Copy of Enforceable Undertaking

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This undertaking is offered to the Securities Commission for acceptance under section 69J of the Securities Act 1978 by:

Capital Funding Limited ("CFL") 315 Main West Coast Road Yaldhurst CHRISTCHURCH

And each of the directors of CFL ("the directors"):

Background

1.

CFL was incorporated on 17 April 2003. One of its directors, Ms C Snell, was previously the sole director of a company called Carlton Capital Limited ("CCL").

2.

An investigation into CCL earlier this year indicated that securities were offered to the public in breach of securities laws. There were no registered prospectuses or investment statements for the offers. Liquidators were appointed to CCL on 18 July 2003.

3.

CFL sent letters to former clients of CCL in July and November 2003 ("the Letters"). The Letters promoted two investment opportunities available with CFL under an Information Memorandum and a Heads of Agreement.

4.

The Commission has concerns that the Letters, the Information Memorandum, and the Heads of Agreement may not comply with the Securities Act 1978 and the Securities Regulations 1983 as they appear to contain or refer to offers of securities to the public, but they do not refer to an investment statement or prospectus. There is no investment statement or registered prospectus for the offers.

5.

The Commission notified CFL of its intention to meet to consider making an order prohibiting the distribution of the Letters, the Information Memorandum, and the Heads of Agreement, or any advertisement which relates to an offer of securities under the Letters, the Information Memorandum, and the Heads of Agreement under section 38B of the Securities Act 1978.

6.

CFL has told the Commission it is preparing a prospectus for offers of securities.

7.

As an alternative to a prohibition order, the Commission has agreed to accept enforceable undertakings from CFL and its directors to stop distribution of these documents pending the outcome of the Commission's investigation. These undertakings are set out below.

Undertakings

8.

CFL and the directors will withdraw from distribution and make no further use of the Letters and the Information Memorandum until such time as a prospectus relating to any securities offered to the public is registered with the Companies Office.

9.

CFL and the directors will not offer further securities to the public for subscription, other than in an investment statement, registered prospectus, or authorised advertisement that complies with the Securities Act 1978 and the Securities Regulations 1983.

10.

CFL and the directors will seek appropriate professional advice in preparing or finalising the form of any new investment statement and prospectus.

11.

CFL and the directors will not distribute or permit the distribution by any person, and will take all reasonable steps to ensure that no employee or agent distributes or permits the distribution, of any advertisement containing or referring to an offer of securities to the public unless a prospectus relating to the securities has been registered with the Companies Office and an investment statement has been prepared.

12.

The directors of CFL will take all reasonable steps to ensure compliance by CFL, its directors, agents and employees with the applicable undertakings.

Acknowledgements

13.

CFL and the directors acknowledge that the Commission:

(a)

is continuing to investigate CFL and its operation and activities;

(b)

may issue a media release referring to the undertaking and to the concerns of the Commission which led to the undertaking being executed;

(c)

may from time to time publicly refer to the undertaking; and

(d)

will make this undertaking available for public inspection.

14.

CFL and the directors acknowledge that this undertaking does not derogate from the rights and remedies available to the Commission or to any other person or entity arising from the conduct described in the undertaking.

15.

CFL and the directors acknowledge that the Commission's acceptance of an enforceable undertaking under section 69J of the Securities Act 1978 does not affect the Commission's power to investigate past or future conduct of any person, to take any action or exercise any power under the Act or under any other legislation, or to refer any matter for criminal prosecution or seek any civil penalty.

Signed for and on behalf of Capital Funding Limited
by its duly authorised officer:

[C. Snell]

Signed by the directors of Capital Funding Limited:

[C. Snell]
Director

[G. Ward]
Director

Accepted by the Securities Commission
pursuant to section 69J of the Securities Act 1978
by its authorised delegate:

[L.Mason]
General Counsel

[Dated this 17th day of December 2003]

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