THIS DEBT SETTLEMENT AND SUBSCRIPTION AGREEMENT (THE “AGREEMENT”) RELATES TO AN
OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT RELATES HAVE BEEN
REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE 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
AND PROVINCIAL LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.

DEBT SETTLEMENT AND SUBSCRIPTION AGREEMENT

THIS DEBT SETTLEMENT AND SUBSCRIPTION AGREEMENT (the “Agreement”) made as of the
___ day of ______________, 2008.

BETWEEN:

Freshwater Technologies, Inc. (the “Company”) a Nevada corporation with an
address for business at 30 Denver Crescent, Toronto, Ontario, Canada M2J 1G8

AND:

__________________ (the “Subscriber”), a ______________ with an address at
_______________________

WHEREAS:

A.                          The Subscriber has made unsecured loans totalling an
aggregate of $___________ to the Company (the “Outstanding Amount”); and

B.                          The Subscriber has agreed to accept _____________
shares of the Company’s common stock at a price of $0.05 per share (the
“Shares”), as payment of the Outstanding Amount pursuant to the terms and
conditions set forth in this Agreement.

NOW THEREFORE THIS AGREEMENT witnesses that, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1.

Interpretation

1.1                         In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind whatsoever.

1.2                         Any reference to currency is to the currency of the
United States of America unless otherwise indicated.

 

 

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2.

Acknowledgement of Indebtedness

2.1                         The Company and the Subscriber acknowledge and agree
that the Company is indebted to the Subscriber in the amount of the Outstanding
Amount.

3.

Payment of Indebtedness

3.1                         As full and final payment of the Outstanding Amount,
the Company will on the Closing Date (as defined herein) issue to the Subscriber
the Shares, as fully paid and non-assessable, and the Subscriber will accept the
Shares as full and final payment of the Outstanding Amount.

4.

Release

4.1                         The Subscriber hereby agrees that upon delivery of
the Shares by the Company in accordance with the provisions of this Agreement,
the Outstanding Amount will be fully satisfied and extinguished, and the
Subscriber will remise, release and forever discharge the Company and its
respective directors, officers, employees, successors, solicitors, agents and
assigns from any and all obligations relating to the Outstanding Amount.

5.

Documents Required from Subscriber

5.1                         The Subscriber must complete, sign and return to the
Company two (2) executed copies of this Agreement.

5.2                         The Subscriber shall complete, sign and return to
the Company as soon as possible, on request by the Company, any documents,
notices and undertakings as may be required by regulatory authorities, stock
exchanges and applicable law.

6.

Closing

6.1                         Closing of the offering of the Shares (the
“Closing”) shall occur on or before August 14, 2008, or on such other date as
may be determined by the Company (the “Closing Date”).

7.

Acknowledgements of Subscriber

7.1                         The Subscriber acknowledges and agrees that:

 

(a)

none of the Shares have been or will be registered under the Securities Act of
1933 (the “1933 Act”), or under any state securities or “blue sky” laws of any
state of the United States, and, unless so registered, may not be offered or
sold in the United States or, directly or indirectly, to U.S. Persons, as that
term is defined in Regulation S under the 1933 Act (“Regulation S”), except in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act, 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 securities laws;

 

(b)

the Company has not undertaken, and will have no obligation, to register any of
the Shares under the 1933 Act or any other applicable securities legislation;

 

(c)

the Subscriber has received and carefully read this Agreement;

 

(d)

the decision to execute this Agreement and acquire the Shares hereunder has not
been based upon any oral or written representation as to fact or otherwise made
by or on behalf of the Company and such decision is based entirely upon a review
of any public information which has been filed by the Company with the
Securities and Exchange Commission (“SEC”) in compliance, or intended
compliance, with applicable securities legislation;

 

 

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(e)

the Subscriber and the Subscriber’s advisor(s) have had a reasonable opportunity
to ask questions of and receive answers from the Company in connection with the
issuance of the Shares hereunder, and to obtain additional information, to the
extent possessed or obtainable by the Company without unreasonable effort or
expense;

 

(f)

the books and records of the Company were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the Subscriber
during reasonable business hours at its principal place of business and that all
documents, records and books in connection with the issuance of the Shares
hereunder have been made available for inspection by the Subscriber and the
Subscriber’s attorney and/or advisor(s);

 

(g)

the Subscriber will indemnify and hold harmless the Company and, where
applicable, its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) arising out of or based upon any representation or
warranty of the Subscriber contained herein, or in any document furnished by the
Subscriber to the Company in connection herewith being untrue in any material
respect or any breach or failure by the Subscriber to comply with any covenant
or agreement made by the Subscriber to the Company in connection therewith;

 

(h)

upon the issuance thereof, and until such time as the same is no longer required
under the applicable securities laws and regulations, the certificates
representing any of the Shares will bear a legend in substantially the following
form:

 

THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
U.S. PERSONS PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES 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.

 

(i)

the Subscriber has been advised to consult the Subscriber’s own legal, tax and
other advisors with respect to the merits and risks of an investment in the
Shares and with respect to applicable resale restrictions, and it is solely
responsible (and the Company is not in any way responsible) for compliance with:

 

(i)

any applicable laws of the jurisdiction in which the Subscriber is resident in
connection with the distribution of any of the Shares hereunder, and

 

(ii)

applicable resale restrictions;

 

(j)

none of the Shares are listed on any stock exchange or automated dealer
quotation system and no representation has been made to the Subscriber that any
of the Shares will become listed on any stock exchange or automated dealer
quotation system, except that currently certain market makers

 

 

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make market in the shares of common stock of the Company on the Over-the-Counter
Bulletin Board;

 

(k)

the Subscriber is outside the United States when receiving and executing this
Agreement and is acquiring the Shares as principal for its own account, for
investment purposes only, and not with a view to, or for, resale, distribution
or fractionalization thereof, in whole or in part, and no other person has a
direct or indirect beneficial interest in the Shares;

 

(l)

none of the Shares may be offered or sold to a U.S. Person or for the account or
benefit of a U.S. Person (other than a distributor) prior to the end of the
Distribution Compliance Period (as defined herein);

 

(m)

neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Shares;

 

(n)

no documents in connection with the sale of the Shares hereunder have been
reviewed by the SEC or any state securities administrators;

 

(o)

there is no government or other insurance covering any of the Shares;

 

(p)

the issuance and sale of the Shares to the Subscriber will not be completed if
it would be unlawful or if, in the discretion of the Company acting reasonably,
it is not in the best interests of the Company;

 

(q)

the statutory and regulatory basis for the exemption claimed for the offer and
issuance of the Shares, although in technical compliance with Regulation S,
would not be available if the offering is part of a plan or scheme to evade the
registration provisions of the 1933 Act; and

 

(r)

this Agreement is not enforceable by the Subscriber unless it has been accepted
by the Company.

8.

Representations, Warranties and Covenants of the Subscriber

8.1                      The Subscriber hereby represents and warrants to and
covenants with the Company (which representations, warranties and covenants
shall survive the Closing) that:

 

(a)

the Subscriber is not a U.S. Person;

 

(b)

the Subscriber is not acquiring the Shares for the account or benefit of,
directly or indirectly, any U.S. Person;

 

(c)

the Subscriber is resident in the jurisdiction out on the signature page of this
Agreement and the issuance of the Shares to the Subscriber as contemplated in
this Agreement complies with or is exempt from the applicable securities
legislation of the jurisdiction of residence of the Subscriber;

 

(d)

the Subscriber is acquiring the Shares as principal for investment purposes only
and not with a view to resale or distribution and, in particular, the Subscriber
has no intention to distribute, either directly or indirectly, any of the Shares
in the United States or to U.S. Persons;

 

(e)

the Subscriber is outside the United States when receiving and executing this
Agreement;

 

(f)

the Subscriber is aware that an investment in the Company is speculative and
involves certain risks, including the possible loss of the entire investment;

 

(g)

the Subscriber has made an independent examination and investigation of an
investment in the Shares and the Company and has depended on the advice of its
legal and financial advisors and

 

 

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- 5 -

 

agrees that the Company will not be responsible in any way whatsoever for the
Subscriber’s decision to invest in the Shares and the Company;

 

(h)

the Subscriber (i) has adequate net worth and means of providing for its current
financial needs and possible personal contingencies, (ii) has no need for
liquidity in this investment, and (iii) is able to bear the economic risks of an
investment in the Shares for an indefinite period of time;

 

(i)

the Subscriber understands and agrees that the Company and others will rely upon
the truth and accuracy of the acknowledgements, representations and agreements
contained in this Agreement and agrees that if any of such acknowledgements,
representations and agreements are no longer accurate or have been breached, the
Subscriber shall promptly notify the Company;

 

(j)

the Subscriber has the legal capacity and competence to enter into and execute
this Agreement and to take all actions required pursuant hereto;

 

(k)

the Subscriber has duly executed and delivered this Agreement and it constitutes
a valid and binding agreement of the Subscriber enforceable against the
Subscriber in accordance with its terms;

 

(l)

the Subscriber is not an underwriter of, or dealer in, the common shares of the
Company, nor is the Subscriber participating, pursuant to a contractual
agreement or otherwise, in the distribution of the Shares;

 

(m)

the Subscriber understands and agrees that none of the Shares have been
registered under the 1933 Act, or under any state securities or “blue sky” laws
of any state of the United States, and, unless so registered, may not be offered
or sold in the United States or, directly or indirectly, to U.S. Persons except
in accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act, 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 and provincial
securities laws;

 

(n)

the Subscriber understands and agrees that offers and sales of any of the Shares
prior to the expiration of a period of six months after the date of original
issuance of the Shares (the one year period hereinafter referred to as 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 1933 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 1933 Act or an exemption therefrom and
in each case only in accordance with applicable state and provincial securities
laws;

 

(o)

the Subscriber understands and agrees not to engage in any hedging transactions
involving any of the Shares unless such transactions are in compliance with the
provisions of the 1933 Act and in each case only in accordance with applicable
state and provincial securities laws;

 

(p)

the Subscriber understands and agrees that the Company will refuse to register
any transfer of the Shares not made in accordance with the provisions of
Regulation S, pursuant to an effective registration statement under the 1933 Act
or pursuant to an available exemption from the registration requirements of the
1933 Act;

 

(q)

the Subscriber has the requisite knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
investment in the Shares and the Company;

 

(r)

the Subscriber acknowledges that it has not acquired the Shares as a result of,
and will not itself engage in, any “directed selling efforts” (as defined in
Regulation S under the 1933 Act) in the United States in respect of any of the
Shares which would include any activities undertaken for the

 

 

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- 6 -

 

purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of any of the
Shares; provided, however, that the Subscriber may sell or otherwise dispose of
any of the Shares pursuant to registration of any of the Shares pursuant to the
1933 Act and any applicable state securities laws or under an exemption from
such registration requirements and as otherwise provided herein;

 

(s)

the Subscriber is not aware of any advertisement of any of the Shares and is not
acquiring the Shares as a result of any form of general solicitation or general
advertising including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees have been invited by
general solicitation or general advertising; and

 

(t)

no person has made to the Subscriber any written or oral representations,

 

(i)

that any person will resell or repurchase any of the Shares,

 

(ii)

that any person will refund the purchase price of any of the Shares,

 

(iii)

as to the future price or value of any of the Shares, or

 

(iv)

that any of the Shares will be listed and posted for trading on any stock
exchange or automated dealer quotation system or that application has been made
to list and post any of the Shares of the Company on any stock exchange or
automated dealer quotation system.

8.2                      In this Agreement, the term “U.S. Person” shall have
the meaning ascribed thereto in Regulation S.

9.

Acknowledgement and Waiver

9.1                      The Subscriber has acknowledged that the decision to
acquire the Shares was solely made on the basis of publicly available
information. The Subscriber hereby waives, to the fullest extent permitted by
law, any rights of withdrawal, rescission or compensation for damages to which
the Subscriber might be entitled in connection with the distribution of any of
the Shares.

10.

Representations and Warranties will be Relied Upon by the Company

10.1                   The Subscriber acknowledges that the representations and
warranties contained herein and are made by it with the intention that such
representations and warranties may be relied upon by the Company and its legal
counsel in determining the Subscriber’s eligibility to acquire the Shares under
applicable securities legislation, or (if applicable) the eligibility of others
on whose behalf it is contracting hereunder to acquire the Shares under
applicable securities legislation. The Subscriber further agrees that by
accepting delivery of the certificates representing the Shares on the Closing
Date, it will be representing and warranting that the representations and
warranties contained herein and are true and correct as at the Closing Date with
the same force and effect as if they had been made by the Subscriber on the
Closing Date and that they will survive the purchase by the Subscriber of Shares
and will continue in full force and effect notwithstanding any subsequent
disposition by the Subscriber of such Shares.

11.

Resale Restrictions

11.1                   The Subscriber acknowledges that any resale of the
Securities will be subject to resale restrictions contained in the securities
legislation applicable to the Subscriber or proposed transferee. The Subscriber
acknowledges that the Shares have not been registered under the 1933 Act of the
securities laws of any state of the United States. The Shares may not be offered
or sold in the United States unless registered in accordance with

 

 

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United States federal securities laws and all applicable state and provincial
securities laws or exemptions from such registration requirements are available.

11.2                   The Subscriber acknowledges that restrictions on the
transfer, sale or other subsequent disposition of the Shares by the Subscriber
may be imposed by securities laws in addition to any restrictions referred to in
Section 11.1 above, and, in particular, the Subscriber acknowledges and agrees
that none of the Shares may be offered or sold to a U.S. Person or for the
account or benefit of a U.S. Person (other than a distributor) prior to the end
of the Distribution Compliance Period.

12.

Legending and Registration of Subject Shares

12.1                   The Subscriber hereby acknowledges that a legend may be
placed on the certificates representing any of the Shares to the effect that the
Shares represented by such certificates are subject to a hold period and may not
be traded until the expiry of such hold period except as permitted by applicable
securities legislation.

12.2                   The Subscriber hereby acknowledges and agrees to the
Company making a notation on its records or giving instructions to the registrar
and transfer agent of the Company in order to implement the restrictions on
transfer set forth and described in this Agreement.

13.

Collection of Personal Information

13.1                   The Subscriber acknowledges and consents to the fact that
the Company is collecting the Subscriber’s personal information for the purpose
of fulfilling this Agreement and completing this offering. The Subscriber’s
personal information (and, if applicable, the personal information of those on
whose behalf the Subscriber is contracting hereunder) may be disclosed by the
Company to (a) stock exchanges or securities regulatory authorities, (b) the
Company’s registrar and transfer agent, and (c) any of the other parties
involved in this offering, including legal counsel, and may be included in
record books in connection with this offering. By executing this Agreement, the
Subscriber is deemed to be consenting to the foregoing collection, use and
disclosure of the Subscriber’s personal information (and, if applicable, the
personal information of those on whose behalf the Subscriber is contracting
hereunder) and to the retention of such personal information for as long as
permitted or required by law or business practice. Notwithstanding that the
Subscriber may be purchasing Shares as agent on behalf of an undisclosed
principal, the Subscriber agrees to provide, on request, particulars as to the
identity of such undisclosed principal as may be required by the Company in
order to comply with the foregoing.

14.

Costs

14.1                   The Subscriber acknowledges and agrees that all costs and
expenses incurred by the Subscriber (including any fees and disbursements of any
special counsel retained by the Subscriber) relating to the acquisition of the
Shares shall be borne by the Subscriber.

15.

Governing Law

15.1                   This Agreement is governed by the laws of the State of
Nevada.

16.

Survival

16.1                   This Agreement, including without limitation the
representations, warranties and covenants contained herein, shall survive and
continue in full force and effect and be binding upon the parties hereto
notwithstanding the completion of the purchase of the Shares by the Subscriber
pursuant hereto.

17.

Assignment

17.1                   This Agreement is not transferable or assignable.

 

 

 

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18.

Execution

18.1                   The Company shall be entitled to rely on delivery by
facsimile machine of an executed copy of this Agreement and acceptance by the
Company of such facsimile copy shall be equally effective to create a valid and
binding agreement between the Subscriber and the Company in accordance with the
terms hereof.

19.

Severability

19.1                   The invalidity or unenforceability of any particular
provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.

20.

Entire Agreement

20.1                   Except as expressly provided in this Agreement and in the
agreements, instruments and other documents contemplated or provided for herein,
this Agreement contains the entire agreement between the parties with respect to
the sale of the Shares and there are no other terms, conditions, representations
or warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.

21.

Notices

21.1                   All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Subscriber shall be
directed to the address on page 9 hereto and notices to the Company shall be
directed to the Company’s President at 30 Denver Crescent, Toronto, Ontario,
Canada M2J 1G8.

22.

Counterparts

22.1                   This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall constitute an
original and all of which together shall constitute one instrument.

IN WITNESS WHEREOF the Subscriber has duly executed this Agreement as of the
date first above mentioned.

DELIVERY INSTRUCTIONS

1.

Delivery - please deliver the certificates to:

                                          
                                          
                                          
                                                 

                                          
                                          
                                          
                                                 

2.

Registration - registration of the certificates which are to be delivered at
closing should be made as follows:

                                          
                                          
                                          
                                                 

(name)

                                          
                                          
                                          
                                                 

(address)

 

 

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3.

The undersigned hereby acknowledges that it will deliver to the Company all such
additional completed forms in respect of the Subscriber’s purchase of the Shares
as may be required for filing with the appropriate securities commissions and
regulatory authorities.

 

 

                                          
                                          

(Name of Subscriber – Please type or print)

                                          
                                          

(Signature and, if applicable, Office)

                                          
                                          

(Address of Subscriber)

                                          
                                          

(City, State or Province, Postal Code of Subscriber)

                                          
                                          

(Country of Subscriber)

 

A C C E P T A N C E

The above-mentioned Agreement in respect of the Shares is hereby accepted by
FRESHWATER TECHNOLOGIES, INC.

DATED at Vancouver, the ___ day of ___________, 2008.

FRESHWATER TECHNOLOGIES, INC.

 

 

Per:

                                                                         

 

Authorized Signatory