<PAGE>
Securities and Exchange Commission
Washington, DC 20549
-----------------------------------
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 30, 1997
TRC COMPANIES, INC.
-------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9947 06-0853807
- ------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5 Waterside Crossing, Windsor, CT 06095
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (860) 289-8631
--------------
<PAGE>
Item 5. Other Events
Special Committee Report:
The Special Committee of outside board members of TRC, created by the Board of
Directors on March 28, 1997, has completed its investigation. As the Company
has previously reported, the Special Committee has been formed by the Board to
investigate the exercise by the Company's former CEO and chairman, Vincent A.
Rocco, and president, Bruce D. Cowen, of stock options in excess of those the
Board had authorized, as well as other matters. The Special Committee conducted
its investigation with the assistance of outside counsel and accountants who had
no prior affiliation with the Company, and also consulted with the Company's
outside auditors. The investigation revealed no circumstances that had any
material adverse effect on the Company's historical audited financial
statements.
TRC has entered into agreements with Messrs. Rocco and Cowen under which they
have agreed to reimburse the company fully for the Company's damages related to
their exercise of excess stock options and their travel and entertainment
expenses in excess of Company policy. Messrs. Rocco and Cowen have agreed to
pay such damages to the Company during the current fiscal quarter, unless the
parties are unable to agree upon the amounts at issue. Should that be the case,
the amounts will be determined by arbitration.
With respect to other matters reviewed, the Special Committee concluded that
changes were warranted in the reporting of some information in certain of the
Company's public reports, but none affect in any way the accuracy of the
Company's financial statements or its reported results. One was the Company's
description of its net contract backlog at year-end 1996 as $70 million. It
appears that the backlog amount reported by the Company in 1996 and prior years
included in part a measure of backlog the Company uses for internal business
purposes, which reflects not only the net amount of orders believed to be firm,
which at year-end 1996 was approximately $36 million, but also the amount of
additional orders that management estimates, based on historical experience,
will be received in the coming fiscal year in connection with existing contracts
and from proposals already made by the Company. Other examples were an
overstatement of the number of the Company's Fortune 500 customers, and of the
contribution to revenue in one recent quarter of work performed under Master
Service Agreements.
Item 7. Exhibits
99.1 Termination Agreement, dated April 1, 1997, between TRC Companies,
Inc. and Vincent A. Rocco
99.2 Termination Agreement, dated April 1, 1997, between TRC Companies,
Inc. and Bruce D. Cowen
2
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRC COMPANIES, INC.
Date: June 9, 1997 By: /s/ Martin H. Dodd
----------------------------------
Martin H. Dodd
Senior Vice President,
General Counsel and Secretary
3
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TRC Companies, Inc.
Form 8-K Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<C> <S>
99.1 Termination agreement dated April 1, 1997, between
TRC Companies, Inc. and Vincent A. Rocco
99.2 Termination agreement dated April 1, 1997, between
TRC Companies, Inc. and Bruce D. Cowen
</TABLE>
4
<PAGE>
EXHIBIT 99.1
Termination agreement, dated April 1, 1997, between
TRC Companies, Inc. and Vincent A. Rocco
5
<PAGE>
Termination Agreement
This Agreement ("Agreement") is made this 1st day of April, 1997 between
TRC Companies, Inc. ("TRC") and Vincent A. Rocco ("Rocco").
WHEREAS the Board of Directors of TRC ("Board") established, with Rocco's
approval, a Special Committee of the Board to investigate certain allegations
concerning Rocco, the chief executive officer and chairman of the Board, and
Bruce D. Cowen ("Cowen"), the president of TRC and a member of the Board, as
described in Exhibit A to the resolutions of the Board adopted at its meeting
held March 29, 1997; and
WHEREAS Rocco pledged his full cooperation with the Special Committee's
investigation; and
WHEREAS Rocco has agreed that he obtained stock options from TRC in excess
of the quantity of such options authorized to be granted to him by the Board of
directors ("Excess Options"), and such conduct is one of the subjects of the
Special Committee's investigation; and
WHEREAS it appears that Rocco obtained warrants of TRC issued in connection
with TRC's acquisition of Environmental Solutions, Inc. ("ESI Warrants") without
the authorization of the Board, and has not exercised any of such warrants; and
WHEREAS Rocco has resigned as Chairman of the Board and chief executive
officer of TRC, and of all other positions and titles he holds with respect to
TRC and any subsidiary or affiliate of TRC, including without limitation The
Polish American Environmental Technology Corporation (PAKTO); and
WHEREAS Rocco wishes to make TRC whole for the financial consequences of
the conduct to which he has admitted, and otherwise to assist the interests of
TRC;
NOW, THEREFORE, TRC and Rocco hereby agree as follows:
1. In final settlement of TRC's claims against Rocco arising out of his
obtaining Excess Options and ESI Warrants, (a) Rocco shall pay to TRC within 35
days of the date of execution of this Agreement a sum ("Option Restitution
Sum"), to be mutually determined hereafter by TRC and Rocco, that is the amount
by which TRC was damaged by virtue of Rocco's exercise of Excess Options
("Damage Amount"), plus interest on the Damage Amount at a rate or rates per
annum paid or payable from time to time during the period by TRC on borrowings
from the Bank of Boston (the "Interest Rate") calculated from the date of each
exercise to the date of payment of the Option Restitution
6
<PAGE>
Sum; (b) Rocco shall immediately surrender to TRC the ESI Warrants, and such ESI
Warrants shall, effective immediately and without regard to the surrender
required by this Agreement, be canceled, null and void and of no further force
or effect; and (c) Rocco shall immediately surrender to TRC all outstanding TRC
stock options he now holds, whether or not they were granted to him pursuant to
authorization of the Board, and such stock options shall, effective immediately
and without regard to the surrender required by this Agreement, be canceled,
null and void and of no further force or effect.
2. In final settlement of TRC's claims against Rocco arising out of
obtaining reimbursement from TRC for travel and entertainment expenses in excess
of those reimbursements authorized by TRC's policy, Rocco shall pay to TRC
within 35 days of the execution of this Agreement a sum ("Expense Reimbursement
Sum") to be mutually determined hereafter by TRC and Rocco, that is the amount
of any travel and entertainment expenses incurred by Rocco and paid or
reimbursed by TRC since January 1, 1995 in violation of TRC's policy for the
payment of such expenses then in effect ("Inappropriate T & E Expense"), plus
interest at the Interest Rate on the Inappropriate T & E Expense calculated from
the date of each payment or reimbursement to the date of payment of the Expense
Reimbursement Sum.
3. If TRC and Rocco have not agreed on either the Option Restitution Sum or
the Expense Reimbursement Sum, or both, within 35 days of the date of execution
of this Agreement, then the Sum(s) as to which no agreement has been reached
shall be determined by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") as modified by the
provisions of this paragraph 3. Any such arbitration shall be conducted by a
single arbitrator, who shall be an accountant selected by agreement of both
parties. If the parties have been unable to agree upon an arbitrator who has
agreed to serve within 45 days of the receipt by one party from the other of
written notice of a dispute governed by this paragraph 3, the arbitrator shall
be selected in accordance with Rule 13 of the Commercial Arbitration Rules of
the AAA, provided that the AAA shall be instructed that the list of potential
arbitrators it submits shall be composed exclusively of accountants, and in the
event appointment cannot be made from the submitted lists in accordance with
Rule 13, the AAA shall appoint the arbitrator. The parties shall bear equally
the fees of the arbitrator and of the AAA. The arbitrator may proceed to
resolution notwithstanding the failure of a party to participate in the
proceedings, and shall structure the arbitration proceedings in a manner to
result in a final determination by the arbitrator no later than 90 days
following the appointment of the arbitrator. The arbitration shall take place
at a site mutually agreeable to the parties within New York City. If no
agreement has been reached on both the Option Restitution Sum and the Expense
Reimbursement Sum, a single arbitration shall determine both sums. A judgment
upon the award rendered in any arbitration shall be final and binding upon the
parties and may be entered in any court having jurisdiction thereof. If an
arbitration is to be conducted to resolve a dispute
7
<PAGE>
between TRC and Cowan concerning either an Option Reimbursement Sum and/or an
Expense Reimbursement Sum, such other dispute shall be arbitrated in the same
arbitration conducted pursuant to this Agreement, before the same arbitrator; in
that event Cowen and Rocco shall act jointly in the arbitrator selection
process. In the event one or both Sum(s) is determined by arbitration, the due
date shall be ten calendar days after the announcement of the determination by
the arbitrator.
4. To secure payment of the Option Restitution Sum and the Expense
Reimbursement Sum, Rocco shall deliver by 2:00 p.m. on April 4, 1997 to the law
offices of Day, Berry & Howard in Hartford, Connecticut, a letter of credit in
the amount of $900,000.00 from a bank and in a form acceptable to TRC of which
TRC is the beneficiary, providing that TRC shall draw on the letter of credit to
the extent necessary to obtain any and all payment due TRC from Rocco pursuant
to the Agreement by presenting a written certificate, signed by a member of the
Special Committee of the Board and countersigned by a member of the firm of
Cleary, Gottlieb, Steen & Hamilton, to the issuing bank stating that the date of
a payment under this Agreement has passed without payment being received by TRC
and specifying the amount then due to be paid immediately to TRC by the issuing
bank under the letter of credit (the "Letter of Credit"). TRC shall be entitled
to recover by judicial process from Rocco any deficiency in the value received
pursuant to the Letter of Credit to the full extent of the Option Restitution
Sum and the Expense Reimbursement Sum, and shall promptly consent to the
termination of the Letter of Credit and any balance remaining thereunder once
full payment of the Sum(s) due has been received by TRC.
5. Rocco shall immediately surrender to TRC all property of TRC that is in
his possession, including without limitation corporate credit cards, computer
equipment, telephones and pagers, automobile(s) and records and papers
pertaining to TRC's business. TRC shall immediately cease payments on all life
and other insurance policies in favor of Rocco or beneficiaries designated by
him, and shall not object or interfere with Rocco's or Rocco's beneficiaries'
assuming payments on such policies to the extent the policies so permit,
provided TRC shall maintain in force medical insurance to the extent required by
applicable law for the period provided by applicable law.
6. TRC shall pay to Rocco any unpaid salary and accrued vacation, not
including any incentive compensation, prorated to March 29, 1997. Rocco shall
make no claim against TRC for severance or other similar payment, and the
Severance Agreement between TRC and Rocco dated August 19, 1994 shall be of no
further force or effect, except for Sections 3.1 and 3.2 thereof, which shall
continue in effect pursuant to their terms.
8
<PAGE>
7. Rocco shall immediately pay to TRC $50,000.00 in immediately available
funds by wire transfer, to defray the costs of the investigation initiated and
directed by Messrs. McGuire and Turner concerning Rocco's conduct.
8. In the event that Rocco fails to deliver the Letter of Credit by the
time and at the place specified in paragraph 4 of this Agreement, then TRC may
by written notice to Rocco terminate this Agreement which shall immediately
become null and void, provided however that paragraphs I (b)-(c), 5, 6 and 7
shall remain in full force and effect.
9. Rocco shall cooperate with TRC with respect to providing such
information, documents or testimony as may be necessary and appropriate,
including without limitation making himself available upon reasonable notice for
interview by representatives of TRC and others at TRC's request, provided that
nothing herein shall limit Rocco's invocation of legal privileges otherwise
available to him. Rocco may be represented by counsel, at his own expense, with
respect to any interview or other cooperation requested by TRC pursuant to this
paragraph.
10. At TRC's request Rocco shall promptly execute all instruments,
consents, and waivers necessary to fulfill the terms and purposes of this
Agreement.
11. TRC is not by this Agreement releasing Rocco from any claims it now has
or may hereafter acquire against Rocco other than its claims to recover from
Rocco the Option Restitution Sum, the ESI Warrants and the Expense Reimbursement
Sum, as those terms are defined above.
12. This Agreement may not be modified except in a writing executed by the
parties hereto.
13. This Agreement shall be governed by the law of the State of Connecticut
without giving effect to the choice of law provisions thereof.
9
<PAGE>
14. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns, provided, however,
that no party hereto may assign any of its rights or obligations under this
Agreement without the prior written consent of the other party.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date written above.
TRC Companies, Inc.
By: /s/ Edward W. Large
----------------------------------
Edward W. Large, director
/s/ Vincent A. Rocco
-------------------------------------
Vincent A. Rocco
10
<PAGE>
EXHIBIT 99.2
Termination agreement, dated April 1, 1997, between
TRC Companies, Inc. and Bruce D. Cowen
11
<PAGE>
Termination Agreement
This Agreement ("Agreement") is made this 1st day of April, 1997 between
TRC Companies, Inc. ("TRC") and Bruce D. Cowen ("Cowen").
WHEREAS the Board of Directors of TRC ("Board") established, with Cowen's
approval, a Special Committee of the Board to investigate certain allegations
concerning Cowen, the president of TRC and a member of the Board, and Vincent A.
Rocco ("Rocco"), TRC's chief executive officer and chairman of the Board, as
described in Exhibit A to the resolutions of the Board adopted at its meeting
held March 29, 1997; and
WHEREAS Cowen pledged his full cooperation with the Special Committee's
investigation; and
WHEREAS Cowen has agreed that he obtained stock options from TRC in excess
of the quantity of such options authorized to be granted to him by the Board of
Directors ("Excess Options"), and such conduct is one of the subjects of the
Special Committee's investigation; and
WHEREAS it appears that Cowen obtained warrants of TRC issued in connection
with TRC's acquisition of Environmental Solutions, Inc. ("ESI Warrants") without
the authorization of the Board, and has not exercised any of such warrants; and
WHEREAS Cowen has resigned as president and a member of the board of TRC,
and of all other positions and titles he holds with respect to TRC and any
subsidiary or affiliate of TRC, including without limitation The Polish American
Environmental Technology Corporation (PAKTO); and
WHEREAS Cowen wishes to make TRC whole for the financial consequences of
the conduct to which he has admitted, and otherwise to assist the interests of
TRC;
NOW, THEREFORE, TRC and Cowen hereby agree as follows:
1. In final settlement of TRC's claims against Cowen arising out of his
obtaining Excess Options and ESI Warrants, (a) Cowen shall pay to TRC within 35
days of the date of execution of this Agreement a sum ("Option Restitution
Sum"), to be mutually determined hereafter by TRC and Cowen, that is the amount
by which TRC was damaged by virtue of Cowen's exercise of Excess Options
("Damage Amount"), plus interest on the Damage Amount at a rate or rates per
annum paid or payable from time to time during the period by TRC on borrowings
from the Bank of Boston (the "Interest Rate") calculated from the date of each
exercise to the date of payment of the Option
12
<PAGE>
Restitution Sum; (b) Cowen shall immediately surrender to TRC the ESI Warrants,
and such ESI Warrants shall, effective immediately and without regard to the
surrender required by this Agreement, be canceled, null and void and of no
further force or effect; and (c) Cowen shall immediately surrender to TRC all
outstanding TRC stock options he now holds, whether or not they were granted to
him pursuant to authorization of the Board, and such stock options shall,
effective immediately and without regard to the surrender required by this
Agreement, be canceled, null and void and of no further force or effect.
2. In final settlement of TRC's claims against Cowen arising out of
obtaining reimbursement from TRC for travel and entertainment expenses in excess
of those reimbursements authorized by TRC's policy, Cowen shall pay to TRC
within 35 days of the execution of this Agreement a sum ("Expense Reimbursement
Sum") to be mutually determined hereafter by TRC and Cowen, that is the amount
of any travel and entertainment expenses incurred by Cowen and paid or
reimbursed by TRC since January 1, 1995 in violation of TRC's policy for the
payment of such expenses then in effect ("Inappropriate T & E Expense"), plus
interest at the Interest Rate on the Inappropriate T & E Expense calculated from
the date of each payment or reimbursement to the date of payment of the Expense
Reimbursement Sum.
3. If TRC and Cowen have not agreed on either the Option Restitution Sum or
the Expense Reimbursement Sum, or both, within 35 days of the date of execution
of this Agreement, then the Sum(s) as to which no agreement has been reached
shall be determined by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") as modified by the
provisions of this paragraph 3. Any such arbitration shall be conducted by a
single arbitrator, who shall be an accountant selected by agreement of both
parties. If the parties have been unable to agree upon an arbitrator who has
agreed to serve within 45 days of the receipt by one party from the other of
written notice of a dispute governed by this paragraph 3, the arbitrator shall
be selected in accordance with Rule 13 of the Commercial Arbitration Rules of
the AAA, provided that the AAA shall be instructed that the list of potential
arbitrators it submits shall be composed exclusively of accountants, and in the
event appointment cannot be made from the submitted lists in accordance with
Rule 13, the AAA shall appoint the arbitrator. The parties shall bear equally
the fees of the arbitrator and of the AAA. The arbitrator may proceed to
resolution notwithstanding the failure of a party to participate in the
proceedings, and shall structure the arbitration proceedings in a manner to
result in a final determination by the arbitrator no later than 90 days
following the appointment of the arbitrator. The arbitration shall take place
at a site mutually agreeable to the parties within New York City. If no
agreement has been reached on both the Option Restitution Sum and the Expense
Reimbursement Sum, a single arbitration shall determine both sums. A judgment
upon the award rendered in any arbitration shall be final and binding upon the
parties and may be entered in any court
13
<PAGE>
having jurisdiction thereof. If an arbitration is to be conducted to resolve a
dispute between TRC and Rocco concerning either an Option Restitution Sum and/or
an Expense Reimbursement Sum, such other dispute shall be arbitrated in the same
arbitration conducted pursuant to this Agreement, before the same arbitrator; in
that event Cowen and Rocco shall act jointly in the arbitrator selection
process. In the event one or both Sum(s) is determined by arbitration, the due
date shall be ten calendar days after the announcement of the determination by
the arbitrator.
4. To secure payment of the Option Restitution Sum and the Expense
Reimbursement Sum, Cowen shall deliver by 2:00 p.m. on April 4, 1997 to the law
offices of Day, Berry & Howard in Hartford, Connecticut a letter of credit in
the amount of $900,000.00 from a bank and in a form acceptable to TRC of which
TRC is the beneficiary providing that TRC shall draw on the letter of credit to
the extent necessary to obtain any and all payment due TRC from Cowen pursuant
to the Agreement by presenting a written certificate, signed by a member of the
Special Committee of the Board and countersigned by a member of the firm of
Cleary, Gottlieb, Steen & Hamilton, to the issuing bank stating that the date of
a payment under this Agreement has passed without payment being received by TRC
and specifying the amount then due to be paid immediately to TRC by the issuing
bank under the letter of credit (the "Letter of Credit"). TRC shall be entitled
to recover by judicial process from Cowen any deficiency in the value received
pursuant to the Letter of Credit to the full extent of the Option Restitution
Sum and the Expense Reimbursement Sum, and shall promptly consent to the
termination of the Letter of Credit and any balance remaining thereunder once
full payment of the Sum(s) due has been received by TRC.
5. Cowen shall immediately surrender to TRC all property of TRC that is in
his possession, including without limitation corporate credit cards, computer
equipment, telephones and pagers, automobile(s) and records and papers
pertaining to TRC's business. TRC shall immediately cease payments on all life
and other insurance policies in favor of Cowen or beneficiaries designated by
him, and shall not object or interfere with Cowen's or Cowen's beneficiaries'
assuming payments on such policies to the extent the policies so permit,
provided TRC shall maintain in force medical insurance to the extent required by
applicable law for the period provided by applicable law.
6. TRC shall pay to Cowen any unpaid salary and accrued vacation, not
including any incentive compensation, prorated to March 29, 1997. Cowen shall
make no claim against TRC for severance or other similar payment, and the
Severance Agreement between TRC and Cowen dated August 19, 1994 shall be of no
further force or effect, except for Sections 3.1 and 3.2 thereof, which shall
continue in effect pursuant to their terms.
14
<PAGE>
7. Cowen shall immediately pay to TRC $50,000.00 in immediately available
funds by wire transfer, to defray the costs of the investigation initiated and
directed by Messrs. McGuire and Turner concerning Cowen's conduct.
8. In the event that Cowen fails to deliver the Letter of Credit by the
time and at the place specified in paragraph 4 of this Agreement, then TRC may
by written notice to Cowen terminate this Agreement which shall immediately
become null and void, provided however that paragraphs l(b)-(c), 5, 6 and 7
shall remain in full force and effect.
9. Cowen shall cooperate with TRC with respect to providing such
information, documents or testimony as may be necessary and appropriate,
including without limitation making himself available upon reasonable notice for
interview by representatives of TRC and others at TRC's request, provided that
nothing herein shall limit Cowen's invocation of legal privileges otherwise
available to him. Cowen may be represented by counsel, at his own expense, with
respect to any interview or other cooperation requested by TRC pursuant to this
paragraph.
10. At TRC's request Cowen shall promptly execute all instruments,
consents, and waivers necessary to fulfill the terms and purposes of this
Agreement.
11. TRC is not by this Agreement releasing Cowen from any claims it now has
or may hereafter acquire against Cowen other than its claims to recover from
Cowen the Option Restitution Sum, the ESI Warrants and the Expense Reimbursement
Sum, as those terms are defined above.
12. This Agreement may not be modified except in writing executed by the
parties hereto.
13. This Agreement shall be governed by the law of the State of
Connecticut, without giving effect to the choice of law provisions thereof.
15
<PAGE>
14. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns, provided, however,
that no party hereto may assign any of its rights or obligations under this
Agreement without the prior written consent of the other party.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date written above.
TRC Companies, Inc.
By: /s/ Edward W. Large
----------------------------
Edward W. Large, director
/s/ Bruce D. Cowen
-------------------------------
Bruce D. Cowen
16
