UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
TECHNICAL COMMUNICATIONS CORPORATION
(Name of Issuer)
Common Stock, $0.10 par value per share
(Title of Class of Securities)
878 409 101
(CUSIP Number)
M. Mahmud Awan, Ph. D. Paul Bork, Esq.
TechMan International Corporation Hinckley, Allen & Snyder
240 Sturbridge Road 28 State Street
Charlton City, Massachusetts 01506 Boston, Massachusetts 02109
(508) 248-3211 (617) 345-9000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
July 6, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior coverage page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
1. Name of Reporting Person: M. Mahmud Awan
SS or IRS Identification Number of the Above Person:
2. Check the Appropriate Box if a Member of a Group: (a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: USA
7. Sole Voting Power: 138,378 shares
8. Shared Voting Power: 0 shares
9. Sole Dispositive Power: 138,378 shares
10. Shared Dispositive Power: 0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 138,378
shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 10.8%
14. Type of Reporting Person: IN
<PAGE>
1. Name of Reporting Person: Philip A. Phalon
SS or IRS Identification Number of the Above Person:
2. Check the Appropriate Box if a Member of a Group: (a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: USA
7. Sole Voting Power: 2,250 shares
8. Shared Voting Power: 0 shares
9. Sole Dispositive Power: 2,250 shares
10. Shared Dispositive Power: 0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 2,250 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 0.2%
14. Type of Reporting Person: IN
<PAGE>
1. Name of Reporting Person: Robert B. Bregman
SS or IRS Identification Number of the Above Person:
2. Check the Appropriate Box if a Member of a Group: (a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: USA
7. Sole Voting Power: 2,700 shares
8. Shared Voting Power: 0 shares
9. Sole Dispositive Power: 2,700 shares
10. Shared Dispositive Power: 0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 2,700 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 0.2%
14. Type of Reporting Person: IN
<PAGE>
1. Name of Reporting Person: William C. Martindale, Jr.
SS or IRS Identification Number of the Above Person:
2. Check the Appropriate Box if a Member of a Group: (a) [X]
(b) [ ]
3. SEC Use Only
4. Source of Funds: PF
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: USA
7. Sole Voting Power: 10,000 shares
8. Shared Voting Power: 67,000 shares
9. Sole Dispositive Power: 10,000 shares
10. Shared Dispositive Power: 67,000 shares
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 77,000 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares: [X]
13. Percent of Class Represented by Amount in Row (11): 6.0%
14. Type of Reporting Person: IN
<PAGE>
Item 1. Security and Issuer
The Statement of M. Mahmud Awan, Philip A. Phalon, Robert B. Bregman and
William C. Martindale, Jr. (the "Purchasing Group") on Schedule 13D dated April
3, 1998, as amended and supplemented by Amendment No. 1 dated May 15, 1998,
Amendment No. 2 dated May 22, 1998, Amendment No. 3 dated June 9, 1998,
Amendment No. 4 dated June 15, 1998, Amendment No. 5 dated June 19, 1998, and
Amendment No. 6 dated July 6, 1998, in respect of the common stock, $0.10 par
value ("Common Stock"), of Technical Communications Corporation (the "Issuer")
whose principal executive offices are located at 100 Domino Drive, Concord,
Massachusetts 01742, is hereby amended and supplemented as follows:
Item 4. Purpose of Transaction
Item 4(d) is hereby amended and supplemented by the addition of the following
paragraph:
"On June 29 and July 2, 1998, the Issuer and certain of its directors, and
Arnold McCalmont, respectively, filed in the Massachusetts Superior Court,
Middlesex County, Motions for Clarification and Reconsideration of the Court's
Order dated June 9, 1998, which invalidated the adoption on April 30, 1998 of a
staggered Board scheme. On July 1, 1998, Mr. Phalon and Dr. Awan filed an
Opposition to Defendants' Motion for Clarification and Reconsideration, a copy
of which is attached hereto as Exhibit 6 and incorporated herein by reference.
On July 6 and 7, 1998, the Court denied said Defendants' Motions for
Clarification and Reconsideration. On July 6, 1998, the Court also scheduled a
hearing for July 10, 1998 on the Complaint for Civil Contempt dated June 29,
1998 filed by Mr. Phalon and Dr. Awan against the Issuer and each of its
directors (other than Mr. Phalon) in respect of their conduct in attempting to
adopt a staggered Board scheme on June 24, 1998."
Item 7. Materials to be Filed as Exhibits
Item 7 is hereby amended and supplemented as follows:
"Schedule of Exhibits
Exhibit 6 Opposition to Defendants' Motion for
Clarification and Reconsideration dated
July 1, 1998, in the Massachusetts
Superior Court, Middlesex County, Civil
Action No. 98-2553."
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 7, 1998 /s/ *
__________________________________
M. Mahmud Awan
/s/ Philip A. Phalon
__________________________________
Philip A. Phalon
/s/ *
__________________________________
Robert B. Bregman
/s/ *
__________________________________
William C. Martindale, Jr.
*/s/ Philip A. Phalon
_______________________________
Philip A. Phalon
Attorney - in - Fact
<PAGE>
EXHIBIT 6
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. Superior Court
Civil Action No. 98-2553
________________________________)
PHILIP A. PHALON, and )
M. MAHMUD AWAN, )
)
Plaintiffs, )
)
v. )
)
TECHNICAL COMMUNICATIONS )
CORPORATION, ARNOLD MCCALMONT, )
HERBERT A. LERNER, ROBERT T. )
LESSARD, CARL H. GUILD, )
MITCHELL B. BRISKIN, DONALD )
LAKE, and THOMAS B. PEOPLES, )
)
Defendants. )
________________________________)
PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION
FOR CLARIFICATION AND RECONSIDERATION
I. INTRODUCTION
The Plaintiffs, Philip A. Phalon and M. Mahmud Awan (the "Plaintiffs")
hereby oppose the Motion of the Defendants, Technical Communications
Corporation, Herbert A. Lerner, Robert T. Lessard, Carl H. Guild, Mitchell B.
Briskin, Donald Lake and Thomas B. Peoples (the "Defendants") For Clarification
and For Reconsideration (the "Defendants' Motion") on the grounds that: (i)
Judge Quinlan's Order and Injunction are clear and unambiguous and the
Defendants are in contempt of both; (ii) the Defendants have already sought
reconsideration from the Single Justice of the Massachusetts Appeals Court, and
the Single Justice has upheld the Injunction; (iii) the Defendants' base their
Motion on facts which have always been known to the Defendants and which the
Defendants could and should have brought to the attention to the Court prior to
the issuance of the Injunction had they genuinely believed them to be material;
(iv) the Defendants are inappropriately and selectively using the
attorney-client privilege to prevent the Plaintiffs from obtaining relevant
evidence, while at the same time waiving that privilege when it is in their
interest to do so; and (v) the Defendants' Motion mischaracterizes both the
letter and spirit of the Injunction, the current state of the evidence in this
case, and the alleged impartiality of Defendants Briskin, Lake and Peoples.
II. ARGUMENT
A. The Defendants Have Committed Civil Contempt, And This Court Should
Decline To Reconsider The Injunction On That Basis Alone.
By electing to opt into Chapter 156B, section 50A on June 24, 1998, only 14
days after this court enjoined them from taking steps to stagger TCC's Board of
Directors, the Defendants have committed civil contempt. The case law is clear
that the Defendants were required to seek clarification of the Court Order prior
to engaging in conduct which could potentially be considered civil contempt. The
Defendants intentionally elected not to do so, and rely instead on a belated
motion for clarification and reconsideration, entirely contrary to established
Massachusetts precedent.1
The Plaintiffs have filed a Complaint for Civil Contempt to compel the
Defendants to comply with the Injunction. In light of the Defendants'
intentionally contemptuous conduct toward this Court, their Motion for
Clarification and Reconsideration should be denied, and this Court should act
immediately to hold the Defendants in contempt. The Defendants' Motion need not
be considered further.
B. Justice Perretta's Order, Created No Distinction Which Permitted The
Defendants To Do Indirectly What This Court Enjoined Them From Doing
Directly.
The Defendants appear to argue that Justice Perretta's Order created a
"distinction" between the proper use of Section 50A, and its use for an
inappropriate purpose, which permitted them to end run the effect of the
Injunction and avoid its prohibitions, simply by orchestrating abstentions by
Directors McCalmont, Lerner, Lessard and Guild at the Special Meeting, thereby
achieving indirectly through the votes of Directors Lake, Peoples, Briskin, the
identical result which the court enjoined. Justice Perretta's Order makes no
such "distinction", but rather upholds the trial court's analysis and the
issuance of the Injunction. Justice Perretta's Order clearly comports with Judge
Quinlan's finding that the entire context of the April 30, 1998 vote opting into
Section 50A was a manipulative device. There is absolutely nothing in Justice
Perretta's Order, implicit or otherwise, which holds that abstentions by the
McCalmont Group at the Special Meeting, (under circumstances where the
participation of at least one of its members was necessary to establish a
quorum) renders permissible conduct that Judge Quinlan specifically enjoined.
This argument should be disregarded in its entirety.
C. The Court Should Decline To Consider Factual Information Which Was
Readily Available Prior To The Issuance Of The Injunction.
The Defendants' Motion relies in large part upon the Affidavits of
Directors Briskin, Peoples, Guild, and McCalmont, and the Affidavit of TCC's
Attorney, Evan Slavitt. The factual allegations contained in each of these
affidavits were known to the Defendants both before and after the filing of the
Verified Complaint. The facts contained in those affidavits could have been
brought to the court's attention prior to, or at the time of the hearing on the
Plaintiff's Motion for a Preliminary Injunction on June 8, 1998. The Defendants
elected not to do so. Since it was clear that this information was available to
the Defendants and uniquely within their control prior to the hearing on the
Plaintiffs Motion for Preliminary Injunction, the Court should not now consider
their belated request for reconsideration based on those same facts.2
To the extent that the Defendants seek to selectively rely on the excerpts
from the Plaintiffs' depositions, the Court should decline to consider this
information, because the Plaintiffs have not yet had the opportunity to depose
any of the Defendants, including the allegedly "disinterested" directors, Lake,
Peoples and Briskin. Moreover, portions of Mr. Phalon's deposition which the
Defendants have elected not to bring to the Court's attention clearly establish
a reasonable basis for the conclusion that Lake, Peoples, and Briskin are not
disinterested, and that they are in fact controlled by the McCalmont Group. See
Section II(E), infra.
Finally, the Defendants should not be permitted to contest the propriety of
the Injunction a third time. Presumably, they presented their best case at the
initial hearing on the Plaintiff's Motion for a Preliminary Injunction, and were
unsuccessful. They also requested Single Justice review and reconsideration of
the propriety of Judge Quinlan's issuance of the Injunction, and were
unsuccessful there as well. This latest attempt, seeking reconsideration a third
time prior to the completion of discovery, must not be tolerated. At a minimum,
the Injunction must remain in place until all parties in this case have had a
full and fair opportunity to complete discovery.3 The Defendants must not be
permitted to improperly utilize incomplete and selective discovery as a basis
for overturning an appropriately issued Injunction.
D. The Defendants Selective Use Of The Attorney-Client Privilege Must Not
Be Condoned.
When the Plaintiffs sought discovery of the Slavitt Report, the Defendants
resisted production of the report on the basis that it was subject to the
attorney-client privilege. At the hearing on the Plaintiff's Motion for
Expedited Discovery, the Defendants did not offer to make attorney Slavitt
available for deposition, even though Attorney Slavitt conducted the
investigation and authored the Slavitt Report, which is one of the central
factual repositories in this case. The Defendants' assertion of the
attorney-client privilege notwithstanding, the Defendants have now apparently
decided to waive that privilege, at least insofar as it now benefits their case
to do so, and in particular with respect the Defendants' alleged disclosures of
the substance of the Slavitt Report to the Securities and Exchange Commission.
It is clear that the Defendants are selectively using and disregarding the
attorney-client privilege, in an attempt to garner an unfair advantage in this
case. They must not be permitted to ignore the privilege for the purpose of
introducing facts advantageous to their position on one hand, while at the same
time sheltering in the privilege to deprive the Plaintiffs of access to
information directly relevant to their claims. Based on the submission of the
Slavitt Affidavit as part of the Defendants' Motion, this Court should find that
the Defendants have waived the attorney client privilege with respect to Mr.
Slavitt's investigation, the Slavitt Report, any and all disclosure issues to
the Securities and Exchange Commission, and other issues central to the
Plaintiffs' claims, or in the alternative should strike the Slavitt Affidavit.
To do otherwise, would be to unfairly prejudice the Plaintiff's by depriving
them of facts necessary to prove their case.
E. Defendants, Lake, Peoples And Briskin Are Not Disinterested.
The Plaintiffs never claimed to have been privy to contact between Lake,
Peoples and Briskin, and the McCalmont Group. On the contrary, they have been
intentionally excluded from any all such communications. Nevertheless, Phalon
made clear at this deposition, that while he had not been privy to specific
communications, the manner in which Lake, Peoples and Briskin were elected to
fill vacancies on TCC's Board at the April 30, 1998 Meeting reinforced his
belief that they were also connected to and controlled by the McCalmont Group.
(Phalon Depo, 6/24/98, at 110-111.)
As Mr. Phalon testified, that with respect to Lake, Peoples and Briskin,
TCC's customary procedures were not followed, he was never informed as to their
identity prior to the April 30th meeting, and they were voted into their
positions without discussion, in the context of a meeting which last only a few
minutes.4 These facts are not denied by Defendants, and they form a reasonable
basis for Phalon's conclusion that Briskin, Lake, and Peoples are controlled by
the McCalmont Group. The fact that the Defendants have submitted selective facts
in affidavits from these individuals does not remove the context in which they
were appointed to TCC's Board, or the conclusion based on the manner in which
they were appointed - solely by votes of the McCalmont Group - that they are in
fact controlled by the McCalmont Group.
Finally, even if Lake, Briskin and Peoples are not controlled by the
McCalmont Group, it is undisputed that the Injunction is also directed at them
and they are required to abide by its provisions. It is also undisputed that
they voted to stagger TCC's Board of Directors 14 days after the Injunction
issued. That act constitutes contempt, and renders fatally defective any action
taken on June 24, 1998 by those Directors.
III. CONCLUSION
Based on the foregoing, the Defendants Motion should be denied, and this
Court should enter a finding that the Defendants have waived any attorney-client
privilege as to: (i) attorney Slavitt's disclosures to the SEC; (ii) the Slavitt
Report; and (iii) all aspects of the internal investigation, or in the
alternative strike the Slavitt Affidavit.
The Plaintiffs rely upon, and incorporate herein by reference their
Complaint for Civil Contempt, filed with this Court on June 29, 1998, a true and
accurate copy of which is attached hereto as Exhibit "A".
Respectfully submitted,
PHILIP A. PHALON, and
M. MAHMUD AWAN
By their attorneys,
/s/ Mark S. Resnick
_____________________________
Robert Sylvia (BBO# 491060)
Paul Bork (BBO# 541815)
Mark S. Resnick (BBO# 559885)
HINCKLEY, ALLEN & SNYDER
28 State Street
Boston, MA 02109
(617) 345-9000
DATED: July 1, 1998
CERTIFICATE OF SERVICE
I, Mark S. Resnick, hereby certify that on this 1st day of July, 1998, I
served a true and accurate copy of the foregoing on Evan M. Slavitt, Gadsby &
Hannah, LLP, 225 Franklin, Boston, MA 02110 and Alan D. Rose, Rose and
Associates, One Boston Place, Boston, MA 02108, by hand delivery.
/s/ Mark S. Resnick
_____________________________
Mark S. Resnick
______________________________
1 The Court is respectfully directed to the Plaintiffs' Complaint for Civil
Contempt and its Exhibits, filed with this Court on June 29, 1998, and attached
hereto as Exhibit A, and the citations to authority contained therein.
2 The timing with which the Defendants elected to bring these facts to the
Court's attention illustrates the Defendants' obvious strategy to manufacture
some basis to justify reconsideration, in the event they were initially
unsuccessful in their opposition to the Plaintiffs' Motion for Preliminary
Injunction.
3 It should be further noted that the Plaintiffs initially sought expedited
discovery as to the contents of the Slavitt Report, and the Court concluded that
the Plaintiffs should utilize the traditional discovery devices and the
traditional time periods in connection with their effort to obtain that
information. The Defendants have not agreed to produce the Slavitt Report, nor
have they agreed to produce Defendants, Lake, Peoples and Briskin for deposition
as originally requested by the Plaintiffs.
4 Q: So in what way other than that is Mitchell Briskin beholden to Arnold
McCalmont? A: You know, I really can't tell you, because those people [Briskin,
Lake and Peoples] were nominated to that Board and rushed through in a manner
that I have absolutely no knowledge of who they are, where they came from or how
they got there. They were put on the Board in a 12 minute Board of Directors
Meeting without any discussion whatsoever, totally disparate from any other way
that I was familiar with that we put people on the Board . . . they were all
nominated and elected so fast . . . so if you're asking me, do I know anything
about Briskin or Lake, the answer is other than their name and what I say I was
told [relative to their allegiance to McCalmont] I know nothing. (Phalon Depo.
624, 98 at 110 through 111).
A true and accurate copy of the excerpts from the Phalon Deposition are
attached hereto as Exhibit B.
