Document:

SUBSCRIPTION AGREEMENT

 

 

Loreto Resources Corporation

c/o Gottbetter & Partners,
LLP

488 Madison Avenue

12th Floor

New York, NY 10022

 

 

This Subscription Agreement
(this “Agreement”) has been executed by the subscriber set forth in the signature page attached hereto
(the “Subscriber”) in connection with the private placement offering (the “Offering”)
of up to $100,000 in principal amount of 10% eighteen (18) month convertible promissory notes (the “Notes”)
of Loreto Resources Corporation, a Nevada Corporation (the “Company”). This subscription is being submitted
to you in accordance with and subject to the terms and conditions described in this Agreement.

 

The Notes being subscribed
for pursuant to this Agreement, or the securities into which the Notes may be converted, have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”). The Offering is being made on a “best efforts”
basis to “accredited investors,” as defined in Regulation D under the Securities Act, and subscribers who are not ”U.S.
persons,” as defined in Regulation S under the Securities Act. The Company reserves the right, in its sole discretion and
for any reason, to reject any Subscriber’s subscription in whole or in part, or to allot less than the number of Notes subscribed
for.

 

The closing of the
Offering (the “Closing;” and the date on which such Closing occurs hereinafter referred to as the “Closing
Date”) shall be at the offices of Gottbetter & Partners, LLP, as escrow agent (the “Escrow Agent”),
at 488 Madison Avenue, New York, New York 10022 (or such other place as is mutually agreed to by the Company). The Company may
conduct multiple closings for the sale of the Notes until the termination of the Offering. The Offering shall continue until the
maximum amount of the Offering is reached or it is otherwise terminated by the Company.

 

1.         Subscription.
The undersigned Subscriber hereby subscribes to purchase the principal amount of Notes set forth on the signature page attached
hereto (the “Purchase Price”), subject to the terms and conditions of this Agreement and on the basis
of the representations, warranties, covenants and agreements contained herein.

 

2.         Subscription
Procedure. To complete a subscription for the Notes, the Subscriber must fully comply with the subscription procedure provided
in this Section on or before the Closing Date.

 

a.         Transaction
Documents. On or before the Closing Date, the Subscriber shall review, complete and execute the Signature Page to this Agreement,
the Anti-Money Laundering Investor Form (with attachments), the Investor Profile and the Investor Certification, attached hereto
as Appendix A (collectively, the “Transaction Documents”), and deliver the Transaction Documents
to the Escrow Agent. Executed documents may be delivered to the Escrow Agent by facsimile or electronic mail (e-mail), if the Subscriber
delivers the original copies of the documents to the Escrow Agent as soon as practicable thereafter.

 

    	1

    	 

    
 

 

b.         Purchase Price.
Simultaneously with the delivery of the Transaction Documents to the Escrow Agent as provided herein, and in any event on or prior
to the Closing Date, the Subscriber shall deliver to the Escrow Agent the full Purchase Price, by check or by wire transfer of
immediately available funds. In connection with this transaction, the Company shall pay to the Escrow Agent a fee of $250 (the
“Escrow Fee”) for services rendered by the Escrow Agent in such capacity hereunder.

 

c.         Company Discretion.
The Subscriber understands and agrees that the Company in its sole discretion reserves the right to accept or reject this or any
other subscription for Notes, in whole or in part, notwithstanding prior receipt by the Subscriber of notice of acceptance of this
subscription. The Company shall have no obligation hereunder until the Company shall execute and deliver to the Subscriber an executed
copy of this Agreement. If this subscription is rejected in whole, or the offering of Notes is terminated, all funds received from
the Subscriber will be returned without interest or offset, and this Agreement shall thereafter be of no further force or effect.
If this subscription is rejected in part, the funds for the rejected portion of this subscription will be returned without interest
or offset, and this Agreement will continue in full force and effect to the extent this subscription was accepted.

 

d.         No Trading.
The Subscriber represents and warrants to the Company that neither the Subscriber nor any of its affiliates has directly or indirectly
traded any securities of the Company, including without limitation, making any short sales or engaging in any hedging transaction
with respect to such securities (collectively, “Prohibited Transactions”), since becoming aware of the
Offering. Furthermore, Subscriber shall not engage in any Prohibited Transactions through the final Closing Date.

 

3.         Representations
and Warranties of the Company. The Company hereby represents and warrants to the Subscriber the following:

 

a.         Organization
and Qualification. The Company is a corporation duly organized and validly existing under the laws of the State of Nevada.
The Company has all requisite power and authority to carry on its business as currently conducted, other than such failures that
would not reasonably be expected to have a material adverse effect on the Company’s business, properties or financial condition
(a “Material Adverse Effect”). The Company is duly qualified to transact business in each jurisdiction
in which the failure to be so qualified would reasonably be expected to have a Material Adverse Effect.

 

b.         Authorization.
As of the Closing, all action on the part of the Company, its board of directors, officers and existing stockholders necessary
for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company hereunder
and thereunder shall have been taken, and this Agreement, assuming due execution by the parties hereto and thereto, will constitute
valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, subject to: (i) judicial
principles limiting the availability of specific performance, injunctive relief, and other equitable remedies and (ii) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in effect generally relating to or affecting creditors’
rights.

 

    	2

    	 

    
 

 

c.         Governmental
Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing
with, any federal, state or local governmental authority on the part of the Company is required in connection with the offer, sale
or issuance of the Notes, except for the following: (i) the filing of such notices as may be required under the Securities Act
and (ii) the compliance with any applicable state securities laws, which compliance will have occurred within the appropriate time
periods therefor.

 

d.         Litigation.
There are no actions, suits, proceedings or investigations pending or, to the best of the Company’s knowledge, threatened
before any court, administrative agency or other governmental body against the Company which question the validity of this Agreement,
or the right of the Company to enter into either of them, or to consummate the transactions contemplated hereby or thereby, or
which would reasonably be expected to have a Material Adverse Effect. The Company is not a party or subject to, and none of its
assets is bound by, the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality
which would reasonably be expected to have a Material Adverse Effect.

 

e.         Compliance
with Other Instruments. The Company is not in violation or default of any provision of its Articles of Incorporation, each
as in effect immediately prior to the Closing, except for such failures as would not reasonably be expected to have a Material
Adverse Effect. The Company is not in violation or default of any provision of any material instrument, mortgage, deed of trust,
loan, contract, commitment, judgment, decree, order or obligation to which it is a party or by which it or any of its properties
or assets are bound which would reasonably be expected to have a Material Adverse Effect. To the best of its knowledge, the Company
is not in violation or default of any provision of any federal, state or local statute, rule or governmental regulation which would
reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of and compliance with this Agreement
and the issuance and sale of the Notes, will not result in any such violation, be in conflict with or constitute, with or without
the passage of time or giving of notice, a default under any such provision, require any consent or waiver under any such provision
(other than any consents or waivers that have been obtained), or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company pursuant to any such provision.

 

f.         Certain Registration
Matters. Assuming the accuracy of the Subscriber’s representations and warranties set forth in this Agreement and the
Transaction Documents, and the representations and warranties made by all other purchasers of Notes in the Offering, no registration
under the Securities Act is required for the offer and sale of the Notes by the Company to the Subscriber hereunder.

 

g.         No General
Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Notes by any
form of general solicitation or general advertising (within the meaning of Regulation D).

 

    	3

    	 

    
 

 

4.         Representations
and Warranties of the Subscriber. The Subscriber represents and warrants to the Company the following:

 

a.         Subscriber
Knowledge and Experience. The Subscriber, its advisers, if any, and designated representatives, if any, have the knowledge
and experience in financial and business matters necessary to evaluate the merits and risks of its prospective investment in the
Company, and have carefully reviewed and understand the risks of, and other considerations relating to, the purchase of Notes and
the tax consequences of the investment, and have the ability to bear the economic risks of the investment.

 

b.         Investment
Purpose. The Subscriber is acquiring the Notes for investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof. The Subscriber understands and acknowledges that the Notes and the securities that may
be issued upon conversion of the Notes (collectively, the “Securities”) have not been registered under
the Securities Act or any state securities laws, by reason of a specific exemption from the registration provisions of the Securities
Act and applicable state securities laws, which depends upon, among other things, the bona fide nature of the investment intent
as expressed herein. The Subscriber further represents that it does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to any third person with respect to any of the Securities. The Subscriber
understands and acknowledges that the offering of the Notes pursuant to this Agreement will not be registered under the Securities
Act nor under the state securities laws on the ground that the sale provided for in this Agreement and the issuance of securities
hereunder is exempt from the registration requirements of the Securities Act and any applicable state securities laws.

 

c.         No
Public Market. The Subscriber understands that no public market now exists, and there never will be a public market for, the
Notes, that an active public market for the Company’s common stock does not now exist and that there may never be an active
public market for the common stock of the Company.

 

d.         Information.
The Subscriber, its advisers, if any, and designated representatives, if any, have received and reviewed information about the
Company and have had an opportunity to discuss the Company’s business, management and financial affairs with its management.
The Subscriber understands that such discussions, as well as any written information provided by the Company, were intended to
describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily
a thorough or exhaustive description, and except as expressly set forth in this Agreement, the Company makes no representation
or warranty with respect to the completeness of such information and makes no representation or warranty of any kind with respect
to any information provided by any entity other than the Company. Some of such information includes projections as to the future
performance of the Company, which projections may not be realized, are based on assumptions which may not be correct and are subject
to numerous factors beyond the Company’s control.

 

e.         Investment
Authorization. As of the Closing, all action on the part of Subscriber, and its officers, directors and partners, if applicable,
necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Subscriber
hereunder and thereunder shall have been taken, and this Agreement, assuming due execution by the parties hereto and thereto, constitute
valid and legally binding obligations of the Subscriber, enforceable in accordance with their respective terms, subject to: (i)
judicial principles limiting the availability of specific performance, injunctive relief, and other equitable remedies and (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect generally relating to or affecting
creditors’ rights.

 

    	4

    	 

    
 

 

f.         Accredited
Investor Status. The Subscriber either (i) is an “accredited investor” as defined in Rule 501 of Regulation D as
promulgated by the Securities and Exchange Commission under the Securities Act or (ii) is not a “U.S. Person” as defined
in Regulation S as promulgated by the Securities and Exchange Commission under the Securities Act, and, in each case, shall submit
to the Company such further assurances of such status as may be reasonably requested by the Company.

 

g.         Non-U.S.
Person Status. The Subscriber, if a non-U.S. Person, agrees that it is acquiring the Notes in an offshore transaction pursuant
to Regulation S and hereby represents to the Company as follows:

 

(i)         The
Subscriber is outside the United States when receiving and executing this Subscription Agreement;

 

(ii)         The
Subscriber has not acquired the Notes as a result of, and will not itself engage in, any “directed selling efforts”
(as defined in Regulation S) in the United States in respect of the Notes which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale
of the Notes; provided, however, that the Subscriber may sell or otherwise dispose of the Notes pursuant to registration of the
Notes under the Securities Act and any applicable state and provincial securities laws or under an exemption from such registration
requirements and as otherwise provided herein;

 

(iii)         The
Subscriber understands and agrees that offers and sales of any of the Notes prior to the expiration of a period of one year after
the date of transfer of the Notes under this Subscription Agreement (the “Distribution Compliance Period”),
shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions
of the Securities Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be
made only in compliance with the registration provisions of the Securities Act or an exemption therefrom, and in each case only
in accordance with all applicable securities laws;

 

(iv)         The
Subscriber understands and agrees not to engage in any hedging transactions involving the Notes prior to the end of the Distribution
Compliance Period unless such transactions are in compliance with the Securities Act; and

 

(v)         The
Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection
with any invitation to subscribe for the Notes or any use of this Subscription Agreement, including: (a) the legal requirements
within its jurisdiction for the purchase of the Notes; (b) any foreign exchange restrictions applicable to such purchase; (c) any
governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may
be relevant to the purchase, holding, redemption, sale or transfer of the Notes. Such Subscriber’s subscription and payment
for, and its continued beneficial ownership of the Notes, will not violate any applicable securities or other laws of the Subscriber’s
jurisdiction.

 

    	5

    	 

    
 

 

h.         Anti-Money
Laundering. Subscriber represents that neither it nor, to its knowledge, any person or entity controlling, controlled by or
under common control with it, nor any person having a beneficial interest in it, nor any person on whose behalf the Subscriber
is acting: (i) is a person listed in the Annex to Executive Order No. 13224 (2001) issued by the President of the United States
(Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism);
(ii) is named on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Office of Foreign Assets
Control; (iii) is a non-U.S. shell bank or is providing banking services indirectly to a non-U.S. shell bank; (iv) is a senior
non-U.S. political figure or an immediate family member or close associate of such figure; or (v) is otherwise prohibited from
investing in the Company pursuant to applicable U.S. anti-money laundering, anti-terrorist and asset control laws, regulations,
rules or orders (categories (i) through (v), each a “Prohibited Subscriber”). The Subscriber agrees to provide
the Company, promptly upon request, all information that the Company reasonably deems necessary or appropriate to comply with applicable
U.S. anti-money laundering, anti-terrorist and asset control laws, regulations, rules and orders. The Subscriber consents to the
disclosure to U.S. regulators and law enforcement authorities by the Company and its affiliates and agents of such information
about the Subscriber as the Company reasonably deems necessary or appropriate to comply with applicable U.S. antimony laundering,
anti-terrorist and asset control laws, regulations, rules and orders. If the Subscriber is a financial institution that is subject
to the USA Patriot Act, the Subscriber represents that it has met all of its obligations under the USA Patriot Act. The Subscriber
acknowledges that if, following its investment in the Company, the Company reasonably believes that the Subscriber is a Prohibited
Subscriber or is otherwise engaged in suspicious activity or refuses to promptly provide information that the Company requests,
the Company has the right or may be obligated to prohibit additional investments, segregate the assets constituting the investment
in accordance with applicable regulations or immediately require the Subscriber to transfer the Securities. The Subscriber further
acknowledges that the Subscriber will have no claim against the Company or any of its affiliates or agents for any form of damages
as a result of any of the foregoing actions.

 

i.         High
Risk Investment. The Subscriber or its duly authorized representative realizes that because of the inherently speculative nature
of businesses of the kind conducted and contemplated by the Company, the Company’s financial results may be expected to fluctuate
from month to month and from period to period and will, generally, involve a high degree of financial and market risk that could
result in substantial or, at times, even total losses for investors in securities of the Company.

 

j.         Subscriber
Liquidity. The Subscriber has adequate means of providing for its current and anticipated financial needs and contingencies,
is able to bear the economic risk for an indefinite period of time and has no need for liquidity of the investment in the Notes
and could afford complete loss of such investment.

 

    	6

    	 

    
 

 

k.         No
General Solicitation. The Subscriber is not subscribing for Notes as a result of or subsequent to any advertisement, article,
notice or other communication, published in any newspaper, magazine or similar media or broadcast over television, radio, or the
internet, or presented at any seminar or meeting, or any solicitation of a subscription by a person not previously known to the
Subscriber in connection with investments in securities generally.

 

l.         Subscriber
Information. All of the information that the Subscriber has heretofore furnished or which is set forth herein is correct and
complete as of the date of this Agreement, and, if there should be any material change in such information prior to the admission
of the undersigned to the Company, the Subscriber will immediately furnish revised or corrected information to the Company.

 

m.         Gottbetter
& Partners, LLP – Relationship to Company. The Subscriber acknowledges that Adam S. Gottbetter is the owner of Gottbetter
& Partners, LLP and Gottbetter Capital Group, Inc. Gottbetter & Partners, LLP and Gottbetter Capital Group, Inc. own shares
of the Company. Gottbetter & Partners, LLP is counsel to the Company and receives legal fees pursuant to a retainer agreement
with the Company. Gottbetter & Partners, LLP is also acting as Escrow Agent for this Offering and may receive an escrow fee
in connection with the Subscriber’s investment.

 

5.         Transfer
Restrictions. The Subscriber acknowledges and agrees as follows:

 

a.         Reliance
on Exemptions. The Notes have not been registered for sale under the Securities Act, in reliance on the private offering exemption
in Section 4(2) thereof and under Regulation D or Regulation S thereunder; the Company does not intend to register the Notes under
the Securities Act at any time in the future.

 

b.         Shell
Company Status. The Company is presently a “shell company” as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).  Pursuant to Rule 144(i), securities issued by a current or former
shell company (that is, the Notes) that otherwise meet the holding period and other requirements of Rule 144 nevertheless cannot
be sold in reliance on Rule 144 until one year after the Company (a) is no longer a shell company; and (b) has filed current “Form
10 information“ (as defined in Rule 144(i)) with the SEC reflecting that it is no longer a shell company, and provided that
at the time of a proposed sale pursuant to Rule 144, the Company is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act and has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act,
as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and
materials), other than Form 8-K reports.  As a result, the restrictive legends on certificates for the Securities cannot be
removed except in connection with an actual sale meeting the foregoing requirements or pursuant to an effective registration statement.

 

c.         Legends.
The Subscriber understands that the certificates representing the Securities, until such time as they have been registered under
the Securities Act, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed
against transfer of such certificates or other instruments):

 

    	7

    	 

    

 

For
U.S. Persons:

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES,
WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED
IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

 

For
Non-U.S. Persons:

 

THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S) PURSUANT TO
REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS
SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE 1933 ACT, AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING
THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.

 

The legend(s)
set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities
upon which it is stamped, if (a) such Securities are sold pursuant to a registration statement under the Securities Act, or
(b) such holder delivers to the Company an opinion of counsel, reasonably acceptable to the Company, that a disposition of
the Securities is being made pursuant to an exemption from such registration and that the Securities, after such transfer, shall
no longer be “restricted securities” within the meaning of Rule 144.

 

d.         No
Governmental Review. No governmental agency has passed upon the Securities or made any finding or determination as to the wisdom
of any investments therein.

 

e.         Restrictions
on Transfer. There are substantial restrictions on the transferability of the Securities, and if the Company decides to issue
certificates representing the Securities, restrictive legends will be placed on any such certificates.

    	8

    	 

    
 

 

6.         Indemnification.
The Subscriber agrees to indemnify and hold harmless the Company, the Escrow Agent and their respective officers, directors, employees,
agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever
(including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced
or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Subscriber of any covenant or agreement made by the Subscriber herein or
in any other document delivered in connection with this Agreement.

 

7.         Irrevocability; Binding Effect.
The Subscriber hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Subscriber, except as required
by applicable law, and that this Agreement shall survive the death or disability of the Subscriber and shall be binding upon and
inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and permitted
assigns. If the Subscriber is more than one person, the obligations of the Subscriber hereunder shall be joint and several and
the agreements, representations, warranties and acknowledgments herein shall be deemed to be made by and be binding upon each such
person and such person’s heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

8.         Modification.
This Agreement shall not be modified or waived except by an instrument in writing signed by the party against whom any such modification
or waiver is sought.

 

9.         Notices. Any notice or other
communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt
requested, or delivered against receipt to the party to whom it is to be given (a) if to the Company, at the address set forth
above, or (b) if to the Subscriber, at the address set forth on the signature page hereof (or, in either case, to such other address
as the party shall have furnished to the other in writing in accordance with the provisions of this Section 10). Any notice or
other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing
a party’s address which shall be deemed given at the time of receipt thereof.

 

10.         Assignability. This Agreement
and the rights, interests and obligations hereunder are not transferable or assignable by the Subscriber and the transfer or assignment
of the Notes shall be made only in accordance with all applicable laws.

 

11.         Applicable
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference
to the principles thereof relating to the conflict of laws.

 

12.         Arbitration. The parties
agree to submit all controversies to arbitration in accordance with the provisions set forth below and understand that:

 

(a)         Arbitration is final and
binding on the parties.

 

(b)         The parties are waiving
their right to seek remedies in court, including the right to a jury trial.

 

    	9

    	 

    
 

 

(c)         Pre-arbitration discovery
is generally more limited and different from court proceedings.

 

(d)         The arbitrator’s
award is not required to include factual findings or legal reasoning and any party’s right to appeal or to seek modification
of rulings by arbitrators is strictly limited.

 

(e)         The panel of arbitrators
will typically include a minority of arbitrators who were or are affiliated with the securities industry.

 

(f)         All controversies which
may arise between the parties concerning this Agreement shall be determined by arbitration pursuant to the rules then pertaining
to the Financial Industry Regulatory Authority in New York City, New York. Judgment on any award of any such arbitration may be
entered in the Supreme Court of the State of New York or in any other court having jurisdiction of the person or persons against
whom such award is rendered. Any notice of such arbitration or for the confirmation of any award in any arbitration shall be sufficient
if given in accordance with the provisions of this Agreement. The parties agree that the determination of the arbitrators shall
be binding and conclusive upon them.

 

13.         Blue Sky Qualification. The
purchase of Notes under this Agreement is expressly conditioned upon the exemption from qualification of the offer and sale of
the Notes from applicable federal and state securities laws. The Company shall not be required to qualify this transaction under
the securities laws of any jurisdiction and, should qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction.

 

14.         Use of Pronouns. All pronouns
and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity
of the person or persons referred to may require.

 

15.         Confidentiality. The Subscriber
acknowledges and agrees that any information or data the Subscriber has acquired from or about the Company, not otherwise properly
in the public domain was received in confidence. The Subscriber agrees not to divulge, communicate or disclose, except as may be
required by law or for the performance of this Agreement, or use to the detriment of the Company or for the benefit of any other
person, or misuse in any way, any confidential information of the Company, including any scientific, technical, trade or business
secrets of the Company and any scientific, technical, trade or business materials that are treated by the Company as confidential
or proprietary, including, but not limited to, ideas, discoveries, inventions, developments and improvements belonging to the Company
and confidential information obtained by or given to the Company about or belonging to third parties.

 

16.         Miscellaneous.

 

(a)         This Agreement constitutes the entire
agreement between the Subscriber and the Company with respect to the subject matter hereof and supersedes all prior oral or written
agreements and understandings, if any, relating to the subject matter hereof. The terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits
of such terms or provisions.

    	10

    	 

    
 

 

(b)         The representations and warranties
of the Company and the Subscriber made in this Agreement shall survive the execution and delivery hereof and delivery of the Notes.

 

(c)         Each of the parties hereto shall
pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby, whether or not the transactions contemplated hereby are
consummated.

 

(d)         This Agreement may be executed in
one or more original or facsimile counterparts, each of which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

 

(e)         Each provision of this Agreement
shall be considered separable and, if for any reason any provision or provisions hereof are determined to be invalid or contrary
to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Agreement.

 

(f)         Paragraph titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as set forth in the text.

 

(g)         The Subscriber understands and acknowledges
that there may be multiple Closings for the Offering.

 

(h)         The Subscriber hereby agrees to
furnish the Company such other information as the Company may request prior to the Closing with respect to its subscription hereunder.

 

18.         Public
Disclosure. Neither the Subscriber nor any officer, manager, director, member, partner, stockholder, employee, affiliate, affiliated
person or entity of the Subscriber shall make or issue any press releases or otherwise make any public statements or make any disclosures
to any third person or entity with respect to the transactions contemplated herein and will not make or issue any press releases
or otherwise make any public statements of any nature whatsoever with respect to the Company without the Company’s express
prior approval. The Company has the right to withhold such approval in its sole discretion.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

    	11

    	 

    
 

How to subscribe for Notes in the private
offering of

Loreto Resources Corporation:

 

		1.	Date and Fill in the principal amount of Notes being purchased and Complete and Sign
the Signature Page.

 

		2.	Initial the Investor Certification page.

 

		3.	Fax or email all forms and then send all signed original documents to:

 

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY 10022

Facsimile Number: (212) 400-6901

Telephone Number: (212) 400-6900

Attn: Paul C. Levites

E-mail Address: pcl@gottbetter.com

 

		4.	If you are paying the Purchase Price
by check, a check for the exact dollar amount of the Purchase
Price for the principal amount of Notes you are offering to purchase and the $____ Escrow Fee should be made payable
to the order of “Gottbetter & Partners, LLP, Escrow Agent
for LORETO RESOURCES CORPORATION” and should be sent to Gottbetter & Partners, LLP, 488 Madison Avenue, 12th
Floor, New York, NY 10022.

 

		5.	If you are paying the Purchase Price by wire transfer, you should send a wire transfer
for the exact dollar amount of the Purchase Price for the number of Notes you are offering to purchase and the $160 Escrow
Fee according to the following instructions: 

 

BANK:  Citibank, N.A.

ABA#:  021000089

SWIFT CODE: CITIUS33

ACCOUNT NAME:  Gottbetter & Partners,
LLP Attorney Trust

ACCOUNT:   9998176923

REFERENCE:  Loreto Resources
Corporation Escrow – [insert Subscriber’s name]”

 

Thank you for your interest,

 

 

Loreto Resources Corporation

 

    	12

    	 

    
 

 

LORETO RESOURCES COPORATION

SIGNATURE PAGE TO

SUBSCRIPTION AGREEMENT

 

IN WITNESS WHEREOF, the Subscriber hereby
executes this Subscription Agreement.

 

Dated: _______________, 2012

 

	 	 	 
	SUBSCRIBER (individual)	 	SUBSCRIBER (entity)
	 	 	 
	 	 	 
	Signature	 	Name of Entity
	 	 	 
	 	 	 
	Print Name	 	Signature
	 	 	 
	 	 	 
	 	 	Print Name:	 
	Signature (if Joint Tenants or Tenants in Common)	 	 
	 	 	Title:	 	 
	 	 	 
	Address of Principal Residence:	 	Address of Executive Offices:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Social Security Number(s):	 	IRS Tax Identification Number:
	 	 	 
	 	 	 
	Telephone Number:	 	Telephone Number:
	 	 	 
	 	 	 
	Facsimile Number:	 	Facsimile Number:
	 	 	 
	 	 	 
	E-mail Address:	 	E-mail Address:
	 	 	 

 

 

$_______________

Principal Amount of Notes

 

$250 Escrow Fee, to be paid by the Company

 

    	13

    	 

    
 

 

LORETO RESOURCES CORPORATION

 

IN WITNESS WHEREOF, the Company has duly executed
this Subscription Agreement with respect to the principal amount of $_______________ of Notes as of the _____ day of __________,
2012.

 

 

	 	LORETO RESOURCES CORPORATION
	 	 	 	 
	 	By:	 	 
	 	Name:	Adam Zive	 
	 	Title:	Interim Chief Executive Officer

 

 

 

 

 

 

 

 

    	 

    	 

    

 

 

ANTI-MONEY LAUNDERING INFORMATION FORM

The following is required in accordance
with the AML provision of the USA PATRIOT ACT.

(Please fill out and return with requested
documentation.)

 

	INVESTOR NAME:	 
	 	 
	LEGAL ADDRESS:	 
	 	 
	 	 
	 	 
	SSN# or TAX ID#	 
	 	 
	OF INVESTOR:	 

 

FOR INVESTORS WHO ARE INDIVIDUALS: 

 

	YEARLY INCOME:	 	AGE:	 
	 	 	 	 
	NET WORTH*:	 
	 	 	 	 
	OCCUPATION:	 
	 	 	 	 
	ADDRESS OF EMPLOYER:	 
	 	 
	 	 
	 	 	 	 
	INVESTMENT OBJECTIVE(S):	 

 

 

IDENTIFICATION & DOCUMENTATION
AND SOURCE OF FUNDS:

 

		1.	Please submit a copy of non-expired identification for the authorized signatory(ies) on the investment
documents, showing name, date of birth, address and signature. The address shown on the identification document MUST match the
Investor’s address shown on the Investor Signature Page.

 

	Current Driver’s License	or	Valid Passport	or	Identity Card

(Circle one or more)

 

		2.	If the Investor is a corporation, limited liability company, trust or other type of entity, please
submit the following requisite documents: (i) Articles of Incorporation, By-Laws, Certificate of Formation, Operating Agreement,
Trust or other similar documents for the type of entity; and (ii) Corporate Resolution or power of attorney or other similar document
granting authority to signatory(ies) and designating that they are permitted to make the proposed investment.

 

		3.	Please advise where the funds were derived from to make the proposed investment:

 

	Investments	Savings	Proceeds of Sale	Other ____________

 (Circle one or more)

 

	Signature:	 	 
	Print Name:	 	 
	Title (if applicable):	 	 
	Date:	 	 

 

		*	For purposes of calculating your net worth in this form,
(a) your primary residence shall not be included as an asset; (b) indebtedness secured by your primary residence, up to
the estimated fair market value of your primary residence at the time of your purchase of the securities, shall not be included
as a liability (except that if the amount of such indebtedness outstanding at the time of your purchase of the securities exceeds
the amount outstanding 60 days before such time, other than as a result of the acquisition of your primary residence, the amount
of such excess shall be included as a liability); and (c) indebtedness that is secured by your primary residence in excess of
the estimated fair market value of your primary residence at the time of your purchase of the securities shall be included as
a liability.

 

    	 

    	 

    
 

 

LORETO RESOURCES CORPORATION

 

INVESTOR CERTIFICATION

 

For
Individual Accredited Investors Only

(all
Individual Accredited Investors must INITIAL where appropriate):

 

		Initial _______	I have a net worth (excluding the value of my primary residence) in excess of $1,000,000 either
individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar
shared ownership interest with my spouse. (For purposes of calculating your net worth under this paragraph,
(a) your primary residence shall not be included as an asset; (b) indebtedness secured by your primary residence, up to
the estimated fair market value of your primary residence at the time of your purchase of the securities, shall not be included
as a liability (except that if the amount of such indebtedness outstanding at the time of your purchase of the securities exceeds
the amount outstanding 60 days before such time, other than as a result of the acquisition of your primary residence, the amount
of such excess shall be included as a liability); and (c) indebtedness that is secured by your primary residence in excess of the
estimated fair market value of your primary residence at the time of your purchase of the securities shall be included as a liability.)

 

		Initial _______	I have had an annual gross income for the past two years of at least $200,000 (or $300,000 jointly
with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year.

 

For Non-Individual
Accredited Investors

(all Non-Individual
Accredited Investors must INITIAL where appropriate):

 

		Initial _______	The investor certifies that it is a partnership, corporation, limited liability company or business
trust that is 100% owned by persons who meet at least one of the criteria for Individual Investors set forth above.

		Initial _______	The investor certifies that it is a partnership, corporation, limited liability company or business
trust that has total assets of at least $5 million and was not formed for the purpose of investing in the Company.

		Initial _______	The investor certifies that it is an employee benefit plan whose investment decision is made by
a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered
investment adviser.

		Initial _______	The investor certifies that it is an employee benefit plan whose total assets exceed $5,000,000
as of the date of this Agreement.

		Initial _______	The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions
are made solely by persons who meet either of the criteria for Individual Investors.

		Initial _______	The investor certifies that it is a U.S. bank, U.S. savings and loan association or other similar
U.S. institution acting in its individual or fiduciary capacity.

		Initial _______	The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities
Exchange Act of 1934.

		Initial _______	The investor certifies that it is an organization described in §501(c)(3) of the Internal
Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in the Company.

		Initial _______	The investor certifies that it is a trust with total assets of at least $5,000,000, not formed
for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience
in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

		Initial _______	The investor certifies that it is a plan established and maintained by a state or its political
subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess
of $5,000,000.

		Initial _______	The investor certifies that it is an insurance company as defined in §2(13) of the Securities
Act, or a registered investment company.

 

 

     

     

    

LORETO RESOURCES CORPORATION

Investor Profile

(Must be completed by Investor)

Section A - Personal Investor Information

	Investor Name(s):	 
	Individual executing Profile or Trustee:	 
	Social Security Numbers / Federal I.D. Number:	 
	Date of Birth:	 	 	 	Marital Status:	 	 
	Joint Party Date of Birth:	 	 	 	Investment Experience (Years):	 	 
	Annual Income:	 	 	 	Liquid Net Worth:	 	 
	Net Worth*:	 
	Tax Bracket:	 	 	15% or below	 	 	25% - 27.5%	 	 	Over 27.5%
	 	 
	Home Street Address:	 
	Home City, State & Zip Code:	 
	Home Phone:	 	Home Fax:	 	Home Email:	 
	Employer:	 
	Employer Street Address:	 
	Employer City, State & Zip Code:	 
	Bus. Phone:	 	Bus. Fax:	 	Bus. Email:	 
	Type of Business:	 
	(PLACEMENT AGENT) Account Executive / Outside Broker/Dealer:
	 
	If you are a United States citizen, please list the number and jurisdiction of issuance of any other government-issued document evidencing residence and bearing a photograph or similar safeguard (such as a driver’s license or passport), and provide a photocopy of each of the documents you have listed.
	 
	If you are NOT a United States citizen, for each jurisdiction of which you are a citizen or in which you work or reside, please list (i) your passport number and country of issuance or (ii) alien identification card number AND (iii) number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard, and provide a photocopy of each of these documents you have listed.  These photocopies must be certified by a lawyer as to authenticity. 
	 
	
         

        *    
        For purposes of calculating your net worth in this form, (a) your primary residence shall not be included as an asset; (b)
        indebtedness secured by your primary residence, up to the estimated fair market value of your primary residence at the time of
        your purchase of the securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding
        at the time of your purchase of the securities exceeds the amount outstanding 60 days before such time, other than as a result
        of the acquisition of your primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness
        that is secured by your primary residence in excess of the estimated fair market value of your primary residence at the time of
        your purchase of the securities shall be included as a liability.

         

         

	Section B – Certificate Delivery Instructions
	 
	 	 	Please deliver certificate to the Employer Address listed in Section A.
	 	 	Please deliver certificate to the Home Address listed in Section A.
	 	 	Please deliver certificate to the following address:	 
	 
	Section C – Form of Payment – Check or Wire Transfer
	 
	 	 	Check payable to Gottbetter & Partners, LLP, as Escrow Agent for Loreto Resources Corp.
	 	 	Wire funds from my outside account according to the “How to subscribe for Units” Page.
	 	 	The funds for this investment are rolled over, tax deferred from __________ within the allowed 60 day window.
	 
	Please check if you are a FINRA member or affiliate of a FINRA member firm: ________
	 
	 	 	 
	Investor Signature	 	Date
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

    	 

    	 

    

Appendix
A

 

For Non-U.S.
Person Investors

(all Investors who are not a U.S. Person
must INITIAL this section):

 

		Initial _______	The Investor is not a “U.S. Person” as defined in Regulation S; and specifically the
Purchaser is not:

 

		A.	a natural person resident in the United States of America, including its territories and possessions
(“United States”);

		B.	a partnership or corporation organized or incorporated under the laws of the United States;

		C.	an estate of which any executor or administrator is a U.S. Person;

		D.	a trust of which any trustee is a U.S. Person;

		E.	an agency or branch of a foreign entity located in the United States;

		F.	a non-discretionary account or similar account (other than an estate or trust) held by a dealer
or other fiduciary for the benefit or account of a U.S. Person;

		G.	a discretionary account or similar account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an individual) resident in the United States; or

		H.	a partnership or corporation: (i) organized or incorporated under the laws of any foreign jurisdiction;
and (ii) formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Act) who are not
natural persons, estates or trusts.

 

And, in
addition:

 

		I.	the Purchaser was not offered the Notes in the United States;

		J.	at the time the buy-order for the Notes was originated, the Purchaser was outside the United States;
and

		K.	the Purchaser is purchasing the Notes for its own account and not on behalf of any U.S. Person
(as defined in Regulation S) and a sale of the Notes has not been pre-arranged with a purchaser in the United States.EIGHTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT

 

THIS EIGHTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT ("Amendment"), dated as of October 31, 2012, amends and supplements that certain Loan and Security Agreement
dated as of January 2, 2008, as amended to date (as so amended, the "Loan Agreement"), between JEFFERSON ELECTRIC, INC.,
a Delaware corporation ("Borrower"), and JOHNSON BANK ("Bank").

 

RECITALS

 

Borrower and
Bank desire to amend and supplement the Loan Agreement as provided below.

 

AGREEMENTS

 

In consideration of the promises and agreements
set forth in the Loan Agreement, as amended hereby, the parties agree as follows:

 

1.Definitions and References. Capitalized terms
not otherwise defined herein have the meanings assigned in the Loan Agreement. All references to the Loan Agreement contained in
the Loan Documents shall, upon fulfillment of the conditions specified in Section 3 below, mean the Loan Agreement as amended
by this Amendment.

 

2.Amendments to Loan Agreement. The Loan Agreement
is amended as follows:

 

(a)The following defined terms are added to Article
I of the Loan Agreement to appear in proper alphabetical order therein:

 

"Applicable Margin" means, for
any day, the rate per annum set forth below:

 

 

	Level	Debt Service Coverage Ratio	Applicable Margin
	I	Greater than or equal to 2.00:1.00	2.25%
	II	Greater than or equal to 1.75:1.00 but less than 2.00:1.00	2.50%
	III	Greater than or equal to 1.50:1.00 but less than 1.75:1.00	2.75%
	IV	
        Greater than or equal to 1.25: 1.00 but less than 1.50:1.00

        
	3.00%
	V	Greater than or equal to 1.10:1.00 but less than 1.25:1.00	3.25%
	VI	Greater than or equal to than 1.00:1.00 but less than 1.10:1.00	3.50%

 

    	 

    	 

    

 

The Applicable Margin shall be adjusted
quarterly, to the extent applicable, on the fifth (5th) business day after the Borrower provides or is required to provide the
financial statements and other information pursuant to Section 5.1.1, or, with respect to any fiscal quarter end, 5.1.2, as applicable,
and the related Compliance Certificate, pursuant to Section 5.1.7. Notwithstanding anything contained in this paragraph to the
contrary, (i) if the Borrower fails to deliver such financial statements and Compliance Certificate in accordance with the provisions
of Sections 5.1.1, 5.1.2 and 5.1.7, the Applicable Margin shall be based upon clause (a) of the definition of Defined Interest
Rate until the fifth (5th) business day after such financial statements and Compliance Certificate are actually delivered, whereupon
the Applicable Margin shall be determined by the then current Debt Service Coverage Ratio; (ii) no reduction to any Applicable
Margin shall become effective at any time when an Event of Default has occurred and is continuing.

 

"Debt Service Coverage Ratio"
shall have the meaning given to such term in Section 5.22 hereof.

 

"Defined Interest Rate" means (i)
prior to the initial determination under clause (ii) hereof after the receipt of the financial statements and Compliance Certificate
for the fiscal quarter ending September 30, 2012, the interest rate in effect immediately prior to the effectiveness of the Eighth
Amendment and (ii) after the receipt of the financial statements and Compliance Certificate for the fiscal quarter ending September
30, 2012 (subject to clause (i) of the definition of Applicable Margin), (a) if the Debt Service Coverage Ratio as set forth in
the most recently delivered Compliance Certificate is less than 1.00:1.00, 5.25% and (b) if the Debt Service Coverage Ratio as
set forth in the most recently delivered Compliance Certificate is greater than or equal to 1.00:1.00, LIBOR plus the Applicable
Margin.

 

"Eighth Amendment" means the
Eighth Amendment to this Loan Agreement dated as of October 31, 2012 between Borrower and Bank.

 

"LIBOR" means the per annum rate
of interest for a period equal to one month described as the “London interbank offered rate, or Libor” for such period
that is in effect two business days prior to the commencement of the applicable calendar month as reported in The Wall Street Journal,
“Money Rates” table (and currently defined as the British Bankers’ Association average of interbank offered rates
for dollar deposits in the London market) or, if The Wall Street Journal or another authoritative source is not available, as LIBOR
is otherwise determined by the Bank in its sole and absolute discretion.

 

(b)The following defined terms in Article
I of the Loan Agreement are amended in their entirety to read as follows:

 

"Loan Amount" means $6,000,000.

 

    	2

    	 

    
 

"Net Cash Flow" for any fiscal
period of Borrower, means EBITDA, less the sum of (a) income taxes paid in cash and (b) distributions for income taxes paid in
cash.

 

"Tangible Net Worth" means (i)
total assets plus debt which is subordinated to the debt hereunder on terms satisfactory to the Bank, minus (ii) the sum of: intangible
assets plus total liabilities, all determined in accordance with GAAP.

 

(c)Section 2.1.1 of the Loan Agreement is amended by
deleting the date "October 31, 2012" in the last sentence thereof and inserting "October 31, 2013" in its place.

 

(d)Sections 2.2, 2.3.2, 2.9 and 2.8 of the Loan Agreement
are deleted in their entirety and replaced with "[Reserved.]"

 

(e)Section 2.3.1 of the Loan Agreement is amended in
its entirety to read as follows:

 

2.3.1Interest Rate on the  Revolving Note.
The interest rate hereunder on the Revolving Note shall be equal to the Defined Interest Rate, changing as and when the Defined
Interest Rate changes.

 

(f)Section 5.1.3 of the Loan Agreement is amended by
deleting "and a detailed inventory report" therein.

 

(g)Section 5.1.7 of the Loan Agreement
is amended in its entirety to read as follows:

 

5.1.7Within 30 days after the end of each
fiscal month, a statement in form satisfactory to the Bank certified by an officer of Borrower representing and warranting that
(a) the representations and warranties contained in this Agreement are true and correct as of the date of such statement, except
for changes permitted or contemplated by this Agreement which have been disclosed in writing to Bank; (b) no condition, event,
act or omission has occurred or exists which constitutes an Event of Default under this Agreement; (c) no condition, event, act
or omission has occurred which, with the giving of notice or the passage of time, will constitute an Event of Default under this
Agreement; and (d) Borrower is in compliance with Sections 5.21, 5.22 and 6.3 of this Agreement and attaching a computation of
each of the financial ratios and amounts referred to in such sections, each in detail satisfactory to the Bank (such statement,
a "Compliance Certificate").

 

(h)Section 5.21 of the Loan Agreement
is amended in its entirety to read as follows:

 

5.21Tangible Net Worth. Borrower
shall maintain, at all times, a Tangible Net Worth not less than ($1,150,000).

 

(i)Section 5.22 of the Loan Agreement is amended in
its entirety to read as follows:

 

    	3

    	 

    
 

5.22Debt Service Coverage Ratio.
Borrower shall achieve, as of the last day of each fiscal quarter of Borrower, commencing September 30, 2012 a ratio of (a) Net
Cash Flow to (b) the sum of required principal payments plus interest expense (not including accrued but unpaid interest expense
on subordinated indebtedness owing to PPSI), all calculated for the four fiscal quarter period ending on the date of determination
(the "Debt Service Coverage Ratio"), of at least 1.0 to 1.0.

 

(j)Section 5.27 of the Loan Agreement
is amended in its entirety to read as follows:

 

5.27 Field Audit. Borrower shall
cooperate with Lender's conducting a field audit examination (at Borrower's expense) of Borrower's assets, liabilities, books and
records at a time to be determined by the Lender after the date of the Eighth Amendment.

 

(j)Section 5.29 of the Loan Agreement is created to
read as follows:

 

5.29DDA Balance. Borrower
shall maintain at all times a balance in its demand deposit account of no less than $100,000.

 

(l)Section 5.30 of the Loan Agreement
is created to read as follows:

 

5.30Post-Closing Obligations. Borrower
shall deliver to the Bank, promptly after the date of the Eighth Amendment, but in any event within 45 days after such date, evidence
that the life insurance policy referenced in Section 5.24 of the Loan Agreement remains in full force and effect, subject to Bank's
first priority lien thereon.

 

(k)Exhibit A attached hereto shall be
deemed an exhibit to the Loan Agreement and shall replace its predecessor thereto.

 

(l) The following amounts shall be calculated
for the Borrower on a consolidated basis with its subsidiaries: EBITDA, Net Cash Flow, Net Income, pre-Tax Net Income, Tangible
Net Worth and the calculations for purposes of Sections 5.21, 5.22 and 6.3 of the Loan Agreement. The reports delivered under Sections
5.1.1, 5.1.2, 5.1.4, 5.1.5 and 5.1.7 of the Loan Agreement shall be prepared for Borrower on a consolidated basis with its subsidiaries.

 

3.Closing Conditions. This Amendment shall become
effective upon the execution and delivery by Borrower and Bank of this Amendment and receipt by Bank of:

 

(a)a reaffirmation of subordination
agreement, duly executed by PPSI and Bemag Transformer Inc.;

 

(b)a reaffirmation of guaranty, duly
executed by Thomas Klink and PPSI;

 

(c)searches of the appropriate public offices demonstrating
that no lien is of record affecting Borrower or its properties, except Authorized Security Interests;

 

    	4

    	 

    
 

(d)copies, certified by duly authorized representatives
of Borrower and PPSI to be true and correct and in full force and effect on the date hereof, of (i) the charter documents of such
entity; (ii) resolutions of such entity authorizing the issuance, execution and delivery of the Loan Documents to which such
entity is a party; and (iii) a statement containing the names and titles of the representatives of such entity authorized to sign
such Loan Documents, together with true signatures of such persons;

 

(e)a legal opinion of Borrower's counsel;

 

(f)the replacement Revolving Note, in the form attached
hereto as Exhibit A, duly executed by Borrower; and

 

and all proceedings taken in connection with the transactions
contemplated by this Amendment, and all instruments, authorizations and other documents applicable thereto, shall be reasonably
satisfactory to Bank.

 

4.No Waiver. Borrower
agrees that nothing contained herein shall be construed by Borrower as a waiver by Bank of Borrower's compliance with any representation,
warranty or covenant contained in the Loan Agreement and that no waiver of any provision of the Loan Agreement by Bank has occurred.
Borrower further agrees that nothing contained herein shall impair the right of Bank to require strict performance by Borrower
of the Loan Agreement.

 

5.Representations and Warranties. Borrower represents
and warrants to Bank that:

 

(a)The execution and delivery of this Amendment and
the other Loan Documents referenced herein is within its corporate power, has been duly authorized by proper corporate action on
the part of Borrower, is not in violation of any existing law, rule or regulation of any governmental agency or authority, any
order or decision of any court, the charter documents of Borrower or the terms of any agreement, restriction or undertaking to
which Borrower is a party or by which it is bound, and do not require the approval or consent of any governmental body, agency
or authority or any other person or entity; and

 

(b)The representations and warranties of Borrower contained
in the Loan Documents are true and correct in all material respects as of the date of this Amendment (except to the extent that
such representations and warranties specifically refer only to another date).

 

6.Term Note. The parties hereto acknowledge that
the Term Note as defined in the Loan Agreement prior to the effectiveness of this Amendment has been paid in full, and all referenced
in the Loan Agreement to the Term Note shall be deemed to be deleted.

 

7.Costs and Expenses. Borrower
agrees to pay on demand all reasonable out-of-pocket costs and expenses paid or incurred by Bank in connection with the negotiation,
preparation, execution and delivery of this Amendment and all documents, instruments and agreements related hereto and thereto,
including the reasonable fees and expenses of Bank's counsel.

 

8.Full Force and Effect. The Loan Agreement,
except as otherwise expressly amended hereby, remains in full force and effect.

 

9.Execution in Counterparts.
This Amendment may be executed in several counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.

 

[remainder of page intentionally left blank]

 

    	5

    	 

    
 

10.Facsimile Signatures.
Facsimile copies of any party's signature hereto shall be deemed effective execution of this Amendment by such party.

 

 

	 	JEFFERSON ELECTRIC, INC.
	 	 
	 	BY__/s/ Thomas Klink___________________
	 	Its___President______________________
	 	 
	 	JOHNSON BANK
	 	 
	 	BY____/s/ Robert MacDonald_____________
	 	Its____Vice President_________________

 

 

    	6

    	 

    
 

EXHIBIT A

 

Form of Revolving Note

 

REVOLVING NOTE

 

	$6,000,000.00	Milwaukee, Wisconsin
	 	October 31, 2012

 

FOR VALUE RECEIVED, on or before the date
specified in Section 2.1.1 of the Loan Agreement (as defined below) as the date final payment of all outstanding principal
and accrued interest on this Note is due, the undersigned, JEFFERSON ELECTRIC, INC., a Delaware corporation, promises to pay to
the order of JOHNSON BANK (the "Bank") the principal sum of Six Million and 00/100 Dollars ($6,000,000.00), or such
lesser amount as is shown to be outstanding according to the records of the Bank, together with interest on the principal balance
outstanding from time to time at such rates and payable at such times as set forth in the Loan Agreement.

 

Payments of both principal and interest
are to be made in immediately available funds in lawful currency of the United States of America at the office of the Bank, 333
East Wisconsin Avenue, Milwaukee, Wisconsin 53202, or such other place as the holder hereof shall designate to the undersigned
in writing.

 

This Note is the Revolving Note issued pursuant
to a Loan and Security Agreement dated as of January 2, 2008, as amended to date (as so amended and as further amended from time
to time, the "Loan Agreement"), between the undersigned and the Bank, to which Loan Agreement reference is made for rights
and obligations as to prepayment and acceleration of maturity. This Note replaces that certain Revolving Note in the stated principal
amount of $6,000,000 dated October 31, 2011, from the undersigned and payable to the Bank, which replaced that certain Revolving
Note in the stated principal amount of $5,000,000 dated December 3, 2008 from the undersigned and payable to the Bank, and the
undersigned acknowledges that the indebtedness evidenced thereby has not been extinguished and that no novation has occurred.

 

The undersigned agrees to pay all costs
of collection, including reasonable attorneys' fees.

 

	 	JEFFERSON ELECTRIC, INC.
	 	 
	 	BY___/s/ Thomas Klink________________
	 	Its______President____________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}]]