Problem solved after I've removed quote and equals sign in daemon options:
DAEMON_OPTS="--daemonize -s --pidfile=$PIDFILE --port=$PORT --basic-auth=\" Trac,/var/Trac/.htpasswd,\" $PROJECT_ENV"
became:
DAEMON_OPTS="--daemonize -s --pidfile=$PIDFILE --port=$PORT --basic-auth Trac,/var/Trac/.htpasswd, $PROJECT_ENV"