EDEN INNOVATIONS LTD — Capital/Financing Update 2011

Nov 14, 2011

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ACN 109 200 900

CLEANSING STATEMENT

15 November 2011

Issued under section 708(12C)(e) of the Corporations Act 2001 (Cth) (as inserted by ASIC Class Order [CO 10/322])

This Cleansing Statement has been prepared for the purposes of section 708(12C)(e) of the Corporations Act 2001 (as inserted by ASIC Class Order [CO 10/322]) to enable fully paid ordinary shares in the capital of Eden Energy Ltd ("the Company") to be issued on conversion of a convertible note issued by the Company to La Jolla Cove Investors Inc. ("La Jolla") to be on-sold by La Jolla to retail investors.

This Cleansing Statement is important and should be read in its entirety.

1. THE EFFECT OF THE ISSUE OF THE FIRST NOTE ON EDEN ENERGY LTD

1.1 Background

On 11 November 2011, Eden Energy Ltd ( Company ) and La Jolla Cove Investors Inc. ( La Jolla ) entered into the Eden Energy Funding Agreement ( Funding Agreement ) pursuant to which the Company agreed to issue, and La Jolla agreed to acquire, up to 3 convertible notes ( Notes ), each with an issue price (or face value) of US $1,000,000.00. La Jolla is a US-based private investment company.

This Cleansing Statements relates to the issue of the First Note.

An outline of the rights and liabilities attaching to the First Note is provided in section 2 of this Cleansing Statement. A summary of some of the key terms and conditions of the Funding Agreement is provided in section 4 of this Cleansing Statement.

Under the Funding Agreement, the Notes will be issued sequentially. In each case, the obligation of La Jolla to subscribe for, and the Company to issue, a Note will only arise following the satisfaction of certain conditions precedent. At the date of this Cleansing Statement, the Company has satisfied each of the relevant conditions (which are summarised in section 4.1) capable of satisfaction for the issue of the First Note, and La Jolla will subscribe for, and the Company will issue, the First Note to La Jolla on the date of this Cleansing Statement ( Initial Closing Date )

1.2 Issue of the Notes

The Company must issue the First Note, but has the right to elect whether or not to issue the Subsequent Notes. The Subsequent Notes are able to be issued in the period commencing on the date that the Company has fully drawn down all of the

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Purchase Price under the Note most recently issued or has obtained all necessary approvals required for the issue of that Note (whichever occurs last) and ending two (2) months thereafter ( Subsequent Note Period ). If the Company does not issue either Subsequent Note, either party may terminate the Funding Agreement and La Jolla may redeem the Principal Amount, and any accrued but unpaid interest, on any Note then on issue at a cash price of 120% of the Principal Amount or to convert the said amount into Shares (or do a combination of both of those things).

1.3 The payment of the Purchase Price of the First Note

The payment of the Purchase Price of the First Note will be made by La Jolla in instalments, in the following manner:

• (a) US $250,000.00 on the Initial Closing Date; and

• (b) Subject to the satisfaction of certain conditions, commencing in the month following the Initial Closing Date, the Company must notify La Jolla whether it requires it to pay the Company a monthly payment in an amount of US $250,000.00 ( Monthly Payment ) or whether it waives that instalment payment, provided that the Company must draw down all of the Purchase Price of the First Note (of US $1,000,000.00) within six (6) months of the Initial Closing Date.

The obligation on La Jolla to make each Monthly Payment is conditional on the satisfaction of certain conditions at the time payment is required to be made of that Monthly Payment under the Funding Agreement (refer to sections 4.1 and 4.2 of this Cleansing Statement).

1.4 Consideration payable to La Jolla

In consideration of La Jolla agreeing to enter into the Funding Agreement, the Company will pay to La Jolla a facility fee equal to US $60,000.00, to be payable by the issue of 1,175,018 Shares at an issue price of $0.050364 per Share (representing the VWAP price for the five trading days prior to the execution of the Funding Agreement on 11 November 2011). In addition, the Company has agreed to pay La Jolla a further facility fee of US$60,000.00 (also to be satisfied by the issue of Shares at an issue price of $0.050364) on the closing date for the second Note.

1.5 Purpose and effect of the issue of the First Note on the Company

The First Note issued by the Company will, subject to satisfaction of all of the conditions precedent to the payment of each Monthly Payment, raise US $1,000,000.00 (less the expenses associated with the issue of the First Note). The funds raised from the issue of the First Note will be used for working capital purposes.

The Directors consider that the raising of capital by the issue of the First Note is in the best interests of the Company as it secures, on acceptable terms and at an important time to it, the funding likely to be required by the Company in the ordinary course of the development and growth of its business in the short to medium term. This funding will be supplemented by the amount raised by the Company under the Rights Issue announced on 31 October 2011.

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The Directors consider that the benefits of the issue of the First Note include the following:

• (a) the cost of the funds raised by the Company from the issue of the First Note and the interest rate on the moneys provided by La Jolla is reasonable in the current market;

• (b) the Company will not be required to give other security to secure repayment of the moneys advanced;

• (c) the Conversion Price (refer to section 2.7) is, in the Directors’ opinion, not dissimilar to the issue price that the Company would be likely to have had to accept if it had elected to raise the required funding in the current market environment by an issue of any new Shares to third party professional and sophisticated investors.

The principal effects of the issue of the First Note on the Company will be to:

• (a) increase the Company's cash reserves by US $250,000.00 (after deducting the Company's expenses associated with the issue of the First Note) immediately upon the First Note being issued;

• (b) subject to the terms of the Funding Agreement and satisfaction of the conditions applicable under the Funding Agreement with regard to Monthly Payments, increase the Company's cash reserves by an additional US $750,000.00 in aggregate by way of three further Monthly Payments of not less than US $250,000.00 each;

• (c) give rise to the Company assuming a liability for the proceeds received from La Jolla for payment of the Purchase Price of the First Note less any amount which has been the subject of a conversion into new Shares;

• (d) give rise to the Company assuming an obligation to pay interest on the Principal Amount to La Jolla at the rate of 4.75% per annum monthly in arrears; and

• (e) if the First Note is converted, either in whole or in part, increase the number of Shares on issue as a consequence of the issue of new Shares to La Jolla.

In relation to paragraph (e), the number of new Shares to be issued to La Jolla will depend on whether the First Note is converted in whole or in part, the applicable Conversion Price (refer to section 2.7) and the prevailing US$/AU$ exchange rate at the time of conversion.

• 1.6 The effect of the First Note Issue on the capital structure of the Company

The current issued capital of the Company (before the issue of the First Note) is set out below.

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Type of Security	Securities prior to the Note Issue
Shares (ASX Code: EDE)	247,153,019
Listed Options (ASX Code: EDEO)	36,343,365
ESOP Options	2,688,014
Options expiring 31 December 2011 exercisable at $0.10	5,000,000
Options expiring 20 November 2012 exercisable at $0.10625	4,000,000

The number of Shares on issue will increase by 1,175,018 (on account of the Shares issued in satisfaction of the facility fee) following the issue of the First Note (see section 1.4). The Company will also have one Note on issue.

As noted in section 1.5, the number of new Shares to be issued to La Jolla (if any) will depend on whether the Note is converted in whole or in part, the applicable Conversion Price and the prevailing US$/AU$ exchange rate at the time of conversion.

By way of example, if the First Note is converted in whole at a time when the relevant VWAP is AU $0.04958 (which reflects the VWAP at the close of trade on 14 November 2011, being the last Business Day prior to the issue of this Cleansing Statement) and the US$/AU$ exchange rate is $1.00 US for every AU 99.79 cents (which reflects the US$/AU$ exchange rate on 14 November 2011, the last Business Day prior to issue of this Cleansing Statement (refer to section 1.8)), 25,158,835 new Shares would be issued to La Jolla as outlined below:

(US $1,000,000/0.9979) (80% x AU $0.04958)* = =	AU $997,900 0.039664 25,158,835 new Shares

*Also refer to section 2.7.

Based on the number of Shares on issue at the date of this Cleansing Statement, as set out in the table below, the issue of 25,158,835 new Shares to La Jolla would give La Jolla a relevant interest in approximately 9.63% of the expanded total number of Shares (excluding any Shares issued under the Rights Issue). It is, however, important to note that this is an illustration only based on full conversion of the Note and the example VWAP and US$/AU$ exchange rate referred to above. The actual outcome, if La Jolla elects to convert the First Note in whole or in part, will depend on that election and the Conversion Price and the prevailing US$/AU$ exchange rate applicable at the time of conversion.

In addition, La Jolla is subject to an "Ownership Limitation" under the terms of the Funding Agreement. The Company shall not effect any conversion of a Note, and La Jolla shall not have the right to convert any portion of a Note, to the extent that after giving effect to the conversion, on the applicable Conversion Notice, La Jolla (together with its Affiliates, and any other person or entity acting as a group together with La Jolla or any of La Jolla’s Affiliates) would beneficially own in excess of 19.99% of the Company ( Ownership Limitation ).

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1.7 Pro forma Statement of Financial Position of the Company taking account of the First Note Issue

Set out below is a pro forma consolidated Statement of Financial Position as at 30 June 2011 for the Company based on the consolidated Statement of Financial Position as at 30 June 2011 adjusted to reflect the First Note Issue and the Rights Issue currently taking place and prepared on the basis of the accounting policies normally adopted by the Company and the assumptions set out below.

The pro forma financial information is presented in an abbreviated form in so far as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

CONSOLIDATED ENTITY'S STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2011

ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Financial assets Property, plant and equipment Intangible assets Exploration and evaluation TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Interest bearing liabilities Provisions TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY	30 June 2011 Adjustments Pro-forma $ $ 2,024,427 3,667,750 5,692,177 793,470 750,000 1,543,470 348,259 348,259 60,334 60,334
	3,226,490 4,417,750 7,644,240
	100,500 100,500 1,278,562 1,278,562 90,967 90,967 5,441,027 5,441,027 101,818 101,818
	7,012,874 7,012,874
	10,239,364 4,417,750 14,657,114
	618,672 93,000 711,672 - 1,000,000 1,000,000 1,575,173 (493,000) 1,082,173
	2,193,845 600,000 2,793,845
	2,193,845 600,000 2,793,845
	8,045,519 3,817,750 11,863,269
	46,635,488 3,877,750 50,513,238 1,729,434 1,729,434 (40,319,403) (60,000) (40,379,403)
	8,045,519 3,817,750 11,863,269

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The unaudited pro forma consolidated balance sheet set out above has been prepared on the basis and assumption that there has been and will be no material movements in the assets and liabilities of the consolidated entity between 1 July 2011 and the date of this Cleansing Statement other than:

• the issue of 6,250,000 Shares through a placement completed on 16 September 2011 to raise a total of $380,000 after issue expenses (Placement). The placements were made to sophisticated and professional investors, at a price of $0.064 per Share;

• the payment of the first instalment of the settlement funds to Omni Laboratories Inc of US$500,000 made on 18 October 2011;

• the issue of the First Note to La Jolla and receipt by the Company of the Initial Payment of US $250,000 in cash (with the balance of the Purchase Price of the First Note (in the sum of US $750,000) being treated as a receivable), and the issue of $60,000 worth of Shares to La Jolla in payment of their facility fee under the Funding Agreement (in each case based on an exchange rate of US$1.00:AU$1.00);

• the issue of approximately 70,615,000 New Shares and 70,615,000 New Options under the Rights Issue raising $3,530,750 before expenses of the Offer and on the assumption that the Rights Issue is fully subscribed and payment of the estimated expenses of the Rights Issue of $93,000.00 are included in "Trade and Other Payables" and to be paid, net of GST.

1.8 US$/AU$ exchange rate

As the Purchase Price of the Notes are denominated in US dollars, the exchange rate between US dollars and Australian dollars at any given time will be relevant.

It is important to note that the US$/AU$ exchange rate may vary from time. As at 14 November 2011 (the last Business Day prior to the issue of this Cleansing Statement), the US$/AU$ exchange rate equated to approximately US $1.00 = AU $0.9979.

The US$/AU$ exchange rate will impact on the amount (in Australian dollars) owed by the Company to La Jolla from time to time and is relevant, along with the Conversion Price, in determining the number of new Shares to be issued to La Jolla on the conversion of the Note.

2. RIGHTS AND LIABILITIES ATTACHING TO THE FIRST NOTE

A summary of the key terms of the First Note is set out below:

• 2.1 The Purchase Price of the First Note is US $1,000,000.00, payable by four instalments of US $250,000.

• 2.2 Interest is payable on the First Note on the Principal Amount at the rate of 4.75% per annum, and is payable monthly in arrears in cash or, at the option of the Company, in Shares issued at the then applicable Conversion Price.

• 2.3 The First Note matures on the Maturity Date.

• 2.4 The First Note is unsecured and the Principal Amount ranks equally with all other unsecured debts owed by the Company.

• 2.5 La Jolla may convert the First Note, either in whole or in part, by the delivery to the Company of a Conversion Notice.

• 2.6 If on the day La Jolla issues a Conversion Notice the VWAP is below $0.07 per Share, the Company will have the right, by no later than 3:00pm Sydney time on the date that is seven (7) Business Days after its receipt of the Conversion Notice, to prepay that portion of the Principal Amount of the First Note that La

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Jolla has sought to convert pursuant to the Conversion Notice, plus any accrued and unpaid interest, at 105% of such amount. The Funding Agreement provides for the downward adjustment of the Floor Price in certain circumstances.

• 2.7 The number of new Shares into which the First Note may be converted is equal to the Principal Amount that is to be converted (as specified in the Conversion Notice) divided by the Conversion Price. The Conversion Price is equal to the lesser of:

• 2.7.1 $0.50 (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalisations or the like); or

• 2.7.2 80% of the average of the three (3) lowest VWAP during the twenty-one (21) trading days prior to La Jolla's election to convert (the Funding Agreement provides for this percentage figure to be adjusted downwards in certain circumstances).

• 2.8 In the event the Company is prohibited from issuing Shares for any reason, or fails to timely deliver Shares on the Delivery Date, or upon the occurrence of an Event of Default under the Funding Agreement, then at La Jolla's election, the Company must pay to La Jolla ten (10) Business Days after request by La Jolla or on the Delivery Date (if requested by La Jolla) a sum of money determined by multiplying the Principal Amount of the First Note designated by La Jolla (but not exceeding the Principal Amount the subject of the Conversion Notice or the portion of the Principal Amount which cannot be converted into Shares, as required) by 120%, together with accrued but unpaid interest thereon in redemption of such portion of the First Note.

• 2.9 Further to the above paragraph, if the Company commits any Event of Default specified in the Funding Agreement, La Jolla may in its sole and absolute discretion rescind any Conversion Notice it has issued and require the immediate repayment of all amounts owing or otherwise outstanding under the First Note. In these circumstances, the Company must pay 120% of the outstanding Principal Amount, together with all accrued and unpaid interest.

• 2.10 In each of the five months prior to the Maturity Date, the Company may elect to force La Jolla to convert one-fifth of the then remaining Principal Amount (calculated at the beginning of the first of the five months prior to the Maturity Date, so that the effect of the forced conversion over the last five successive months would be to convert the entire remaining Principal Amount) of the First Note into Shares, provided however there is not currently occurring an Event of Default on behalf of the Company under the Funding Agreement.

• 2.11 Unless converted, the Principal Amount must be paid to La Jolla on the Maturity Date. The Company may not make any prepayments on the First Note without the consent of La Jolla.

• 2.12 If a "Fundamental Corporate Change" occurs, then La Jolla will have the right to:

• 2.12.1 require the Company to prepay the First Note for cash at 120% of the Principal Amount, together with all accrued and unpaid interest payable to the date of prepayment; or

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• 2.12.2 receive upon conversion of the Principal Amount of the First Note which was outstanding immediately prior to such Fundamental Corporate Change (or any portion thereof) the number of securities of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property as is receivable upon or as a result of such Fundamental Corporate Change by a holder of the number of Shares into which the outstanding portion of the First Note so converted would have been able to be converted at the Conversion Price applicable immediately prior to such Fundamental Corporate Change.

A Fundamental Corporate Change includes a reorganisation or reclassification of capital, consolidation or merger of the Company with a third party, the sale, transfer or disposal of substantially all of the assets and business of the Company, or any transaction or series of transactions whereby more than 50% of the voting power of the Company is disposed of.

• 2.13 The First Note shall not be transferable by La Jolla unless La Jolla first obtains the written consent of the Company.

• 2.14 If during the term of the Funding Agreement, La Jolla fails to fund any amount within ten (10) business days of the date that the delivery of funds relevant to such purchase would otherwise be due, La Jolla shall be liable for and immediately pay $200,000 to the Company by way of liquidated damages ( Liquidated Damages Amount ). If the Investor pays the Liquidated Damages Amount to the Company, the Investor shall have no further obligations under the Funding Agreement and the Notes, including with respect to (i) any unpaid portion of a Note already issued by the Company, or (ii) the Purchase Price for any Subsequent Note that has not been issued by the Company

• 2.15 Conversion of the First Note will not be permitted if that would cause La Jolla’s (together with any Affiliates) voting power in the Company to increase to more than 19.99%.

• 2.16 The First Note will not be quoted on ASX or any other securities exchange.

• 2.17 Except as otherwise provided in the Funding Agreement, the Funding Agreement shall not entitle La Jolla to any of the rights of a Shareholder, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of Shareholders or any other proceedings of the Company, unless and to the extent converted into Shares in accordance with the terms of the First Note.

Under the Funding Agreement, the Company is required to apply to ASX for quotation of any new Shares issued on the conversion of the First Note within two (2) Trading Days of the issue of those new Shares.

3. RIGHTS AND LIABILITIES ATTACHING TO SHARES ISSUED ON THE CONVERSION OF THE FIRST NOTE

The new Shares to be issued to La Jolla on the conversion of the First Note will rank equally in all respects with all of the existing Shares. The rights attaching to Shares, including the new Shares to be issued to La Jolla on the conversion of the First Note, are set out in the Constitution and, in certain circumstances, regulated by the Corporations Act, the ASX Listing Rules and the general law.

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Full details of the rights and liabilities attaching to Shares are set out in the Company’s constitution, a copy of which can be inspected, free of charge, at the Company’s registered office during normal business hours.

The following is a broad summary of the rights, privileges and restrictions attaching to all Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders.

3.1 Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares (at present there are none), at meetings of Shareholders of the Company:

• (a) each Shareholder entitled to attend and vote may vote in person or by proxy, attorney or representative;

• (b) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote (save that where a Shareholder has appointed more than one person as proxy, attorney or representative, none of the proxies, attorneys or representatives, is entitled to vote, and where a Shareholder is present in more than one capacity, that Shareholder is entitled only to one vote); and

• (c) on a poll, every person present who is a Shareholder shall, in respect of each Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid shares, shall have such number of votes as bears the same proportion of the amount paid up or agreed to be considered as paid up on the total issue price of that Share at the time the poll is taken bears to the total issue price of the Share.

3.2 Rights on winding up

Subject to the rights of holders of shares with special rights in a winding up (at present there are none) and the Constitution, on a winding up of the Company all assets that may be legally distributed among members will be distributed in proportion to the number of Shares held by them (and a partly paid share is counted as a fraction of a Share equal to the amount paid on it, divided by the total issue price of the share).

3.3 Transfer of shares

Subject to the constitution of the Company, the Corporations Act, the Listing Rules and any other laws, Shares are freely transferable.

3.4 Future increases in capital

The allotment and issue of any Shares is under the control of the Board. Subject to the requirements of the Listing Rules, the Constitution and the Corporations Act, the Directors may allot or otherwise dispose of Shares on such terms and conditions as they see fit.

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3.5 Variation of rights

Under the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders, vary or abrogate the rights attaching to shares. If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of the issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the sanction of a special resolution of the Company and with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

3.6 Dividend rights

Subject to the rights of holders of shares issued with special, preferential or qualified rights (at present there are none), the profits of the Company that the Directors determine to distribute by way of dividend are divisible among the holders of Shares and is payable on each Share on the basis of the proportion which the amount paid is of the total amounts paid, agreed to be considered to be paid or payable on the Share. A dividend may be declared at a rate per annum in respect of a specified period but no amount paid on a Share in advance of calls is to be treated as paid on that Share.

3.7 Meetings and notice

Each Shareholder is entitled to receive notice of and to attend general meetings of the Company and to receive all notices, accounts and other documents required to be sent to Shareholders under the Constitution, the Corporations Act or the ASX Listing Rules.

3.8 ASX Listing Rules

While the Company is admitted to the official list of ASX, if the ASX Listing Rules prohibit an act being done, the act must not be done despite anything in the Constitution. Nothing in the Constitution prevents an act being done that the ASX Listing Rules require to be done. If a provision of the Constitution is or becomes inconsistent with the ASX Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

3.9 Alteration of Constitution

The Constitution can only be amended by a special resolution passed by at least 75% of Shareholders present and voting at a general meeting.

4. SUMMARY OF THE KEY TERMS OF THE FUNDING AGREEMENT

The terms of issue of the First Note (and any Subsequent Notes which may be issued by the Company to La Jolla) are governed by the Funding Agreement. To the extent that the key terms of the Funding Agreement are not addressed in sections 1 and 2 above, a summary is outlined below.

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4.1 Conditions precedent to the First Note Issue

Under the Funding Agreement, the Company and La Jolla have agreed that, on the satisfaction of certain conditions, the Company will issue the First Note to La Jolla. The conditions which are required to be satisfied include:

• (a) the lodgement of this Cleansing Statement with ASX;

• (b) any approvals required for the First Note Issue having been obtained, including any approval required under ASX Listing Rule 7.1 and approval through the Foreign Investment Review Board ( FIRB );

• (c) the representations and warranties made by the Company to La Jolla in the Funding Agreement are confirmed by the Company as being accurate;

• (d) the Company confirming to La Jolla that the Company's board of Directors has authorised the execution of the Funding Agreement, the First Note Issue and the transactions contemplated by the Funding Agreement;

• (e) there being no suspension of trading in Shares in ASX, no declaration of a banking moratorium in the US or Australia and no material outbreak or escalation of hostilities in the US or Australia;

• (f) there being no event or development which would reasonably and foreseeably have a material adverse effect on the business, properties, prospects, condition (financial or otherwise) or results of operations of the Company or its subsidiaries or on the consummation of the transactions contemplated by the Funding Agreement;

• (g)

no Event of Default under the Funding Agreement has occurred;

• (h) no law, order, ruling, judgment or writ which would restrain or prohibit the transactions contemplated by the Funding Agreement;

• (i) La Jolla having received such documents, certificates, payments or other deliveries as it may reasonably request and as are customary to give effect to the transaction in the Funding Agreement; and

• (j) a legal opinion is delivered to La Jolla issued by the Company's legal advisers regarding the enforceability of the Funding Agreement.

At the date of this Cleansing Statement, the Company has satisfied each of the conditions set out in the Funding Agreement capable of being satisfied, or they have been waived as the case may be, and the Company will issue the First Note on the date of this Cleansing Statement.

4.2 Conditions precedent to the making of Monthly Payments in respect of the First Note

The obligation on La Jolla to make a Monthly Payment in respect of the First Note is also subject to the satisfaction of certain conditions on or before the time the Monthly Payment is to be made. These conditions are essentially the same as the conditions that must be satisfied prior to the Note issue, save and except for those

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conditions referred to in sections 4.1(a), (d), (i) and (j) above. There is an additional condition that the Company must have honoured all Conversion Notices submitted by La Jolla as required and the Shares issued must have been transferable on ASX within one day of their issue.

4.3 Representations and warranties made by the Company

The Company has given all usual representations and warranties to La Jolla which one would ordinarily expect to find in a funding agreement similar to the Funding Agreement.

4.4 The issue of Subsequent Notes

La Jolla has agreed to purchase two (2) additional Notes, each with an issue price of US $1,000,000.00 ( Subsequent Notes ) during the Subsequent Note Period.

The form and terms of each Subsequent Note, the purchase of the Subsequent Notes and the payment of the Purchase Price for each Subsequent Note are subject to the same terms and conditions as apply to the First Note.

La Jolla is to purchase (and the Company is to issue) the Subsequent Note within ten (10) Business Days of the Company giving La Jolla a call notice during the Subsequent Note Period. If the Company fails to deliver the call notice within such period, either party may terminate the Funding Agreement. Upon termination, La Jolla may redeem the outstanding Principal Amount and any accrued but unpaid interest on any Note (including any Subsequent Note) then on issue at a cash price of 120% of the Principal Amount or to convert the said amount into Shares.

4.5 Events of Default

If an Event of Default occurs and is continuing, La Jolla may in its sole and absolute discretion rescind any Conversion Notice and require the immediate repayment of all amounts owing or otherwise outstanding under the First Note (and/or any Subsequent Notes it has purchased). In these circumstances, the Company must pay 120% of the outstanding Principal Amount, together with all accrued and unpaid interest, of such Note(s).

Each of the following, among other events, constitute an Event of Default if they occur and are not cured by the Company within ten (10) Business Days of becoming aware of the event occurring:

• (a) the Company defaults in the payment of principal of or interest on the First Note (and/or any Subsequent Notes) and such default continues for five (5) Business Days;

• (b) the Company fails to deliver to La Jolla either the new Shares set out in a Conversion Notice submitted by La Jolla or, if applicable, the amount of cash necessary to redeem the First Note (and/or any Subsequent Notes);

• (c) the Company breaches the Funding Agreement and such breach continues for a period of ten (10) Business Days after the delivery to the Company of written notice that the Company is in breach;

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• (d) any of the representations, warranties or covenants made by the Company in the Funding Agreement are false or misleading in a material respect;

• (e) an insolvency event occurs in respect of the Company or any of its subsidiaries;

• (f) a judgment is entered against the Company for payment of money and remains undischarged for 60 days, where the aggregate amount outstanding exceeds $100,000;

• (g) it becomes unlawful for the Company to perform or comply with its obligations under the Funding Agreement in any respect;

• (h) the average VWAP for any period of three (3) consecutive Trading Days is less than AU $0.01 per Share;

• (i) the Shares no longer can be traded on the ASX, or shall be suspended from trading on the ASX, and shall not be reinstated, relisted or such suspension lifted within five days;

• (j) the Shares issued to La Jolla on the conversion of the First Note (and/or any Subsequent Notes) are not granted official quotation by ASX;

• (k) the Company fails to timely file all reports required to be filed by it under any applicable law, rule or regulation;

• (l) the Company fails to issue a cleansing statement in compliance with ASIC Class Order 10/322, in a form and substance acceptable to La Jolla, with the ASX, as required by the terms of the Funding Agreement;

• (m) the Company fails to receive all necessary consents, including without limitation shareholder consents, necessary for the issuance of the Note or any Shares issuable upon conversion of the Note(s) to La Jolla; and

• (n) the Company defaults in the payment of principal or interest under any indebtedness, individually or in the aggregate, or more than AU $100,000.00.

4.6 Indemnity

The Company agrees to indemnify La Jolla, its Affiliates and their respective officers, directors, employees, consultants, partners, members and attorneys from and against any and all losses, claims, damages, judgments, penalties, liabilities and deficiencies (expressly excluding indirect, incidental, exemplary, consequential, punitive or special loss or damage), and agrees to reimburse these parties for all reasonable out-of-pocket expenses to the extent arising out of or in connection with:

• (a) any misrepresentation, omission of fact or breach of any of the Company's representations or warranties contained in the Funding Agreement or other necessary documentation, or any instrument, agreement or certificate entered into or delivered by the Company pursuant to the Funding Agreement; and

• (b) any failure by the Company to perform any of its covenants, agreements, undertakings or obligations under the Funding Agreement or any instrument,

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certificate or agreement entered into or delivered by the Company pursuant to the Funding Agreement.

4.7 Governing Law

The Funding Agreement is governed by and interpreted in accordance with the laws of the State of Western Australia.

5. ADDITIONAL INFORMATION

5.1 The Company is a "disclosing entity"

The Company is a "disclosing entity" under the Corporations Act and, accordingly, is subject to regular reporting and disclosure obligations under both the Corporations Act and the ASX Listing Rules.

These obligations require the Company to notify ASX of information about specific events and matters as they arise. In particular, the Company has an obligation under ASX Listing Rule 3.1 and section 674 of the Corporations Act (subject to certain limited exceptions) to notify ASX immediately once it is or becomes aware of information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Shares.

The Company is also required to prepare and lodge with ASIC yearly and halfyearly financial statements accompanied by a Directors’ statement and report, and an audit report or review. Copies of documents lodged with ASIC in relation to the Company may be obtained from, or inspected at, an ASIC office (refer to section 5.2).

5.2 Copies of documents

The Company will provide a copy of each of the following documents, free of charge, to any person on request:

• (a) the annual financial report most recently lodged by the Company with ASIC, being the financial report of the Company for the year ended 30 June 2011 ( 2011 Financial Report ); and

• (b) any continuous disclosure documents given by the Company to ASX after the lodgement of the 2011 Financial Report (ie, on 21 September 2011) and before the lodgement of this Cleansing Statement with ASX.

A list of the continuous disclosure documents given by the Company to ASX after the lodgement of the 2011 Financial Report and before the lodgement of this Cleansing Statement with ASX is set out in the table below.

Date	Headline
14/11/2011	Non-Renounceable Rights Issue Prospectus
14/11/2011	Appendix 3B
11/11/2011	US$3 million Convertible Note Facility
11/11/2011	Non-Renounceable Rights Issue Updated Timetable

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09/11/2011	Eden Continues Carbon Nanotube Advancement
08/11/2011	Pro-Rata Non-Renounceable Rights Issue Updated Timetable
07/11/2011	Appendix 3B
03/11/2011	Option Issue
02/11/2011	Encouraging Results on Eden's Nano-Carbon in Concrete
31/10/2011	First Quarter Activities and Cashflow Report
31/10/2011	Letter to Optionholders
31/10/2011	Results of Meeting
31/10/2011	Pro-Rata Non-Renounceable Rights Issue
31/10/2011	AGM Presentation
28/09/2011	Pyrolysis Project Progress Report
27/09/2011	Release of Next Generation OptiBlend Kits
26/09/2011	Alteration to Notice of Meeting – Date Change
23/09/2011	Notice of Annual General Meeting / Proxy Form
22/09/2011	Appendix 3B

5.3 Information excluded from continuous disclosure notice

Other than as set out in this Cleansing Statement, there is no information about the First Note or the Funding Agreement that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules, which is information that investors would reasonably expect to be included in this Cleansing Statement.

5.4 Glossary

2011 Financial Report means the annual financial report lodged by the Company with ASIC in respect of the year ended 30 June 2011.

Affiliates means in relation to any entity:

• (a) any entity it controls;

• (b) any entity under common control with it by another entity, or

• (c) any entity which controls it.

ASIC means the Australian Securities and Investments Commission

ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange, as the context requires.

ASX Listing Rules means the listing rules of ASX.

AU $ means Australian dollars.

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Business Day means a day other than a Saturday, Sunday or any other day on which banks located in California, US or Victoria or Western Australia, Australia are authorised or obligated to close.

Cleansing Statement means this cleansing statement issued on 15 November 2011 under section 708(12C)(e) of the Corporations Act (as inserted by ASIC Class Order [CO 10/322]).

Company means Eden Energy Ltd A.C.N. 109 200 900.

Constitution means the constitution of the Company at the date of this Cleansing Statement.

Conversion Notice means the notice by which La Jolla notifies the Company that it wishes to convert the First Note, either in whole or in part, into new Shares, as outlined in section 2.5.

Conversion Price means the price at which new Shares are issued on the conversion of the relevant Principal Amount (as specified in the relevant Conversion Notice), in accordance with the formula outlined in section 2.7.

Corporations Act means the Corporations Act 2001 (Cth).

Delivery Date means the date within two Business Days after receipt by the Company of a Conversion Notice.

Directors means the directors of the Company at the date of this Cleansing Statement.

Event of Default means an event outlined in section 4.5.

First Note means the Note to be issued by the Company to La Jolla under the Funding Agreement on the Initial Closing Date.

Fundamental Corporate Change has the meaning given to that term in section 2.12.

Funding Agreement means the finding agreement dated 11 November 2011 between the Company and La Jolla, pursuant to which the First Note (and any Subsequent Notes) will be issued to La Jolla.

Initial Closing Date has the meaning set out in section 1.1.

Initial Payment means the initial payment of US $250,000.00 to be made by La Jolla as at the Initial Closing Date as part payment of the Purchase Price.

La Jolla means La Jolla Cove Investors, Inc., a corporation registered in California, US of Suite 218, 1150 Silverado Street, La Jolla, California, US.

Maturity Date means the date which is three (3) years from the Initial Closing Date.

Monthly Payments means the monthly payments to be made by La Jolla towards the payment of the Purchase Price in the manner outlined in section 1.3.

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Note means a convertible note to be issued by the Company to La Jolla under the Funding Agreement.

Note Issue means the issue of the First Note to La Jolla pursuant to the Funding Agreement.

Option means an option to acquire a Share.

Other Property means any cash, shares or other securities or property of any nature whatsoever (including warrants or other subscription rights) in addition to or in lieu of shares of any successor or acquiring corporation.

Prepayment Right means the Company's right, in certain circumstances, to prepay that portion of the Principal Amount of the First Note that La Jolla has sought to convert, plus any accrued and unpaid interest, at 105% of such amount, as outlined in section 2.6.

Principal Amount means, at any time, the then outstanding principal amount of the First Note, but only such amount in respect of which La Jolla has actually advanced and has not furnished a Conversion Notice and which has not been repaid by the Company.

Purchase Price means the purchase price (or face value) of a Note, being (in each instance) US $1,000,000.00.

Rights Issue means the offer contained in the prospectus issued by the Company dated 14 November 2011 of 2 new Shares for every 7 existing Shares held by qualifying shareholders as at 5.00pm on 23 November 2011 at an issue price of $0.05 per new Share, together with 1 free attaching new Option (each to subscribe for 1 Share at $0.20 on or before 30 June 2014) for every new Share issued under the prospectus for the issue of up to approximately 70,615,000 new Shares and up to approximately 70,615,000 new Options.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a shareholder of the Company.

Subsequent Note Period has the meaning set out in section 1.2.

Subsequent Notes means up to two additional Notes which La Jolla may purchase under the Funding Agreement.

Trading Day means any day on which the ASX is open.

US means the United State of America.

US $ means US dollars.

VWAP means for any date, the daily volume weighted average sale price of the Shares for such date on ASX.

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