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                                                                    EXHIBIT 10.8

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

This THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") dated as
of this 27th day of December 2001, 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 requested certain modifications to the Loan Agreement.

     C. Coast is willing to amend the Loan Agreement 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:

1. Full Covenant Compliance. Section 2.1 of the Loan Agreement is hereby amended
   by inserting the words "and, without limiting the foregoing, Borrower is in
   full compliance with the financial covenants set forth in Section 8.1 of the
   Schedule to the Loan Agreement" to the conclusion of the first sentence of
   such section.

2. Credit Limit.  Section 2.1 of the Schedule to the Loan Agreement is
   hereby amended by deleting the words "Five Million Dollars ($5,000,000)" and
   substituting the words "One Million Dollars ($1,000,000)" in lieu thereof.

3. Tangible Net Worth. Paragraph 1 of Section 8.1 of the Schedule to the Loan
   Agreement is hereby amended in full and restated as follows:

        "1. Borrower shall at all times have a Tangible Net Worth of
        not less than $1,650,582 for the quarter ending December 31,
        2001, $1,675,754 for the quarter ending March 31, 2002,
        $1,773,919 for the quarter ending June 30, 2002 and $1,817,709
        for the quarter ending September 30, 2002, based on a trailing
        six months basis."

4. Minimum Cash Covenant. Paragraph 5 of Section 8.1 of the Schedule to the Loan
   Agreement is hereby amended in full and restated as follows:

        "5. Borrower shall at all times maintain cash balances of at
        least $203,590 for the quarter ending December 31, 2001,
        $385,818 for the quarter ending March 31, 2002, $474,899 for
        the quarter ending June 30, 2002 and $384,915 for the quarter
        ending September 30, 2002. If the cash balances fall below the
        amounts set forth in this paragraph 5, the reporting criteria
        otherwise set forth in this Agreement may be modified at the
        option of Coast and the advance rates against Eligible
        Receivables and Inventory may be reduced at the discretion of
        Coast (such discretion to be exercised in Coast's reasonable
        business judgment)."

5.  Reporting. If at any time, Borrower has any Loans outstanding under this
    Agreement, then during such time, the monthly reporting requirements set
    forth in paragraphs 1 through 3 of Section 8 of the Schedule to the Loan
    Agreement shall be converted from monthly to weekly or daily (at Coast's
    discretion) reporting.

6.  EBIT. Paragraph 7 of Section 8.1 of the Schedule to the Loan Agreement is
    hereby amended in full and restated as follows:

        "7. Borrower shall at all times maintain EBIT (as defined
        below) of not less than $14,281 for the quarter ending December
        31, 2001, $10,042 for the quarter ending March 31, 2002,
        $63,880 for the quarter ending June 30, 2002 and $131,173 for
        the quarter ending September 30, 2002, measured quarterly on a
        rolling 6-month basis. If at any time, Borrower has any Loans
        outstanding under this Agreement, Borrower, during such time,
        shall maintain a ratio of (a) EBIT (as defined below) to (b)
        interest expense of not less than 1.00 to 1.00 with quarterly
        increases in such covenant based on Borrower's net income
        measured on a trailing 6-month basis. `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)

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        (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. For purposes of this covenant, "rolling
        6-month basis" means that such covenant shall be measured using
        the applicable two most recently concluded fiscal quarters."

7.  Access to Collateral, Books and Records. Section 8.4 of the Loan Agreement
    is hereby amended by deleting the first sentence in its entirety and
    substituting the following in lieu thereof:

        "At reasonable times but not less frequently than semi-annually
        and on one (1) Business Day's notice, Coast, or its agents,
        shall have the right to perform Audits; provided that if
        Borrower has any Loans outstanding under this Agreement, such
        Audits shall be preformed no less frequently than quarterly.
        With respect to any borrowing occurring hereunder, not less
        than thirty days prior to the date of such borrowing, Borrower
        shall provide Coast with written notice of Borrower's intent to
        borrow from Coast in order for Coast to conduct an Audit, the
        results of which must be satisfactory to Coast in its
        discretion."

8.  Maturity Date.

    (a) Section 9.1 of the Loan Agreement is hereby amended in full and restated
    as follows:

        "This Agreement shall continue in effect until the Maturity
        Date."

    (b) Section 9.1 of the Schedule to the Loan Agreement is hereby amended in
    full and restated as follows:

        "December 31, 2002, subject to early termination as provided in
        Section 9.2 of the Agreement. The Agreement will not be renewed
        on or after December 31, 2002, except with the prior written
        consent of Coast and Borrower, such consent to be at their sole
        discretion."

9.  Conditions Precedent. The amendments hereunder are conditioned upon
    Lender's receipt of a fully-executed copy of this Amendment.

10. Covenant. Borrower shall deliver to Coast by no later than June 30, 2002,
    new financial projections forecasting the period from September 30, 2002
    through September 30, 2003, for evaluation of covenants and loan structure
    for the then duration of the Loan Agreement and as information to consider
    whether Coast will offer, in its sole discretion, to renew the Agreement on
    or after December 31, 2002.

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

12. 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.

13. 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.

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

15. 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.

16. 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, THE COLLATERAL, ANY ALLEGED TORTIOUS

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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 Weinstein
       -----------------------                 -------------------------
Name:  Carl H. Guild Jr.                Name:  Lawrence Weinstein
       -----------------------                 -------------------------
Title: President & CEO                  Title: 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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