What is the adjective clause in the sentence - terry. still carries the knife that his dad gave him.

That his dad gave him is the adjective clause in the sentence.

Adjective clauses all modify nouns, and usually come after the noun they modify.

In this case, that his dad gave him is modifying the knife.

Random note, adjective clauses usually start with words like that, which, who, and other pronouns like that, and it will also have a subject and a verb.

Source: Really great Language Arts teacher

The adjective clause is " that his dad gave him "

it is describing the knife ... which knife? the one that his dad gave him