................................................
Indebtedness...................................................................................
Encumbrance....................................................................................
Distributions; Investments.....................................................................
Transactions with Affiliates...................................................................
Subordinated Debt..............................................................................
Compliance.....................................................................................

8
8
8
9
9
9
9
9
9
9

8

EVENTS OF DEFAULT.......................................................................................
8.1
Payment Default................................................................................
8.2
Covenant Default...............................................................................
8.3
Material Adverse Change........................................................................
8.4
Attachment.....................................................................................
8.5
Insolvency.....................................................................................
8.6
Other Agreements...............................................................................

9
10
10
10
10
10
10

</TABLE>
2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 920
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 3
Description: Exhibit 10.19

[E/O]

<PAGE>
<TABLE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 1

*P64567/6101903/1*

3

<S>
Judgments......................................................................................
Misrepresentations.............................................................................
Guaranty.......................................................................................

<C>
10
11
11

9

BANK’S RIGHTS AND REMEDIES..............................................................................
9.1
Rights and Remedies............................................................................
9.2
Power of Attorney..............................................................................
9.3
Accounts Collection............................................................................
9.4
Bank Expenses..................................................................................
9.5
Bank’s Liability for Collateral................................................................
9.6
Remedies Cumulative............................................................................
9.7
Demand Waiver..................................................................................

11
11
11
12
12
12
12
12

10

NOTICES.................................................................................................

12

11

CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER.............................................................

13

12

GENERAL PROVISIONS......................................................................................
12.1
Successors and Assigns.........................................................................
12.2
Indemnification................................................................................
12.3
Time of Essence................................................................................
12.4
Severability of Provision......................................................................
12.5
Amendments in Writing, Integration.............................................................
12.6
Counterparts...................................................................................
12.7
Survival.......................................................................................
12.8
Confidentiality................................................................................
12.9
Attorneys’ Fees, Costs and Expenses............................................................

13
13
13
13
13
13
13
14
14
14

13

DEFINITIONS.............................................................................................
13.1
Definitions....................................................................................

14
14

Bruce R. Culver and Donna T. Culver..............................................................................

5

Silicon Valley Bank..............................................................................................

5

8.7
8.8
8.9

</TABLE>
3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 51315
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 4
Description: Exhibit 10.19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.04.00

[E/O]

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

4
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated April 26,
2001, between SILICON VALLEY BANK ("Bank"), whose address is 3003
Tasman Drive, Santa Clara, California 95054 with a loan production
office located at 4455 E. Camelback Road, Suite E-290, Phoenix, Arizona
85018 and TASER INTERNATIONAL, INC. ("Borrower"), whose address is 7860
East McClain Drive, Suite 2, Scottsdale, AZ 85260 provides the terms on
which Bank will lend to Borrower and Borrower will repay Bank. The
parties agree as follows:

1

ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.
2

LOAN AND TERMS OF PAYMENT

2.1

PROMISE TO PAY.

Borrower promises to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1

REVOLVING ADVANCES.

(a) Bank will make Advances not exceeding the Committed Revolving Line.
Amounts borrowed under this Section may be repaid and reborrowed during the term
of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower’s deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.
(d) Bank’s obligation to lend the undisbursed portion of the
Obligations will terminate if, in Bank’s sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of
the Obligations, or there has been any material adverse deviation by Borrower
from the most recent business plan of Borrower presented to and accepted by Bank
prior to the execution of this Agreement.
2.2

INTEREST RATE, PAYMENTS.

(a) Interest Rate. Advances accrue interest on the outstanding
principal balance at a per annum rate of 1 percentage point above the Prime
Rate. After an Event of Default, Obligations accrue interest at 5 percent above
the rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable
on the last day of each month. Bank may debit any of Borrower’s deposit accounts
including Account Number ___________________ for principal and interest payments
owing or any amounts Borrower owes
4

Ed#: 1

*P64567/6101904/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 64502
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 5
Description: Exhibit 10.19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.05.00

[E/O]

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
5
Bank. Bank will promptly notify Borrower when it debits Borrower’s accounts.
These debits are not a set-off. Payments received after 12:00 noon Pacific time
are considered received at the opening of business on the next Business Day.
When a payment is due on a day that is not a Business Day, the payment is due
the next Business Day and additional fees or interest accrue.
2.3

FEES.
Borrower will pay:

(a) Facility Fee. A fully earned, non-refundable Facility Fee of
$45,000 due no later than May 15, 2001; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys’
fees and reasonable expenses) incurred through and after the date of this
Agreement, are payable when due.
3

CONDITIONS OF LOANS

3.1

CONDITIONS PRECEDENT TO INITIAL ADVANCE.

Bank’s obligation to make the initial Advance is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
3.2

CONDITIONS PRECEDENT TO ALL ADVANCES.

Bank’s obligations to make each Advance, including the initial Advance,
is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
<R>
(b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Advance and no Event of Default may have occurred and be continuing, or result
from the Advance. Each Advance is Borrower’s representation and warranty on that
date that the representations and warranties of Section 5 remain true.
</R>
4

CREATION OF SECURITY INTEREST

4.1

GRANT OF SECURITY INTEREST.

Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower’s duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. If this Agreement is terminated, Bank’s lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.
5

REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:

5.1

DUE ORGANIZATION AND AUTHORIZATION.

Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which
5

Ed#: 2

*P64567/6101905/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 63305
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 6
Description: Exhibit 10.19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.06.00

[E/O]

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
6
the conduct of its business or its ownership of property requires that it be
qualified, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower’s formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could reasonably be expected to cause a Material
Adverse Change.
5.2

COLLATERAL.

Borrower has good title to the Collateral, free of Liens except
Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects.
5.3

LITIGATION.

Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower’s Responsible Officers, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.
5.4

NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.

All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations. There has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5

SOLVENCY.

The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6

REGULATORY COMPLIANCE.

Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change.

6

Ed#: 1

*P64567/6101906/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 29519
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 7
Description: Exhibit 10.19

[E/O]

<PAGE>
5.7

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.07.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

7
SUBSIDIARIES.

Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8

FULL DISCLOSURE.

No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading. Bank
recognizes that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts
may differ from the projected and forecasted results.
6

AFFIRMATIVE COVENANTS

Borrower will do all of the following for so long as Bank has an
obligation to lend, or there are outstanding Obligations:
6.1

GOVERNMENT COMPLIANCE.

Borrower will maintain its and all Subsidiaries’ legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be
expected to cause a material adverse effect on Borrower’s business or
operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower’s business or operations
or would reasonably be expected to cause a Material Adverse Change.
6.2

FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated
operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (ii) as soon as available, but no later than 90 days after
the last day of Borrower’s fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Bank; (iii) a prompt report of
any legal actions pending or threatened against Borrower or any Subsidiary that
could result in damages or costs to Borrower or any Subsidiary of $100,000 or
more; and (iv) budgets, sales projections, operating plans or other financial
information Bank reasonably requests.
(b) Allow Bank to audit Borrower’s Collateral at Borrower’s expense.
Such audits will be conducted no more often than every year unless an Event of
Default has occurred and is continuing.
6.3

INVENTORY; RETURNS.

Borrower will keep all Inventory in good and
from material defects. Returns and allowances between
debtors will follow Borrower’s customary practices as
this Agreement. Borrower must promptly notify Bank of
disputes and claims, that involve more than $50,000.

7

Ed#: 1

*P64567/6101907/1*

marketable condition, free
Borrower and its account
they exist at execution of
all returns, recoveries,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 42672
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 8
Description: Exhibit 10.19

[E/O]

<PAGE>
6.4

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.08.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

8
TAXES.

Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments (other than taxes
and assessments which Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Bank, on
demand, appropriate certificates attesting to the payment.
6.5

INSURANCE.

Borrower will keep its business and the Collateral insured for risks
and in amounts standard for Borrower’s industry, and as Bank may reasonably
request. Insurance policies will be in a form, with companies, and in amounts
that are satisfactory to Bank in Bank’s reasonable discretion. All property
policies will have a lender’s loss payable endorsement showing Bank as an
additional loss payee and all liability policies will show the Bank as an
additional insured and provide that the insurer must give Bank at least 20 days
notice before canceling its policy. At Bank’s request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy will, at Bank’s option, be payable to Bank on account
of the Obligations.
6.6

PRIMARY ACCOUNTS.

Borrower will maintain its primary depository and operating accounts
with Bank.
6.7

FURTHER ASSURANCES.

Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank’s security interest in
the Collateral or to effect the purposes of this Agreement.
7

NEGATIVE COVENANTS

Borrower will not do any of the following without Bank’s prior written
consent, which will not be unreasonably withheld, for so long as Bank has an
obligation to lend or there are any outstanding Obligations:
7.1

DISPOSITIONS.

Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.
7.2

CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.

Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its ownership or management of greater than
25% (other than by the sale of Borrower’s equity securities in a public offering
or to venture capital investors so long as Borrower identifies the venture
capital investors prior to the closing of the investment). Borrower will not,
without at least 30 days prior written notice, relocate its chief executive
office or add any new offices or business locations in which Borrower maintains
or stores over $5,000 in Borrower’s assets or property.

8

Ed#: 1

*P64567/6101908/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 3460
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 9
Description: Exhibit 10.19

[E/O]

<PAGE>
7.3

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.09.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

9
MERGERS OR ACQUISITIONS.

Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.
7.4

INDEBTEDNESS.

Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5

ENCUMBRANCE.

Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.
7.6

DISTRIBUTIONS; INVESTMENTS.

Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
7.7

TRANSACTIONS WITH AFFILIATES.

Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for transactions that are in
the ordinary course of Borrower’s business, upon fair and reasonable terms that
are no less favorable to Borrower than would be obtained in an arm’s length
transaction with a nonaffiliated Person.
7.8

SUBORDINATED DEBT.

Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank’s prior written consent.
7.9

COMPLIANCE.

Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower’s
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.
8

EVENTS OF DEFAULT
Any one of the following is an Event of Default:
9

Ed#: 1

*P64567/6101909/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 1242
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 10
Description: Exhibit 10.19

[E/O]

<PAGE>
8.1

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.10.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

10
PAYMENT DEFAULT.

If Borrower fails to pay any of the Obligations within 3 days after
their due date. During the additional period the failure to cure the default is
not an Event of Default (but no Advance will be made during the cure period);
8.2

COVENANT DEFAULT.

<R>
If Borrower violates any covenant in Section 7 or does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower and Bank and as to any
default under a term, condition or covenant that can be cured, has not cured the
default within 10 days after it occurs, or if the default cannot be cured within
10 days or cannot be cured after Borrower’s attempts within 10 day period, and
the default may be cured within a reasonable time, then Borrower has an
additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Advances will be made during the cure period);
</R>
8.3

MATERIAL ADVERSE CHANGE.

If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower; or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations; or (iii) is a material impairment of the value or priority of
Bank’s security interests in the Collateral.
8.4

ATTACHMENT.

If any material portion of Borrower’s assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower’s assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Advances will be made
during the cure period);
8.5

INSOLVENCY.

If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Advances will be made before any
Insolvency Proceeding is dismissed);
8.6

OTHER AGREEMENTS.

If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7

JUDGMENTS.

If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied);

10

Ed#: 2

*P64567/6101910/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 51234
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 11
Description: Exhibit 10.19

[E/O]

<PAGE>
8.8

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.11.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

11
MISREPRESENTATIONS.

If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document; or
8.9

GUARANTY.

<R>
Any guaranty of any Obligations ceases for any reason to be in full
force or any Guarantor does not perform any obligation under any guaranty of the
Obligations, or any material misrepresentation or material misstatement exists
now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor, or any event of default under that certain Third Party Broker
Account Pledge Agreement, of even date, by and between Bruce R. Culver and Donna
T. Culver and Bank, securing the guaranty executed by Bruce R. Culver as a
Guarantor.
</R>
9

BANK’S RIGHTS AND REMEDIES

9.1

RIGHTS AND REMEDIES.

When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 0 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank’s rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2

POWER OF ATTORNEY.

Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s name
on any checks or other forms of payment or security; (ii) sign Borrower’s name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under
11

Ed#: 3

*P64567/6101911/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 5258
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 12
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.12.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
12
Borrower’s insurance policies; (iv) settle and adjust disputes and claims about
the Accounts directly with account debtors, for amounts and on terms Bank
determines reasonable; and (v) transfer the Collateral into the name of Bank or
a third party as the Code permits. Bank may exercise the power of attorney to
sign Borrower’s name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default
has occurred. Bank’s appointment as Borrower’s attorney in fact, and all of
Bank’s rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank’s obligation to
provide Advances terminates.
9.3

ACCOUNTS COLLECTION.

When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank’s security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4

BANK EXPENSES.

<R>
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of Default.
</R>
9.5

BANK’S LIABILITY FOR COLLATERAL.

If Bank complies with reasonable banking practices and the Code, it is
not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to
the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other person. Borrower
bears all risk of loss, damage or destruction of the Collateral.
9.6

REMEDIES CUMULATIVE.

Bank’s rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank’s exercise of one right or
remedy is not an election, and Bank’s waiver of any Event of Default is not a
continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.7

DEMAND WAIVER.

Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10

NOTICES

All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
12

Ed#: 2

*P64567/6101912/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 47812
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 13
Description: Exhibit 10.19

[E/O]

<PAGE>
11

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.13.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

13
CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

Arizona law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the process, venue and
exclusive jurisdiction of the State and Federal courts in Maricopa County,
Arizona.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12

GENERAL PROVISIONS

12.1

SUCCESSORS AND ASSIGNS.

This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank’s prior written consent which may be granted or
withheld in Bank’s discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits
under this Agreement.
12.2

INDEMNIFICATION.

Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank’s gross negligence or willful misconduct.
12.3

TIME OF ESSENCE.

Time is of the essence for the performance of all obligations in this
Agreement.
12.4

SEVERABILITY OF PROVISION.

Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5

AMENDMENTS IN WRITING, INTEGRATION.

All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6

COUNTERPARTS.

This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

13

Ed#: 2

*P64567/6101913/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 67
CRC: 36439
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 14
Description: Exhibit 10.19

[E/O]

<PAGE>
12.7

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.14.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

14
SURVIVAL.

<R>
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
</R>
12.8

CONFIDENTIALITY.

In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank’s subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee or
purchasers agreement of the terms of this provision), (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank’s
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank’s possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9

ATTORNEYS’ FEES, COSTS AND EXPENSES.

In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys’ fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
13

DEFINITIONS

13.1

DEFINITIONS.
In this Agreement:

"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower’s Books relating to any of the
foregoing, as such definition may be amended from time to time.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys’ fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER’S BOOKS" are all Borrower’s books and records including
ledgers, records regarding Borrower’s assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
14

Ed#: 2

*P64567/6101914/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 69
CRC: 46608
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 15
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.15.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

15
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code, as applicable.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED REVOLVING LINE" is an Advance of up to $1,500,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest, as such definition may be amended from time to
time.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the Obligations,
including Bruce R. Culver.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
15

Ed#: 1

*P64567/6101915/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 67
CRC: 17825
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 16
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.16.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

16
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
<R>
"MATERIAL ADVERSE CHANGE" is described in Section 8.3.
</R>
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower’s indebtedness to Bank under this Agreement or any other
Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor’s
Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank’s security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Licenses or sublicenses granted in the ordinary course of
Borrower’s business and any interest or title of a licensor or under any license
or sublicense, if the licenses and sublicenses permit granting Bank a security
interest;
16

Ed#: 2

*P64567/6101916/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 3472
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 17
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.17.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

17
(e) Leases or subleases granted in the ordinary course of Borrower’s
business, including in connection with Borrower’s leased premises or leased
property;
(f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank’s most recently announced "prime rate," even if it
is not Bank’s lowest rate.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" is April 30, 2002.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower’s indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
BORROWER:
TASER International, Inc.
By:

/s/ Kathleen Manrahan
--------------------------------------Title: Secretary & Chief Financial Officer
17

Ed#: 1

*P64567/6101917/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 12
CRC: 63043
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 18
Description: Exhibit 10.19

[E/O]

<PAGE>
BANK:

18

SILICON VALLEY BANK
By:

/s/ Amy Lou Blunt
--------------------------------------Title: Vice President, Relationship Manager
18
</TEXT>
</DOCUMENT>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.18.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 1

*P64567/6101918/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-23.2, Doc: 12

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-23.2
p64567a3ex23-2.txt
EX-23.2

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 15:05:10.86

PN: DOCHDR 12 SN: *
*DOCHDR/12*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 1252
P64567A3.SUB, DocName: EX-23.2, Doc: 12, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 723.02.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 23.2

[AA LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<R>
As independent public accountants, we hereby consent to the use of our report
dated April 30, 2001 (and to all references to our firm) included in or made a
part of Amendment #3 of the Registration Statement on Form SB-2.
</R>

<R>
Phoenix, Arizona
April 30, 2001
</R>
</TEXT>
</DOCUMENT>

Ed#: 7

*P64567/7230201/7*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 6

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.06.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030206/3*

6

<R>
the Corporation), business address and telephone number, residence address
and telephone number, and the number of shares of each class of stock of the
Corporation beneficially owned by that stockholder; (3) any interest of the
stockholder in the proposed business; (4) the name or names of each person
nominated by the stockholder to be elected or re-elected as a director, if any;
and (5) with respect to each nominee, that nominee’s name, business address and
telephone number, and residence address and telephone number, the number of
shares, if any, of each class of stock of the Corporation owned directly and
beneficially by that nominee, and all information relating to that nominee that
is required to be disclosed in solicitations of proxies for elections of
directors, or is other required, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, or any provision of law subsequently replacing
Regulation 14A, together with a duly acknowledged letter signed by the nominee
stating his or her acceptance of the nomination by that stockholder, stating his
or her intention to serve as a director if elected, and consenting to being
named as a nominee for director in any proxy statement relating to such
election. The person presiding at the annual meeting shall determine whether
business (including the nomination of any person as a director) has been
properly brought before the meeting and, if the facts so warrant, shall not
permit any business (or voting with respect to any particular nominee) to be
transacted that has not been properly brought before the meeting.
Notwithstanding any other provision of the Certificate of Incorporation or any
provision of law that might otherwise permit a lesser or no vote, and in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law or by the
Certificate of Incorporation, the affirmative vote of the holders of not less
than 66.67% of the voting power of the then outstanding shares of capital stock
entitled to vote thereon (the "Voting Stock"), voting together as a single
class, shall be required to amend or repeal, or to adopt a provision
inconsistent with, this Section 2.03-a.
</R>
Section 2.03-b. Date and Time. Annual meetings of stockholders shall be
held at such date and time as shall be designated by the Board of Directors and
stated in the notice of the meeting.
Section 2.03-c. Election of Directors. At each annual meeting of
stockholders beginning in 2001, the stockholders, voting as provided in the
Certificate of Incorporation or in these Bylaws, shall elect directors to
succeed directors whose terms are expiring, each such director to hold office
until the third annual meeting of stockholders after his or her election and
until his or her successor is elected and qualified or until his or her earlier
death, resignation or removal.
Section 2.04. Special Meetings.
<R>
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Certificate of Incorporation,
may only be called and proposed by: (i) the Chairman of the Board; (ii) the
Chief Executive Officer; (iii) the holder(s) of a majority of the voting power
of the Voting Stock; or (iv) the Board of Directors pursuant to a resolution
adopted by a majority of the then-authorized number of directors. Such request
shall state the purpose or purposes of the proposed meeting.
</R>
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Section 2.05. Purpose of Special Meeting.

Business transacted at any special meeting of the stockholders shall be
limited to the matters stated in the notice of such meeting, or other matters
necessarily incidental therefore.
Section 2.06. Notice of Meetings.
Notice of stockholder meetings shall be in writing. Such notice shall
state the place, date and time of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called. A copy of such
notice shall be either delivered personally or mailed, postage prepaid, to each
stockholder of record entitled to vote at such meeting pursuant to Section 2.13
hereof not less than ten (10) nor more than sixty (60) days before such meeting.
If mailed, it shall be directed to each stockholder at his or her address as it
appears upon the records of the Corporation, and upon such mailing of any such
notice, the service thereof shall be complete, and the time of the notice shall
begin to run from the date that such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice to a
corporation, an association, or a partnership shall be accomplished by personal
delivery of such notice to any officer of a corporation or an association or to
any member of a partnership.
Section 2.07. Waiver of Notice.
Notice of any meeting of the stockholders may be waived before, at, or
after such meeting in a writing signed by the stockholder or representative
thereof entitled to vote the shares so represented. Such waiver shall be filed
with the Secretary or entered upon the records of the meeting.
Section 2.08. Quorum; Adjournment.
The holders of a majority of the voting power of all shares entitled to
vote, present in person or represented by proxy, shall constitute a quorum for
the transaction of all business at meetings of the stockholders, except as may
be otherwise provided by statute or by the Certificate of Incorporation. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the original meeting in accordance with the notice thereof.
If a quorum is present when a duly called or held meeting is convened, the
stockholders present in person or represented by proxy may continue to transact
business until adjournment notwithstanding the withdrawal of enough stockholders
originally present in person or by proxy to leave less than a quorum, and for
the purposes of voting pursuant to Section 2.09 hereof, stockholders holding a
majority of the voting power of all shares entitled to vote shall be deemed to
be present in person.
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Section 2.09. Vote Required.

When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the voting power of all shares entitled to vote present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one that by express provision of statute or of
the Certificate of Incorporation or of these Bylaws requires a different vote,
in which case such express provision shall govern the vote required.
Section 2.10. Voting Rights.
Except as may be otherwise required by statute or the Certificate of
Incorporation or these Bylaws, every stockholder of record of the Corporation
shall be entitled at each meeting of the stockholders to one vote for each share
of stock standing in his or her name on the books of the Corporation.
Section 2.11. Proxies.
At any meeting of the stockholders, any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing, signed by
the stockholder, and filed with the Secretary at or before the meeting. In
addition, a stockholder may cast or authorize the casting of a vote by a proxy
by transmitting to the Corporation or the Corporation’s duly authorized agent
before the meeting, an appointment of a proxy by means of a telegram, cablegram,
or any other form of electronic transmission, including telephonic transmission,
whether or not accompanied by written instructions of the stockholder. The
electronic transmission must set forth or be submitted with information from
which it can be determined that the appointment was authorized by the
stockholder. If it is determined that a telegram, cablegram, or other electronic
transmission is valid, the inspectors of election or, if there are no
inspectors, the other persons making that determination shall specify the
information upon which they relied to make that determination.
An appointment of a proxy or proxies for shares held jointly by two or
more stockholders is valid if signed by any one of them, unless and until the
Corporation receives from any one of those stockholders written notice denying
the authority of such other person or persons to appoint a proxy or proxies or
appointing a different proxy or proxies, in which case no proxy shall be
appointed unless the instrument shall otherwise provide. No proxy shall be voted
or acted upon after three (3) years from its date, unless the proxy provides for
a longer period. Subject to the above, any duly executed proxy shall continue in
full force and effect and shall not be revoked unless written notice of its
revocation or a duly executed proxy bearing a later date is filed with the
Secretary of the Corporation. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable proxy.
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Section 2.12. Action in Writing.

Subject to the terms of any preferred stock of the Corporation, any
action required or permitted to be taken by the stockholders of the Corporation
must be taken at a duly called annual or special meeting of such stockholders or
by written consent of all (but not less than all) stockholders entitled to vote
in lieu of such a meeting.
Section 2.13. Closing of Books; Record Date.
The Board of Directors may fix, or authorize an officer to fix, a date,
not more than sixty (60) nor less than ten (10) days preceding the date of any
meeting of the stockholders of the Corporation, as a record date for the
determination of the stockholders of record on the date so fixed or their legal
representatives shall be entitled to notice of and to vote at such meeting,
notwithstanding any transfer of shares on the books of the Corporation against
the transfer of shares during the whole or any part of such period.
ARTICLE III: DIRECTORS
Section 3.01. General Powers.
The business of the Corporation shall be managed by its Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are by statute or by the Certificate of Incorporation
or by these Bylaws permitted, directed or required to be exercised or done by
the Board of Directors.
Section 3.02. Number and Qualification.
The number of directors that shall constitute the whole Board of
Directors shall from time to time be fixed exclusively by the Board of Directors
by a resolution adopted by a majority of the whole Board of Directors serving at
the time of that vote. In no event shall the number of directors that constitute
the whole Board of Directors be fewer than three (3), nor greater than nine (9).
No decrease in the number of directors shall have the effect of shortening the
term of any incumbent director. Directors of the Corporation need not be elected
by written ballot. Directors need not be stockholders.
Section 3.03. Classes and Terms.
The Board of Directors of the Corporation shall be divided into three
classes designated Class A, Class B, and Class C, respectively, all as nearly
equal in number as possible, with each director then in office receiving the
classification that at least a majority of the Board of Directors designates.
The initial term of office of directors of Class A shall expire at the annual
meeting of stockholders of the Corporation in 2001, of Class B shall expire at
the annual meeting of stockholders of the Corporation in 2002, and of Class C
shall expire at the annual meeting of stockholders of the Corporation in 2003,
and in all cases a director shall serve until the director’s successor is
elected and qualified or until his earlier death, resignation or removal. At
each annual meeting of stockholders beginning with the annual meeting of
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<R>
stockholders in 2001, each director elected to succeed a director whose term is
then expiring shall hold office until the third annual meeting of stockholders
after his or her election and until his or her successor is elected and
qualified or until his or her earlier death, resignation or removal. If the
number of directors that constitutes the whole Board of Directors is changed as
permitted by the Certificate of Incorporation or these Bylaws, the majority of
the whole Board of Directors that adopts the change shall also fix and determine
the number of directors comprising each class; provided, however, that any
increase or decrease in the number of directors shall be apportioned among the
classes as equally as possible. Notwithstanding any provision of the Certificate
of Incorporation or any provision of law that might otherwise permit a lesser or
no vote, and in addition to any affirmative vote of the holders of any
particular class or series of the capital stock of the Corporation required by
law or by the Certificate of Incorporation, the affirmative vote of 66.67% of
the Voting Stock, voting together as a single class, shall be required to amend
or repeal, or to adopt any provision inconsistent with, this Section 3.03.
</R>
Section 3.04. Vacancies.
<R>
Vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, or other cause, and
newly-created directorships resulting from any increase in the authorized number
of directors, may be filled by no less than a majority vote of the remaining
directors then in office, though less than a quorum, who are designated to
represent the same class or classes of stockholders that the vacant position,
when filled, is to represent or by the sole remaining director (but not by the
stockholders except as required by law); provided, however, that, with respect
to any directorship to be filled by the Board of Directors by reason of an
increase in the number of directors: (a) such directorship shall be for a term
of office continuing only until the next election of one or more directors by
the stockholders; and (b) the Board of Directors may not fill more than two such
directorships during the period between any two successive annual meetings of
stockholders. Each director chosen in accordance with this provision shall
receive the classification of the vacant directorship to which he or she has
been appointed or, if it is a newly-created directorship, shall receive the
classification that at least a majority of the Board of Directors designates and
shall hold office until the first meeting of stockholders held after his or her
election for the purpose of electing directors of that classification and until
his or her successor is elected and qualified or until his or her earlier death,
resignation, or removal from office. Notwithstanding any provision of the
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser or no vote, and in addition to any affirmative vote of the holders of
any particular class or series of the capital stock of the Corporation required
by law or by the Certificate of Incorporation, the affirmative vote of 66.67% of
the Voting Stock, voting together as a single class, shall be required to amend
or repeal, or to adopt any provision inconsistent with, this Section 3.04.
</R>
Section 3.05. Meetings.
Section 3.05-a. Place of Meetings. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
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Section 3.05-b. Regular Meetings. As soon as practicable after
each regular election of directors, the Board of Directors shall meet at the
registered office of the Corporation, or at such other place within or without
the State of Delaware as may be designated by the Board of Directors, for the
purpose of electing the officers of the Corporation and for the transaction of
such other business as shall come before the meeting. Other regular meetings of
the Board of Directors may be held without notice at such time and place within
and without the State of Delaware as shall from time to time be determined by
resolution of the Board of Directors.
Section 3.05-c. Special Meetings. Special meetings of the
Board of Directors may be called by the Chairman, Chief Executive Officer, or a
majority of the then directors, and shall be held at such time and place as
shall be designated in the notice thereof.
Section 3.05-d. Notice. Notice of a special meeting shall be
given to each Director at least twenty-four (24) hours before the time of the
meeting. Said notice shall be in writing and state the place, date and hour of
the meeting and the purpose or purposes for which the meeting is called.
Whenever any provision of law, the Certificate of Incorporation, or the Bylaws
require notice to be given, any director may, in writing, either before or after
the meeting, waive notice thereof. Without notice, any director, by his or her
attendance at and participation in the action taken at the meeting, shall be
deemed to have waived notice thereof.
Section 3.05-e. Quorum: Voting Requirements: Adjournment. A
majority of the Board of Directors then in office shall constitute a quorum for
the transaction of business, and the act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation or these Bylaws.
If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the meeting to another
time or place, and no notice as to such adjourned meeting need be given other
than by announcement at the meeting at which such adjournment is taken. If a
quorum is present at the call of a meeting, the directors may continue to
transact business until adjournment notwithstanding the withdrawal of enough
directors to leave less than a quorum.
Section 3.05-f. Organization of Meetings. At all meetings of
the Board of Directors, the Chairman of the Board, or in his absence, the Chief
Executive Officer, or in his absence, any director appointed by the Chief
Executive Officer, shall preside, and the Secretary, or in his absence, any
person appointed by the Chairman, shall act as Secretary.
Section 3.05-g. Action in Writing. Except as may be otherwise
required by statute or the Certificate of Incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors of the
Corporation or of any committee thereof may be taken by written consent in lieu
of a meeting, if all members of the Board or committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
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Section 3.05-h. Absent Directors. A director may give advance
written consent or opposition to a proposal to be acted on at a meeting of the
Board of Directors. Such advance written consent or opposition shall be
ineffective unless the writing is delivered to the Chief Executive Officer,
Chairman or Secretary of the Corporation prior to the meeting at which such
proposal is to be considered. If the director is not present at the meeting,
consent or opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but such consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected, such substantial
similarity to be determined in the sole judgment of the presiding officer at the
meeting.
Section 3.06. Committees.
Section 3.06-a. Designation. The Board of Directors may
designate one or more committees, each committee to consist of one or more of
the directors of the Corporation. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
Section 3.06-b. Limitations on Authority. No committees of the
Corporation shall have authority as to any of the following matters:
(a) Approving or adopting, or recommending to the
stockholders any action or matter expressly required by law to be submitted to
stockholders for approval; or
(b) Adopting, amending or repealing any bylaw of the
Corporation.
Section 3.06-c. Minutes of Committee Meetings. Committees
shall keep regular minutes of their proceedings and report the same to the Board
of Directors when required.
Section 3.07. Telephone Conference Meetings.
Any Director or any member of a duly constituted committee of the Board
of Directors may participate in any meeting of the Board of Directors or of any
duly constituted committee thereof by means of a conference telephone or other
comparable communication technique whereby all persons participating in such a
meeting can hear and communicate with each other. For the purpose of
establishing a quorum and taking any action at such a meeting, the members
participating in such a meeting pursuant to this Section 3.07 shall be deemed
present in person at such meeting.
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Section 3.08. Compensation.

Unless otherwise provided by the Board of Directors, directors shall be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors or a committee thereof. Directors who are not employees of the
Corporation shall be paid at least $500 for attendance at each meeting of the
Board of Directors, or any committee thereof, unless a different sum is fixed by
resolution of the Board of Directors. Directors may also receive other
compensation, such as stock options or grants, for their service as directors or
committee members as determined by the Board of Directors. Nothing herein
contained shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 3.09. Limitation of Director Liability.
A director shall not be liable to the Corporation or its stockholders
for dividends illegally declared, distributions illegally made to stockholders,
or any other actions taken in good faith reliance upon financial statements of
the Corporation represented to the director to be correct by the Chief Executive
Officer of the Corporation or the officer having charge of its books of account
or certified by an independent or certified public accountant to fairly reflect
the financial condition of the Corporation; nor shall the director be liable if
in good faith in determining the amount available for dividends or distributions
the Board values the assets in a manner allowable under applicable law.
Section 3.10. Resignation and Removal.
<R>
A director may resign at any time by giving written notice to the
Secretary or Assistant Secretary. Such resignation shall take effect on the date
of the receipt of such notice or at such later date as specified therein. A
director of any class of directors of the Corporation may be removed before the
expiration date of that director’s term of office only by an affirmative vote of
the holders of 66.67% of the voting power of the Voting Stock, voting together
as a single class. Notwithstanding any provision of the Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, and in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law or by
the Certificate of Incorporation, the affirmative vote of 66.67% of the Voting
Stock, voting together as a single class, shall be required to amend or repeal,
or to adopt any provision inconsistent with, this Section 3.10.
</R>
ARTICLE IV: OFFICERS
Section 4.01. Selection: Qualifications.
Section 4.01-a. Election: Qualifications. The Board of
Directors at its next meeting after each annual meeting of the stockholders
shall choose a Chairman of the Board, a Chief Executive Officer, a Secretary, a
Chief Financial Officer, and such other officers or agents as it deems
necessary, none of whom need be members of the Board.
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Section 4.01-b. Additional Officers. The Board of Directors
may choose a President, additional Vice Presidents, Assistant Secretaries and
Assistant Treasurers and such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
Section 4.02. Salaries.
The salaries of all officers, and of the Chairman of the Corporation,
shall be fixed by the Board of Directors on an annual basis.
Section 4.03. Term of Office.
The officers of the Corporation shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
Board of Directors may be removed at any time with or without cause by the
affirmative vote of a majority of the Board of Directors. Any officer may resign
at any time by giving written notice to the Chief Executive Officer or the
Secretary of the Corporation. Any vacancy occurring in any office of the
Corporation by death, resignation, removal, or otherwise shall be filled by the
Board of Directors.
Section 4.04. Chairman of the Board.
The Chairman of the Board of Directors shall preside at all meetings of
the Board of Directors and of the stockholders and shall perform such other
duties as he or she may be directed to perform by the Board of Directors.
Section 4.05. Chief Executive Officer.
The Chief Executive Officer of the Corporation shall have general
active management of the business of the Corporation. Unless the Board has
elected a Chairman of the Board of Directors, the Chief Executive Officer shall
preside at meetings of the stockholders of the Corporation and at meetings of
the Board of Directors. The Chief Executive Officer may execute and deliver in
the name of the Corporation any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the Corporation, except in cases in
which the authority to sign and deliver is required by law to be exercised by
another person or is expressly delegated by the Board to some other officer or
agent of the Corporation; may delegate the authority to execute and deliver
documents to other officers of the Corporation; shall maintain records of and,
whenever necessary, certify any proceedings of the stockholders and the Board;
shall perform such other duties as may from time to time be prescribed by the
Board; and, in general, shall perform all duties usually incident to the office
of the Chief Executive Officer.
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Section 4.06. President.

The President of the Corporation shall have general active management
of the business of the Corporation in the absence or disability of the Chief
Executive Officer. He shall also generally assist the Chief Executive Officer
and exercise such other powers and perform such other duties as are delegated to
him by the Chief Executive Officer or Chairman, or as the Board of Directors
shall prescribe.
Section 4.07. Vice-Presidents.
Unless otherwise determined by the Board of Directors, the Vice
Presidents, if any, shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President. They shall also
generally assist the Chief Executive Officer and the President and exercise such
other powers and perform such other duties as are delegated to them by the Chief
Executive Officer or the President or as the Board of Directors shall prescribe.
Section 4.08. Secretary and Assistant Secretary.
The Secretary or Assistant Secretary shall attend all meetings of the
stockholders and of the Board of Directors and shall record all the proceedings
of the meetings of the stockholders and of the Board of Directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required, and shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Chairman or the
Board of Directors, under whose supervision he shall be.
The Assistant Secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of inability or refusal to act by the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Chairman, or Board
of Directors, may, from time to time, prescribe.
Section 4.09. Chief Financial Officer.
Section 4.09-a. Custody of Funds and Accounting. The Chief
Financial Officer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors.
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Section 4.09-b. Disbursements and Reports. The Chief Financial
Officer shall disburse the funds of the Corporation as may be ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Chief Executive Officer and the Board of Directors, at the regular
meetings of the Board, or when the Board of Directors so requires, an account of
all his transactions as Chief Financial Officer and of the financial condition
of the Corporation.
Section 4.09-c. Bond. If required by the Board of Directors,
the Chief Financial Officer shall give the Corporation a bond in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the
restoration, upon the expiration of his term of office or his resignation,
retirement, or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
ARTICLE V. CERTIFICATES FOR SHARES
Section 5.01. Issuance of Shares and Fractional Shares.
The Board of Directors is authorized to issue shares and fractional
shares of stock of the Corporation up to the full amount authorized by the
Certificate of Incorporation in such amounts as may be determined by the Board
of Directors and as permitted by law.
Section 5.02. Form of Certificate.
The shares of the Corporation shall be represented by certificates,
provided that the Board of Directors of the Corporation may resolve that some or
all of any or all classes or series of its stock will be uncertificated shares
as provided in Section 5.06. Certificates shall be signed by the Chairman of the
Board or the President and by the Secretary or Assistant Secretary of the
Corporation, certifying the number of shares of capital stock owned by him in
the Corporation. If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the designations,
preferences, and relative, participating, optional, or other special rights of
the various classes of stock or series thereof and the qualifications,
limitations, or restrictions of such rights, together with a statement of the
authority of the Board of Directors to determine the relative rights and
preferences of subsequent classes or series, shall be set forth in full on the
face or back of the certificate which the Corporation shall issue to represent
such stock, or, in lieu thereof, such certificate shall contain a statement that
the stock is, or may be, subject to certain rights, preferences, or restrictions
and that a statement of the same will be furnished without charge by the
Corporation upon request by any stockholder. Certificates representing the
shares of the capital stock of the Corporation shall be in such form not
inconsistent with law or the Certificate of Incorporation or these Bylaws as
shall be determined by the Board of Directors.
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Section 5.03. Facsimile Signatures.

Whenever any certificate is countersigned or otherwise authenticated by
a transfer agent, transfer clerk, or registrar, then a facsimile of the
signatures of the officers or agents of the Corporation may be printed or
lithographed upon such certificate in lieu of the actual signatures. In case any
officer or officers who shall have signed, or whose facsimile signature shall
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation,
or otherwise, before such certificate or certificates shall have been delivered
by the Corporation, such certificate or certificates may nevertheless be adopted
by the Corporation and be signed and delivered as though the person or persons
who signed such certificate or certificates, or whose facsimile signature or
signatures shall have been used thereon, had not ceased to be the officer or
officers of the Corporation.
Section 5.04. Lost, Stolen, or Destroyed Certificates.
The Board of Directors may direct a certificate or certificates to be
issued in place of a certificate or certificates previously issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates or uncertificated shares, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 5.05. Transfers of Stock.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books;
except that the Board of Directors may, by resolution duly adopted, establish
conditions upon the transfer of shares of stock to be issued by the Corporation,
and the purchasers of such shares shall be deemed to have accepted such
conditions on transfer upon the receipt of the certificate representing such
shares, provided that the restrictions shall be referred to on the certificates
or the purchaser shall have otherwise been notified thereof.
Section 5.06. Uncertificated Shares.
Unless prohibited by the Certificate of Incorporation or these Bylaws,
some or all of any or all classes and series of the Corporation’s shares may be
uncertificated shares. Upon receipt of proper transfer instructions from the
registered owner of uncertificated shares, such uncertificated shares shall be
canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the Corporation. Within a reasonable time after the
issuance or
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transfer of uncertificated shares, the Corporation shall send to the
new stockholder the information required by Section 5.02 to be stated on
certificates. If this Corporation becomes a publicly held corporation which
adopts, in compliance with Section 17 of the Securities Exchange Act of 1934, a
system of issuance, recordation, and transfer of its shares by electronic or
other means not involving an issuance of certificates, this information is not
required to be sent to new stockholders.
Section 5.07. Closing of Transfer Books: Record Date.
The Board of Directors or an officer of the Corporation authorized by
the Board may close the stock transfer books of the Corporation for a period not
exceeding sixty (60) days preceding the date of any meeting of stockholders as
provided in Section 2.13 hereof or the date for payment of any dividend as
provided in Section 6.02 hereof or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect. In lieu of closing the stock transfer books as aforesaid, the Board of
Directors or an officer of the Corporation authorized by the Board may fix, in
advance, a date, not exceeding sixty (60) days preceding the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to receive
payment.
Section 5.08. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive right of
the persons registered on its books as the owners of shares to receive dividends
and to vote as such owners and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided in the laws of Delaware.
Section 5.09. Stock Options and Agreements.
In addition to any stock options, plans, or agreements into which the
Corporation may enter, any stockholder of the Corporation may enter into an
agreement giving any other stockholder or stockholders or any third party an
option to purchase any of his stock in the Corporation, and such shares of stock
shall thereupon be subject to such agreement and transferable only upon proof of
compliance therewith; provided, however, that a copy of such agreement shall be
filed with the Corporation and reference thereto placed upon the certificates
representing said shares of stock.
ARTICLE VI: DIVIDENDS
Section 6.01. Method of Payment.
Dividends upon the capital stock of the Corporation may be declared by
the Board of Directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
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Section 6.02. Closing of Books: Record Date.

The Board of Directors or an officer of the Corporation authorized by
the Board may fix a date not exceeding sixty (60) days preceding the date fixed
for the payment of any dividend as the record date for the determination of the
stockholders entitled to receive payment of the dividend and, in such case, only
stockholders of record on the date so fixed shall be entitled to receive payment
of such dividend notwithstanding any transfer of shares on the books of the
Corporation after the record date. The Board of Directors or an officer of the
Corporation authorized by the Board may close the books of the Corporation
against the transfer of shares during the whole or any part of such period. If
the Board of Directors or an officer of the Corporation authorized by the Board
fails to fix such a record date, the record date shall be the thirtieth (30th)
day preceding the date of such payment.
Section 6.03. Reserves.
Before payment of any dividend, there may be set aside out of the funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves for meeting contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board shall think conducive to the interest of the Corporation,
and the Board may modify or abolish any such reserve in the manner in which it
was created.
ARTICLE VII: CHECKS
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
ARTICLE VIII: CORPORATE SEAL
The Corporation shall have no corporate seal.
ARTICLE IX: FISCAL YEAR
The fiscal year of the Corporation shall end on December 31 unless
otherwise fixed by resolution of the Board of Directors.
ARTICLE X: AMENDMENTS
<R>
These Bylaws shall not be adopted, altered, amended or repealed except
in accordance with the provisions of the Certificate of Incorporation and these
Bylaws. Unless a different requirement is mandated by the Certificate of
Incorporation or these Bylaws, adoption, alteration, amendment or repeal of
these Bylaws requires the affirmative action of a majority of the directors then
in office or the vote of the holders of not less than 66.67% of the Voting
Stock, voting together as a single class, at an annual meeting of the
stockholders or any special meeting of the stockholders.
</R>
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ARTICLE XI: BOOKS AND RECORDS
Section 11.01. Books and Records.
The Board of Directors of the Corporation shall cause to be kept:

Section 11.01-a. A share register not more than one year old,
giving the names and addresses of the stockholders, the number and classes held
by each, and the dates on which the certificated or uncertificated shares were
issued;
Section 11.01-b. Records of all proceedings of stockholders
and directors; and
Section 11.01-c. Such other records and books of account as
shall be necessary and appropriate to the conduct of the corporate business.
Section 11.02. Computerized Records.
The records maintained by the Corporation, including its share
register, financial records, and minute books, may utilize any information
storage technique, including, for example, computer memory or microimages, even
though that makes them illegible visually, if the records can be converted, by
machine and within a reasonable time, into a form that is legible visually and
whose contents are assembled by related subject matter to permit convenient use
by persons in the normal course of business.
Section 11.03. Examination and Copying by Stockholders.
Every stockholder of record of the Corporation shall have a right to
examine, in person or by agent or attorney, at any reasonable time or times, at
the place or places where usually kept, and upon the showing of a proper
purpose, the Corporation’s stock ledger, a list of its stockholders and its
other books and records, and to make copies or extracts therefrom.
ARTICLE XII: LOANS AND ADVANCES
Section 12.01. Loans, Guarantees, and Suretyship.
The Corporation may lend money to, guarantee an obligation of, become a
surety for, or otherwise financially assist a person, if the transaction, or a
class of transactions to which the transaction belongs, is approved by the
affirmative vote of a majority of the directors present at a lawfully convened
meeting and such action: (a) is in the usual and regular course of business of
the Corporation; (b) is with, or for the benefit of, a related corporation, an
organization with which the Corporation has the power to make donations; (c) is
with, or for the benefit of, an officer or other employee of the Corporation or
a subsidiary, including an officer or employee who is a director of the
Corporation or a subsidiary, and may reasonably be expected, in the judgment of
the Board of Directors, to benefit the Corporation; or (d) has been approved by
the
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affirmative vote of the holders of seventy-five percent (75%) of the Voting
Stock, voting together as a single class. The loan, guarantee, or other
assistance may be with or without interest and may be unsecured or may be
secured in any manner that a majority of the Board of Directors approves,
including, without limitation, a pledge of or other security interest in shares
of the Corporation.
Section 12.02. Advances to Officers, Directors, and Employees.
The Corporation may, without a vote of the directors, advance money to
its directors, officers, or employees to cover expenses that can reasonably be
anticipated to be incurred by them in the performance of their duties and for
which they would be entitled to reimbursement in the absence of an advance.
ARTICLE XIII: INDEMNIFICATION
Section 13.01. Directors and Officers
Section 13.01-a. Indemnity in Third-Party Proceedings. The
Corporation shall indemnify its directors and officers in accordance with the
provisions of this Section 13.01-a if the director or officer was or is a party
to, or is threatened to be made a party to, any proceeding (other than a
proceeding by or in the right of the Corporation to procure a judgment in its
favor), against all expenses, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by the director or officer in connection with
such proceeding if the director or officer acted in good faith and in a manner
the director or officer reasonably believed was in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, the director or officer, in addition, had no reasonable cause to
believe that the director’s or officer’s conduct was unlawful; provided,
however, that the director or officer shall not be entitled to indemnification
under this Section 13.01-a: (1) in connection with any proceeding charging
improper personal benefit to the director or officer in which the director or
officer is adjudged liable on the basis that personal benefit was improperly
received by the director or officer unless and only to the extent that the court
conducting such proceeding or any other court of competent jurisdiction
determines upon application that, despite the adjudication of liability, the
director or officer is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, or (2) in connection with any proceeding (or
part thereof) initiated by such person or any proceeding by such person against
the Corporation or its directors, officers, employees or other agents unless:
(A) such indemnification is expressly required to be made by law, (B) the
proceeding was authorized by the Board of Directors, or (C) such indemnification
is provided by the Corporation, in its sole discretion, pursuant to the powers
vested in the Corporation under the Delaware General Corporation Law.
Section 13.01-b. Indemnity in Proceedings by or in the Right
of the Corporation. The Corporation shall indemnify its directors and officers
in accordance with the provisions of this Section 13.01-b if the director or
officer was or is a party to, or is threatened to be made a party to, any
proceeding by or in the right of the Corporation to procure a judgment in its
favor, against all expenses actually and reasonably incurred by the director or
officer in connection with the defense or settlement of such proceeding if the
director or officer acted in good faith and in a manner the director or officer
reasonably believed was in or not opposed to the best interests of the
corporation; provided, however, that the director or officer shall not be
entitled to indemnification under this Section 13.01-b: (1) in connection with
any proceeding in which the director or officer has been adjudged liable to the
Corporation unless and only to the extent that the court conducting such
proceeding, or the Delaware Court of Chancery, determines
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upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnification for such expenses as such court shall deem proper,
or (2) in connection with any proceeding (or part thereof) initiated by such
person or any proceeding by such person against the Corporation or its
directors, officers, employees or other agents unless (A) such indemnification
is expressly required to be made by law, (B) the proceeding was authorized by
the Board of Directors, or (C) such indemnification is provided by the
Corporation, in its sole discretion, pursuant to the powers vested in the
Corporation under the Delaware General Corporation Law.
Section 13.02. Employees and Other Agents
The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those conferred
in this Article XIII to directors and officers of the Corporation.
Section 13.03. Good Faith.
Section 13.03-a. For purposes of any determination under this
Article XIII, a director or officer shall be deemed to have acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding to have had no reasonable cause to believe that his or her conduct
was unlawful, if his or her action is based on information, opinions, reports
and statements, including financial statements and other financial data, in each
case prepared or presented by:
1. one or more officers or employees of the
Corporation whom the director or officer believed to be reliable and competent
in the matters presented;
2. counsel, independent accountants or other persons
as to matters which the director or officer believed to be within such person’s
professional or expert competence; or
3. with respect to a director, a committee of the
Board of Directors upon which such director does not serve, as to matters within
such committee’s designated authority, which committee the director believes to
merit confidence; so long as, in each case, the director or executive officer
acts without knowledge that would cause such reliance to be unwarranted.
Section 13.03-b. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal proceeding, that he had reasonable cause to believe that his or her
conduct was unlawful.
Section 13.03-c. The provisions of this Section 13.03 shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
by the Delaware General Corporation Law.
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Section 13.04. Advances of Expenses

The Corporation shall pay the expenses incurred by its directors or
officers in any proceeding (other than a proceeding brought for an accounting of
profits made from the purchase and sale by the director or officer of securities
of the corporation within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provision of any state statutory
law or common law) in advance of the final disposition of the proceeding at the
written request of the director or officer, if the director or officer: (a)
furnishes the Corporation a written affirmation of the director’s or officer’s
good faith belief that the director or officer is entitled to be indemnified
under this Article XIII, and (b) furnishes the Corporation a written undertaking
to repay the advance to the extent that it is ultimately determined that the
director or officer is not entitled to be indemnified by the Corporation. Such
undertaking shall be an unlimited general obligation of the director or officer
but need not be secured. Advances pursuant to this Section 13.04 shall be made
no later than 10 days after receipt by the Corporation of the affirmation and
undertaking described in clauses (a) and (b) above, and shall be made without
regard to the director’s or officer’s ability to repay the amount advanced and
without regard to the director’s or officer’s ultimate entitlement to
indemnification under this Article XIII. The Corporation may establish a trust,
escrow account or other secured funding source for the payment of advances made
and to be made pursuant to this Section 13.04 or of other liability incurred by
the director or officer in connection with any proceeding.
Section 13.05. Enforcement
Without the necessity of entering into an express contract, all rights
to indemnification and advances to directors and officers under this Article
XIII shall be deemed to be contractual rights and be effective to the same
extent and as if provided for in a contract between the Corporation and the
director or officer. Any director or officer may enforce any right to
indemnification or advances under this Article XIII in any court of competent
jurisdiction if: (a) the Corporation denies the claim for indemnification or
advances, in whole or in part, or (b) the Corporation does not dispose of such
claim within 45 days of request therefor. It shall be a defense to any such
enforcement action (other than an action brought to enforce a claim for
advancement of expenses pursuant to, and in compliance with, Section 13.01 of
this Article XIII) that the director or officer is not entitled to
indemnification under this Article XIII. However, except as provided in Section
13.12 of this Article XIII, the Corporation shall not assert any defense to an
action brought to enforce a claim for advancement of expenses pursuant to
Section 13.04 of this Article XIII if the director or officer has tendered to
the Corporation the affirmation and undertaking required thereunder. The burden
of proving by clear and convincing evidence that indemnification is not
appropriate shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors or independent legal counsel) to have made a
determination prior to the commencement of such action that indemnification is
proper in the circumstances because the director or officer has met the
applicable standard of conduct nor an actual determination by the Corporation
(including its Board of Directors or independent legal counsel) that
indemnification is improper because the director or officer has not met such
applicable standard of conduct, shall be asserted as a defense to the action or
create a presumption that the director or officer is not entitled to
indemnification under this Article XIII or otherwise. The director’s or
officer’s expenses incurred in connection with successfully establishing such
person’s right to indemnification or advances, in whole or in part, in any
proceeding shall also be paid or reimbursed by the Corporation.
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Section 13.06. Non-Exclusivity of Rights

The rights conferred on any person by this Article XIII shall not be
exclusive of any other right which such person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding office. The Corporation is authorized to enter into individual
contracts with any or all of its directors, officers, employees or agents
respecting indemnification and advances, to the fullest extent not prohibited by
the Delaware General Corporation Law.
Section 13.07. Survival of Rights
The rights conferred on any person by this Article XIII shall continue
as to a person who has ceased to be a director, officer, employee or other agent
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
Section 13.08. Insurance
To the fullest extent permitted by the Delaware General Corporation
Law, the Corporation, upon approval by the Board of Directors, may purchase
insurance on behalf of any person required or permitted to be indemnified
pursuant to this Article XIII.
Section 13.09. Amendments
Any repeal or modification of this Article XIII shall only be
prospective and shall not affect the rights under this Article XIII in effect at
the time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any director, officer, employee or agent of the
Corporation.
Section 13.10. Savings Clause
If this Article XIII or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director and officer to the full extent not
prohibited by any applicable portion of this Article XIII that shall not have
been invalidated, or by any other applicable law.
Section 13.11. Certain Definitions
For the purposes of this Article XIII, the following definitions shall
apply:
Section 13.11-a. The term "PROCEEDING" shall include any
threatened, pending or completed action, suit or proceeding, whether brought in
the right of the Corporation or otherwise, and whether of a civil, criminal,
administrative or investigative nature, in which the director or officer may be
or may have been involved as a party, witness or otherwise, by reason of the
fact that the director or officer is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, whether or not serving in such capacity at
the time any liability or expense is incurred for which indemnification or
reimbursement can be provided under this Article XIII.
Bylaws-Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 25

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.25.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030225/3*

25

Section 13.11-b. The term "EXPENSES" includes, without
limitation thereto, expenses of investigations, judicial or administrative
proceedings or appeals, attorney, accountant and other professional fees and
disbursements and any expenses of establishing a right to indemnification under
this Article XIII, but shall not include amounts paid in settlement by the
director or officer or the amount of judgments or fines against the director or
officer.
Section 13.11-c. References to "OTHER ENTERPRISE" include,
without limitation, employee benefit plans; references to "FINES" include,
without limitation, any excise taxes assessed on a person with respect to any
employee benefit plan; references to "SERVING AT THE REQUEST OF THE Corporation"
include, without limitation, any service as a director, officer, employee or
agent which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
its beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "NOT OPPOSED TO THE BEST INTERESTS OF THE CORPORATION" as referred to in
this Article XIII.
Section 13.11-d. References to "THE CORPORATION" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer or employee of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this Article XIII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
Section 13.11-e. The meaning of the phrase "TO THE FULLEST
EXTENT PERMITTED BY LAW" shall include, but not be limited to: (i) to the
fullest extent authorized or permitted by any amendments to or replacements of
the Delaware General Corporation Law adopted after the date of this Article XIII
that increase the extent to which a corporation may indemnify its directors and
officers, and (ii) to the fullest extent permitted by the provision of the
Delaware General Corporation Law that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any amendment to
or replacement of the Delaware General Corporation Law.
Section 13.12. Notification and Defense of Claim
As a condition precedent to indemnification under this Article XIII,
not later than 30 days after receipt by the director or officer of notice of the
commencement of any proceeding the director or officer shall, if a claim in
respect of the proceeding is to be made against the Corporation under this
Article XIII, notify the Corporation in writing of the commencement of the
proceeding. The failure to properly notify the Corporation shall not relieve the
Corporation from any liability which it may have to the director or officer
otherwise than under this Article XIII. With respect to any proceeding as to
which the director or officer so notifies the Corporation of the commencement:
Section 13.12-a. The Corporation shall be entitled to
participate in the proceeding at its own expense.
Bylaws-Taser International, Inc.
Page 21

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 26

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.26.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6030226/3*

26

Section 13.12-b. Except as otherwise provided in this Section
13.12, the Corporation may, at its option and jointly with any other
indemnifying party similarly notified and electing to assume such defense,
assume the defense of the proceeding, with legal counsel reasonably satisfactory
to the director or officer. The director or officer shall have the right to use
separate legal counsel in the proceeding, but the Corporation shall not be
liable to the director or officer under this Article XIII for the fees and
expenses of separate legal counsel incurred after notice from the Corporation of
its assumption of the defense, unless (1) the director or officer reasonably
concludes that there may be a conflict of interest between the Corporation and
the director or officer in the conduct of the defense of the proceeding, or (2)
the Corporation does not use legal counsel to assume the defense of such
proceeding. The Corporation shall not be entitled to assume the defense of any
proceeding brought by or on behalf of the Corporation or as to which the
director or officer has made the conclusion provided for in (1) above.
Section 13.12-c. If two or more persons who may be entitled to
indemnification from the Corporation, including the director or officer seeking
indemnification, are parties to any proceeding, the Corporation may require the
director or officer to use the same legal counsel as the other parties. The
director or officer shall have the right to use separate legal counsel in the
proceeding, but the Corporation shall not be liable to the director or officer
under this Article XIII for the fees and expenses of separate legal counsel
incurred after notice from the Corporation of the requirement to use the same
legal counsel as the other parties, unless the director or officer reasonably
concludes that there may be a conflict of interest between the director or
officer and any of the other parties required by the Corporation to be
represented by the same legal counsel.
Section 13.12-d. The Corporation shall not be liable to
indemnify the director or officer under this Article XIII for any amounts paid
in settlement of any proceeding effected without its written consent, which
shall not be unreasonably withheld. The director or officer shall permit the
Corporation to settle any proceeding that the Corporation assumes the defense
of, except that the Corporation shall not settle any action or claim in any
manner that would impose any penalty or limitation on the director or officer
without such person’s written consent.
Section 13.13. Exclusions
Notwithstanding any provision in this Article XIII, the Corporation
shall not be obligated under this Article XIII to make any indemnification in
connection with any claim made against any director or officer: (a) for which
payment is required to be made to or on behalf of the director or officer under
any insurance policy, except with respect to any excess amount to which the
director or officer is entitled under this Article XIII beyond the amount of
payment under such insurance policy; (b) if a court having jurisdiction in the
matter finally determines that such indemnification is not lawful under any
applicable statute or public policy; (c) in connection with any proceeding (or
part of any proceeding) initiated by the director or officer, or any proceeding
by the director or officer against the Corporation or its directors, officers,
employees or other persons entitled to be indemnified by the Corporation,
unless: (1) the Corporation is expressly required by law to make the
indemnification; (2) the proceeding was authorized by the Board of Directors of
the Corporation; or (3) the director or officer initiated the proceeding
pursuant to Section 13.05 of this Article XIII and the director or officer is
successful in whole or in part in such proceeding; or (d) for an accounting of
profits made from the purchase and sale by the director or officer of securities
of the Corporation within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provision of any state statutory
law or common law.
Bylaws-Taser International, Inc.
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BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-3.2, Doc: 4, Page: 27

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 603.02.27.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

27
Section 13.14. Subrogation

In the event of payment under this Article XIII, the Corporation shall
be subrogated to the extent of such payment to all of the rights of recovery of
the director or officer. The director or officer shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable the Corporation effectively to bring suit to enforce such rights.
ARTICLE XIV: DEFINITIONS AND USAGE
Whenever the context of these Bylaws requires, the plural shall be read
to include the singular, and vice versa; and words of the masculine gender shall
refer to the feminine gender, and vice versa; and words of the neuter gender
shall refer to any gender.
<R>
The undersigned, Secretary of the Corporation, hereby certifies that
the foregoing is a true and complete copy of the Corporation’s Bylaws as amended
effective April 10, 2001 and the same have not been modified and remain in full
force and effect on the date of this certificate.
</R>
<R>
Dated:

April 24, 2001.

</R>
<R>
</R>

/s/ Kathleen C. Hanrahan
_______________________________
Kathleen C. Hanrahan, Secretary

372437 V4
Bylaws-Taser International, Inc.
Page 23
</TEXT>
</DOCUMENT>

Ed#: 5

*P64567/6030227/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-4.3, Doc: 5

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-4.3
p64567a3ex4-3.txt
EX-4.3

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 5

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/5*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 7602
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 1
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 4.3
VOID AFTER 5:00 P.M. PACIFIC TIME ON __________, 2006
WARRANTS TO PURCHASE COMMON STOCK

W-_____

Ed#: 4

*P64567/6040301/4*

_________Warrants
TASER INTERNATIONAL, INC.
CUSIP ______________
THIS CERTIFIES THAT

or registered assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from TASER International, Inc., a corporation incorporated under the
laws of the state of Delaware (the "Company"), subject to the terms and
conditions set forth hereinafter and in the Warrant and Unit Agreement
hereinafter more fully described (the "Warrant Agreement"), at any time on or
before the close of business on __________, 2006 or, if such Warrant is redeemed
as provided in the Warrant Agreement, at any time prior to the effective time of
such redemption (the "Expiration Date"), one fully paid and non-assessable share
of Common Stock of the Company (the "Common Stock") upon presentation and
surrender of this Warrant Certificate, with the instructions for the
registration and delivery of Common Stock filled in, at the stock transfer
office in Glendale, California, of U.S. Stock Transfer Corporation, Warrant
Agent of the Company (the "Warrant Agent") or of its successor warrant agent or,
if there be no successor warrant agent, at the corporate offices of the Company,
and upon payment of the Exercise Price (as defined in the Warrant Agreement) and
any applicable taxes paid either in cash, or by certified or official bank
check, payable in lawful money of the United States of America to the order of
the Company. Each Warrant entitles the holder to purchase one share of Common
Stock initially for one hundred ten percent (110%) of: two-thirds of the Initial
Public Offering price of the Units (the "Exercise Price"). The number and kind
of securities or other property for which the Warrants are exercisable are
subject to further adjustment in certain events, such as mergers, splits, stock
dividends, recapitalizations and the like, to prevent dilution. Upon 30 days
notice, the Company may redeem any or all outstanding and unexercised Warrants
at any time if the basic net income per share of Common Stock as confirmed by an
audit conducted in accordance with generally accepted accounting principles
applicable in the United States (which such audit may be conducted with respect
to any fiscal year of the Company or any other 12-month period ending on the
last day of a fiscal quarter of the Company, in the Company’s sole discretion),
for an audited 12-month period preceding the date of such notice is equal to or
greater than $1.00, at a price of $0.25 per Warrant. All Warrants not
theretofore exercised or redeemed will expire on _________, 2006.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 43039
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 2
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040302/3*

2

This Warrant Certificate is subject to all of the terms,
provisions and conditions of the Warrant Agreement, dated as of ____________,
2001 (the "Warrant Agreement"), between the Company and the Warrant Agent, to
all of which terms, provisions and conditions the registered holder of this
Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
incorporated herein by reference and made a part hereof and reference is made to
the Warrant Agreement for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Warrant Agent, the Company and
the holders of the Warrant Certificates. Copies of the Warrant Agreement are
available for inspection at the stock transfer office of the Warrant Agent or
may be obtained upon written request addressed to the Company at 7860 East
McClain Drive, Suite 2, Scottsdale, Arizona 85260, Attention: Chief Financial
Officer.
The Company shall not be required upon the exercise of the
Warrants evidenced by this Warrant Certificate to issue fractions of Warrants,
Common Stock or other securities, but shall make adjustment therefor in cash on
the basis of the current market value of any fractional interest as provided in
the Warrant Agreement.
In certain cases, the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States,
certain states thereof or other jurisdictions. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement to continue to
be effective during the term of the Warrants with respect to such sales under
the Securities Act of 1933, as amended, and to take such action under the laws
of various states as may be required to cause the sale of securities upon
exercise to be lawful. However, the Company will not be required to honor the
exercise of Warrants if, in the opinion of the Board of Directors, upon advice
of counsel, the sale of securities upon such exercise would be unlawful. In
certain cases, the Company may, but is not required to, purchase Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Warrants.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender to the Warrant Agent, any successor warrant agent
or, in the absence of any successor warrant agent, at the corporate offices of
the Company, may be exchanged for another Warrant Certificate or Certificates
evidencing in the aggregate the same number of Warrants as the Warrant
Certificate or Certificates so surrendered. If the Warrants evidenced by this
Warrant Certificate shall be exercised in part, the holder hereof shall be
entitled to receive upon surrender hereof another Warrant Certificate or
Certificates evidencing the number of Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be
entitled to vote, receive dividends or be deemed the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose whatever, nor shall anything contained in the
Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof or give or withhold consent to any
corporate action (whether upon any matter submitted to stockholders at any
meeting thereof, or give or withhold consent to any merger,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 19679
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 3
Description: ex-4.3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040303/3*

<PAGE>
3
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, conveyance or
otherwise) or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Warrant Agreement) or to receive
dividends or subscription rights or otherwise until the Warrants evidenced by
this Warrant Certificate shall have been exercised and the Common Stock
purchasable upon the exercise thereof shall have become deliverable as provided
in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise
within any period during which the transfer books for the Company’s Common Stock
or other class of stock purchasable upon the exercise of the Warrants evidenced
by this Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent, and with every other
holder of a Warrant Certificate that:
(a) This Warrant Certificate is transferable on the registry
books of the Warrant Agent only upon the terms and conditions set forth in the
Warrant Agreement; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name this Warrant Certificate is registered as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all purposes
whatever and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 22
CRC: 44025
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 4
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

4

WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal.
Dated: _______________ , 2001

TASER International, Inc.

By: _____________________________
Patrick W. Smith,
Chief Executive Officer
Attest: _________________________
Secretary
Countersigned
U.S. Stock Transfer Corporation
By: ________________________________
Authorized Officer

Ed#: 3

*P64567/6040304/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 50
CRC: 47278
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 5
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.05.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

5
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE THE
WARRANTS IN WHOLE OR IN PART)

To: TASER INTERNATIONAL, INC.
The undersigned Registered Holder

(

Ed#: 4

*P64567/6040305/4*

)

_______________________________________
(Please insert Social Security or other
identification number of Registered Holder)
hereby irrevocably elects to exercise the right of purchase represented by the
within this Warrant Certificate for, and to purchase thereunder, _______________
shares of Common Stock provided for therein and tenders payment herewith to the
order of TASER INTERNATIONAL, INC. in the amount of $________________. The
undersigned requests that certificates for such shares of Common Stock be issued
as follows:
Name:________________________________________________________________________
Address:______________________________________________________________________
Deliver to:___________________________________________________________________
Address:______________________________________________________________________
and if said number of Warrants being exercised shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Certificate for the balance of
such Warrants as well as the shares of Common Stock represented by this Warrant
Certificate be registered in the name of, and delivered to, the Registered
Holder at the address stated below:
Address:_____________________________________________________________________
Dated:_____________, _______
Signature
_______________________________________
(Signature must conform in all respects to the name of Registered Holder as
specified in the case of this Warrant Certificate in every particular, without
alteration or any change whatever.)
Signature Guaranteed:
_______________________________________
The signature should be guaranteed by an eligible institution (Banks,
Stockbrokers, Savings and Loan Association and Credit Union with membership in
an approved signature Medallion Program), pursuant to S.E.C. Rule 17Ad-15.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 48
CRC: 40330
P64567A3.SUB, DocName: EX-4.3, Doc: 5, Page: 6
Description: ex-4.3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.03.06.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040306/3*

6
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (

)

_______________________________________
(Please insert
Social Security or other
identification number of
Registered Holder)
hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print Name and Address including Zip Code)
Warrants evidenced by the within Warrant Certificate, and
irrevocably constitutes and appoints

______________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of TASER International, Inc.
with the full power of substitution in the premises.
Dated:__________________, ________
Signature:
_________________________________
(Signature must conform in all respects to the name of Registered Holder as
specified on the face of this Unit Certificate in every particular, without
alteration or any change whatsoever, and the signature must be guaranteed in the
usual manner.)
Signature Guaranteed:
_________________________________
The signature should be guaranteed by an eligible institution (Banks,
Stockbrokers, Savings and Loan Association and Credit Union with membership in
an approved signature Medallion Program), pursuant to S.E.C. Rule 17Ad-15.
</TEXT>
</DOCUMENT>

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-4.5, Doc: 6

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-4.5
p64567a3ex4-5.txt
EX-4.5

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 6

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/6*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 63769
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 1
Description: ex-4.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040501/3*

1
Exhibit 4.5
WARRANT AND UNIT AGREEMENT

TASER International, Inc., 7860 E. McClain Drive, Suite 2, Scottsdale, Arizona
85260, a Delaware corporation ("Company"), and US Stock Transfer Corporation,
1745 Gardena Avenue, Glendale, California, a _________ corporation ("Transfer
Agent"), agree as follows:
1. PURPOSE. The Company proposes to publicly offer and issue in an initial
public offering (the "Offering") ____________ units ("Units"). Each Unit will
entitle the registered holder of a Unit ("Unit Holder") to (i) one and one-half
(1.5) shares of the Company’s $0.00001 par value common stock ("Share") and (ii)
one and one-half (1.5) warrants, each whole warrant permitting the purchase of
one (1) Share ("Warrant").
2. WARRANTS. Each Warrant will entitle the registered holder of a Warrant
("Warrant Holder") to purchase from the Company one (1) Share at one hundred ten
percent (110%) of: two-thirds of the Initial Public Offering price of the Units
(the "Exercise Price"). A Warrant Holder may exercise all or any number of
Warrants resulting in the purchase of a whole number of Shares.
3. EXERCISE PERIOD. The Warrants may be exercised at any time during the period
commencing thirty (30) days after the effective date ("Offering Date") of the
Offering ("Exercise Date") and ending at 3:00 p.m., Denver Colorado time on the
fifth (5th) anniversary date of the closing of the Offering ("Expiration Date"),
except as changed by Section 15 of this Agreement.
4. NON-DETACHABILITY. A Warrant Certificate (as defined below) may not be
detached from a Share certificate contained in a Unit for at least thirty (30)
days following the Offering Date. Until such time, a Warrant Certificate may be
split up, combined, exchanged or transferred on the books of the Transfer Agent
only together with a Share certificate. Paulson Investment Company, Inc. will
then determine when the Units separate, after which the Shares and Warrants will
trade separately.
5. CERTIFICATES. The Warrant certificates shall be in registered form only and
shall be substantially in the form set forth in Exhibit A attached to this
Agreement ("Warrant Certificate"). The Unit certificates shall be in registered
form only and shall be substantially in the form set forth in Exhibit B attached
to this Agreement ("Unit Certificate"). Warrant and Unit Certificates shall be
signed by, or shall bear the facsimile signature of, the Chief Executive
Officer, President or a Vice President of the Company and the Secretary or an
Assistant Secretary of the Company. If any person, whose facsimile signature has
been placed upon any Warrant or Unit Certificate or the signature of an officer
of the Company, shall have ceased to be such officer before such Warrant or Unit
Certificate is countersigned, issued and delivered, such Warrant or Unit
Certificate shall be countersigned, issued and delivered with the same effect as
if such person had not ceased to be such officer. Any Warrant or Unit
Certificate may be signed by, or made to bear the facsimile signature of, any
person who at the actual date of the preparation of such Warrant or Unit
Certificate shall be a proper officer of the Company to sign such Warrant or
Unit Certificate, even though such person was not such an officer upon the date
of this Agreement.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 4803
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 2
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040502/3*

<PAGE>
2
6. ISSUANCE OF NEW CERTIFICATES. Notwithstanding any of the provisions of this
Agreement or the several Warrant or Unit Certificates to the contrary, the
Company may, at its option, issue new Warrant or Unit Certificates in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price or the number or kind of shares purchasable under the
several Warrant or Unit Certificates made in accordance with the provisions of
this Agreement.
7. COUNTERSIGNING. Warrant and Unit Certificates shall be manually countersigned
by the Transfer Agent and shall not be valid for any purpose unless so
countersigned. The Transfer Agent hereby is authorized to countersign and
deliver to, or in accordance with the instructions of, any Warrant or Unit
Holder any Warrant or Unit Certificate, respectively, which is properly issued.
8. REGISTRATION OF TRANSFER AND EXCHANGES. The Transfer Agent will keep or cause
to be kept books for registration of ownership or transfer of Warrant and Unit
Certificates issued hereunder. Such registers shall show the names and addresses
of the respective holders of the Warrant and Unit Certificates and the number of
Warrants and Units evidenced by each such Warrant or Unit Certificate. Subject
to the provisions of Section 4, the Transfer Agent shall from time to time
register the transfer of any outstanding Warrant or Unit Certificate upon
records maintained by the Transfer Agent for such purpose upon surrender of such
Warrant or Unit Certificate to the Transfer Agent for transfer, accompanied by
appropriate instruments of transfer in form satisfactory to the Company and the
Transfer Agent and duly executed by the Warrant or Unit Holder or a duly
authorized attorney. Upon any such registration of transfer, a new Warrant or
Unit Certificate shall be issued in the name of and to the transferee and the
surrendered Warrant or Unit Certificate shall be cancelled.
9. EXERCISE OF WARRANTS.
a. Any one Warrant or any multiple of one Warrant evidenced by any
Warrant Certificate may be exercised on or after the Exercise Date and on or
before the Expiration Date. A Warrant shall be exercised by the Warrant Holder
by surrendering to the Transfer Agent the Warrant Certificate evidencing such
Warrant with the exercise form on the reverse of such Warrant Certificate duly
completed and executed and delivering to the Transfer Agent, by good check or
bank draft payable to the order of the Company, the Exercise Price for each
Share to be purchased. No fractional warrant may be exercised, but will be
redeemed for cash equal to the current market value of such fractional warrant,
as defined in Section 19 of this Warrant and Unit Agreement.
b. Upon receipt of a Warrant Certificate with the exercise form thereon
duly executed together with payment in full of the Exercise Price (and an amount
equal to any applicable taxes or government charges) for the Shares for which
Warrants are then being exercised, the Transfer Agent shall requisition from any
transfer agent for the Shares, and upon receipt shall make delivery of,
certificates evidencing the total number of whole Shares for which Warrants are
then being exercised in such names and denominations as are required for
delivery to, or in accordance with the instructions of, the Warrant Holder. Such
certificates for the Shares shall be deemed to be issued, and the person to whom
such Shares are issued of record shall be deemed to have become a holder of
record of such Shares, as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price (and an amount equal to any
applicable taxes or government

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 36631
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 3
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040503/3*

<PAGE>
3
charges), whichever shall last occur, provided that if the books of the Company
with respect to the Shares shall be deemed to be closed, the person to whom such
Shares are issued of record shall be deemed to have become a record holder of
such Shares as of the date on which such books shall next be open (whether
before, on or after the Expiration Date). The Company covenants and agrees that
it shall not cause its stock transfer books to be closed for a period of more
than twenty (20) consecutive business days except upon consolidation, merger,
sale of all of its assets, dissolution or liquidation or as otherwise provided
by law.
c. In addition, if it is required by law and upon instruction by the
Company, the Transfer Agent will deliver to each Warrant Holder a prospectus
that complies with the provisions of Section 5 of the Securities Act, as
amended, and the Company agrees to supply the Transfer Agent with a sufficient
number of prospectuses to effectuate that purpose.
d. Any Warrant Certificate or Certificates may be exchanged at the
option of the holder thereof for another Warrant Certificate or Certificates of
different denominations, of like tenor and representing in the aggregate the
same number of Warrants, upon surrender of such Warrant Certificate or
Certificates, with the Form of Assignment duly filled in and executed, to the
Transfer Agent, at any time or from time-to-time after the close of business on
the date hereof and prior to the close of business on the Expiration Date. The
Transfer Agent shall promptly cancel the surrendered Warrant Certificate or
Certificates and deliver the new Warrant Certificate or Certificates pursuant to
the provisions of this Section.
e. If less than all the Warrants evidenced by a Warrant Certificate are
exercised upon a single occasion, a new Warrant Certificate for the balance of
the Warrants not so exercised shall be issued and delivered to, or in accordance
with, transfer instructions properly given by the Warrant Holder until the
Expiration Date.
f. All Warrant Certificates surrendered upon exercise of the Warrants
shall be cancelled.
g. Upon the exercise, or conversion of any Warrant, the Transfer Agent
shall account promptly to the Company with respect to Warrants exercised and
concurrently pay to the Company all moneys received by the Transfer Agent for
the purchase of securities or other property through the exercise of such
Warrants.
h. Expenses incurred by the Transfer Agent while acting in the capacity
as Transfer Agent, in accordance with this Agreement, will be paid by the
Company. A detailed accounting statement relating to the number of shares
exercised, names of registered Warrant Holder(s) and the net amount of exercise
funds remitted will be given to the Company with the payment of each exercise
amount.
10. REDEMPTION. The Warrants outstanding at the time of a redemption may be
redeemed at the option of the Company, in whole or in part on a pro-rata basis,
at any time if, at the time notice of such redemption is given by the Company as
provided in subsection a. below, the basic net income per share of Common Stock
as confirmed by an audit conducted in accordance with generally accepted
accounting principles applicable in the United States (which such audit may be

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 52
CRC: 24295
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 4
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040504/3*

<PAGE>
4
conducted with respect to any fiscal year of the Company or any other 12-month
period ending on the last day of a fiscal quarter of the Company, in the
Company’s sole discretion), for an audited 12-month period preceding the date of
such notice is equal to or greater than $1.00, at a price of $0.25 per Warrant
(the "Redemption Price"). On the redemption date (the "Redemption Date"), the
holders of record of redeemed Warrants shall be entitled to payment of the
Redemption Price upon surrender of such redeemed Warrants to the Company at the
principal office of the Transfer Agent in Glendale, California.
a. Notice of redemption of Warrants shall be given at least thirty (30)
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Transfer Agent and by
first class mail to all of the holders of record of Warrants at their respective
addresses appearing on the books or transfer records of the Company or such
other address designated in writing by the holder of record to the Transfer
Agent not less than forty (40) days prior to the Redemption Date.
b. From and after the Redemption Date, all rights of the Warrant
Holders (except the right to receive the Redemption Price) shall terminate, but
only if (i) no later than one day prior to the Redemption Date the Company shall
have irrevocably deposited with the Transfer Agent as paying agent a sufficient
amount to pay on the Redemption Date the Redemption Price for all Warrants
called for redemption and (ii) the notice of redemption shall have stated the
name and address of the Transfer Agent and the intention of the Company to
deposit such amount with the Transfer Agent no later than one day prior to the
Redemption Date.
c. The Transfer Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Transfer Agent for the redemption of
Warrants to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
d. Any amounts deposited with the Transfer Agent that shall be
unclaimed after six (6) months after the Redemption Date may be withdrawn by the
Company, and thereafter the holders of the Warrants called for redemption for
which such funds were deposited shall look solely to the Company for payment.
The Company shall be entitled to the interest, if any, on funds deposited with
the Transfer Agent and the holders of redeemed Warrants shall have no right to
any such interest.
e. If the Company fails to make a sufficient deposit with the Transfer
Agent as provided above, the holder of any Warrants called for redemption may at
the option of the holder (i) by notice to the Company declare the notice of
redemption a nullity as to such holder, or (ii) maintain an action against the
Company for the Redemption Price. If the holder brings such an action, the
Company will pay reasonable attorneys’ fees of the holder. If the holder fails
to bring an action against the Company for the Redemption Price within sixty
(60) days after the Redemption Date, the holder shall be deemed to have elected
to declare the notice of redemption to be a nullity as to such holder and such
notice shall be without any force or effect as to such holder. Except as
otherwise specifically provided in this subsection e., a notice of redemption,
once mailed by the Company, as provided in subsection a., shall be irrevocable.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 14157
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 5
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.05.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040505/3*

<PAGE>
5
11. TAXES. The Company will pay all taxes attributable to the initial issuance
of Shares upon exercise of Warrants. The Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in any
issue of Warrant or Unit Certificates or in the issue of any certificates of
Shares in the name other than that of the Warrant or Unit Holder upon the
exercise of any Warrant or Unit, as the case may be.
12. MUTILATED OR MISSING CERTIFICATES. If any Warrant or Unit Certificate is
mutilated, lost, stolen or destroyed, the Company and the Transfer Agent may, on
such terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant or Unit Certificate, include
the surrender thereof), and upon receipt of evidence satisfactory to the Company
and the Transfer Agent of such mutilation, loss, theft or destruction, issue a
substitute Warrant or Unit Certificate, respectively, of like denomination or
tenor as the Warrant or Unit Certificate so mutilated, lost, stolen or
destroyed. Applicants for substitute Warrant or Unit Certificates shall comply
with such other reasonable regulations and pay any reasonable charges as the
Company or the Transfer Agent may prescribe.
13. SUBSEQUENT ISSUE OF CERTIFICATES. Subsequent to their original issuance, no
Warrant or Unit Certificates shall be reissued except (i) such Certificates
issued upon transfer thereof in accordance with Section 8 hereof, (ii) such
Certificates issued upon any combination, split-up or exchange of Warrant or
Unit Certificates pursuant to Section 8 hereof, (iii) such Certificates issued
in replacement of mutilated, destroyed, lost or stolen Warrant or Unit
Certificates pursuant to Section 12 hereof, (iv) Warrant Certificates issued
upon the partial exercise of Warrant Certificates pursuant to Section 9 hereof,
and (v) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder pursuant
to Section 6 hereof. The Transfer Agent is hereby irrevocably authorized to
countersign and deliver, in accordance with the provisions of said Sections 6,
8, 9 and 12, the new Warrant or Unit Certificates, as the case may be, required
for purposes thereof, and the Company, whenever required by the Transfer Agent,
will supply the Transfer Agent with Warrant and Unit Certificates duly executed
on behalf of the Company for such purposes.
14. RESERVATION OF SHARES. For the purpose of enabling the Company to satisfy
all obligations to issue Shares upon exercise of Warrants, the Company will at
all times reserve and keep available free from preemptive rights, out of the
aggregate of its authorized but unissued shares, the full number of Shares which
may be issued upon the exercise of the Warrants. The Company covenants all
shares which shall be so issuable, will upon issue be fully paid and
nonassessable by the Company and free from all taxes, liens, charges and
security interests with respect to the issue thereof. In the case of a Warrant
exercisable solely for securities listed on a securities exchange or for which
there are at least two (2) independent market makers, the Company may elect to
redeem Warrants submitted to the Transfer Agent for exercise for a price equal
to the difference between the aggregate low asked price, or closing price, as
the case may be, of the securities for which such Warrant is exercisable on the
date of such submission and the Exercise Price of such Warrants; in the event of
such redemption, the Company will pay to the holder of such Warrants the
above-described redemption price in cash within ten (10) business days after
receipt of notice from the Transfer Agent that such Warrants have been submitted
for exercise.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 61188
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 6
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.06.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040506/3*

<PAGE>
6
15. GOVERNMENTAL RESTRICTIONS. If any Shares issuable upon the exercise of
Warrants require registration or approval of any governmental authority, the
Company will use commercially reasonable efforts to secure such registration or
approval and, to the extent practicable, take action in anticipation of and
prior to the exercise of the Warrants necessary to permit a public offering of
the securities underlying the Warrants during the term of this Agreement;
provided that in no event shall such Shares be issued, and the Company shall
have the authority to suspend the exercise of all Warrants, until such
registration or approval shall have been obtained; but all Warrants, the
exercise of which is requested during any such suspension, shall be exercisable
at the Exercise Price. If any such period of suspension continues past the
Expiration Date, all Warrants, the exercise of which have been requested on or
prior to the Expiration Date, shall be exercisable upon the removal of such
suspension until the close of business on the business day immediately following
the expiration of such suspension.
16. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE PRICE. The
number and kind of securities or other property purchasable upon exercise of a
Warrant shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of any of the following events:
a. In case the Company shall (i) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of such
shares or (iii) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event. Any
adjustment made pursuant to this subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this subsection, the
holder of any Warrant Certificate thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company, (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Transfer
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
b. In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in subsection a. above or subsection e.
below), any Warrant Holder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and shall be

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 44699
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 7
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.07.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040507/3*

<PAGE>
7
evidenced by a certified Board resolution filed with the Transfer Agent) shall
be made for the application of this Section with respect to the rights and
interests thereafter of the Warrant Holders (including but not limited to the
allocation of the Exercise Price between or among shares of classes of capital
stock), to the end that this Section (including the adjustments of the number of
shares of Common Stock or other securities purchasable and the Exercise Price
thereof) shall thereafter be reflected, as nearly as reasonably practicable, in
all subsequent exercises of the Warrants for any shares or securities or other
property (or cash) thereafter deliverable upon the exercise of the Warrants.
c. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section,
the Company will promptly file with the Transfer Agent a certificate signed by a
Chairman of the Board or the Chief Executive Officer, the President or a Vice
President of the Company and by the Secretary or an Assistant Secretary of the
Company setting forth the number and kind of securities or other property
purchasable upon exercise of a Warrant, as so adjusted, stating that such
adjustments in the number or kind of shares or other securities or property
conform to the requirements of this Section, and setting forth a brief statement
of the facts accounting for such adjustments. Promptly after receipt of such
certificate, the Company, or the Transfer Agent at the Company’s request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be
supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; provided, however, that failure to file or to give any notice
required under this subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section; and provided,
further, that, where appropriate, such notice may be given in advance and
included as part of the notice required to be given pursuant to Section 18
hereof.
d. In case of any consolidation of the Company with, or merger of the
Company into, another corporation (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Common
Stock), or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
corporation formed by such consolidation or merger or the corporation which
shall have acquired such assets, as the case may be, shall execute and deliver
to the Transfer Agent a supplemental warrant agreement providing that the holder
of each Warrant then outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, solely
the kind and amount of shares of stock and other securities and property (or
cash) receivable upon such consolidation, merger, sale or transfer by a holder
of the number of shares of Common Stock of the Company for which such Warrant
might have been exercised immediately prior to such consolidation, merger, sale
or transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section. The above provision of this subsection shall similarly
apply to successive consolidations, mergers, sales or transfers.
The Transfer Agent shall not have any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 23 hereof, may

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 54
CRC: 65423
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 8
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.08.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040508/3*

<PAGE>
8
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, a certificate of a firm of independent
certified public accountants (who may be the accountants regularly employed by
the Company) with respect thereto.
e. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Agreement.
f. The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board, and not disapproved by the Transfer Agent, to make any computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence, be conclusive evidence of the correctness
of any computation made under this Section.
g. For the purpose of this Section, the term "Common Stock" shall mean
(i) the Common Stock or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that at any time as a result of an adjustment made pursuant
to this Section, the holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section, and all
other provisions of this Agreement, with respect to the Common Stock, shall
apply on like terms to any such other shares.
h. The Company may, from time to time and to the extent permitted by
law, reduce the exercise price of the Warrants by any amount for a period of not
less than twenty (20) days. If the Company so reduces the exercise price of the
Warrants, it will give not less than fifteen (15) days’ notice of such decrease,
which notice may be in the form of a press release, and shall take such other
steps as may be required under applicable law in connection with any offers or
sales of securities at the reduced price.
17. REDUCTION OF EXERCISE PRICE BELOW PAR VALUE. Before taking any action that
would cause an adjustment pursuant to Section 16 hereof reducing the portion of
the Exercise Price required to purchase one share of capital stock below the
then par value (if any) of a share of such capital stock, the Company will use
its best efforts to take any corporate action which, in the opinion of its
counsel, may be necessary in order that the Company may validly and legally
issue fully paid and non-assessable shares of such capital stock.
18. NOTICE TO WARRANT HOLDERS. In case the Company after the date hereof shall
propose (i) to offer to the holders of Common Stock, generally, rights to
subscribe to or purchase any additional shares of any class of its capital
stock, any evidences of its indebtedness or assets, or any other rights or
options or (ii) to effect any reclassification of Common Stock (other than a

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 56
CRC: 21351
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 9
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.09.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040509/3*

<PAGE>
9
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock) or any capital reorganization, or any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required, or any sale, transfer or other
disposition of its property and assets substantially as an entirety, or the
liquidation, voluntary or involuntary dissolution or winding-up of the Company,
then, in each such case, the Company shall file with the Transfer Agent and the
Company, or the Transfer Agent on its behalf, shall mail (by first-class,
postage prepaid mail) to all registered holders of the Warrant Certificates
notice of such proposed action, which notice shall specify the date on which the
books of the Company shall close or a record be taken for such offer of rights
or options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up shall take place or commence, as the
case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate any adjustments in the Exercise Price and the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (i) above, at least ten (10) days prior
to the record date for determining holders of the Common Stock for purposes of
such action or, if a record is not to be taken, the date as of which the holders
of shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (ii) above, at least twenty (20) days
prior to the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up. Failure to give any such notice or any defect therein
shall not affect the legality or validity of any transaction listed in this
Section.
19. NO FRACTIONAL WARRANTS, UNITS OR SHARES. The Company shall not be required
to issue fractions of Warrants or Units upon the reissue of Warrants or Units,
any adjustments as described in Section 16 or otherwise; but the Company in lieu
of issuing any such fractional interest, shall adjust the fractional interest by
payment to the Warrant or Unit Holder an amount, in cash, equal to the current
market value of any such fraction or interest. If the total Warrants or Units
surrendered by exercise would result in the issuance of a fractional Share, the
Company shall not be required to issue a fractional Share but rather the
resulting fractional interest shall be adjusted by payment in an amount, in
cash, equal to the current market value of such fractional interest. The current
market value for such fractional interest will be the market value of one whole
interest multiplied by the fraction thereof.
20. RIGHTS OF WARRANT HOLDERS. No Warrant Holder, as such, shall have any rights
of a shareholder of the Company, either at law or equity, and the rights of the
Warrant Holders, as such, are limited to those rights expressly provided in this
Agreement or in the Warrant Certificates. The Company and the Transfer Agent may
treat the registered Warrant Holder in respect of any Warrant Certificates as
the absolute owner thereof for all purposes notwithstanding any notice to the
contrary.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 53
CRC: 52123
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 10
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.10.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040510/3*

<PAGE>
10
21. RIGHT OF ACTION. All rights of action in respect to this Agreement are
vested in the respective registered holders of the Warrant and Unit
Certificates; and any registered holder of any Warrant or Unit Certificate,
without the consent of the Transfer Agent or of any other holder of a Warrant or
Unit Certificate, may, in his own behalf for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, his right to exercise the
Warrants evidenced by such Warrant Certificate, for the purchase of shares of
the Common Stock in the manner provided in the Warrant Certificate and in this
Agreement.
22. AGREEMENT OF WARRANT AND UNIT HOLDERS. Every holder of a Warrant or Unit
Certificate by accepting the same consents and agrees with the Company, the
Transfer Agent and with every other holder of a Warrant or Unit Certificate,
respectively, that:
a. The Warrant and Unit Certificates are transferable on the registry
books of the Transfer Agent only upon the terms and conditions set forth in this
Agreement; and
b. The Company and the Transfer Agent may deem and treat the person in
whose name the Warrant or Unit Certificate is registered as the absolute owner
of the Warrant or Unit, as the case may be, (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Company or the
Transfer Agent) for all purposes whatever and neither the Company nor the
Transfer Agent shall be affected by any notice to the contrary.
23. TRANSFER AGENT. The Company hereby appoints the Transfer Agent to act as the
agent of the Company and the Transfer Agent hereby accepts such appointment upon
the following terms and conditions by all of which the Company and every Warrant
and Unit Holder, by acceptance of his Warrants or Units, shall be bound:
a. Statements contained in this Agreement and in the Warrant and Unit
Certificates shall be taken as statements of the Company. The Transfer Agent
assumes no responsibility for the correctness of any of the same except such as
describes the Transfer Agent or for action taken or to be taken by the Transfer
Agent.
b. The Transfer Agent shall not be responsible for any failure of the
Company to comply with any of the Company’s covenants contained in this
Agreement or in the Warrant or Unit Certificates.
c. The Transfer Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Transfer Agent shall incur no
liability or responsibility to the Company or to any Warrant or Unit Holder in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel, provided the
Transfer Agent shall have exercised reasonable care in the selection and
continued employment of such counsel.
d. The Transfer Agent shall incur no liability or responsibility to the
Company or to any Warrant or Unit Holder for any action taken in reliance upon
any notice, resolution, waiver,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 57
CRC: 52369
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 11
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.11.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040511/3*

<PAGE>
11
consent, order, certificate or other paper, document or instrument believed by
it to be genuine and to have been signed, sent or presented by the proper party
or parties.
e. The Company agrees to pay to the Transfer Agent reasonable
compensation for all services rendered by the Transfer Agent in the execution of
this Agreement, to reimburse the Transfer Agent for all expenses, taxes and
governmental charges and all other charges of any kind or nature incurred by the
Transfer Agent in the execution of this Agreement and to indemnify the Transfer
Agent and save it harmless against any and all liabilities, including judgments,
costs and counsel fees, arising from the Transfer Agent’s engagement under this
Agreement except as a result of the Transfer Agent’s negligence, bad faith or
willful misconduct.
f. The Transfer Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Warrant or Unit Holders shall furnish
the Transfer Agent with reasonable security and indemnity for any costs and
expenses which may be incurred in connection with such action, suit or legal
proceeding, but this provision shall not affect the power of the Transfer Agent
to take such action as the Transfer Agent may consider proper, whether with or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants or Units may be enforced by the Transfer
Agent without the possession of any of the Warrant or Unit Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Transfer Agent shall be
brought in its name as Transfer Agent, and any recovery of judgement shall be
for the ratable benefit of the Warrant or Unit Holders as their respective
rights or interest may appear.
g. The Transfer Agent and any shareholder, director, officer or
employee of the Transfer Agent may buy, sell or deal in any of the Warrants,
Units or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Transfer Agent under this Agreement. Nothing herein shall preclude the Transfer
Agent from acting in any other capacity for the Company or for any other legal
entity.
24. SUCCESSOR TRANSFER AGENT. Any legal entity into which the Transfer Agent may
be merged or converted or with which it may be consolidated, or any legal entity
resulting from any merger, conversion or consolidation to which the Transfer
Agent shall be a party, or any legal entity succeeding to the corporate trust
business of the Transfer Agent, shall be the successor to the Transfer Agent
hereunder without the execution or filing of any paper or any further act of a
party or the parties hereto provided such legal entity is eligible to be
appointed under Section 25 below. In any such event or if the name of the
Transfer Agent is changed, the Transfer Agent or such successor may adopt the
countersignature of the original Transfer Agent and may countersign such Warrant
or Unit Certificates either in the name of the predecessor Transfer Agent or in
the name of the successor Transfer Agent.
25. CHANGE OF TRANSFER AGENT. The Transfer Agent may resign or be discharged by
the Company from its duties under this Agreement by the Transfer Agent or the
Company, as the case may be, giving notice in writing to the other, and by
giving a date when such resignation or discharge shall take effect, which notice
shall be sent at least thirty (30) days prior to the date so

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 55
CRC: 64832
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 12
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.12.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040512/3*

<PAGE>
12
specified. If the Transfer Agent shall resign, be discharged or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Transfer Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Transfer Agent or by
any Warrant or Unit Holder or after discharging the Transfer Agent, then the
Company agrees to perform the duties of the Transfer Agent hereunder until a
successor Transfer Agent is appointed. Any successor Transfer Agent shall be a
bank or a trust company, in good standing, organized under the laws of any state
of the United States of America, having a combined capital and surplus of at
least $4,000,000 at the time of its appointment as Transfer Agent. After
appointment, the successor Transfer Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Transfer Agent without further act or deed, and the former Transfer Agent shall
deliver and transfer to the successor Transfer Agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for effecting the delivery or transfer. Failure to give
any notice provided for in this Section, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Transfer Agent or the appointment of the successor Transfer Agent, as the case
may be.
26. NOTICES. Any notice or demand authorized by this Agreement to be given or
made by the Transfer Agent or by any Warrant or Unit Holder to or on the Company
shall be sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Transfer Agent), as follows:
TASER International, Inc.
7860 E. McClain Drive, Suite 2
Scottsdale, Arizona 85260
Any notice or demand authorized by this Agreement to be given or made
by any Warrant or Unit Holder or by the Company to or on the Transfer Agent
shall be sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Transfer Agent with the Company), as follows:
US Stock Transfer Corporation
1745 Gardena Avenue
Glendale, California 91204
Any distribution, notice or demand required or authorized by this
Agreement to be given or made by the Company or the Transfer Agent to or on the
Warrant or Unit Holders shall be sufficiently given or made if sent by mail,
first class, certified or registered, postage prepaid, addressed to the Warrant
or Unit Holders at their last known addresses as they shall appear on the
registration books for the Warrant or Unit Certificates maintained by the
Transfer Agent.
27. SUPPLEMENTS AND AMENDMENTS. The Company and the Transfer Agent may from time
to time supplement or amend this Agreement without the approval of any Warrant
or Unit Holders in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 36
CRC: 49200
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 13
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.13.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
13
provisions in regard to matters or questions arising hereunder which the Company
and the Transfer Agent may deem necessary or desirable.
28. SUCCESSORS. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Transfer Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
29. TERMINATION. This Agreement shall terminate at the close of business on the
Expiration Date or such earlier date upon which all Warrants have been
exercised; provided, however, that if exercise of the Warrants is suspended
pursuant to Section 15 and such suspension continues past the Expiration Date,
this Agreement shall terminate at the close of business on the business day
immediately following expiration of such suspension. The provisions of Section
23 shall survive such termination.
30. GOVERNING LAW. This Agreement and each Warrant and Unit Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
[California] and for all purposes shall be construed in accordance with the laws
of said State.
31. BENEFITS OF
give any person
the Warrant and
this Agreement,
of the Company,

Ed#: 3

*P64567/6040513/3*

THIS AGREEMENT. Nothing in this Agreement shall be construed to
or corporation other than the Company, the Transfer Agent and
Unit Holders any legal or equitable right, remedy or claim under
and this Agreement shall be for the sole and exclusive benefit
the Transfer Agent and the Warrant and Unit Holders.

32. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an original and
all such counterparts shall together constitute but one and the same instrument.
33. INTEGRATION. As of the date hereof, this Agreement contains the entire and
only agreement, understanding, representation, condition, warranty or covenant
between the parties hereto with respect to the matters herein, supersedes any
and all other agreements between the parties hereto relating to such matters,
and may be modified or amended only by a written agreement signed by both
parties hereto pursuant to the authority granted by Section 27.

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 37
CRC: 61384
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 14
Description: ex-4.5

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.14.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
14
34. DESCRIPTIVE HEADINGS. The descriptive headings of the Sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
Date:

_______________, 2001
TASER International, Inc.,
a Delaware corporation
By:_________________________________
Its Chief Executive Officer

SEAL
ATTEST:
____________________________
Its Secretary
US Stock Transfer Corporation,
a ____________ corporation
By:_________________________________
Its Vice President
SEAL
ATTEST:
____________________________
Its Secretary

Ed#: 3

*P64567/6040514/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 2
CRC: 49605
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 15
Description: ex-4.5

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.15.00

15
EXHIBIT A
[WARRANT CERTIFICATE]

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 3

*P64567/6040515/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 6
CRC: 22031
P64567A3.SUB, DocName: EX-4.5, Doc: 6, Page: 16
Description: OLD EX-4.5

[E/O]

<PAGE>

16
EXHIBIT B
[UNIT CERTIFICATE]

</TEXT>
</DOCUMENT>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 604.05.16.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 5

*P64567/6040516/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.15, Doc: 7

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.15
p64567a3ex10-15.txt
EX-10.15

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 7

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/7*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.15, Doc: 7, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.15.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 2

*P64567/6101501/2*

1
Exhibit 10.15
[TASER INTERNATIONAL LETTERHEAD]
PROMISSORY NOTE

Amount of Note ($): $75,000 Cash
City: Scottsdale, State: Arizona
Date: July 1, 1999
FOR VALUE RECEIVED the undersigned jointly and severally promise(s) to pay
to the order of:
Malcolm Sherman, currently residing in Scottsdale, Arizona
the principal sum of:
Seventy-Five thousand & no/100 ($75,000.00) dollars together with interest
thereon from date at the rate of:
9.18% Per Annum
until maturity, said principal and interest shall be paid in 24 equal monthly
payments of $3,757.37, beginning on August 15, 1999 with the last payment
submitted on July 15, 2001. (Please see attached Loan Amortization).
Each maker and endorser severally waives demand, protest and notice of
maturity, non-payment or protest and all requirements necessary to hold each of
them liable as makers and endorsers and, should litigation be necessary to
enforce this note, each maker and endorser waives trial by jury and consents to
the personal jurisdiction and venue of a court of subject matter jurisdiction
located in the State of Arizona, and County of Maricopa.
Each maker and endorser further agrees, jointly and severally, to pay all
costs of collection, including a reasonable attorney’s fee in case the principal
of this note or any payment on the principal or any interest thereon is not paid
at the respective maturity thereof, or in case it becomes necessary to protest
the security hereof, whether suit be brought or not.
This note is to be construed and enforced according to the laws of the
State of Arizona; upon default in the payment of principal and/or interest when
due, the whole sum of principal and interest remaining unpaid shall, at the
option of the holder, become immediately due and payable and it shall accrue
interest at the highest rate allowable by law, or, if no highest rate is
otherwise indicated, at ten (10%) percent, from the date of default.
Default shall include, but not be limited to non-payment within ten (10)
days from the due date set out herein.
Unless specifically disallowed by law, should litigation arise hereunder,
service of process therefore may be obtained through certified mail, return
receipt requested; the parties hereto waiving and all rights they may have to
object to the method by which service was perfected.
/s/MWS
/s/TPS

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.15, Doc: 7, Page: 2

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.15.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
2
Taser International, Inc. herein acknowledges and agrees to the following,
regarding the herein described Promissory Note.
A. The monies being borrowed are to secure tooling and equipment for that
product as described in the enclosed attachment, marked "A" and listed
as "Steman International Procurement, Quotation No: 98Q01-1-AT," Taser
International, Inc. purchase order numbers: 021025-00, 021026-00,
021027-00, 021028-00, 021024-00 additionally known as "The Advanced
Taser." Additional components as secured by Taser International, Inc. to
complete the production of this product are included in the UCC filing
and are described as electrical components, finished product or
packaging.
B. Taser International, Inc. agrees to the tooling and components as
purchased by the funds of this Promissory Note being subject to a UCC
filing in favor of Malcolm W. Sherman i.e., lender. Said UCC filing to
be valid for the full period of the listed payment schedule. Taser
International, Inc. agrees to the UCC filing of this lien and its
permission is granted for a "floating lien" to be issued to Malcolm W.
Sherman.
C. Taser International, Inc. agrees and acknowledges that they have no
right to sell, transfer, assign, sublease or encumber the equipment or
this agreement or material covered under this agreement.
D. All cost relative to the filing of the above listed UCC filings are to
be born by Taser International, Inc.
All matters pertinent to this Agreement (including its interpretation,
application, validity, performance and breech), shall be governed by, construed
and enforce in accordance with the laws of the State of Arizona. The parties
herein waive trial by jury and agree to submit to the personal jurisdiction and
venue of a court of subject matter jurisdiction located in Maricopa County,
State of Arizona. In the event that litigation results from or arises out of
this Agreement or the performance thereof, the parties agree to reimburse the
prevailing party’s reasonable attorney’s fees, court costs, and all other
expenses, whether or not taxable by the court as costs in addition to any other
relief to which the prevailing party may be entitled. In such event, no action
shall be entertained by said court or any court of competent jurisdiction if
filed more than one year subsequent to the date of the cause(s) of action
actually accrued regardless of whether damages were otherwise as of said time
calculable.
TASER INTERNATIONAL, INC.
------------------------Corporation
/s/ Malcolm W. Sherman
---------------------Payee - Signature
M. W. Sherman
--------------------Payee Name Printed
Attest: /s/ Thomas P. Smith
--------------------------Treasurer - Signature
Thomas P. Smith
--------------------------Treasurer
</TEXT>
</DOCUMENT>

Ed#: 2

*P64567/6101502/2*

By: /s/ Patrick Smith
--------------------President - Signature
Patrick Smith
--------------------President
Corporate Seal
[Corporate Seal]

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.16, Doc: 8

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.16
p64567a3ex10-16.txt
EX-10.16

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 8

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/8*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 10.16
[TASER INTERNATIONAL LETTERHEAD]

May 26, 2000
Malcolm Sherman
9068 E. Hillery Dr.
Scottsdale, AZ 85260
Dear Malcolm,
This letter is to confirm our previous discussions regarding your pending
retirement as a full time employee of TASER International.
-

As we discussed, we would like you to work directly with Tom Smith to train
him to maintain the current export customer base during the time between
now and your formal retirement on June 30, 2000.

-

The company will continue to pay your normal salary and car allowance up
through June 30, although your work schedule between now and that time will
be at your discretion in order to effectively train Tom and close any
pending deals.

-

After June 30, the company will pay your vacation time of 4 weeks in the
month of July. These payments will be made on a biweekly basis concurrent
with our normal payroll.

-

Your outstanding balance of non-reimbursed expenses
will be repaid in full on a biweekly basis starting
payments will be of the same amount as your current
allowance, paid on a biweekly basis concurrent with
disbursements.

-

You will be asked to continue to serve on the board of directors and as an
active significant shareholder. As you are aware, we do not remunerate our
board members with cash compensation. However, the company will extend your
current stock options (20,000 shares) for an additional 5 years after your
formal retirement (i.e. Expiration date of 7/1/2005). All of these options
shall be considered vested as of June 30, 2000 if they have not already
vested prior to that time.

-

Further, the company shall work with you as an independent contractor
(effective May 27th, 2000) in certain foreign countries. Specifically, you
shall be considered the exclusive foreign agent for the countries of:
-

PAGE 1

Ed#: 2

*P64567/6101601/2*

(approximately $30,000)
on August 15. These
salary plus car
our payroll

India
Nepal
Sri Lanka
PWS:/s/PWS
---

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

2
-

BANGLADESH
UKRAINE
JORDAN
ISRAEL

For a period of 12 months (i.e. Through June 30, 2001), these countries
shall be reserved for you, operating as an independent contractor, to
close an exclusive distribution deal. You will be paid a 10% commission
for all sales in these countries for the period of time that you remain
the exclusive agent. This 10% commission shall not include the $20,000
deposit already received from Jordan, but shall include any additional
sums received from the distributor in Jordan. Commissions will be paid
to Sherman as payments are received by TASER International regardless of
shipping dates as listed on purchase orders. Sales prices offered to
Sherman during the course of his appointment as "exclusive agent" shall
be equal to the best of prices offered to any other exclusive agreement
granted by the company. In those instances which requires overages in
billing, i.e. over the export selling price of TASER, these amount are
to be forwarded to third parties for "commissions". TASER International,
Inc, Agrees to forward via wire transfer or company check to such
accounts as directed upon instructions from Sherman after these funds
have been secured. Sherman’s 10% commission is based on the net product
prices as given to Sherman by TASER (less freight and miscellaneous
charges). Once payment of commissions or overages has been remitted as
instructed by Sherman, TASER shall be released of all liability
associated with the specific transactions.
In order to maintain your exclusive agency for these areas, the
following performance criteria must be met (the numbers in each column
represent the number of ADVANCED TASERs sold within the territory):
<Table>
<Caption>
---------------------------------------------------------------------------------------------------Country
3/30
3/30
3/30
3/30
3/30
3/30
2001
2002
2003
2004
2005
2006
---------------------------------------------------------------------------------------------------<S>
<C>
<C>
<C>
<C>
<C>
<C>
India
500
600
720
864
1036
1244
---------------------------------------------------------------------------------------------------Ukraine
300
360
432
518
622
748
--------------------------------------------------------------------------------------------------Sri Lanka
100
120
144
172
208
248
--------------------------------------------------------------------------------------------------Bangladesh
200
240
288
346
414
498
--------------------------------------------------------------------------------------------------Nepal
50
60
72
86
104
124
--------------------------------------------------------------------------------------------------Jordan
200
240
288
346
414
498
--------------------------------------------------------------------------------------------------Israel
200
240
288
346
414
498
---------------------------------------------------------------------------------------------------

</Table>
The sales in each column represent sales in the 12 calendar months
proceeding the date atop the column. Should sales not meet or exceed
this number, the exclusivity will expire without notice and the company
will have the option to pursue other sales opportunities in those
markets without further compensation due.
All inquiries from these territories will be forwarded to Sherman
directly, and no pricing information shall be given to inquiries without
Sherman’s prior consent.
-

Under the terms of this representation, you will be responsible for all
travel and other related expense for you to develop these markets. This
shall include telephone

PAGE 2

Ed#: 2

*P64567/6101602/2*

PWS:/s/PWS
---

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 3

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
3
charges, cellular air time and all other related incidental expenses. We
will, of course, support your efforts with reasonable collateral materials.
Although you will remain on the payroll for the month of June as an
employee, any sales in these territories (as listed above) beyond the
$20,000 deposit already received from Jordan shall be treated as
commissioned sales in your relationship as an independent contractor.
-

For purposes of supporting your role as a sales agent in the above listed
countries, you may continue to use the title of "Director of Sales and
Marketing." But this exception is FOR THOSE TERRITORIES ONLY. Accordingly,
you may use your existing business cards in conjunction with these
countries.

-

Any potential business outside the scope of countries listed in this
agreement, including any initiated by distributors in the countries listed
within this document (specifically: India, Nepal, Sri Lanka, Bangladesh,
Ukraine, Jordan and Israel), must be approved by TASER International in
advance. The company may accept or reject any offers for additional
countries at its sole discretion. The company has current prospects in
Egypt and other countries in the Middle East and shall pursue those
prospects directly.

-

Effective May 27th, you will be operating as an independent sales
representative and independent contractor in relation to these foreign
sales activities. You will also be responsible for ensuring that all
distribution agreements in those countries comply with US export law and
relevant laws concerning foreign commerce.

-

Although you will remain a member of our board of directors, any
commitments on behalf of the company subsequent to the date of this letter
must be approved, and joint signed by either Tom or Rick Smith as active
officers in the company.

-

All foreign orders shall be prepaid prior to shipment.

-

In the event the company is going to go public through an IPO, be acquired
by another entity, or raise a significant amount of capital to fund
operations, the company shall have the right to buy-out the exclusivity
provisions outlined above by a single payment equivalent to 6 months’
historical commissions.

-

I trust that the above accurately memorializes our discussion of yesterday.
Should a disagreement arise over any of the provisions relating to your
retirement, or the subsequent sales representation outlined above, we shall
first sit over a beer and work it out. If this is unsuccessful, both
parties (TASER International and Malcolm Sherman) hereby agree that any
disputes shall be settled in binding arbitration under the rules of the
American Arbitration Association. Specifically, this agreement sets forth
the entire understanding and agreement of the parties hereto with respect
to the subject matter hereof and supersedes all other representations and
understandings both written and oral. This agreement is drafted under the
laws of the state of Arizona, and the venue for any legal recourse shall
take place under laws as written in Arizona, and the venue for any legal
recourse shall take place under these laws and be adjudicated within its
jurisdiction. Further, the parties agree that any controversy or claim
arising out of, or relating to, this contract, or the breach thereof, shall
be settled by arbitration in accordance with the rules of the American
Arbitration

PAGE 3

Ed#: 2

*P64567/6101603/2*

PWS:/s/PWS
---

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.16, Doc: 8, Page: 4

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.16.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
4
Association in the state of Arizona, USA under their auspices and the
parties agree to have any dispute heard and adjudicated under these rules
in the state of Arizona USA and both parties agree to be bound by the
decision of the arbitrator and to pay their proportionate fees as required
under the rules of the association and judgment upon the award rendered by
the arbitrator(s) may be entered into any court having jurisdiction
thereof.
-

This agreement may be amended or modified only in writing, signed in
advance by the parties hereto or their designated representatives. This
agreement shall inure to the benefit of and be binding upon the parties
hereto, and their respective successors and assigns.

-

This memorandum outlines all terms related to your pending retirement, and
the parties agree that any and all documents and or agreements entered into
or/of prior date to this agreement are herein cancelled and mutually
abrogated by the parties.

-

This memorandum outlines all terms related to your pending retirement, and
the parties hereby mutually release each other from any and all claims
and/or obligations related to your employment as Director of Sales and
Marketing for TASER International other than those obligations outlined
herein. Pre-existing financial obligations currently owed to you (such as
your salary, vacation pay, notes payable and accrued expenses) shall
survive this agreement in their current form.

-

TASER agrees to pay Sherman all outstanding balances owed as outlined above
regardless and excluded from the releases in the preceding paragraph. These
expenses will carry an effective interest rate of 10% per annum, accrued
monthly on the unpaid balance only, until the entire principal and accrued
interest is paid in full. Such interest shall be calculated from the
beginning date at which the expenses were outstanding (i.e. the average
monthly balance). However, any prior financing charges will be applied as
credits against the interest owed.

-

Regarding office space, TASER will make temporary office space available
through the end of July, 2000. After that time, the company will plan to
redistribute the use of space within our offices. Further, TASER will make
partial secretarial support available for preparation of formal letters and
contracts in conjunction with TASER sales for those territories assigned to
Sherman as a part of this contract only.

Malcolm, I’ve truly enjoyed the past 6 years together. I’ve grown tremendously
working with you. I wish you nothing but the best and hope you find more time
over the coming months and years to take some well-deserved personal time.
Sincerely,
/s/ Rick W. Smith
----------------Rick W. Smith
President, TASER
International
PAGE 4
</TEXT>
</DOCUMENT>

Understood and Agreed,
5/26/2000
--------date

Ed#: 2

*P64567/6101604/2*

/s/ Malcolm W. Sherman
---------------------Malcolm W. Sherman

PWS:/s/PWS
---

5/26/2000
--------date

MWS:/s/MWS
---

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.17, Doc: 9

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.17
p64567a3ex10-17.txt
EX-10.17

JB: *

Phone: (602) 223-4455

Operator: BPX31319

PN: DOCHDR 9

Date: 7-MAY-2001 15:05:10.86

SN: *

*DOCHDR/9*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.17, Doc: 9, Page: 1

[E/O]

<PAGE>
<R>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.17.02.00

Ed#: 4

*P64567/6101702/4*

1
[SILICON VALLEY BANK LETTERHEAD]

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVB0IIS3615
DATE: APRIL 13, 2001
BENEFICIARY:
TASER INTERNATIONAL, INC.
7860 E. MCCLAIN DRIVE, SUITE 2
SCOTTSDALE, AZ 85260
ATTN: KATHY HANRAHAN, CONTROLLER
(480) 905-2012
APPLICANT:
BRUCE R. CULVER & DONNA T. CULVER
6592 E. OAK SPRING DRIVE
OAK PARK, CA 91377
(818) 991-9950
AMOUNT: US$500,000.00 (FIVE HUNDRED THOUSAND AND 00/100 U.S. DOLLARS)
EXPIRATION DATE: DECEMBER 31, 2001
LOCATION: AT OUR COUNTERS IN SANTA CLARA, CALIFORNIA
DEAR SIR/MADAM:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.
SVB0IIS3615 IN YOUR FAVOR AVAILABLE BY YOUR DRAFTS DRAWN ON US AT SIGHT AND
ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
1. THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.
PARTIAL DRAWS ARE ALLOWED. THIS LETTER OF CREDIT MUST ACCOMPANY ANY
DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE
RETURNED TO THE BENEFICIARY UNLESS IT IS FULLY UTILIZED.
DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER AND DATE OF THIS LETTER OF
CREDIT.
DOCUMENTS MUST BE FORWARDED TO US BY OVERNIGHT DELIVERY SERVICE TO:
SILICON VALLEY BANK, 3003 TASMAN DRIVE, SANTA CLARA CA 95054, ATTN:
INTERNATIONAL DIVISION.
WE HEREBY AGREE WITH THE DRAWERS, ENDORSERS AND BONAFIDE HOLDERS THAT
THE DRAFTS DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS
OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO THE
DRAWEE, IF NEGOTIATED ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT.
</R>
PAGE 1 OF 2

Date: 7-MAY-2001 15:05:10.86

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.17, Doc: 9, Page: 2

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.17.03.00

Ed#: 3

*P64567/6101703/3*

2
[SILICON VALLEY BANK LETTERHEAD]

IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVB011S3615
DATE: APRIL 13, 2001
EXCEPT AS EXPRESSLY STATED HEREIN THIS LETTER OF CREDIT IS SUBJECT TO THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500.

/s/ Danny J. Rowan
-------------------AUTHORIZED SIGNATURE

/s/ Dawn Y. Shinsato
-------------------AUTHORIZED SIGNATURE

DANNY J. ROWAN

DAWN Y. SHINSATO

PAGE 2 OF 2

Date: 7-MAY-2001 15:05:10.86

SN: 0

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.17, Doc: 9, Page: 3

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.17.04.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

3
March 30, 2001

Board of Directors
TASER, International, Inc.
7860 East McClain Drive, Suite 2
Scottsdale, Arizona 85260-1627
Letter of Support
Gentlemen:
<R>
The undersigned Phillips W. Smith and Bruce R. Culver are directors of
TASER International, Inc., a Delaware corporation (the "Company"). Through
loans, advances, provisions of guarantees, and other arrangements, we have from
time-to-time supported financially and otherwise the business of the Company.
</R>
We agree, by this letter, to continue to support the Company by
establishing an irrevocable, standby letter of credit issued by a bank of
recognized standing in an amount not less than $500,000. The letter of credit is
intended to provide additional financial resources on which the Company may rely
in the event of its suffering a working capital deficit or otherwise. Such
letter of credit may be drawn upon by the Company at any time prior to
December 31, 2001 upon presentation to the bank of a resolution validly
adopted by the Board of Directors of the Company confirming a determination by
the Board of Directors of the Company’s need for additional funds and electing
to draw upon such letter of credit.
In consideration of this letter of support and the provision of the letter
of credit, the Company shall pay each of us $10,000, and in the event of a draw
upon the letter of credit, enter into commercially reasonable arrangements for
the repayment to us of amounts so drawn.
If the foregoing accurately reflects our understanding, please so indicate
by signing the enclosed copy of this letter and returning it to us.
Very truly yours,
/s/ Phillips W. Smith
--------------------------------Phillips W. Smith

/s/ Bruce R. Culver
--------------------------------Bruce R. Culver
Agreed and accepted
this 30th day of March 2001.
TASER International, Inc.
/s/ Patrick W. Smith
--------------------------------Patrick W. Smith
Chief Executive Officer and Director
</TEXT>
</DOCUMENT>

Ed#: 5

*P64567/6101704/5*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.18, Doc: 10

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.18
p64567a3ex10-18.txt
EX-10.18

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 15:05:10.86

PN: DOCHDR 10 SN: *
*DOCHDR/10*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 0
CRC: 0
P64567A3.SUB, DocName: EX-10.18, Doc: 10, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.18.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 10.18
[TASER INTERNATIONAL(R) LOGO]

<R>
7339 East Evans Road - Scottsdale, AZ - 85280 - USA - (480) 991-0791 Fax (480) 991-0791
</R>
AMENDMENT TO PROMISSORY NOTE(S)
Note Balance: __________
City/State: Scottsdale, Arizona
Date of Amendment: 3/30/01
This Amendment No. __ to the Original Loans and Security Agreement
(this "Amendment") is made as of March 30, 2001 by and between TASER
International Inc. ("Borrower") and _____________ ("Lender").
Borrower and Lender are parties to, among other documents, a
Promissory Note agreement as of ______ (date of initial investment). Borrower
and Lender desire to amend the Promissory Notes in accordance with the following
terms.
NOW THEREFORE, Borrower and Lender agree as follows:
4.

The Maturity Dates are hereby amended to July 1, 2002. With an
additional provision that the company may at its discretion,
extend the maturity date 2 consecutive terms of 12 months each to
cover working capital shortfalls.

Unless otherwise defined, all other terms specified in the Promissory Notes
shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
above written.
Borrower:

Lender:

TASER International Inc.

By: /s/ Patrick W. Smith
_____________________

____________________

Name: Patrick W. Smith

Name:

</TEXT>
</DOCUMENT>

Ed#: 6

*P64567/6101801/6*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-10.19, Doc: 11

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-10.19
p64567a3ex10-19.txt
EX-10.19

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 15:05:10.86

PN: DOCHDR 11 SN: *
*DOCHDR/11*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 8
CRC: 3547
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 1
Description: Exhibit 10.19

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 10.19
LOAN AND SECURITY AGREEMENT
TASER INTERNATIONAL, INC.
1

Ed#: 1

*P64567/6101901/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 62
CRC: 62733
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 2
Description: Exhibit 10.19

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.02.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 1

*P64567/6101902/1*

2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>
1

ACCOUNTING AND OTHER TERMS..............................................................................

Page
---<C>
4

2

LOAN AND TERMS OF PAYMENT...............................................................................
2.1
Promise to Pay.................................................................................
2.2
Interest Rate, Payments........................................................................
2.3
Fees...........................................................................................

4
4
4
5

3

CONDITIONS OF LOANS.....................................................................................
3.1
Conditions Precedent to Initial Advance........................................................
3.2
Conditions Precedent to all Advances...........................................................

5
5
5

4

CREATION OF SECURITY INTEREST...........................................................................
4.1
Grant of Security Interest.....................................................................

5
5

5

REPRESENTATIONS AND WARRANTIES..........................................................................
5.1
Due Organization and Authorization.............................................................
5.2
Collateral.....................................................................................
5.3
Litigation.....................................................................................
5.4
No Material Adverse Change in Financial Statements.............................................
5.5
Solvency.......................................................................................
5.6
Regulatory Compliance..........................................................................
5.7
Subsidiaries...................................................................................
5.8
Full Disclosure................................................................................

5
5
6
6
6
6
6
7
7

6

AFFIRMATIVE COVENANTS...................................................................................
6.1
Government Compliance..........................................................................
6.2
Financial Statements, Reports, Certificates....................................................
6.3
Inventory; Returns.............................................................................
6.4
Taxes..........................................................................................
6.5
Insurance......................................................................................
6.6
Primary Accounts...............................................................................
6.7
Further Assurances.............................................................................

7
7
7
7
8
8
8
8

7

NEGATIVE
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9

COVENANTS......................................................................................
Dispositions...................................................................................
Changes in Business, Ownership, Management or Business Locations...............................
Mergers or Acquisitions........................................................................
Indebtedness...................................................................................
Encumbrance....................................................................................
Distributions; Investments.....................................................................
Transactions with Affiliates...................................................................
Subordinated Debt..............................................................................
Compliance.....................................................................................

8
8
8
9
9
9
9
9
9
9

8

EVENTS OF DEFAULT.......................................................................................
8.1
Payment Default................................................................................
8.2
Covenant Default...............................................................................
8.3
Material Adverse Change........................................................................
8.4
Attachment.....................................................................................
8.5
Insolvency.....................................................................................
8.6
Other Agreements...............................................................................

9
10
10
10
10
10
10

</TABLE>
2

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 40
CRC: 920
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 3
Description: Exhibit 10.19

[E/O]

<PAGE>
<TABLE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.03.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 1

*P64567/6101903/1*

3

<S>
Judgments......................................................................................
Misrepresentations.............................................................................
Guaranty.......................................................................................

<C>
10
11
11

9

BANK’S RIGHTS AND REMEDIES..............................................................................
9.1
Rights and Remedies............................................................................
9.2
Power of Attorney..............................................................................
9.3
Accounts Collection............................................................................
9.4
Bank Expenses..................................................................................
9.5
Bank’s Liability for Collateral................................................................
9.6
Remedies Cumulative............................................................................
9.7
Demand Waiver..................................................................................

11
11
11
12
12
12
12
12

10

NOTICES.................................................................................................

12

11

CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER.............................................................

13

12

GENERAL PROVISIONS......................................................................................
12.1
Successors and Assigns.........................................................................
12.2
Indemnification................................................................................
12.3
Time of Essence................................................................................
12.4
Severability of Provision......................................................................
12.5
Amendments in Writing, Integration.............................................................
12.6
Counterparts...................................................................................
12.7
Survival.......................................................................................
12.8
Confidentiality................................................................................
12.9
Attorneys’ Fees, Costs and Expenses............................................................

13
13
13
13
13
13
13
14
14
14

13

DEFINITIONS.............................................................................................
13.1
Definitions....................................................................................

14
14

Bruce R. Culver and Donna T. Culver..............................................................................

5

Silicon Valley Bank..............................................................................................

5

8.7
8.8
8.9

</TABLE>
3

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 51315
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 4
Description: Exhibit 10.19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.04.00

[E/O]

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

4
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated April 26,
2001, between SILICON VALLEY BANK ("Bank"), whose address is 3003
Tasman Drive, Santa Clara, California 95054 with a loan production
office located at 4455 E. Camelback Road, Suite E-290, Phoenix, Arizona
85018 and TASER INTERNATIONAL, INC. ("Borrower"), whose address is 7860
East McClain Drive, Suite 2, Scottsdale, AZ 85260 provides the terms on
which Bank will lend to Borrower and Borrower will repay Bank. The
parties agree as follows:

1

ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.
2

LOAN AND TERMS OF PAYMENT

2.1

PROMISE TO PAY.

Borrower promises to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1

REVOLVING ADVANCES.

(a) Bank will make Advances not exceeding the Committed Revolving Line.
Amounts borrowed under this Section may be repaid and reborrowed during the term
of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be
made. Borrower must promptly confirm the notification by delivering to Bank the
Payment/Advance Form attached as Exhibit B. Bank will credit Advances to
Borrower’s deposit account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank believes
is a Responsible Officer or designee. Borrower will indemnify Bank for any loss
Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.
(d) Bank’s obligation to lend the undisbursed portion of the
Obligations will terminate if, in Bank’s sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospect of repayment of
the Obligations, or there has been any material adverse deviation by Borrower
from the most recent business plan of Borrower presented to and accepted by Bank
prior to the execution of this Agreement.
2.2

INTEREST RATE, PAYMENTS.

(a) Interest Rate. Advances accrue interest on the outstanding
principal balance at a per annum rate of 1 percentage point above the Prime
Rate. After an Event of Default, Obligations accrue interest at 5 percent above
the rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable
on the last day of each month. Bank may debit any of Borrower’s deposit accounts
including Account Number ___________________ for principal and interest payments
owing or any amounts Borrower owes
4

Ed#: 1

*P64567/6101904/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 64502
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 5
Description: Exhibit 10.19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.05.00

[E/O]

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
5
Bank. Bank will promptly notify Borrower when it debits Borrower’s accounts.
These debits are not a set-off. Payments received after 12:00 noon Pacific time
are considered received at the opening of business on the next Business Day.
When a payment is due on a day that is not a Business Day, the payment is due
the next Business Day and additional fees or interest accrue.
2.3

FEES.
Borrower will pay:

(a) Facility Fee. A fully earned, non-refundable Facility Fee of
$45,000 due no later than May 15, 2001; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys’
fees and reasonable expenses) incurred through and after the date of this
Agreement, are payable when due.
3

CONDITIONS OF LOANS

3.1

CONDITIONS PRECEDENT TO INITIAL ADVANCE.

Bank’s obligation to make the initial Advance is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.
3.2

CONDITIONS PRECEDENT TO ALL ADVANCES.

Bank’s obligations to make each Advance, including the initial Advance,
is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
<R>
(b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Advance and no Event of Default may have occurred and be continuing, or result
from the Advance. Each Advance is Borrower’s representation and warranty on that
date that the representations and warranties of Section 5 remain true.
</R>
4

CREATION OF SECURITY INTEREST

4.1

GRANT OF SECURITY INTEREST.

Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower’s duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. If this Agreement is terminated, Bank’s lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.
5

REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:

5.1

DUE ORGANIZATION AND AUTHORIZATION.

Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which
5

Ed#: 2

*P64567/6101905/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 65
CRC: 63305
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 6
Description: Exhibit 10.19

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.06.00

[E/O]

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
6
the conduct of its business or its ownership of property requires that it be
qualified, except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower’s formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could reasonably be expected to cause a Material
Adverse Change.
5.2

COLLATERAL.

Borrower has good title to the Collateral, free of Liens except
Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects.
5.3

LITIGATION.

Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower’s Responsible Officers, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.
5.4

NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.

All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations. There has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.
5.5

SOLVENCY.

The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6

REGULATORY COMPLIANCE.

Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change.

6

Ed#: 1

*P64567/6101906/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 29519
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 7
Description: Exhibit 10.19

[E/O]

<PAGE>
5.7

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.07.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

7
SUBSIDIARIES.

Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8

FULL DISCLOSURE.

No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading. Bank
recognizes that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts
may differ from the projected and forecasted results.
6

AFFIRMATIVE COVENANTS

Borrower will do all of the following for so long as Bank has an
obligation to lend, or there are outstanding Obligations:
6.1

GOVERNMENT COMPLIANCE.

Borrower will maintain its and all Subsidiaries’ legal existence and
good standing in its jurisdiction of formation and maintain qualification in
each jurisdiction in which the failure to so qualify would reasonably be
expected to cause a material adverse effect on Borrower’s business or
operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, noncompliance with
which could have a material adverse effect on Borrower’s business or operations
or would reasonably be expected to cause a Material Adverse Change.
6.2

FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated
operations during the period certified by a Responsible Officer and in a form
acceptable to Bank; (ii) as soon as available, but no later than 90 days after
the last day of Borrower’s fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Bank; (iii) a prompt report of
any legal actions pending or threatened against Borrower or any Subsidiary that
could result in damages or costs to Borrower or any Subsidiary of $100,000 or
more; and (iv) budgets, sales projections, operating plans or other financial
information Bank reasonably requests.
(b) Allow Bank to audit Borrower’s Collateral at Borrower’s expense.
Such audits will be conducted no more often than every year unless an Event of
Default has occurred and is continuing.
6.3

INVENTORY; RETURNS.

Borrower will keep all Inventory in good and
from material defects. Returns and allowances between
debtors will follow Borrower’s customary practices as
this Agreement. Borrower must promptly notify Bank of
disputes and claims, that involve more than $50,000.

7

Ed#: 1

*P64567/6101907/1*

marketable condition, free
Borrower and its account
they exist at execution of
all returns, recoveries,

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 42672
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 8
Description: Exhibit 10.19

[E/O]

<PAGE>
6.4

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.08.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

8
TAXES.

Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments (other than taxes
and assessments which Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Bank, on
demand, appropriate certificates attesting to the payment.
6.5

INSURANCE.

Borrower will keep its business and the Collateral insured for risks
and in amounts standard for Borrower’s industry, and as Bank may reasonably
request. Insurance policies will be in a form, with companies, and in amounts
that are satisfactory to Bank in Bank’s reasonable discretion. All property
policies will have a lender’s loss payable endorsement showing Bank as an
additional loss payee and all liability policies will show the Bank as an
additional insured and provide that the insurer must give Bank at least 20 days
notice before canceling its policy. At Bank’s request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy will, at Bank’s option, be payable to Bank on account
of the Obligations.
6.6

PRIMARY ACCOUNTS.

Borrower will maintain its primary depository and operating accounts
with Bank.
6.7

FURTHER ASSURANCES.

Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank’s security interest in
the Collateral or to effect the purposes of this Agreement.
7

NEGATIVE COVENANTS

Borrower will not do any of the following without Bank’s prior written
consent, which will not be unreasonably withheld, for so long as Bank has an
obligation to lend or there are any outstanding Obligations:
7.1

DISPOSITIONS.

Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.
7.2

CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.

Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its ownership or management of greater than
25% (other than by the sale of Borrower’s equity securities in a public offering
or to venture capital investors so long as Borrower identifies the venture
capital investors prior to the closing of the investment). Borrower will not,
without at least 30 days prior written notice, relocate its chief executive
office or add any new offices or business locations in which Borrower maintains
or stores over $5,000 in Borrower’s assets or property.

8

Ed#: 1

*P64567/6101908/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 3460
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 9
Description: Exhibit 10.19

[E/O]

<PAGE>
7.3

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.09.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

9
MERGERS OR ACQUISITIONS.

Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.
7.4

INDEBTEDNESS.

Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5

ENCUMBRANCE.

Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.
7.6

DISTRIBUTIONS; INVESTMENTS.

Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so. Pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock.
7.7

TRANSACTIONS WITH AFFILIATES.

Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for transactions that are in
the ordinary course of Borrower’s business, upon fair and reasonable terms that
are no less favorable to Borrower than would be obtained in an arm’s length
transaction with a nonaffiliated Person.
7.8

SUBORDINATED DEBT.

Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank’s prior written consent.
7.9

COMPLIANCE.

Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower’s
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.
8

EVENTS OF DEFAULT
Any one of the following is an Event of Default:
9

Ed#: 1

*P64567/6101909/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 64
CRC: 1242
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 10
Description: Exhibit 10.19

[E/O]

<PAGE>
8.1

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.10.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

10
PAYMENT DEFAULT.

If Borrower fails to pay any of the Obligations within 3 days after
their due date. During the additional period the failure to cure the default is
not an Event of Default (but no Advance will be made during the cure period);
8.2

COVENANT DEFAULT.

<R>
If Borrower violates any covenant in Section 7 or does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower and Bank and as to any
default under a term, condition or covenant that can be cured, has not cured the
default within 10 days after it occurs, or if the default cannot be cured within
10 days or cannot be cured after Borrower’s attempts within 10 day period, and
the default may be cured within a reasonable time, then Borrower has an
additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Advances will be made during the cure period);
</R>
8.3

MATERIAL ADVERSE CHANGE.

If there (i) occurs a material adverse change in the business,
operations, or condition (financial or otherwise) of the Borrower; or (ii) is a
material impairment of the prospect of repayment of any portion of the
Obligations; or (iii) is a material impairment of the value or priority of
Bank’s security interests in the Collateral.
8.4

ATTACHMENT.

If any material portion of Borrower’s assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower’s assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Advances will be made
during the cure period);
8.5

INSOLVENCY.

If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Advances will be made before any
Insolvency Proceeding is dismissed);
8.6

OTHER AGREEMENTS.

If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $100,000 or that could cause a Material Adverse Change;
8.7

JUDGMENTS.

If a money judgment(s) in the aggregate of at least $50,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Advances
will be made before the judgment is stayed or satisfied);

10

Ed#: 2

*P64567/6101910/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 51234
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 11
Description: Exhibit 10.19

[E/O]

<PAGE>
8.8

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.11.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

11
MISREPRESENTATIONS.

If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document; or
8.9

GUARANTY.

<R>
Any guaranty of any Obligations ceases for any reason to be in full
force or any Guarantor does not perform any obligation under any guaranty of the
Obligations, or any material misrepresentation or material misstatement exists
now or later in any warranty or representation in any guaranty of the
Obligations or in any certificate delivered to Bank in connection with the
guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to
any Guarantor, or any event of default under that certain Third Party Broker
Account Pledge Agreement, of even date, by and between Bruce R. Culver and Donna
T. Culver and Bank, securing the guaranty executed by Bruce R. Culver as a
Guarantor.
</R>
9

BANK’S RIGHTS AND REMEDIES

9.1

RIGHTS AND REMEDIES.

When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 0 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requires and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank’s rights
or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2

POWER OF ATTORNEY.

Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s name
on any checks or other forms of payment or security; (ii) sign Borrower’s name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under
11

Ed#: 3

*P64567/6101911/3*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 68
CRC: 5258
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 12
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.12.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>
12
Borrower’s insurance policies; (iv) settle and adjust disputes and claims about
the Accounts directly with account debtors, for amounts and on terms Bank
determines reasonable; and (v) transfer the Collateral into the name of Bank or
a third party as the Code permits. Bank may exercise the power of attorney to
sign Borrower’s name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default
has occurred. Bank’s appointment as Borrower’s attorney in fact, and all of
Bank’s rights and powers, coupled with an interest, are irrevocable until all
Obligations have been fully repaid and performed and Bank’s obligation to
provide Advances terminates.
9.3

ACCOUNTS COLLECTION.

When an Event of Default occurs and continues, Bank may notify any
Person owing Borrower money of Bank’s security interest in the funds and verify
the amount of the Account. Borrower must collect all payments in trust for Bank
and, if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.
9.4

BANK EXPENSES.

<R>
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of Default.
</R>
9.5

BANK’S LIABILITY FOR COLLATERAL.

If Bank complies with reasonable banking practices and the Code, it is
not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to
the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other person. Borrower
bears all risk of loss, damage or destruction of the Collateral.
9.6

REMEDIES CUMULATIVE.

Bank’s rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank’s exercise of one right or
remedy is not an election, and Bank’s waiver of any Event of Default is not a
continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.7

DEMAND WAIVER.

Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10

NOTICES

All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
12

Ed#: 2

*P64567/6101912/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 63
CRC: 47812
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 13
Description: Exhibit 10.19

[E/O]

<PAGE>
11

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.13.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

13
CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

Arizona law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the process, venue and
exclusive jurisdiction of the State and Federal courts in Maricopa County,
Arizona.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12

GENERAL PROVISIONS

12.1

SUCCESSORS AND ASSIGNS.

This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank’s prior written consent which may be granted or
withheld in Bank’s discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits
under this Agreement.
12.2

INDEMNIFICATION.

Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank’s gross negligence or willful misconduct.
12.3

TIME OF ESSENCE.

Time is of the essence for the performance of all obligations in this
Agreement.
12.4

SEVERABILITY OF PROVISION.

Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5

AMENDMENTS IN WRITING, INTEGRATION.

All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6

COUNTERPARTS.

This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

13

Ed#: 2

*P64567/6101913/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 67
CRC: 36439
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 14
Description: Exhibit 10.19

[E/O]

<PAGE>
12.7

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.14.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

14
SURVIVAL.

<R>
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
</R>
12.8

CONFIDENTIALITY.

In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank’s subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee or
purchasers agreement of the terms of this provision), (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank’s
examination or audit and (v) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (a) is in the public domain or in Bank’s possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank; or (b) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9

ATTORNEYS’ FEES, COSTS AND EXPENSES.

In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys’ fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
13

DEFINITIONS

13.1

DEFINITIONS.
In this Agreement:

"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower’s Books relating to any of the
foregoing, as such definition may be amended from time to time.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys’ fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER’S BOOKS" are all Borrower’s books and records including
ledgers, records regarding Borrower’s assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
14

Ed#: 2

*P64567/6101914/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 69
CRC: 46608
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 15
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.15.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

15
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code, as applicable.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED REVOLVING LINE" is an Advance of up to $1,500,000.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest, as such definition may be amended from time to
time.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the Obligations,
including Bruce R. Culver.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
15

Ed#: 1

*P64567/6101915/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 67
CRC: 17825
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 16
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.16.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

16
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
<R>
"MATERIAL ADVERSE CHANGE" is described in Section 8.3.
</R>
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower’s indebtedness to Bank under this Agreement or any other
Loan Document;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor’s
Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank’s security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Licenses or sublicenses granted in the ordinary course of
Borrower’s business and any interest or title of a licensor or under any license
or sublicense, if the licenses and sublicenses permit granting Bank a security
interest;
16

Ed#: 2

*P64567/6101916/2*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 58
CRC: 3472
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 17
Description: Exhibit 10.19

[E/O]

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.17.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

<PAGE>

17
(e) Leases or subleases granted in the ordinary course of Borrower’s
business, including in connection with Borrower’s leased premises or leased
property;
(f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank’s most recently announced "prime rate," even if it
is not Bank’s lowest rate.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" is April 30, 2002.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower’s indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
Patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower’s consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
BORROWER:
TASER International, Inc.
By:

/s/ Kathleen Manrahan
--------------------------------------Title: Secretary & Chief Financial Officer
17

Ed#: 1

*P64567/6101917/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 12
CRC: 63043
P64567A3.SUB, DocName: EX-10.19, Doc: 11, Page: 18
Description: Exhibit 10.19

[E/O]

<PAGE>
BANK:

18

SILICON VALLEY BANK
By:

/s/ Amy Lou Blunt
--------------------------------------Title: Vice President, Relationship Manager
18
</TEXT>
</DOCUMENT>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 610.19.18.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

Ed#: 1

*P64567/6101918/1*

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: *
Validation: N * Lines: *
CRC: *
P64567A3.SUB, DocName: EX-23.2, Doc: 12

[B/E]

<DOCUMENT>
<TYPE>
<FILENAME>
<DESCRIPTION>
<TEXT>

EX-23.2
p64567a3ex23-2.txt
EX-23.2

JB: *

Phone: (602) 223-4455

Operator: BPX31319

Date: 7-MAY-2001 15:05:10.86

PN: DOCHDR 12 SN: *
*DOCHDR/12*

Ed#: *

BOWNE INTEGRATED TYPESETTING SYSTEM Site: (BPX) BOWNE OF PHOENIX - NEW
Name: TASER
Validation: Y
Lines: 23
CRC: 1252
P64567A3.SUB, DocName: EX-23.2, Doc: 12, Page: 1

[E/O]

<PAGE>

Phone: (602) 223-4455

Operator: BPX31319

JB: P64567 PN: 723.02.01.00

Date: 7-MAY-2001 15:05:10.86

SN: 0

1
Exhibit 23.2

[AA LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<R>
As independent public accountants, we hereby consent to the use of our report
dated April 30, 2001 (and to all references to our firm) included in or made a
part of Amendment #3 of the Registration Statement on Form SB-2.
</R>

<R>
Phoenix, Arizona
April 30, 2001
</R>
</TEXT>
</DOCUMENT>

Ed#: 7

*P64567/7230201/7*