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EXHIBIT 10.40

SIXTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT

    SIXTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of April 25, 2001, among SPECIAL DEVICES, INCORPORATED, a corporation organized
under the laws of the State of Delaware (the "Borrower"), the lenders party to
the Credit Agreement referred to below (collectively, the "Banks") and BANKERS
TRUST COMPANY, as Administrative Agent. All capitalized terms used herein and
not otherwise defined shall have the respective meanings provided such terms in
the Credit Agreement.

W I T N E S S E T H:

    WHEREAS, the Borrower, the Banks and the Administrative Agent are parties to
a Credit Agreement, dated as of December 15, 1998 (as in effect on the date
hereof, the "Credit Agreement");

    WHEREAS, the Borrower has determined that it is in its best interests (i) to
sell all or substantially all of its assets that are used in the design,
manufacture and sale of precision-engineered pyrotechnic components and
subsystems for use in aerospace applications (the "Aerospace Sale") and (ii) to
enter into the Mesa Sale-Leaseback Transaction and the Moorpark Sale-Leaseback
Transaction simultaneously (collectively, the "Sale-Leaseback Transaction");

    WHEREAS, to effectuate the Aerospace Sale, the Borrower, PS/EMC West, LLC
(the "Buyer") and Pacific Scientific Corporation (the "Parent") have heretofore
entered into an Asset Purchase Agreement, dated as of March 27, 2001 (the
"Aerospace Purchase Agreement");

    WHEREAS, the Borrower has requested that the Banks (i) consent to the
Aerospace Sale and (ii) modify the terms of the Sale-Leaseback Transaction from
that which exists in the Credit Agreement prior to giving effect to this
Amendment, both as provided herein;

    WHEREAS, the Borrower also has requested certain other amendments to the
Credit Agreement as provided herein; and

    WHEREAS, subject to the terms and conditions of this Amendment, the Banks
hereby agree to grant the consents, modifications and amendments under the
Credit Agreement as herein provided;

    NOW, THEREFORE, it is agreed:

I.  Consents under Credit Agreement.  

    1.  Notwithstanding anything to the contrary contained in Section 3.03(d) or
9.02 of the Credit Agreement, the Banks hereby consent to the Aerospace Sale
pursuant to the Aerospace Purchase Agreement, so long as (i) no Default or Event
of Default then exists or would result therefrom, (ii) such sale is in an
arm's-length transaction and the Borrower receives at least fair market value
(as determined in good faith by the Borrower), (iii) the total consideration
received therefrom by the Borrower is 100% cash and is paid at the time of the
closing of such sale (except for the portion of such consideration which
represents any post-closing working capital purchase price adjustment),
(iv) such consideration shall be at least $45,000,000 (subject to a pre-closing
and a post-closing working capital purchase price adjustment as provided in the
Aerospace Purchase Agreement) (the "Gross Sale Proceeds") and the Net Sale
Proceeds therefrom shall be at least $29,100,000, (v) 100% of the Net Sale
Proceeds therefrom are applied upon receipt thereof soley as a mandatory
repayment of principal of outstanding Term Loans in accordance with the
requirements of Sections 4.02(h) and (i) of the Credit Agreement (for avoidance
of doubt, it is acknowledged and agreed that no portion of such Net Sale
Proceeds shall be permitted to be reinvested pursuant to Section 4.02(d) of the
Credit Agreement), (vi) to the extent that the Net Sale Proceeds from the
Aerospace Sale are not sufficient to repay all outstanding Term Loans in full at
the time of the closing of the Aerospace Sale, the Borrower shall use a portion
of the Gross Sale Proceeds not constituting Net Sale Proceeds upon the receipt
thereof to repay in full all remaining outstanding Term Loans at the time of the
closing of the Aerospace Sale,

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and (vii) an amount (the "Revolver Blocked Amount") equal to $9,000,000 of
non-Net Sale Proceeds from the Aerospace Sale is applied upon receipt thereof to
repay outstanding Revolving Loans (with no corresponding reduction to the Total
Revolving Loan Commitment as a result of such repayment pursuant to this
clause (vii)). To the extent Collateral is sold in compliance with the preceding
provisions of this Section 1, such Collateral shall be sold free and clear of
the Liens created by the respective Security Documents and the Banks hereby
authorize the Administrative Agent and the Collateral Agent to take any actions
deemed appropriate in order to effect such releases.

    2.  Notwithstanding anything to the contrary contained in Sections
9.02(xviii) and (xix) of the Credit Agreement, the Banks hereby consent to the
Sale-Leaseback Transaction, so long as (i) such transaction occurs after the
consummation of the Aerospace Sale, (ii) no Default or Event of Default then
exists or would result therefrom, (iii) such transaction is in an arm's-length
transaction and the Borrower receives at least fair market value (as determined
in good faith by the Borrower), (iv) the Mesa Sale-Leaseback Transaction and the
Moorpark Sale-Leaseback Transaction occur simultaneously with each other as part
of one transaction, (v) the total consideration received therefrom by the
Borrower is 100% cash (except for a seller note in an aggregate principal amount
not to exceed $4,550,000) and is paid (or delivered) at the time of the closing
of such transaction and such note shall be pledged and delivered to the
Collateral Agent pursuant to the Pledge Agreement, (vi) such consideration shall
be at least $36,000,000 (the "Gross Sale-Leaseback Proceeds") and the Net Sale
Proceeds therefrom shall be at least $29,000,000 in cash, (vii) 100% of the Net
Sale Proceeds therefrom are applied upon receipt thereof as a mandatory
reduction to the Total Revolving Loan Commitment pursuant to Section 3.03(d) of
the Credit Agreement (with a corresponding mandatory repayment of outstanding
Revolving Loans pursuant to Section 4.02(a) of the Credit Agreement) (for
avoidance of doubt, it is acknowledged and agreed that no portion of such Net
Sale Proceeds shall be permitted to be reinvested pursuant to Section 4.02(d) of
the Credit Agreement), provided that, notwithstanding the foregoing, the Total
Revolving Loan Commitment shall not be reduced to below $8,500,000 as a result
of the application of the Net Sale Proceeds from the Sale-Leaseback Transaction.
To the extent Collateral is sold in compliance with the preceding provisions of
this Section 2, such Collateral shall be sold free and clear of the Liens
created by the respective Security Documents and the Banks hereby authorize the
Administrative Agent and the Collateral Agent to take any actions deemed
appropriate in order to effect such releases.

    3.  Prior to giving effect to this Amendment, the Borrower and the Banks
acknowledge that the Total Revolving Loan Commitment is $25,000,000, although no
more than $22,500,000 of the Total Revolving Loan Commitment may be utilized by
the Borrower as per the Fifth Amendment and Consent, dated as of January 12,
2001, to the Credit Agreement. At the time of the consummation of the Aerospace
Sale, the Banks agree that the Borrower shall have full access to the Total
Revolving Loan Commitment then in effect subject to the terms and conditions of
the Credit Agreement and this Amendment (it being understood that, for the
avoidance of doubt, the Total Revolving Loan Commitment shall still be reduced
as, and to the extent, provided in Section 2 of this Part I and as provided in
the Credit Agreement and utilization thereof shall still be limited as provided
in Section 4 of Part I of this Amendment).

    4.  In order to induce the Banks to grant the consents set forth in
preceding Sections 1, 2 and 3 of this Part I, the following restrictions shall
apply:

     (i) During the period commencing upon the Sixth Amendment Effective Date
(as defined below) and continuing until the earlier of (x) such time as when the
Borrower shall have paid its estimated tax payments with respect to both its
federal and state income tax obligations resulting from the Aerospace Sale
(which date shall not be earlier than October 15, 2001) and (y) the consummation
of the Sale-Lease Back Transaction and the application of the Net Sale Proceeds
therefrom as required by Section 2 of this Part I, the Borrower shall at all
times ensure that the Total Unutilized Revolving Loan Commitment is at least
equal to the Revolver Blocked Amount

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(although the Revolver Blocked Amount may be utilized to incur Revolving Loans
in accordance with the terms of the Credit Agreement to pay the foregoing
estimated tax payments on or after October 15, 2001). Without limiting the
provisions of Section 4.02(a) of the Credit Agreement, on any day during the
period set forth above in this Section 4 that the Total Unutilized Revolving
Loan Commitment is less than the Revolver Blocked Amount, the Borrower shall
prepay on such day the principal of Swingline Loans and, after all Swingline
Loans have been repaid in full (or if no Swingline Loans are outstanding),
Revolving Loans in an amount equal to such deficiency; and

    (ii) In the event that the Sale-Leaseback Transaction occurs prior to
October 15, 2001, the Borrower shall, at the time of the consummation of the
Sale-Leaseback Transaction and in addition to the other requirements of this
Amendment, deposit with the Administrative Agent cash in an aggregate amount
equal to the Revolver Blocked Amount to be held as security for the remaining
Obligations in a cash collateral account to be established by the Administrative
Agent (although (x) from and after October 15, 2001 such cash may be released to
the Borrower to pay its estimated tax payments in respect of the Aerospace Sale
to the extent that such cash has not theretofore been applied against the
Obligations in accordance with the cash collateral arrangements agreed to by the
Administrative Agent and the Borrower (which cash collateral arrangements shall
only permit the Banks to apply such cash against the Obligations from and after
the occurrence of an Event of Default under Section 10.01 or 10.05 of the Credit
Agreement) and (y) after the Borrower has made such estimated tax payments as
provided above, any portion of such cash remaining on deposit with the
Administrative Agent shall be released to the Borrower so long as no Default or
Event of Default then exists).

    5.  Notwithstanding anything to the contrary contained in the Credit
Agreement or in the Capital Call Agreement, from and after the consummation of
the Aerospace Sale and the application of the proceeds therefrom as provided in
Section 1 of this Part I, the Capital Call Agreement shall be terminated and
shall be of no further force or effect.

II.  Amendments to Credit Agreement.  

    1.  Section 9.02(xxi) of the Credit Agreement is hereby amended by deleting
the number "30" appearing in the first sentence of said Section 9.02(xxi) and
inserting the number "33" in lieu thereof.

    2.  Section 9.08 of the Credit Agreement is hereby deleted in its entirety
and the following new Section 9.08 is inserted in lieu thereof:

    "9.08 Consolidated Interest Coverage Ratio. The Borrower will not permit the
Consolidated Interest Coverage Ratio for any Test Period to be less than
1.00:1.00."

    3.  Section 9.09 of the Credit Agreement is hereby deleted in its entirety
and the following new Section 9.09 is inserted in lieu thereof:

    "9.09 Maximum Leverage Ratio. (A) From and after the last day of the
Borrower's fiscal quarter ending closest to April 30, 2001 through but not
including the date of the consummation of the Sale-Leaseback Transaction, the
Borrower will not permit the Leverage Ratio at any time to be greater than
9.00:1.00.

    (B) From and after the consummation of the Sale-Lease Back Transaction, the
Borrower will not permit the Leverage Ratio at any time to be greater than
8.25:1.00."

    4.  Section 9.10 of the Credit Agreement is hereby deleted in its entirety
and the following new Section 9.10 is inserted in lieu thereof:

    "9.10 Minimum Consolidated EBITDA. (A) From and after the last day of the
Borrower's fiscal quarter ending closest to April 30, 2001 through but not
including the date of the

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consummation of the Sale-Leaseback Transaction, the Borrower will not permit
Consolidated EBITDA for any Test Period ending during such period to be less
than $13,500,000.

    (B) From and after the consummation of the Sale-Leaseback Transaction, the
Borrower will not permit Consolidated EBITDA for any Test Period ending from and
after such time to be less than $12,000,000."

    5.  The definition of "Consolidated EBITDA" appearing in Section 11.01 of
the Credit Agreement is hereby amended by (i) deleting the word "and" appearing
at the end of clause (x)(iii) thereof and inserting a comma in lieu thereof and
(ii) inserting the following text immediately after the words "Consolidated EBIT
for such period" appearing in clause (x)(iv) thereof:

"and (v) up to $1,000,000 in the aggregate of payments, fines, penalties and
legal and other expenses relating to the settlement of administrative, civil and
criminal proceedings arising out of the accidental initiation incident that
occurred on April 24, 2000 at the Borrower's former facility located in
Hollister, California to the extent that such charges were deducted in arriving
at Consolidated EBIT for such period".

    6.  The definition of "Revolving Loan Maturity Date" appearing in
Section 11.01 of the Credit Agreement is hereby amended by deleting the date
"December 15, 2003" appearing therein and inserting the date "April 30, 2002" in
lieu thereof.

    7.  Section 11.01 of the Credit Agreement is hereby further amended by
inserting in the appropriate alphabetical order the following new definitions:

    "Aerospace Sale" shall have the meaning provided for in the recitals to the
Sixth Amendment and Consent, dated as of April 25, 2001, to this Agreement.

    "Sale-Leaseback Transaction" shall have the meaning provided for in the
recitals to the Sixth Amendment and Consent, dated as of April 25, 2001, to this
Agreement.

    8.  Section 13.07(a) of the Credit Agreement is hereby deleted in its
entirety and the following new Section 13.07(a) is inserted in lieu thereof:

    "13.07 Calculations; Computations; Accounting Terms. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Banks); provided that, except as otherwise specifically provided
herein, (w) all computations and all definitions used in determining compliance
with Sections 9.07 through 9.10, inclusive, shall utilize accounting principles
and policies in conformity with those used to prepare the historical financial
statements of the Borrower referred to in Section 7.05(a), (x) all computations
and all definitions used in determining compliance with Sections 9.08 through
9.10, inclusive, shall be determined as if the Scot Sale (and the application of
the proceeds therefrom) had occurred on the first day of the Borrower's fiscal
quarter that began closest to November 1, 1999, (y) all computations and all
definitions used in determining compliance with Sections 9.08 through 9.10,
inclusive, shall be determined as if the Aerospace Sale (and the application of
the proceeds therefrom) had occurred on the first day of the Borrower's fiscal
quarter that began closest to February 1, 2000, and (z) from and after the
consummation of the Sale-Leaseback Transaction, all computations and all
definitions used in determining compliance with Sections 9.08 through 9.10,
inclusive, shall be determined as if the Sale-Leaseback Transaction (and the
application of the proceeds therefrom) had occurred on the first day of the
Borrower's fiscal quarter that began closest to February 1, 2001."

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IV.  Miscellaneous.  

    1.  In order to induce the Banks to enter into this Amendment, the Borrower
hereby represents and warrants that (i) all representations, warranties and
agreements contained in Section 7 of the Credit Agreement are true and correct
in all material respects on and as of the Sixth Amendment Effective Date (unless
such representations and warranties relate to a specific earlier date, in which
case such representations and warranties shall be true and correct as of such
earlier date) and (ii) there exists no Default or Event of Default on the Sixth
Amendment Effective Date, in each case both before and after giving effect to
this Amendment.

    2.  This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.

    3.  This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Administrative Agent.

    4.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.

    5.  This Amendment shall become effective on the date (the "Sixth Amendment
Effective Date") when (i) each Credit Party and the Required Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including, without limitation, by way of facsimile
transmission) the same to the Administrative Agent at the Notice Office and
(ii) the Aerospace Sale shall have been consummated on the terms and conditions
set forth herein. This Amendment and the agreements contained herein shall be
binding on the successors and assigns of the parties hereto.

    6.  From and after the Sixth Amendment Effective Date, all references in the
Credit Agreement and in the other Credit Documents to the Credit Agreement shall
be deemed to be references to the Credit Agreement as modified hereby.

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    IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.

    SPECIAL DEVICES, INCORPORATED
 
 
By:
 
/s/ DONALD C. CAMPION   

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Name: Donald C. Campion
Title: E.V.P. & Chief Financial Officer
 
 
BANKERS TRUST COMPANY,

Individually and as Administrative Agent
 
 
By:
 
/s/ MARGUERITE SUTTON   

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Name: Marguerite Sutton
Title: Vice President
 
 
BANKBOSTON, N.A.
 
 
By:
 

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Name:                
Title:                
 
 
THE BANK OF NOVA SCOTIA
 
 
By:
 
/s/ JOHN QUICK   

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Name: John Quick
Title: Managing Director
 
 
CITY NATIONAL BANK
 
 
By:
 

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Name:                
Title:                
 
 
FIRST UNION NATIONAL BANK
 
 
By:
 
/s/ ALLAN SIEGEL   

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Name: Allan Siegel
Title: Managing Director

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GENERAL ELECTRIC CAPITAL CORPORATION
 
 
By:
 
/s/ JAMES M. KOPACK   

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Name: James M. Kopack
Title: Senior Risk Manager
 
 
MORGAN STANLEY DEAN WITTER
  PRIME INCOME TRUST
 
 
By:
 

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Name:               
Title:                
 
 
NATIONAL CITY BANK
 
 
By:
 
/s/ MARK J. RINGEL   

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Name: Mark J. Ringel
Title: Vice President
 
 
PARIBAS
 
 
By:
 
/s/ EDWARD T. IRWIN   

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Name: Edward T. Irwin
Title: Managing Director
 
 
By:
 
/s/ RO TOYOSHIMA   

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Name: Ro Toyoshima
Title: Vice President
 
 
KZH STERLING LLC
 
 
By:
 

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Name:                
Title:                
 
 
UNION BANK OF CALIFORNIA, N.A.
 
 
By:
 
/s/ RICHARD DEGREY   

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Name: Richard DeGrey
Title: Vice President

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ARK CLO 2000-1, LIMITED
 
 
By:
 

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Name: Patriarch Partners, LLC,
its Collateral Manager
 
 
By:
 
/s/ LYNN TILTON   

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Name: Lynn Tilton
Title: Authorized Signatory

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EXHIBIT 10.40

SIXTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT