TO BUYER IN SUCH NUMBER AS IS CALCULATED IN
ACCORDANCE WITH SECTION 2.3(B) AND THE CONSIDERATION SHALL BE ADJUSTED DOWNWARDS
ACCORDINGLY IN THE EVENT THAT THE COMPANY FAILS TO EARN AN AGGREGATE PRE-TAX
INCOME OF AT LEAST $1,000,000 (THE "EARNINGS THRESHOLD") IN ANY FOUR QUARTER
PERIOD, AS DETERMINED BY AN AUDIT OR REVIEW OF THE COMPANY CONDUCTED BY THE THK
ACCOUNTANTS AT THE END OF EACH FOUR QUARTER PERIOD (THE "AUDITED FOUR QUARTER
PERIOD EARNINGS").
(B)
IF THE COMPANY FAILS TO EARN AT LEAST THE EARNINGS THRESHOLD IN
ANY FOUR QUARTER PERIOD THEN THE SELLER WILL FORFEIT AND RETURN TO BUYER IN
ACCORDANCE WITH THE ESCROW AGREEMENT SUCH PERCENTAGE OF THE THK SHARES IN NUMBER
AS IS EQUAL TO THE PERCENTAGE SHORTFALL BETWEEN THE HIGHEST AUDITED FOUR QUARTER
PERIOD EARNINGS EARNED DURING THE FIRST TWELVE QUARTERS AND THE EARNINGS
THRESHOLD, (THE "CLAWBACK CONSIDERATION"), REGARDLESS OF WHAT THE MARKET VALUE
OF THE THK SHARES IS AT SUCH POINT IN TIME. AS AN EXAMPLE ONLY IF THE COMPANY'S
HIGHEST AUDITED FOUR QUARTER PERIOD EARNINGS DURING THE FIRST TWELVE QUARTERS IS
$700,000, THEN THE SHORTFALL BETWEEN THIS AMOUNT AND THE EARNINGS THRESHOLD IS
$30,000 MAKING THE PERCENTAGE SHORTFALL BETWEEN THESE TWO FIGURES 30%. THE
NUMBER OF THK SHARES TO BE FORFEITED AND RETURNED BY THE SELLER TO THE BUYER
WILL THEREFORE BE 30% OF THE TOTAL NUMBER OF THK SHARES ALLOCATED TO SELLER AS
PART OF THE SHARES CONSIDERATION.
(C)
THE AUDITS OR REVIEWS CARRIED OUT TO PRODUCE THE AUDITED FOUR
QUARTER PERIOD EARNINGS FOR EACH FOUR QUARTER PERIOD AS REFERRED TO IN SECTION
2.3 SHALL BE CONDUCTED BY THK ACCOUNTANTS AND THE RESULTS OF SUCH AUDITS OR
REVIEWS (TOGETHER WITH FULL ACCESS TO WORKING PAPERS OF THE AUDITS OR REVIEWS)
SHALL BE PROVIDED TO THE SELLER WITHIN FIVE DAYS OF RECEIPT OF THE SAME BY THE
BUYER. THK SHALL INSTRUCT THE THK ACCOUNTANTS TO COMPLETE THE AUDITS OR REVIEWS
AS SOON AS REASONABLY PRACTICABLE AND IN ANY EVENT TO ENDEAVOUR IF POSSIBLE TO
COMPLETE THE AUDITS OR REVIEWS WITHIN 3 MONTHS OF THE END OF EACH FOUR QUARTER
PERIOD.
2.4
Escrow Agreement. At the Closing, the Shares Consideration shall
be transferred by THK to Gerard M. Jacobs, as escrow agent (the "Escrow Agent"),
for the purpose of securing the Seller's obligations in Section 2.3 and the
forfeiture and return of the Clawback Consideration to THK in accordance with
Section 2.3. The Shares Consideration shall be held by the Escrow Agent pursuant
to the terms of an escrow agreement to be entered into among the Parties in the
Agreed Form (the "Escrow Agreement"). Any interest or dividends earned on the
Shares Consideration shall be disbursed to the Seller in accordance with the
terms of the Escrow Agreement. The Shares Consideration shall serve as the
initial source until exhausted, but not the only source, for the satisfaction of
the obligations of the Seller arising under Section 2.3.
ARTICLE III
RESTRICTIONS ON TRANSFER: REGISTRATION
3.1
Restrictions on Transfer. All certificates representing THK Common
Stock issued