<PAGE>   1
                                                                   Exhibit 10.12
[BANK OF AMERICA LOGO]


                                PROMISSORY NOTE

<TABLE>
<CAPTION>
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Principal Loan      Loan Date      Maturity       Loan No        Call      Collateral          Account       Officer        Initials
<S>                 <C>            <C>            <C>            <C>       <C>                 <C>            <C>            <C>
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$60,000.00          10-24-2000     01-24-2001     New                                          15380          Z0315
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</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

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

PRINCIPAL                INITIAL                  DATE OF NOTE:
AMOUNT: $60,000.00       RATE: 11.500%            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
has with Lender. (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security Interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired. (h) Lender in good faith deems itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 25.000% per
annum. The interest rate will not exceed the maximum rate permitted by
applicable law. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
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.
<PAGE>   2
10-24-2000                       PROMISSORY NOTE                          PAGE 2
                                  (CONTINUED)
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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

===============================================================================

<PAGE>   3
                              COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
       PRINCIPAL   LOAN DATE   MATURITY   LOAN NO.   CALL   COLLATERAL   ACCOUNT   OFFICER   INITIALS
<S>   <C>         <C>         <C>        <C>        <C>    <C>          <C>       <C>       <C>
                                                                          15380     Z0315
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       Lender: Bank of America, N.A.
           7339 E. Evans Rd Ste 1                         101 North First Avenue
           Scottsdale, AZ 85260                           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.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until all Indebtedness incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate in writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty will
continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and modifications
of the Indebtedness 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 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
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial
<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
and effect until such right of setoff or security interest is specifically
waived or released by an instrument in writing executed by Lender.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
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
     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
     of any of Lender's rights or of any of Guarantor's obligations as to any
     future transactions. Whenever the consent of Lender is required under this
     Guaranty, 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
<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__________
<PAGE>   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       LENDER: Bank of America, N.A.
           7339 E. Evans Rd Ste 1                         101 North First Avenue
           Scottsdale, AZ 85260                           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
hereafter acquired.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at the address
of Lender listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
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
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial

<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
exercise such right or 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 and effect until such right of setoff or security interest is
specifically waived or released by an instrument in writing executed by Lender.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender
and shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
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
     any other provision of this Guaranty. No prior waiver by Lender, nor any
     course of dealing between Lender and Guarantor, shall constitute a waiver
     of any of Lender's rights or of any of Guarantor's obligations as to any
     future transactions. Whenever the consent of Lender is required under this
     Guaranty, 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
<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 __________________________

________________________________________________________________________________
________________________________________________________________________________
<PAGE>   9
[Bank of America Logo]

                         COMMERCIAL SECURITY AGREEMENT

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL      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       Lender: Bank of America, N.A.
           7339 E. Evans Rd Ste 1                         101 North First Avenue
           Scottsdale, AZ 85260                           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."

     GRANTOR. The word "Grantor" means Taser International Incorporated, its
     successors and assigns.

     GUARANTOR. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with the Indebtedness.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and interest, together with all other
     indebtedness and costs and expenses for which Grantor is responsible under
     this Agreement or under any of the Related Documents. In addition, the word
     "Indebtedness" includes all other obligations, debts and liabilities, plus
     interest thereon, of Grantor, or any one or more of them, to Lender, as
     well as all claims by Lender against Grantor, or any one or more of them,
     whether existing now or later; whether they are voluntary or involuntary,
     due or not due, direct or indirect, absolute or contingent, liquidated or
     unliquidated; whether Grantor may be liable individually or jointly with
     others; whether Grantor may be obligated as guarantor, surety,
     accommodation party or otherwise; whether recovery upon such indebtedness
     may be or hereafter may become barred by any statute of limitations; and
     whether such indebtedness may be or hereafter may become otherwise
     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.

<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
equipment, Grantor shall deliver to Lender, as often as Lender shall require,
such lists, descriptions, and designations of such Collateral as Lender may
require to identify the nature, extent, and location of such Collateral. Such
information shall be submitted for Grantor and each of its subsidiaries or
related companies.

MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral. Lender
and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Grantor shall immediately notify Lender of all cases involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.

TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the Indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
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.

<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
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole
discretion, shall deem appropriate under the circumstances, but failure to
honor any request by Grantor shall not of itself be deemed to be a failure to
exercise reasonable care. Lender shall not be required to take any steps
necessary to preserve any rights in the Collateral against prior parties, nor
to protect, preserve or maintain any security interest given to secure the
Indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
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.


<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,
     as may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     in equity, or otherwise.

     CUMULATIVE REMEDIES.  All of Lender's rights and remedies, whether
     evidenced by this Agreement or the Related Documents or by any other
     writing, shall be cumulative and may be exercised singularly or
     concurrently. Election by Lender to pursue any remedy shall not exclude
     pursuit of any other remedy, and an election to make expenditures or to
     take action to perform and obligation of Grantor under this Agreement,
     after Grantor's failure to perform, shall not affect Lender's right to
     declare a default and to exercise its remedies.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS.  This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement 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 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
<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


BY:
   --------------------------------------------------------
   PATRICK W. SMITH, PRESIDENT

================================================================================
<PAGE>   14
<TABLE>
<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>
<PAGE>   15
<TABLE>
<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)

Please type or laser-print this form. Be sure it is completely legible. Read all
     instructions.
Fill in form very carefully; mistakes may have legal consequences. Follow
     instructions completely. If you have any questions, consult your attorney.
     Filing officer cannot give legal advice.
Do not insert anything in the open space in the upper portion of this form; it
     is reserved for filing officer use.
When properly completed, send Filing Officer Copy, with required fee, to filing
     officer. If you want an acknowledgment, also send Acknowledgment Copy,
     otherwise detach. If you want to make a search request, complete item 9 and
     send Search Request Copy, otherwise detach. Always detach Debtor and
     Secured Party Copies.
If you need to use attachments, use 8-1/2 X 11 inch sheets and put at the top of
     each additional sheet the name of the first Debtor, formatted exactly as it
     appears in Item 1 of this form; you are encouraged to use Addendum (Form
     UCC1Ad).

                               ITEM INSTRUCTIONS

1.   DEBTOR NAME: Enter only Debtor name in Item 1, an entity's name (1a) or an
     individuals's name (1b). Enter Debtor's exact full legal name. Don't
     abbreviate.
1a.  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.
1b.  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,

<PAGE>   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
        by means of a card (credit or debit) and wishes to use such means of
        payment, check the appropriate box and enter filer's account number in
        Item B, or, in the alternative, filer may present this information by a
        cover letter.

C.      Complete Item C if you want acknowledgment copy returned and you have
        presented simultaneously a carbon or other copy of this form for use as
        an acknowledgment copy.

D.      If filer desires to use titles of lessee and lessor, or consignee and
        consignor, instead of Debtor and Secured Party, check the appropriate
        box in Item D. This item is optional. If this is not a UCC security
        interest filing (e.g., a tax lien, judgment lien, etc.), check the
        appropriate box in Item D, complete Items 1-9 as applicable and attach
        any other Items required under other law.
<PAGE>   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.

GRANTOR:

TASER INTERNATIONAL INCORPORATED

BY:________________________________________
   PATRICK W. SMITH, PRESIDENT

_______________________________________________________________________________

                              FOR LENDER USE ONLY
                             INSURANCE VERIFICATION
DATE: ___________________                              PHONE: _________________
AGENT'S NAME: _____________________________________________
INSURANCE COMPANY: ____________________________________________________
POLICY NUMBER: ________________________________________________________________
EFFECTIVE DATES: ______________________________________________________________
COMMENTS: _____________________________________________________________________
_______________________________________________________________________________

<PAGE>   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>                                                    <C>
     [                                       ]
TO:  [                                       ]          DATE: OCTOBER 24, 2000
     [                                       ]
</TABLE>

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                ]
     [                                       ]
<PAGE>   19
[BANK OF AMERICA LOGO]

                     DISBURSEMENT REQUEST AND AUTHORIZATION

<TABLE>
<CAPTION>
             PRINCIPAL    LOAN DATE     MATURITY   LOAN NO.   CALL   COLLATERAL   ACCOUNT   OFFICER   INITIALS
<S>        <C>           <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       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>                      <C>
Undisbursed Funds:        $60,000.00
                          ----------
Note Principal:           $60,000.00
</TABLE>

CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:

<TABLE>
<S>                                            <C>
Prepaid Finance Charges Paid in Cash:             $0.00

Other Charges Paid in Cash:                      $30.00
     $5.00 Recording
     $12.50 Lien Search
     $12.50 Goodstanding
                                                 ------
Total Charges Paid in Cash:                      $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:____________________________________________
   PATRICK W. SMITH, PRESIDENT

================================================================================
<PAGE>   20

                         CORPORATE RESOLUTION TO BORROW

<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


================================================================================

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      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.

     EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which may be submitted
     by Lender, and which shall evidence the terms and conditions under and
     pursuant to which such liens and encumbrances, or any of them, are given;
     and also to execute and deliver to Lender any other written instruments,
     any chattel paper, or any other collateral, of any kind or nature, which
     they may in their discretion deem reasonably necessary or proper in
     connection with or pertaining to the giving of the liens and encumbrances.

     DEPOSIT ACCOUNTS. To open one or more depository accounts in the
     Corporation's name and sign and deliver all documents or items required to
     fulfill the conditions of all banking business, including without
     limitation the initiation of wire transfers, until authority is revoked by
     action of the Corporation on written notice to Lender.

     NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Corporation in which the Corporation may
     have an interest, and either to receive cash for the same or to cause such
     proceeds to be credited to the account of the Corporation with Lender, or
     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.

================================================================================