Exhibit 10.12.1


 


 


 


 


 


WARRANT
AGREEMENT


BY AND BETWEEN


TRC COMPANIES, INC.


AND


FEDERAL PARTNERS, L.P.


Dated July 19,
2006











Table of
Contents


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  SECTION 1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  SECTION 2.

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  2

  
	
  SECTION 3.

  	
   

  	
  Issuance of Warrants

  	
   

  	
  3

  
	
  SECTION 4.

  	
   

  	
  Registration, Transfer
  and Exchange of Certificates

  	
   

  	
  3

  
	
  SECTION 5.

  	
   

  	
  Mutilated or Missing
  Warrant Certificates

  	
   

  	
  4

  
	
  SECTION 6.

  	
   

  	
  Duration and Exercise
  of Warrants

  	
   

  	
  4

  
	
  SECTION 7.

  	
   

  	
  No Fractional Shares

  	
   

  	
  5

  
	
  SECTION 8.

  	
   

  	
  Payment of Taxes

  	
   

  	
  5

  
	
  SECTION 9.

  	
   

  	
  Warrant Holder Rights;
  Dividends and Distributions

  	
   

  	
  6

  
	
  SECTION 10.

  	
   

  	
  Reservation and
  Issuance of Warrant Shares

  	
   

  	
  6

  
	
  SECTION 11.

  	
   

  	
  Obtaining of
  Governmental Approvals and Stock Exchange Listings

  	
   

  	
  6

  
	
  SECTION 12.

  	
   

  	
  Adjustment of Exercise
  Price and Number of Warrant Shares Purchasable

  	
   

  	
  6

  
	
  SECTION 13.

  	
   

  	
  Notices to Warrant
  Holders

  	
   

  	
  9

  
	
  SECTION 14.

  	
   

  	
  Representations of
  Holder

  	
   

  	
  10

  
	
  SECTION 15.

  	
   

  	
  Amendments and Waivers

  	
   

  	
  11

  
	
  SECTION 16.

  	
   

  	
  Specific Performance

  	
   

  	
  11

  
	
  SECTION 17.

  	
   

  	
  Notices

  	
   

  	
  11

  
	
  SECTION 18.

  	
   

  	
  Binding Effect

  	
   

  	
  11

  
	
  SECTION 19.

  	
   

  	
  Termination

  	
   

  	
  11

  
	
  SECTION 20.

  	
   

  	
  Counterparts

  	
   

  	
  11

  
	
  SECTION 21.

  	
   

  	
  Delaware Law

  	
   

  	
  11

  
	
  SECTION 22.

  	
   

  	
  Benefits of this Warrant Agreement

  	
   

  	
  11

  



 
















 


WARRANT AGREEMENT, dated July 19, 2006, between TRC
COMPANIES, INC., a Delaware corporation (the “Issuer”), and FEDERAL PARTNERS,
L.P., a Delaware limited partnership (the “Holder”).


WHEREAS, the
Issuer and its wholly-owned subsidiaries (together, “TRC”) and Holder are
parties to the Subordinated Loan Agreement dated as of the date hereof (as the
same may be amended, supplemented or otherwise modified from time to time, the “Subordinated
Loan Agreement”), pursuant to which Holder has agreed to make a subordinated
loan to TRC; and


WHEREAS, in order
to induce Holder to make the subordinated loan to TRC pursuant to the
Subordinated Loan Agreement, the Issuer has agreed to execute and deliver this
Warrant Agreement and to issue the Warrants hereinafter described.


NOW, THEREFORE, in
consideration of the premises, the parties hereto agree as follows:


SECTION 1.           Definitions.  As used in this Warrant Agreement, terms
defined in the Subordinated Loan Agreement shall have such defined meanings
when used herein (regardless of whether the Subordinated Loan Agreement shall
still be in effect) and the following terms shall have the following meanings,
unless the context otherwise requires:


“Business Day”
shall mean any day excluding Saturday, Sunday and any day which shall be in the
City of New York a legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close.


“Common Stock”
shall have the meaning set forth in Section 3.


“Current Market
Price per Share” shall have the meaning specified in Section 12(b).


“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, or any successor
Federal statute.


“Exercise Price”
shall mean the exercise price of a Warrant, which shall be $.01 per Warrant
Share, subject to adjustment as provided in Section 12.


“Expiration
Date” shall mean 5:00 p.m., New York City time, on the tenth anniversary of
the date hereof, or, if such day is not a Business Day, the next succeeding
Business Day.


“Requirement of
Law” shall mean, as to any Person, the Certificate of Incorporation and
By-laws or other organizational or governing documents of such Person and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other governmental authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.









 



 


“Securities Act”
shall mean the Securities Act of 1933, as amended, or any successor Federal
statute.


“Warrant”
shall mean the warrant issued pursuant to this Warrant Agreement entitling the
record holder thereof to purchase from the Issuer at the Warrant Office up to
66,000 shares of Common Stock (subject to adjustment as provided in Section 12)
at the Exercise Price at any time before 5:00 p.m., local time, on the
Expiration Date.


“Warrant
Certificate” shall mean a certificate evidencing one or more Warrants,
substantially in the form of Exhibit A hereto, with such changes therein as may
be required to reflect any adjustments made pursuant to Section 12.


“Warrant Office”
shall mean the office or agency of the Issuer at which the Warrant Register
shall be maintained and where the Warrants may be presented for exercise,
exchange, substitution and transfer, which office or agency will be the office
of the Issuer at 21 Griffen Road North, Windsor, Connecticut 06095, which
office or agency may be changed by the Issuer pursuant to notice in writing to
the Persons named in the Warrant Register as the holders of the Warrants.


“Warrant
Register” shall mean the register, substantially in the form of Exhibit B
hereto, maintained by the Issuer at the Warrant Office.


“Warrant Shares”
shall mean the shares of Common Stock issuable or issued upon exercise of the
Warrants, as the number and/or type of such shares may be adjusted from time to
time pursuant to Section 12.


SECTION 2.           Representations and Warranties.  The Issuer hereby represents and warrants, on
the date hereof, as follows:


(a)           The Issuer is a
corporation validly existing and in good standing under the laws of the State
of Delaware and has the corporate power and authority to execute and deliver
this Warrant Agreement and the Warrant Certificates, to issue the Warrants and
to perform its obligations under this Warrant Agreement and the Warrant Certificates.


(b)           The execution,
delivery and performance by the Issuer of this Warrant Agreement and the
Warrant Certificates, the issuance of the Warrants and the issuance of the
Warrant Shares upon exercise of the Warrants have been duly authorized by all
necessary corporate action.


(c)           This Warrant
Agreement has been duly executed and delivered by the Issuer and constitutes a
legal, valid, binding and enforceable obligation of the Issuer, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
except as equitable remedies may be limited by general principles of equity
(whether such remedies are sought in a proceeding at law or in equity).  When the Warrants and Warrant Certificates
have been issued as contemplated hereby, (i) the Warrants and the Warrant
Certificates will constitute legal, valid, binding and enforceable obligations
of the Issuer, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, 



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moratorium or
other similar laws affecting creditors’ rights generally and except as
equitable remedies may be limited by general principles of equity (whether such
remedies are sought in a proceeding at law or in equity) and (ii) the Warrant
Shares, when issued upon exercise of the Warrants in accordance with the terms
thereof, will be duly authorized, validly issued, fully paid and nonassessable
shares of the Common Stock.


(d)           (i) The Issuer’s capital stock
consists of 30,000,000 shares of Common Stock, of which 17,538,691 have been
issued and are outstanding and of which 66,000 have been reserved for issuance
upon exercise of the Warrants; and 500,000 shares of preferred stock, 15,000 of
which are designated as Series A-1 Cumulative Convertible Preferred Stock, and
all of which are issued and outstanding, and (ii) other than (A) the shares
referred to above and (B) the Warrants, and (C) options to purchase 3,002,770
shares of Common Stock under the Company’s Restated Stock Option Plan and
132,493 warrants to purchase Common Stock, there are no outstanding options,
warrants, conversion rights or other rights to obtain any shares of Common
Stock or preferred stock from the Issuer or any other security issued by the
Issuer convertible into or exchangeable for shares of Common Stock or preferred
stock of the Issuer.


(e)           All of the issued and outstanding
shares of stock in the Issuer are validly issued, fully paid and nonassessable,
and have been issued in compliance with all applicable federal and state
securities laws, rules and regulations.


(f)            Neither the Issuer nor any Affiliate
of the Issuer is:


(i)            Investment Company Act.  An “investment company”, or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of
1940, as amended.


(ii)           Holding Company Act.  A “holding company”, a “subsidiary company”
of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company”, as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.


(iii)          Regulations as to Borrowing.  Subject to any statute or regulation which
regulates the incurrence of any Indebtedness including, without limitation,
statutes or regulations relative to common or interstate carriers or to the
sale of electricity, gas, steam, water, telephone, telegraph or other public
utility services.


SECTION 3.           Issuance of Warrants.  The Issuer hereby agrees to issue and deliver
to Holder on the Closing Date Warrants evidencing rights to purchase 66,000
shares of Common Stock, $.01 par value per share, of the Issuer (“Common Stock”),
subject to adjustment as provided in Section 12, at any time on or before the
Expiration Date at a price per share equal to the Exercise Price.  On the Closing Date, simultaneously with the
making of the loan by the Holder to TRC pursuant to the Subordinated Loan
Agreement, the Issuer shall deliver to Holder one or more Warrant Certificates
evidencing the Warrants.


SECTION 4.           Registration, Transfer and
Exchange of Certificates.  Subject to
Section 14, the Issuer shall maintain at the Warrant Office the Warrant
Register for registration 



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of the Warrants and Warrant Certificates and transfers
thereof.  On the Closing Date the Issuer
shall register the outstanding Warrants and Warrant Certificates in the name of
Holder.  The Issuer may deem and treat
the registered holder(s) of the Warrant Certificates as the absolute owner(s)
thereof and the Warrants represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant Certificates made by any Person) for
the purpose of any exercise thereof or any distribution to the holder(s)
thereof, and for all other purposes, and the Issuer shall not be affected by
any notice to the contrary.


(a)            The Issuer shall
register the transfer of any outstanding Warrants in the Warrant Register upon
surrender of the Warrant Certificate(s) evidencing such Warrants to the Issuer
at the Warrant Office, accompanied (if so required by it) by a written
instrument or instruments of transfer in form satisfactory to it, duly executed
by the registered holder or holders thereof or by the duly appointed legal
representative thereof.  Upon any such
registration of transfer, new Warrant Certificate(s) evidencing such
transferred Warrants shall be issued to the transferee(s) and the surrendered
Warrant Certificate(s) shall be canceled. 
If less than all the Warrants evidenced by Warrant Certificate(s)
surrendered for transfer are to be transferred, new Warrant Certificate(s)
evidencing such remaining number of Warrants shall be issued to the holder
surrendering such Warrant Certificate(s).


(b)           Warrant Certificates
may be exchanged at the option of the holder(s) thereof, when surrendered to
the Issuer at the Warrant Office, for another Warrant Certificate or other
Warrant Certificates of like tenor and representing in the aggregate a like
number of Warrants.  Warrant Certificates
surrendered for exchange shall be canceled.


(c)            No charge shall be
made for any such transfer or exchange except for any tax or other governmental
charge imposed in connection therewith. 
Except as provided in Sections 14(b) and (c), each Warrant Certificate
issued upon transfer or exchange shall bear the legend set forth in Section
14(b) if the Warrant Certificate presented for transfer or exchange bore such
legend.


SECTION 5.           Mutilated or Missing Warrant
Certificates.  If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of
evidence reasonably satisfactory to the Issuer of such loss, theft or
destruction of such Warrant Certificate and, if requested, indemnity
satisfactory to it; provided that such indemnity shall be deemed to constitute
reasonably satisfactory evidence of such loss, theft or destruction.  No service charge shall be made for any such
substitution, but all expenses and reasonable charges associated with procuring
such indemnity and all stamp, tax and other governmental duties that may be
imposed in relation thereto shall be borne by the holder of such Warrant
Certificate.  Each Warrant Certificate
issued in any such substitution shall bear the legend set forth in Section
14(b) if the Warrant Certificate for which such substitution is made bore such
legend.


SECTION 6.           Duration and Exercise of Warrants.  (a)The Warrants evidenced by a Warrant
Certificate shall be exercisable in whole or in part by the registered holder
thereof on any Business Day at any time on or after the date hereof and on or
prior to the Expiration Date.



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(b)           Subject to the
provisions of this Warrant Agreement, upon presentation of the Warrant
Certificate evidencing the Warrants to be exercised, with the form of election
to purchase on the reverse thereof duly completed and signed by the registered
holder or holders thereof, to the Issuer at the Warrant Office, and upon
payment of the aggregate Exercise Price for the number of Warrant Shares in
respect of which such Warrants are being exercised in lawful money of the
United States of America, the Issuer shall issue and cause to be delivered
within five (5) Business Days of such exercise to or upon the written order of
the registered holder(s) of such Warrants and in such name or names as such
registered holder(s) may designate, a certificate for the Warrant Share or
Warrant Shares issued upon such exercise of such Warrants.  Any Person(s) so designated to be named
therein shall be deemed to have become holder(s) of record of such Warrant
Share or Warrant Shares as of the date of exercise of such Warrants.  Except as set forth in Sections 14(b) and
(c), each Warrant Share shall bear the legend set forth in Section 14(b).  Payment of the aggregate Exercise Price may
be made with respect to each Warrant Share, at the option of the Holder:


(i)            by cash, certified or bank cashier’s
check or wire transfer;


(ii)           by surrendering to the Issuer the
number of shares of Common Stock to be acquired upon exercise of the Warrant
which is equal to (A) such aggregate Exercise Price divided by (B) the Current
Market Price per Share of one share of Common Stock determined as of the last
Business Day prior to the date of exercise of this Warrant; or


(iii)          any combination of the foregoing.


(c)            If less than all
the Warrants evidenced by a Warrant Certificate are exercised at any time, a
new Warrant Certificate or Certificates shall be issued for the remaining
number of Warrants evidenced by such Warrant Certificate.  Each new Warrant Certificate so issued shall
bear the legend set forth in Section 14(b) if the Warrant Certificate presented
in connection with partial exercise thereof bore such legend.  All Warrant Certificates surrendered upon
exercise of Warrants shall be canceled.


SECTION 7.           No Fractional Shares.  The Issuer shall not be required to issue fractional
shares of Common Stock upon exercise of the Warrants but may pay for any such
fraction of a share an amount in cash equal to the Current Market Price per
Share (as defined in Section 12(b)) of Common Stock of such share (determined
in accordance with the provisions of Section 12(b)) multiplied by such
fraction.


SECTION 8.           Payment of Taxes.  The Issuer will pay all taxes (other than any
applicable income or similar taxes payable by the holders of the Warrants or
Warrant Shares) attributable to the initial issuance of Warrant Shares upon the
exercise of the Warrants;  provided
that the Issuer shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue of any Warrant Certificate or any
certificate for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Issuer shall not be required to issue or deliver such certificates unless
or until the Person or Persons requesting the issuance thereof shall have paid
to the Issuer the amount of such tax or shall have established to the
satisfaction of the Issuer that such tax has been paid.



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SECTION 9.           Warrant Holder Rights; Dividends
and Distributions.  The Warrants
shall not (prior to exercise thereof) confer upon the holders thereof the right
to vote as stockholders of the Issuer or any other right as stockholder of the
Issuer, except that, in the event the Issuer shall make a distribution or pay
any dividend to all holders of Common Stock of the Issuer in cash, evidences of
its indebtedness or assets, each Warrant shall be entitled to its pro rata
share of such distribution as if such Warrant had been exercised immediately
prior to such distribution or record date, as applicable, and such pro rata
share shall be paid or distributed to the holders of the Warrants as and when
paid or distributed to the holders of Common Stock.


SECTION 10.         Reservation and Issuance of Warrant
Shares.  (a)The Issuer will at all
times have authorized, and reserve and keep available, free from preemptive
rights, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon the exercise of the Warrants, the number of shares
deliverable upon exercise of all outstanding Warrants.


(b)           Before taking any
action which would cause an adjustment pursuant to Section 12 hereof to reduce
the Exercise Price below the then par value (if any) of the Warrant Shares
issuable upon exercise of the Warrants, the Issuer will take any corporate
action which may be necessary in order that the Issuer may validly and legally
issue Warrant Shares at the Exercise Price as so adjusted.


(c)            The Issuer
covenants that all Warrant Shares will, upon issuance in accordance with the
terms of this Warrant Agreement, be free from all taxes with respect to the
issuance thereof and from all Liens, charges and security interests, except as
provided in Section 8.


SECTION 11.         Obtaining of Governmental Approvals
and Stock Exchange Listings.  The
Issuer will, at its own expense, (a) obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities which
may from time to time be required of the Issuer in order to satisfy its
obligations hereunder and (b) take all action which may be necessary so that
the Warrant Shares or other Securities, immediately upon their issuance upon
the exercise of Warrants, will be listed on each securities exchange, if any,
on which the Common Stock is then listed.


SECTION 12.         Adjustment of Exercise Price and Number
of Warrant Shares Purchasable.  Prior
to the Expiration Date, the Exercise Price and the number of Warrant Shares
purchasable upon the exercise of each Warrant are subject to adjustment from
time to time upon the occurrence of any of the events enumerated in this
Section 12.


(a)            If the Issuer at
any time while this Warrant Agreement is outstanding shall (i) declare a
dividend on Common Stock in shares or other securities of the Issuer (other
than debt securities covered by Section 9), (ii) split or subdivide the
outstanding Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares or (iv) issue by reclassification of its Common Stock
any shares of other securities of the Issuer (other than debt securities
covered by Section 9), then, in each such event, the number of Warrant Shares
purchasable upon exercise of each Warrant immediately prior thereto shall be
adjusted so that the holder shall be entitled to receive the kind and number of
shares or other securities of the Issuer which the holder would have owned or
have been entitled to receive after the happening of any


 



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of the events
described above had such Warrant been exercised immediately prior to the
happening of such event (or any record date with respect thereto).  Such adjustment shall be made whenever any of
the events listed above shall occur.  An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of the event retroactive to the record
date, if any, for the event.


(b)           The
“Current Market Price per Share” of Common Stock on any date shall be
deemed to be:


(i)            the average of the daily closing
prices for the twenty (20) consecutive trading days immediately preceding such
date as reported on the Composite Transactions Tape or, if the Common Stock is
not reported on the Composite Transactions Tape, the last sale price regular
way of the Common Stock on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, in case no such sale
takes place on such day, the average of the closing bid and asked prices
regular way, in either case on such securities exchange, or, if the Common
Stock is not listed or admitted to trading on such an exchange, the closing
sales price or, if there is no closing sales price, the average of the closing
bid and asked prices in the over-the-counter market as reported by the National
Association of Securities Dealers’ Automated Quotation System (“NASDAQ”), or,
if not so reported, as reported by the National Quotation Bureau, Incorporated,
or any successor thereof; or


(ii)           if no such prices are furnished, the
fair market value of a share of Common Stock as determined in good faith by the
Board of Directors of the Issuer and set forth in a written notice delivered to
the Holder; provided that if a valuation has been made by an independent
investment banking firm within six (6) months prior to any date as of which the
Current Market Price per Share is to be determined hereunder, then such
valuation or determination shall be binding on the Issuer and the holders of
the Warrants and Warrant Shares unless any event shall have occurred since the
date of such valuation or determination which, in the reasonable opinion of the
Issuer’s Board of Directors, materially affects the continued validity of such
valuation or determination.


(c)            No adjustment in
the number of Warrant Shares shall be required unless such adjustment would
require an increase or decrease of at least 1.0% in the aggregate number of
Warrant Shares purchasable upon exercise of all Warrants; provided that
any adjustments which by reason of this Section 12(c) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment; provided, however, that notwithstanding the
foregoing, all such adjustments shall be made no later than three (3) years
from the date of the first event that would have required an adjustment but for
this paragraph.  All calculations under
this Section 12 shall be made to the nearest cent or to the nearest hundredth
of a share, as the case may be.


(d)           If at any time, as a
result of an adjustment made pursuant to this Section 12, the holder of any
Warrant thereafter exercised shall become entitled to receive any shares of the
Issuer other than shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the 



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Warrant Shares
contained in this Section 12, and the provisions of this Agreement with respect
to the Warrant Shares shall apply on like terms to such other shares.


(e)            Whenever the number
of Warrant Shares purchasable upon the exercise of each Warrant is adjusted,
the Exercise Price per Warrant Share payable upon exercise of each Warrant
shall be adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of Warrant
Shares purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
purchasable immediately after such adjustment.


(f)            In the event of any
capital reorganization of the Issuer, or of any reclassification of the Common
Stock (other than a reclassification referred to in paragraph (a)(iv) above),
or in case of the consolidation of the Issuer with or the merger of the Issuer
with or into any other corporation or of the sale of the properties and assets
of the Issuer as, or substantially as, an entirety to any other corporation,
each Warrant shall, after such capital reorganization, reclassification of
Common Stock, consolidation, merger or sale, and in lieu of being exercisable
for Warrant Shares, be exercisable, upon the terms and conditions specified in
this Warrant Agreement, for the number of shares of stock or other securities
or assets (including cash) to which a holder of the number of Warrant Shares
purchasable (at the time of such capital reorganization, reclassification of
Common Stock, consolidation, merger or sale) upon exercise of such Warrant
would have been entitled upon such capital reorganization, reclassification of
Common Stock, consolidation, merger or sale; and in any such case, if
necessary, the provisions set forth in this Section 12 with respect to the rights
thereafter of the holders of the Warrants shall be appropriately adjusted so as
to be applicable, as nearly as they may reasonably be, to any shares of stock
or other securities or assets thereafter deliverable on the exercise of the
Warrants.  The Issuer shall not effect
any such consolidation, merger or sale, unless prior to or simultaneously with
the consummation thereof, the successor corporation (if other than the Issuer)
resulting from such consolidation or merger or the corporation purchasing such
assets or the appropriate corporation or entity shall assume, by written
instrument, the obligation to deliver to the Holder of each Warrant the shares
of stock, securities or assets to which, in accordance with the foregoing
provisions, such Holder may be entitled and all other obligations of the Issuer
under this Warrant Agreement (and if the Issuer shall survive the consummation
of such consolidation or merger or purchase, such assumption shall be in
addition to, and shall not release the Issuer from, any continuing obligations
of the Issuer under this Warrant Agreement). 
The provisions of this paragraph (f) shall apply to successive
reorganizations, reclassifications, consolidations, mergers and sales.


(g)           Irrespective of any
adjustments in the Exercise Price or the number or kind of shares purchasable
upon exercise of the Warrants, Warrant Certificates theretofore or thereafter
issued may continue to express the same Exercise Price per share and number and
kind of shares as are stated on the Warrant Certificates initially issuable
pursuant to this Agreement.


(h)           If any question
shall at any time arise with respect to the adjusted Exercise Price or Warrant
Shares issuable upon exercise, such question shall be determined by the
independent auditors of the Issuer and such determination shall be binding upon
the Issuer and the holders of the Warrants and the Warrant Shares.



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SECTION 13.         Notices to Warrant Holders.  Upon any adjustment of the Exercise Price or
number of Warrant Shares issuable upon exercise pursuant to Section 12, the
Issuer shall promptly, but in any event within (10) days thereafter, cause to
be given to each of the registered holders of the Warrants, at its address
appearing on the Warrant Register by registered mail, postage prepaid, a certificate
signed by its chief financial officer setting forth the Exercise Price as so
adjusted and/or the number of shares of Common Stock issuable upon the exercise
of each Warrant as so adjusted and describing in reasonable detail the facts
accounting for such adjustment and the method of calculation used.  Where appropriate, such certificate may be
given in advance and included as a part of the notice required to be mailed
under the other provisions of this Section 13.


In the event:


(a)           the Issuer shall authorize issuance
to all holders of Common Stock of rights or warrants to subscribe for or
purchase capital stock of the Issuer or of any other subscription rights or
warrants;


(b)           the Issuer shall authorize a dividend
or other distribution to all holders of Common Stock payable in evidences of
its indebtedness, cash or assets;


(c)           of any consolidation or merger to
which the Issuer is a party and for which approval of any stockholders of the
Issuer is required, or of the conveyance or transfer of the properties and
assets of the Issuer substantially as an entirety, or of any capital
reorganization or reclassification or change of the Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination);


(d)           of the voluntary or involuntary
dissolution, liquidation or winding up of the Issuer;


(e)           the Issuer proposes to take any other
action which would require an adjustment of the Exercise Price or number of Warrant
Shares issuable upon exercise pursuant to Section 12;


then the Issuer
shall cause to be given to each of the registered holders of the Warrants at
its address appearing on the Warrant Register, at least ten (10) days prior to
the applicable record date hereinafter specified (or as expeditiously as
possible after the occurrence of any involuntary dissolution, liquidation or
winding up referred to in clause (d) above), a written notice in accordance
with Section 17 stating (i) the date as of which the holders of record of
Common Stock  to
be entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to become
effective (or has become effective, in the case of any involuntary dissolution,
liquidation or winding up); and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their shares
for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up.  The failure
to give the notice required by this Section 13 or any defect therein shall not
affect the legality or validity of any 



 9
 






 



distribution,
right, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.


SECTION 14.         Representations of Holder.  (a) Holder represents that (i) it is
acquiring the Warrants for its own account, for investment and not with a view
to any distribution or public offering within the meaning of the Securities Act
but subject to any requirement of law that the disposition of the property of
the holder of a Warrant and/or Warrant Share shall at all times be within its
control, (ii) such Holder is an “accredited investor” as defined in Regulation
D of the Securities Act and (iii) such Holder has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the investment made in connection with the acquisition of the
Warrants.  Holder acknowledges that the
Warrants and the Warrant Shares issuable upon exercise thereof have not been
registered under the Securities Act and agrees that it will not sell or
otherwise transfer any of its Warrants or Warrant Shares except upon the terms
and conditions specified herein.


(b)           Each Warrant
Certificate issued to Holder or to a subsequent transferee (unless, in the
opinion of Holder’s counsel, the first paragraph of such legend is not required
in order to ensure compliance with the Securities Act) shall include a legend
in substantially the following form:


THE OFFER AND SALE
OF THE WARRANTS AND UNDERLYING SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.


IN ADDITION, THE
WARRANTS AND UNDERLYING SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT DATED JULY __, 2006, BETWEEN THE
ISSUER AND THE INITIAL HOLDER OF THE WARRANTS NAMED THEREIN, A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF
THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.


(c)            The
restrictions set forth in Section 14(b) shall terminate and cease to be
effective with respect to any Warrants or Warrant Shares registered under the
Securities Act.  Whenever such
restrictions shall so terminate the holder of such Warrants and/or Warrant
Shares shall be entitled to receive from the Issuer, without expense (other
than transfer taxes, if any), Warrant Certificates or certificates for such
Warrant Shares not bearing the legend set forth in Section 14(b) at which time
the Issuer will rescind any transfer restrictions relating thereto.



 10
 






 



 


SECTION 15.         Amendments and Waivers.  Any provision of this Warrant Agreement may
be amended, supplemented, waived, discharged or terminated by a written
instrument signed by the Issuer and the holders of the Warrants holding a
majority of the Warrant Shares; provided, that the Exercise Price may
not be increased, the number of Warrant Shares issuable upon exercise of the
Warrants may not be reduced (except pursuant to Section 12 hereof), the
Expiration Date may not be changed to an earlier date and this Section may not
be amended except with the consent of the holders of any affected outstanding
Warrants and/or Warrant Shares, as the case may be.


SECTION 16.         Specific Performance.  The holders of the Warrants and/or Warrant
Shares shall have the right to specific performance by the Issuer of the
provisions of this Warrant Agreement. 
The Issuer hereby irrevocably waives, to the extent that it may do so
under applicable law, any defense based on the adequacy of a remedy at law
which may be asserted as a bar to the remedy of specific performance in any
action brought against the Issuer for specific performance of this Warrant
Agreement by the holders of the Warrants and/or Warrant Shares.


SECTION 17.         Notices.  (a)Any notice or demand to be given or made
by the holders to or on the Issuer pursuant to this Warrant Agreement shall be
sufficiently given or made if sent by overnight courier or mail, first-class or
registered, postage prepaid, addressed to the Issuer at the Warrant Office.


(b)           Any notice to be
given by the Issuer to the holders of the Warrants or the Warrant Shares shall
be sufficiently given if sent by overnight courier or first-class mail, postage
prepaid, addressed to such holder as such holder’s name and address shall
appear on the Warrant Register or the Common Stock registry of the Issuer, as
the case may be.


SECTION 18.         Binding Effect.  This Warrant Agreement shall be binding upon
and inure to the sole and exclusive benefit of the Issuer, its successors and
assigns, Holder and the registered holders from time to time of the Warrants
and the Warrant Shares.


SECTION 19.         Termination.  This Warrant Agreement shall terminate and be
of no further force and effect at the earlier of the close of business on the
Expiration Date or the date on which none of the Warrants shall be outstanding
(whether by reason of the exercise thereof or the redemption thereof by the
Issuer).


SECTION 20.         Counterparts.  This Warrant Agreement may be executed in one
or more separate counterparts and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.


SECTION 21.         Delaware Law.  This Warrant Agreement and each Warrant
Certificate shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without giving effect to the choice or conflicts
of laws provisions thereof.


SECTION 22.         Benefits of this Warrant Agreement.  Nothing in this Warrant Agreement shall be
construed to give to any Person other than the Issuer and the registered
holders of the Warrants and the Warrant Shares any legal or equitable right,
remedy or claim under this Warrant Agreement.



 11
 






 



 


IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.


	
   

  	
  TRC COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H.
  Dodd

  
	
   

  	
   

  	
  Name: Martin H.
  Dodd

  
	
   

  	
   

  	
  Title: Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FEDERAL
  PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
  NINTH FLOOR
  CORPORATION

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen M.
  Duff

  
	
   

  	
   

  	
  Name: Stephen M. Duff

  
	
   

  	
   

  	
  Title: Treasurer

  



 



 12















 


EXHIBIT A


TO WARRANT AGREEMENT


[FORM OF WARRANT CERTIFICATE]


THE OFFER AND SALE
OF THE WARRANTS AND UNDERLYING SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.


IN ADDITION, THE
WARRANTS AND UNDERLYING SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT DATED JULY 19, 2006, BETWEEN
THE ISSUER AND THE INITIAL HOLDER OF THE WARRANTS NAMED THEREIN, A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF
THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.









 



 


WARRANT
CERTIFICATE


evidencing
Warrants to purchase


Common Stock in


TRC Companies, Inc.


No.
W-1


This Warrant
Certificate certifies that Federal Partners, L.P., a Delaware limited
partnership, or registered assigns, is the registered holder of a Warrant (the “Warrant”)
to purchase Common Stock, $.01 par value, in TRC Companies, Inc., a Delaware
corporation (the “Issuer”).  The
Warrant entitles the holder, but only subject to the conditions set forth
herein and in the Warrant Agreement referred to below, to purchase from the
Issuer at any time prior to 5:00 P.M., local time of the Warrant Office, on the
tenth anniversary of the date hereof or, if such day is not a Business Day, the
next succeeding Business Day (the “Expiration Date”), 66,000 fully paid
and nonassessable shares of Common Stock of the Issuer (the “Warrant Shares”)
at a price (the “Exercise Price”) of $.01 per Warrant Share payable in
lawful money of the United States of America, upon surrender of this Warrant
Certificate, execution of the annexed Form of Election to Purchase and payment
of the Exercise Price at the office of the Issuer at 21 Griffen Road North,
Windsor, Connecticut 06095 or such other address as the Issuer may specify in
writing to the registered holder of the Warrant evidenced hereby (the “Warrant
Office”).  The Exercise Price and
number of Warrant Shares purchasable upon exercise of the Warrant are subject
to adjustment upon the occurrence of certain events as set forth in the Warrant
Agreement referred to below.



 2
 






 



 


The Issuer may
deem and treat the registered holder(s) of the Warrant evidenced hereby as the
absolute owner(s) thereof (notwithstanding any notation of ownership or other
writing thereon made by anyone), for the purpose of any exercise hereof and of
any distribution to the holder(s) hereof, and for all other purposes, and the
Issuer shall not be affected by any notice to the contrary.


Warrant
Certificates, when surrendered at the Warrant Office by the registered holder
hereof in person or by a legal representative duly authorized in writing, may
be exchanged, in the manner and subject to the limitations provided in the
Warrant Agreement, but without payment of any service charge, for another
Warrant Certificate or Warrant Certificates of like tenor evidencing in the
aggregate a like number of Warrants.


Upon due
presentment for registration of transfer of this Warrant Certificate at the
Warrant Office, a new Warrant Certificate or Warrant Certificates of like tenor
and evidencing in the aggregate a like number of Warrants shall be issued in
exchange for this Warrant Certificate to the transferee(s) and, if less than
all the Warrants evidenced hereby are to be transferred, to the registered
holder hereof, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.


This Warrant
Certificate is one of the Warrant Certificates referred to in the Warrant
Agreement dated July 19, 2006, between the Issuer and the Holder (the “Warrant
Agreement”).  Said Warrant Agreement
is hereby incorporated by reference in and made a part of this Warrant
Certificate and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Issuer and the holders.



 3
 






 



 


IN WITNESS
WHEREOF, the Issuer has caused this Warrant Certificate to be signed by its
duly authorized officers.


	
   

  	
  TRC COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Martin H.
  Dodd

  
	
   

  	
  Name: Martin H. Dodd

  
	
   

  	
  Title: Senior Vice President

  



 



 4















 


ANNEX


TO FORM OF


WARRANT CERTIFICATE


[FORM OF
ELECTION TO PURCHASE]


(To be executed upon exercise of Warrant)


The undersigned
hereby irrevocably elects to exercise the right, represented by this Warrant
Certificate, to purchase __________ Warrant Shares and herewith tenders payment
for such Warrant Shares to the order of the Issuer in the amount of $__________
in accordance with the terms hereof.  The
undersigned requests that a certificate for such Warrant Shares be registered
in the name of _________________ whose address is _________________ and that
such certificate be delivered to _________________ whose address is
_________________.  If said number of
Warrant Shares is less than all of the Warrant Shares purchasable hereunder,
the undersigned requests that a new Warrant Certificate representing the
remaining balance of the Warrant Shares be registered in the name of
_________________ whose address is _________________ and that such Warrant
Certificate be delivered to _________________ whose address is __________________________.


 


	
  Signature:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of the Warrant Certificate.)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  



 















 


 


EXHIBIT B


TO WARRANT AGREEMENT


WARRANT REGISTER


	
  Warrant

  CertificateNo.

  	
   

  	
  Original Number

  of Warrants and

  Warrant Shares

  	
   

  	
  Names and Address

  of Warrant Holders

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  W-1

  	
   

  	
  Warrant to
  purchase 66,000 shares of Common Stock

  	
   

  	
  Federal
  Partners, L.P.

  c/o The Clark Estates, Inc.

  One Rockefeller Plaza, 31st Floor

  New York, NY 10020

  Attention: Stephen Duff