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                                                                    Exhibit 10.4


                   AMENDMENT TO LOAN AND SECURITY AGREEMENT
                   ----------------------------------------


     This AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") dated as
of this 29th day of December 2000, between TECHNICAL COMMUNICATIONS CORPORATION
("Borrower") and COAST BUSINESS CREDIT, a division of Southern Pacific Bank
("Coast"), is made in reference to the following facts:

     A.   Borrower previously entered into a Loan and Security Agreement with
Coast dated July 31, 2000 (as amended, the "Loan Agreement") and related
documents in connection therewith (as each may be amended, supplemented,
replaced or modified from time to time, the "Loan Documents"). Terms used
herein, unless otherwise defined herein, shall have the meanings set forth in
the Loan Agreement.

     B.   Borrower has caused an Event of Default under Section 8.1 of the Loan
Agreement as a result of the failure of Borrower to comply with the Tangible Net
Worth requirements under the Loan Agreement.

     C.   Borrower has requested, among other things, that Coast waive the Event
of Default and modify the Tangible Net Worth requirements under the Loan
Agreement.

     D.   Coast is willing to amend the Loan Agreement and waive the Event of
Default on the terms and subject to the conditions set forth in this Amendment.

     NOW THEREFORE, in consideration of the foregoing and the terms and
conditions hereof, the parties do hereby agree as follows, effective as of the
date set forth above:

          1.   Limited Waiver.  Subject to the terms and conditions of this
               --------------
Amendment, Coast hereby waives the Event of Default under Section 8.1 of the
Loan Agreement due to the failure of Borrower to maintain Tangible Net Worth of
not less than $6,500,000 as of September 30, 2000.

          The foregoing waiver is a one-time waiver only and not a continuing
waiver, and shall apply only to the matters and time period specifically set
forth in this Amendment.  Without limiting the generality of the foregoing, this
waiver shall not apply to any future failure by Borrower to comply with the
terms of the Loan Agreement referenced above or any other term therein.

          2.   Tangible Net Worth.  The first paragraph of Section 8.1 of the
               ------------------
Schedule is hereby amended in full and restated as follows:

     "Tangible Net Worth:  Beginning December 31, 2000, Borrower shall at all
times have a Tangible Net Worth of not less than $4,688,513 from December 31,
2000 through and including March 30, 2001, $4,790,633 from March 31, 2001
through and including June 29, 2001, $5,633,740 from June 30, 2001 through and
including September 28, 2001, $5,969,418
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beginning September 29, 2001 and thereafter, increasing quarterly by 70% of
Borrower's net income based on a trailing six months. In no event shall such
increase exceed 70% of Borrower's net income on an annualized basis during any
fiscal year of Borrower."

          3.   Interest Coverage Ratio.  Section 8.1 of the Schedule is hereby
               -----------------------
amended by adding a new paragraph 7 as follows:

               "7.  Borrower shall at all times maintain a ratio of (a) EBIT (as
defined below) to (b) interest expense of not less than 1.25 to 1.00, measured
quarterly on a trailing 12-month basis beginning March 31, 2001.  'EBIT' means,
in any fiscal period, Borrower's net income (other than extraordinary or non-
recurring items of Borrower for such period), plus (i) the amount of all
                                              ----
interest expense and income tax expense of Borrower for such period, and plus or
minus (as the case may be) (ii) any other non-cash charges which have been added
or subtracted, as the case may be, in calculating Borrower's net income for such
period."

          4.   Inventory Loans. The parties hereto agree that until such time
               ---------------
that Coast notifies Borrower in writing to the contrary Borrower, in its sole
discretion, shall have no right to request Inventory Loans under Section 2.1(b)
of the Schedule or otherwise and Coast shall be under no obligation to provide
Inventory Loans.  Any Inventory Loans outstanding on the date hereof are fully
due and payable on the date hereof together with accrued but unpaid interest
thereon.

          5.   Amendment Fee. In addition to all other fees and charges,
               -------------
Borrower hereby agrees to pay Coast an amendment fee of $30,000, fully earned
and payable on the date hereof.

          6.   Reaffirmation.  Except as modified by the terms herein, the Loan
               -------------
Agreement and the other Loan Documents remain in full force and effect.  If
there is any conflict between the terms and provisions of this Amendment and the
terms and provisions of the Loan Agreement or the other Loan Documents, the
terms and provisions of this Amendment shall govern.

          7.   Counterparts.  This Amendment may be executed in one or more
               ------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

          8.   Governing Law.  This Amendment shall be governed by and construed
               -------------
according to the laws of the State of California.

          9.   Attorneys' Fees; Costs.  Borrower agrees to pay, on demand, all
               ----------------------
attorneys' fees and costs incurred in connection with the negotiation,
documentation and execution of this Amendment. If any legal action or proceeding
shall be commenced at any time by any party to this Amendment in connection with
its interpretation or enforcement, the prevailing party or parties in such
action or proceeding shall be entitled to reimbursement of its reasonable
attorneys' fees and costs in connection therewith, in addition to all other
relief to which the prevailing party or parties may be entitled.

          10.  Jury Trial Waiver. BORROWER AND COAST EACH WAIVE ALL RIGHTS TO
               -----------------
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST
THE OTHER WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THE LOAN DOCUMENTS, THIS
AMENDMENT, THE OBLIGATIONS,

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<PAGE>

THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY BORROWER OR COAST, OR, IN ANY
WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN BORROWER AND COAST.

   "Borrower"                           "Coast"

   TECHNICAL COMMUNICATIONS             COAST BUSINESS CREDIT,
   CORPORATION                          a division of Southern Pacific Bank


   By:   /s/ Carl H. Guild Jr.          By:   /s/ Lawrence J. Placek
      ----------------------------         -------------------------------------
   Name:  Carl H. Guild Jr.             Name:  Lawrence J. Placek
        --------------------------           -----------------------------------
   Title: President and CEO             Title: Sr Vice President
         -------------------------            ----------------------------------




          Each of the undersigned hereby acknowledges and consents to the
foregoing Amendment and confirms and agrees that the Continuing Guaranty
executed by it in favor of Coast shall remain in full force and effect in
accordance with its terms.

TCC INVESTMENT CORPORATION              TCC FOREIGN SALES CORPORATION


By:   /s/ Carl H. Guild Jr.             By:    /s/ Carl H. Guild Jr.
     -----------------------------           -----------------------------------
Its:   President                        Its:    President
     -----------------------------           -----------------------------------

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