<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c)
or Rule 14a-12
TECHNICAL COMMUNICATIONS CORPORATION
--------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------
(Name of Person[s] Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-(6)(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
--------------------------------------------------------------
<PAGE>
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
--------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------------------------------------
(3) Filing party:
--------------------------------------------------------------
(4) Date filed:
--------------------------------------------------------------
- -------------------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
TECHNICAL COMMUNICATIONS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 7, 2000
To our Stockholders:
Notice is hereby given that the 2000 Annual Meeting of Stockholders (the
"Meeting") of Technical Communications Corporation, a Massachusetts corporation
(the "Company"), will be held at the Company's offices, 100 Domino Drive,
Concord, Massachusetts 01742, at 10:00 a.m. on Monday, February 7, 2000:
1. To elect three (3) Class III Directors named herein, each to serve for a
term of three (3) years or until their respective successors have been
duly elected and qualified;
2. To ratify the selection of the firm of Arthur Andersen LLP as auditors
for the Company for the fiscal year ending September 30, 2000; and
3. To consider and act upon such other business and matters or proposals as
may properly come before the Meeting or any adjournments thereof.
Only stockholders of record on the books of the Company at the close of business
on December 17, 1999, are entitled to notice of and to vote at the Meeting.
Whether or not you expect to attend the Meeting, please sign, date and return
the enclosed proxy in the enclosed envelope at your earliest convenience. If you
return your proxy, you may nevertheless attend the Meeting and vote your shares
in person.
All stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors,
Edward E. Hicks, Clerk
Concord, Massachusetts
January 3, 2000
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
TECHNICAL COMMUNICATIONS CORPORATION
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 2000
Proxies enclosed with this proxy statement are solicited by and on behalf of
the Board of Directors (the "Board of Directors") of Technical Communications
Corporation, a Massachusetts corporation (the "Company"), for use at the Annual
Meeting of Stockholders (the "Meeting") to be held at the Company's offices, 100
Domino Drive, Concord, Massachusetts, at 10:00 a.m. on Monday, February 7, 2000,
and at any adjournments thereof.
SHARES OUTSTANDING AND VOTING PROCEDURES
Only holders of record of outstanding shares of the Company's Common Stock
as of the close of business on December 17, 1999, are entitled to notice of and
to vote at the Meeting.
As of December 17, 1999, there were 1,312,153 shares of the Company's Common
Stock outstanding and entitled to vote. The shares of Common Stock are the only
voting securities of the Company. Stockholders are entitled to cast one vote for
each share held of record.
If the enclosed proxy is properly marked, signed and returned in time to be
voted at the Meeting, and is not subsequently revoked, the shares represented by
proxy will be voted in accordance with the instructions marked thereon. The
proxy is in ballot form so that a specification may be made (i) to grant or
withhold authority to vote for the election of Directors, and (ii) to vote for
or against, or abstain from voting on, the ratification of the firm of Arthur
Andersen LLP as the Company's auditors. SIGNED PROXIES RETURNED TO THE COMPANY
AND NOT MARKED TO THE CONTRARY WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS
SET FORTH IN THE PROXY. Any stockholder may revoke a proxy at any time prior to
its exercise by filing a later-dated proxy or a written notice of revocation
with the Clerk of the Company. Stockholders attending the Meeting may also
revoke their proxies by voting in person at the Meeting.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote may be properly taken, shares represented by all proxies received by the
Company will be voted with respect thereto in accordance with the judgment of
the persons named as attorneys in the proxies.
It is expected that this proxy statement and the accompanying proxy, and an
Annual Report to Stockholders, containing financial statements for the fiscal
year ended October 2, 1999, will be mailed to stockholders on or about
January 3, 2000.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of December 17, 1999, the ownership of common
stock of the Company by any person or group who is known to the Company to be
the beneficial owner of more than 5% of the Company's common stock outstanding
and entitled to vote as of such date.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP PERCENT OF
NAME AND ADDRESS (NUMBER OF SHARES)(1) CLASS(1)
- ---------------- --------------------- ----------
<S> <C> <C>
Martindale Andres & Company, Inc............................ 77,000(2) 5.3%(2)
200 Four Falls Corporate Center, Suite 200
West Conshohocken, PA 19428
M. Mahmud Awan.............................................. 119,908(3) 8.2%(3)
c/o TechMan International Corporation
TechMan Center, Route 20
Charlton City, MA 01508-0949
Royce & Associates, Inc..................................... 106,700(4) 7.3%(4)
c/o Charles M. Royce
1414 Avenue of the Americas
New York, NY 10019
</TABLE>
- ------------------------
(1) Unless otherwise indicated, each of the persons named in the table has sole
voting and investment power with respect to the shares set forth opposite
such person's name. Information with respect to beneficial ownership is
based upon information furnished by each stockholder to the Company directly
or to the Securities and Exchange Commission ("SEC").
(2) The nature of ownership of Martindale Andres & Company ("MAC") as set forth
herein is based upon a Schedule 13D filed with the SEC on September 15,
1998. The Schedule 13D was filed on behalf of a "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
consisting of Dr. Mahmud Awan, Philip A. Phalon, Robert B. Bregman and
William C. Martindale, Jr., principal of MAC. Of the 77,000 shares,
Mr. Martindale has sole dispositive and voting power over 10,000 shares and
shared dispositive and voting power over 67,000 shares.
(3) Dr. Awan individually owns 60,930 shares of Common Stock, which includes
1,000 shares issuable upon the exercise of vested stock options TechMan
International Corporation, which is wholly owned by Dr. Awan, owns 58,978
shares of Common Stock.
(4) The nature of ownership of Royce & Associates, Inc. ("Royce") as set forth
herein is based upon their Schedule 13G filed on February 10, 1999 with the
SEC. Royce in its capacity as investment advisor may be deemed the
beneficial owner of the 106,700 shares indicated in the above table, which
shares are owned by numerous clients of Royce. Mr. Royce disclaims
beneficial ownership of the 106,700 shares owned by Royce.
2
<PAGE>
I. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE NOMINEES LISTED BELOW.
A. NUMBER OF AND NOMINEES FOR DIRECTORS
It is the intention of the persons named as proxies to vote the proxies,
unless authority to vote is specifically withheld, to elect as Class III
Directors Mr. Carl H. Guild, Jr., Mr. Donald Lake and Mr. Thomas E. Peoples.
Each nominee for director will be elected to hold office until the 2003 Annual
Meeting of Stockholders or until his successor is duly elected and qualified.
The Board of Directors knows of no reason why any such nominee should be unable
or unwilling to serve, but, if such should be the case, proxies may be voted for
the election of some other person or for fixing the number of directors as a
lesser number. All three nominees are currently directors of the Company.
The following table sets forth the year each director first became a
director, the position currently held by each director with the Company, their
principal occupation during the past five years, any other directorships held by
such person in any company subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or in any company registered as an
investment company under the Investment Company Act of 1940, as amended, and
their age. The terms of the Class I Directors expire at the 2001 Annual Meeting
of Stockholders; the terms of the Class II Directors expire at the 2002 Annual
Meeting of Stockholders; and the terms of the Class III Directors expire at the
2003 Annual Meeting of Stockholders. The following table is as of December 17,
1999.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND YEAR FIRST POSITIONS AND OFFICES BENEFICIAL OWNERSHIP OF
BECAME A DIRECTOR(1) WITH THE COMPANY AGE (# OF SHARES)(1) CLASS(1)
- -------------------- ---------------------------------- -------- -------------------- --------
<S> <C> <C> <C> <C>
M. Mahmud Awan (2)........... Director, 48 119,908(3) 8.2%
1998--Class I Director Chairman of the Board
Mitchell B. Briskin (4)...... Director 40 2,502(5) *
1998--Class I Director
David A. B. Brown (6)........ Director 56 3,585(7) *
1998--Class II Director
Robert T. Lessard (8)........ Director 59 4,003(9) *
1997--Class II Director
Carl H. Guild, Jr. (10)...... Director, Vice Chairman of the 55 141,503(11) 9.7%
1997--Class III Director Board, Chief Executive Officer and
President
Donald Lake (12)............. Director 55 2,502(13) *
1998--Class III Director
Thomas E. Peoples (14)....... Director 51 3,052(15) *
1998--Class III Director
NON-DIRECTOR OFFICERS
John I. Gill(16)............. Executive Vice President 60 19,551 1.3%
Michael P. Malone(17)........ Principal Financial Officer, 40 1,342(18) *
Treasurer and Assistant Clerk
ALL DIRECTORS, DIRECTOR
NOMINEES AND OFFICERS AS A
GROUP
(9 PERSONS).................. 297,948(19) 20.4%
</TABLE>
- ------------------------
* Less than one percent (1%) of the outstanding common stock.
3
<PAGE>
(1) Unless otherwise indicated, each of the persons named in the table has sole
voting and investment powers with respect to the shares set forth opposite
such person's name. With respect to each person or group, percentages are
calculated based on the number of shares beneficially owned plus shares that
may be acquired by such person or group within sixty days of December 17,
1999, upon the exercise of stock options. Unless otherwise indicated herein,
none of the persons named in this table is, or was within the past year, a
party to any contract, arrangement or understanding with any person with
respect to any securities of the Company, including, but not limited to,
joint ventures, loan or option arrangements, puts or calls, guarantees
against loss or guarantees of profit, division of losses or profits or the
giving or withholding of proxies. None of the persons named in the table,
nor any of their respective associates have any arrangement or understanding
with any person with respect to any future employment by the Company or its
affiliates, or with respect to any future transactions to which the Company
or any of its affiliates will or may be a party. Except as otherwise
described herein, none of the persons named in this table own any security
of the Company of record but not beneficially. The address of Messrs. Awan,
Briskin, Brown, Lessard, Guild, Lake, Peoples, Gill and Malone is
c/o Technical Communications Corporation, 100 Domino Drive, Concord,
Massachusetts 01742.
(2) Dr. Awan joined the Board of Directors and became Chairman of the Board on
November 19, 1998, following settlement of shareholder litigation (the
"Litigation") initiated by Dr. Awan and Philip A. Phalon, a former director
of the Company, which had been pending in Middlesex County, Massachusetts
Superior Court since February, 1998. Dr. Awan has served as Chairman and
Chief Executive Officer of TechMan International Corporation ("Techman"), a
privately held manufacturer of fiber optic medical devices and communication
systems, since 1982. Dr. Awan is also President/CEO of Sturbridge Finance
limited, a venture capital firm based in Sturbridge, Massachusetts.
(3) Includes 58,978 shares owned by TechMan, which is wholly owned by Dr. Awan,
and 1,000 shares issuable upon the exercise of stock options.
(4) Mr. Briskin is Vice President of Stonebridge Associates, an investment bank,
since 1999. Mr. Briskin was formerly a principal at Concord Investment
Partners from 1997 to 1999. From 1996 to 1997 Mr. Briskin was attending
Harvard Business School. From 1990 to 1995, Mr. Briskin was General Manager
at General Chemical Corporation; previously, he was a lawyer with Patterson,
Belknap, Webb & Tyler in New York City.
(5) Includes an aggregate of 1,278 issuable upon the exercise of various stock
options.
(6) Mr. Brown joined the Board of Directors on November 19, 1998, filling a
vacancy created by the resignation of Herbert A. Lerner. Since 1984,
Mr. Brown has been the President of The Windsor Group, Inc., a business
consulting firm focused on the oil industry and international operations.
(7) Includes an aggregate of 1,000 shares issuable upon the exercise of a stock
option.
(8) Mr. Lessard was employed in a variety of management positions from 1966
through December 1995 at the U.S. National Security Agency ("NSA"),
Department of Defense. During his final two years at NSA, Mr. Lessard was
the Group Chief in the Operations Directorate responsible for communications
and cryptographic technology. Since his retirement in December 1995, he has
represented the Director of the National Security Agency on several special
projects.
(9) Includes an aggregate of 1,945 issuable upon the exercise of stock options.
(10) In conjunction with the settlement of the Litigation reached by the Company
on November 19, 1998 and the appointment of Dr. Awan as Chairman of the
Board, Mr. Guild was named to the new position of Vice Chairman of the Board
on the same date. Mr. Guild had served as Chairman of the Board and Chief
Executive Officer of the Company from February 13, 1998 until November 19,
1998; he continues to serve as Chief Executive Officer and President.
Mr. Guild was elected to the Board on May 1, 1997 and had been an
independent consultant to the Company from that time until February 13,
1998. From 1993 to 1997, he was a Senior Vice President with Raytheon
Engineers and Constructors, Inc., a unit of Raytheon Company. Mr. Guild
serves as President and Chief Executive Officer of the Company pursuant to
an Employment Agreement with Company previously filed with the SEC as an
Exhibit to the Company's Form 10-K for the year ending October 3, 1998.
4
<PAGE>
(11) Includes an aggregate of 139,945 shares issuable upon the exercise of
various stock options that have vested. Excludes 32,000 shares subject to
options that have not vested as of or within sixty days of December 17,
1999.
(12) Mr. Lake has been a financial consultant focusing on international
financial operations related to intelligence and law enforcement activities
to various government agencies since 1991. Before initiating his consulting
practice, Mr. Lake served as Director of the International Banking Services
Division of the American Security Bank in Washington, D.C.
(13) Includes an aggregate of 1,278 issuable upon the exercise of stock options.
(14) Since October 1, 1999, Mr. Peoples is Senior Vice President of
Gencorp, Inc., a publicly held manufacturer of automotive, polymer,
aerospace and defense products. From 1992 to September 30, 1999,
Mr. Peoples was the Vice President for International and Washington
Operations of Aerojet, a privately held aerospace and defense contractor.
Prior to 1992, Mr. Peoples served as Manager of Business Development for
Smart Munitions Programs at Raytheon Company.
(15) Includes an aggregate of 1,278 shares issuable upon exercise of stock
options.
(16) Mr. Gill, Executive Vice President since 1995, has been employed by the
Company since August, 1983. He was Vice President, Manufacturing and
Technical Operations from 1989 to 1995.
(17) Mr. Malone joined the Company in 1998 as Principal Financial Officer and
Treasurer. From 1997 to 1998 he was the Controller at Vasca, Inc., a
privately held medical device company. Prior to 1997, Mr. Malone was with
Zoll Medical Corporation, a publicly traded medical device company for five
years as its Controller and Treasurer.
(18) Includes an aggregate of 1,000 shares issuable upon the exercise of a stock
option. Excludes 4,000 shares subject to options that have not vested as of
or within sixty days of December 17, 1999.
(19) Includes an aggregate of 148,724 shares of common stock issuable upon the
exercise of vested stock options. Excludes 36,000 shares issuable upon the
exercise of stock options that have not vested as of or within sixty days of
December 17, 1999.
A quorum being present, the affirmative vote of the holders of a plurality
of the shares of Common Stock voting in person or by proxy at the Meeting is
required to elect each director. Thus, abstention or broker non-votes will not
be included in the totals and will have no effect on the outcome of the vote.
B. MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held 4 meetings during the twelve months ended
October 2, 1999. Each of the directors attended 100% of the aggregate of
(a) the total number of meetings of the Board of Directors he was eligible to
attend and (b) the total number of meetings of all committees of the Board of
Directors on which he served which were held during fiscal year 1999.
The Audit Committee of the Board, of which Messrs. Briskin, Brown and Lake
are members, held 4 meetings during fiscal year 1999. Messrs. Lerner and Phalon
were members of the Audit Committee until November 19, 1998. The Audit Committee
oversees the accounting and tax functions of the Company, recommends to the
Board the engagement of independent auditors for the year subject to approval by
the stockholders of the Company, reviews with management and the auditors the
plan and scope of the audit engagement, reviews the annual financial statements
of the Company and any recommended changes or modifications to control
procedures and accounting practices and policies, and monitors with management
and the auditors the Company's system of internal controls and its accounting
and reporting practices.
The Compensation Committee of the Board, of which Messrs. Lessard and Awan
are members, held no meetings during fiscal year 1999. The Compensation
Committee reviews and recommends to the Board compensation for the President,
the Chairman of the Board and outside directors. It also reviews and recommends
the adoption, amendment and implementation of incentive compensation plans,
stock option
5
<PAGE>
plans and other employee benefit plans and programs for the Company and officers
and directors of the Company.
During fiscal year 1999, the Company did not have a Nominating Committee or
an Operations Committee.
C. COMPENSATION OF DIRECTORS
Directors who are not regular employees of the Company received a fee of
$1,200 for each meeting of the Board of Directors they attended during fiscal
year 1999. In addition, each outside director is authorized to receive an annual
retainer of $2,800, paid in arrears in quarterly increments of $700. During
fiscal year 1999, directors also received a fee of $500 for each meeting of a
committee of the Board of Directors they attended. Mr. Herbert Lerner, who was
an employee of the Company until his resignation on November 19, 1998 was also
authorized to receive the retainer and fees for attendance at meetings.
At the 1999 Annual Meeting of the Board of Directors on February 8, 1999 a
1,000 share immediately exercisable stock option was granted to each of the
seven directors, with a term of five years from the date of grant at an exercise
price of $3.40, 85% of fair market value. In addition, 500 shares of the
Company's common stock was granted to each of the seven directors at a price per
share of $4.00, which was equal to fair market value on February 8, 1999.
D. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Carl H. Guild, Jr., Vice Chairman of the Board, Chief Executive Officer and
President of the Company, was formerly a Trustee of the Technical Communications
Corporation Employees' Stock Ownership Trust, which has been formally dissolved.
Herbert A. Lerner, who resigned as a Director of the Company and as Company
Treasurer and Chief Financial Officer on November 19, 1998, was also formerly a
Trustee of the Employees' Stock Ownership Plan. At its August 27, 1997 meeting,
the Board of Directors voted to terminate the Employee Stock Ownership Plan
effective October 1, 1997.
Edward E. Hicks, Esq., the Company's Secretary and Clerk, is a member of a
law firm that provides legal services to the Company.
On November 19, 1998, the Company settled the Litigation described in
Note 2 in Section I.C, above. Pursuant to such settlement, the Company, Arnold
McCalmont, Herbert A. Lerner, Robert T. Lessard, Carl H. Guild, Jr., Mitchell B.
Briskin, Donald Lake and Thomas E. Peoples entered into a settlement agreement
with M. Mahmud Awan and Philip A. Phalon. The settlement agreement and
standstill agreement set forth mutual full releases as to the litigation and
also include provisions requiring, among other things, (i) the Company to
reimburse the former proxy contestants' expenses in payments aggregating
$395,000, (ii) the dissolution of the Awan/ Phalon group created to facilitate
the proxy contest and (iii) the former proxy contestants to abide by certain
standstill provisions until October 1, 2000.
On June 27, 1995, the Company invested $250,800 for a minority interest in
Series B Preferred Stock of Net2Net Corporation, then a privately held company
that developed high performance management and analysis systems for Asynchronous
Transfer Mode ("ATM") networks. On May 15, 1998, Visual Networks, Inc.
("Visual"), a public company, merged with and into Net2Net. Under the terms of
the merger, all outstanding shares of Net2Net were exchanged for an aggregate of
2,250,000 shares of Visual common stock. During fiscal 1999 the Company sold its
holdings in Visual for the aggregate sum of $1,401,968, excluding expenses.
Net2Net's President was Stephen McCalmont, son of Arnold M. McCalmont, a
former director and former Chairman of Technical Communications Corporation, and
brother of James A. McCalmont, another former director of the Company. Both of
these gentlemen, in addition to Herbert A. Lerner, a former director, Chief
Financial Officer and Treasurer of the Company, were also investors in Net2Net
Corporation.
6
<PAGE>
E. EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
COMPENSATION
The following tables set forth certain summary information concerning
compensation paid or accrued by the Company during the past three fiscal years
to its Chief Executive Officer and the other executive officers of the Company
whose annual compensation during fiscal year 1999 exceeded $100,000 (hereafter
referred to as the "named executive officers"):
<TABLE>
<CAPTION>
NAME AND FISCAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------ -------- -------- -------- ------------
<S> <C> <C> <C> <C>
Carl H. Guild, Jr. (4)........................... 1999 $199,680 $ -- $ 4,814(5)
Chief Executive Officer and President 1998 $126,548 $ -- $125,502(6)
1997 $ -- $ -- $ 3,600(7)
John I. Gill..................................... 1999 $119,745 $19,700 $ 1,797(1)
Executive Vice President 1998 $118,591 $ -- $ 1,493(2)
1997 $116,325 $18,171(3) $ --
</TABLE>
- ------------------------
(1) Represents the Company's 25% match on the first 6% of Mr. Gill's 1999 fiscal
year 401(k) contribution.
(2) Represents the Company's 25% match on the first 6% of Mr. Gill's 1998 fiscal
year 401(k) contribution.
(3) The amount of $18,171 was paid to Mr. Gill for services rendered in fiscal
year 1996.
(4) Prior to his employment as Chief Executive Officer of the Company and his
election as Chairman of the Board on February 13, 1998, Mr. Guild had been
an independent consultant to the Company and a Director since May 1, 1997.
(5) Includes income realized upon receipt of Company stock of $2,000 as a result
of a February 8, 1999 grant by the Company's Board of Directors and $2,814
representing the Company's 25% match on the first 6% of Mr. Guild's 1999
fiscal year 401(k) contribution.
(6) Includes consultant's fees and expenses of $109,689 related to work
performed in fiscal year 1997 and paid in fiscal year 1998, as well as work
performed prior to February 13, 1998 and paid in fiscal year 1998. The total
also includes director's fees of $11,300 from the beginning of fiscal year
1998 until February 13, 1998, income realized upon receipt of Company stock
of $3,015 as a result of the Company's August 14, 1998 grant of stock to
members of its Board of Directors and $1,498 for the Company's 25% match on
the first 6% of Mr. Guild's 1998 fiscal year 401(k) contribution.
(7) Includes director's fees earned and paid in fiscal year 1997. Although
Mr. Guild performed consulting services for the Company in fiscal year 1997,
no payments to him were made until the following year.
7
<PAGE>
STOCK OPTIONS
Set forth below is an Option/SAR Grants table concerning individual grants
of stock options and SARs made during fiscal year 1999 to each of the named
executive officers.
OPTIONS/SAR GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL EXERCISE POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS/SARS OF BASE ASSUMED ANNUAL
UNDERLYING OPTIONS/ GRANTED TO EMPLOYEES PRICE EXPIRATION RATES OF STOCK PRICE
SARS GRANTED IN FY 1999(1) ($/SH) DATE APPRECIATION FOR OPTION TERM
------------------- -------------------- -------- ---------- ------------------------------
0% 5% 10%
-------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Carl H. Guild, Jr.... 100,000(2) 82.6% $4.00 11/19/08 -- $252,000 $637,000
1,000(3) .8% $3.40 2/8/04 $600 $ 3,000 $ 7,000
John I. Gill......... -- -- -- -- -- -- --
</TABLE>
- ------------------------
(1) In fiscal year 1999, options to purchase a total of 121,000 shares of the
Company's Common Stock were granted to employees of the Company.
(2) Common Stock options which were granted to Mr. Guild under the 1991 Plan on
November 19, 1998. These options are exercisable as follows: (i) 60,000
shares became exercisable on November 19, 1998; (ii) 20,000 shares are
exercisable on June 30, 1999; and (iii) 20,000 shares are exercisable on
September 30, 1999.
(3) Common Stock option granted to Mr. Guild under the 1991 Plan on February 8,
1999, exercisable immediately.
Set forth below is a table concerning each exercise of stock options (or
tandem SARs) and freestanding SARs during fiscal year 1999 by each of the named
executive officers and the value at October 2, 1999 of unexercised options and
SARs.
AGGREGATED OPTION/SAR EXERCISES FOR FISCAL YEAR ENDED OCTOBER 2, 1999 AND
FISCAL YEAR OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
SHARES --------------------------- -------------------------
ACQUIRED ON VALUE NOT NOT
NAME EXERCISE REALIZED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ---- ----------- -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Carl H. Guild, Jr.................. -- -- 139,945(2) 32,000(3) -- --
John I. Gill....................... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) In-the-Money options are those options for which the fair market value of
the underlying Common Stock is greater than the exercise price of the
option. Value is based on the difference between the option exercise price
and the fair market value at October 2, 1999 ($2.563 per share) multiplied
by the number of shares underlying the in-the-money portion of the option.
(2) This represents exercisable grants of options as follows: (i) 4,000 shares
granted on May 1, 1997 exercisable at $8.88 per share; (ii) 4,000 shares
granted on May 1, 1997 exercisable at $9.76 per share; (iii) 20,000 shares
granted on February 16, 1998 exercisable at $5.00 per share; (iv) 10,000
shares granted on February 16, 1998 exercisable at $5.50 per share; (v) 945
shares granted on August 14, 1998 exercisable at $5.42 per share;
(vi) 100,000 shares granted on November 19, 1998 exercisable at $4.00 per
share and (vii) 1,000 shares granted on February 8, 1999 exercisable at
$3.40 per share.
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(3) This represents unexercisable grants of options under the 1991 Plan to buy
12,000 shares granted on May 1, 1997 which vest on the following dates and
are exercisable at the following prices: (i) 4,000 shares on May 1, 2000 at
$10.74 per share; (ii) 4,000 shares on May 1, 2001 at $11.81 per share;
(iii) 4,000 shares on May 1, 2002 at $12.99 per share. This also represents
unexercisable grants of options under the 1991 Plan to buy 20,000 shares
granted on February 16, 1998 which vest on the following dates and are
exercisable at the following prices: (i) 10,000 shares on February 16, 2000
at $6.05 per share; and (ii) 10,000 shares on February 16, 2001 at $6.66 per
share.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who beneficially own more than
ten percent (10%) of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater-than-ten-percent
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) reports they file.
Based solely on the Company's review of the copies of such forms received
and written representations from certain reporting persons that they were not
required to file, the Company believes that during fiscal year 1999, its
executive officers, directors and greater-than-ten-percent stockholders complied
with all applicable Section 16(a) filing requirements, with the exception of the
late filing of a Form 3 for Mr. Malone, Principal Financial Officer of the
Company, and the late filing of Form 4's reporting 136 non-discretionary
purchases and sales pursuant to margin calls on behalf of Dr. M. Mahmud Awan,
Chairman, individually and 47 transactions by TechMan International Corporation,
which is wholly-owned by Dr. Awan.
II. RATIFICATION OF SELECTION OF AUDITORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE SELECTION OF ARTHUR ANDERSEN LLP AS AUDITORS.
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending September 30, 2000. Arthur Andersen LLP served as the Company's
auditors for fiscal year 1999. A quorum being present, the affirmative vote of
the holders of a majority of the shares of Common Stock voting in person or by
proxy on the appointment of the auditors shall be required for approval. Thus,
abstentions or broker non-votes will not be included in the totals and will have
no effect on the outcome of the vote.
It is expected that a member of the firm of Arthur Andersen LLP will be
present at the Meeting and will be available to respond to appropriate
questions.
III. OTHER MATTERS
The Board of Directors of the Company is not aware of any matter, other than
those described above, that may come before the Meeting. However, if any matters
are properly presented to the Meeting for action, it is intended that the
persons named in the enclosed proxy will vote on such matters in accordance with
their best judgment.
PROPOSALS OF STOCKHOLDERS
It is currently contemplated that the 2001 Annual Meeting of Stockholders
will be held on February 12, 2001. Proposals of stockholders intended to be
present at that annual meeting of stockholders must be received by the Company
at its principal executive offices no later than September 18, 2000, for
inclusion in the Proxy Statement and Form of Proxy relating to that meeting and
must comply with the applicable requirements of federal securities laws. In
order to curtail controversy as to the date on which a
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proposal was received by the Company, it is suggested that proponents submit
their proposals by certified mail, return receipt requested.
EXPENSES AND SOLICITATION
The cost of the solicitation of proxies will be borne by the Company.
Proxies will be solicited principally through the mails. Further solicitation of
proxies from some stockholders may be made by directors, officers and regular
employees of the Company, personally, by telephone, telegraph or special letter.
No additional compensation, except for reimbursement of reasonable out-of-pocket
expenses, will be paid for any such further solicitation. In addition, the
Company may request banks, brokers and their custodians, nominees and
fiduciaries to solicit customers of theirs who have shares of the Company
registered in the name of a nominee. The Company will reimburse any such persons
for their reasonable out-of-pocket costs.
ADDITIONAL INFORMATION
The Company will provide, without charge to each stockholder entitled to a
vote at the Meeting, a copy of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the year ending October 2, 1999. A request
for copies of such report should be addressed to the Company at 100 Domino
Drive, Concord, Massachusetts 01742, Attention: Investor Relations.
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TECHNICAL COMMUNICATIONS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
February 7,2000
The undersignaed hereby appoints CARL H. GUILD, JR. and EDWARD E. HICKS, or
either of them, the action of both of them voting to be controlling attorneys
of the undersigned, with full powers of substitution, with all the powers the
undersigned would possess if personally present, to vote the stock of the
undersigned in TECHNICAL COMMUNICATIONS CORPORATION at the Annual Meeting of
Stockholders to be held at 10:00 a.m. on February 7, 2000 and at any
adjournments thereof.
This proxy, if properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, the proxy will be
voted FOR items 1 and 2.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
DIRECTED AND IF NO CHOICE IS INDICATED IT WILL BE VOTED FOR ITEMS 1 AND 2.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
1. The Board of Directors recommends you vote FOR the election of the
three (3) nominees listed below:
Election of directors: NOMINEES: Carl H. Guild, Jr., Donald Lake and Thomas
E. Peoples
/ / FOR all nominees
/ / WITHHOLD from the following nominee(s):____________________________
2. The Board of Directors recommends that you vote FOR the ratification
of Arthur Andersen LLP.
To ratify the selection of the firm of Arthur Andersen LLP as the Company's
auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
Please sign exactly as the name appears stenciled on this Proxy. When signing
as attorney, executors, administrators, trustee or guardian, please set forth
your full title. If the stockholder is a corporation, the signature should be
that of an authorized officer who should indicate his or her title.
Date: ___________________________________________
_________________________________________________
(Signature)
_________________________________________________
(Signature)
