SECOND MODIFICATION AND AMENDMENT AGREEMENT

 

This Second Modification and Amendment Agreement (“Agreement”) dated as of May
16, 2008 is entered into by and among Liberty Star Uranium & Metals Corp., a
Nevada corporation (the “Company”) and the subscribers identified on the
signature page hereto (each herein a “Subscriber” and collectively “Subscribers”
or the “Parties”).

 

WHEREAS, the Company and the Subscribers are parties to a Subscription Agreement
(“Subscription Agreement”) dated May 11, 2007 as amended on or about February
12, 2008 relating to an aggregate investment by Subscribers of up to $5,000,000
of principal amount of promissory notes (“Notes”) of the Company convertible
into shares of the Company’s $.001 par value common stock and Common Stock
Purchase Warrants (“Warrants”); and

 

WHEREAS, the Company and Subscribers desire to further restructure the terms of
the Transaction Documents to their mutual benefit.

 

NOW THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Subscribers hereby agree as
follows:

 

1.           All the capitalized terms employed herein shall have the meanings
attributed to them in the Subscription Agreements and the documents and
agreements delivered therewith (“Transaction Documents”).

 

2.           Only in connection with the Monthly Amounts due on the 11th day of
each of May and June, 2008, Section 2.1 of the Note is amended as follows:

 

“2.1.       Payment of Monthly Amount in Cash or Common Stock. Subject to
Section 3.2 hereof, the Borrower shall pay the Monthly Amount, at the Borrower’s
election, in either of the following manners: (i) in cash within three (3)
business days after the applicable Repayment Date, or (ii) in registered Common
Stock at an applied conversion rate equal to the lesser of (A) the Fixed
Conversion Price (as defined in section 3.1 hereof), or (B) 75% of the VWAP (as
defined below) as reported by Bloomberg L.P. for the Principal Market for the
ten trading days preceding such Repayment Date (as such amount may be adjusted
as described herein). Amounts paid with shares of Common Stock must be delivered
to the Holder not later than three (3) business days after the applicable
Repayment Date. The Borrower must send notice to the Holder by confirmed
telecopier not later than 6:00 PM, New York City time on the fifth trading day
preceding a Repayment Date (however the notice in reference to the payment due
on May 11, 2008, shall be given within 2 days of execution of this Agreement and
the Common Stock will be issued within 2 days of such notice but the VWAP
calculation (date for the May 11, 2008 payment) will be May 11) notifying Holder
of Borrower’s election to pay the Monthly Amount in cash or Common Stock. The
Notice must state the amount of the Monthly Amount including a description of
the components of such Monthly Amount and include supporting calculations.
Elections by the Borrower must be made to all Other Holders in proportion to the
relative Note principal held by the Holder and the Other Holders. If such notice
is not timely sent or if the Monthly Redemption Amount is not timely delivered
or if the Borrower elects to pay the Monthly Amount with Common Stock, then
Holder shall have the right, instead of the Company, to elect in writing within
three (3) trading days prior to the applicable Repayment Date or required
Delivery Date, as the case may be, whether to be paid in Common Stock or defer
the payment of the relevant Monthly Amount in

 

 

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whole or in part until three (3) business days after demand therefore by the
Holder, but may not request cash on such payments until maturity or unless
otherwise agreed to by the Company. The conversion price in connection with such
deferred Monthly Amount shall be the lowest conversion price that could be
calculated for any Repayment Date from the Repayment Date for such deferred
Monthly Amount until such Monthly Amount is actually paid. Such Holder’s
election shall not be construed to be a waiver of any default by Borrower
relating to non-timely compliance by Borrower with any of its obligations under
this Note. “VWAP” shall mean the sum of the dollars traded for every purchase
and sale of the Common Stock on the Principal Market (determined as the price
per share of Common Stock at which such purchase and sale occurred multiplied by
the number of shares of Common Stock so purchased and sold) divided by the total
shares of Common Stock traded during the period.”

 

3.            The Fixed Conversion Price as defined in Section 3.1 of the Note
is amended to $0.50.

 

4.            The foregoing notwithstanding, the first Monthly Amount will be
paid on May 12, 2008. Any portion of the Monthly Amount paid with shares of
Common Stock shall be delivered to the Subscribers, and any restrictive legend
upon sale of such Shares under Rule 144 will immediately be removed.

 

5.            The Purchase Price as defined in the Class A Warrant will be
$0.50.

 

6.           The Company undertakes to make a public announcement on Form 8-K
describing this Agreement not later than the fourth business day after the
execution of this Agreement.

 

7.           For the benefit of the parties hereto, the Company hereby makes all
the representations, warranties, covenants undertakings and indemnifications
contained in the Transaction Documents, as if such representations were made by
the Company as of this date. The Subscribers hereby make all of the
representations, warranties, covenants, indemnifications and undertakings
contained in the Transaction Documents as if such representations were made by
the Subscribers as of this date.

 

8.            Subject to the modifications and amendments provided herein,
the Transaction Documents shall remain in full force and effect, including but
not limited to the accrual of interest and liquidated damages, if any. Except as
expressly set forth herein, this Agreement shall not be deemed to be a waiver,
amendment or modification of any provisions of the Transaction Documents or of
any right, power or remedy of the Subscribers, or constitute a waiver of any
provision of the Transaction Documents (except to the extent herein set forth),
or any other document, instrument and/or agreement executed or delivered in
connection therewith, in each case whether arising before or after the date
hereof or as a result of performance hereunder or thereunder. Except as set
forth herein, the Subscribers reserve all rights, remedies, powers, or
privileges available under the Transaction Documents, at law or otherwise.
This Agreement shall not constitute a novation or satisfaction and accord of
the Transaction Documents or any other document, instrument and/or agreement
executed or delivered in connection therewith.

 

9.            Each of the undersigned states that he has read the foregoing
Agreement and understands and agrees to it.

 

10.          This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to any other party, it being understood that all parties need not sign
the same counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were an original
thereof.

 

 

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IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
as of the date first written above.

 

LIBERTY STAR URANIUM & METALS CORP.

the “Company”

 

By: /s/ James Briscoe

 

“SUBSCRIBERS”

 

 

/s/ signed
ALPHA CAPITAL ANSTALT

/s/ signed
HARBORVIEW MASTER FUND L.P.

 

 

/s/ signed
PLATINUM PARTNERS LONG TERM
GROWTH VI

/s/ signed
CHESTNUT RIDGE PARTNERS LP

 

 

/s/ signed
BRIDGEPOINTE MASTER FUND, LTD.

/s/ signed
BRIO CAPITAL LP

 

 

/s/ signed
DOUBLE U MASTER FUND LP

/s/ signed
IROQUOIS MASTER FUND LTD.

 

 

/s/ signed
ENABLE GROWTH PARTNERS LP

/s/ signed
ENABLE OPPORTUNITY PARTNERS LP

 

 

 

ESCROW AGENT

 

 

 

/s/ signed
GRUSHKO & MITTMAN, P.C.

 

 

 

 

CW1856541.1