Document:

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                                                                   Exhibit 10.30

                           NON-COMPETITION AGREEMENT

     NON-COMPETITION AGREEMENT (this "Agreement"), dated as of July 29, 1999, by
and between Samuel Levin, an individual (the "Executive"), and Scot
Incorporated, a Delaware corporation (the "Company").

                                    RECITALS

     WHEREAS, the parties hereto recognize and agree that the non-competition
covenants in this Agreement are necessary, among other things, to protect the
value of the business engaged in by the Company and Special Devices,
Incorporated, a Delaware corporation and the sole stockholder of the Company
("SDI").

     NOW, THEREFORE, in consideration of the foregoing recital, the terms and
provisions herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1. COVENANT NOT TO COMPETE.

     (a) In consideration of, among other things, the payments set forth in
Section 2 of this Agreement, for the period commencing on the date hereof and
extending until November 30, 2001, the Executive will not, voluntarily or
involuntarily, for any reason whatsoever, directly or indirectly, individually
or on behalf of persons not now parties to this Agreement, or as a partner,
stockholder, director, officer, principal, agent, or in any other capacity or
relationship, for his own account or for the benefit of any other person, firm,
corporation, partnership, association or other entity:

          (i) compete in the Business (as defined below) with the Company or SDI
     or any of their successors or assigns, within the United States of America
     or the European Community (the "Territory");

          (ii) engage in the business of owning or managing any company that
     engages in the Business or any other operation that sells products that
     compete with the products produced by the Business within the Territory;
     PROVIDED, HOWEVER, that the ownership of less than 2% of the outstanding
     shares of any class of capital stock of a publicly-held corporation shall
     not be deemed to be a violation of this Section 1(a);

          (iii) solicit for employment or hire any of the officers or directors
     or other persons currently employed by the Company or SDI or those persons
     that are in the future employed by the Company or SDI or any of their
     successors or assigns.

     (b) For the purposes of this Section 1, the term "Business" shall mean each
type of business conducted by the Company or SDI as of the date hereof.

     (c) During the term of this Agreement, the Executive will not, directly or
indirectly, approach or seek Business from any Customer (as defined below),
refer Business from any Customer to any enterprise or business or be paid
commissions based on Business-

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related sales received from any Customer by any enterprise or business. For
purposes of this Section 1, the term "Customer" means any person, firm,
corporation, partnership, association or other entity to which the Company or
SDI or any of their successors or assigns, provided goods or services during the
36-month period prior to the time at which any determination shall be made that
any such person, firm, corporation, partnership, association or other entity is
a Customer.

     (d) The Executive acknowledges that the restrictions imposed by this
Agreement are fully understood by him and are fair and reasonable.

     (e) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by a court of competent jurisdiction
that the character, duration or geographical scope of such provisions is
unreasonable, then it is the intention and the agreement of the parties hereto
that this Agreement shall be construed by the court in such a manner as to
impose only those restrictions on the Executive's conduct that are reasonable in
light of the circumstances and as are necessary to assure the Company and SDI
the benefits of this Agreement. If, in any judicial proceeding, a court shall
refuse to enforce all of the separate covenants deemed included herein because
taken together they are more extensive than necessary to assure to the Company
or SDI the intended benefits of this Agreement, it is expressly understood and
agreed by the parties hereto that the provisions of this Agreement that, if
eliminated, would permit the remaining separate provisions to be enforced in
such proceeding, shall be deemed eliminated, for the purposes of such
proceeding, from this Agreement.

     (f) Notwithstanding the restrictions set forth in this Section 1, Executive
may from time to time perform consulting services for various entities owned or
controlled by J.F. Lehman Equity Investors I, L.P. on terms mutually agreeable
to both parties.

     2. CONSIDERATION.

     (a) In consideration of the Executive's promises in Section 1 hereof, the
Company shall pay an aggregate of $890,000 to the Executive, of which $570,000
will be payable on November 30, 1999, $185,000 will be payable on November 30,
2000 and $135,000 will be payable on November 30, 2001 (each such installment to
be paid without accrual of interest).

     (b) Whenever any payments are to be made to the Executive under this
Agreement the Company, in its discretion, may require the Executive to remit to
the Company, or may withhold from such payment, all or any part of the amount
determined in the Company's discretion to be sufficient to satisfy federal,
state and local withholding tax obligations which the Company or its counsel
determine may arise from any payment to the Executive pursuant to this
Agreement.

     3. SPECIFIC PERFORMANCE.

     The Company, SDI and the Executive recognize that the covenants to be
performed under this Agreement by the Executive are special, unique and of
extraordinary

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character, and that in the event of the breach by the Executive of the terms and
conditions of this Agreement, the Company or SDI will be entitled to institute
and prosecute proceedings in any court of competent jurisdiction, either at law
or in equity, to obtain damages for any breach of this Agreement, to enforce the
specific performance thereof by the Executive or to enjoin the Executive from
breaching the provisions of Section 1 or any other provision of this Agreement.
Nothing contained in this Section 3 shall be construed to prevent the Company or
SDI from seeking such other remedy in the courts, in case of any breach of this
Agreement by the Executive, as the Company or SDI may elect.

     4. ASSIGNABILITY.

     The rights and obligations of the Company and SDI under this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
the Company and SDI. The Executive's rights and obligations hereunder may not be
assigned or alienated and any attempt to do so by the Executive will be void.

     5. NOTICES.

     Any notices provided hereunder must be in writing and shall be deemed
effective upon the earlier of personal delivery (including personal delivery by
telecopy or telex) or the third day after mailing by first class mail to the
recipient at the address indicated below:

                To the Company:

                Scot, Incorporated
                2525 Curtiss Street
                Downers Grove, Illinois 60515
                Attention:  Chief Financial Officer
                Facsimile:  (708) 969-4719

                With copies to:

                Special Devices, Incorporated
                14370 White Sage Road
                Moorpark, CA  93021
                Attention:  Chief Financial Officer
                Facsimile:  (805) 553-1200

                Gibson, Dunn & Crutcher LLP
                333 South Grand Avenue
                Los Angeles, California 90071
                Attention:  Kenneth M. Doran
                Facsimile:  (213) 229-7537

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                To Executive:

                Mr. Samuel Levin
                2539 Osage Dr.
                Glenview, Illinois 60025

                With a copy to:

                Kelly Olson, Michod, Rogan & Siepke
                181 West Madison St.
                Chicago, Illinois 60602
                Attention:  Charles L. Michod, Jr.
                Facsimile:  (312) 236-6706

or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.

     6. ARBITRATION.

     (a) Any controversy, claim or dispute between the parties directly or
indirectly concerning this Agreement or the breach hereof or the subject matter
hereof, including questions concerning the scope and applicability of this
Clause (i), shall be finally settled by arbitration before one arbitrator held
in Chicago, Illinois, in accordance with the rules of commercial arbitration
then followed by the American Arbitration Association or any successor to the
functions thereof. The arbitrator shall have the right and authority to
determine how his or her decision or determination as to each issue or matter in
dispute may be implemented or enforced. Any decision or award of the arbitrator
shall be final and conclusive on the parties to this Agreement, and there shall
be no appeal therefrom other than for gross negligence or willful misconduct on
the part of the arbitrator. The prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorneys' fees and disbursements from
the non-prevailing party.

     (b) The parties hereto agree that an action to compel arbitration pursuant
to this Agreement may be brought in any court and in connection therewith the
laws of the State of Illinois shall control. Application may also be made to
such court for confirmation of any decision or award of the arbitrator, for an
order of enforcement and for any other remedies that may be necessary to
effectuate such decision or award. The parties hereto hereby consent to the
jurisdiction or the arbitrator and of such court and waive any objection to the
jurisdiction of such arbitrator and court.

     (c) Notwithstanding the foregoing provisions of this Clause (i), however,
nothing contained herein shall require arbitration of any issue arising under
this Agreement for which injunctive relief is successfully sought by any party
hereto.

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     7. MISCELLANEOUS.

     (a) GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal, substantive laws of the State of
Illinois, without giving effect to the conflict of laws rules thereof.

     (b) AMENDMENT; WAIVER. No amendment or modification of this Agreement shall
be binding unless it is in writing signed by the parties hereto. The waiver by
any party to this Agreement of a breach of any provision hereof by any other
party shall not be construed as a waiver of any subsequent breach by any party.

     (c) ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with respect to the subject matter of this Agreement.

     (d) BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and, to the extent expressly provided herein,
to their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement.

     (e) SEVERABILITY OF PROVISIONS. If any provision of this Agreement
otherwise is deemed to be invalid or unenforceable or is prohibited by the laws
of the state or jurisdiction where it is to be performed, this Agreement shall
be considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The remaining
provisions of this Agreement shall be valid and binding and of like effect as
though such provision were not included.

     (f) CAPTIONS. The captions used herein are for ease of reference only and
shall not define or limit the provisions hereof.

     (g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but of which taken
together shall constitute one and the same agreement.

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     IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of July 29, 1999.

                                       /s/ Samuel Levin
                                       ----------------------------------------
                                       Samuel Levin

                                       Scot Incorporated

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

                                    6<PAGE>

                                                                   EXHIBIT 10.31

                          SPECIAL DEVICES, INCORPORATED
                             1999 STOCK OPTION PLAN

1.     PURPOSE. This Stock Option Plan (the "Plan") is intended as an incentive
to encourage stock ownership by officers and directors and executive and
professional employees of Special Devices, Incorporated (the "Company") and its
Parent and Subsidiary corporations so that they may acquire or increase their
equity interest in the success of the Company and its Parents and Subsidiaries,
and to encourage them to remain in the service of the Company or of its Parents
or Subsidiaries. Each option granted under this Plan will be designated as
either an "Incentive Stock Option" or a "Nonqualified Stock Option." It is
intended that each option designated as an Incentive Stock Option granted under
this Plan will qualify as an incentive stock option within the meaning of
Section 422(b) of the Code.

2.     DEFINITIONS.

       2.1    "BOARD OF DIRECTORS" means the board of directors of the Company.

       2.2    "CHANGE IN CONTROL" shall mean the happening of any of the
following:

       2.2.1  any person who is not a stockholder of the Company or of any
Parent on the date of adoption of this Plan (or group of such persons acting in
concert) acquires, during any period of twelve consecutive calendar months,
stock of the Company or of a Parent representing a majority of the voting power
of all stock of the Company or any Parent having the right to vote for the
election of directors;

       2.2.2  the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than eighty percent (80%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (ii) a merger or consolidation
effected to implement a Recapitalization of the Company;

       2.2.3  the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets or any transaction
having a similar effect; or

       2.2.4  if the Company enters into an agreement with an unrelated
party for the sale of all or substantially all of the assets or outstanding
stock of a Subsidiary (or a transaction having a similar effect), or any other
event occurs by reason of which a Subsidiary ceases to be a Subsidiary of the
Company, a Change in Control shall be deemed to have occurred with respect to
those Employees who are then employed by such Subsidiary.

       2.3    "CHANGE IN CONTROL DATE" shall mean the earliest date on which
one of the events described in the definition of "Change in Control" occurs, as
determined by the Board of Directors, in its sole discretion, provided that, if
Section 2.2.4 of the definition of

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 2

"Change of Control" applies, the Change in Control Date shall be deemed to be
the date of the agreement, provided that the transaction does close.

       2.4    "CHANGE IN CONTROL PRICE" shall mean the highest fair market
value, or the highest price paid or offered in any bona fide transaction related
to a Change in Control of the Company, at any time during the sixty (60) days
preceding the Change in Control Date.

       2.5    "CODE" means the Internal Revenue Code of 1986, as amended.

       2.6    "COMPANY" means Special Devices, Incorporated, a Delaware
corporation.

       2.7    "EMPLOYEE" means any bona fide full or part time common law
employee of the Company or of any Parent or Subsidiary of the Company.

       2.8    "INCENTIVE STOCK OPTION" means an Option granted pursuant to
this Plan intended to qualify and designated as an incentive stock option within
the meaning of Section 422 of the Code.

       2.9    "NONQUALIFIED STOCK OPTION" means any Option granted pursuant to
this Plan other than an Incentive Stock Option.

       2.10   "OPTION" or "STOCK OPTION" means any stock option granted
pursuant to this Plan.

       2.11   "OPTIONEE" means any individual to whom an Option is granted
pursuant to this Plan.

       2.12   "PARENT" means, at the time of granting any Option, 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 fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

       2.13   "PLAN" means the Special Devices, Incorporated 1999 Stock Option
Plan.

       2.14   "RECAPITALIZATION" means any reorganization, merger or other
subdivision, consolidation, recapitalization, reclassification, stock split,
combination of shares, issuance of warrants, stock dividend or similar event
with respect to or affecting the common stock of the Company, par value one cent
($.01) per share.

       2.15   "STOCK OPTION COMMITTEE" means the committee appointed to
administer the Plan pursuant to Article 7 herein, if such committee is
appointed.

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 3

       2.16   "SUBSIDIARY" means, at the time of granting any Option, 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 fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

       2.17   "TEN PERCENT SHAREHOLDER" means any person who owns (or is
considered by reason of Section 425(d) of the Code to own) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary of the Company.

3.     ELIGIBILITY.The persons who shall be eligible to receive Options shall be
such officers, directors and executive and professional employees of the Company
or its Parent or Subsidiary corporations as the Board of Directors shall select
from time to time. An Optionee may hold more than one Option, but only on the
terms and subject to the restrictions hereafter set forth.

4.     STOCK. The stock subject to the Options shall be shares of the Company's
authorized but unissued or reacquired common stock, par value one cent ($.01)
per share, hereafter sometimes called Stock. The aggregate number of shares
which may be issued under Options shall not exceed three hundred seventy
thousand (370,000) shares of Stock. The limitation established by the preceding
sentence shall be subject to adjustment as provided in Section 5.12 of the Plan.
If any outstanding Option for any reason expires or is terminated, the shares of
Stock allocable to the unexercised portion of such Option may again be subjected
to an Option under the Plan.

5.     TERMS AND CONDITIONS

       5.1    OPTION AGREEMENT. Stock Options granted pursuant to the Plan
shall be authorized by the Board of Directors and shall be evidenced by
agreements in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the terms and
conditions set forth in this Article 5. The agreements shall not impose upon the
Company or its Parents or Subsidiaries any obligation to retain the Optionee in
their employ for any period.

       5.2    NUMBER OF SHARES. Each Option shall state the number of shares of
Stock to which it pertains.

       5.3    OPTION PRICE. Each Option shall state the option price, which
in the case of an Incentive Stock Option shall be not less than (i) one hundred
percent (100%) of the fair market value of the shares of Stock on the date of
the granting of the Option if the Optionee is not a Ten Percent Shareholder, or
(ii) one hundred ten percent (110%) of the fair market value

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 4

of the shares of Stock on the date of the granting of the Option if the Optionee
is a Ten Percent Shareholder. The fair market value of the shares of Stock shall
be determined pursuant to Section 7.2.

       5.4    MEDIUM AND TIME OF PAYMENT. The option price shall be payable
upon the exercise of the Option and may be paid in cash or by good check. At the
sole option of the Company, if approved by the Board of Directors, a portion of
the purchase price may be paid by delivery of shares of Stock previously owned
by the Optionee, duly endorsed for transfer to the Company, with a fair market
value (as determined by the Board of Directors) on the date of delivery equal to
the option price, or by delivery of a recourse promissory note bearing interest
at such rate, on such other terms and in form and with security satisfactory to
the Company, or any combination of the foregoing approved by the Board of
Directors. Exercise of an Option shall not be effective until the Company has
received written notice of exercise, specifying the number of whole and
fractional shares of Stock to be purchased, accompanied by payment in full of
the aggregate option price of the number of shares purchased.

       5.5    TERM OF OPTIONS. Each Option, by its terms, shall not be
exercisable after the expiration of ten years from the date the Option is
granted, provided, however, that any Incentive Stock Option granted to a Ten
Percent Shareholder, by its terms, shall not be exercisable after the expiration
of five years from the date the Option is granted. Any Option may provide that
it will expire within a shorter period than the maximum permitted hereby.

       5.6    INSTALLMENTS. Each Option shall be exercisable on such dates
and in such amounts (subject to the other provisions hereof) as shall be
determined by the Board of Directors. It is not required that each Option have
the same installment provisions. In its sole discretion, the Board of Directors
may accelerate the exercise date of part or all of any Option.

       5.7    TRANSFERABILITY. Each Option, by its terms, shall not be
transferable by the individual to whom granted otherwise than by will or the
laws of descent and distribution, and shall be exercisable, during the
Optionee's lifetime, only by the Optionee.

       5.8    LIMITS ON EXERCISE. Each Option shall be subject to the
requirement that, if at any time the Board of Directors, in its discretion,
shall determine that the listing, registration, or qualification of the shares
subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option, or the issue or purchase of shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors.

       5.9    LIMIT ON OPTIONS. An Option shall not be an Incentive Stock
Option to the extent that the aggregate fair market value of stock with respect
to which such Option is

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 5

exercisable for the first time by any individual during any calendar year
(taking into account all Incentive Stock Options simultaneously or previously
granted under all stock option plans of the Company and its Parents and
Subsidiaries) exceeds One Hundred Thousand Dollars ($100,000).

       5.10   TERMINATION OF EMPLOYMENT. Each Option by its terms shall not
be exercisable after thirty (30) days after the termination of employment of the
individual to whom the Option was granted, unless such termination was a result
of the death or disability of the employee, and may provide that it shall not be
exercisable after the date of termination of employment of the individual to
whom the Option was granted.

       5.11   EXPIRATION OF PLAN. No Option shall be granted under this Plan
more than ten years from the date on which this Plan was adopted or approved by
the stockholders of the Company, whichever is earlier. No Option granted under
this Plan shall be valid unless the Plan is approved by the stockholders of the
Company within twelve (12) months before or after its adoption by the Board of
Directors.

       5.12   RECAPITALIZATION. Upon any Recapitalization, the Board of
Directors shall make an appropriate and equitable adjustment in the number and
kind of securities with respect to which rights may be granted under this Plan
and the price at which such securities may be purchased, and an appropriate and
equitable adjustment in the number and kind of securities that may be purchased
under each outstanding Option and the price at which shares may be purchased
under each such Option.

       The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make or authorize any adjustments,
recapitalizations, reorganizations, or other changes in the Company's capital
structure or business, any merger or consolidation, any issuance of bonds,
debentures, preferred shares or common shares, the dissolution or liquidation of
the Company, any sale or transfer of all or any part of the Company's assets or
business, or any other act, whether or not similar to the events described
above.

       5.13   RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an
Option shall have no rights as a stockholder with respect to any shares covered
by the Option until the date of the issuance of a stock certificate for such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 5.12 hereof.

       5.14   MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of the Plan, the Board of
Directors may modify, extend or renew outstanding Options granted under the
Plan, or accept the surrender of outstanding Options (to the extent not
theretofore exercised) and authorize the granting of

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 6

new Options in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of an Option shall, without the
consent of the Optionee, alter or impair any rights or obligations under any
Option theretofore granted under the Plan.

       5.15   INVESTMENT PURPOSE. Each Option under the Plan shall be
granted on the condition that the purchases of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution unless the
stock subject to such Option is registered under the Securities Act of 1933, as
amended, and any applicable state securities laws, or a resale of such stock
without such registration would otherwise be permissible. Each person exercising
an Option must represent that such condition is fulfilled, unless in the opinion
of counsel for the Company such condition is not required under the Securities
Act of 1933 or any other applicable law, regulation, or rule of any governmental
agency.

       5.16   WITHHOLDING TAXES. Whenever under the Plan shares are to be
issued or cash is to be paid in satisfaction of Options, the Company shall have
the right to require the recipient to remit to the Company an amount sufficient
to satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares or payment of such
cash.

       5.17   TERMINATION OF OPTIONS. Each Option, by its terms, shall
reserve to the Company the right to terminate the Option, in connection with a
Change in Control for a payment in cash equal to the difference between the
exercise price for the shares of Stock subject to the Option and the Change in
Control Price of such Stock.

       5.18   OTHER PROVISIONS. The Option agreements authorized under the
Plan shall contain such other provisions, including, without limitation, such
rights of redemption, purchase and first refusal, and such other restrictions
upon the exercise of Options or the transfer of the Stock issued upon exercise,
as the Board of Directors of the Company shall deem advisable. Any Incentive
Stock Option agreement shall contain such limitations and restrictions upon the
exercise of the Option as shall be necessary in order that such Option will be
an "Incentive Stock Option" as defined in Section 422 of the Code.

6.     EXERCISE OF OPTIONS

       6.1    STOCK TRANSFER BOOKS. Notwithstanding any other provision of this
Plan or of any Option, no stock shall be issued by the Company while its stock
transfer books are closed.

       6.2    SECURITIES LAWS. Notwithstanding any other provision of this
Plan or of any Option, no Option shall be exercisable, and no stock shall be
issued upon the exercise of any Option, if such exercise or such issuance of
stock would result in any violation of law or the imposition on the Company of a
requirement that it commence filing periodic reports under the Securities
Exchange Act of 1934 or any similar provision of law.

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 7

7.     ADMINISTRATION

       7.1    ADMINISTRATION BY BOARD OF DIRECTORS. The Plan shall be
administered by the Board of Directors. The interpretation and construction by
the Board of Directors of any provisions of the Plan or of any Option granted
under it shall be final. The Board of Directors shall have the authority to
appoint a Stock Option Committee to assume the duties and responsibilities of
administering the Plan. The Stock Option Committee, if such be established by
the Board of Directors, shall be composed of no less than three (3) persons (who
shall be members of the Board of Directors), each of whom shall be a
"disinterested person" as defined herein, and such Stock Option Committee shall
have the same power, authority and rights in the administration of the Plan as
the Board of Directors. No director shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
under it.

       The Board of Directors shall determine from time to time the
persons who shall receive Options hereunder; provided, however, Options may be
granted hereunder only to persons who, at the time of the grant thereof, are
officers, directors or key employees of the Company and its Parents and
Subsidiaries, except as otherwise provided in this Plan; provided, further, that
any decision to award Options hereunder to any person or the determination of
the maximum number of shares of Stock (as hereinafter defined) which may be
subject to Options granted to any such director, employee or officer shall be
made by either (i) the Board of Directors, all of the directors of which and all
of the directors acting in such matter shall be disinterested persons as defined
herein, or (ii) the Stock Option Committee appointed by the Board of Directors
pursuant to this section. For purposes of this Plan, "disinterested person"
shall mean a director who is not, during the one year prior to service as an
administrator of the Plan, or during such service, granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any of its
Parents or Subsidiaries entitling the participants therein to acquire stock,
stock options or stock appreciation rights of the Company or any of its Parents
or Subsidiaries.

       7.2    DETERMINATION OF FAIR MARKET VALUE. For the purpose of granting
Incentive Stock Options, the Board of Directors shall determine the fair market
value of the Stock of the Company as follows:

              7.2.1  If the Company's Stock is traded on any recognized stock
exchange or exchanges, such fair market value shall be deemed to be the highest
closing price of the Stock on such stock exchange or exchanges on the day the
Option is granted or if no sale of the Company's Stock shall have been made on
any stock exchange on that day, on the next preceding day on which there was a
sale of such stock.

              7.2.2  During such time as the Stock is not listed on an
established exchange, but is actively traded on the over-the-counter market, the
fair market value per

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SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 8

share shall be the mean between dealer "bid" and "ask" prices of the Stock in
the over-the-counter market on the day the Option is granted, as reported by the
National Association of Securities Dealers, Inc.

              7.2.3  During such time as the Company's Stock is neither listed
on any recognized exchange nor actively traded over-the-counter, the fair market
value shall be determined in good faith by the Board of Directors. In making
such determination, the Board of Directors may (but shall not be required to)
rely on the opinions of one or more qualified, independent appraisers.

       7.3    INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as directors or as members of the Stock Option
Committee, the members of the Board of Directors shall be indemnified by the
Company against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Board or Stock Option Committee member is liable for
negligence or misconduct in the performance of his duties; provided that within
sixty (60) days after institution of any such action, suit or proceeding a Board
or Stock Option Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.

8.     AMENDMENT AND TERMINATION

       8.1    AMENDMENT. The Board of Directors of the Company may, insofar
as permitted by law, from time to time, with respect to any shares at the time
not subject to Options, suspend or discontinue the Plan or revise or amend it in
any respect whatsoever except that, without approval of the stockholders, no
such revision or amendment shall change the number of shares subject to the
Plan, change the designation of the class of employees eligible to receive
Options or decrease the price at which Incentive Stock Options may be granted,
materially increase the benefits accruing to participants under the Plan,
materially increase the number of securities which may be issued under the Plan,
or materially modify the requirements as to eligibility for participation in the
Plan.

<PAGE>

SPECIAL DEVICES, INCORPORATED
1999 STOCK OPTION PLAN
Page 9

9.     MISCELLANEOUS

       9.1    GOVERNING LAW. This Plan shall be governed by, and construed in
accordance with, the laws of the State of Delaware.

       9.2    CONSTRUCTION. In the event any parts of this Plan are found to
be void, the remaining provisions of this Plan shall nevertheless be binding
with the same effect as though the void parts were deleted.

       9.3    APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Stock pursuant to Options will be used for general corporate
purposes.

       9.4    NO OBLIGATION TO EXERCISE OPTION. The grant of an Option shall
impose no obligation upon the Optionee to exercise such Option.

       9.5    APPROVAL OF STOCKHOLDERS. The Plan shall take effect immediately
upon adoption by the Board of Directors. However, if this Plan is not approved
by the stockholders of the Company within the period beginning twelve (12)
months before and ending twelve (12) months after the date the Plan is adopted
by the Board of Directors, no Options granted hereunder shall constitute
Incentive Stock Options.

                                       SPECIAL DEVICES, INCORPORATED

                                       By:
                                          -------------------------------
                                          George A. Sawyer
                                          President and Chief Executive Officer

Dated: June 23, 1999

ATTEST:

------------------------
Keith Oster, Secretary

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