THIS DEBT SETTLEMENT AGREEMENT made as of the 3 day of June, 2003.

BETWEEN:


                    Scottish Holdings Inc.
                    703-938 Howe Street
                    Vancouver, B.C.
                    V7R 2L9
                    Canada


                       (hereinafter called the "Creditor")

                                                               OF THE FIRST PART

AND:

                    BOUNDARIES CAPITAL, INC.,
                    A company incorporated under the laws of Nevada and with an
                    office in British Columbia,
                    460-789 West Pender Street, Vancouver
                    British Columbia
                    V6C 2T7 CANADA

                        (hereinafter called the "Debtor")

                                                              OF THE SECOND PART

WHEREAS:


A.             As at the date hereof, the Debtor is indebted to the Creditor in
               the total amount of US $ 3,120. (the "Debt");


B.             The Debtor has agreed to issue to the Creditor a total of 312,000
               shares (the "Shares") in the capital stock of the Debtor at a
               deemed price of US $0.01 per share.


C.             The Creditor has agreed to accept the said Shares in full
               satisfaction of the Debt;



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               NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
               the mutual promises and covenants herein contained, the parties
               hereto agree as follow:


1.             The Creditor hereby agrees to accept from the Debtor the Shares
               in full satisfaction of the Debt.


2.             The Creditor hereby agrees that upon the issuance to it of the
               Shares, the Creditor releases and forever discharges the Debtor,
               its successors and assigns from all manner of actions, suits,
               debts due, accounts, bonds, contracts, claims and demands
               whatsoever which against the Debtor it ever had, now has, or
               which its successors or assigns or any of them hereafter may have
               by reason of the Debtor's indebtedness to the Creditor.


3.             This Agreement and the rights of the Creditor under it may not be
               sold, conveyed or otherwise assigned by the Creditor without the
               prior written consent of the Debtor first having been obtained,
               which consent shall not be unreasonably withheld.


4.             No right of a party hereto shall be prejudiced by events beyond a
               party's reasonable control including, without limiting the
               generality of the foregoing, pressures or delays from outside
               parties, labour disputes, the exigencies of nature, governments,
               regulatory authorities and acts of God, but excluding the want of
               funds. All times herein provided for shall be extended by the
               period necessary to cure any such event and the party affected
               shall use all reasonable means to do so promptly.


5.             This Agreement shall be governed by and be construed in
               accordance with the laws of British Columbia. The courts of
               British Columbia shall have sole jurisdiction to hear and
               determine all manner of disputes and claims arising out of or in
               any way connected with the laws of British Columbia. The courts
               of British Columbia shall have sole jurisdiction to hear and
               determine all manner of disputes and claims arising out of or in
               any way connected with the construction, breach or alleged,
               threatened or anticipated breach of this Agreement and determine
               all questions as to the validity, existence or enforceability
               thereof.


6.             Time shall be of the essence of this Agreement.



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7.             This Agreement may be executed in two or more counterparts each
               of which shall be deemed an original but all of which together
               constitute one and the same instrument.


8.             This Agreement shall enure to the benefit of and be binding upon
               each of the parties hereto and their respective successors and
               permitted assigns.












          IN WITNESS WHEREOF the parties have executed this Agreement as of the
day and year first above written.




SIGNED, SEALED AND DELIVERED              )
in the presence of:                       )
                                          )     Authorized Signatory
/s/ Alan Crawford                         )     /s/ Phil Johnston
----------------------------              )     ---------------------




SIGNED, SEALED AND DELIVERED              )
in the presence of:                       )
                                          )     /s/ Allen Sewell
/s/ Negar Towfigh                         )     ------------------------
-------------------------------                 Authorized Signatory
                                                Boundaries Capital, Inc.