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                                                                    Exhibit 10.7

                           TASER INTERNATIONAL, INC.

                             2001 STOCK OPTION PLAN

                          (EFFECTIVE JANUARY 6, 2001)

                            SECTION 1. INTRODUCTION

Taser International, Inc. has adopted its 2001 Stock Option Plan providing for
the grant of stock options to certain eligible individuals who have or will
render services to the Company. This Plan has been approved by the Board of
Directors of the Company effective January 6, 2001.

The purpose of the Plan is to advance the interests of the Company and its
stockholders by enhancing the Company's ability to attract and retain qualified
persons to perform services for the Company, by providing incentives to such
persons to put forth maximum efforts for the Company and by rewarding persons
who contribute to the achievement of the Company's economic objectives. The Plan
seeks to achieve this purpose by providing for Options which may contribute
Incentive Stock Options or Non-qualified Stock Options.

                           SECTION 2. ADMINISTRATION

SECTION 2.1    COMMITTEE COMPOSITION.

The Plan shall be administered by the Board, or by a committee of the Board
consisting of not less than three persons; provided, however, that from and
after the date on which the Company first registers a class of its equity
securities under Section 12 of the Exchange Act, the Plan shall be administered
to the extent provided herein by such a committee of the Board. Members of such
committee, if established, shall be appointed from time to time by the Board,
shall serve at the pleasure of the Board and may resign at any time upon written
notice to the Board. As used in this Plan, the term "Committee" will refer to
the Board or to such committee, if established.

SECTION 2.2    COMMITTEE RESPONSIBILITIES.

     (a)       The Committee shall have the authority to recommend to the Board
for its consideration and approval (i) the Employees, Outside Directors and
Consultants who are to receive Options under the Plan, (ii) the time or times
when Options will be granted, (iii) the type, number, exercise price, vesting
requirements and other features and conditions of such Options, (iv) the
duration of each Option, (v) the restrictions and conditions to which the
exercisability of Options may be subject, and (vi) such other provisions of the
Options as the Committee may deem necessary or desirable and as are consistent
with the terms of the Plan. The Committee shall determine the form or forms of
the Stock Option Agreements with Optionees which shall evidence the particular
terms, conditions, rights and duties of the Company and the Optionees with
respect to Options granted pursuant to the Plan, which agreement shall be
consistent with the provisions of the Plan.

     (b)       With the consent of the Optionee affected thereby, and subject to
the consideration and approval of the Board, the Committee may amend or modify
the terms of any outstanding Option in any

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manner, provided that the amended or modified terms are permitted by the Plan as
then in effect. Without limiting the generality of the foregoing sentence, the
Committee may, with the consent of the Optionee affected thereby and subject to
consideration and approval of the Board, modify the exercise price, number of
shares, or other terms and conditions of an Option, extend the term of an
Option, accelerate the exercisability or vesting or otherwise terminate any
restrictions relating to an Option, accept surrender of any outstanding Option,
or, to the extent not previously exercised or vested, authorize the grant of new
Options in substitution for surrendered Options.

     (c)  The Committee shall have the authority to interpret the Plan and,
subject to the provisions of the Plan, to establish, adopt and revise such
rules and regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's decisions and
determinations under the Plan need not be uniform and may be made selectively
among Optionees, whether or not such Optionees are similarly situated. Each
determination, interpretation, or other action made or taken by the Committee
pursuant to the provisions of the Plan shall be conclusive and binding for all
purposes. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
under the Plan.

                     SECTION 3. SHARES AVAILABLE FOR GRANTS

SECTION 3.1    BASIC LIMITATION.

The Maximum number of shares of Common Stock that shall be authorized and
reserved for issuance under the Plan shall be 550,000 shares, $.00001 par
value. The limitation of this Section 3.1 shall be subject to adjustment
pursuant to Section 3.3.

SECTION 3.2    ADDITIONAL SHARES AVAILABLE FOR USE.

If Options are forfeited or terminate for any other reason before being
exercised, then the corresponding Common Stock shall again become available for
the grant of Options under the Plan. Also, previously acquired shares of Common
Stock which are tendered by the Optionee to the Company in whole or partial
satisfaction of the Exercise Price pursuant to Section 6.2, or in whole or
partial satisfaction of withholding obligations pursuant to Section 10.2, shall
become available for use under the Plan to the extent permitted by Rule 16b-3
of the Exchange Act. The aggregate number of shares of Common Stock that may be
issued under the Plan upon the exercise of Incentive Stock Options shall in no
event exceed 5,000,000 shares.

SECTION 3.3    ADJUSTMENT TO SHARES.

In the event of a stock split, any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend payable in
Common Stock, extraordinary dividend or divestiture (including a spin-off), a
combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise) into a lesser number of shares of Common Stock,
or any other change in the corporate structure or shares of the Company, the
Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) shall make
appropriate adjustments (which determination shall be conclusive) as to one or
more of:

     (a)  The number of and kind of securities subject to and reserved under
the Plan;

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     (b) In order to prevent dilution or enlargement of the rights of Optionees,
the number, kind and Exercise Price of securities subject to outstanding
Options;

     (c) The limitations set forth in Section 5.2.

     Without limiting the generality of the foregoing, in the event that any of
such transactions are effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or assets, including cash, with
respect to or in exchange for such Common Stock, all Optionees holding
outstanding Options shall upon the exercise of such Options receive, in lieu of
any shares of Common Stock they may be entitled to receive, such stock,
securities, or assets, including cash, as would have been issued to such
Optionees if their Options had been exercised and such Optionees had received
Common Stock prior to such transaction.

     Notwithstanding the provisions of this Section 3.3, there shall be no
adjustment to the shares authorized pursuant to this Plan for an event
described in Section 3.3 that occurs before or simultaneously with the
effective date of this Plan.

     Except as provided in this Section 3.3, an Optionee shall have no rights
by reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

                            SECTION 4.  ELIGIBILITY

SECTION 4.1  NON-QUALIFIED STOCK OPTIONS.

Only Employees, Outside Directors and Consultants shall be eligible for the
grant of NSOs.

SECTION 4.2  INCENTIVE STOCK OPTIONS.

Only Employees who are common-law employees of the Company, a Parent or a
Subsidiary shall be eligible for the grant of Incentive Stock Options. In
addition, an Employee who owns more than 10% of the total combined voting power
of all classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an Incentive Stock Option
unless the requirements set forth in Section 422(c)(6) of the Code are
satisfied.

                           SECTION 5.  STOCK OPTIONS

SECTION 5.1  STOCK OPTION AGREEMENT.

Each grant of an Option under the Plan shall be evidenced by a Stock Option
Agreement between the Optionee and the Company. Such Option shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan as shall be determined by the Committee in its
discretion and upon consideration and approval of the Board. The provisions of
the various Stock Option Agreements entered into under the Plan need not be
identical. Options shall be granted for no cash consideration unless minimal
cash consideration is required by applicable law.

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SECTION 5.2  NUMBER OF SHARES.

Each Stock Option Agreement shall specify the number of Common Stock subject to
the Option. Options granted to any Optionee in a single fiscal year of the
Company shall not cover more than 75,000 shares of Common Stock, except that
Options granted to a new Employee in the fiscal year of the Company in which
his or her service as an Employee first commences shall not cover more than
100,000 shares of Common Stock. The limitations set forth in the preceding
sentence shall be subject to adjustment in accordance with Section 3.3.

SECTION 5.3  EXERCISE PRICE.

     (a)  Incentive Stock Options.

The Exercise Price per share to be paid by the Optionee at the time an
Incentive Stock Option is exercised shall be determined by the Committee, in
its discretion and upon consideration and approval of the Board; provided,
however that the such price shall not be less than (i) 100% of the Fair Market
Value of one share of Common Stock on the date the Option is granted, or (ii)
110% of the Fair Market Value of one share of Common Stock on the date the
Option is granted if, at the time the Option is granted, the Optionee owns,
directly or indirectly (as determined pursuant to Section 424(d) of the Code),
more than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or Parent corporation of the Company (within the
meaning of Sections 424(f) and 424(e), respectively, of the Code).

     (b)  Non-qualified Stock Options.

The Exercise Price per share to be paid by the Optionee at the time an NSO is
exercised shall be determined by the Committee, in its discretion and upon
consideration and approval of the Board; provided, however that the such price
shall not be less than 85% of the Fair Market Value of one share of Common
Stock on the date the Option is granted.

SECTION 5.4  EXERCISABILITY AND TERM.

An Option shall become exercisable at such times and in such installments
(which may be cumulative) as shall be determined by the Committee in its
discretion at the time the Option is granted. Upon the completion of its term,
an Option, to the extent not then exercised, shall expire.

     (a)  Incentive Stock Options.

The period during which an Incentive Stock Option may be exercised shall be
fixed by the Committee in its discretion and upon consideration and approval of
the Board at the time such Option is granted; provided that the term of an
Incentive Stock Option shall in no event exceed (i) 10 years from the date of
grant, or (ii) 5 years from the date of grant if, at the time the Option is
granted, the Optionee owns, directly or indirectly (as determined pursuant to
Section 424(d) of the Code), more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary or Parent corporation
of the Company (within the meaning of Sections 424(f) and 424(e), respectively,
of the Code).

     (a) Non-qualified Stock Options.

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The period during which an NSO may be exercised shall be fixed by the Committee
in its discretion and upon consideration and approval of the Board at the time
such Option is granted.

SECTION 5.5    MANNER OF EXERCISE.

An Option may be exercised by an Optionee in whole or in part from time to
time, subject to the conditions contained herein and in the Stock Option
Agreement, by delivery, in person or through certified or registered mail, of
written notice of exercise to the Company at its principal executive office
(Attention: Chief Financial Officer), and by paying in full the total Option
Exercise Price for the shares of Common Stock purchased. Such notice shall be
in a form satisfactory to the Committee and shall specify the particular Option
(or portion thereof) that is being exercised and the number of shares with
respect to which the Option is being exercised. Subject to compliance with
Section 11.1 of the Plan, the exercise of the Option shall be deemed effective
upon receipt of such notice and payment complying with the terms of the Plan
and the Stock Option Agreement.

     As soon as practicable after the effective exercise of the Option, the
Optionee shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the Company shall deliver to the Optionee
one or more duly issued stock certificates evidencing such ownership. If an
Optionee exercises any Option with respect to some, but not all, of the shares
of Common Stock subject to such Option, the right to exercise such Option with
respect to the remaining shares shall continue until it expires or terminates
in accordance with its terms. An Option shall only be exercisable with respect
to whole shares.

                      SECTION 6. PAYMENT FOR OPTION SHARES

SECTION 6.1    GENERAL RULE.

The entire Exercise Price of Common Stock issued upon exercise of Options shall
be payable in cash or cash equivalents at the time when such shares of Common
Stock are purchased, provided, however, that the Committee, in its discretion
upon the original grant or thereafter, and upon the consideration and approval
of the Board, may allow such payments to be made in any form described in this
Section 6. In determining whether or upon what terms and conditions an Optionee
will be permitted to pay the Exercise Price of an Option in a form other than
cash, the Committee may consider all relevant facts and circumstances including,
without limitation, the tax and securities law consequences to the Optionee and
the Company and the financial accounting consequences to the Company.

SECTION 6.2    SURRENDER OF STOCK.

To the extent that this Section 6.2 is applicable, an Optionee may pay all or
any part of the Exercise Price by surrendering, or attesting to the ownership
of, shares of Common Stock that are already owned by the Optionee. Such shares
of Common Stock shall be valued at their Fair Market Value on the date when the
new shares of Common Stock are purchased under the Plan.

SECTION 6.3    EXERCISE/SALE.

To the extent that this Section 6.3 is applicable, an Optionee may pay all or
any part of the Exercise Price and any withholding taxes by delivering (on a
form prescribed by the Company) an irrevocable direction

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to a securities broker approved by the Company to sell all or part of the
Common Stock being purchased under the Plan and to deliver all or part of the
sales proceeds to the Company.

SECTION 6.4    EXERCISE/PLEDGE.

To the extent that this Section 6.4 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) an irrevocable direction to pledge all or part of
the Common Stock being purchased under the Plan to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company.

SECTION 6.5    PROMISSORY NOTE.

To the extent that this Section 6.5 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) a full-recourse promissory note. However, the par
value of the Common Stock being purchased under the Plan, if newly issued,
shall be paid in cash or cash equivalents.

SECTION 6.6    OTHER FORMS OF PAYMENT.

To the extent that this Section 6.6 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid in any other form that is
consistent with applicable laws, regulations and rules.

SECTION 6.7    DISPOSITION OF COMMON STOCK ACQUIRED PURSUANT TO THE EXERCISE OF
               INCENTIVE STOCK OPTIONS.

Prior to making a disposition (as defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option granted under the Plan before the expiration of two years after its date
of grant or before the expiration of one year after its date of exercise, the
Optionee shall send written notice to the Company of the proposed date of such
disposition, the number of shares to be disposed of, the amount of proceeds to
be received from such disposition and any other information relating to such
disposition that the Company may reasonably request. The right of an Optionee to
make any such disposition shall be conditioned on the receipt by the Company of
all amounts necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to such disposition. The
Committee shall have the right, in its sole discretion, to endorse the
certificates representing such shares with a legend restricting transfer and to
cause a stop transfer order to be entered with the Company's transfer agent
until such time as the Company receives the amounts necessary to satisfy such
withholding and employment-related tax requirements or until the later of the
expiration or two years from its date of grant or one year from its date of
exercise.

SECTION 6.8    AGGREGATE LIMITATIONS OF STOCK SUBJECT TO INCENTIVE STOCK
               OPTIONS.

To the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options (within the meaning of Section 422 of the Code)
are exercisable for the first time by an Optionee during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
Subsidiary or any parent corporation of the Company) exceeds $100,000 (or such
other amount as may be prescribed by the Code from time to time), such excess
Options shall be treated as Non-qualified Stock Options. The determination shall
be made by taking Incentive Options into account in the order in which they were
granted. If such excess only applies to a portion of an Incentive Stock Option,
the Committee, in its

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discretion, shall designate which shares shall be treated as shares acquired
upon exercise of an Incentive Stock Option.

        SECTION 7.  EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE

SECTION 7.1  Termination of Employment or Other Service Due to Death,
             Disability, or Retirement.

Except as otherwise provided in the Plan, or as otherwise determined by the
Committee upon consideration and approval of the Board, either at the time an
Option is granted or thereafter, in the event an Optionee's employment or other
service with the Company and all Subsidiaries or Parent is terminated by reason
of such Optionee's death, Disability or Retirement, all outstanding Options
then held by the Optionee shall become immediately exercisable in full and
remain exercisable after such termination for a period of three months in the
case of Retirement and one year in the case of death or Disability (but in no
event after the expiration date of any such Option).

SECTION 7.2  TERMINATION OF EMPLOYMENT OF OTHER SERVICE FOR REASONS OTHER THAN
             DEATH, DISABILITY OR RETIREMENT.

Except as otherwise provided in the Plan, or as otherwise determined by the
Committee upon consideration and approval of the Board, either at the time an
Option is granted or thereafter, in the event an Optionee's employment or other
service with the Company and all Subsidiaries or Parent in relation to which
the Option was granted is terminated for any reason other than death,
Disability or Retirement, all rights of the Optionee shall immediately
terminate without notice of any kind, and no Options then held by the Optionee
shall thereafter be exercisable; provided, however, that if such termination is
due to any reason other than termination by the Company or any Subsidiary or
Parent for "cause," all outstanding Options then held by such Optionee shall
remain exercisable for a period of three months after such termination (but in
no event after the expiration date of any such Option). For purposes of this
Section 7.2, "cause" shall be as defined in any employment or other agreement
or policy applicable to the Optionee or, if no such agreement or policy exists,
shall mean (a) the unauthorized use or disclosure of the confidential
information or trade secrets of the Company, which use or disclosure causes
material harm to the Company, (b) any material breach of a non-competition
agreement entered into with the Company, (c) conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the United States or
any state thereof, (d) gross negligence or (d) continued failure to perform
assigned duties after receiving written notification from the Board. The
foregoing shall not be deemed an exclusive list of all acts or omissions that
the Company (or a Parent or Subsidiary) may consider grounds for the discharge
of the Optionee.

SECTION 7.3  MODIFICATION OF EFFECT OF TERMINATION.

Notwithstanding the provisions of this Section 7, upon an Optionee's
termination of employment or other service with the Company and all
Subsidiaries or Parent with respect to which Options were granted, the
Committee may, in its sole discretion upon consideration and approval of the
Board (which discretion may be exercised before or following such termination),
cause Options, or any portions thereof, then held by such Optionee to become
exercisable and remain exercisable following such termination in the manner
determined by the Committee and approved by the Board; provided, however, that
no Option shall be exercisable after the expiration date thereof, and any
Incentive Stock Option that remains unexercised more than three months
following employment termination by reason of Retirement or more than one

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year following employment termination by reason of death or Disability shall
thereafter be deemed to be a Non-qualified Stock Option.

                          SECTION 8. CHANGE OF CONTROL

SECTION 8.1    ACCELERATION OF VESTING.

If a Change of Control of the Company shall be about to occur or shall occur,
the Committee, in its discretion and upon consideration and approval of the
Board, may determine that all outstanding Options shall become immediately
exercisable in full and shall remain exercisable during the remaining term
thereof, regardless of whether the employment or other status of the Optionees
with respect to which Options have been granted shall continue with the Company
or any Subsidiary, subject to the following limitations: If the Company and the
other party to the transaction constituting a Change in Control agree that such
transaction is to be treated as a "pooling of interests" for financial reporting
purposes, and if such transaction in fact is so treated, then the acceleration
of exercisability shall not occur to the extent that the Company's independent
accountants and such other party's independent accountants each determine in
good faith that such acceleration would preclude the use of "pooling of
interests" accounting.

SECTION 8.2    CASH PAYMENT.

If a Change in Control of the Company shall be about to occur or shall occur,
then the Committee, in its discretion and upon consideration and approval of the
Board and without the consent of any Optionee effected thereby, may determine
that some or all Optionees holding outstanding Options shall receive, with
respect to some or all of the shares of Common Stock subject to such Options, as
of the effective date of any such Change of Control of the Company, cash in an
amount equal to the excess of the Fair Market Value of such shares immediately
prior to the effective date of such Change of Control over the Exercise Price of
such Options.

SECTION 8.3    LIMITATION ON CHANGE OF CONTROL PAYMENTS.

Notwithstanding any provision of Sections 8.1 or 8.2 above to the contrary, if,
with respect to an Optionee, the acceleration of the exercisability of an Option
as provided for in Section 8.1 or the payment of cash in exchange for all or
part of an Option as provided in Section 8.2 (which acceleration or payment
could be deemed a "payment" within the meaning of Section 280G(b)(2) of the
Code), together with any other payments which such Optionee has the right to
receive from the Company or any corporation which is a member of an "affiliated
group" (as defined in Section 1504(b) of the Code) of which the Company is a
member, would constitute a "parachute payment" (as defined in Section 280G(b)(2)
of the Code), then the acceleration of exercisability and the payments to such
Optionee pursuant to Sections 8.1 and 8.2 above shall be reduced to the largest
extent or amount as, in the sole judgment of the Committee, will result in no
portion of such payments being subject to the excise tax imposed by Section 4999
of the Code.

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                        SECTION 9. LIMITATION ON RIGHTS

SECTION 9.1    EMPLOYMENT OR SERVICE.

Nothing in the Plan shall interfere with or limit in any way the right of the
Company or any Subsidiary or Parent to terminate the employment or service of
any Employee, Outside Director or Consultant at any time, or confer upon any
Employee, Outside Director or Consultant any right to continue in the employ or
service of the Company or any Subsidiary or Parent.

SECTION 9.2    STOCKHOLDERS' RIGHTS.

An Optionee shall have no dividend rights, voting rights or other rights as a
stockholder with respect to any Common Stock covered by his or her Option prior
to the time when a stock certificate for such Common Stock is issued or, in the
case of an Option, the time when he or she becomes entitled to receive such
Common Stock by filing a notice of exercise and paying the Exercise Price. No
adjustment shall be made for cash dividends or other rights for which the
record date is prior to such time, except as expressly provided in the Plan.

SECTION 9.3    RESTRICTIONS ON TRANSFER.

Other than pursuant to a qualified domestic relations order (as defined by the
Code), no right or interest of any Optionee in an Option prior to the exercise
of such Option shall be assignable or transferable, or subjected to any lien,
during the lifetime of the Optionee, either voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, including execution,
levy, garnishment, attachment, pledge, divorce, or bankruptcy. In the event of
an Optionee's death, such Optionee's rights and interest in Options shall be
transferable by testamentary will or the laws of descent and distribution, any
payment of any amounts due under the Plan shall be made to, and exercise of any
Options (to the extent permitted pursuant to Section 7 of the Plan) may be made
by the Optionee's legal representatives, heirs or legatees.

     If, in the opinion of the Committee, an Optionee holding an Option is
disabled from caring for his or her affairs because of a mental condition,
physical condition, or age, any payments due the Optionee may be made to, and
any rights of the Optionee under the Plan shall be exercised by, such
Optionee's guardian, conservator, or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status.

SECTION 9.4    NON-EXCLUSIVITY OF THE PLAN.

Nothing contained in the Plan is intended to amend, modify, or rescind any
previously approved compensation plans or programs entered into by the Company.
The Plan will be construed to be in addition to any and all other such plans or
programs. Neither the adoption of the Plan nor the submission of the Plan to
the stockholders of the Company for approval will be construed as creating any
limitations on the power or authority of the Board to adopt such additional or
other compensation arrangements as the Board may deem necessary or desirable.

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                         SECTION 10. WITHHOLDING TAXES

SECTION 10.1   GENERAL.

To the extent required by applicable federal, state, local or foreign law, an
Optionee or his or her successor shall make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise in
connection with the Plan. The Company shall not be required to issue any Common
Stock or make any cash payment under the Plan until such obligations are
satisfied.

SECTION 10.2   SHARE WITHHOLDING.

The Committee, in its discretion and upon consideration and approval of the
Board, may permit an Optionee to satisfy all or part of his or her withholding
or income tax obligations by having the Company withhold all or a portion of any
Common Stock that otherwise would be issued to him or her or by surrendering all
or a portion of any Common Stock that he or she previously acquired. Such shares
of Common Stock shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash.

                    SECTION 11. SECURITIES LAW RESTRICTIONS

SECTION 11.1   SHARE ISSUANCE.

Notwithstanding any other provision of the Plan or any agreements entered into
pursuant hereto, the Company shall not be required to issue or deliver any
certificate for shares of Common Stock under this Plan, and an Option shall not
be considered to be exercised notwithstanding the tender by the Optionee of any
consideration therefore, unless and until each of the following conditions has
been fulfilled:

     (a)  (i) There has be in effect with respect to such shares a registration
statement under the Securities Act and any applicable state securities laws if
the Committee, in its sole discretion, shall have determined to file, cause to
become effective, and maintain the effectiveness of such registration statement;
or (ii) if the Committee has determined not to so register the shares of Common
Stock to be issued under the Plan, (A) exemptions from registration under the
Securities Act and applicable state securities laws shall be available for such
issuance (as determined by counsel to the Company) and (B) there shall have been
received from the Optionee (or, in the event of death or disability, the
Optionee's heir(s) or legal representative(s)), any representations or
agreements requested by the Company in order to permit such issuance to be made
pursuant to such exemptions; and

     (b)  There shall have been obtained any other consent, approval, or permit
from any state or federal governmental agency which the Committee shall, in its
sole discretion upon the advice of counsel, deem necessary or advisable.

SECTION 11.2   SHARE TRANSFERS.

Shares of Common Stock issued pursuant to Options granted under the Plan may
not be sold, assigned, transferred, pledged, encumbered, or otherwise disposed
of, whether voluntarily or involuntarily, directly or indirectly, by operation
of law or otherwise, except pursuant to registration under the Securities Act
and applicable state securities laws or pursuant to exemptions from such
registrations. The Company may condition the sale, assignment, transfer,
pledge, encumbrance, or other disposition of such shares not

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issued pursuant to an effective and current registration statement under the
Securities Act and all applicable state securities laws on the receipt from the
party to whom the shares of Common Stock are to be so transferred of any
representations or agreements requested by the Company in order to permit such
transfer to be made pursuant to exemptions from registration under the
Securities Act and applicable state securities laws.

SECTION 11.3   HOLDING PERIOD REQUIREMENTS.

Any Options granted and any Common Stock acquired pursuant to the exercise of
Options under this Plan may be subject to a six-month holding requirement from
the grant date in order for the transaction to be exempt from the short-swing
trading profits provision of Section 16(b) of the Exchange Act.

SECTION 11.4   LEGENDS.

     (a)       Unless a registration statement under the Securities Act and
applicable state securities laws is in effect with respect to the issuance or
transfer of shares of Common Stock under the Plan, each certificate representing
any such shares shall be endorsed with a legend in substantially the following
form, unless counsel for the Company is of the opinion as to any such
certificate that such legend is unnecessary:

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH
STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE SOLELY ESTABLISHED TO THE
SATISFACTION OF THE COMPANY AND ITS COUNSEL.

     (b)       The Committee, in its sole discretion, may endorse certificates
representing shares issued pursuant to the exercise of Incentive Stock Options
with a legend in substantially the following form:

THE SALE, EXCHANGE, PLEDGE, ASSIGNMENT, OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TRANSFER RESTRICTIONS
CONTAINED IN SECTION 5.05 OF THE BYLAWS OF THIS CORPORATION AND IN THE
CORPORATION'S 2001 STOCK OPTION PLAN, AND REFERENCE SHOULD BE MADE TO THOSE
DOCUMENTS FOR THE TERMS OF SUCH RESTRICTIONS.

              SECTION 12. AMENDMENT, MODIFICATION AND TERMINATION

SECTION 12.1   TERM OF THE PLAN.

The Plan, as set forth herein, shall become effective on January 6, 2001. The
Plan shall remain in effect until it is terminated under Section 12.2, except
that no Incentive Stock Options shall be granted on or after the 10th
anniversary of the later of (a) the date when the Board adopted the Plan or (b)
the date when

Stock Option Plan-Page 11

<PAGE>   12

the Board adopted the most recent increase in the number of Common Stock
available under Section 3 which was approved by the Company's stockholders.

SECTION 12.2  AMENDMENT OR TERMINATION.

The Board may, at any time and for any reason, amend, suspend or terminate the
Plan or any portion thereof. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Options shall be granted under the
Plan after the termination thereof. No termination, suspension, or amendment of
the Plan shall alter or impair any outstanding Option without the consent of
the Optionee affected thereby; provided, however, that this sentence shall not
impair the right of the Committee to take whatever action it deems appropriate
under Section 3.3 or Section 8 of the Plan.

                           SECTION 13.  MISCELLANEOUS

SECTION 13.1  GOVERNING LAW.

The place of administration of the Plan shall be conclusively deemed to be
within the State of Arizona, and the rights and obligations of any and all
persons having or claiming to have had an interest under the Plan or any Stock
Option Agreement shall be governed by and construed exclusively and solely in
accordance with the laws of the State of Delaware without regard to the
conflict of laws provisions of any jurisdictions. All parties agree to submit
to the jurisdiction of the state and federal courts of Arizona with respect to
matters relating to the Plan and agree not to raise or assert the defense that
such forum is not convenient for such party.

SECTION 13.2  SUCCESSORS AND ASSIGNS.

This Plan shall be binding upon and inure to the benefit of the successors and
permitted assigns of the Company, including, without limitation, whether by way
or merger, consolidation, operation of law, assignment, purchase, or other
acquisition of substantially all of the assets or business of the Company, and
any and all such successors and assigns shall absolutely and unconditionally
assume all of the Company's obligations under the Plan.

SECTION 13.3  SURVIVAL OF PROVISIONS.

The rights, remedies, agreements, obligations, and covenants contained in or
made pursuant to the Plan, any Stock Option Agreement, and any other notices or
agreements in connection therewith, including, without limitation, any notice
of exercise of an Option, shall survive the execution and delivery of such
notices and agreements and the delivery and receipt of shares of Common Stock
and shall remain in full force and effect.

                            SECTION 14.  DEFINITIONS

SECTION 14.1  BOARD

Board means the Company's Board of Directors, as constituted from time to time.

Stock Option Plan-Page 12

<PAGE>   13

SECTION 14.2   CHANGE IN CONTROL

Change in Control shall mean:

     (a)       The sale, lease, exchange or other transfer of all or
substantially all of the Company's assets, in one transaction or in a series of
related transactions;

     (b)       The approval by the stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company; or

     (c)       A change in the control of the Company of a nature that would be
required to be reported (assuming such event had not been "previously
reported") in response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the effective date of the Plan, pursuant to Section 13 or 15(d) of
the Exchange Act, whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limitation, such Change in
Control shall be deemed to have occurred at such time as:

          (i)    any Person becomes, after the effective date of the Plan, the
                 "beneficial owner" (as defined in Rule 13d-3 under the Exchange
                 Act), directly or indirectly, of 20% or more of the combined
                 voting power of the Company's outstanding securities ordinarily
                 having the right to vote at elections of directors, or

          (ii)   individuals who constitute the Board on the effective date of
                 the Plan cease for any reason to constitute at least a majority
                 thereof, provided that any person becoming a director
                 subsequent to the effective date of the Plan whose election, or
                 nomination for election by the Company's stockholders, was
                 approved by a vote of at least a majority of the directors
                 comprising or deemed pursuant hereto to comprise the Board on
                 the effective date of the Plan (either by a specific vote or by
                 approval of the proxy statement of the Company in which such
                 person is named as a nominee for director) shall be, for
                 purposes of this clause (ii) and the following sentence,
                 considered as though such person were a member of the Board on
                 the effective date of the Plan. Notwithstanding anything in the
                 foregoing to the contrary, no Change of Control shall be deemed
                 to have occurred for purposes of Section 8 by virtue of any
                 transaction which shall have been approved by the affirmative
                 vote of at least a majority of the members of the Board or by
                 the stockholders of the Company on the effective date of the
                 Plan.

SECTION 14.3   CODE

Code means the Internal Revenue Code of 1986, as amended.

SECTION 14.4   COMMITTEE

Committee means a committee of the Board, as described in Section 2.

SECTION 14.5   COMMON STOCK

Common Stock means the common stock of the Company.

Stock Option Plan - Page 13

<PAGE>   14

SECTION 14.6   COMPANY

Company means Taser International, Inc., a Delaware corporation.

SECTION 14.7   CONSULTANT

Consultant means a consultant or adviser who provides bona fide services to the
Company, a Parent, or a Subsidiary as an independent contractor. Service as a
Consultant shall be considered employment for all purposes of the Plan, except
as provided in Section 4.2.

SECTION 14.8   DISABILITY

Disability means the permanent and total disability of the Optionee within the
meaning of Section 22(e)(3) of the Code.

SECTION 14.9   EMPLOYEE

Employee means a common-law employee of the Company, a Parent, or Subsidiary.

SECTION 14.10  EXCHANGE ACT

Exchange Act means the Securities Exchange Act of 1934, as amended.

SECTION 14.11  EXERCISE PRICE

Exercise Price means the amount for which one share of Common Stock may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement.

SECTION 14.12  FAIR MARKET VALUE

Fair Market Value means, with respect to the Common Stock, the following:

     (a)       If the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or admitted
but transactions in the Common Stock are reported on the NasdaqK Small Cap
Market, the last sale price of the Common Stock on such exchange or reported by
the NasdaqK Small Cap Market System as of such date (or, if no shares were
traded on such day, as of the next preceding day on which there was such a
trade).

     (b)       If the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the NasdaqK Small Cap Market System, and bid
and asked prices therefore in the over-the-counter market are reported by The
NasdaqK Small Cap Market, the Nasdaq Bulletin Board, or the National Quotation
Bureau, Inc. (or any comparable reporting service), the mean of the closing bid
and asked prices as of such date, as so reported by the applicable NasdaqX
system, or, if not so reported thereon, as reported by the National Quotation
Bureau, Inc. (or such comparable reporting service).

     (c)       In all other cases, such price as the Committee determines in
good faith in the exercise of its reasonable discretion.

Stock Option Plan - Page 14

<PAGE>   15

SECTION 14.13  INCENTIVE STOCK OPTION

Incentive stock option means a stock option as described in Section 422(b) of
the Code.

SECTION 14.14  NON-QUALIFIED STOCK OPTION

Non-qualified stock option means any option that is not an incentive stock
option as described in Section 422 of the Code nor an option as described in
Section 423 of the Code.

SECTION 14.15  OPTION

Option means an Incentive Stock Option or Non-qualified Stock Option granted
under the Plan and entitling the holder to purchase Common Stock.

SECTION 14.16  OPTIONEE

Optionee means an individual or estate who holds an Option.

SECTION 14.17  OUTSIDE DIRECTOR

Outside Director shall mean a member of the Board who is not an Employee.
Service as an Outside Director shall be considered employment for all purposes
of the Plan, except as provided in Section 4.2.

SECTION 14.18  PARENT

Parent means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.

SECTION 14.19  PERSON

Person means any individual, corporation, partnership, group, association, or
other "person" (as such term is used in Section 14(d) of the Exchange Act),
other than the Company, a wholly-owned Subsidiary of the Company, or any
employee benefit plan sponsored by the Company or a wholly-owned Subsidiary of
the Company.

SECTION 14.20  PLAN

Plan means this Taser International, Inc. 2001 Stock Option Plan, as amended
from time to time.

SECTION 14.21  RETIREMENT

Retirement means the retirement of an Optionee pursuant to and in accordance
with the regular retirement plan or practice of the Company or Subsidiary then
covering the Optionee, or, if approved by the Board for purposes of the Plan,
any early retirement plan or practice of the Company or Subsidiary then
covering the Optionee.

Stock Option Plan-Page 15

<PAGE>   16

SECTION 14.22  SECURITIES ACT

Securities Act means the Securities Act of 1933, as amended.

SECTION 14.23  STOCK OPTION AGREEMENT

Stock Option Agreement means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
Option.

SECTION 14.24  SUBSIDIARY

Subsidiary means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

                             SECTION 15.  EXECUTION

To record the adoption of the Plan by the Board, the Company has caused its
duly authorized officer to execute this document in the name of the Company.

                                             Taser International, Inc.

                                             By:___________________________

Adoption by Board of Directors:         January 6, 2001

Ratification/Adoption by Stockholders:  _________, 2001

Stock Option Plan-Page 16<PAGE>   1
                                                                    Exhibit 10.9

                            [ICER CORPORATION LOGO]

THIS AGREEMENT is made this 15th day of October, 1993 between Mr. John H. Cover
(hereinafter called "Mr. Cover"), and ICER Corporation (hereinafter called
ICER), an Arizona Corporation.

                                  WITNESSETH:

     WHEREAS, Mr. Cover has critical skills and industry knowledge material to
the development and marketing of products relating to the business of ICER

     NOW, THEREFORE, the parties agree as follows:

                       ARTICLE I: SCOPE OF THE AGREEMENT

     1. Mr. Cover agrees to join the management team of ICER Corporation as an
        officer and director of the company for one (1) year full time
        employment. His position will encompass responsibility for technology
        and product development, but will not be limited to such areas.

     2. In accordance with his position with ICER, Mr. Cover agrees not to
        engage in independent business relations with competitors of ICER
        wherein:

        i) Competitors of ICER are defined as companies engaged in the
           manufacture and/or design of electronic weapons that are less than
           fourteen inches in length and are non lethal.
<PAGE>   2
ICER CORPORATION                                                 COVER AGREEMENT

        ii) Independent business relations are defined as any fee for service
            arrangement, or any product development work with competitors as
            defined in i).

       iii) Independent business relations do not include any work or
            relationships conducted within the framework of Mr. Cover's
            representation of ICER.

        iv) Mr. Cover is free to leave unaltered the licensing arrangements
            already in existence with such competitors and to pursue
            compensation from such competitors for the use of his existing
            patents at his discretion.

         v) The provisions of this section shall remain in full force and effect
            for the period of Mr. Cover's employment with ICER.

        vi) Breach of this agreement wherein Mr. Cover engages in independent
            business relations with competitors of ICER during the period
            described in iv), will result in the forfeiture of Mr. Cover's
            remaining stock options and the immediate termination of his
            employment with ICER.

     3. Mr. Cover agrees to license ICER Corporation: Rights to utilize the
        TASER trademark in conjunction with product marketing and other business
        functions. Further, Mr. Cover agrees not to license the use of the TASER
        trademark to any company not already licensed for such use (see addendum
        I).

     4. Mr. Cover will provide ICER with a comprehensive listing of his existing
        patents and trademarks to be attached as an addendum to this document
        (addendum I). Such listing will include the names and addresses of all
        licensed entities, and all renewal rights for such licensing for said
        patents and trademarks.

     5. All technical designs and intellectual property generated during Mr.
        Cover's work with ICER will be work-made-for-hire or assigned to ICER
        and will be the exclusive property of the Company.

     6. Mr. Cover affirms that he has complete authority over the patents and
        trademarks in the agreement and that he is free to enter into this
        agreement without any hindrance from or violation of prior commitments.
        Mr. Cover further affirms that he is not bound by non-disclosure or
        trade secret protection clauses which would inhibit him from fully
        applying his knowledge to his work at ICER. Accordingly, Mr. Cover
        indemnifies ICER from any damages
<PAGE>   3
ICER CORPORATION                                                 COVER AGREEMENT
--------------------------------------------------------------------------------

     resulting from litigation regarding prior commitments which would preclude
     him from having entered into this agreement.

  7. Mr. Cover agrees not to disclose the confidential information of ICER
     Corporation without clear consent from the other members of management.
     Such information will include any information which is clearly designated
     as confidential, including trade secrets developed, marketing plans,
     manufacturing know how, financial or other data which is designated as
     confidential.

                            ARTICLE II: COMPENSATION

  1. Mr. Cover will be paid a salary of $2,500 per month during the time of his
     full time employment with the Company.

  2. Mr. Cover will receive stock options for 10,000 shares of ICER Corporation
     representing ten (10) percent of the company with the following vesting
     schedule:

     2,500 shares at initiation of this agreement
     2,500 shares upon completion of functional prototype
     2,500 shares at first shipment of product to market
     2,500 shares on Oct. 15, 1994 (1 year).

  3. These options will have a strike price of $0.36 (thirty six cents per
     share) and a time to expiration of 5 years during Mr. Cover's continued
     involvement with the company.

  4. Further, Mr. Cover will receive a cash bonus in the amount of the exercise
     price of the stock options at the date and time of each stock option
     vesting that can be used only for exercising the above stock options.

  5. Mr. Cover's equity position (via stock options) is guaranteed not to be
     diluted below ten (10) percent through the first $250,000 of invested
     capital.

<PAGE>   4
ICER CORPORATION                                                 COVER AGREEMENT
--------------------------------------------------------------------------------

                           ARTICLE III: CONTINGENCIES

  1. Patrick W. Smith and Phillips W. Smith may elect to discontinue the
     activities of the corporation upon 2 weeks' notice to Mr. Cover. Under such
     circumstances, Mr. Phillips W. Smith will have the right to reclaim the
     liquid assets of the company not to exceed the amount of his cumulative
     investment. Further, from date of such notice Mr. Cover will have the right
     to use his skills and trademarks for whatever purpose he desires.

  2. Mr. Cover may elect not to continue his work with the Company with 2 weeks'
     notice. Mr. Cover would retain all vested options with right to exercise
     for 6 months from the date of departure from the company. Unvested options
     would be forfeited, and the corresponding shares would remain the property
     of the Company.

  3. In the event that Mr. Cover should not be able to exercise power of
     attorney over the equity in his name while the company is privately held
     (i.e. the shares are not on the public market), the Corporation would have
     option to repurchase such shares within 6 months from Mr. Cover's estate or
     heirs for an amount equal to the greater of:

     i) The book value of such shares calculated by standard accounting
     practices

     ii) $10 per share

     iii) Amounts solicited from competitive bidders.

AGREED,

By:  /s/ Patrick Smith                        By:   /s/ John H. Cover
    -----------------------                        -----------------------
     Patrick Smith                                  John H. Cover
     For ICER CORPORATION

Dated:   10/15/93
       --------------------

[SEAL]

CORPORATE SEAL
<PAGE>   5
                        AMENDMENT TO LICENSING AGREEMENT

     THIS AMENDMENT TO LICENSING AGREEMENT ("AMENDMENT") is made and entered
into this 31st day of August, 1996, by and between John H. Cover, Jr. ["JACK
COVER"] and Air Taser, Incorporated f/k/a/ ICER Corporation, an Arizona
corporation ["AIR TASER"].

     In consideration of the covenants and agreements hereinafter set forth,
the amounts of money paid in accordance herewith, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
that certain Licensing Agreement dated October 15, 1993 ("LICENSE") is hereby
amended as follows:

     1.   AIR TASER hereby agrees to pay to JACK COVER and JACK COVER hereby
agrees to accept the sum of One Hundred Thousand Dollars ($100,000) in full
payment and satisfaction of any and all minimum royalties and earned royalties
now due or hereinafter accruing to JACK COVER from AIR TASER pursuant to the
terms of the LICENSE as originally executed or as subsequently modified or
amended, in writing, prior to the date hereof. Said payment shall be made
contemporaneously with the full execution and delivery of this AMENDMENT by
each of the parties hereto.

     2.   JACK COVER, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, for: (i) himself, (ii) his heirs,
(iii) his legal representatives, legatees, successors and assigns of all of the
foregoing persons and entities, hereby releases and forever discharges AIR
TASER, any past, present and future shareholders, successors, assigns, officers,
directors, agents, attorneys and employees of AIR TASER, together with their
respective heirs, legal representatives, legatees, successors, and assigns, of
and from all actions, claims, demands, damages, debts, losses, liabilities,
indebtedness, causes of action either at law or in equity and obligations of
whatever kind or nature, whether known or unknown, direct or indirect, new or
existing, by reason of any matter, cause or thing whatsoever from the beginning
of the world to the date hereof concerning any minimum of earned royalties which
are now due or which may hereafter accrue to JACK COVER pursuant to the terms of
the LICENSE.

     3.   This AMENDMENT embodies the entire agreement between the parties and
supersedes any prior agreements or understanding between them in connection
with the subject matter hereof and the transactions contemplated hereby. There
are no oral or parol agreements, representations, or inducements existing
between the parties relating to this transaction which are not expressly set
forth herein and covered hereby. All terms of this AMENDMENT are contractual
and not mere recitals and shall be construed as if drafted by all parties
hereto. The terms of this AMENDMENT are and shall be binding upon each of the
parties hereto, their agents, employees successors and assigns, and upon all
other persons

                                    -1 of 2-
<PAGE>   6
 claiming any interest in the subject matter hereof through any of the parties
hereto.

     4.   To the extent that this AMENDMENT contradicts, is inconsistent or in
conflict with any prior agreements between or among any or all of the parties,
this AMENDMENT supersedes any conflicting or inconsistent provision of any prior
agreement and is controlling to the extent necessary to resolve such conflict or
inconsistency. Any and all provisions in a prior agreement not inconsistent with
this AMENDMENT remain valid and binding.

     5.   It is acknowledged that the parties hereto have read this AMENDMENT
and consulted counsel before executing same; that they have relied upon their
own judgment and that of their respective counsel in executing this AMENDMENT
and have not relied on or been induced by any representation, statement or act
by any other party referred to in this instrument; that the parties hereto have
entered into this AMENDMENT voluntarily, with full knowledge of its
significance; and that this AMENDMENT is in all respects complete and final.

     6.   If any term or provision of this AMENDMENT or the application thereof
to any person, entity or circumstance shall, to any extent, be held invalid
and/or unenforceable by a court of competent jurisdiction, the remainder of this
AMENDMENT, or the application of such term or provisions to persons, entities or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby, and each term and provision of the AMENDMENT
shall be valid and be enforced to the fullest extent permitted by law.

     7.   This AMENDMENT may not be amended, changed, or modified except by
written instrument executed by all parties hereto.

     8.   This AMENDMENT shall be construed and enforced according to the laws
of the State of Arizona.

     9.   This AMENDMENT may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one instrument.

     IN WITNESS WHEREOF, the parties have caused this AMENDMENT to be duly
executed as of the day and year first above written.

AIR TASER, INCORPORATED

By: /s/ Patrick Smith                   /s/ John H. Cover, Jr.
    -----------------                       ------------------
                                            John H. Cover, Jr.
                                            11 Half Moon Bend
                                            Coronado, CA 92118
Title:   President
       --------------

                                    -2 of 2-
<PAGE>   7
               2nd AMENDMENT TO THE AIR TASER LICENSING AGREEMENT

      This 2nd Amendment to the AIR TASER licensing agreement (2nd Amendment) is
made and entered into this 31st day of August, 1996, by and between John H.
Cover, Jr. ["JACK COVER"] and AIR TASER, Incorporated f/k/a ICER Corporation, an
Arizona Corporation ["AIR TASER"].

      In consideration of the covenants and agreements hereinafter set forth,
the amounts of money paid in accordance herewith, and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
that certain Licensing Agreement dated October 15, 1993 ["LICENSE"] is hereby
amended as follows:

1. AIR TASER hereby agrees to pay to Jack Cover, and Jack Cover hereby agrees to
   accept the sum of FIFTEEN THOUSAND DOLLARS ($15,000) in full payment for a
   limited exclusivity for rights to technology embodied in U.S. patent
   #5,078,117 ["The '117 Patent"]. In accordance with this limited exclusivity,
   Jack Cover agrees that he shall license no other company, person, or entity
   of any type to utilize the technology described in the '117 patent for use in
   electronic weapon system other than the companies licensed for such use prior
   to this 31st day of August, 1996. These pre-existing licenses are non
   transferable and shall not be transferred to any entity other than the
   original license holder as enumerated below. Further, Mr. Cover shall not
   expand or modify the rights of the existing licensees, as listed below,
   without written approval from AIR TASER, Inc. A comprehensive listing of such
   licensed companies is given below:

      a) EESTI, Engineering, LLC, a company in Poway, CA. (Copy of license
         attached as Exhibit A.)

      b) Yong Suk Park, d.b.a. Bestex, Co. (Copy of license addendum regarding
         '117 patent rights attached as Exhibit B.)

2. This agreement in no way binds Mr. Cover from licensing rights to utilize the
   '117 technology in applications which are not electronic weapons. Mr. Cover
   is free to license any person, company, association, agency, or entity of any
   type to utilize the '117 technology so long as the license contains the
   specific language below:

      "The licensee may not use the technology embodied in U.S. Patent
      #5,078,117 in conjunction with any electronic weapon system. The violation
      of this restriction shall cause immediate cancellation of this license
      without notice, and may cause damages payable to John H. Cover and/or AIR
      TASER, Inc."

3. If any term or provision of this 2nd Amendment or the application thereof to
   any person entity, or circumstance shall, to any extent, be held invalid and
   or unenforceable by a court of competent jurisdiction, the remainder of this
   2nd Amendment, or the application of such term or provisions to persons,
   entities, or
<PAGE>   8
     circumstances other than those as to which it is held invalid or
     unenforceable shall not be affected thereby, and each term and provision of
     the 2nd Amendment shall be valid and be enforced to the fullest extent
     permitted by law.

4.   This 2nd Amendment may not be amended, changed, or modified except by
     written instrument executed by all parties hereto.

5.   This 2nd Amendment shall be construed and enforced according to the laws of
     the state of Arizona.

          IN WITNESS WHEREOF, the parties have caused this 2nd Amendment to be
duly executed as of the day and year first above written.

AIR TASER, INCORPORATED,

By: /s/ Patrick Smith                            /s/ John H. Cover, Jr.
    _________________                            ______________________
    President                                    John H. Cover, Jr.
                                                 11 Half Moon Bend
                                                 Coronado, CA 92118

<PAGE>   9
                                   EXHIBIT A.

<PAGE>   10
ELECTROARMS, INC.
     John H. Cover, Pres. 602/529-2344
     5833 No. Kolb Rd. #10212
     Tucson, AZ 85730

                                                               December 15, 1995

     LICENSE AGREEMENT BETWEEN ANTON SIMSON, EESTI Engrg, LLC, POWAY, CA,
     LICENSEE & JOHN H. COVER, LICENSOR - under Pat. No. 5,078,117 (generally
     covering the use of compressed gas capsules that are easily discharged &
     the gas will propell projectiles, weights, contactors, nets, etc., in a
     non-firearm mode of operation).

     This Agreement specifically pertains to EESTI's manufacture of Taser-type
     cassettes designed to snap onto stun guns giving the stun gun owner the
     Taser stand-off range & effectiveness in stopping power over dangerous
     criminals.

     More specifically this License relates to J.H. Cover's License with Eastex
     Co., Yong Park, who imports & sells the Thunder Power - and other stun guns
     - which will be used in conjunction with the EESTI SGA Cassettes containing
     the SPOGC's.

     In return for this Exclusive License to EESTI, J.H. Cover will receive an
     Earned Royalty from Anton Simson, EESTI, of $0.25 - or 25(cents) @ for each
     SGA Cassette they Make & Sell.

     In summary, the Licensor, John H. Cover, hereby grants an Exclusive License
     under Patent #5,078,117 to Anton Simson, d.b.a. EESTI Engineering, LLC, to
     manufacture and sell the Stun Gun/SGA Taser Cassettes as the Exclusive
     Licensee.

     Signatures below constitute the legal acceptance by the two Parties of the
     above Terms & Conditions.

     /s/ Anton Simson      2-19-96                /s/ John H. Cover     12/15/95
     -----------------------------                ------------------------------
     Anton Simson, Licensee - Date                John H. Cover, Licensor - Date

<PAGE>   11

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

                                   EXHIBIT B.

<PAGE>   12
ELECTROARMS, INC.   619/423-0689
11 Half Moon Bend, Coronado, CA 92118                December 1, 1998

Yong S Park, Pres.             Subject: License Addendum covering
Bestex Co., Unit B                      Bestex Sale of a Stun Gun
3421 San Fernando Rd.          Adaptor/SGA designed for the Thunder
Los Angeles, CA 90065          Power Stun Gun.

ADDENDUM TO THE LICENSE AGREEMENT signed by Yong Suk Park, d.b.a. Bestex Co.,
3/7/90 & John H. Cover, Licensor, on 2/19/90.

Licensor hereby grants an Exclusive License to distribute and sell the SGA
Taser Cassettes designed to "snap" onto the front of the Bestex Thunder Power
Stun Gun modified to function with the SGA -- which projects the high voltage
electric contactors at an attacker -- such that the user does not receive a
shock to this hand (insulation)

This License is under J.H. Cover's Patent #5,078,117 covering the
Self-Puncturing Compressed Gas Capsule. This technology permits the use of
compressed air to propell the contactors & is therefore not classified as a
Firearm. EESTI, Anton Simson, Poway, CA will make the SGA under my Patent
License & supply them to Bestex.

The Terms for Bestex's Exclusivity are: 1)$20,000 upfront ($10,000 upon
execution of the License -- 1st week of March, 1996 -- and $10,000 April 1,
1996), 2) Bestex's Minimum Royalty will be $2500/mos starting 4/2/96, and 3)
Bestex will pay J.H. Cover $2 Earned Royalty for each Thunder Power Stun Gun
sold(or any modification or substitution thereof that fits the SGA) and
25(cents) for each SGA Cassette sold.

It is important that Yong Park, Anton Simson & Jack Cover work as a team on
this program. There are decisions to be made such as the Packaging of the
Product -- the Thunder Power & (2) SGA cassettes in a box -- sales and
advertising strategies including the name of the Product. "Public Defender" and
ElectroStorm(stop rape & murder) are possibilities. An early meeting such as
the first week in December is suggested. Jack Cover will consult as needed
without compensation.

The signatures below constitute the legal acceptance of the two parties of the
above terms & conditions.

/s/ Yong Suk Park,   12/18/95          /s/ John H. Cover   12/15/95
-----------------------------          ----------------------------
Yong Suk Park, Licensee - Date         John H. Cover, Licensor

<PAGE>   13

                                                                         8/31/96

AIR TASER INCORPORATED

                  Rec'd $15,000 for 2nd Amendment Compensation

                                 /s/ J.H. Cover
                                 --------------
                                   J.H. Cover
<PAGE>   14
                          [SPECIMEN STOCK CERTIFICATE]

                                [AIR TASER LOGO]
                            INTELLIGENT SELF DEFENSE
     Number                                                          Shares
     00004                                                           50,000

                             AIR TASER INCORPORATED
                       Share Issue Authorized by  /s/ illegible    /s/ illegible
                                                  -------------    -------------
                                                    President        Secretary

THIS CERTIFIES THAT John H. Cover is the registered holder of Fifty Thousand
(50,000) Shares transferrable only on the books of the Corporation by the
holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.

IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be Hereunto
affixed
                              this Seventeenth day of June A.D. 1994
<PAGE>   15
                          [SPECIMEN STOCK CERTIFICATE]

[SEAL]

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto AIR TASER, INC.
____________ Shares represented by the within Certificate, and do hereby
irrevocably constitute and appoint PATRICK SMITH Attorney to transfer the said
Shares on the books of the within named Corporation with full power of
substitution in the premises.

Dated  AUGUST 31, 1994

In presence of

/s/ illegible                                  /s/ John H. Cover
-----------------------                        -----------------------
                                               John H. Cover
                                               11 Half Moon Bend
                                               Coronado, CA 92118

NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>   16

                              SETTLEMENT AGREEMENT

     THIS SETTLEMENT AGREEMENT ["Settlement Agreement"] is made and entered into
this 8/30/96 day of August, 1996, by and between John H. Cover, Jr. ["JACK
COVER"] and Virginia A. Cover ["VIRGINIA COVER"] and Air Taser, Incorporated
f/k/a ICER Corporation, an Arizona corporation ["AIR TASER"].

                                    RECITALS

     A. WHEREAS, AIR TASER, is an Arizona corporation engaged in the business
of manufacturing and selling certain goods and products, including a non-lethal
electronic self-defense device used to temporarily immobilize an attacker ["AIR
TASER DEVICE"].

     B. WHEREAS, JACK COVER, was and is the sole owner and licensor of certain
U.S. patents, including:

      a.   Patent #4,253,132 [the "132 Patent"] which covers generally the
           circuitry by which current from a battery is transformed so that an
           electrical charge with which a potential attacker is struck operates
           to temporarily immobilize a potential attacker; and

      b.   Patent #5,078,117 [the "117 Patent"] which covers generally the
           non-explosive means of projecting electrically charged darts to
           deliver an immobilizing electrical charge to a potential attacker.

     C. WHEREAS, VIRGINIA COVER is the spouse of JACK COVER and may have or
claim certain marital property rights in and to the 132 Patent, the 117 Patent
and other assets which are the subject of this Settlement Agreement.

     D. WHEREAS, on or about October 15, 1993, JACK COVER, as licensor, and AIR
TASER, as licensee, executed a certain written Licensing Agreement ["AIR TASER
LICENSE"].

     A true and correct copy of the AIR TASER LICENSE executed by and between
AIR TASER and JACK COVER is attached hereto as Exhibit "A" and by reference
made a part hereof.

     E. WHEREAS, by written agreement executed on or about October 15, 1993, by
and between AIR TASER and JACK COVER ["EMPLOYMENT AGREEMENT"], JACK COVER
accepted a position of employment with AIR TASER for a period of one (1) year
upon the terms and conditions set forth therein. JACK COVER asserts that on or
about October 15, 1993, in accordance with Article 1, paragraph 4, of the
EMPLOYMENT AGREEMENT, he tendered to AIR TASER a copy of a certain patent
license with Electronic Medical Research Laboratories, Inc. d/b/a Tasertron
["TASERTRON"] covering the 132 Patent and granting certain exclusive rights
relative to the U.S. law enforcement market. In or about June, 1994, JACK COVER
resigned as a full time employee of AIR TASER.

<PAGE>   17

          A true and correct copy of the EMPLOYMENT AGREEMENT executed by and
between AIR TASER and JACK COVER is attached hereto as Exhibit "B" and by
reference made a part hereof.

     F.   WHEREAS, pursuant to Article I, paragraph 7, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed not to disclose the confidential information of
AIR TASER, including trade secrets, marketing plans, manufacturing know-how,
and financial or other data designated as confidential.

     G.   WHEREAS, pursuant to Article I, paragraph 3, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed to license AIR TASER to utilize the "Taser"
trademark in conjunction with product marketing and other business functions and
further agreed not to license the use of the "Taser" trademark to any company
not licensed for such use prior to October 15, 1993.

     H.   WHEREAS, pursuant to Article I, paragraph 5, of the EMPLOYMENT
AGREEMENT, JACK COVER agreed that all technical designs and intellectual
property generated during his employment with AIR TASER would be
work-made-for-hire, would be assigned to AIR TASER and would be the exclusive
property of AIR TASER.

     I.   WHEREAS, in April, 1995, after receiving a letter dated March 29,
1995 from AIR TASER's attorneys, Brown & Bain, alleging certain violations of
the AIR TASER LICENSE and threatening legal action, JACK COVER and VIRGINIA
COVER filed suit in the Superior Court of the State of Arizona in and for the
County of Maricopa, captioned Cover, et al. v. Icer Corporation n/k/a Air
Taser, Incorporated, case number CV95-06851 [the "ARIZONA LITIGATION"], seeking
a declaratory judgment holding that the AIR TASER LICENSE does not include the
right to sell the AIR TASER DEVICE to law enforcement agencies together with
an injunctive Order prohibiting AIR TASER from selling or attempting to sell
the AIR TASER DEVICE to law enforcement agencies.

     J.   WHEREAS, AIR TASER vigorously denies any and all liability with
respect to the allegations of fact and the claims asserted in the complaint
filed by JACK COVER and VIRGINIA COVER in the ARIZONA LITIGATION.

     K.   WHEREAS, in October, 1995, AIR TASER filed its Answer and Counterclaim
in the ARIZONA LITIGATION wherein its denied, inter alia, that the AIR TASER
LICENSE restricts the sale of the AIR TASER DEVICE to any particular market or
user and further alleged, by way of counterclaim, various causes of action
including breach of contract, breach of fiduciary duty and fraud for which it
requested both money damages and injunctive and other equitable relief.

                                      -2-

<PAGE>   18

     L.   WHEREAS, JACK COVER and VIRGINIA COVER vigorously deny any and all
liability with respect to the allegations and the claims asserted in the
counterclaim filed by AIR TASER in the ARIZONA LITIGATION. JACK COVER
affirmatively asserts that on or prior to October 15, 1993, he disclosed the
terms of the TASERTRON license to AIR TASER, including the terms purporting to
grant exclusivity as to the use of the 132 Patent within certain markets and
geographical boundaries.

     M.   WHEREAS, in February, 1995, TASERTRON filed an action against AIR
TASER in the Federal District Court for the Central District of California
captioned Electronic Medical Research Laboratories, Inc. d/b/a/ Tasertron v. Air
Taser, Inc., case number ED CV 95-53 RT (JRX) ["CALIFORNIA LITIGATION"]
asserting an exclusive right to market devices utilizing the technology covered
by the 132 Patent within certain markets and geographical boundaries. In
September, 1995 the CALIFORNIA LITIGATION was settled and AIR TASER agreed,
inter alia, to refrain from selling the AIR TASER DEVICE to U.S. law enforcement
agencies for a specified period of time.

     N.   WHEREAS, all parties hereto desire to fully settle and compromise all
matters in controversy heretofore existing between them.

     O.   WHEREAS, all parties have examined the benefits to be obtained under
this Settlement Agreement and have considered the costs, risks and delays
associated with the continued prosecution of the claims asserted in the ARIZONA
LITIGATION. Each of the parties, having full knowledge of the contents hereof
and after obtaining the advice of counsel, believes that, in consideration of
all the circumstances and after significant investigation and settlement
negotiations between and among the parties, the settlement embodied in this
Settlement Agreement is fair, reasonable and in the best interests of all
parties concerned.

     NOW THEREFORE, in consideration of the foregoing Recitals, the
representations, warranties, covenants and agreements contained in this
Settlement Agreement, the sum of One Dollar ($1.00) each to the other in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto represent, warrant, covenant
and agree as follows:

     1.   The foregoing Recitals and all Exhibits referred to herein and
attached hereto, are incorporated in this Settlement Agreement as if set forth
in full in the body hereof.

     2.   It is hereby stipulated and agreed that, subject only to the terms of
that certain Stipulation of Settlement ("STIPULATION") executed by and between
AIR TASER and Electronic Medical Research Laboratories, Inc. d/b/a/ Tasertron in
the CALIFORNIA LITIGATION, in its present form or as it may hereafter be
amended, the AIR TASER

                                      -3-
<PAGE>   19

LICENSE authorizing the manufacture, use and sale of devices covered by the 132
Patent and the 117 Patent is unrestricted as to any particular market, user,
geographical area, dimension or design. However, the AIR TASER LICENSE shall
not encompass applications of the technology covered by the 117 Patent other
than in conjunction with electronic devices. A copy of the STIPULATION is
attached hereto as Exhibit "C".

     3.  It is hereby stipulated and agreed that paragraph 6.2 of the AIR TASER
LICENSE is modified so that if, an any month, the minimum royalty exceeds the
earned royalty, that excess shall be applicable as a credit to AIR TASER in the
next calendar month in the following manner: if the earned royalty for the next
month exceeds the minimum royalty for that month, then the excess shall apply
to reduce the earned royalty dollar for dollar until that excess for the
previous month is used up. However, if all the excess is not used up in that
next month, then it shall no longer operate as a credit in the future. In no
event shall AIR TASER be thereby relieved of the obligation to pay the agreed
minimum royalty in any month.

     4.  AIR TASER agrees that the negative balance in JACK COVER's cumulative
royalty account existing as of the date of execution of this Settlement
Agreement, which negative balance constitutes a credit to AIR TASER against
future earned royalties, is hereby eliminated.

     5.  It is hereby stipulated and agreed that the period of exclusivity
relative to devices utilizing the technology covered by the 117 Patent and
meeting certain specified characteristics as provided in paragraph 4.2 of the
AIR TASER LICENSE has expired and that, subject to the provisions of paragraph
6 of this Settlement Agreement, JACK COVER is free to license others to utilize
the technology covered by the 117 Patent on a non-exclusive basis.

     6.  JACK COVER hereby agrees that he shall not on his own account, nor
shall he authorize in any future patent licenses he may grant to other
individuals or other entities, manufacture, use or sell or license for
manufacture, use or sale (a) any launchers which are compatible with the AIR
TASER cartridge model number 34200 or (b) cartridges which are compatible with
the AIR TASER power handle model number 34100. "Compatible" for these purposes
means a device which, without modification by the user, will operate with the
AIR TASER components [model numbers 34100 and 34200] to deliver an electric
shock to a target. AIR TASER will not knowingly and intentionally manufacture or
sell any devices [excluding model numbers 34100 and 34200] which are compatible
with any launchers or cartridges manufactured by other existing patent licenses
of JACK COVER. In any future patent licenses which JACK COVER may grant, and in
any amendments to any existing licenses which he may in the future enter into,
he shall include the following language:

                                      -4-

<PAGE>   20

          "This license does not allow the licensee to manufacture, use or sell
          (a) any launchers which are compatible with the AIR TASER cartridge
          model number 34200 or (b) any cartridges which are compatible with the
          AIR TASER power handle model number 34100. "Compatible for these
          purposes means a device which, without modification by the user, will
          operate with the AIR TASER components [model numbers 34100 and 34200]
          to deliver an electric shock to a target. Furthermore, licensee hereby
          acknowledges that it has had an opportunity to inspect or is otherwise
          familiar with the AIR TASER air cartridge and the AIR TASER power
          handle prior to execution of the license.

          In order to facilitate JACK COVER's compliance with this paragraph,
AIR TASER shall within ten (10) days following execution and delivery of this
Settlement Agreement, deliver three (3) inoperative power handles [model 34100]
and three (3) inoperative cartridges [model 34200] to JACK COVER.

     7.   It is hereby stipulated and agreed that the last sentence of paragraph
6.3 of the AIR TASER LICENSE shall be deleted and stricken from the AIR TASER
LICENSE, and the following sentence shall be inserted in its place:

          "If the DEFAULT is not cured by payment of this MINIMUM ROYALTY by
          cashier's check or money order on or before 5:00 P.M. local Arizona
          time of the tenth (10th) day following written notice by Licensor to
          Licensee of the facts constituting the alleged default, this licensing
          agreement shall terminate automatically without further notice."

     8.   It is hereby stipulated and agreed that the last sentence of
paragraph 6.4 of the AIR TASER LICENSE shall be deleted and stricken from the
AIR TASER LICENSE, and the following sentence shall be inserted in its place:

          "If the DEFAULT is not cured by payment of this EARNED ROYALTY by
          cashier's check or money order on or before 5:00 P.M. local Arizona
          time of the tenth (10th) day following written notice by Licensor to
          Licensee of the facts constituting the alleged default, this licensing
          agreement shall terminate automatically without further notice."

                                      -5-
<PAGE>   21

     9.  AIR TASER does not know of any reason why the 132 Patent or the 117
Patent should not continue in existence until the dates set forth in the AIR
TASER LICENSE. AIR TASER will not take, nor will it cause anyone else to take,
any action which would impair the validity of either patent and, if AIR TASER
shall in the future have any concern as to the early termination of either
patent, it will notify JACK COVER of the basis for its concern so that he might
take such action as he deems necessary to avoid such early termination.

     10.  It is hereby stipulated and agreed that upon expiration of the 132
Patent, AIR TASER's obligation to pay JACK COVER a $2.00 per unit earned
royalty for each unit which utilizes the power generation device and electric
wave form described in the 132 Patent shall be terminated, notwithstanding AIR
TASER's continued use of the technology covered by the 132 Patent.

     11.  It is hereby stipulated and agreed that upon expiration of the 117
Patent, AIR TASER's obligation to pay JACK COVER a $0.25 per unit earned
royalty for each device which utilizes compressed gasses to launch electrical
contactors from the power generator shall be terminated, notwithstanding AIR
TASER's continued use of the technology covered by the 117 Patent.

     12.  It is hereby stipulated and agreed that upon expiration of the 117
Patent, AIR TASER's obligation to make any further minimum royalty payments or
earned royalty payments, as those terms are used in paragraphs 6.1 and 6.2 of
the AIR TASER LICENSE, to JACK COVER shall be terminated, notwithstanding AIR
TASER's continued use of the technology covered by either or both the 117
Patent and/or the 132 Patent.

     13.  JACK COVER hereby represents and warrants that he is the sole owner
of the "Taser" registered trademark, Registration No. 1,235,685, and that of
those licensees of the "Taser" trademark whose licenses came into existence on
or prior to October 15, 1993, AIR TASER and Electronic Medical Research
Laboratories, Inc. d/b/a Tasertron are the only licensees currently using or
authorized to use the "Taser" trademark. JACK COVER hereby reaffirms his prior
agreement, as originally set forth in Article I, paragraph 3, of the EMPLOYMENT
AGREEMENT, that AIR TASER, as licensee, is authorized to utilize the "Taser"
trademark in conjunction with product marketing and other business functions
and that JACK COVER shall not license the use of the "Taser" trademark to any
individual or entity not licensed for such use prior to October 15, 1993. In
order to prevent abandonment of the "Taser" trademark, JACK COVER hereby agrees
that AIR TASER shall have the right, jointly with JACK COVER, to police and
protect the use of the "Taser" trademark by others, in his name or in the name
of AIR TASER, in a reasonable manner to maintain the quality of the mark and to
prevent the unauthorized use of the mark by third parties. However, other
patent licensees of JACK COVER may, with his prior

                                      -6-
<PAGE>   22

written consent, refer to the "Taser" device for comparative purposes only
[patent licensees not expressly licensed to use the "Taser" trademark on or
prior to October 15, 1993 may not claim that their device is a "Taser" or
incorporate the "Taser" trademark in their product name], provided that the
word "Taser" is designated as a registered trademark, that the patent licensee
includes a disclaimer that said patent licensee is not licensee of the "Taser"
trademark and that said disclaimer appears in the same context as the word
"Taser" in the same size typeface as the word "Taser", but in no event may the
word "Taser" appear in a typeface larger than 12 points. JACK COVER further
represents and warrants that attached hereto as Group Exhibit "D" is a full and
complete list of the names and current addresses of all licensees of the
"Taser" trademark together with the copies of the subject licenses and all
amendments thereto.

     14.  JACK COVER does hereby sell, transfer and assign to AIR TASER all
shares of AIR TASER stock acquired by him at any time [i.e., 50,000 shares]
free and clear of all liens, claims and encumbrances. JACK COVER agrees that
contemporaneously with the execution and delivery of this Settlement Agreement
he shall surrender said stock, properly endorsed, to AIR TASER.

     15.  JACK COVER hereby represents and warrants that Exhibit "E" attached
hereto is a full and complete list of the names and current addresses of all
past or present licensees of the 117 Patent and the 132 Patent together with
copies of the subject licenses and any and all amendments thereto.

     16.  JACK COVER hereby represents and warrants that, except for the
ARIZONA LITIGATION, there are no law suits pending or threatened and there are
no existing or potential causes of action involving the 117 Patent, the 132
Patent and/or the "Taser" trademark.

     17.  JACK COVER hereby reaffirms his prior agreement, as originally set
forth in Article I, paragraph 5, of the EMPLOYMENT AGREEMENT that all technical
designs and intellectual property generated by JACK COVER during his work with
ATR TASER was work-made-for-hire, was, or upon request, will be assigned to AIR
TASER and is the exclusive property of AIR TASER. JACK COVER further agrees to
execute all documents and perform all acts necessary to enable AIR TASER to
acquire or perfect any and all rights, titles, patents, copyrights, interests
and other protection which may be available with regard to such technical
designs and intellectual properties. JACK COVER agrees that contemporaneously
with the execution and delivery of this Settlement Agreement he shall execute
and deliver to AIR TASER the Declaration for Patent Application with Power of
Attorney and the Assignment attached hereto as Exhibits "F" and "G",
respectively. AIR TASER warrants and agrees that the Declaration for Patent,
Exhibit "F", covers both a method of manufacturing compressed fluid containers
and a

                                      -7-

<PAGE>   23

double walled compressed gas cylinder, and that patent, should it be granted,
would not, to the best of its knowledge, replace or conflict with the 117
Patent, and even if the patent should be granted, it would not allow AIR TASER
to utilize the technology covered by the 117 patent without paying JACK COVER
the royalties required by the AIR TASER LICENSE. Attached hereto as Exhibit "H"
is a schedule of intellectual property generated by JACK COVER during his work
with AIR TASER which the parties agree was either work-made-for-hire or
assigned to AIR TASER and which is the exclusive property of AIR TASER.

     18.  JACK COVER hereby reaffirms his continuing contractual obligation not
to disclose confidential information of AIR TASER, as originally set forth in
Article I, paragraph 7, of the EMPLOYMENT AGREEMENT. The term "confidential
information" shall mean any information or material which is proprietary to AIR
TASER, whether owned or developed by AIR TASER, which is not generally known
other than by AIR TASER, and which JACK COVER may have obtained through any
direct or indirect contact with AIR TASER. Confidential information includes,
without limitation, business records and plans, financial statements and
projections, marketing plans, manufacturing know-how, pricing structure, costs,
appraisals, customer lists, the identity of suppliers of AIR TASER whose
identities became known to JACK COVER as a result of his employment by AIR
TASER and other proprietary information which is designated as confidential.

          The parties hereto acknowledge and agree that damages at law may not
be a measurable or adequate remedy for a breach of JACK COVER's continuing
obligation not to disclose the confidential information of AIR TASER, and,
accordingly, consent to the entry by any court of competent jurisdiction in
Arizona, or, if jurisdiction is not appropriate in Arizona, such other court of
competent jurisdiction, of an order enjoining the violation of such agreement
should the requirements for an injunction be met and further agree that the
entry of such order would be an appropriate remedy for the breach of this
obligation.

     19.  JACK COVER and AIR TASER agree that contemporaneously with the
execution and delivery of this Settlement Agreement, they shall execute and
exchange Releases in the form attached hereto as Exhibits "I" and "J".

     20.  Except as otherwise provided herein and notwithstanding the execution
of the Releases executed and exchanged pursuant to paragraph 19 hereof, the
terms of the AIR TASER LICENSE, as modified by this Settlement Agreement,
including without limitation the terms governing the duration of the AIR TASER
LICENSE, the specified minimum royalty and the per unit earned royalties
applicable to both the 117 Patent and the 132 Patent, shall hereafter remain in
full force and effect.

                                      -8-

<PAGE>   24

     21.  Within five (5) business days following the execution of this
Settlement Agreement by all parties hereto, JACK COVER and VIRGINIA COVER, by
and through their attorney of record, shall prepare and file with the Court
wherein the ARIZONA LITIGATION is now pending an appropriate Motion and Agreed
Order providing for the dismissal of the ARIZONA LITIGATION on its merits, with
prejudice and without costs or attorneys' fees, all matters in controversy
having been fully settled, compromised and adjourned.

     22.  VIRGINIA COVER hereby consents to each and every term and provision
of the Settlement Agreement as set forth herein and hereby sells, transfers and
assigns to AIR TASER any right, title and interest she may have in or to the
property hereby transferred by JACK COVER to AIR TASER.

     23.  The parties hereto acknowledge that it is their intent to consummate
this Settlement Agreement and agree to execute all documents and to perform all
acts reasonably necessary to effectuate and implement all terms and conditions
of this Settlement Agreement.

     24.  This Settlement Agreement shall be preserved as confidential by the
parties hereto. The parties hereto, and each of them, agree (i) to take all
precautions necessary to safeguard the information contained in this Settlement
Agreement and any and all information furnished in connection herewith from
disclosure to any person or entity other than employees, officers, directors and
agents (including legal counsel and financial advisors) and, in addition, those
individuals who otherwise normally have access to information of such nature
under the parties' established confidentiality procedures; (ii) not to use this
Settlement Agreement or any information contained herein or furnished in
connection herewith for any purpose other than to resolve the issues and
controversies as may exist between the parties. The parties hereto, and each of
them, further agree that if any of them are requested or required by law to
disclose the contents of this Settlement Agreement or any information contained
herein or furnished in connection herewith, the party so requested will provide
all other parties with prompt written notice of the request so that any party
may seek an appropriate protective order or consent to the waiver of compliance
with this confidentiality provision of the Settlement Agreement. If in the
absence of a protective order or such waiver, any party is, nonetheless,
compelled to disclose any or the contents of this Settlement Agreement to a
Court or other tribunal under circumstances where such party would be liable
for contempt or other penalty if disclosure is not made, said party shall
disclose to such Court or other tribunal only that limited portion of the
information which is legally required to be disclosed.

                                      -9-
<PAGE>   25

     25.  Unless expressly provided otherwise in this Settlement Agreement, any
notice, request, demand or other communication required to be given under this
Settlement Agreement or any document or instrument executed and delivered
pursuant to this Settlement Agreement shall be in writing, shall be
deemed to be given or delivered (a) on the date of personal or facsimile
delivery of the notice, request, demand or other communication at or before 2:00
p.m. local Arizona time, (b) on the second business day after the day of mailing
of such notice, request, demand or other communication by United States
Registered Mail or United States Certified Mail, postage prepaid, or (c) on the
next business day after mailing of such notice, request, demand or other
communication by express next-day courier, freight charges prepaid, to the
parties (including any person or entity designated for receipt of a photocopy
thereof) at the following addresses or at such other address as any of the
parties may hereafter specify in the aforementioned manner:

     if to JACK COVER:        John H. Cover, Jr.
                              5855 North Kolb Road
                              Apt. 10212
                              Tucson, AZ 85750

                              (Facsimile:             )

     with a copy to:          Gary F. Howard, Esq.
                              Howard & Rouse, P.C.
                              3800 North Central Avenue
                              Suite 280
                              Phoenix, AZ 85012

                              (Facsimile: 602-263-6005)

     if to VIRGINIA COVER:    Virginia A. Cover
                              11 Half Moon Bend
                              Coronado, CA 92118

                              (Facsimile:             )

     with a copy to:          Gary F. Howard, Esq.
                              Howard & Rouse, P.C.
                              3800 North Central Avenue
                              Suite 280
                              Phoenix, AZ 85012

                              (Facsimile: 602-263-6005)

                                      -10-

<PAGE>   26

     if to AIR TASER:              Patrick W. Smith
                                   Air Taser, Inc.
                                   7339 E. Evans Road, Suite 1
                                   Scottsdale, AZ 85260

                                   (Facsimile: 602-991-0791)

     with a copy to:               Joel H. Shapiro, Esq.
                                   Kamenear, Kadison & Anderson
                                   20 North Wacker Drive
                                   Suite 4100
                                   Chicago, IL 60606

                                   (Facsimile: 312-332-6163)

     26.  This Settlement Agreement embodies the entire agreement between the
parties and supersedes any prior agreements or understanding between them in
connection with the subject matter hereof and the transactions contemplated
hereby. There are no oral or parol agreements, representations, or inducements
existing between the parties relating to this transaction which are not
expressly set forth herein and covered hereby. All terms of this Settlement
Agreement are contractual and not mere recitals and shall be construed as if
drafted by all parties hereto. The terms of this Settlement Agreement are and
shall be binding upon each of the parties hereto, their agents, employees
successors and assigns, and upon all other persons claiming any interest in the
subject matter hereof through any of the parties hereto.

     27.  To the extent that this Settlement Agreement contradicts, is
inconsistent or in conflict with any prior agreements between or among any or
all of the parties, this Settlement Agreement supersedes any conflicting or
inconsistent provision of any prior agreement and is controlling to the extent
necessary to resolve such conflict or inconsistency. Any and all provisions in
a prior agreement not inconsistent with this Settlement Agreement remain valid
and binding.

     28.  This Settlement Agreement may not be amended, changed, or modified
except by written instrument executed by all parties to this Settlement
Agreement.

     29.  The place of business of AIR TASER, the place of negotiation,
execution and delivery of this Settlement Agreement and the other
documents and instruments to be executed and delivered pursuant to this
Settlement Agreement, and the place of performance under this Settlement
Agreement being the State of Arizona, this Settlement Agreement shall be
construed and enforced according to the laws of the State of Arizona.

                                      -11-
<PAGE>   27

     30.  This Settlement Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.

     IN WITNESS WHEREOF, the parties have caused this Settlement Agreement to
be duly executed as of the day and year first above written.

AIR TASER, INCORPORATED

By:     /s/ Patrick Smith              /s/ John H. Cover, Jr.
       -------------------------       ---------------------------
Title: President                           John H. Cover, Jr.
       ----------------------
                                       /s/ Virginia A. Cover
                                       ---------------------------
                                           Virginia A. Cover

                                      -12-
<PAGE>   28
                              LICENSING AGREEMENT

1.   CONSIDERATION; EFFECTIVE DATE

     1.1 The effective date of this agreement shall be Oct. 15, 1993.

2.   PARTIES

     2.1 John H. Cover is an individual with business located at Box 404, 4725
     Sunrise Drive, Tucson, Arizona 85718 (LICENSOR)

     2.2 ICER Corporation is an Arizona Corporation engaged in the development
     of non lethal electronic weapons for sale to the general consumer market
     (LICENSEE).

3.   BACKGROUND

     3.1 Licensor represents and warrants that he owns several patent rights,
     both domestic and foreign as listed on Exhibit "A" though not in every
     country of the world, and specifically U.S. Patent Number 4,254,132 and
     5,078,117, (the Licensed Patents) concerning a power supply and ballistics
     launching mechanism for weapons or other devices utilizing electricity for
     immobilization purposes.

     3.2 Licensor is not aware of any ownership of another of inventions or
     patent rights or trade secret or know-how rights in conflict with his own;
     and Licensor believes that he possesses such right, title and interest in
     and to the electronic immobilization devices and equipment useful therein
     as is necessary and appropriate to the terms of this agreement.

     3.3 Licensee is a company seeking to develop such technology for
     manufacture and marketing an alternative non lethal self defense device to
     firearms.

     3.4 Any other concepts, advanced technologies or other patents Licensor now
     possesses or might obtain in the future are specifically excluded from this
     agreement. HOWEVER, SUCH TECHNOLOGIES MAY BE COVERED IN SEPARATE
     ARRANGEMENTS SPECIFYING CONTRACT AND SALARIED WORK.

4.   LICENSE
<PAGE>   29
ICER CORPORATION                                                COVER AGREEMENT

     4.1  Licensor hereby grants Licensee a non exclusive license for use of
     patent number 4,254,132 and the electric wave form and power generator
     described therein. Under said licensed patent to manufacture, use and sell
     devices, with and without launching mechanisms covered by patent number
     4,254,132.

     4.2. LICENSOR HEREBY GRANTS LICENSEE LICENSE FOR PATENT 5,078,117. LICENSOR
     IS LICENSED UNDER SAID PATENT TO MANUFACTURE, USE AND SELL DEVICES COVERED
     BY PATENT 5,078,117. THIS LICENSE WILL BE EXCLUSIVE FOR DEVICES WHICH MEET
     ALL OF THE FOLLOWING CHARACTERISTICS:

          i)    ELECTRONIC WEAPONRY DESIGNED TO IMMOBILIZE
          ii)   WEAPON AS IN i) WHEREIN THE GREATEST DIMENSION OF THE WEAPON IS
                 OF LESS THAN FOURTEEN INCHES.
          iii)  A WEAPON WHICH IS DESIGNED TO BE NON LETHAL
          iv)   A WEAPON DESIGNED FOR USE AGAINST HUMANS

          THIS EXCLUSIVITY BINDS LICENSEE TO ENSURE THAT ANY FURTHER LICENSING
     OF PATENT 5,078,117 DESCRIBES CLEARLY THAT THE LICENSING OF PATENT
     5,078,117 DESCRIBES CLEARLY THAT THE LICENSE MAY NOT BE USED FOR
     MANUFACTURE OF DEVICES WHICH MEET THOSE FOUR CHARACTERISTICS. THIS
     EXCLUSIVITY WILL BE BINDING FOR TWENTY FOUR MONTHS (24). AFTER TWENTY FOUR
     MONTHS, THIS EXCLUSIVITY CLAUSE WILL REMAIN IN EFFECT IF THE TOTAL EARNED
     ROYALTIES PAID BY LICENSEE TO LICENSOR EXCEEDS $100,000 PER YEAR, USING
     MONTHS 12-24 AS THE FIRST YEAR FOR SUCH CALCULATION. SHOULD THE EARNED
     ROYALTIES FALL BELOW $100,000 PER YEAR, LICENSOR WILL BE FREE TO LICENSE
     PATENT 5,078,117 FOR SIMILAR USE.

     4.3. No party shall enter into any contracts or make any warranties on
     behalf of the other party.

     4.4. Licensee shall not negotiate sub license or assign this license unless
     specifically authorized in writing by Licensor. Bona fide sales by Licensee
     to bona fide third parties for resale are not sub licensing so long as
     these sales are not in violation of Paragraph 6.12 below.

5.   TERM OF LICENSE

     5.1. The license will be for the period of validity of patent 4,254,132 on
     devices utilizing the technology described therein

<PAGE>   30
ICER CORPORATION                                                 COVER AGREEMENT

     and for the PERIOD OF VALIDITY of patent 5,078,117 for mechanisms
     utilizing the technology described therein.

     5.2  Licensee's obligation to pay royalties, as set forth in
     Paragraph 6, runs in favor of Licensor's heirs, successors and
     assigns.

6.   ROYALTIES

     6.1  From Oct. 15, 1993 until the expiration of the above described
     patents, unless Licensee ceases to make, use, or sell devices covered by
     the Licensed Patents, Licensee agrees to pay Licensor a MINIMUM ROYALTY of
     Two thousand five hundred and no/100 Dollars ($2,500) per month payable on
     the 15th and on the 15th of each and every month thereafter during the
     term of this license. Payment of the MINIMUM ROYALTY shall be delinquent
     if not paid within 5 days after the due date.

     6.2  LICENSEE ALSO AGREES TO PAY AN EARNED ROYALTY TO BE COMPUTED MONTHLY
     AND, AFTER REDUCTION BY THE AMOUNT PAID IN CUMULATIVE MINIMUM ROYALTIES
     ABOVE CUMULATIVE EARNED ROYALTIES, SAID EARNED ROYALTIES SHALL BE EQUAL TO
     TWO DOLLARS PER UNIT ($2.00) FOR EACH UNIT WHICH UTILIZES THE POWER
     GENERATION DEVICE AND ELECTRIC WAVE FORM DESCRIBED IN PATENT 4,254,132 AND
     $0.25 PER UNIT FOR EACH DEVICE WHICH UTILIZES COMPRESSED GASSES TO LAUNCH
     ELECTRICAL CONTACTORS FROM THE POWER GENERATOR. THIS $0.25 EARNED
     ROYALTY SHALL REMAIN IN EFFECT FOR THE LIFE OF PATENT 4,254,132 IF IT DOES
     NOT UTILIZE THE TECHNOLOGY DESCRIBED IN PATENT NUMBER 5,078,117. IF IT
     DOES UTILIZE THE TECHNOLOGY DESCRIBED IN PATENT NUMBER 5,078,117, THEN THE
     EARNED ROYALTY SHALL REMAIN IN EFFECT FOR THE LIFE OF SAID PATENT
     5,078,117. AN EARNED ROYALTY OF $0.10 WILL BE PAID FOR "PRACTICE
     CASSETTES" WHICH UTILIZE THE TECHNOLOGY IN PATENT 5,078,117, WHEREIN
     "PRACTICE CASSETTES" ARE DEFINED AS DEVICES WHICH SIMULATE THE ACTION OF
     PROPELLING ELECTRICAL CONTACTORS TO A TARGET BUT WHICH ARE
     NON-FUNCTIONAL--I.E. ARE NOT RELIABLE CONTACTORS FOR USE IN COMBAT
     SITUATIONS.

     6.3  Licensee's MINIMUM ROYALTY payment is due on the 15th of each month.
     MINIMUM ROYALTY payments are past due five days thereafter. If MINIMUM
     ROYALTY payments are not made within five days of the due date, then a
     DEFAULT of this agreement occurs automatically and without notice.
     Licensee has
<PAGE>   31
ICER CORPORATION                                            COVER AGREEMENT

payment with a cashier's check or money order for the full amount of the
MINIMUM ROYALTY due. If the DEFAULT is not cured by payment of this MINIMUM
ROYALTY by cashier's check or money order by 5:00 P.M. on the tenth day after
which it is due, this licensing agreement is automatically terminated without
notice.

6.4.  Licensee's EARNED ROYALTY payment is due on the fifteenth day of the month
following the month in which the REVENUES FROM SALES WERE RECEIVED. EARNED
ROYALTY payments are past due and delinquent if not paid by 5:00 P.M. on the
twentieth day of SAID MONTH. If EARNED ROYALTY payments are not made by the
twentieth of the month, then a DEFAULT of this agreement occurs automatically
and without notice. Licensee has until the thirtieth of the month to cure the
DEFAULT by payment with a cashier's check or money order for the full amount of
the EARNED ROYALTY due. If the DEFAULT is not cured by payment of this EARNED
ROYALTY by cashier's check or money order by 5:00 P.M. on the thirtieth day of
the month in which it is due, this licensing agreement is automatically
terminated without notice.

6.5. Royalties are payable by Licensee to Licensor at the address of the
Licensor.

6.6. Royalties are payable in U.S. Dollars

6.7. Accompanying each EARNED ROYALTY payment, Licensee will provide to Licensor
the accounting data on the sales of the licensed devices, including any daily
summaries and the monthly summary from which the gross sales figures for the
month are determined.

6.8. Licensee will keep books, accounts, and records that reflect all revenues
and expenditures incurred in connection with the operation of its business. The
books, accounts, and records shall be maintained at the regular place of
business of Licensee. Licensee, during regular business hours, shall make the
books, accounts, and records required to be maintained herein available to
Licensor and/or his designated legal representative for examination and audit by
appointment upon reasonable request and during normal business hours. Licensor
agrees to pay for said examination and audit, however, if said examination and
audit reveals a discrepancy of more than 5% of reported figures, Licensee shall
pay for an examination and audit
<PAGE>   32
ICR CORPORATION                                        COVER AGREEMENT

     6.9.      Within sixty days after the end of each calendar year, Licensee
     shall prepare and deliver to Licensor a detailed statement of sales during
     the calendar year that result from the operations of Licensee's business.

     6.10.     Licensor agrees that all such information shall be held by its
     legal representatives, agents, trustees, attorneys, and accountants in
     confidence.

     6.11.     Licensee will mark each of the subject devices with the following
     notice: "Licensed under U.S. Patent No. 4,253,132" Or: "Licensed under U.S.
     Patent No. 5,078,117" Or both.

     6.12.     DELETED.

7.   INFRINGEMENT OF LICENSOR's PATENTS

     7.1.      In the event that any party shall become aware of any perceived
     infringement or any appropriation of Licensor's patents, trade secrets, or
     know how rights in the electronic immobilization devices or equipment,
     products or materials useful therein, the party shall give notice thereof
     to the other party hereto.

     7.2.      Licensee agrees to cooperate with any lawful efforts that
     Licensor may undertake to seek legal remedies for any such infringements or
     misappropriations.

8.   INDEMNITIES FOR MALFEANCE, LIABILITY FOR PERSONAL INJURY OR PROPERTY
     DAMAGE

     8.1.      The License herein granted to Licensee is primarily in the
     nature of a sharing of information and a covenant not to sue for
     infringements of the Licensor's rights and is not in the nature of a
     specification of activities required of the Licensee or of equipment or
     process of details required to be used by the Licensee.

     8.2.      The manufacture, use, and sale of Licensee's products shall be
     the sole responsibility of Licensee and/or its agents.

     8.3.      Accordingly, Licensor shall not be liable for any personal injury
     or property damage resulting from the design, construction, or use of the
     licensed technology or of the equipment or products used in connection with
     the technology, if such injury or damage arises from the activities of
     Licensee.

<PAGE>   33
ICER CORPORATION                                                 COVER AGREEMENT

     8.4  In no event shall Licensor be liable for any direct, special,
     incidental, or consequential damages, or any damages whatsoever, whether in
     an action for contract, negligence, or other tortious action arising out
     of, or in connection with, the use of any of the products covered by this
     license.

     8.5  Licensee shall protect, save, indemnify, and hold Licensor harmless
     from all claims, demands, charges, or litigation arising out of the making,
     using, or selling of the merchandise and devices produced and sold by
     Licensee and arising, directly or indirectly, out of, or by reason of, any
     business activities of Licensee. Licensee shall reimburse Licensor for all
     loss, damage, or expense, including reasonable attorney's fees (should such
     a creature exist), which he may suffer or incur, directly or indirectly, by
     reason of any such claims, demands, charges, or litigation. This indemnity
     shall extend to and include any claims for personal injuries or damage
     caused to persons using the merchandise or devices made or sold by
     Licensee.

9.   CONTROLLING LAWS

     9.1  All questions relating to the validity, interpretation, performance,
     or enforcement of this agreement, whether by arbitration or otherwise,
     shall be determined in a court with the laws applicable to the State of
     Arizona, U.S.A.

10.  BINDING EFFECT

     10.1 Each and every provision on this license shall bind and shall inure to
     the benefit of the parties hereto and their legal representatives.

     10.2 The term "legal representatives" means in addition to executors and
     administrators, every person, partnership, corporation, or association
     succeeding to the interest or to any part of the interest in or to this
     license or in the subject matter of this license, of either Licensor or
     Licensee, whether such succession results from the act of a party interest,
     occurs by operation of law, or is the effect of the operation of the law
     together with the act of such a party. Each and every covenant, agreement,
     and condition of this agreement to be performed by the Licensee shall be
     binding upon all successors in the interest to Licensee.

11.  NOTICES

<PAGE>   34
ICER CORPORATION                                                 COVER AGREEMENT

     11.1.     All notices required herein shall be in writing.

     11.2.     Written notices may be delivered personally to the president of
     the subject party or to the officer or person specified below.

     11.3.     Written notices shall be deemed to have been effective three days
     following the date of mailing by certified mail, postage prepaid, return
     receipt requested, addressed to John H. Cover, Licensor, as follows:

               BOX 404
               4725 Sunrise Dr.
               Tucson, Arizona 85718

               Licensee addressed to:

               4601 East Indian Bend Road
               Scottsdale, Arizona 85253

     11.4      Each party shall have the right to change the effective address
     for a notice by a notice in writing directed to the other party above.

12.  ENTIRE AGREEMENT; AMENDMENTS; HEADINGS

     12.1      This agreement together with its appendices constitutes the
     entire agreement between the parties REGARDING LICENSING OF TECHNOLOGY, and
     SUPERSEDES any prior communications ON THE SUBJECT whether written or oral.

     12.2      This agreement may be amended or modified only  by an instrument
     in writing, signed by duly constituted officers of both parties.

     12.3      No waiver, no matter how long continuing or how many times
     extended, shall be construed as a permanent waiver or as an amendment to
     this instrument.

     12.4      The marginal headings herein are for purposes of convenient
     reference only and shall not be used to construe or modify the terms
     written in the text of this instrument.

13.  FAILURE TO PERFORM

<PAGE>   35
ICER CORPORATION                                                 COVER AGREEMENT

13.1.  Licensee, as well as its successors in interest and or assigns, agrees
that failure to perform in accordance with the terms of this license,
terminates this license and any manufactures, use, or sale of devices covered
by the Licensed Patents, with or without launching mechanisms, thereafter is
without license.

AGREED,

By: /s/ Patrick Smith                By: /s/ John H. Cover
   -----------------------                -----------------------
     Patrick Smith                          John H. Cover
     For ICER CORPORATION

Dated: 10/15/93
      --------------------

CORPORATE SEAL

[SEAL]

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