Filed by sedaredgar.com - Liberty Star Uranium & Metals Corp. - Exhibit 10.3






ESCROW AGREEMENT 

          This
Agreement is dated as of the 14th day of August, 2009 among Liberty Star Uranium
& Metals Corp., a Nevada corporation (the "Company"), the Subscribers
identified on Schedule A hereto (each a “Subscriber” and collectively
“Subscribers”), and Grushko & Mittman, P.C. (the "Escrow Agent"): 

W I T N E S S
E T H: 

          WHEREAS,
the Company and Subscribers have entered into a Subscription Agreement calling
for the sale by the Company to the Subscribers of secured convertible Notes for
an aggregate purchase price of up to $615,000 in the amounts set forth on
Schedule A hereto; and 

          WHEREAS,
the parties hereto require the Company to deliver the Notes against payment
therefor, with such Notes and the Escrowed Funds to be delivered to the Escrow
Agent, along with the other documents, instruments and payments hereinafter
described, to be held in escrow and released by the Escrow Agent in accordance
with the terms and conditions of this Agreement; and 

          WHEREAS,
the Escrow Agent is willing to serve as escrow agent pursuant to the terms and
conditions of this Agreement; 

          NOW
THEREFORE, the parties agree as follows: 

ARTICLE I 

INTERPRETATION 

         
1.1.      Definitions. Capitalized terms used
and not otherwise defined herein that are defined in the Subscription Agreement
shall have the meanings given to such terms in the Subscription Agreement.
Whenever used in this Agreement, the following terms shall have the following
respective meanings: 

               •      
 "Agreement" means this Agreement and all amendments made hereto and
thereto by written agreement between the parties; 

               •        “Closing
Date” shall have the meaning set forth in Section 1 of the Subscription
Agreement; 

               •        "Escrowed
Payment" means an aggregate cash payment of up to $615,000 which is the Purchase
Price; 

               •        
“Legal Fees” shall have the meaning set forth in Section 8(b) of the
Subscription Agreement; 

               •        “Legal
Opinion” means the original signed legal opinion referred to in Section 6 of the
Subscription Agreement; 

               •        “Lockup
Agreement” means the original Lockup Agreement referred to in Section 9(t) of
the Subscription Agreement, executed by the person identified in Section 9(t) of
the Subscription Agreement; 

               •        “Notes”
shall have the meaning set forth in the second recital to the Subscription
Agreement; 

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               •        “Principal
Amount” shall mean up to $615,000; 

               •        "Subscription
Agreement" means the Subscription Agreement (and the exhibits and schedules
thereto) entered into or to be entered into by the Company and Subscribers in
reference to the sale and purchase of the Notes; 

               •        
“Subsidiary Guaranty” shall have the meaning set forth in Section 13 of the
Subscription Agreement; 

               •        “Warrants”
shall have the meaning set forth in Section 3 of the Subscription Agreement;


               •        Collectively,
Subsidiary Guaranty, Legal Opinion, Lockup Agreement, Notes, Warrants, and the
executed Subscription Agreement are referred to as "Company Documents"; and 

               •        Collectively,
the Escrowed Payment and the Subscriber executed Subscription Agreement are
referred to as "Subscriber Documents". 

         
1.2.      Entire Agreement. This Agreement along
with the Company Documents and the Subscriber Documents constitute the entire
agreement between the parties hereto pertaining to the Company Documents and
Subscriber Documents and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. There are
no warranties, representations and other agreements made by the parties in
connection with the subject matter hereof except as specifically set forth in
this Agreement, the Company Documents and the Subscriber Documents. 

         
1.3.      Extended Meanings. In this Agreement
words importing the singular number include the plural and vice versa; words
importing the masculine gender include the feminine and neuter genders. The word
"person" includes an individual, body corporate, partnership, trustee or trust
or unincorporated association, executor, administrator or legal representative.


         
1.4.      Waivers and Amendments. This Agreement
may be amended, modified, superseded, cancelled, renewed or extended, and the
terms and conditions hereof may be waived, only by a written instrument signed
by all parties, or, in the case of a waiver, by the party waiving compliance.
Except as expressly stated herein, no delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder preclude any other or future exercise of any other right,
power or privilege hereunder. 

         
1.5.      Headings. The division of this
Agreement into articles, sections, subsections and paragraphs and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. 

         
1.6.      Law Governing this Agreement. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts of laws principles that would
result in the application of the substantive laws of another jurisdiction. Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York. Both parties and
the individuals executing this Agreement and other agreements on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party (which shall be the party which receives an award
most closely resembling the remedy or action sought) shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or 

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unenforceable under any law shall not affect the validity or
enforceability of any other provision of any agreement. 

         
1.7.      Specific Enforcement, Consent to
Jurisdiction. The Company and Subscriber acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injuction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity. Subject to Section 1.6 hereof, each of the Company
and Subscriber hereby waives, and agrees not to assert in any such suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction
of such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Nothing
in this Section shall affect or limit any right to serve process in any other
manner permitted by law. 

ARTICLE II 

DELIVERIES TO THE ESCROW AGENT 

         
2.1.      Company Deliveries. On or before the
Closing Date, the Company shall deliver the Company Documents to the Escrow
Agent. 

          2.2.     
Subscriber Deliveries. On or before the Closing Date, each Subscriber
shall deliver to the Escrow Agent such Subscriber’s portion of the Purchase
Price and the executed Subscription Agreement. The Escrowed Payment will be
delivered pursuant to the following wire transfer instructions: 

Citibank, N.A. 
1155 6th Avenue 
New York, NY
10036 
ABA Number: 0210-00089 
For Credit to: Grushko & Mittman, IOLA
Trust Account 
Account Number: 45208884 

         
2.3.      Intention to Create Escrow Over Company
Documents and Subscriber Documents. The Subscriber and Company intend that
the Company Documents and Subscriber Documents shall be held in escrow by the
Escrow Agent pursuant to this Agreement for their benefit as set forth herein.


         
2.4.      Escrow Agent to Deliver Company Documents
and Subscriber Documents. The Escrow Agent shall hold and release the
Company Documents and Subscriber Documents only in accordance with the terms and
conditions of this Agreement. 

ARTICLE III 

RELEASE OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS


         
3.1.      Release of Escrow. Subject to the
provisions of Section 4.2, the Escrow Agent shall release the Company Documents
and Subscriber Documents as follows: 

                        
(a)      On the Closing Date, the Escrow Agent will
simultaneously release the Company Documents to the Subscriber and release the
Subscriber Documents to the Company except that the Legal Fees will be released
to the Subscribers’ attorneys. 

                        
(b)      Any funds not used by the Company for the
purposes designated on Schedule 9(e) to the Subscription Agreement shall be
returned by the Company pro rata to the Subscribers based on the principal 

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amount of the Notes issued to the Subscribers and the Company
will receive a like credit for the amounts so returned to a Subscriber against
amounts owed by the Company to such Subscriber. 

                        
(c)      All funds to be delivered to the Company shall
be delivered pursuant to the wire instructions to be provided in writing by the
Company to the Escrow Agent.

                         (d)     
Notwithstanding the above, upon receipt by the Escrow Agent of joint written
instructions ("Joint Instructions") signed by the Company and the Subscriber, it
shall deliver the Company Documents and Subscriber Documents in accordance with
the terms of the Joint Instructions. 

                        
(e)      Notwithstanding the above, upon receipt by the
Escrow Agent of a final and non-appealable judgment, order, decree or award of a
court of competent jurisdiction (a "Court Order"), the Escrow Agent shall
deliver the Company Documents and Subscriber Documents in accordance with the
Court Order. Any Court Order shall be accompanied by an opinion of counsel for
the party presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the Court
Order has competent jurisdiction and that the Court Order is final and
non-appealable. 

         
3.2.      Termination Date. If a Closing does
not take place prior to August 31, 2009, then at the request of the Subscribers
or the Company, the Escrow Agent will promptly return the applicable Company
Documents to the Company and return the Subscriber Documents to the Subscribers.


         
3.3.      Acknowledgement of Company and Subscriber;
Disputes. The Company and the Subscriber acknowledge that the only terms and
conditions upon which the Company Documents and Subscriber Documents are to be
released are set forth in Sections 3 and 4 of this Agreement. The Company and
the Subscriber reaffirm their agreement to abide by the terms and conditions of
this Agreement with respect to the release of the Company Documents and
Subscriber Documents. Any dispute with respect to the release of the Company
Documents and Subscriber Documents shall be resolved pursuant to Section 4.2 or
by agreement between the Company and Subscriber. 

ARTICLE IV 

CONCERNING THE ESCROW AGENT 

         
4.1.      Duties and Responsibilities of the Escrow
Agent. The Escrow Agent's duties and responsibilities shall be subject to
the following terms and conditions: 

                        
(a)      The Subscriber and Company acknowledge and
agree that the Escrow Agent (i) shall not be responsible for or bound by, and
shall not be required to inquire into whether either the Subscriber or Company
is entitled to receipt of the Company Documents and Subscriber Documents
pursuant to, any other agreement or otherwise; (ii) shall be obligated only for
the performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iii) may rely on and shall be protected in acting
or refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by the
Escrow Agent in good faith to be genuine and to have been signed or presented by
the proper person or party, without being required to determine the authenticity
or correctness of any fact stated therein or the propriety or validity or the
service thereof; (iv) may assume that any person believed by the Escrow Agent in
good faith to be authorized to give notice or make any statement or execute any
document in connection with the provisions hereof is so authorized; (v) shall
not be under any duty to give the property held by Escrow Agent hereunder any
greater degree of care than Escrow Agent gives its own similar property; and
(vi) may consult counsel satisfactory to Escrow Agent, the opinion of such
counsel to be full and complete authorization and protection in respect of any
action taken, suffered or omitted by Escrow Agent hereunder in good faith and in
accordance with the opinion of such counsel. 

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                         (b)     
The Subscriber and Company acknowledge that the Escrow Agent is acting solely as
a stakeholder at their request and that the Escrow Agent shall not be liable for
any action taken by Escrow Agent in good faith and believed by Escrow Agent to
be authorized or within the rights or powers conferred upon Escrow Agent by this
Agreement. The Subscriber and Company, jointly and severally, agree to indemnify
and hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives for any action taken or omitted to be
taken by Escrow Agent or any of them hereunder, including the fees of outside
counsel and other costs and expenses of defending itself against any claim or
liability under this Agreement, except in the case of gross negligence or
willful misconduct on Escrow Agent's part committed in its capacity as Escrow
Agent under this Agreement. The Escrow Agent shall owe a duty only to the
Subscriber and Company under this Agreement and to no other person. 

                        
(c)      The Subscriber and Company jointly and
severally agree to reimburse the Escrow Agent for outside counsel fees, to the
extent authorized hereunder and incurred in connection with the performance of
its duties and responsibilities hereunder. 

                        
(d)      The Escrow Agent may at any time resign as
Escrow Agent hereunder by giving five (5) days prior written notice of
resignation to the Subscriber and the Company. Prior to the effective date of
the resignation as specified in such notice, the Subscriber and Company will
issue to the Escrow Agent a Joint Instruction authorizing delivery of the
Company Documents and Subscriber Documents to a substitute Escrow Agent selected
by the Subscriber and Company. If no successor Escrow Agent is named by the
Subscriber and Company, the Escrow Agent may apply to a court of competent
jurisdiction in the State of New York for appointment of a successor Escrow
Agent, and to deposit the Company Documents and Subscriber Documents with the
clerk of any such court. 

                        
(e)      The Escrow Agent does not have and will not
have any interest in the Company Documents and Subscriber Documents, but is
serving only as escrow agent, having only possession thereof. The Escrow Agent
shall not be liable for any loss resulting from the making or retention of any
investment in accordance with this Escrow Agreement. 

                        
(f)      This Agreement sets forth exclusively the
duties of the Escrow Agent with respect to any and all matters pertinent thereto
and no implied duties or obligations shall be read into this Agreement. 

                        
(g)      The Escrow Agent shall be permitted to act as
counsel for the Subscribers in any dispute as to the disposition of the Company
Documents and Subscriber Documents, in any other dispute between the Subscriber
and Company, whether or not the Escrow Agent is then holding the Company
Documents and Subscriber Documents and continues to act as the Escrow Agent
hereunder. 

                        
(h)      The provisions of this Section 4.1 shall
survive the resignation of the Escrow Agent or the termination of this
Agreement. 

         
4.2.      Dispute Resolution: Judgments.
Resolution of disputes arising under this Agreement shall be subject to the
following terms and conditions: 

                        
(a)      If any dispute shall arise with respect to the
delivery, ownership, right of possession or disposition of the Company Documents
and Subscriber Documents, or if the Escrow Agent shall in good faith be
uncertain as to its duties or rights hereunder, the Escrow Agent shall be
authorized, without liability to anyone, to (i) refrain from taking any action
other than to continue to hold the Company Documents and Subscriber Documents
pending receipt of a Joint Instruction from the Subscriber and Company, or (ii)
deposit the Company Documents and Subscriber Documents with any court of
competent jurisdiction in the State of New York, in which event the Escrow Agent
shall give written notice thereof to the Subscriber and the Company and shall
thereupon be relieved and discharged from all further obligations pursuant to
this Agreement. The Escrow Agent may, but shall be under no duty to, institute
or defend any legal proceedings which relate to the Company Documents and
Subscriber Documents. The Escrow Agent shall have the right to 

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retain counsel if it becomes involved in any disagreement,
dispute or litigation on account of this Agreement or otherwise determines that
it is necessary to consult counsel. 

                        
(b)      The Escrow Agent is hereby expressly
authorized to comply with and obey any Court Order. In case the Escrow Agent
obeys or complies with a Court Order, the Escrow Agent shall not be liable to
the Subscriber and Company or to any other person, firm, corporation or entity
by reason of such compliance. 

ARTICLE V 

GENERAL MATTERS 

         
5.1.      Termination. This escrow shall
terminate upon the release of all of the Company Documents and Subscriber
Documents or at any time upon the agreement in writing of the Subscriber and
Company. 

         
5.2.      Notices. All notices, demands,
requests, consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or certified,
return receipt requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand delivery,
telegram, or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:

(a)      If to the Company, to: 

Liberty Star Uranium & Metals
Corp. 
5610 E. Sutler Lane 
Tucson, Arizona 85712 
Attn: James A.
Briscoe, President 
Fax: (520) 844-1118 

          With a
copy by telecopier only to: 

Clark Wilson LLP 
800-885 West
Georgia Street 
Vancouver, B.C. Canada 
Attn: Bernard Pinsky, Esq.

Fax: (604) 687-6314 

(b)      If to the Subscribers, to:
the addresses and fax numbers listed on Schedule A hereto 

          With a
copy by facsimile only to: 

Grushko & Mittman, P.C. 
551
Fifth Avenue, Suite 1601 
New York, New York 10176 
Fax: 212-697-3575 

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(c)      If to the Escrow Agent, to:


Grushko & Mittman, P.C. 
551
Fifth Avenue, Suite 1601 
New York, New York 10176 
Fax: 212-697-3575 

or to such other address as any of them shall give to the
others by notice made pursuant to this Section 5.2. 

         
5.3.      Interest. The Escrowed Payment shall
not be held in an interest bearing account nor will interest be payable in
connection therewith. In the event the Escrowed Payment is deposited in an
interest bearing account, each Subscriber shall be entitled to receive its
pro rata portion of any accrued interest thereon, but only if the
Escrow Agent receives from such Subscriber the Subscriber’s United States
taxpayer identification number and other requested information and forms. 

         
5.4.      Assignment; Binding Agreement. Neither
this Agreement nor any right or obligation hereunder shall be assignable by any
party without the prior written consent of the other parties hereto. This
Agreement shall enure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns. 

         
5.5.      Invalidity. In the event that any one
or more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal, or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to the fullest extent
permitted by law. 

         
5.6.      Counterparts/Execution. This Agreement
may be executed in any number of counterparts and by different signatories
hereto on separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but one and the
same instrument. This Agreement may be executed by facsimile transmission and
delivered by facsimile transmission. 

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

LIBERTY STAR URANIUM & METALS
CORP. 
the “Company” 


By:___________________________________


“SUBSCRIBERS”

	 	 	 
	ALPHA CAPITAL ANSTALT 	 	HARBORVIEW MASTER FUND L.P. 
	 	 	 
	 	 	 
	 	 	 
	PLATINUM PARTNERS LONG TERM 	 	BRIO CAPITAL LP 
	GROWTH VI 	 	  
	 	 	 
	 	 	 
	 	 	 
	IROQUOIS MASTER FUND LTD. 	 	DOUBLE U MASTER FUND LP 
	 	 	 
	 	 	 
	 	 	 
	  	 	ESCROW AGENT 
	 	 	 
	 	 	 
	 	 	 
	  	 	GRUSHKO & MITTMAN, P.C.



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SCHEDULE A TO FUNDS ESCROW AGREEMENT


	SUBSCRIBERS 
	NOTE PRINCIPAL AMOUNT
      
(PURCHASE PRICE) 
	ALPHA CAPITAL ANSTALT 
Pradafant 7 
9490 Furstentums
      
Vaduz, Lichtenstein 
Fax: 011-42-32323196 	$338,251.00





	HARBORVIEW MASTER FUND L.P. 
Harbor House, 2nd
      Floor 
Waterfront Drive, Road Town 
Tortola, BVI 
Fax:
      (284) 494-4771 	$76,847.00 




	PLATINUM PARTNERS LONG TERM GROWTH VI 
152 West
      57th Street 
New York, NY 10019 
Attn: Mark Nordlicht
      
Fax: (212) 	$126,116.00





	BRIO CAPITAL LP 
401 E. 34th St.-Suite South
      33C 
New York, NY 10016 
Fax: (646) 390-2158 	$21,857.00 



	DOUBLE U MASTER FUND LP 
Harbour House, 
Waterfront
      Drive, Road Town 
Tortola, BVI 
Fax: (284) 494-4771 	$26,106.00 




	IROQUOIS MASTER FUND LTD. 
c/o Iroquois Capital
      Management, LLC 
641 Lexington Avenue, 26th Floor 
New
      York, NY 10022 
Fax: (212) 207-3452 	$25,823.00 




	TOTAL 	$615,000.00 



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