Document:

Exhibit 10.12

SUBORDINATED LOAN
AGREEMENT

SUBORDINATED LOAN AGREEMENT, dated as of July 19, 2006, as
amended, supplemented or otherwise modified from time to time (the “Agreement”),
by and among TRC COMPANIES, INC., a Delaware corporation (the “Parent”),
and each of Parent’s Subsidiaries identified on the signature pages hereof
(such Subsidiaries, together with Parent, are referred to hereinafter each
individually as a “Borrower”, and individually and collectively, jointly
and severally, as the “Borrowers”) and FEDERAL PARTNERS, L.P., a
Delaware limited partnership (the “Lender”).

R E C I T A L S:

WHEREAS, the Borrowers and Wells Fargo Foothill, Inc., a
California corporation, entered into the Senior Credit Agreement (as defined
below); and

WHEREAS, in connection with the consummation of the transactions
contemplated by the Senior Credit Agreement, the Borrowers and the Lender
desire to enter into this Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto hereby agree
as follows:

ARTICLE I

Definitions

SECTION 1.01.  Defined
Terms.  As used in this Agreement the
following terms shall have the following respective meanings (such definitions
to be equally applicable to the singular and plural forms thereof):

“Account Debtor” shall have the meaning set forth in the
Senior Credit Agreement as in effect on the date hereof .

“Affiliate” shall mean, with respect to any Person, any
other Person that, directly or indirectly, controls, is controlled by or is
under common control with such Person. 
For purposes of this definition, the term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) of a Person
shall mean the possession, direct or indirect, of the power to vote ten percent
(10%) or more of the Equity Interests in such Person or to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Equity Interests, by virtue of being a general partner or managing
member, by contract or otherwise.

“Agent” shall mean Wells Fargo Foothill, Inc. and its
permitted successors and assigns pursuant to the Senior Credit Agreement.

 

 

“Agreement” shall have the meaning set forth in the
preamble hereto.

“Bankruptcy Code” shall mean Title 11 of the United States
Code entitled “Bankruptcy”, as now or hereafter in effect, or any successor
thereto.

“Board of Directors” shall have the meaning set forth in
the Senior Credit Agreement as in effect on the date hereof

“Borrower” and “Borrowers” shall have the meaning
set forth in the preamble hereto.

“Business Day”
shall mean any day on which commercial banks are open for commercial banking
business in New York, New York.

“Capital Leases” shall have the meaning set forth in the
Senior Credit Agreement as in effect on the date hereof.

“Cash Equivalents” shall mean (a) marketable direct
obligations issued by, or unconditionally guaranteed by, the United States or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within 1 year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270
days from the date of creation thereof and, at the time of acquisition, having
a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d)
certificates of deposit or bankers’ acceptances maturing within 1 year from the
date of acquisition thereof issued by any bank organized under the laws of the
United States or any state thereof having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000, (e) Deposit
Accounts maintained with (i) any bank that satisfies the criteria described in
clause (d) above, or (ii) any other bank organized under the laws of the United
States or any state thereof so long as the amount maintained with any such
other bank is less than or equal to $100,000 and is insured by the Federal
Deposit Insurance Corporation, and (f) Investments in money market funds
substantially all of whose assets are invested in the types of assets described
in clauses (a) through (e) above.

“Change in Control” shall mean that (a) Permitted Holders
fail to own and control directly or indirectly twenty-five percent (25%), or
more, of the Stock of Parent having the right to vote for the election of
members of the Board of Directors, (b) any “person” or “group” (within the meaning
of Section 13(d) and 14(d) of the Exchange Act), other than Permitted Holders,
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of ten percent (10%), or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (c) a majority of the members of the Board of Directors do not constitute
Continuing Directors.

“Closing Date”
shall mean the July 19, 2006.

 

 

“Closing Fee”
shall have the meaning set forth in Section 3.03.

“Contingent Liability”
and “Contingent Liabilities” shall mean, respectively, each obligation
and liability of any Borrower and all such obligations and liabilities of any
Borrower incurred pursuant to any agreement, undertaking or arrangement by
which such Borrower: (a) guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, dividend, obligation or other liability of any other Person in
any manner (other than by endorsement of instruments in the course of
collection), including, without limitation, any indebtedness, dividend or other
obligation which may be issued or incurred at some future time;
(b) guarantees the payment of dividends or other distributions upon the
shares or ownership interest of any other Person; (c) undertakes or agrees
(whether contingently or otherwise): (i) to purchase, repurchase, or
otherwise acquire any indebtedness, obligation or liability of any other Person
or any or any property or assets constituting security therefor, (ii) to
advance or provide funds for the payment or discharge of any indebtedness,
obligation or liability of any other Person (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, working capital or other financial condition
of any other Person, or (iii) to make payment to any other Person other
than for value received; (d) agrees to lease property or to purchase
securities, property or services from such other Person with the purpose or
intent of assuring the owner of such indebtedness or obligation of the ability
of such other Person to make payment of the indebtedness or obligation;
(e) to induce the issuance of, or in connection with the issuance of, any
letter of credit for the benefit of such other Person; or (f) undertakes
or agrees otherwise to assure a creditor against loss.  The amount of any Contingent Liability shall
(subject to any limitation set forth herein) be deemed to be the maximum amount
for which such Person may be liable pursuant to the terms of the instrument
embodying such Contingent Liability, or, if not stated or determinable, the
maximum reasonably anticipated liability (assuming full performance) in respect
thereof.

“Continuing Directors” shall have the meaning set forth in
the Senior Credit Agreement as in effect on the date hereof.

“Default” shall mean any of the events specified in Article
IX, whether or not any requirement for the giving of notice, the lapse of time,
or both, or the happening of any other condition, has been satisfied.

“Deposit Accounts”
shall have the
meaning set forth in the Senior Credit Agreement as in effect on the date
hereof.

“Distribution”
shall mean and include in respect of any Person:  (i) the payment of any dividends or
other distributions on Securities (except distributions in such Securities) and
(ii) the redemption or acquisition of Securities of such Person, as the
case may be, unless made contemporaneously from the net proceeds of the sale of
Securities other than the redemption of its Class A-1 Convertible Preferred Stock
held by Fletcher International, Ltd.

 

 

“Dollars” and the sign “$” shall each mean Dollars in
lawful currency of the United States of America.

“Equity Interests” shall mean all equity interests of a
Person, including, without limitation, any common or preferred stock, limited
or general partnership interests, limited liability company membership
interests, options, warrants, or other rights to purchase or acquire any such
equity interest, or securities convertible into any such equity interest.

“Event of Default” shall mean any of the events specified
in Article IX, provided that any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.

“Exchange Act” shall have the meaning set forth in the
Senior Credit Agreement as in effect on the date hereof.

“Fiscal Year” shall mean the fiscal year of the Borrowers,
which period shall be the 12-month period ending on June 30 of each year.

“GAAP” shall mean
generally accepted accounting principles consistently applied with prior
periods; provided, however, that GAAP with respect to any interim
financial statements or reports shall be deemed subject to Fiscal Year-end
adjustments and footnotes made in accordance with GAAP.

“Governmental
Authority”
shall have the meaning set forth in the Senior Credit Agreement as in effect on
the date hereof.

“Inactive Subsidiaries” shall have the meaning set forth
in the Senior Credit Agreement as in effect on the date hereof.

“Indebtedness”
shall mean at any time (a) all Liabilities of any Borrower, (b) all
other debt, secured or unsecured, created, issued, incurred or assumed by any
Borrower for money borrowed or for the deferred purchase price of any fixed or
capital asset (other than trade payables incurred in the ordinary course of
business and repayable in accordance with customary trade practices),
(d) indebtedness secured by any Lien existing on property owned by any
Borrower whether or not the Indebtedness secured thereby has been assumed,
provided, that if such obligation or liability is not assumed, the amount of
such obligation or liability for purposes hereof shall in no event exceed the
value of such asset, and (e) all Contingent Liabilities of any Borrower
whether or not reflected on its balance sheet.

“Insolvency Proceeding” shall have the meaning set forth in
the Senior Credit Agreement as in effect on the date hereof.

“Interest Payment Date” shall mean (a) the last day of
March, June, September and December in each year, commencing September 29,
2006, and (b) the Termination Date; provided that, in each case, if such
day is not a Business Day, the next succeeding Business Day.

“Intercompany Subordination Agreement” shall have the
meaning set forth in the Senior Credit Agreement as in effect on the date
hereof.

 

 

“Investments” shall have the meaning set forth in the
Senior Credit Agreement as in effect on the date hereof.

“Lender” shall have the meaning set forth in the preamble
hereto.

“Liabilities”
shall mean at all times all liabilities of any Borrower that would be shown as
such on a balance sheet of such Borrower prepared in accordance with GAAP.

“Lien” shall mean
any mortgage, pledge, hypothecation, judgment lien or similar legal process,
title retention lien, or other lien or security interest.

“Loan” shall mean the loans made by the Lender to the
Borrowers hereunder in the aggregate principal amount of Five Million Dollars
($5,000,000).

“Loan Documents” shall be the collective reference to this
Agreement, the Note, the Subordination Agreement and all other instruments,
documents and agreements executed by or on behalf of the Borrowers or any
Subsidiary and delivered concurrently herewith or at any time hereafter to or
for the benefit of the Lender in connection with the Loan and other
transactions contemplated by this Agreement, all as amended, supplemented or
modified from time to time.

“Materially Adverse Effect” shall mean a materially adverse
effect on the business, assets, results of operations, financial condition or
prospects of the Borrowers and their Subsidiaries taken as a whole.

“Moody’s” shall have the meaning set forth in the defined
term Cash Equivalents.

“Mortgages” shall have the meaning set forth in the Senior
Credit Agreement as in effect on the date hereof.

“Note” shall mean the Subordinated Promissory Note,
substantially in the form of Exhibit A, made by Borrowers in favor of Lender.

“Obligations” shall mean all liabilities, indebtedness and
obligations (monetary (including post-petition interest, allowed or not) or
otherwise) of the Borrowers pursuant to this Agreement, any other Loan Document
or any other document or instrument executed in connection herewith or
therewith, in each case howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due.

“Parent” shall
have the meaning set forth in the preamble hereto.

“Person” shall mean any natural person, corporation,
partnership, trust, limited liability company, association, governmental
authority or unit, or any other entity, whether acting in an individual,
fiduciary or other capacity.

“Permitted Holders” shall have the meaning set forth
in the Senior Credit Agreement as in effect on the date hereof.

 

 

“Permitted Investments”
shall mean (a) Investments in cash and Cash Equivalents, (b) Investments in
negotiable instruments for collection, (c) advances made in connection with
purchases of goods or services in the ordinary course of business, (d)
Investments received in settlement of amounts due to a Borrower or any
Subsidiary of a Borrower effected in the ordinary course of business or owing
to a Borrower or any Subsidiary of a Borrower as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of a Borrower or any Subsidiary of a Borrower, and (e)
investments, including intercompany loans, made by any Borrower in any other
Borrower so long as such investments, if in the form of indebtedness, are not
secured by any of the assets of any Borrower and are subject to the
Intercompany Subordination Agreement.

“Permitted Purchase
Money Indebtedness” shall mean, as of any date of determination, Purchase
Money Indebtedness incurred after the Closing Date in an aggregate principal
amount outstanding at any one time not in excess of Two Million Dollars
($2,000,000).

“Purchase Money
Indebtedness” shall have the meaning set forth in the Senior Credit
Agreement as in effect on the date hereof.

“Real Property”
shall have the meaning set forth in the Senior Credit Agreement as in effect on
the date hereof.

“Refinancing
Indebtedness” shall mean refinancings, renewals, or extensions of
Indebtedness so long as: (a) the terms and conditions of such
refinancings, renewals, or extensions do not, in Agent’s reasonable judgment,
materially impair the prospects of repayment of the Obligations by Borrowers or
materially impair Borrowers’ creditworthiness, (b) such refinancings, renewals,
or extensions do not result in an increase in the principal amount of the
Indebtedness so refinanced, renewed, or extended, (c) such refinancings,
renewals, or extensions do not result in an increase in the interest rate with
respect to the Indebtedness so refinanced, renewed, or extended, (d) such
refinancings, renewals, or extensions do not result in a shortening of the average
weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor
are they on terms or conditions that, taken as a whole, are materially more
burdensome or restrictive to Borrowers, (e) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension must include subordination terms and conditions that are at least as
favorable to the Lender as those that were applicable to the refinanced,
renewed, or extended Indebtedness, and (f) the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended.

“S&P” shall
have the meaning set forth in the defined term Cash Equivalents.

“Securities” shall
mean all shares of stock, partnership interests, membership interests,
membership units or other ownership interests in any other Person or all
warrants, options or other rights to acquire the same.

 

 

“Senior Credit Agreement” shall mean the Credit Agreement,
dated as July 17, 2006, between the Borrowers, the lenders party thereto and
Wells Fargo Foothill, Inc., as the same may be amended, modified, extended,
renewed, restated, supplemented, restructured or refinanced from time to time
as permitted pursuant to the terms of the Subordination Agreement.

“Senior Indebtedness”
shall mean
all obligations, liabilities and indebtedness of every nature of the Borrowers
from time to time owing to the Senior Lender under the Senior Credit Agreement,
including, without limitation, the principal amount of all indebtedness, claims
and indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct or contingent, heretofore, now and hereafter
owing, due and payable, whether before or after the filing of a Proceeding
under the Bankruptcy Code together with (a) any amendments, modifications,
renewals or extensions thereof to the extent not prohibited by the terms of the
Subordination Agreement and (b) any interest accruing thereon after the
commencement of a Proceeding under the Bankruptcy Code without regard to
whether or not such interest is an allowed claim.

“Senior Lender” shall mean the “Lenders” as such
term is defined in the Senior Credit Agreement.

“Senior Loan Documents” shall mean, collectively, the
Senior Credit Agreement, the security documents, and other documents executed
pursuant thereto or in connection therewith, as the same may be amended,
modified, extended, renewed, restated, supplemented, restructured or refinanced
from time to time as permitted pursuant to the terms of the Subordination
Agreement.

“Solvent” shall
have the meaning set forth in Section 4.17.

“Stock” shall have the meaning set forth in the Senior
Credit Agreement as in effect on the date hereof.

“Subordination Agreement” shall mean the Subordination
Agreement, dated as of the date hereof, among the Borrowers, the Agent and the
Lender, as the same may be amended, modified, extended, renewed, restated,
supplemented or restructured from time to time.

“Subsidiary” shall
mean, with respect to any Borrower, a corporation, partnership, limited liability
company or other entity of which such Borrower owns, directly or indirectly,
such number of outstanding shares or other Equity Interests as to have more
than fifty percent (50%) of the ordinary voting power for the election of
directors or other managers of such corporation, partnership, limited liability
company or other entity.

“Termination Date” shall mean the earlier of (i) the
date on which the Loan has been paid in full and all Obligations in connection
therewith and herewith have been satisfied and (ii) July 19, 2009.

SECTION 1.02.  Other
Definitional Provisions.  (a) Unless
otherwise defined herein, all terms defined in this Agreement shall have the
defined meanings when used in the Note or any certificate, report or other
document made or delivered pursuant hereto or thereto.

 

 

(b)           As used herein,
in the Note and in any certificate, report or other document made or delivered
pursuant hereto or thereto, accounting terms not defined in Section 1.01,
and accounting terms partly defined in Section 1.01 to the extent not
defined, shall have the respective meanings given to them under GAAP.  To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms under
GAAP, the definitions contained herein shall control.

(c)           The words “hereof,”
“herein,” “hereunder” and “hereto” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and Section, subsection, Schedule and Exhibit
references contained in this Agreement are references to Sections, subsections,
Schedules and Exhibits in or to this Agreement, unless otherwise specified.

(d)           The meanings
given to the terms defined herein shall be equally applicable to both the singular
and plural forms of such terms.

(e)           The words “including,”
“includes” and “include” shall be deemed to be followed by the words “without
limitation”.

(f)            References to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only
to the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document.

(g)           References to
Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.

ARTICLE II

Loan Facility

SECTION 2.01.  The Loan.  Subject to the terms and conditions hereof,
the Lender hereby agrees to lend to the Borrowers on the Closing Date the
aggregate principal amount of Five Million Dollars ($5,000,000).

SECTION 2.02.  Procedure
for Borrowing.  The Borrowers shall
give irrevocable written notice to the Lender prior to 11:00 a.m., New York
City time, on the Closing Date of their intention to borrow the Loan, which
notice shall state that the Lender shall make payment to the Borrowers by wire
transfer to specified account(s) of the Borrowers (or such other account(s) of
any third party) designated in such notice. 
If the terms and conditions hereof have been met to the satisfaction of
the Lender, by 4:00 p.m. on the Closing Date, the Lender shall make available
to the Borrowers (or such third party) in the manner specified by the Borrowers
in such notice the amount of the Loan in immediately available funds.

 

 

SECTION 2.03.  The Note.  The Loan shall be (a) evidenced by the
Note, (b) payable to the order of the Lender in the principal amount of
Five Million Dollars ($5,000,000), (c) dated the Closing Date and
(d) stated to mature on July 19, 2009. 
On the maturity date of the Note, the full principal amount of the Loan
then outstanding shall be due and payable together with all accrued but unpaid
interest, fees and other amounts due and payable hereunder.  The Note shall bear interest on the unpaid
principal amounts thereof at the applicable interest rate per annum specified
in Section 3.01.  Interest on the
Note shall be payable as specified in Section 3.01.

ARTICLE III

General Provisions Relating to the Loan

SECTION 3.01.  Interest Rates and Payment Dates.  (a) The Loan shall bear interest on the
unpaid principal amount thereof for the period from and including the Closing
Date to and including the Termination Date, at a fixed rate per annum equal to
nine percent (9%) per annum.  Upon the
occurrence and during the continuance of an Event of Default the principal of
the Loan shall, until such Event of Default has been cured, remedied or waived
by the Lender, bear interest at a rate per annum of eleven percent (11%) per
annum calculated on the basis of a 360-day year for the actual number of days
elapsed.

(b)           Interest
shall be payable quarterly in arrears commencing on September 29, 2006, on each
Interest Payment Date thereafter, upon prepayment of the Loan in part pursuant
to Section 3.02 and upon payment in full of the Loan.

SECTION 3.02.  Optional and Mandatory Prepayments.  (a) The Borrowers shall have the right,
from time to time, to prepay the outstanding Loan, either in whole or in part,
by payment of (i) the
principal amount of the Loan or portion thereof to be prepaid and (ii) all accrued but unpaid interest on the
principal amount or portion thereof to be prepaid.  Any optional partial prepayment of the
Loan shall be in the minimum principal amount of Two Hundred Fifty Thousand
Dollars ($250,000) or an integral multiple thereof.  Notwithstanding the foregoing, no prepayment
of the Loan shall be made without the written consent of the Agent unless the
loans made pursuant to the Senior Credit Agreement shall have been irrevocably
repaid in full in cash and the commitments thereunder shall have terminated or
unless otherwise permitted under the Senior Credit Agreement.

(b)           In
the event that there shall be a sale by the Parent of any of its Equity
Interests, except with respect to preferred stock issued to Fletcher
International, Ltd., then, within three (3) Business Days of the date of
receipt of the net cash proceeds of such sale, the Parent shall repay the Loan
in an amount equal to such net cash proceeds; provided, however,
that such payment shall only be made (i) following the irrevocable payment
in full in cash of all Senior Indebtedness and all other liabilities,
indebtedness and obligations of the Borrowers due and payable to the Senior
Lender pursuant to the terms of the Senior Loan Documents and the termination
of the loan commitments under the Senior Credit Agreement, (ii) with the
prior written consent of the Agent or (iii) as otherwise permitted under the
Senior Credit Agreement.  Any amount to
be prepaid pursuant to this Section 3.02(b) shall be due and payable on
the date

 

 

referred to in the
first sentence of this Section 3.02(b) together with accrued interest to
such date on the amount prepaid.

SECTION 3.03.  Closing Fee.  The Borrowers agree to pay to the Lender a
closing fee equal to one and one-half percent (1.5%) (the “Closing Fee”)
of the Loan, payable on the Closing Date.

SECTION 3.04.  Certain Waivers.  (a) Except as otherwise expressly
provided herein, the Borrowers hereby waive promptness, diligence, presentment,
demand, protest, notice of any and all advances of the Loan made under this
Agreement and the Note, notice of occurrence of any Default or Event of Default
(except to the extent notice is expressly required to be given pursuant to the
terms of this Agreement or any of the other Loan Documents), or of any demand
for any payment under this Agreement, notice of any action at any time taken or
omitted by the Lender under or in respect of any of the Obligations hereunder,
any requirement of diligence and, generally, all demands, notices and other
formalities of every kind in connection with this Agreement and the other such
Loan Documents.  The Borrowers hereby
waive all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshaling of assets of the Borrowers and any other entity or
Person primarily or secondarily liable with respect to any of such Obligations,
and all suretyship defenses generally. 
The Borrowers hereby assent to, and waive notice of, any extension or
postponement of the time for the payment, or place or manner for payment,
compromise, refinancing, consolidation or renewals of any of such Obligations
hereunder, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by the Lender at any time or times in respect
of any default by the Borrowers in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement and the other Loan
Documents, any and all other indulgences whatsoever by the Lender in respect of
any of the Obligations hereunder, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
such Obligations or the addition, substitution or release, in whole or in part,
of the Borrowers or any other entity or Person primarily or secondarily liable
for any such Obligation.  Without
limiting the generality of the foregoing, the Borrowers assent to any other
action or delay in acting or failure to act on the part of the Lender,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy which might, but for the provisions of this
Section 3.04, afford grounds for terminating, discharging or relieving the
Borrowers, in whole or in part, from any of their obligations under this
Section 3.04, it being the intention of the Borrowers that, so long as any
of such Obligations hereunder remains unsatisfied, the obligations of the
Borrowers under this Section 3.04 shall not be discharged except by
performance and then only to the extent of such performance.  The Obligations of the Borrowers under this
Section 3.04 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to the Borrowers or the Lender.

(b)           The
provisions of this Section 3.04 are made for the benefit of the Lender and
its permitted successors and assigns, and may be enforced by them from time to
time against the Borrowers as often as occasion therefor may arise and without
requirement on the part of the Lender or such successors or assigns first to
marshal any of their claims or to exercise any of their rights against the
Borrowers or to exhaust any remedies available to them against the

 

 

Borrowers or to
resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy.  The provisions of this Section 3.04
shall remain in effect until all of such Obligations shall have been paid in
full or otherwise fully satisfied.

SECTION 3.05.  Use of Proceeds.  The Borrowers shall use the proceeds of the
Loan for general corporate purposes.

ARTICLE IV

Representations and Warranties

In order to induce the Lender to enter into this Agreement and to
make the Loan hereunder, the Borrowers, jointly and severally, hereby represent
and warrant to the Lender that the following statements are and, after giving
effect to the transactions contemplated hereby, will be true, correct and
complete:

SECTION 4.01.   (a) Organization and Good Standing.  Each of the Borrowers and each of their
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, has all requisite power to own or lease its property, and conduct
its business as now conducted and as presently contemplated, and is in good
standing as a foreign corporation or other entity and is duly authorized to do
business in each jurisdiction where such qualification is necessary except
where a failure to be so qualified would not have a Materially Adverse Effect.

(b)           Authorization.  The execution, delivery and performance of
this Agreement, the other Loan Documents and the Senior Loan Documents to which
any of the Borrowers or any of their Subsidiaries is or is to become a party
and the transactions contemplated hereby and thereby are within the authority
of such Person, have been duly authorized by all necessary proceedings, do not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrowers or any of their Subsidiaries
is subject or any judgment, order, writ, injunction, license or permit
applicable to the Borrowers or any of their Subsidiaries and do not conflict
with any provision of the corporate charter or bylaws or any agreement or other
instrument binding upon, the Borrowers or any of their Subsidiaries.

(c)           Enforceability.  The execution and delivery of this Agreement
and the other Loan Documents to which any of the Borrowers or any of their
Subsidiaries is or is to become a party will result in valid and legally
binding obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting generally the enforcement of creditors’
rights and except to the extent that availability of the remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.

 

 

SECTION 4.02.  Governmental Approvals.  The execution, delivery and performance by
the Borrowers and their Subsidiaries of this Agreement, the other Loan
Documents and the Senior Loan Documents to which each is or is to become a
party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than (i) the filing of the Mortgages, financing statements and security
interest against trademarks with the United States Patent and Trademark Office
with respect to the Senior Loan Documents and (ii) those already obtained.

SECTION 4.03.  Financial Statements and Projections.  (a) Fiscal Year.  Each of the Borrowers and their Subsidiaries
has a fiscal year which ends on June 30 of each calendar year.

(b)           Financial
Statements.  There has been furnished
to the Lender the consolidated financial statements of the Parent and its
Subsidiaries for Fiscal Years June 30, 2005 and June 30, 2004, as certified by
Deloitte & Touche, in the Annual Report on Form 10-K for the year ended
June 30, 2005 and the unaudited statements for the fiscal month ended May 31,
2006.  The consolidated financial
statements of the Parent and its Subsidiaries present fairly in all material
respects, Parent’s and its Subsidiaries’ financial condition as of the date
thereof and results of operations for the period then ended.

SECTION 4.04.  No Material Changes, etc.  From May 31, 2006 through the Closing Date,
there has occurred no materially adverse change in the financial condition or
business of the Borrowers and their Subsidiaries as shown on or reflected in
the consolidated balance sheet of the Parent and its Subsidiaries as May 31,
2006, or the consolidated statement of income for the fiscal month then ended,
other than changes in the ordinary course of business that have not had any
Materially Adverse Effect.

SECTION 4.05.  No Violation of Laws.  None of the Borrowers or any of their
Subsidiaries is in violation of or delinquent with respect to, any decree,
order, or arbitration award of any court or governmental authority, or any
agreement with, or any license or permit from, any governmental authority, or
any statute, law, license, rule or regulation including, without limitation,
laws and regulations relating to occupational health and safety, equal
employment opportunities, fair employment practices, and sex, race, religious
or age discrimination, in any of the foregoing cases in a manner that would
reasonably be expected to have a Materially Adverse Effect.  Any and all approvals by any federal, state
or local authority necessary for the operation of the business of the Borrowers
and their Subsidiaries by any of the Borrowers or their Subsidiaries have been
received and remain in full force and effect, except where the failure to have
received such approvals or for such approvals to have remained in full force
and effect would not reasonably be expected to have a Materially Adverse
Effect.

SECTION 4.06.  Litigation.  Other than those matters set forth on
Schedule 4.10 to the Senior Credit Agreement, there are no actions, suits,
proceedings or investigations of any kind pending or, to the knowledge of the
Borrowers, threatened against any of the Borrowers or their Subsidiaries before
any court, tribunal or administrative agency or board that could be reasonably
expected to, either in any case or in the aggregate, have a Materially Adverse
Effect, or materially impair the right of the Borrowers and their Subsidiaries,
taken as a whole, to carry

 

 

on business as now
conducted by them, or result in any liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Parent and its Subsidiaries, or which
question the validity of this Agreement, any of the other Loan Documents or the
Senior Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.

SECTION 4.07.  No Materially Adverse Contracts, etc.  None of the Borrowers or any of their
Subsidiaries is subject to any charter, corporate or other legal restriction,
or any judgment, decree, order, rule or regulation that has or could reasonably
be expected in the future to have a Materially Adverse Effect.  None of the Borrowers or any of their
Subsidiaries is a party to any contract or agreement that has or would be
reasonably expected to have any Materially Adverse Effect.

SECTION 4.08.  Compliance with Other Instruments, etc.  None of the Borrowers or any of their
Subsidiaries is in violation of any provision of its charter documents, bylaws,
limited liability company agreement or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or any
decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could be reasonably expected to result in the
imposition of substantial penalties or have a Materially Adverse Effect.

SECTION 4.09.  Tax Status.  Each of the Borrowers and their Subsidiaries
has made or filed all federal and state income tax returns and all other
material tax returns, reports and declarations required by any jurisdiction to
which it is subject and has paid all material taxes and other governmental
assessments and charges due, except those being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been set aside.  There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the Borrowers know of no basis for any such claim.

SECTION 4.10.  No Event of Default.  No Default or Event of Default has occurred
and is continuing.

SECTION 4.11.  Holding Company and Investment Company
Acts.  None of the Borrowers or any
of their Subsidiaries is a “holding company”, or a “subsidiary company” of a “holding
company”, or an “affiliate” of a “holding company”, as such terms are defined
in the Public Utility Holding Company Act of 2005; nor is it an “investment
company”, or an “affiliated company” or a “principal underwriter” of an “investment
company”, as such terms are defined in the Investment Company Act of 1940.

SECTION 4.12.  Disclosure.  Neither this Agreement, nor any of the other
Loan Documents, nor any other written information provided to the Lender by the
Borrowers or any of their Subsidiaries contains any untrue statement of a
material fact or, when taken as a whole, omits to state a material fact
necessary in order to make the statements herein or therein, when taken as a
whole, not misleading at the time made in light of the circumstances under
which such statements were made.  There
is no fact known to the Borrowers which materially adversely affects, or which
could reasonably be expected to materially adversely affect, the business,
assets, results of operations, financial condition or prospects of the
Borrowers and their

 

 

Subsidiaries taken
as a whole, exclusive of effects resulting from changes in general economic
conditions, legal standards or regulatory conditions.

SECTION 4.13.  Senior Loan Documents .  On the Closing Date, the Borrowers furnished
to the Lender true, complete and correct copies of the Senior Loan Documents
(including schedules, exhibits and annexes thereto).  The Senior Loan Documents have not
subsequently been amended, supplemented, or modified (other than the amendments,
if any, delivered to the Lender on or prior to the Closing Date) and constitute
the complete understanding among the parties thereto in respect of the matters
and transactions covered thereby.  The
representations and warranties of the Borrowers and their Affiliates contained
in the Senior Loan Documents were true and correct in all material respects
when made or deemed to be made.

SECTION 4.14.  Solvency.  Both before and after giving effect to this
Agreement, the other Loan Documents and the consummation of the transactions
contemplated by the Senior Credit Agreement, the Borrowers and their
Subsidiaries on a consolidated basis are Solvent.  As used herein, “Solvent” shall mean
that the Borrowers and their Subsidiaries have assets as a going concern having
a fair value in excess of their liabilities, have assets as a going concern
having a fair value in excess of the amount required to pay their liabilities
on existing indebtedness as such indebtedness becomes absolute and matured, and
has, and expects to continue to have, access to adequate capital for the
conduct of their businesses and the ability to pay their indebtedness from time
to time incurred in connection with the operation of their businesses as such
indebtedness matures.

ARTICLE V

Conditions Precedent

The agreement of the Lender to make the Loan on the Closing Date
is subject to the satisfaction of, or waiver by the Lender of, the following
conditions precedent concurrently with the closing of the transactions
hereunder:

SECTION 5.01.  Loan Documents.  Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to the
Lender.  The Lender shall have received a
fully executed copy of each such document.

SECTION 5.02.  Corporate Actions.  All action necessary for the valid execution,
delivery and performance by each of the Borrowers of this Agreement, the other
Loan Documents and the Senior Loan Documents to which each of them is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Lender shall have been provided to the Lender.

SECTION 5.03.  Opinion of Counsel.  The Lender shall have received a favorable
legal opinion addressed to the Lender, dated as of the Closing Date, in form
and substance satisfactory to the Lender, from Martin Dodd, general counsel to
the Borrowers.

 

 

SECTION 5.04.  Payment of Closing Fees and Expenses.  The Borrowers shall have paid to the Lender
all Closing Fees and expenses payable by the Borrowers hereunder.

SECTION 5.05.  No Material Adverse Change.  The Lender shall be satisfied that there
shall have occurred no material adverse change in the business, assets, results
of operations, financial condition or prospects of the Borrowers and their
Subsidiaries taken as a whole since May 31, 2006.

SECTION 5.06.  No Litigation.  Other than as set forth on Schedule 4.10 to
the Senior Credit Agreement, no litigation, inquiry, injunction or restraining
order shall be pending, entered or threatened that, in the reasonable opinion
of the Lender, could reasonably be expected to have a material adverse effect
on the transactions contemplated hereby, the business, assets, results of
operations, financial condition or prospects of the Borrowers and their
Subsidiaries, taken as a whole, the ability of the Borrowers or any of their
Subsidiaries to perform their obligations under the Loan Documents or the
rights and remedies of the Lender under the Loan Documents.

ARTICLE VI

Affirmative Covenants

Each Borrower covenants and agrees that, until payment in full of
all Obligations, such Borrower shall comply with all of the covenants contained
in this Article VI.

SECTION 6.01.  Corporate
Existence.  Each of the Borrowers
shall at all times preserve and maintain its existence, rights, franchises and
privileges, and shall at all times continue as going concerns in the business
which the Borrowers are presently conducting, other than pursuant to a merger
or consolidation (i) between Borrowers, (ii) between Subsidiaries of Borrowers
that are Inactive Subsidiaries (iii) between Subsidiaries of Borrowers that are
not Inactive Subsidiaries or (iv) between a Borrower and a Subsidiary that is
not an Inactive Subsidiary where the Borrower is the surviving Person.

SECTION 6.02.  Maintain
Insurance.  The Borrowers shall at
all times insure and keep insured in insurance companies reasonably acceptable
to the Lender, all insurable property owned by them which is of a character
usually insured by companies similarly situated and operating like properties,
against loss or damage from fire and such other hazards or risks as are
customarily insured against by companies similarly situated and operating like
properties; and shall similarly insure employers’, public and professional
liability risks.

SECTION 6.03.  Tax Liabilities.  The Borrowers shall at all times pay and
discharge all property and other taxes, assessments and governmental charges
upon, and all claims (including claims for labor, materials and supplies)
against the Borrowers or any of their properties, equipment or inventory,
before the same shall become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good faith by
appropriate proceedings.

 

 

SECTION 6.04.  Notice of
Proceedings.  The Borrowers shall,
immediately after knowledge thereof shall have come to the attention of the
general counsel of any Borrower, give written notice to the Lender of all
threatened or pending actions, suits, and proceedings before any court or
governmental department, commission, board or other administrative agency which
would reasonably be expected to have a Materially Adverse Effect.

SECTION 6.05.  Notice of
Default.  The Borrowers shall,
immediately after the commencement thereof, give notice to the Lender in
writing of the occurrence of an Event of Default or of any event which, with
the lapse of time, the giving of notice or both, would constitute an Event of
Default hereunder.

SECTION 6.06.  Compliance with
Laws.  The Borrowers shall comply
with the requirements of all applicable laws, rules, regulations, and orders of
any Governmental Authority, other than laws, rules, regulations and orders the
non-compliance with which, individually or in the aggregate, would not reasonably
be expected to result in a Material Adverse Change.

SECTION 6.07.  Formation of
Subsidiaries and Inactive Subsidiaries. 
At the time that any Borrower forms any direct or indirect Subsidiary,
acquires any direct or indirect Subsidiary or reactivates an Inactive
Subsidiary after the Closing Date, such Borrower shall cause such new or
reactivated Subsidiary to provide to the Lender a joinder to this Agreement and
the Intercompany Subordination Agreement, together with such other documents
all in form and substance satisfactory to the Lender.  Any document, agreement, or instrument
executed or issued pursuant to this Section 6.07 shall be a Loan Document.

ARTICLE VII

Negative Covenants

Each Borrower
covenants and agrees that, until payment in full of all Obligations, such
Borrower shall comply with all covenants contained in this Article VII.

SECTION 7.01.  Indebtedness.  Each of the Borrowers shall not, either
directly or indirectly, create, assume, incur or have outstanding any
Indebtedness, or become liable, whether as endorser, guarantor, surety or
otherwise, for any debt or obligation of any other Person, except:

(a)           the Senior Indebtedness;

(b)           the Obligations;

(c)           Indebtedness set forth on Schedule
4.19 of the Senior Credit Agreement and any Refinancing Indebtedness in respect
of such Indebtedness;

(d)           Permitted Purchase Money Indebtedness
and any Refinancing Indebtedness in respect of such Indebtedness;

 

 

(e)           endorsement for
collection or deposit of instruments or other payment items for deposit and any
commercial paper secured in the ordinary course of business;

(f)            obligations of the
Borrowers and their Subsidiaries for taxes, assessments, municipal or other
governmental charges;

(g)           Indebtedness
composing Permitted Investments; and

(h)           obligations of the
Borrowers and their Subsidiaries for accounts payable, other than for money
borrowed, incurred in the ordinary course of business.

SECTION 7.02. 
Encumbrances.  The
Borrowers and their Subsidiaries shall not, either directly or indirectly,
create, assume, incur or suffer or permit to exist any Lien or charge of any
kind or character upon any asset of any Borrower or Subsidiary, whether owned
at the date hereof or hereafter acquired, except:

(a)           Liens for taxes,
assessments or other governmental charges or levies not yet delinquent, do not
have priority over the Agent’s Liens or which are being contested in good faith
by appropriate proceedings in such a manner as not to make the property
forfeitable;

(b)           judgment Liens that
do not constitute an Event of Default under Section 7.7 of the Senior Credit
Agreement;

(c)           Liens set forth on
Schedule P-2 to the Senior Credit Agreement, provided that any such lien only
secures the Indebtedness that it secures on the Closing Date and any
Refinancing Indebtedness in respect thereof;

(d)           Liens or charges
incidental to the conduct of its business or the ownership of its property and
assets which were not incurred in connection with the borrowing of money or the
obtaining of an advance or credit, and which do not in the aggregate materially
detract from the value of its property or assets or materially impair the use
thereof in the operation of its business;

(e)           Liens arising out of
judgments or awards against any Borrower or Subsidiary with respect to which it
shall concurrently therewith be prosecuting a timely appeal or proceeding for
review and with respect to which it shall have secured a stay of execution
pending such appeal or proceedings for review;

(f)            pledges or deposits
to secure obligations under worker’s compensation laws or similar legislation;

(g)           good faith deposits
in connection with contracts or leases to which Borrower is a party;

(h)           deposits to secure
public or statutory obligations of any Borrower or Subsidiary;

 

 

(i)            Liens pursuant to
the Senior Loan Documents in favor of the Agent and the Senior Lender to secure
the Senior Indebtedness.

(j)            the interests of
lessor under operating leases;

(k)           purchase money Liens
or the interests of lessor under Capital Leases to the extent that such Liens
or interest secure Permitted Purchase Money Indebtedness and so long as (i)
such Lien attaches only to the asset purchased or acquired and the proceeds
thereof, and (ii) such Lien only secures the Indebtedness that was incurred to
acquire the asset purchased or acquired or any Refinancing Indebtedness in
respect thereof;

(l)            Liens arising by
operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, incurred in the ordinary course of
business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) which are being contested
in good faith by appropriate proceedings in such a manner as not to make the
property forfeitable;

(m)          Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business;

(n)           with respect to any
Real Property, easements, rights of way and zoning restrictions that do not
materially interfere with or impair the use or operation thereof; and

(o)           rights of setoff or
bankers’ liens in favor of banks or other depositary institutions arising in
the ordinary course of business.

SECTION 7.03. 
Distributions.  Other than
Distributions by a Borrower to another Borrower, the Borrowers shall not make
any Distribution.

SECTION 7.04. 
Use of Proceeds.  None of
the Borrowers or any of their Subsidiaries or Affiliates shall use any portion
of the proceeds of the Loan, either directly or indirectly, for any other
purpose other than as set forth in Section 3.05.

ARTICLE VIII

Subordination

SECTION 8.01. 
Subordination to Senior Indebtedness.  Notwithstanding anything to the contrary
contained herein, (a) to the extent and in the manner set forth in the
Subordination Agreement, the Indebtedness incurred in connection with the Loan
and represented by the Note and the payment of the principal or interest
(including, without limitation, any interest accruing subsequent to the
commencement of any proceeding against or with respect to the Borrowers in
insolvency, bankruptcy, receivership, reorganization, dissolution, assignment
for the benefit of creditors or other similar case or proceeding whether or not
such interest constitutes an allowed claim in any such proceeding) and premium,
if any, on the Loan and all other Indebtedness, obligations and liabilities,
now existing or hereafter created, arising under or in connection with this
Agreement or the Note, including without limitation, all 

 

 

expenses, fees, indemnities, interest and
other amounts payable hereunder or thereunder are expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior
Indebtedness and (b) to the extent of any inconsistency between the terms of
this Agreement and the terms of the Subordination Agreement, the terms of the
Subordination Agreement shall govern and control and shall be deemed to
supersede the applicable inconsistent provisions of this Agreement.

ARTICLE IX

Events of Default

SECTION 9.01.  Events of Default.  The occurrence of any of the following events
shall constitute an Event of Default hereunder:

(a)           Nonpayment
of Obligations.  Any principal amount
due and owing on the Note is not paid when due or any amount due and owing on
any of the Obligations, whether by its terms or as otherwise provided herein,
is not paid within three (3) Business Days of the date when such amount is due.

(b)           Misrepresentation.  Any representation or warranty in this
Agreement, the other Loan Documents or any other agreement with the Lender
shall be false in any material respect when made.

(c)           Nonperformance.  Any failure to perform or default in the
performance of any covenant, condition or agreement contained in this Agreement
and such failure to perform or default in performance continues for a period of
thirty (30) days after the Borrowers receive notice or knowledge from any
source of such failure to perform or default in performance, or in the other
Loan Documents with the Lender and such failure to perform or default in
performance continues beyond any applicable grace or cure period.

(d)           Default
under Loan Documents.  A default
under any of the other Loan Documents and such failure to perform or default in
performance continues for a period of thirty (30) days after the Borrowers
receive notice or knowledge from any source of such failure to perform or
default in performance, all of which covenants, conditions and agreements
contained therein are hereby incorporated in this Agreement by express
reference, shall be and constitute an Event of Default under this Agreement and
any other of the Obligations.

(e)           Default
under Other Agreements.  Any (i)
default in the payment of principal, interest or any other sum for any other
obligation (other than the Senior Indebtedness) beyond any period of grace
provided with respect thereto or in the performance of any other term,
condition or covenant contained in any agreement (including, but not limited to
any capital or operating lease or any agreement in connection with the deferred
purchase price of property) evidencing or relating to Indebtedness with an
outstanding principal balance of Two Hundred Fifty Thousand Dollars ($250,000)
or more, the effect of which default is to cause or permit the holder of such
obligation (or the other party to such other agreement) to cause such
obligation to become due prior to its stated maturity or terminate such other
agreement or (ii) any default in 

 

 

the payment of principal, interest or any other sum
for any Senior Indebtedness or in the performance of any other term, condition
or covenant contained in the Senior Credit Agreement which results in the
Senior Indebtedness becoming due prior to its stated maturity.

(f)            Assignment
for Creditors.  Any Borrower makes an
assignment for the benefit of creditors, fails to pay, or admits in writing its
inability to pay its debts as they mature; or if a trustee of any substantial
part of the assets of any Borrower is applied for or appointed, and in the case
of such trustee being appointed in a proceeding brought against such Borrower,
the Borrower, by any action or failure to act indicates its approval of,
consent to, or acquiescence in such appointment or such appointment is not
vacated, stayed on appeal or otherwise shall not have ceased to continue in
effect within sixty (60) days after the date of such appointment.

(g)           Bankruptcy.  Any proceeding involving any Borrower, is
commenced by or against such Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law
or statute of the federal government or any state government, and in the case
of any such proceeding being instituted against such Borrower, (i) such
Borrower, by any action or failure to act indicates its approval of, consent to
or acquiescence therein, or (ii) an order shall be entered approving the
petition in such proceedings and such order is not vacated, stayed on appeal or
otherwise shall not have ceased to continue in effect within sixty (60) days
after the entry thereof.

(h)           Change
in Control.  A Change in Control
occurs.

SECTION 9.02.  Remedies.  Upon the occurrence of an Event of Default,
subject to the terms of Article VIII, the Lender may by written notice to the
Borrowers and the Senior Lender declare the Loan (with accrued interest
thereon) and all other amounts owing to the Lender under this Agreement and the
Note to be due and payable forthwith, whereupon the same shall immediately
become due and payable, and may exercise its remedies under the applicable
law.  Except as expressly provided above
in this Article IX, presentment, demand, protest and all other notices of any
kind are hereby expressly waived to the extent permitted by law.

ARTICLE X

Miscellaneous

SECTION
10.01.  Notices. 
All notices, consents, requests and demands to or upon the respective
parties hereto to be effective shall be in writing or by telecopy and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand or by overnight courier, or when deposited in the
mail, certified mail, return receipt requested, postage prepaid, three (3) days
after being so deposited or, in the case of telecopy notice, when sent,
addressed as follows to the Borrowers and to the Lender at their respective
address (or telecopy number) set forth herein, or to such address or other
address as may be hereafter notified in writing by any of the respective
parties hereto or any future holders of the Note:

 

 

If to
the Borrowers, to:

TRC Companies, Inc.

21 Griffin Road North

Windsor, Connecticut  06095

Attention:  Martin Dodd

Fax:  (860) 298-6323

with a
copy to:

Paul, Hastings, Janofsky
& Walker LLP

1055 Washington Boulevard

Stamford, Connecticut  06901

Attention:  Christopher H. Craig, Esq.

Fax:  (203) 359-3031

If to
Lender, to:

Federal Partners, L.P.

c/o Ninth Floor Corporation

One Rockefeller Plaza

New York, NY  

Attention:  Stephen M. Duff

Fax:  (212) 977-3425

With a
copy to:

Patterson Belknap Webb
& Tyler LLP

1133 Avenue of the Americas

New York, New York  10036-6710

Attention:  Jeffrey E. LaGueux, Esq.

Fax:  (212) 336-2222

SECTION
10.02.  Amendment and Waiver; Cumulative
Remedies.  No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrowers therefrom, shall be effective unless
the same shall be in writing and signed by the Lender and the Borrowers, and then such waiver shall be
effective only in the specific instance and for the specific purpose for which
given.  No failure to exercise and no delay in exercising, on the part of
any of the parties hereto or any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

SECTION 10.03.  Survival of Representations and Warranties.  All representations and warranties made
hereunder and in any document, certificate or statement 

 

 

delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the Note, and shall terminate when all amounts outstanding
under the Note and all other amounts payable hereunder have been paid in full; provided, that, obligations
in respect of indemnifications hereunder shall survive the repayment of amounts
outstanding hereunder and under the Note for one (1) year.

SECTION 10.04.  Payment of Expenses and Taxes;
Indemnification.  The Borrowers,
jointly and severally, agree (a) to pay or reimburse the Lender for all
its reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, execution and delivery of, and any amendment, supplement, waiver
or modification to, this Agreement, the Note, the other Loan Documents and any
documents prepared in connection herewith or therewith (other than at the
request of the Lender), and the consummation of the transactions and to pay or
reimburse the Lender for all of its reasonable out-of-pocket costs and expenses
incurred in connection with the enforcement of any rights contemplated hereby
and by the Note, the other Loan Documents and any documents prepared in
connection therewith, (b) to pay, indemnify, and to hold the Lender
harmless from, any and all reasonable recording and filing fees and any and all
reasonable liabilities with respect to, or resulting from any delay by the
Borrowers in paying, stamp, excise and other similar taxes other than taxes
payable by withholding, if any, if legal, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation of
any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Note, and the other Loan Documents, and (c) to pay,
indemnify, and hold the Lender harmless from and against any and all other
reasonable liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Agreement, the Note and the other Loan Documents
(all of the foregoing, collectively, the “indemnified liabilities”); provided,
that, the Borrowers shall have no obligation hereunder with respect to
indemnified liabilities to the extent such indemnified liabilities arise from
the gross negligence or willful misconduct of the Lender.  A Person seeking to be indemnified under this
Section 10.04 shall notify the Borrowers of any event requiring indemnification
within ten (10) Business Days following such Person’s receipt of notice of
commencement of any action or proceeding, or such Person’s obtaining knowledge
of the occurrence of any other event, giving rise to a claim for
indemnification hereunder; provided, that, failure to deliver
such notice shall not impair or limit the indemnification obligations of the
Borrowers except to the extent of actual prejudice.  The Borrowers will be entitled (but  not obligated) to assume the defense or
settlement of any such action or proceeding or to participate in any
negotiations to settle or otherwise resolve any claim using counsel of their
choice reasonably acceptable to the Person to be indemnified.  If the Borrowers elect to assume the defense
or settlement of any such action or proceeding, the Person to be indemnified
(and its counsel) may continue to participate at its own expense in such action
or proceeding.  The agreements in this
subsection shall survive repayment of the Note and all other amounts
payable hereunder for one (1) year.

SECTION 10.05.  Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Lender, and their respective
successors and assigns, except that the Borrowers may not assign or transfer
any of their rights or obligations under this Agreement without the prior
written consent of the Lender.

 

 

SECTION 10.06.  Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

SECTION 10.07.  Counterparts.  This Agreement maybe executed by one or more
of the parties to this Agreement on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.  A set of the copies of
this Agreement signed by all the parties shall be delivered to and held by the
Lender and the Borrowers.

SECTION 10.08.  SUBMISSION TO JURISDICTION; WAIVERS.  EACH BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

(i)            SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH IT
IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NONEXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(ii)           CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES TRIAL BY JURY AND ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN
AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(iii)          AGREES THAT SERVICE OF PROCESS IN ANY
SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO IT AT ITS REGISTERED AGENT IN ITS STATE OF INCORPORATION OR
AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED BY THE
BORROWER; AND

(iv)          AGREES THAT NOTHING HEREIN SHALL
AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

SECTION 10.09.  GOVERNING LAW.  This Agreement and the Note and the rights
and obligations of the parties under this Agreement and the Note shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York.

SECTION 10.10.  Third Party Rights.  This Agreement is solely for the benefit of
the parties hereto and, where applicable, the Senior Lender and its respective
successors and 

 

 

assigns as permitted
hereunder, and no other Person shall have any right, benefit, priority or
interest under, or because of the existence of, this Agreement.  The Senior Lender and its respective
successors and assigns are intended third party beneficiaries of
Section 3.02 (to the extent of any limitation requiring the irrevocable
payment in full in cash of the Senior Indebtedness prior to any prepayments of
the Loan) and Article VIII of this Agreement and may enforce their rights with
respect thereto directly against the parties hereto.

SECTION 10.11.  Entire Agreement.  This Agreement, together with the other
documents and agreements referenced herein to be executed by the parties in
connection herewith or that otherwise are executed by the parties concurrently
herewith, constitutes the entire agreement of the parties with respect to the
subject matter hereof, and supersedes any prior agreements or understandings,
whether written or oral.

 [Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.

	
  

  	
  FEDERAL PARTNERS, L.P., 

  By Ninth Floor Corporation, its Manager 

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Stephen M. Duff

  
	
   

  	
  Name:

  	
  Stephen M. Duff

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC COMPANIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name:

  	
  Martin H. Dodd

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC ENVIRONMENTAL

  CORPORATION, 

  a Connecticut corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name:

  	
  Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC ENGINEERS, INC.,

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name:

  	
  Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  

 

 

 

	
  

  	
   

  	
   

  
	
   

  	
  TRC OMNI ENVIRONMENTAL

  CORPORATION,

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name:

  	
  Martin H. Dodd

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  ECON CAPITAL, LP,

  a Texas limited partnership, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC MARIAH ASSOCIATES, INC.,

  a Wyoming corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC GARROW ASSOCIATES, INC.,

  a Georgia corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  NOVAK ENGINEERING, INC.,

  a Michigan corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  

 

 

 

	
  

  	
  SITE-BLAUVELT ENGINEERS, INC. (VA),

  a Virginia corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SITE-BLAUVELT ENGINEERS, INC. (NJ),

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd 

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SITE CONSTRUCTION SERVICES, INC.,

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SITE-BLAUVELT ENGINEERS, INC. (NY),

  a New York corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS, INC.,

  an Arizona corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  

 

 

 

	
  

  	
  ENVIRONOMICS SOUTHWEST, L.L.C.,

  an Arizona limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS WEST, L.L.C.,

  an Arizona limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  ENVIRONOMICS TX, L.L.C.,

  an Arizona limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  WILLIS ENGINEERING INC.,

  a Louisiana corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  VPOINT,

  a Nevada corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  

 

 

 

	
  

  	
  TRC RAVIV ASSOCIATES, INC.,

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  BV ENGINEERING,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC SOLUTIONS, INC.,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  TRC LOWNEY,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  IMBSEN & ASSOCIATES,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  

 

 

 

	
  

  	
   

  	
   

  
	
   

  	
  TRC ENGINEERED AUTOMATION SYSTEMS,
  INCORPORATED,

  a California corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  ESSEX ENVIRONMENTAL, INC.,

  a California corporation , as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  VECTRE CORP.,

  a New Jersey corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  E/PRO ENGINEERING AND ENVIRONMENTAL
  CONSULTING LLC,

  a Maine limited liability company, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SGS WITTER, INC.,

  a New Mexico corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  
	
   

  	
   

  	
   

  

 

 

 

	
  

  	
   

  	
   

  
	
   

  	
  CUBIX CORPORATION,

  a Texas corporation, as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name: 

  	
  Martin H. Dodd

  
	
   

  	
  Title:   

  	
  Secretary

  

 

EXHIBITS

A             Form of NoteExhibit 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, 

 2
 

 

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 

 3
 

 

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.

 4
 

 

 

(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.

 5
 

 

 

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

 

 6

 

 

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 

 7
 

 

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.

 8
 

 

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]