Document:

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                                                                EXHIBIT 10.36

           FOURTH AMENDMENT, CONSENT AND WAIVER TO CREDIT AGREEMENT

         FOURTH AMENDMENT, CONSENT AND WAIVER TO CREDIT AGREEMENT (this
"Amendment"), dated as of September 18, 2000, 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 to sell 100% of the capital stock of Scot, Incorporated, a
corporation organized under the laws of the State of Delaware ("Scot") and a
Wholly-Owned Domestic Subsidiary of the Borrower (the "Scot Sale");

         WHEREAS, to effectuate the Scot Sale, the Borrower and Scot have
heretofore entered into an Agreement and Plan of Merger, dated as of August
18, 2000;

         WHEREAS, the Borrower has requested that the Banks consent to the
Scot Sale as provided herein;

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

         NOW, THEREFORE, it is agreed:

I.  CONSENTS UNDER CREDIT AGREEMENT.

         1.  The Banks hereby consent to the Scot Sale, 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, (iv) such consideration shall
be at least $55,400,000 and the Net Sale Proceeds therefrom shall be at least
$38,000,000, (v) 100% of the Net Sale Proceeds therefrom are applied upon
receipt thereof as a mandatory repayment of principal of outstanding Term
Loans in accordance with the requirements of Sections 4.02(h) and

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(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) and (vi) an
amount (the "Revolver Blocked Amount") equal to $11,500,000 of non-Net Sale
Proceeds from the Scot Sale is applied upon receipt thereof to prepay
outstanding Revolving Loans (with no corresponding reduction to the Total
Revolving Loan Commitment).  To the extent Collateral is sold in compliance
with the preceding provisions of this Section 1 of Part I, such Collateral
shall be sold free and clear of the Liens created by the respective Security
Documents and Scot also shall be released from its obligations under the
Subsidiaries Guaranty, 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.  In order to induce the Banks to grant the consent set forth in
preceding Section 1 of this Part I and notwithstanding anything to the
contrary contained in the Credit Agreement, the following limitations shall
apply:

        (i)  During the period commencing upon the consummation of the Scot
     Sale and continuing until such time as when the Borrower shall have paid
     its estimated tax payments with respect to both its federal and state
     income tax obligations for its fiscal year ending closest to October 31,
     2000 (which date shall not be earlier than January 15, 2001), (A) the
     Borrower may not incur any Revolving Loans, Swingline Loans or Letters
     of Credit if, after giving effect to the incurrence thereof, the
     aggregate outstanding principal amount of all Revolving Loans, Swingline
     Loans and Letter of Credit Outstandings would exceed the lesser of (x)
     the Total Revolving Loan Commitment as then in effect and (y) an amount
     equal to $20,000,000 LESS the Revolver Blocked Amount and (B) on any day
     on which the sum of the aggregate outstanding principal amount of all
     Revolving Loans, Swingline Loans and Letter of Credit Outstandings
     exceeds the lesser of (x) the Total Revolving Loan Commitment as then in
     effect and (y) an amount equal to $20,000,000 LESS 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 excess.  If, after giving effect to the prepayment of all
     outstanding Swingline Loans and Revolving Loans as contemplated by the
     immediately preceding sentence, the aggregate amount of the Letter of
     Credit Outstandings exceeds the lesser of (x) the Total Revolving Loan
     Commitment as then in effect and (y) an amount equal to $20,000,000 LESS
     the Revolver Blocked Amount, the Borrower shall pay to the
     Administrative Agent at the Payment Office on such day an amount of cash
     and/or Cash Equivalents equal to the amount of such excess (up to a
     maximum amount equal to the Letter of Credit Outstandings at such time),
     such cash and/or Cash Equivalents to be held as security for all
     obligations of the Borrower to the Issuing Bank and the Banks under the
     Credit Agreement in a cash collateral account to be established by the
     Administrative Agent.  The Banks hereby agree that, notwithstanding the
     existence or continuation of any Default or Event of Default (except as
     otherwise provided in clause (ii) below of the proviso), the Borrower
     shall at any time during the continuance of the limitations set forth in
     this Section 2(i) (but not before January 15, 2001) be permitted to
     incur Revolving Loans and Swingline Loans in an aggregate principal amount
     not exceeding the Revolver Blocked Amount PROVIDED that (i) the proceeds
     of such Revolving Loans and Swingline

                                      -2-
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     Loans shall be promptly utilized by the Borrower for the sole purpose of
     satisfying its federal and state income tax obligations with respect to
     its fiscal year ending closest to October 31, 2000 and (ii) no Default
     or Event of Default under Section 10.01, 10.05, 10.10 or 10.11 of the
     Credit Agreement shall then exist; and

        (ii)  At all times after the Borrower shall have made its estimated
     tax payments with respect to its federal and state income tax
     obligations for its fiscal year ending closest to October 31, 2000
     (which date shall be no earlier than January 15, 2001) (at which time
     clause (i) above of this Section 2 of this Part I shall no longer be
     effective), unless the Required Banks shall have otherwise agreed in
     writing, (A) the Borrower may not incur any Revolving Loans, Swingline
     Loans or Letters of Credit if, after giving effect to the incurrence
     thereof, the aggregate outstanding principal amount of all Revolving
     Loans, Swingline Loans and Letter of Credit Outstandings would exceed
     the lesser of (x) the Total Revolving Loan Commitment as then in effect
     and (y) $20,000,000 and (B) on any day on which the sum of the aggregate
     outstanding principal amount of all Revolving Loans, Swingline Loans and
     Letter of Credit Outstandings exceeds the lesser of (x) the Total
     Revolving Loan Commitment as then in effect and (y) $20,000,000, 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
     excess.  If, after giving effect to the prepayment of all outstanding
     Swingline Loans and Revolving Loans as contemplated by the immediately
     preceding sentence, the aggregate amount of the Letter of Credit
     Outstandings exceeds the lesser of (x) the Total Revolving Loan
     Commitment as then in effect and (y) $20,000,000, the Borrower shall pay
     to the Administrative Agent at the Payment Office on such day an amount
     of cash and/or Cash Equivalents equal to the amount of such excess (up
     to a maximum amount equal to the Letter of Credit Outstandings at such
     time), such cash and/or Cash Equivalents to be held as security for all
     obligations of the Borrower to the Issuing Bank and the Banks under the
     Credit Agreement in a cash collateral account to be established by the
     Administrative Agent.

         3.  Notwithstanding anything to the contrary contained in the
Capital Call Agreement (as in effect prior to giving effect to this
Amendment), from and after the Fourth Amendment Effective Date (as defined
below), the Capital Call Agreement (as in effect prior to giving effect to
this Amendment) shall be terminated and of no further force or effect (it
being understood and agreed that the provisions of this Section 3 shall not
apply in any respect to the new Capital Call Agreement entered into
concurrently with this Amendment).

II.  AMENDMENTS TO CREDIT AGREEMENT.

         1.  The table appearing in Section 4.02(b) of the Credit Agreement
is hereby deleted in its entirety and the following new table is inserted in
lieu thereof (which table reflects payments made prior to the Fourth
Amendment Effective Date and shall be the table used in determining the PRO
RATA application of the Net Sale Proceeds from the Scot Sale):

                                      -3-

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         "SCHEDULED REPAYMENT DATE                AMOUNT

           October 31, 2000                     $175,000.00
           January 31, 2001                     $175,000.00
           April 30, 2001                     $3,352,152.72
           July 31, 2001                      $3,352,152.72
           October 31, 2001                   $4,469,536.96
           January 31, 2002                   $2,500,000.00
           April 30, 2002                     $2,500,000.00
           July 31, 2002                      $2,500,000.00
           October 31, 2002                   $2,500,000.00
           January 31, 2003                   $4,175,000.00
           April 30, 2003                     $4,175,000.00
           July 31, 2003                      $4,175,000.00
           October 31, 2003                   $4,175,000.00
           January 31, 2004                   $4,500,000.00
           April 30, 2004                     $4,500,000.00
           July 31, 2004                      $4,500,000.00
           October 31, 2004                   $4,500,000.00
           January 31, 2005                   $5,800,000.00
           April 30, 2005                     $5,800,000.00
           July 31, 2005                      $  951,157.60".

         2.  Section 4.02(f) of the Credit Agreement is hereby amended by
inserting the following parenthetical immediately after the text "Initial
Borrowing Date" appearing in clause (iii) of the first parenthetical thereof:

     "(excluding, for purposes of this clause (iii), any equity
     contributions made to the Borrower pursuant to the Capital Call
     Agreement)".

         3.  Section 4.02(h) of the Credit Agreement is hereby amended by
inserting the following proviso at the end thereof:

     "; PROVIDED, HOWEVER, that any mandatory repayment of Term Loans
     required to be applied pursuant to this Section 4.02(h) after
     September 18, 2000 (other than with the Net Sale Proceeds from the
     Scot Sale) shall be applied (i) first, to reduce in direct order of
     maturity the Scheduled Repayments that are due on April 30, 2001,
     July 31, 2001 and October 31, 2001 and (ii) second, to the extent
     that any such amounts are in excess of the amount of such Scheduled
     Repayments at the time of such payments, as provided above in this
     Section 4.02(h) without regard to this proviso."

                                      -4-

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         4.  Section 7.10 of the Credit Agreement is hereby amended by
inserting the following new sentence at the end thereof:

     "Notwithstanding the foregoing, the representations and warranties
     set forth above in this Section 7.10 shall not be deemed breached as
     a result of defects with respect qualification requirements under
     Section 410(b) of the Code in connection with certain Plans
     sponsored by the Borrower and Scot, Incorporated (a Wholly-Owned
     Domestic Subsidiary of the Borrower) and an early participation
     qualification defect in connection with a Plan sponsored by Scot,
     Incorporated so long as (i) the aggregate liability of the Borrower
     and its Subsidiaries as a result thereof does not exceed $600,000
     and (ii) such defects are remedied on or before December 15, 2001."

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

                "FISCAL QUARTER
                ENDING CLOSEST TO               RATIO

                January 31, 2001              1.25:1.00
                April 30, 2001                1.25:1.00
                July 31, 2001                 1.30:1.00
                October 31, 2001              1.30:1.00
                January 31, 2002
                  and the last day of each
                  fiscal quarter thereafter   3.00:1.00."

         6.  Section 9.09 of the Credit Agreement is hereby amended by
deleting said Section 9.09 in its entirety and inserting the following new
Section 9.09 in lieu thereof:

         "9.09 MAXIMUM LEVERAGE RATIO.  The Borrower will not permit the
     Leverage Ratio at any time during a period set forth below to be greater
     than the ratio set forth opposite such period below:

                      PERIOD                               RATIO

                The last day of the Borrower's
                fiscal quarter ending closest
                to January 31, 2001 through and
                including the date immediately
                preceding the last day of the
                Borrower's fiscal quarter ending
                closest to April 30, 2001                  7.00:1.00

                The last day of the Borrower's fiscal
                quarter ending closet to April 30,
                2001 through and including the date
                immediately preceding the last day of
                the Borrower's fiscal quarter ending

                                      -5-

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                closest to July 31, 2001                   7.10:1.00

                The last day of the Borrower's
                fiscal quarter ending closest
                to July 31, 2001 through and
                including the date immediately
                preceding the last day of the
                Borrower's fiscal quarter ending
                closest to October 31, 2001                6.70:1.00

                The last day of the Borrower's fiscal
                quarter ending closest to October 31,
                2001 through and including the date
                immediately preceding the last day of
                the Borrower's fiscal quarter ending
                closest to January 31, 2002                6.00:1.00

                Thereafter                                 3.00:1.00."

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

                "FISCAL QUARTER
                ENDING CLOSEST TO                             AMOUNT

                October 31, 2000                           $22,000,000
                January 31, 2001                           $21,500,000
                April 30, 2001                             $21,000,000
                July 31, 2001                              $22,000,000
                October 31, 2001                           $23,000,000
                January 31, 2002                           $48,000,000
                April 30, 2002                             $49,000,000
                July 31, 2002                              $51,000,000
                October 31, 2002
                  and the last day of each
                  fiscal quarter thereafter                $53,000,000".

         8.  The definition of "Capital Call Agreement" appearing in Section
11.01 of the Credit Agreement is hereby amended by deleting the date "January
26, 2000" appearing therein and inserting the date "September 18, 2000" in
lieu thereof:

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

         "Scot Sale" shall have the meaning provided for in the recitals to
     the Fourth Amendment, Consent and Waiver, dated as of September 18,
     2000, to this Agreement.

                                      -6-

<PAGE>

         10.  Section 13.07(a) of the Credit Agreement is hereby amended by
(i) inserting the text "(x)" immediately after the text "except as otherwise
specifically provided herein," appearing in the proviso thereof, and (ii)
inserting the following new clause (y) at the end of such proviso:

         "and (y) all computations and all definitions used in determining
     compliance with Sections 9.08 through 9.10, inclusive (including for
     purposes of the Capital Call Agreement), 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".

III.  WAIVERS TO CREDIT AGREEMENT.

         1.  The Banks hereby waive any Default or Event of Default that has
arisen (i) under Sections 9.08 and 9.10 of the Credit Agreement for the Test
Period ended closest to July 31, 2000 and (ii) under Section 9.09 of the
Credit Agreement for the period from and after April 30, 2000 through but not
including the Fourth Amendment Effective Date.

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 Fourth 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 Fourth Amendment Effective Date, in each
case 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 "Fourth
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, (ii) JFL Equity and the Borrower shall have entered into the Capital

                                      -7-

<PAGE>

Call Agreement in the form attached hereto, (iii) the Borrower shall have
paid to the Administrative Agent for the account of each Lender who has
executed a counterpart hereof and delivered same to the Administrative Agent
at the Notice Office on or prior to 5:00 P.M. (New York City time) on
September 18, 2000, an amendment fee equal to 0.125% of the sum of (x) such
Lender's Revolving Loan Commitment and (y) the aggregate outstanding
principal amount of such Lender's Term Loans, in each case on the Fourth
Amendment Effective Date (but calculated before giving effect to any
repayment on such date from the proceeds of the Scot Sale) and (iv) the Scot
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 Fourth 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.

                               *       *       *

                                      -8-

<PAGE>

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

                                       SPECIAL DEVICES, INCORPORATED

                                       By:  /s/ Joseph A. Stroud
                                            ----------------------------------
                                            Name:  Joseph A. Stroud
                                            Title: Executive Vice President &
                                                   Chief Financial Officer

<PAGE>

                                       BANKERS TRUST COMPANY,
                                         Individually and as Administrative
                                         Agent

                                       By:  /s/ Susan L. Le Fevre
                                            ----------------------------------
                                            Name:  Susan L. Le Fevre
                                            Title: Director

<PAGE>

                                       FLEET NATIONAL BANK FORMERLY KNOWN AS
                                       BANKBOSTON, N.A.

                                       By:  /s/ Claire E. Keady
                                            ----------------------------------
                                            Name:  Claire E. Keady
                                            Title: Assistant Vice President

<PAGE>

                                       THE BANK OF NOVA SCOTIA

                                       By:  /s/ John Quick
                                            ----------------------------------
                                            Name:  John Quick
                                            Title: Managing Director

<PAGE>

                                       CITY NATIONAL BANK

                                       By:
                                            ----------------------------------
                                            Name:
                                            Title:

<PAGE>

                                       FIRST UNION NATIONAL BANK

                                       By:  /s/ Robert A. Brown
                                            ----------------------------------
                                            Name:  Robert A. Brown
                                            Title: Vice President

<PAGE>

                                       GENERAL ELECTRIC CAPITAL CORPORATION

                                       By:  /s/ James M. Kopack
                                            ----------------------------------
                                            Name:  James M. Kopack
                                            Title: Senior Risk Manager

<PAGE>

                                       MORGAN STANLEY DEAN WITTER
                                         PRIME INCOME TRUST

                                       By:  /s/  Peter Gewirtz
                                            ----------------------------------
                                            Name:  Peter Gewirtz
                                            Title: Vice President

<PAGE>

                                       NATIONAL CITY BANK

                                       By:  /s/ Lisa B. Lisi
                                            ----------------------------------
                                            Name:  Lisa B. Lisi
                                            Title: Senior Vice President

<PAGE>

                                       PARIBAS

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

                                       By:  /s/ PJ De Pillipis
                                            ----------------------------------
                                            Name:  PJ de Pillipis
                                            Title: Managing Director

<PAGE>

                                       KZH STERLING LLC

                                       By:  /s/ Susan Lee
                                            ----------------------------------
                                            Name:  Susan Lee
                                            Title: Authorized Agent

<PAGE>

                                       UNION BANK OF CALIFORNIA, N.A.

                                       By:  /s/  Michael A. Ross
                                            ----------------------------------
                                            Name:  Michael A. Ross
                                            Title: Vice President

<PAGE>

Acknowledged and Agreed to:

SCOT, INCORPORATED

By: /s/ Joseph A. Stroud
    ----------------------------------
    Name:  Joseph A. Stroud
    Title: Vice President<PAGE>

                                                                   EXHIBIT 10.37

                 FIFTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT

                  FIFTH AMENDMENT AND CONSENT TO CREDIT AGREEMENT (this
"AMENDMENT"), dated as of January 12, 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 herein 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 previously delivered to the
Administrative Agent and the Banks a notice, dated August 20, 1999, a copy of
which is attached hereto as ANNEX A, relating to certain environmental matters
as described therein (the "ENVIRONMENTAL NONCOMPLIANCE");

                  WHEREAS, the Borrower, the Banks and the Administrative Agent
are parties to a Waiver and Modification to Credit Agreement, dated as of
September 14, 1999 (the "WAIVER"), pursuant to which, among other things, on the
terms and conditions set forth therein, (i) the Banks waived any Default or
Event of Default that may have occurred and be continuing under the Credit
Agreement solely as a result of the Borrower's failure to be in compliance with
the provisions of the Credit Agreement due to the Environmental Noncompliance
and (ii) in order to induce the Banks to grant the waiver described in
immediately preceding clause (i) and to permit certain Credit Events to occur
from time to time notwithstanding the existence of the Environmental
Noncompliance, it was agreed by and among the parties to the Waiver that, among
other things, until such time as the Required Banks otherwise agree in writing,
the Borrower may not incur or suffer to exist any Revolving Loans, Swingline
Loans or Letters of Credit if, after giving effect to the incurrence or
existence thereof, the aggregate outstanding principal amount of the Revolving
Loans, Swingline Loans and Letter of Credit Outstandings would exceed the lesser
of (x) the Total Revolving Loan Commitment as then in effect and (y)
$20,000,000;

                  WHEREAS, the Borrower, the Banks and the Administrative Agent
are parties to a Fourth Amendment, Consent and Waiver to Credit Agreement, dated
as of September 18, 2000 (the "SCOT AMENDMENT"), pursuant to which, among other
things, on the terms and conditions set forth therein, (i) the Banks consented
to the sale (the "SCOT SALE") of 100% of the capital stock of Scot,
Incorporated, a corporation organized under the laws of the State of Delaware
and a Wholly-Owned Domestic Subsidiary of the Borrower immediately prior to such
sale and (ii) in order to induce the Banks to grant the consent described in
immediately preceding clause (i), it was agreed by and among the parties to the
Scot Amendment that, among other things, until such time as when the Borrower
shall have paid its estimated tax payments with respect to both its

<PAGE>

federal and state income tax obligations for its fiscal year ending closest to
October 31, 2000 (which date shall not be earlier than January 15, 2001), the
Borrower may not incur or suffer to exist any Revolving Loans, Swingline Loans
or Letters of Credit if, after giving effect to the incurrence or existence
thereof, the aggregate outstanding principal amount of the Revolving Loans,
Swingline Loans and Letter of Credit Outstandings would exceed the lesser of (x)
the Total Revolving Loan Commitment as then in effect and (y) $20,000,000 LESS
the Revolver Blocked Amount (as defined in the Scot Amendment);

                  WHEREAS, the Borrower has previously delivered to the
Administrative Agent and the Banks a notice, dated December 14, 2000, a copy of
which is attached hereto as ANNEX B, setting forth (i) the terms of the
settlement of the Environmental Noncompliance (without giving effect to any
amendment or modification thereof or supplement or replacement thereto, except
with the approval of the Required Banks, the "ENVIRONMENTAL NONCOMPLIANCE
SETTLEMENT") including (x) that certain Plea Agreement, dated as of December 12,
2000, by and between the Borrower and the United States Attorney's Office for
the Central District of California (the "FEDERAL SETTLEMENT") setting forth,
among other things, payment obligations on the part of the Borrower in the
aggregate amount of $1,501,200 and (y) that certain Consent Agreement and
Stipulation of Entry of Final Judgment; Order filed in the Superior Court of the
State of California, County of Los Angeles (the "STATE SETTLEMENT") setting
forth, among other things, payment obligations on the part of the Borrower in
the aggregate amount of $565,500, (ii) a request by the Borrower that the
Required Banks agree in writing that the Borrower may incur Revolving Loans and
Swingline Loans for the purpose of making payments relating to the Environmental
Noncompliance Settlement in accordance with the terms thereof and (iii) a
request by the Borrower for certain amendments to the Credit Agreement; and

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

                  NOW, THEREFORE, it is agreed:

I.       CONSENTS UNDER CREDIT AGREEMENT.

                  1. The Borrower and the Banks hereby agree that,
notwithstanding anything to the contrary set forth in Section 2 of Part I of the
Waiver and Section 2 of Part I of the Scot Amendment, but subject to the other
terms and conditions set forth in the Credit Agreement, at all times after the
Fifth Amendment Effective Date (as defined below), unless the Required Banks
shall have otherwise agreed in writing, (A) the Borrower may not incur any
Revolving Loans, Swingline Loans or Letters of Credit if, after giving effect to
the incurrence thereof, the aggregate outstanding principal amount of all
Revolving Loans, Swingline Loans and Letter of Credit Outstandings would exceed
the lesser of (x) the Total Revolving Loan Commitment as then in effect and (y)
the Revolver Cap (as defined below) as then in effect and (B) on any day on
which the sum of the aggregate outstanding principal amount of all Revolving
Loans, Swingline Loans and Letter of Credit Outstandings exceeds the lesser of
(x) the Total Revolving Loan

                                      -2-
<PAGE>

Commitment as then in effect and (y) the Revolver Cap as then in effect, 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 excess and if, after
giving effect to such prepayment of all outstanding Swingline Loans and
Revolving Loans, the aggregate amount of the Letter of Credit Outstandings
exceeds the lesser of (x) the Total Revolving Loan Commitment as then in effect
and (y) the Revolver Cap as then in effect, the Borrower shall pay to the
Administrative Agent at the Payment Office on such day an amount of cash and/or
Cash Equivalents equal to the amount of such excess (up to a maximum amount
equal to the Letter of Credit Outstandings at such time), such cash and/or Cash
Equivalents to be held as security for all obligations of the Borrower to the
Issuing Bank and the Banks under the Credit Agreement in a cash collateral
account to be established by the Administrative Agent.

                  It is understood and agreed that, for purposes of this Section
1 of Part I:

                  (A) "REVOLVER CAP" shall mean an amount initially equal to
         $20,000,000 LESS the Revolver Blocked Amount, which Revolver Cap shall
         be:

                           (x) increased (but not in the aggregate by more than
                  $2,500,000 pursuant to this sub-clause (x)) on each date that
                  the Borrower shall incur Revolving Loans and/or Swingline
                  Loans for the purpose of promptly satisfying its payment
                  obligations expressly in accordance with the terms of the
                  Environmental Noncompliance Settlement (including the payment
                  of related fees and expenses), PROVIDED that (i) the Borrower
                  shall in fact promptly utilize such proceeds for the purpose
                  of promptly satisfying its payment obligations expressly in
                  accordance with the terms of the Environmental Noncompliance
                  Settlement and (ii) no Default or Event of Default under
                  Section 10.01, 10.05, 10.10 or 10.11 of the Credit Agreement
                  shall then exist, PROVIDED, HOWEVER, in no event shall (1) the
                  Borrower be permitted to incur Revolving Loans and/or
                  Swingline Loans for the purpose of satisfying any payment
                  obligation with respect to the Federal Settlement until such
                  time as when any and all required governmental consents and
                  other third party consents with respect to such Federal
                  Settlement shall have been obtained and all such consents
                  shall be final, (2) the Borrower be permitted to incur
                  Revolving Loans and/or Swingline Loans for the purpose of
                  satisfying any payment obligation with respect to the State
                  Settlement until such time as when any and all required
                  governmental consents and other third party consents with
                  respect to such State Settlement shall have been obtained and
                  all such consents shall be final and (3) the Borrower be
                  permitted to incur Revolving Loans and/or Swingline Loans for
                  the purpose of satisfying any obligation to pay fees and
                  expenses (including, without limitation, legal fees and
                  expenses) (other than to the extent expressly required by the
                  terms of the Federal Settlement or the State Settlement, as
                  the case may be) until such time as when any and all required
                  governmental consents and other third party consents with
                  respect to both the Federal Settlement and the State
                  Settlement shall have been obtained and all such consents
                  shall be final; (PROVIDED that the aggregate amount of

                                      -3-
<PAGE>

                  Revolving Loans and/or Swingline Loans incurred by the
                  Borrower pursuant to this subclause (3) shall in no event
                  exceed $433.300), and

                           (y) increased (but not in the aggregate by more than
                  the Revolver Blocked Amount pursuant to this sub-clause (y))
                  on each date on or after the Tax Payment Date that the
                  Borrower shall incur Revolving Loans and/or Swingline Loans
                  for the purpose of promptly making its estimated tax payments
                  with respect to its federal and state income tax obligations
                  for its fiscal year ended closest to October 31, 2000,
                  PROVIDED that (i) the Borrower shall in fact promptly utilize
                  such proceeds for the purpose of promptly making its estimated
                  tax payments with respect to its federal and state income tax
                  obligations for its fiscal year ended closest to October 31,
                  2000 and (ii) no Default or Event of Default under Section
                  10.01, 10.05, 10.10 or 10.11 of the Credit Agreement shall
                  then exist; and

                  (B) "TAX PAYMENT DATE" shall mean the date that the Borrower
         shall make its estimated tax payments with respect to its federal and
         state income tax obligations for its fiscal year ended closest to
         October 31, 2000 (which date shall be no earlier than January 15,
         2001).

II.      AMENDMENTS TO CREDIT AGREEMENT.

                  1. Section 9.09 of the Credit Agreement is hereby amended by
deleting said Section 9.09 in its entirety and inserting the following new
Section 9.09 in lieu thereof:

                  "9.09 MAXIMUM LEVERAGE RATIO. The Borrower will not permit the
         Leverage Ratio at any time during a period set forth below to be
         greater than the ratio set forth opposite such period below:

<TABLE>
<CAPTION>

         PERIOD                                               RATIO
         <S>                                               <C>
         The last day of the
         Borrower's fiscal quarter
         ending closest to January
         31, 2001 through and
         including the date
         immediately preceding the
         last day of the Borrower's
         fiscal quarter ending
         closest to April 30, 2001                         7.15:1.00

         The last day of the
         Borrower's fiscal quarter
         ending closet to April 30,
         2001 through and including
         the date immediately
         preceding the last day of
         the Borrower's fiscal
         quarter ending closest to
         July 31, 2001                                     7.25:1.00

</TABLE>
                                      -4-
<PAGE>

<TABLE>

         <S>                                               <C>
         The last day of the
         Borrower's fiscal quarter
         ending closest to July 31,
         2001 through and including
         the date immediately
         preceding the last day of
         the Borrower's fiscal
         quarter ending closest to
         October 31, 2001                                  6.80:1.00

         The last day of the
         Borrower's fiscal quarter
         ending closest to October
         31, 2001 through and
         including the date
         immediately preceding the
         last day of the Borrower's
         fiscal quarter ending
         closest to January 31, 2002                       6.00:1.00

         Thereafter                                        3.00:1.00."
</TABLE>

                  2. The definition of "Consolidated EBITDA" appearing in
Section 11.01 of the Credit Agreement is hereby deleted and the following new
definition is inserted in lieu thereof:

                  "Consolidated EBITDA" shall mean, for any period, Consolidated
         EBIT for such period, adjusted by (x) adding thereto (without
         duplication) (i) the amount of all amortization, depreciation and other
         non-cash expenses or non-cash charges that were deducted in arriving at
         Consolidated EBIT for such period (including amortization of goodwill,
         the non-cash costs of agreements evidencing Interest Rate Protection
         Agreements, Other Hedging Agreements, license agreements and
         non-competition agreements, and the non-cash amortization of
         Capitalized Lease Obligations, managements fees and organization
         costs), but excluding, however, any non-cash expenses or non-cash
         charges associated with any asset write-downs, (ii) unrealized non-cash
         gains and losses from hedging, foreign currency or commodities
         translations and transactions that were deducted in arriving at
         Consolidated EBIT for such period, (iii) up to (I) $1,700,000 of
         inventory write-downs, (II) $11,300,000 of legal, consulting and other
         expenses relating to the environmental investigations at the Borrower's
         facilities and (III) $638,700 relating to the write-off of a
         receivable, in each case (in the case of this clause (iii)) to the
         extent that such charges were incurred in the Borrower's fiscal quarter
         ended October 31, 1999 and were deducted in arriving at Consolidated
         EBIT for such period and (iv) up to $2,066,700 in the aggregate of
         payments, fines, penalties and legal, consulting and other expenses
         relating to the settlement of the environmental investigations at the
         Borrower's facilities to the extent that such charges were deducted in
         arriving at Consolidated EBIT for such period and (y) subtracting
         therefrom any cash expenses, cash charges or cash payments arising from
         any non-cash expenses, non-cash charges or unrealized non-cash gains or
         losses that were deducted in arriving at Consolidated EBIT in a
         previous period.

                  3. From and after the Fifth Amendment Effective Date, the
Borrower and the Banks hereby agree that the provisions of the Credit Agreement
(including, without limitation, the

                                      -5-
<PAGE>

representations and warranties of the Borrower set forth therein) shall no
longer be modified by the Waiver.

III.     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 Fifth 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), (ii) there exists no Default or Event of
Default on the Fifth Amendment Effective Date, in each case after giving effect
to this Amendment and (iii) the payments required to be made by the Borrower
pursuant to the Environmental Noncompliance Settlement could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole. Without limiting the foregoing,
the Borrower hereby represents and warrants that, other than for the
Environmental Noncompliance Settlement, to the best of its knowledge after due
inquiry, there are no liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (including
attorneys' and consultants' fees and disbursements) that are likely to be
assessed against the Borrower or any of its Subsidiaries from time to time
related to the Environmental Noncompliance that either individually or in the
aggregate could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole.

                  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
"FIFTH AMENDMENT EFFECTIVE DATE") when 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. This Amendment and the agreements contained herein shall be binding on
the successors and assigns of the parties hereto.

                                      -6-
<PAGE>

                  6. From and after the Fifth 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.

                                      * * *

                                      -7-
<PAGE>

                  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
                                          ----------------------------------
                                          Name:  Donald C. Campion
                                          Title: Executive Vice President
                                                 and Chief Financial Officer

<PAGE>

                                      BANKERS TRUST COMPANY,
                                        Individually and as Administrative Agent

                                      By: /s/ Marguerite Suttton
                                          ----------------------------------
                                          Name:  Marguerite Suttton
                                          Title: Vice President

<PAGE>

                                      THE BANK OF NOVA SCOTIA

                                      By: /s/ Jon Burckin
                                          ----------------------------------
                                          Name:  Jon Burckin
                                          Title: Managing Director

<PAGE>

                                      CITY NATIONAL BANK

                                      By: /s/ Edward Vassallo
                                          ----------------------------------
                                          Name:  Edward Vassallo
                                          Title: Vice President

<PAGE>

                                      FIRST UNION NATIONAL BANK

                                      By: /s/ Robert A. Brown
                                          ----------------------------------
                                          Name:  Robert A. Brown
                                          Title: Vice President

<PAGE>

                                      NATIONAL CITY BANK

                                      By: /s/ Mark J. Ringel
                                          ----------------------------------
                                          Name:  Mark J. Ringel
                                          Title: Vice President

<PAGE>

                                      PARIBAS

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

                                      By: /s/ PJ de Filippis
                                          ----------------------------------
                                          Name:  PJ de Filippis
                                          Title: Managing Director

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